These derivative liabilities have been presented on balance sheet as follows:
|
|
|
|
$
|
|
Current
|
75,111
|
|
Non-current
|
1,179,923
|
|
|
1,255,034
|
The lattice methodology was used to value the derivative components, using the following assumptions at issuance and period end date of March 31, 2016:
|
|
|
Assumptions
|
|
|
Dividend yield
|
0.00%
|
|
Risk-free rate for term
|
0.21% - 0.59%
|
|
Volatility
|
100%-105%
|
|
Remaining terms (years)
|
1 - 1.5
|
|
Stock price ($ per share)
|
2.55 and 2.48
|
The projected annual volatility curve for valuation at issuance and period end was based on the comparable company’s annual volatility. The Company used market trade stock prices at issuance and period end date.
12
9. STOCKHOLDERS’ DEFICIENCY
Authorized stock
As at March 31, 2016, the Company is authorized to issue 125,000,000 (December 31, 2015 – 100,000,000) shares of common stock ($0.001 par value) and 10,000,000 (December 31, 2015 – 1,000,000) shares of preferred stock ($0.001 par value).
I
n contemplation of the acquisition of iMedical on February 2, 2016, the Company’s Board of Directors approved the
increase in authorized capital stock from 100,000,000 shares of common stock to 125,000,000 shares of common stock, with a par value of $0.001 per share, and from 1,000,000 shares of preferred stock to 10,000,000 shares of preferred stock, with a par value of $0.001 per share.
Issued and outstanding stock
As explained in detail in Note 1 to the condensed consolidated financial statements, with the closing of the Acquisition Transaction on February 2, 2016:
·
Biotricity’s sole existing director resigned and a new director who is the sole director of the Company was appointed to fill the vacancy;
·
Biotricity’s sole Chief Executive Officer and sole officer, who beneficially owned 6,500,000 shares of outstanding common stock, resigned from all positions and transferred all of his shares back for cancellation;
·
The existing management of the Company were appointed as executive officers; and
·
The existing shareholders of the Company entered into a transaction whereby their existing common shares of the Company were exchanged for either (a) a new class of shares that are exchangeable for shares of Biotricity’s common stock, or (b) shares of Biotricity’s common stock, which (assuming exchange of all such exchangeable shares) would equal in the aggregate a number of shares of Biotricity’s common stock that constitute 90% of Biotricity’s issued and outstanding shares.
In addition, effective on the closing date of the acquisition transaction:
·
Biotricity issued approximately 1.197 shares of its common stock in exchange for each common share of the Company held by the Company shareholders who in general terms, are not residents of Canada (for the purposes of the Income Tax Act (Canada). Accordingly the Company issued 13,376,947 shares;
·
Shareholders of the Company who in general terms, are Canadian residents (for the purposes of the Income Tax Act (Canada)) received approximately 1.197 Exchangeable Shares in the capital of Exchangeco in exchange for each common share of the Company held. Accordingly the Company issued 9,123,031 exchangeable shares;
·
Each outstanding option to purchase common shares in the Company (whether vested or unvested) was exchanged, without any further action or consideration on the part of the holder of such option, for approximately 1.197 economically equivalent replacement options with an inverse adjustment to the exercise price of the replacement option to reflect the exchange ratio of approximately 1.197:1;
·
Each outstanding warrant to purchase common shares in the Company was adjusted, in accordance with the terms thereof, such that it entitles the holder to receive approximately 1.197 shares of the common stock of Biotricity for each Warrant, with an inverse adjustment to the exercise price of the Warrants to reflect the exchange ratio of approximately 1.197:1
13
·
Each outstanding advisor warrant to purchase common shares in the Company was adjusted, in accordance with the terms thereof, such that it entitles the holder to receive approximately 1.197 shares of the common stock of Biotricity for each Advisor Warrant, with an inverse adjustment to the exercise price of the Advisor Warrants to reflect the exchange ratio of approximately 1.197:1; and
·
The outstanding 11% secured convertible promissory notes of the Company were adjusted, in accordance with the adjustment provisions thereof, as and from closing, so as to permit the holders to convert (and in some circumstances permit the Company to force the conversion of) the Convertible Debentures into shares of the common stock of Biotricity at a 25% discount to purchase price per share in Biotricity’s next offering.
Issuance of preferred stock, common stock, exchangeable shares and cancellation of shares in connection with the reverse takeover transaction as explained above represents recapitalization of capital retroactively adjusting the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree.
At March 31, 2016 and December 31, 2015 there were 15,876,947 and 9,000,000 shares of common stock issued and outstanding, respectively. There is currently one share of the Special Voting Preferred Stock issued and outstanding held by one holder of record, which is the Trustee in accordance with the terms of the Trust Agreement
.
Out of outstanding common stock of 15,876,947 as at March 31, 2016, 750,000 are held in escrow and subject to forfeiture. Of the shares of Common Stock and exchangeable shares issued and outstanding approximately 22,500,000 of such shares are or would be restricted shares under the Securities Act.
Stock-based compensation
On March 30, 2015, iMedical approved Directors, Officers and Employees Stock Option Plan, under which it authorized and issued 3,000,000 options. This plan was established to enable the Company to attract and retain the services of highly qualified and experience directors, officers, employees and consultants and to give such person an interest in the success of the Company. These options now represent the right to purchase shares of the Company’s common stock using the same exchange ratio of approximately 1.197:1.
These options will expire by March 30, 2025. The outstanding options as at March 31, 2016 are as follows:
|
|
|
|
|
|
|
No. of options
|
Exercise
|
Vested
|
Unvested
|
|
|
|
Price
|
options
|
options
|
|
|
#
|
$
|
#
|
#
|
|
As at December 31, 2015
|
167,500
|
0.0001
|
-
|
167,500
|
|
Adjustment*
|
33,000
|
-
|
-
|
33,000
|
|
As at March 31, 2016
|
200,500
|
0.0001
|
-
|
200,500
|
* As explained above, on February 2, 2016 all outstanding options have been increased by a factor of 1.197.
14
Broker warrants
The outstanding broker warrants as at March 31, 2016 will expire by May 2018 as detailed below.
|
|
|
|
|
No. of broker
|
Weighted Average
|
|
|
warrants
|
Exercise
|
|
|
|
Price
|
|
|
#
|
$
|
|
As at December 31, 2015
|
271,742
|
1.2000
|
|
Adjustment*
|
53,533
|
(0.1970)
|
|
As at March 31, 2016
|
325,275
|
1.0030
|
* As explained above, on February 2, 2016 all outstanding broker warrants have been increased by a factor of 1.197.
Warrants
The outstanding warrants as at March 31, 2016 will expire by October 2016 as detailed below.
|
|
|
|
|
No. of
|
Weighted Average
|
|
|
warrants
|
Exercise
|
|
|
|
Price
|
|
|
#
|
$
|
|
As at December 31, 2015
|
380,000
|
1.0000
|
|
Adjustment*
|
74,860
|
(0.1970)
|
|
As at March 31, 2016
|
454,860
|
0.8030
|
* As explained above, on February 2, 2016 all outstanding warrants have been increased by a factor of 1.197.
10. RELATED PARTY TRANSACTIONS
The Company’s transactions with related parties were carried out on normal commercial terms and in the course of the Company’s business.
Other than those disclosed elsewhere in the financial statements, the related party transactions are as follows:
The Company paid consulting charges in cash to its stockholders amounting to $43,680 and $60,427 for the three months ended March 31, 2016 and 2015, respectively.
11. COMMITMENTS
a)
On September 14, 2014, the Company finalized an agreement with CardioComm Solutions Inc. (“CardioComm’) for the development of a customized software for the ECG. The term of this agreement is later of 5 years or completion of all services from the effective date of agreement, which is September 14, 2014. Pursuant to this agreement, the Company paid CardioComm a non-refundable royalty advance of $224,775 (CAD 250,000), which was fully expensed during year ended December 31, 2014 as the Company is still under research and development phase. In addition, the Company has committed to pay $584,415 for design of a Windows Operating System ECG Management Software in accordance with an estimated payment schedules for the work performed. During the three months ended March 31, 2016 and 2015, the Company paid $65,520 and $72,513, respectively which were expensed and included in research and development expenses.
15
b)
On July 4, 2014, the Company entered into an operating lease contract for its office premises in Mississauga, Ontario on a year to year basis. The monthly lease payment was $3,910 which was increased to $7,383. The lease agreement also includes provisions of Cloud Hosting services at $2,548 per month and telephone and internet services at $1,092 per month.
c)
On January 8, 2016, the Company entered into a lease agreement for its office premises in California, USA for a monthly base rent of $16,530.
12. SUBSEQUENT EVENTS
The Company’s management has evaluated subsequent events up to May 16, 2016, the date the financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following material subsequent events:
On May 3, 2016, the Company appointed Mr. David A. Rosa as director to fill the remaining vacancy on the Board of Directors of the Company.
In connection with the appointment of Mr. Rosa, the Company authorized the issuance of warrants to purchase 40,000 shares of its common stock, at an exercise price per share of $2.00, with such other terms and conditions as the officers of the Company deem reasonable and acceptable.
On April 27, 2016, the Company appointed Dr. Norman M. Betts as director to fill one of two vacancies on the Board of Directors. In connection with the appointment of Dr. Betts, the Company authorized the issuance of warrants to purchase 40,000 shares of its common stock, at an exercise price per share of $2.00, with such other terms and conditions as the officers of the Company deem reasonable and acceptable.
During April, 2016, the Company entered into subscription agreements by and among the Company and the lending parties for the issuance of an aggregate principal amount of $350,000 unsecured convertible promissory notes pursuant to offering to accredited investors for up to $1,000,000 as explained in Note 7 to the condensed consolidated financial statements.
16
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Except for historical information contained herein, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Important assumptions and other factors that could cause actual results to differ materially from those in the forward-looking statements, include but are not limited to: (a) any fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; (f) competition in the Company’s existing and potential future product lines of business; (g) the Company’s ability to obtain financing on acceptable terms if and when needed; (h) uncertainty as to the Company’s future profitability; (i) uncertainty as to the future profitability of acquired businesses or product lines; and (j) uncertainty as to any future expansion of the Company. Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure of such assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. The Company assumes no obligation to update these forward looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements. Past results are no guaranty of future performance. You should not place undue reliance on any forward-looking statements, which speak only as of the dates they are made. When used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends,” “will” and similar expressions are intended to identify forward-looking statements.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and footnotes thereto included in this Quarterly Report on Form 10-Q (the “Financial Statements”).
Company Overview
We are a healthcare technology company committed to the development of software and hardware solutions to help the management of chronic health issues. We aim to provide a turnkey, wearable medical cardiac monitoring solution. To achieve this, we are dedicated to continuing our research and development programs, honing our medical-device expertise, increasing our deep knowledge of biometrics, developing both software and hardware components and nurturing a cohesive medical network.
Plan of Operation and Recent Corporate Developments
We were incorporated on August 29, 2012 in the State of Nevada. At the time of our incorporation the name of our company was Metasolutions, Inc. On January 27, 2016, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to our Articles of Incorporation, effective as of February 1, 2016, whereby, among other things, we changed our name to Biotricity Inc. and increased the authorized number of shares of common stock from 100,000,000 to 125,000,000 and “blank check” preferred stock from 1,000,000 to 10,000,000.
On February 2, 2016 we acquired iMedical Innovations Inc. (“iMedical”), a corporation incorporated under the laws of the Province of Ontario, Canada, through our indirect subsidiary 1062024 B.C. LTD., a company existing under the laws of the Province of British Columbia (“Exchangeco”). Immediately prior to the closing of such acquisition, we transferred all of the then-existing business, properties, assets, operations, liabilities and goodwill of the Company, to W270 SA, a Costa Rican corporation. Accordingly, as of immediately prior to the closing of such acquisition of iMedical, we had no assets or liabilities.
17
Critical Accounting Policies
The Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in United States Dollars. Significant accounting policies are summarized below:
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant estimates and assumptions include: deferred income tax assets and related valuation allowance, accruals and valuation of warrants, promissory notes and derivative liabilities, and stock options. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.
Earnings (Loss) Per Share
The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. There were no potentially dilutive shares outstanding as at March 31, 2016.
Fair Value of Financial Instruments
ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
|
|
|
|
●
|
|
Level 1
–
Valuation based on quoted market prices in active markets for identical assets or liabilities.
|
|
|
|
|
|
●
|
|
Level 2
–
Valuation based on quoted market prices for similar assets and liabilities in active markets.
|
|
|
|
|
|
●
|
|
Level 3
–
Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.
|
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates
.
These financial instruments include cash and accounts payable. The Company's cash, which is carried at fair value, is classified as a Level 1 financial instrument. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.
18
Recently Issued Accounting Pronouncements
In March 2016, the Company adopted the accounting pronouncement issued by the Financial Accounting Standards Board ("FASB") to update guidance on how companies account for certain aspects of share-based payments to employees. This pronouncement is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. This guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and changes the presentation of excess tax benefits on the statement of cash flows. The Company adopted these provisions on a prospective basis. In addition, this pronouncement changes guidance on: (a) accounting for forfeitures of share-based awards and (b) employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation. The adoption of this pronouncement did not have a material impact on the Company’s financial position and/or results of operations.
In February 2016, an accounting pronouncement was issued by the FASB to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. The Company has not yet determined the effect that the adoption of this pronouncement may have on our financial position and/or results of operations.
On January 1, 2016, the Company adopted the accounting pronouncement issued by the FASB which eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The adoption of this pronouncement did not have a material impact on the Company’s financial position and/or results of operations.
On January 1, 2016, the Company adopted the accounting pronouncement issued by the FASB to update the guidance related to the presentation of debt issuance costs. This guidance requires debt issuance costs, related to a recognized debt liability, be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. The Company adopted this pronouncement on a retrospective basis, and the adoption did not have a material impact on the Company financial position and/or results of operations.
In November 2015, an accounting pronouncement was issued by the FASB to simplify the presentation of deferred income taxes within the balance sheet. This pronouncement eliminates the requirement that deferred tax assets and liabilities are presented as current or noncurrent based on the nature of the underlying assets and liabilities. Instead, the pronouncement requires all deferred tax assets and liabilities, including valuation allowances, be classified as noncurrent. This pronouncement is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company intend to adopt this pronouncement on January 1, 2017, and the adoption will not have a material impact on our financial position and/or results of operations.
In May 2014, an accounting pronouncement was issued by the FASB to clarify existing guidance on revenue recognition. This guidance includes the required steps to achieve the core principle that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This pronouncement is effective for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. The guidance permits the use of one of two retrospective transition methods. We have not yet selected a transition method nor have the Company determined the effect that the adoption of the pronouncement may have on our financial position and/or results of operations.
Results of Operations
19
From our inception in July 2009 through to March 31, 2016, Biotricity has generated a deficit of $10,497,925. We expect to incur additional operating losses through the fiscal year ending December 31, 2016 and beyond, principally as a result of our continuing anticipated research and development costs and due to anticipated initial limited sales of the Bioflux, our planned first product. When we approach final stages of the anticipated commercialization of the Bioflux, we will have to devote and expect to continue to devote significant resources in the areas of capital expenditures and research and development costs.
Three Months Ended March 31, 2016 as Compared to Three Months Ended March 31, 2015
Operating Expenses
Total operating expenses for the fiscal quarter ended March 31, 2016 were $576,620 compared to $1,806,405 for the fiscal quarter ended March 31, 2015, as further described below.
For the fiscal quarter ended March 31, 2016, we incurred research and development expenses of $241,534, compared to research and development expenses of $367,194 for the fiscal quarter ended March 31, 2015. The decrease in research and development expenses relates primarily to slow down in research activities during 2016 as management is waiting for FDA approval of its planned first product.
For the fiscal quarter ended March 31, 2016, we incurred general and administrative expenses of $335,086, compared to general and administrative expenses of $1,439,211 for the fiscal quarter ended March 31, 2015. The decrease is mainly due to recording of $1,273,670 as employee stock option plan expense during Q1 2015 whereas no such expense was recorded during Q1 2016.
Accretion expense and change in fair value of derivative liabilities of $73,572 and $618,959, respectively, for the fiscal quarter ended March 31, 2016 and the three months ended March 31, 2015, relate to the convertible promissory notes issued during Q4 2015 and Q1 2016.
Net Loss
Net loss for the fiscal quarter ended March 31, 2016 amounted to $1,269,151, resulting in a loss per share of $0.0508, compared to $1,806,405 for the fiscal quarter ended March 31, 2015, resulting in a loss per share of $0.0723.
Translation Adjustment
Translation adjustment for the quarter ended March 31, 2016 was $61,518 as compared to translation adjustment of $133,930 for the quarter ended March 31, 2015. This translation adjustment represents loss resulted from the translation of currency in the financial statements from iMedical’s functional currency of Canadian dollars to the reporting currency in U.S. dollars.
Liquidity and Capital Resources
We are a development stage company and have not yet realized any revenues from our planned operations. We have a working capital deficit of $535,304 at March 31, 2016, and have incurred a deficit of $10,497,925 from inception to March 31, 2016. We have funded operations primarily through the issuance of capital stock and other securities.
During the quarter ended March 31, 2016, we raised net cash of $175,000 through the issuance of convertible promissory notes, as part of an aggregate offering of $1.0 million in notes.
As we proceed with the commercialization of the Bioflux product development we have devoted and expect to continue to devote significant resources in the areas of capital expenditures and research and development costs and operations, marketing and sales expenditures.
20
We expect to require additional funds to further develop our business plan, including the anticipated commercialization of the Bioflux and Biolife products. Based on our current operating plans, we will require additional resources to introduce the Bioflux into the Mobile Cardiac Telemetry market and the Biolife device into the consumer market. Since it is impossible to predict with certainty the timing and amount of funds required to launch the Bioflux and Biolife product in any other markets or any of our other proposed products, we anticipate that we will need to raise additional funds through equity or debt offerings or otherwise in order to meet our expected future liquidity requirements. Any such financing that we undertake will likely be dilutive to existing stockholders. We are currently in discussions to raise at least $6.0 million in equity financing, of which we can give no assurance of success.
In addition, we expect to also need additional funds to respond to business opportunities and challenges, including our ongoing operating expenses, protecting our intellectual property, developing or acquiring new lines of business and enhancing our operating infrastructure. While we may need to seek additional funding for such purposes, we may not be able to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock. We may also seek additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all of our proposed product lines.
Net Cash Used in Operating Activities
During the quarter ended March 31, 2016, we used cash in operating activities of $545,791 compared to $586,133 for the quarter ended March 31, 2015.
Net Cash Used in Financing Activities
Net cash provided by financing activities was $225,724 for the quarter ended March 31, 2016 compared to $235,379 for the quarter ended March 31, 2015.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4.
Controls and Procedures
.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing periods specified in the SEC's rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance.
21
At the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.
Limitations on the Effectiveness of Controls
Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.
Changes in Internal Controls
There were no changes in the Company’s internal controls over financial reporting that occurred during the period ended March 31, 2016 that have materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
22
PART II
OTHER INFORMATION
Item 1.
Legal Proceedings.
None
Item 1A.
Risk Factors
Not applicable for smaller reporting companies
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
During March 2016, we commenced a bridge offering of up to an aggregate of $1,000,000 of convertible promissory notes to various investors amounting to $175,000. These notes have a maturity date of 12 months and carry an annual interest rate of 10%. The Bridge Notes principal is paid in cash and interest at 100% average 3 TD VWAP over the last 10 TD plus an embedded warrant at maturity. All of the outstanding principal and accrued interest shall convert (“Forced Conversion”) into units/securities upon the consummation of a Qualified Financing, based upon the lesser of: (i) $1.65 per units/securities and (ii) the quotient obtained by dividing (x) the balance on the Forced Conversion date multiplied by 1.20 by (y) the actual price per unit/security in the Qualified Financing. Upon the Forced Conversion Date, the Holder shall further be issued Warrants exercisable into a number of shares of Common Stock equal to the number of Conversion Shares (but, in the case of units of securities, the primary equity security or the number of shares of Common Stock underlying the primary security if the primary security is not Common Stock).
Item 3.
Defaults Upon Senior Securities.
None.
Item 4.
Mine Safety Disclosures.
Not applicable.
Item 5.
Other Information.
None.
Item 6.
Exhibits
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1
XBRL Instance.
101.SCH
XBRL Taxonomy Extension Schema.
101.CAL
XBRL Taxonomy Extension Calculation.
101.DEF
XBRL Taxonomy Extension Definition.
101.LAB
XBRL Taxonomy Extension Labels.
101.PRE
XBRL Taxonomy Extension Presentation.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 18th day of May 2016.
BIOTRICITY, INC.
By:
/s/ Waqaas Al Siddiq
Name: Waqaas Al-Siddiq
Title: Chief Executive Officer
(principal executive and financial officer)
24