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Item 9A. Controls and Procedures

2022-03-15 compared with 2021-03-31 · 94 added, 80 removed, 66 unchanged (73% of the section changed)

Controls and Procedures

Our disclosure controls and procedures (as defined in Rules

13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit under

the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the appropriate time periods,

and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate,

to allow timely discussions regarding required disclosure.

We, under the supervisions of and with the participation of our management,

including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls

and procedures as of December 31, 2020 and, based on that evaluation, have concluded that the design and operation of our disclosure

controls and procedures were effective as of such date.

Management’s Report on Internal Control over Financial

This Annual Report on Form 10-K does not include a report of

management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered

public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Our disclosure controls and procedures (as defined in Rules 13a 15(e) and 15d 15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the appropriate time periods, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

We, under the supervisions of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021 and, based on that evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to a material weakness in internal control over financial reporting, described below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

GAAP and includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets;

(2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with appropriate authorizations;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, 2021, our management evaluated and assessed, with the participation of our principal executive officer and principal financial officer, the effectiveness of our internal control over financial reporting, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework 2021.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We identified a material weakness in our internal control environment related to the accounting treatment of warrants issued in connection with the Credit Facility, which have a Canadian dollar exercise price.

Management has an established process for appropriately accounting for infrequent and unusual transactions.

We believe that this material weakness was a result of the misapplication of the GAAP accounting guidance.

The material weakness did not result in any material misstatements to the financial statements issued for the years ended December 31, 2021 and 2020, and previously released financial results will be restated in the comparative periods going forward.

Soley due to this material weakness, the Company’s management concluded that at December 31, 2021, the Company’s internal control over financial reporting was not effective.

Following identification of the material weakness and prior to filing this Annual Report on Form 10-K, we completed substantive procedures for the year ended December 31, 2021.

Based on these procedures, management believes that our consolidated financial statements included in this Form 10-K have been prepared in accordance with U.S.

Our CEO and CFO have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results of operations and cash

flows of the Company as of, and for, the periods presented in this Form 10-K.

Davidson & Company LLP has issued an unqualified opinion on our financial statements, which is included in Item 8 of this Form 10-K.

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.

The remediation actions include consultation with external GAAP accounting experts on non-recurring, significant, or unusual transactions.

We believe that these actions will remediate the material weakness.

The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

We expect that the remediation of this material weakness will be completed prior to the end of 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal

control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) during the three months ended December 31, 2020

that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

On March 31, 2021, we entered

into a settlement and release of claims with Bruce Linton, our former Executive Chairman, regarding a dispute over certain post-termination

terms under his employment agreement.

He was previously issued 15 million warrants under his employment agreement.

As part of the settlement,

on March 31, 2021, we issued 7,110,381 subordinate voting shares to Mr.

Linton upon a cashless exercise of 10 million warrants that had

an exercise price of $1.02 per share and issued him 889,519 subordinate voting shares pursuant to a private placement exemption.

not receive any proceeds in connection with the warrant exercise or private placement.

The shares issued pursuant to the warrant exercise

are free of trading restrictions and the shares issued in the private placement are subject to a holding period expiring on August 1,

As part of the settlement, Mr.

Linton surrendered all right, title, and interest in his remaining 5 million warrants for cancellation.

Directors, Executive Officers and Corporate Governance

The information required by this item will be set forth in our