What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-04-01 · 224 added, 214 removed, 134 unchanged (77% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following

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their websites, their venues, or their streaming media content.

Our customers are mostly

sports teams, venues, and advertising agencies, who typically use our products as part of their live events or as part of an advertising

campaign with the goal of engaging fans, increasing consented first-party data, and increasing sales.

At December 31, 2022, we had 16 active

At December 31, 2023, we had five active customers.

Our customers mostly sports

teams (Professional and Collegiate), venues (Arenas, Football Stadiums, Baseball Stadiums), and advertising agencies, which typically

use our products as part of their live events or as part of an advertising campaign with the goal of engaging fans, increasing consented

first-party data, and increasing sales.

At December 31, 2024, we had two active customers.

At December 31, 2023, we had 16 active customers.

Our products and games are

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Our products, include our in-venue XEO and Filter Fan Cam products for live events, and our new stand-alone

“Winfinite” product that can be used by brands, advertising agencies, and content partners to reach potential customers outside

of sports venues, on mobile devices.

“Winfinite” product line that can be used by brands, advertising agencies, and content partners to reach potential customers

outside of sports venues, on mobile devices.

We also have an IP portfolio that could create future licensing and product development opportunities

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alongside live experiences whether a player is at-home, in a restaurant, or in-venue at the event itself.

Our three largest customers

in 2023 were the San Jose Sharks, the Sacramento Kings, and ENT Marketing, a marketing agency that used our platform to promote Coca-Cola

Our largest customers in 2024

were the Texas Rangers and San Jose Sharks.

We now have three principal

software products.

Our eXtreme Engagement Online or “XEO” platform is designed primarily for in-venue main-board work in stadiums

Our Filter Fan Cam (FFC) platform is an Augmented Reality filtering tool that can be used for mobile and in-venue applications.

In addition, we have a stand-alone gaming and prizing product that we call “Winfinite,” which allows brands, media companies,

and advertising agencies to reach out to customers directly on their mobile devices.

We license these three software products to teams,

ad agencies, and other content creators.

Our eXtreme Engagement Online or “XEO” platform is designed primarily for in-venue main-board work in

stadiums and arenas.

Our Filter Fan Cam (FFC) platform is an Augmented Reality filtering tool that can be used for mobile and in-venue

applications.

In addition, we have a stand-alone gaming and prizing product that we call “Winfinite,” which allows brands,

media companies, and advertising agencies to reach out to customers directly on their mobile devices.

We license these three software

products to teams, ad agencies, and other content creators.

Significant Components of Our Results of Operations

general, we recognize revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow

to us, where there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been

met or there are no significant remaining performance obligations for each of our activities as described below.

Foreseeable losses, if

any, are recognized in the year or period in which the loss is determined.

general, we recognize revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will

flow to us, where there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have

been met or there are no significant remaining performance obligations for each of our activities as described below.

Foreseeable losses,

if any, are recognized in the year or period in which the loss is determined.

We earn revenue through the

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require significant judgment.

Judgment is also required to determine the amount of revenue associated with each distinct performance obligation.

Judgment is also required to determine the amount of revenue associated with each distinct performance

Operating Expenses.

classify our operating expense as research and development, and selling, general and administrative.

Personnel costs are the primary component

of each of these operating expense categories, which consist of cash-based personnel costs, such as salaries, benefits and bonuses.

Additionally,

these categories include intangible amortization, amortization expense, interest expense, software costs, professional fees and share-based

compensation.

We classify our operating expense as research and development, and selling, general and administrative.

Personnel costs are the

primary component of each of these operating expense categories, which consist of cash-based personnel costs, such as salaries, benefits

Additionally, these categories include intangible amortization, amortization expense, interest expense, software costs,

professional fees and share-based compensation.

Operating Results

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for the years ended December 31, 2024 and 2023:

the Year Ended December 31,

For the Year Ended December 31,

Statement of Operations and Comprehensive Loss Data:

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(10,852,374 )

(22,671,345 )

Employee retention credit

Change in fair value of warrant liability

Other income/(expense)

(10,512,157 )

Loss before tax provision

(10,512,157 )

Other total comprehensive loss:

Change in foreign currency translation, net of tax

Total comprehensive loss

Provision for income taxes

$ (4,574,836 )

$ (10,512,157 )

Basic and diluted earnings per share to shareholders

Our revenues are derived from three primary sources:

software licensing,

professional services and advertising.

Revenue was $271,169 for the year ended December 31, 2023, representing a decrease of $847,671,

or 76%, from $1,108,840 for the year ended December 31, 2022.

The decrease was primarily due to a significant reduction in the number

of clients from 16 active clients at December 31, 2022 to five active clients at December 31, 2023.

Our revenues are derived from

three primary sources:

software licensing, professional services and advertising.

Revenue was $57,288 for the year ended December 31,

2024, representing a decrease of $213,881, or 79%, from $271,169 for the year ended December 31, 2023.

The decrease was primarily due

to a significant reduction in the number of clients from 16 active clients at December 31, 2023 to two active clients at December 31,

Cost of revenues

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Research and development

was $1,107,235 for the year ended December 31, 2023, representing a decrease of $1,298,771, or 54%, from $2,406,006 for the year

ended December 31, 2022.

The decrease was primarily due to a reduction in staffing levels, including a large portion of our engineering

staff, and a reduction in software costs.

was $246,019 for the year ended December 31, 2024, representing a decrease of $861,216, or 78%, from $1,107,325 for the year ended December

The decrease was primarily due to a reduction in staffing levels, including a large portion of our engineering staff, and a

reduction in software costs.

Selling, general and administrative

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December 31, 2024, representing a decrease of $1,634,691, or 27%, from $5,944,909 for the year ended December 31, 2023.

decrease was primarily due to a reduction in staffing levels, from 39 employees at December 31, 2022 to 8 employees at December 31, 2023,

and stock compensation expense, which decreased from $1,567,583 in 2022 to $(1,452,380) in 2023.

The decrease was

primarily due to a reduction in staffing levels, from 16 employees at December 31, 2023 to 6 employees at December 31, 2024.

Impairment of goodwill and other intangible

Impairment of goodwill and

other intangible assets was $3,968,332 for the year ended December 31, 2023, representing a decrease of $4,950,670 or 56% from $8,919,002

Impairment of goodwill

and other intangible assets was none for the year ended December 31, 2024, representing a decrease of $3,968,332 or 100% from

$3,968,332 for the year ended December 31, 2023.

A number of factors influenced the performance of Xcite Interactive in 2022, including reduced

revenue projections, the time and cost involved in creating custom games, the departure of key Xcite employees, and the competitive landscape

of the fan engagement industry.

As a result, we engaged a third-party to conduct an impairment analysis as of December 31, 2022 and

December 31, 2023, which resulted in an $8,919,002 impairment loss in 2022.

The $3,968,332 impairment as of December 31, 2023 was related

to the impairment of capitalized software from our HP contract and platform.

The $3,698,332 impairment as of December 31, 2023 was related to the impairment of

capitalized software from our HP contract and platform.

Loss from Operations

Loss from operations was $10,852,374 for the year ended December 31,

2023, representing a decrease of $11,818,971, or 52%, from $22,671,345 for the year ended December 31, 2022.

Decreases in salaries

because of reduced staffing levels and software were somewhat offset by decreases in revenue.

Change in fair value of warrant liability

Change in fair value of the

warrant liability was $0 for the year ended December 31, 2023, representing an increase of $361,055, from ($361,055) for the year

ended December 31, 2022.

The warrant liability was a result of having warrants in Canadian dollars and the change in functional currency

to the United States dollar on February 1, 2021.

The Canadian warrants expired in November 2022.

Loss from operations was $4,539,226

for the year ended December 31, 2024, representing a decrease of $6,313,148, or 58%, from $10,852,374 for the year ended December 31,

Decreases in salaries because of reduced staffing levels resulted in the decrease in the loss.

Other income (expense)

Other income (expense) was

an expense of $11,384 for the year ended December 31, 2024, representing a decrease of $351,601, or 103%, from income of $340,217 for

the year ended December 31, 2023.

The decrease in income can be attributed to the $354,105 employee retention credit earned in 2023 with

no credit earned in 2024.

Income tax expense

Income tax expense was $24,226

for the year ended December 31, 2024, representing a decrease of 100% from no income tax expense for the year ended December 31, 2023.

The increase in income tax can be attributed to taxes owed in our Canadian jurisdiction in 2024.

The effect of inflation on

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continue to be influenced by a variety of factors, including:

our ability to generate cash flows from our operations;

future indebtedness and the interest we are obligated to pay on this indebtedness;

the availability of public and private debt and equity financing;

changes in exchange rates which will impact our generation of cash flows from operations when measured in CAD;

our capital expenditure requirements.

Since inception, we have incurred

significant operating losses.

For the years ended December 31, 2023 and 2022, we incurred net losses of approximately $10.5 million and

$22.4 million, respectively.

During such periods, we have financed our operations primarily through an initial public offering of our

common shares in January 2021 and subsequent public offerings, registered direct offerings, and private placements.

In February 2023,

we completed a registered direct offering of our common shares in which we received gross proceeds of $2.25 million and net proceeds of

approximately $2 million.

In October 2023, we completed a public direct offering of our common shares in which we received gross proceeds

of approximately $3 million and net proceeds of approximately $2.5 million.

In November 2023, we completed a private placement of our

equity securities in which we received gross proceeds of $2.6 million.

Throughout 2023, we received approximately $4.6 million in proceeds

from warrant exercises.

Our cash and cash equivalents as of December 31, 2023 was $4.7 million.

Our primary cash needs are for working

capital requirements, capital expenditures and to fund our operations.

We are subject to the risks and

uncertainties associated with a new business.

We believe that our current resources and the expected revenues from operations will be

insufficient to fund our planned operations for the next twelve months.

The report of our independent registered public accounting firm

on our consolidated financial statements for the year ended December 31, 2023 stated that our recurring losses from operations, accumulated

deficit as of December 31, 2023, inability to achieve positive cash flows from operations and inability to fund day to day activities

through operations indicates that a material uncertainty exists that may cast significant doubt on our ability to continue as a going

our ability to generate

cash flows from our operations;

future indebtedness and

the interest we are obligated to pay on this indebtedness;

the availability of public

and private debt and equity financing;

changes in exchange rates

which will impact our generation of cash flows from operations when measured in CAD;

our capital expenditure

requirements.

Since inception, we have

incurred significant operating losses.

For the years ended December 31, 2024 and 2023, we incurred net losses of approximately $4.6 million

and $10.5 million, respectively.

During such periods, we have financed our operations primarily through an initial public offering of

our common shares in January 2021 and subsequent public offerings, registered direct offerings, convertible debt, warrant exercises and

private placements.

In October 2024 warrant holders exercised $0.9 million of warrants into common stock.

Also, in November and December

2024 the Company raised $2.5 million of convertible debt.

In February 2023, we completed a registered direct offering of our common shares

in which we received gross proceeds of $2.25 million and net proceeds of approximately $2.0 million.

In October 2023, we completed a public

direct offering of our common shares in which we received gross proceeds of approximately $3.0 million and net proceeds of approximately

$2.5 million.

In November 2023, we completed a private placement of our equity securities in which we received gross proceeds of $2.6

Throughout 2023, we received approximately $4.6 million in proceeds from warrant exercises.

Our cash and cash equivalents as

of December 31, 2024 was $3.1 million.

Our primary cash needs are for working capital requirements, capital expenditures and to fund our

We are subject to the risks

and uncertainties associated with a new business.

We believe that our current resources and the expected revenues from operations will

be insufficient to fund our planned operations for the next twelve months.

The report of our independent registered public accounting

firm on our consolidated financial statements for the year ended December 31, 2024 stated that our recurring losses from operations,

accumulated deficit as of December 31, 2024, inability to achieve positive cash flows from operations and inability to fund day to day

activities through operations indicates that a material uncertainty exists that may cast significant doubt on our ability to continue

as a going concern.

We plan to increase our cash

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our business plan and implement our business strategy, we anticipate that we will need to obtain additional financing from time to time

and may choose to raise additional funds through public or private equity or debt financings, a bank line of credit, borrowings from affiliates

or other arrangements.

We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all.

and may choose to raise additional funds through public or private equity or debt financings, a bank line of credit, borrowings from

affiliates or other arrangements.

We cannot be sure that any additional funding, if needed, will be available on terms favorable to us

Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute our current shareholders’

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and significant interest costs.

There can be no assurance that we will be able to raise additional capital, when needed, to continue operations

in their current form.

If we cannot raise needed funds, we might be forced to make substantial reductions in our operating expenses, including

reductions in our research and development expenses or headcount reductions, which could adversely affect our ability to implement our

business plan and ultimately our viability as a company.

There can be no assurance that we will be able to raise additional capital, when needed, to continue

operations in their current form.

If we cannot raise needed funds, we might be forced to make substantial reductions in our operating

expenses, including reductions in our research and development expenses or headcount reductions, which could adversely affect our ability

to implement our business plan and ultimately our viability as a company.

The following summarizes the

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Net cash provided by financing activities

Net increase (decrease) in cash

Effect of foreign exchange

Net (decrease) increase in cash and cash equivalents

$ (1,623,093 )

Operating Activities

Net cash used in operating activities

for the year ended December 31, 2023 was $5,471,406 as compared to $9,153,544 for the year ended December 31, 2022.

The decrease in cash

used in operating activities was primarily attributable to a decrease in the net loss.

Net cash used in operating

activities for the year ended December 31, 2024 was $4,971,948 as compared to $5,582,139 for the year ended December 31, 2023.

in cash used in operating activities was primarily attributable to a decrease in the net loss.

Investing Activities

Net cash used in investing

activities for the year ended December 31, 2023 was $14,514 as compared to $2,536,832 for the year ended December 31, 2022.

in cash flow used in investing activities was primarily attributable to a significant reduction in payroll capitalized for the development

of intangible assets, and a reduction in the amount of equipment purchased.

activities for the year ended December 31, 2024 was none as compared to $14,514 for the year ended December 31, 2023.

The change in cash

flow used in investing activities was primarily attributable to a significant reduction in payroll capitalized for the development of

intangible assets and proceeds of sale of equipment in the prior year.

Financing Activities

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activities was $3,278,235 for the year ended December 31, 2024 as compared to $9,045,578 for the year ended December 31, 2023.

in cash flow provided by financing activities was mainly attributable to proceeds we received from the issuance of common shares, exercise

of warrants and options, and repayments on notes payable.

Notes Payable

From 2017 to December 31, 2022,

we issued $4,750,818 aggregate principal amount of promissory notes primarily to Brian Tingle, one of our directors.

The notes bore interest

at the prime rate of the Bank of Canada, which has ranged from 2.45% to 3.95% per annum, compounded annually, that was payable quarterly,

and had a maturity date of three years from the date of issuance.

As of December 31, 2023, all loans have been repaid and we had recorded

$0 in accrued interest that was included in accounts payable and accrued liabilities.

in cash flow provided by financing activities was mainly attributable to the decrease in proceeds we received from the issuance of common

shares, exercise of warrants and options, and repayments on notes payable.

The Company raised $3,278,235 for the year ended December

31, 2024 from debt issuances and warrant exercise compared to $11,693,973 attributed to equity and warrants issuances, net of offering

cost offset by repayment of $2,519,835 related party notes payable for the year ended December 31, 2023.

Critical Accounting Policies and Estimates

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relate to, but are not limited to, the following:

Estimate for excess credit losses

We apply the Current Expected

Credit Loss (CECL) model under ASC 326 for impairment of financial assets.

This model requires the recognition of an allowance for credit

losses based on expected losses over the life of the asset.

If the credit risk of a financial asset decreases in a subsequent period,

any previously recognized impairment loss is reversed through profit or loss, limited to the extent that the carrying amount does not

exceed what the amortized cost would have been had the impairment not been recognized.

Deferred financing costs

consist primarily of direct incremental costs related to our public offerings of our common stock completed in February 2023.

Upon completion

of our public offering and financing any deferred costs were offset against the proceeds.

Property and equipment

Property and equipment is

stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

Such cost includes the cost of replacing part

of the property and equipment.

All other repair and maintenance costs are recognized in the consolidated statements of operations and

comprehensive loss.

The initial cost of property and equipment comprises its purchase price or construction cost and any costs directly

attributable to bringing it to a working condition for its intended use.

The purchase price or construction cost is the aggregate amount

of cash consideration paid and the fair value of any other consideration given to acquire the asset.

Where an item of property and equipment

is comprised of significant components with different useful lives, the components are accounted for as separate items of property and

For all property and equipment, depreciation is calculated over the depreciable amount, which is the cost of an asset less

its residual value.

Depreciation is calculated starting on the date that property and equipment is available for its intended use.

Intangible assets

Intangible assets acquired

separately are measured upon initial recognition at cost, which comprises the purchase price plus any costs directly attributable to the

preparation of the asset for its intended use.

Intangible assets acquired through business combinations (Xcite Interactive) or asset acquisitions

are initially recognized at fair value as at the date of acquisition.

After initial recognition, intangible assets are carried at cost

less accumulated amortization and any accumulated impairment charges.

Warrant liability

Equity financing transactions

may involve issuance of common shares or units.

Each unit comprises a certain number of shares and a certain number of warrants.

on the terms and conditions of each equity financing transaction, the warrants are exercisable to purchase additional common shares at

a price prior to expiry as stipulated by the transaction.

Warrants that are part of units are assigned a value based on the residual value,

As of February 1, 2021, the

Canadian dollar denominated warrants were considered a derivative liability since the obligation to issue shares was not fixed in our

functional currency.

The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the statement

of loss and comprehensive loss.

A $9,743,659 warrant derivative loss was recorded in the statement of loss and comprehensive loss beginning

February 1, 2021 when we changed our functional currency.

We use the Black-Scholes Option Pricing Model for valuation of share-based payments

and derivative financial assets (e.g.

investments in warrants).

Option pricing models require the input of subjective assumptions including

expected price volatility, interest rates, and forfeiture rates.

Changes in the input assumptions can materially affect the fair value

estimate and our earnings and equity reserves.

The last set of Canadian warrants expired on November 17, 2022.

We account for income taxes utilizing

the assets and liability method.

Under this method, deferred tax assets and liabilities are determined based on differences between the

financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and net operating loss and tax

credit carry forwards, using enacted tax rates and laws that are expected to be in effect when the differences reverse.

A valuation allowance is recorded against deferred

tax assets when management does not believe that the realization of DTA’s is more likely than not.

While management believes that

its judgements and estimates regarding deferred tax assets and liabilities are appropriate, significant differences in actual results

may materially affect our future financial results.

We recognize any uncertain income tax

positions at the largest amount that is more-likely-than-not to be sustained upon audit by relevant taxing authority.

An uncertain income

tax position will not be recognized if it has less than a 50% likelihood of being sustained.

Our policy is to recognize

interest and/or penalties related to income tax matters in income tax expense.

As of December 31, 2023 and 2022, we did not record

any accruals for interest and penalties.

We do not foresee material changes to our uncertain tax positions within the next

twelve months.

Determination of share-based payments

separately are measured upon initial recognition at cost, which comprises the purchase price plus any costs directly attributable to

the preparation of the asset for its intended use.

Intangible assets acquired through business combinations (Xcite Interactive) or asset

acquisitions are initially recognized at fair value as at the date of acquisition.

After initial recognition, intangible assets are carried

at cost less accumulated amortization and any accumulated impairment charges.

During the year ended December 31, 2023, the Company completed

an impairment analysis of its intangible assets and concluded the assets were impaired.

As a result, the Company impaired the remaining

carrying value of the intangible assets in the amount of $3,968,332.

No new intangible assets were capitalized during the year ended

December 31, 2024.

Stock-based compensation

The estimation of share-based

payments (including warrants and stock options) requires the selection of an appropriate valuation model and consideration as to the inputs

necessary for the valuation model chosen.

payments (including warrants and stock options) requires the selection of an appropriate valuation model and consideration as to the

inputs necessary for the valuation model chosen.

We use the Black-Scholes valuation model at the date of the grant.

We make estimates as to the

volatility, the expected life, dividend yield and the time of exercise, as applicable.

The expected volatility is based on the average

volatility of share prices of similar companies over the period of the expected life of the applicable warrants and stock options.

expected life is based on historical data.

We make estimates

as to the volatility, the expected life, dividend yield and the time of exercise, as applicable.

The expected volatility is based on

the average volatility of share prices of similar companies over the period of the expected life of the applicable warrants and stock

The expected life is based on historical data.

These estimates may not necessarily be indicative of future actual patterns.

Deferred revenues and revenue recognition

Revenue recognition

The Company recognizes

revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the

entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity

determines are within the scope of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers

(“ASC 606”), the entity performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify

the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the

performance obligations in the contract;

and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

Company only recognizes revenue from contracts when it is probable that the entity will collect substantially all the consideration

it is entitled to in exchange for the goods or services it transfers to the customer.

The Company earns revenue in two primary ways:

1) the sales of software-as-a-service (SAAS) from its interactive production software platform or 2) development and maintenance of

custom-built software or other professional services.

The Company recognizes SAAS revenues

from its interactive production sales over the life of the contract as its performance obligations are satisfied.

Payment terms vary by

contract and can be periodic or one-time payments.

The Company determines that the customer receives and consumes the benefits of the

service simultaneously as the service is provided.

The transaction price is allocated to the contractual performance obligations and recognized

ratably over the contract term.

The Company recognizes revenues

received from the development and maintenance of custom-built software and other professional services provided upon the satisfaction

of its performance obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for

those services.

Performance obligations can be satisfied either at a single point in time or over time.

For those performance obligations

that are satisfied at a single point in time, the revenue is recognized at that time.

For each performance obligation satisfied over time,

the Company recognizes revenue by measuring the progress toward complete satisfaction of that performance obligation.

generally measures progress comparing hours incurred to total estimated hours.

For revenues received from the

sales of advertising, the Company is deemed the agent in its revenue agreements.

The Company does not own or obtain control of the digital

advertising inventory.

The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory,

such as a number of views, or clicks.

As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales

of advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.

The Company’s contracts

with customers may include promises to transfer multiple products and services.

For these contracts, the Company accounts for individual

performance obligations separately if they are capable of being distinct and distinct within the context of the contract.

whether products and services are considered distinct performance obligations may require significant judgment.

Judgment is also required

to determine the stand-alone selling price, for each distinct performance obligation.

License Revenue

We recognize revenue when or

as the performance obligations in the contract are satisfied.

For performance obligations that are fulfilled at a point in time, revenue

is recognized at the fulfillment of the performance obligation.

Since the IP is determined to be a functional license, the value of the

grant of use is recognized in the first period of the contract term in which the license agreement is in force.

Since the costs incurred

to satisfy the ASPIS technology performance obligations are incurred evenly throughout the year, the value of the technical support and

new improvements services are recognized throughout the contract period as these performance obligations are satisfied.

ended December 31, 2024, no revenue was recognized on our functional IP as the Technology Agreement with ASPIS as the license had not been

delivered to ASPIS during the year.

Deferred Revenue

Revenue recognition of sales

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revenue based on the proportion of time remaining under the service arrangement as of the reporting date.

Convertible Debt

We may enter into negotiated short term convertible debt agreement

to provide bridge capital in between equity raises.

Our convertible debt agreements include a debt discount and a common stock conversation

feature that may be exercised by the noteholder that is either at or out of the money.

We evaluate the terms of convertible debt issue

prior to accepting such agreements to determine whether there are embedded derivative instruments, including embedded conversion options,

which are required to be bifurcated and accounted for separately as derivative financial instruments.

We evaluate our convertible debt

in accordance with ASC 470-20, Debt with conversion and Other Options (“ASC 470-20”) and ASC 815-40, Contracts in Entity’s

Own Equity (“ASC 815-40”).

Under ASC 815-40, to qualify for equity classification (or nonbifurcation, if embedded) the instrument

(or embedded feature) must be both (1) indexed to the issuer’s stock and (2) meet the requirements of equity classification guidance.

Functional currency

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there is a change in events and/or conditions which determine the primary economic environment.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis