Worksport Ltd 10-Q

Item 1. Financial Statements Worksport Ltd. Condensed Consolidated Balance Sheets (Unaudited) September 30, 2023 (Unaudited) December 31, 2022 Assets Current Assets Cash and cash equivalents $ 2,965,578 $ 14,620,757 Accounts receivable net 518,110 62,601 Other receivable 164,034 268,032 Inventory (note 4) 3,552,069 1,346,372 Prepaid expenses and deposits (note 5) 694,343 2,034,345 Total Current Assets 7,894,134 18,332,107 Investments (note 11) 90,731 24,423 Property and Equipment, net (note 6) 14,329,099 11,900,672 Right-Of-Use Asset, net (note 12) 968,009 1,238,055 Intangible Assets, net 1,339,518 1,268,873 Total Assets $ 24,621,491 $ 32,764,130 Liabilities and Shareholders’ Equity Current Liabilities Accounts payable and accrued liabilities $ 1,875,831 $ 2,028,305 Payroll taxes payable 43,738 - Related party loan (note 9) 2,192 46,096 Loan payable (note 13) 5,300,000 - Current lease liability (note 12) 342,010 387,329 Total Current Liabilities 7,563,771 2,461,730 Long Term – Lease Liability (note 12) 643,415 884,146 Loan Payable (note 13) - 5,300,000 Total Liabilities 8,207,186 8,645,876 Shareholders’ Equity Series A & B Preferred Stock, $ 0.0001 par value, 100,100 shares authorized, 100 Series A and 0 Series B issued and outstanding, respectively (note 8) - - Common stock, $ 0.0001 par value, 299,000,000 shares authorized, 17,436,805 and 17,159,376 shares issued and outstanding, respectively (note 8) 1,744 1,716 Additional paid-in capital 59,462,708 56,919,625 Share subscriptions receivable ( 1,577 ) ( 1,577 ) Share subscriptions payable 1,614,252 591,289 Accumulated deficit ( 44,654,242 ) ( 33,384,219 ) Cumulative translation adjustment ( 8,580 ) ( 8,580 ) Total Shareholders’ Equity 16,414,305 24,118,254 Total Liabilities and Shareholders’ Equity $ 24,621,491 $ 32,764,130 The accompanying notes form an integral part of these condensed consolidated financial statements. 4 Worksport Ltd. Condensed Consolidated Statements of Operations and Comprehensive Loss For the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited) 2023 2022 2023 2022 Three Months ended September 30, Nine Months ended September 30, 2023 2022 2023 2022 Net Sales $ 458,483 $ 18,350 $ 690,259 $ 77,439 Cost of Goods Sold 368,796 12,602 541,841 58,566 Gross Profit 89,687 5,748 148,418 18,873 Operating Expenses General and administrative 3,091,488 1,520,388 6,965,901 2,972,161 Sales and marketing 380,847 586,388 1,473,910 1,953,243 Professional fees 539,126 858,605 2,899,190 4,160,059 Gain on foreign exchange ( 2,265 ) ( 16,805 ) ( 2,407 ) ( 17,791 ) Total operating expenses 4,009,196 2,948,576 11,336,594 9,067,672 Loss from operations ( 3,919,509 ) ( 2,942,828 ) ( 11,188,176 ) ( 9,048,799 ) Other Income (Expense) Interest expense ( 113,838 ) ( 112,341 ) ( 466,830 ) ( 317,451 ) Interest income 38,992 68,957 237,598 93,892 Rental income (note 17) 45,057 108,552 139,892 204,770 Gain on settlement of debt - - 7,493 - Total other income (expense) ( 29,789 ) 65,168 ( 81,847 ) ( 18,789 ) Net Loss $ ( 3,949,298 ) $ ( 2,877,660 ) $ ( 11,270,023 ) $ ( 9,067,588 ) Loss per Share (basic and diluted) $ ( 0.23 ) $ ( 0.17 ) $ ( 0.65 ) $ ( 0.53 ) Weighted Average Number of Shares (basic and diluted) 17,429,685 17,164,505 17,252,521 17,059,021 The accompanying notes form an integral part of these condensed consolidated financial statements. 5 Worksport Ltd. Condensed Consolidated Statements of Shareholders’ Equity For the Three Months Ended September 30, 2023 and 2022 (Unaudited) Preferred Stock Common Stock Additional Paid-in Capital Share Subscriptions Receivable Share Subscription Payable Accumulated Deficit Cumulative Translation Adjustment Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balance at July 1, 2022 100 $ 0 17,041,055 $ 1,705 $ 55,956,398 $ ( 1,577 ) $ 499,542 $ ( 27,039,733 ) $ ( 8,580 ) $ 29,407,755 Share issuance - - 45,000 4 260,096 - ( 260,100 ) - - - Issuance for services and subscriptions payable - - - - 348,549 - 50,352 - - 398,901 Warrant exercise (note 15) - - 73,750 7 ( 7 ) - - - - - Net loss - - - - - - - ( 2,877,660 ) - ( 2,877,660 ) Balance at September 30, 2022 100 $ 0 17,159,805 $ 1,716 $ 56,565,036 $ ( 1,577 ) $ 289,794 $ ( 29,917,393 ) $ ( 8,580 ) $ 26,928,996 Balance at July 1, 2023 100 $ 0 17,413,810 $ 1,742 $ 58,615,849 $ ( 1,577 ) $ 1,494,885 $ ( 40,704,944 ) $ ( 8,580 ) $ 19,397,375 Issuance for services and subscriptions payable - - - - 739,046 - 119,367 - - 858,413 Shares issued (note 8) - - 22,995 2 88,407 - - - - 88,409 Stock option forfeiture (note 16) - - - - 19,406 - - - - 19,406 Net loss - - - - - - - ( 3,949,298 ) - ( 3,949,298 ) Balance at September 30, 2023 100 $ 0 17,436,805 $ 1,744 $ 59,462,708 $ ( 1,577 ) $ 1,614,252 $ ( 44,654,242 ) $ ( 8,580 ) $ 16,414,305 The accompanying notes form an integral part of these condensed consolidated financial statements. 6 Worksport Ltd. Condensed Consolidated Statements of Shareholders’ Equity For the Nine Months Ended September 30, 2023 and 2022 (Unaudited) Preferred Stock Common Stock Additional Paid-in Capital Share Subscriptions Receivable Share Subscription Payable Accumulated Deficit Cumulative Translation Adjustment Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Balance at January 1, 2022 100 $ 0 16,951,034 $ 1,696 $ 54,608,472 $ ( 1,577 ) $ 430,116 $ ( 20,849,805 ) $ ( 8,580 ) $ 34,180,322 Issuance for services and subscriptions payable - - 90,000 9 1,696,475 - 119,778 - - 1,816,262 Share issuance - - 45,000 4 260,096 - ( 260,100 ) - - - Warrant exercise (note 15) - - 73,771 7 ( 7 ) - - - - - Net loss - - - - - - - ( 9,067,588 ) - ( 9,067,588 ) Balance at September 30, 2022 100 $ 0 17,159,805 $ 1,716 $ 56,565,036 $ ( 1,577 ) $ 289,794 $ ( 29,917,393 ) $ ( 8,580 ) $ 26,928,996 Balance at January 1, 2023 100 $ 0 17,159,376 $ 1,716 $ 56,919,625 $ ( 1,577 ) $ 591,289 $ ( 33,384,219 ) $ ( 8,580 ) $ 24,118,254 Balance 100 $ 0 17,159,376 $ 1,716 $ 56,919,625 $ ( 1,577 ) $ 591,289 $ ( 33,384,219 ) $ ( 8,580 ) $ 24,118,254 Issuance for services and subscriptions payable - - 250,000 25 2,428,139 - 1,022,963 - - 3,451,127 Shares issued (note 8) - - 27,429 3 95,538 - - - - 95,541 Stock option forfeiture (note 16) - - - - 19,406 - - - - 19,406 Net loss - - - - - - - ( 11,270,023 ) - ( 11,270,023 ) Balance at September 30, 2023 100 $ 0 17,436,805 $ 1,744 $ 59,462,708 $ ( 1,577 ) $ 1,614,252 $ ( 44,654,242 ) $ ( 8,580 ) $ 16,414,305 Balance 100 $ 0 17,436,805 $ 1,744 $ 59,462,708 $ ( 1,577 ) $ 1,614,252 $ ( 44,654,242 ) $ ( 8,580 ) $ 16,414,305 The accompanying notes form an integral part of these condensed consolidated financial statements. 7 Worksport Ltd. Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2023 and 2022 (Unaudited) 2023 2022 Operating Activities Net Loss $ ( 11,270,023 ) $ ( 9,067,588 ) Adjustments to reconcile net loss to net cash from operating activities: Shares, options and warrants issued for services 4,711,868 3,768,536 Depreciation and amortization 1,019,556 533,094 Accrued interest - 23,567 Change in operating lease ( 16,004 ) ( 220,458 ) Adjustments to reconcile net income loss to cash provided by (used in) operating activities ( 5,554,603 ) ( 4,962,849 ) Changes in operating assets and liabilities (note 10) ( 2,639,744 ) ( 1,398,690 ) Net cash used in operating activities ( 8,194,347 ) ( 6,361,539 ) Cash Flows from Investing Activities Investments ( 66,308 ) - Purchase of property and equipment ( 3,446,161 ) ( 10,212,245 ) Net cash used in investing activities ( 3,512,469 ) ( 10,212,245 ) Financing Activities Shareholder assumption of debt ( 43,904 ) 14,099 Loan payable - 5,300,000 Repayments on loan payable - ( 28,387 ) Proceeds from issuance of common stock 95,541 - Net cash received from financing activities 51,637 5,285,712 Change in cash ( 11,655,179 ) ( 11,288,072 ) Cash, restricted cash and cash equivalents - beginning of year 14,620,757 28,567,333 Cash, restricted cash and cash equivalents end of period $ 2,965,578 $ 17,279,261 Supplemental Disclosure of non-cash investing and financing Activities Shares issued for purchase of software $ 72,467 $ 430,068 Shares base compensation $ 3,470,533 $ 1,276,709 Cashless warrant exercise $ - $ 37,000 The accompanying notes form an integral part of these condensed consolidated financial statements. 8 Worksport Ltd. Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation and Business Condition a) Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three- and nine-month periods ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023. Worksport Ltd. (together with its subsidiaries, the “Company”) was incorporated in the State of Nevada on April 2, 2003 under the name Franchise Holdings International, Inc. (“FNHI”). In May 2020, FNHI changed its name to Worksport Ltd. During the year ended December 31, 2014, the Company completed a reverse acquisition transaction (the “Reverse Acquisition”) with TruXmart Ltd. (“TruXmart”). On May 2, 2018, TruXmart legally changed its name to Worksport Ltd. (“Worksport”). Worksport designs and distributes truck tonneau covers in Canada and the United States. On May 21, 2021, the Board of Directors authorized the submission of a Certificate of Change/Amendment to the Nevada Secretary of State in which the Company sought to affect a reverse split of its common stock at the rate of 1-for-20 for the purpose of increasing the per share price for the Company’s stock in an effort to meet the minimum listing requirements of the NASDAQ. The Certificate of Change was submitted to the Nevada Secretary of State on May 21, 2021, and the FINRA corporate action was announced on August 3, 2021. FINRA declared the 1-for-20 reverse stock split effective on August 4, 2021. Terravis Energy, Inc. (“Terravis”) was incorporated in the State of Colorado on May 5, 2021. On August 20, 2021, the Company was issued 100 shares of common stock at par value of $ 0.0001 per share for a controlling interest in Terravis. During the year ended December 31, 2022, the Company was issued an additional 9,990,900 shares of common stock of Terravis at par value of $ 0.0001 per share. On January 20, 2022, the Board of Directors of Terravis and the Board of Directors of the Company, as the sole stockholder of Terravis, adopted the Terravis Energy, Inc. 2022 Equity Incentive Plan (the “Terravis 2022 Plan”). Under the Terravis 2022 Plan, Terravis’ Board of Directors or a committee designated by the Board of Directors may grant incentive stock options, nonqualified stock options, shares of restricted stock, restricted stock units, performance shares, performance units and stock appreciation rights to eligible participants consisting of employees of Terravis, member of Terravis’ Board of Directors, advisors and consultants to Terravis. The Terravis Board of Directors authorized and reserved 1,500,000 shares of Terravis common stock under the Terravis 2022 Plan, subject to adjustment for any stock splits of Terravis’ common stock or reorganization, recapitalization, or acquisition of Terravis. On April 6, 2022, Lorenzo Rossi and Steven Rossi, both of whom are members of Terravis’ Board of Directors, were granted non-qualified stock options under the Terravis 2022 Plan exercisable for 750,000 and 250,000 shares of Terravis’ common stock, respectively, with exercise prices of $ 0.01 per share exercisable from the date of grant until the tenth anniversary of the date of grant. On April 12, 2022, Steven Rossi, William Caragol, and Ned L. Siegel, all of whom are members of Terravis’ Board of Directors, were granted non-qualified stock options under the Terravis 2022 Plan exercisable for 250,000 , 50,000 , and 50,000 shares of Terravis’ common stock, respectively, with exercise prices of $ 0.01 per share exercisable from the date of grant until the tenth anniversary of the date of grant. 9 On November 4, 2022, Terravis filed an amendment to its articles of incorporation with the Colorado Secretary of State, pursuant to which the Terravis Board of Directors attached a certificate of designation designating 1,000 shares of its authorized preferred stock as Series A Preferred Stock with a par value $ 0.0001 per share. According to the certificate of designation, holders of the Series A Preferred Stock do not have any dividend, conversion or liquidation rights. Unless otherwise prohibited by law or the Series A Preferred Stock certificate of designation, the Series A Preferred Stock shall vote together with the outstanding shares of common stock of Terravis as one class on any matter put forth before the common stockholders. For so long as the Series A Preferred Stock is outstanding, the holders of the Series A Preferred Stock shall be entitled to 51 % of the total votes on all matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of the common stock and any other shares of capital stock of Terravis shall be entitled to their proportional share of the remaining 49 % of the total votes based on their respective voting power. On November 4, 2022, the Company issued 1,000 shares of Series A Preferred Stock to Steven Rossi, the Chief Executive Officer and President of the Company. During the year ended December 31, 2022, Worksport New York Operations Corporation and Worksport USA Operations Corporation were incorporated in the states of New York and Colorado, respectively. During the year ended December 31, 2022, the Company was issued 1,000 shares of common stock at par value of $ 0.0001 of Worksport USA Operations Corporation. On April 1, 2022, the Company was issued 10,000 shares of common stock of Worksport New York Operations Corporation. b) Statement of Compliance The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) as issued by the Financial Accounting Standards Board (“FASB”). c) Basis of Measurement The Company’s financial statements have been prepared on the accrual basis. d) Consolidation The Company’s condensed consolidated financial statements consolidate the accounts of the Company. All intercompany transactions, balances and unrealized gains or losses from intercompany transactions have been eliminated upon consolidation. e) Functional and Reporting Currency These condensed consolidated financial statements are presented in United States dollars (USD or US$). The functional currency of the Company and its subsidiaries are United States dollar. For purposes of preparing these condensed consolidated financial statements, transactions denominated in Canadian dollars (CAD or C$) were converted to United States dollars at the spot rate. Transaction gains and losses resulting from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying condensed consolidated statement of operations. f) Use of Estimates The preparation of condensed unaudited financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed interim financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 2. Going Concern As of September 30, 2023, the Company had $ 2,965,578 in cash and cash equivalents. The Company has generated only limited revenues and has relied primarily upon capital generated from public and private offerings of its securities. Since the Company’s acquisition of Worksport in fiscal year 2014, it has never generated a profit. As of September 30, 2023, the Company had an accumulated deficit of $ 44,654,242 . 10 The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three and nine months ended September 30, 2023, the Company had net loss es of $ 3,949,298 (2022 - $ 2,877,660 ) and $ 11,270,023 (2022 - $ 9,067,588 ), respectively. As of September 30, 2023, the Company had working capital of $ 330,423 (December 31, 2022 – $ 15,870,377 ) and had an accumulated deficit of $ 44,654,242 (December 31, 2022 - $ 33,384,219 ). The Company has not generated profit from operations since inception and to date has relied on debt and equity financings for continued operations. The Company’s ability to continue as a going concern is dependent upon the ability to generate cash flows from operations and obtain equity and/or debt financing. The Company intends to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps management is taking will be successful. The Company has historically operated at a loss, although that may change as sales volumes increase. As of September 30, 2023, the Company had working capital of $ 330,423 (December 31, 2022 – $ 15,870,377 ) and an accumulated deficit of $ 44,654,242 (December 31, 2022 - $ 33,384,219 ). As of September 30, 2023, the Company had cash and cash equivalents of $ 2,965,578 (December 31, 2022 - $ 14,620,757 ). Despite the Company having mostly completed its purchasing of large manufacturing machinery, operational costs are expected to remain elevated and, thus, further decrease cash and cash equivalents. Concurrently, the Company intends to continue its start of manufacturing and increasing sales volumes in 2023, which should mitigate the effects of operational costs on cash and cash equivalents; this view is supported by the fact that the manufacturing facility of the Company is near completion and has started to generate revenue in the third quarter of 2023. The Company has successfully raised cash, and it is positioned to do so again if deemed necessary or strategically advantageous. During the year ended December 31, 2021, the Company, through its Reg-A public offering, private placement offering, underwritten public offering, and exercises of warrants, raised an aggregate of approximately $ 32,500,000 . On September 30, 2022, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 13, 2022, allowing the Company to issue up to $ 30,000,000 of common stock and prospectus supplement covering the offering, issuance and sale of up to $ 13,000,000 of common stock that may be issued and sold under an At The Market Offering Agreement dated September 30, 2022 (“ATM Agreement”), with H.C. Wainwright & Co., LLC, as the sales agent (“HCW”). Pursuant to the ATM Agreement, HCW is entitled to a commission equal to 3.0 % of the gross sales price of the shares of common stock sold. As of September 30, 2023, the Company has sold and issued 27,429 shares of common stock in consideration for net proceeds of $ 95,541 under the ATM Agreement. On November 2, 2023, the Company closed a sale of 1,925,000 shares of common stock and 1,575,000 pre-funded warrants for a total net proceeds of $ 4,261,542 . In association with sale, the Company also issued 7,000,000 warrants convertible for 7,000,000 shares of common stock at an exercise price of $ 1.34 . The warrants are exercisable six months after issuance and will expire five and a half years from the issuance date. To date, the Company’s principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. During the nine months ended September 30, 2023, the Company received nominal proceeds from public offerings, private placement offerings, and from the exercise of any outstanding warrants or options. Management is focused on transitioning towards revenue as its principal source of liquidity by growing existing product offerings as well as the Company’s customer base. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for planned operations or future business developments. Future business development and demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot provide assurances it will be able to raise additional capital on acceptable terms, or at all. The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Still, certain factors indicate the existence of a material uncertainty that cast substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. These adjustments could be material. 11 3. Significant Accounting Policies The accounting polices used in the preparation of these condensed consolidated interim financial statements are consistent with those of the Company’s audited financial statements for the year ended December 31, 2022. 4. Inventory As of September 30, 2023 and December 31, 2022, inventory consists of the following: Schedule of Inventory September 30, 2023 December 31, 2022 Finished goods $ 1,340,133 $ 1,200,759 Promotional items 101,660 50,790 Raw materials 2,110,276 94,823 Inventory $ 3,552,069 $ 1,346,372 5. Prepaid expenses and deposits As of September 30, 2023 and December 31, 2022, prepaid expenses and deposits consists of the following: Schedule of Prepaid Expenses and Deposits September 30, 2023 December 31, 2022 Consulting, services and advertising $ - $ 1,313,799 Insurance - 20,781 Deposit 694,343 699,765 Prepaid expenses and deposits, net $ 694,343 $ 2,034,345 As of September 30, 2023, prepaid expenses and deposits consists of $ 0 (December 31, 2022 - $ 1,313,799 ) in prepaid consulting, services and advertising for third party consultants through the issuance of shares and stock options. Amounts in deposit relate to prepayment for manufacturing components and finished goods. 6. Property and Equipment As of September 30, 2023 and December 31, 2022, major classes of property and equipment consist of the following: Schedule of Property and Equipment September 30, 2023 December 31, 2022 Equipment $ 5,756,529 $ 2,344,946 Furniture 215,549 143,449 Product molds 515,072 122,675 Computers 91,659 78,885 Leasehold improvements 838,058 675,751 Building 6,079,410 6,079,410 Land 2,239,405 2,239,405 Automobile 168,497 168,497 Deposits - 605,000 Property and Equipment, gross Less accumulated depreciation ( 1,575,080 ) ( 557,346 ) Property and Equipment, net $ 14,329,099 $ 11,900,672 12 7. Promissory Notes The following tables shows the balance of the notes payable as of September 30, 2023, December 31, 2022, and December 31, 2021: Schedule of Notes Payable Balance as of December 31, 2021 $ 263,211 Settlement ( 263,211 ) Balance as of December 31, 2022 and September 30, 2023 $ - During the year ended December 31, 2022, the Company and the promissory note holder reached an agreement to settle all outstanding promissory notes and interest for $ 100,000 . As a result of the settlement, the Company recognized a gain on settlement of debt of $ 163,211 . Additionally, as a part of this settlement, there was accrued interest on these promissory notes included in accounts payable on the accompanying condensed consolidated balance sheets totaling $ 139,121 that was also settled; accordingly, the Company recognized a gain on settlement of debt for this amount. During the year ended December 31, 2019, the note holder advanced $ 88,120 to the Company. As of the date the amount was advanced, the terms of the note were under negotiation and, as a result, the note was due on demand. During the year ended December 31, 2022, the promissory note holder reached an agreement to settle all outstanding promissory notes and interest, noted above. During the year ended December 31, 2016, the Company issued a secured promissory note in the principal amount of $ 73,452 ($ 123,231 CAD). During the year ended December 31, 2018, the Company issued two additions to the original unsecured promissory note of July 2016, totaling $ 22,639 ($ 30,884 CAD). The secured promissory note bore interest at a rate of 18 % per annum. The payment terms of the original note including these additions were due “upon completion of going public on the Canadian Securities Exchange, with no change in interest rate.” The secured promissory note was secured by all present and after-acquired property and assets of the Company. During the year ended December 31, 2019, the Company extended the maturity dates of the secured promissory notes to be due on April 1, 2021. During the year ended December 31, 2022, the Company and promissory note holder reached an agreement to settle all outstanding promissory notes and interest, noted above. As of December 31, 2022, principal balance owing was $ nil . As of September 30, 2023, and December 31, 2022, the accrued interest on this note payable was $ nil . During the year ended December 31, 2016, the Company issued secured promissory notes in the aggregate principal amount of $ 79,000 . The secured promissory notes bore interest at a rate of 18 % per annum, payable monthly. The secured promissory notes were secured by all present and after-acquired property and assets of the Company. During the year ended December 31, 2019, the Company extended the maturity dates of all secured promissory notes to be due on April 1, 2021. During the year ended December 31, 2022, the Company and promissory note holder reached an agreement to settle all outstanding promissory notes and interest, noted above. As of September 30, 2023, and December 31, 2022, the principal balance owing was $ nil . 8. Shareholders’ Equity (Deficit) During nine months ended September 30, 2023, the following transactions occurred: During the nine months ended September 30, 2023, the Company sold 27,429 shares of common stock for a total net proceeds of $ 95,541 . The sale of shares was in connection with the shelf registration statement on Form S-3 effective on October 13, 2022, allowing the Company to issue up to $ 30,000,000 of common stock and prospectus supplement covering the offering, issuance and sale of up to $ 13,000,000 of common stock that may be issued and sold under an At The Market Offering Agreement dated as of September 30, 2022. The Company recognized consulting expense of $ 1,022,963 to share subscriptions payable from restricted shares and stock options to be issued. As of September 30, 2023, the restricted shares have not been issued. During the same period, the Company issued 250,000 shares of common stock for consulting services valued at $ 635,000 . Refer to notes 16 for additional shareholders’ equity (deficit). 13 During nine months ended September 30, 2022, the following transactions occurred: During the nine months ended September 30, 2022, the Company issued 10,000 common shares to a consultant for services received valued at $ 86,000 , of which $ 66,329 was issued from share subscriptions payable. During the same period the Company issued 80,000 common shares for consulting, advisory services and employee compensation valued at $ 240,000 . During the nine months ended September 30, 2022, the Company issued 45,000 shares of restricted stock to members of the board valued at $ 260,100 from share subscriptions payable. During the nine months ended September 30, 2022, the Company recognized consulting expenses of $ 186,107 to share subscriptions payable from restricted shares and stock options to be issued. As of September 30, 2022, the restricted shares have not been issued. Refer to note 16 for additional shareholders’ equity (deficit). As of September 30, 2023, the Company was authorized to issue 299,000,000 shares of its common stock with a par value of $ 0.0001 . All shares were ranked equally with regard to the Company’s residual assets. During the three and nine months ended September 30, 2023, the Company was authorized to issue 100 shares of its Series A and 100,000 Series B Preferred Stock with a par value of $ 0.0001 . Series A preferred Stock have voting rights equal to 299 shares of common stock, per share of preferred stock. Series B preferred Stock have voting rights equal to 10,000 shares of common stock per share of preferred stock. 9. Related Party Transactions During the nine months ended September 30, 2023, the Company recorded salaries expense of $ 299,505 (2022 - $ 231,432 ) for the Company’s CEO. During the nine months ended September 30, 2023, the Company recorded salaries expense of $ 210,719 (2022 - $ 192,589 ) to an officer and director of the Company. As of September 30, 2023, the Company has a payable of $ 2,192 (2022 - $ 46,096 ) to the CEO. Refer to note 16 for additional related party transactions. 10. Changes in Cash Flows from Operating Assets and Liabilities The changes to the Company’s operating assets and liabilities for the nine months ended September 30, 2023 and 2022 are as follows: Schedule of Changes in Operating Assets and Liabilities 2023 2022 Decrease (increase) in accounts receivable $ ( 455,509 ) $ ( 390 ) Decrease (increase) in other receivable 103,998 ( 94,150 ) Decrease (increase) in inventory ( 2,205,697 ) ( 785,014 ) Decrease (increase) in prepaid expenses and deposits 26,200 ( 1,063,680 ) Increase (decrease) in lease liability - 8,737 Increase (decrease) in taxes payable 43,738 ( 112,189 ) Increase (decrease) in accounts payable and accrued liabilities ( 152,474 ) 647,996 Changes in operating assets and liabilities $ ( 2,639,744 ) $ ( 1,398,690 ) 14 11. Investments a) During the year ended December 31, 2019, the Company entered into an agreement to purchase 10,000,000 shares of a privately owned US-based mobile phone development company for $ 50,000 – representing a 10 % equity stake. The shares have been issued to the Company. As of September 30, 2023, and December 31, 2022, the Company had advanced a total of $ 24,423 and is advancing tranches of capital as required by the Company. b) During the nine months ended September 30, 2023, the Company purchased $ 66,308 ($ 90,000 CAD) of Guaranteed Investment Certificate (“GIC”). The GIC bears a variable interest rate and will mature on February 27, 2024. The anticipated earned interest on the GIC at maturity is $ 2,818 ($ 3,825 CAD). 12. Operating Lease Obligations During the year ended December 31, 2019, the Company signed a lease agreement for warehouse space to commence on August 1, 2019 and end on July 31, 2022 with monthly lease payments of $ 2,221 . During the year ended December 31, 2021, the Company entered into a second lease agreement for warehouse space to commence on June 1, 2021 and end on May 31, 2024 with monthly lease payments of $ 19,910 . During the year ended December 31, 2022, the Company signed a lease agreement for approximately 20,296 square feet to be used as its primary corporate office and R&D facility pursuant to a five-year lease, dated June 1, 2022 , for a variable rate averaging $ 22,101 per month over the lifetime of the lease. The Company also pays approximately $ 4,418 in additional fees per month, which varies year to year. The Company has accounted for its leases upon adoption of ASC 842 whereby it recognizes a lease liability and a right-of-use asset at the date of initial application beginning January 1, 2019. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate of 10 %. The Company has measured the right-of-use asset at an amount equal to the lease liability. The Company’s right-of-use asset and lease liability as of September 30, 2023, and December 31, 2022, are as follows: Schedule Right-of-use Asset September 30, 2023 December 31, 2022 Right-of-use asset $ 968,009 $ 1,238,055 Current lease liability $ 342,010 $ 387,329 Long-term lease liability $ 643,415 $ 884,146 The following is a summary of the Company’s total lease costs: Schedule of Lease Costs September 30, 2023 September 30, 2022 Operating lease cost $ 368,984 $ 283,145 The following is a summary of cash paid during the nine months ended September 30, 2023 and 2022 for amounts included in the measurement of lease liabilities: Schedule of Measurement of Lease Liabilities September 30, 2023 September 30, 2022 Operating cashflow $ 378,102 $ 277,974 The following are future minimum lease payments as of September 30, 2023: Schedule of Future Minimum Lease Payments 2023 $ 124,043 2024 361,298 2025 269,645 2026 277,767 2027 117,158 Total future minimum lease payments 1,149,911 Less: amount representing interest ( 164,486 ) Present value of future payments 985,425 Current portion 342,010 Long term portion $ 643,415 15 13. Loan payable a) During the year ended December 31, 2022, the Company entered into a loan agreement with a third party for the purchase of property located in West Seneca, New York, the details of which are disclosed in the Company’s Form 8-K filed with the United States Securities and Exchange Commission on May 11, 2022. The Company received $ 5,300,000 with an interest rate of prime plus 2.25 % with an initial maturity date of May 10, 2024, and the option to extend the loan for an additional year. In order to service the loan throughout the term, the Company deposited $ 667,409 in a restricted account. As of September 30, 2023, the balance in the restricted account was $ 869,728 (December 31, 2022 - $ 411,016 ) and is included in cash and cash equivalents on the accompanying balance sheet. During the nine months ended September 30, 2023, the Company failed certain debt covenants relative to this loan . Subsequently, the loan holder decided to waive the failure of the debt covenants, requiring the Company to provide certain quarterly financial information. b) During the year ended December 31, 2020, the Company received $ 28,387 ($ 40,000 CAD) interest-free from the Government of Canada as part of the COVID-19 small business relief program. Repaying the balance of the loan on or before December 31, 2023 resulted in loan forgiveness of 25 percent ( 25 %). As of September 30, 2022, the Company made the repayment of $ 28,387 ($ 40,000 CAD) and, as of February 14, 2023, received the forgiven debt of $ 7,493 ($ 10,000 CAD). As at September 30, 2023 and December 31, 2022, there are no amounts owing, and the loan has been fully settled. 14. Loss per Share For the three and nine months ended September 30, 2023, basic and diluted loss per share is $ 0.23 and $ 0.65 compared to the three and nine months ended September 30, 2022 having basic and diluted loss per share of $ 0.17 and $ 0.53 . These losses per share are calculated using the weighted average number of shares of 17,429,685 and 17,252,521 for the three and nine months ended September 30, 2023, respectively, and weighted average number of shares of 17,164,505 and 17,059,021 for the three and nine months ended September 30, 2022, respectively. For the periods presented, our potentially dilutive shares relating to stock options and restricted stock units were not included in the computation of diluted net loss per share, as the effect of including these shares in the calculation would have been anti-dilutive. The potentially dilutive shares totaling 20,541,911 and 20,254,411 for the three and nine months ended September 30, 2023 were excluded from the calculation of diluted net loss per share. There are 299,000,000 shares authorized and 17,436,805 and 17,189,104 shares issued and outstanding, as of September 30, 2023 and 2022, respectively. The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants and stock options were excluded due to the anti-dilutive effect they would have on the computation. As of September 30, 2023, the Company has 3,939,924 warrants convertible to 4,239,924 shares of common stock, 170,212 restricted stock to be issued, 300,000 performance stock units and stock options exercisable for 3,576,256 shares of common stock, for a total underlying shares of common stock of 8,286,392 . As of September 30, 2022, the Company had 4,439,924 warrants convertible to 5,239,914 common shares, 772,500 stock options exercisable for 772,500 common shares and performance stock units of 700,000 for 700,000 common shares, for a total underlying common shares of 6,712,414 . 15. Warrants During the nine months ended September 30, 2023, the Company and a stock options holder reached an agreement to cancel all 400,000 stock options in exchange for extending the exercisable period of 300,000 warrants to December 31, 2024. During the year ended December 31, 2022, an aggregate of 250,121 warrants were exercised primarily on a cashless basis for 73,321 shares of common stock, and 1,599,179 Reg-A public offering and private placement warrants expired. During the year ended December 31, 2022, the Company and a warrant holder reached an agreement to extend the exercisable period of 300,000 warrants, convertible to 2 shares of common stock each, for an additional 12 months. During the year ended December 31, 2021, the Company and warrant holder reached an agreement to amend a previous warrant agreement. The Company issued an additional 150,000 warrants for a total of 250,000 warrants valued at $ 37,000 . The exercisable period of the warrants was also amended to a period of five years beginning on January 14, 2021 . The warrants are convertible to 1 share of common stock, each exercisable at $ 2 per share. During the year ended December 31, 2022, the warrants were exercised on a cashless basis for 73,321 shares of common stock. During the year ended December 31, 2021, the Company issued 130,909 representative warrants to the Company’s underwriters. The representative warrants were not exercisable until January 30, 2022. The representative warrants are exercisable for 130,909 shares of common stock at $ 6.05 per share until August 3, 2024. As of December 31, 2022, the Company recognized a value of $ 273,993 for the representative warrants to share issuance cost. 16 As of September 30, 2023, the Company has the following warrants outstanding: Schedule of Warrants Exercise Price Exercise price Number outstanding Remaining Contractual Life (Years) Expiry date $ 6.05 3,446,515 0.85 August 3, 2024 $ 6.05 130,909 0.85 August 6, 2024 $ 4.00 300,000 1.26 December 31, 2024 $ 2.40 62,500 1.47 March 20, 2025 3,939,924 0.89 Schedule of Warrants Activity September 30, 2023 December 31, 2022 Number of warrants Weighted average price Number of warrants Weighted average price Balance, beginning of year 3,939,924 $ 5.84 5,652,827 $ 5.14 Issuance - $ - 130,909 $ 6.05 Expired - $ - ( 1,593,691 ) $ ( 4.00 ) Exercise - $ - ( 250,121 ) $ ( 2.00 ) Balance, end of period 3,939,924 $ 5.84 3,939,924 $ 5.84 16. Stock Options and Performance Share Units Under the Company’s 2015, 2021 and 2022 Equity Incentive Plans, the number of shares of common stock reserved for issuance under the option plan shall not exceed 10% of the issued and outstanding shares of common stock of the Company, have a maximum term of 10 years, and vest at the discretion of the Board of Directors . All equity-settled, share-based payments are ultimately recognized as an expense in the statement of operations with a corresponding credit to “Additional Paid in Capital.” If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior periods if share options ultimately exercised are different than that estimated on vesting. Performance Share Units On May 1, 2023, the Company and Steven Rossi reached an agreement to modify 1,600,000 restricted stock units and 400,000 performance stock units issued on November 11, 2022, and December 29, 2021, respectively, and replace them with 2,000,000 stock options, as described below. On November 11, 2022, 700,000 performance stock units (“PSUs”) granted on December 29, 2021, as described below, were modified to include new terms pertaining to the PSU vesting schedule. The PSUs vest in 5% increments according to the modified schedule that correlates with the Company’s stock price. The first 5% of the PSUs vest upon the Company’s stock price closing at $2.25, 50% will have vested at a closing price of $5.31, and 100% will have vested at a closing price of $13.76 as measured using the volume weighted average of the Company’s common stock for ten (10) consecutive trading days, with over $ 100,000 of trading volume on each of those days. The fair value of the PSUs was estimated to be $ 1,254,460 . As of September 30, 2023, 75,000 PSUs have vested, and the Company recognized $ 128,433 (2022 - $ 0 ) in consulting expenses. On December 29, 2021, the Company granted 400,000 and 300,000 performance stock units (“PSUs”) to the Company’s Chief Executive Officer and a director, respectively. The PSUs were to vest in 5% increments according to a schedule that correlates with the Company’s stock price. The first 5% of the PSUs was to have vested upon the Company’s stock price closing at $3.00, 50% was to have vested at a closing price of $16.50, and 100% was to have vested at a closing price of $31.50. The fair value of the PSUs was estimated to be $ 1,344,570 . As of September 30, 2023, no PSUs have vested, and the Company recognized $ 0 (2022 - $ 201,686 ) in consulting expenses. 17 Stock Options The Company uses the Black-Scholes option pricing model to determine fair value of stock options on the grant date. During the nine months ended September 30, 2023, the Company issued 321,150 stock options to employees, consultants and directors with an exercise price ranging from $ 2.55 to $ 4.20 . 321,150 of the stock options will expire 5 to 10 years from the date of grant. The options shall vest in two equal installments on the first and second anniversary of the grant date. 10,000 of the stock options will vest entirely on September 27, 2024, 47,000 of the stock options shall vest in three installments 15,000 will vest on first and second anniversary of grant date, with the remaining 17,000 to vest on the third anniversary of grant date . The fair value of the options on the grant date was estimated to be $ 1,116,856 . The Company recognized $ 100,901 in wages and salary and consulting expenses during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company issued 2,000,000 stock options to Steven Rossi. The stock options have an exercise price of $ 1.74 and an expiration date of May 1, 2033 . The options shall vest in increments of 10% for each dollar that the Company’s stock price increases between $2.00 and $11.00, as measured using the volume weighted average of the Company’s common stock for ten consecutive trading days. The fair value of the options on the grant date was estimated to be $ 2,821,572 . The Company recognized $ 658,367 in wages and salary during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company issued 75,000 stock options to an employee with an exercise price of $ 2.43 and expiring on May 18, 2033 . The options shall vest in two installments, 25,000 on May 18, 2024, and 50,000 on August 1, 2024. The fair value of the options on the grant date was estimated to be $ 182,025 . The Company recognized $ 22,380 in wages and salary expenses during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company issued 65,000 stock options to employees and a consultant with an exercise price of $ 1.53 and expiring on March 14, 2033 . The options shall vest in two equal installments on March 14, 2024, and 2025 . The fair value of the options on the grant date was estimated to be $ 98,670 . The Company recognized $ 24,130 in wages and salary and consulting expenses during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, 15,000 stock options were cancelled upon the departure of employees; as a result the Company recognized $ 19,406 in wages and salary expense during the period. During the nine months ended September 30, 2023, the Company issued 85,106 stock options to an employee with an exercise price of $ 1.53 and expiring on March 14, 2033 . The options shall vest in two installments; a) one fiscal quarter in which the Company generates $3,600,000 in sales with at least 20% unit margin and b) one fiscal quarter in which the Company generates $5,400,000 in sales with at least 30% unit margin . The fair value of the options on the grant date was estimated to be $ 129,191 . The Company recognized $ 56,557 in wages and salary expenses during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company issued 300,000 stock options to a consultant with an exercise price of $ 1.66 and expiring on January 30, 2028 . The options shall vest in three equal installments on January 30, 2023, March 1, 2023, and September 1, 2023 . The fair value of the options on the grant date was estimated to be $ 486,600 . The Company recognized $ 486,600 in consulting expenses during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company issued 360,000 stock options to directors with an exercise price of $ 1.66 and expiring on January 30, 2033 . The options shall vest in six equal installments on January 30, 2023, July 31, 2023, January 30, 2024, July 30, 2024, January 30, 2025, and July 30, 2025 . The fair value of the options on the grant date was estimated to be $ 592,560 . The Company recognized $ 157,799 in consulting expenses during the nine months ended September 30, 2023. During the year ended December 31, 2022, the Company granted 10,000 and 50,000 options to advisors with an exercise price of $ 2.19 and $ 2.37 , respectively, expiring on February 7, 2027 , and May 5, 2032 , respectively. The options vested immediately upon issuance. The fair values of the options on the grant date were estimated to be $ 21,780 and $ 261,400 , respectively. The Company recognized $ 0 (2022 - $ 283,180 ) in consulting expenses during the nine months ended September 30, 2023. During the year ended December 31, 2022, the Company granted 12,500 options to a consultant with an exercise price of $ 1.60 expiring on November 29, 2032 . The options are earned in four equal installments on February 27, 2023, May 29, 2023, August 29, 2023, and November 27, 2023. The options shall vest one year after being earned on February 27, 2024, May 29, 2024, August 29, 2024, and November 27, 2024 . The fair value of the options on the grant date was estimated to be $ 18,725 . The Company recognized $ 14,159 (2022 - $ 0 ) in consulting expenses during the nine months ended September 30, 2023. 18 During the year ended December 31, 2022, Terravis Energy, Inc., a subsidiary of the Company, granted an aggregate of 1,350,000 of Terravis Energy, Inc. stock options to its officers and directors. The stock options have an exercise price of $ 0.01 and will expire on April 12, 2032 . The options vested immediately upon issuance. The fair value of the options on the grant date was estimated to be immaterial. On July 23, 2021, the Company granted 15,000 options to a director with an exercise price of $ 5.50 and an expiry date of July 23, 2026 . The stock options vested on January 1, 2022 . The fair value of the options on the grant date was estimated to be $ 129,480 . The Company recognized $ 0 (2022 - $ 799 ) to consulting expenses during the nine months ended September 30, 2023. On August 6, 2021, the Company granted 140,000 options to directors, advisors, and officers with an exercise price of $ 5.50 and an expiry date of August 6, 2026 . The stock options vested on January 1, 2022. The fair value of the options on the grant date was estimated to be $ 754,189 . The Company recognized $ 0 (2022 - $ 5,096 ) to consulting expenses during the nine months ended September 30, 2023. On September 1, 2021, the Company granted 400,000 options to a consultant with an exercise price of $ 5.32 and an expiry date of September 1, 2026 . 100,000 shall vest on March 1, 2022, 100,000 shall vest on September 1, 2022, 100,000 shall vest on March 1, 2023, and 100,000 shall vest on September 1, 2023. The fair value of the options on the grant date was estimated to be $ 2,112,000 . The Company recognized $ 87,514 (2022 - $ 790,541 ) to consulting expenses during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company and the stock options holder reached an agreement to cancel all 400,000 stock options in exchange for extending the exercisable period of 300,000 warrants to December 31, 2024. On October 7 and November 2, 2021, the Company granted advisors 5,000 and 62,500 options with exercise prices of $ 5.50 and $ 5.24 , respectively. The options will expire on October 7, 2026 , and November 2, 2026 , respectively. The stock options fully vested on January 1, 2022. The fair value of the options on the grant date was estimated to be $ 353,230 . The Company recognized $ 0 (2022 - $ 32,856 ) to consulting expenses during the nine months ended September 30, 2023. On December 29, 2021, the Company granted an aggregate of 90,000 options to members of the board with an exercise price of $ 2.51 . The options will expire on December 29, 2026 . For each of these three option grants, 10,000 vested on December 29, 2022, 10,000 shall vest on December 29, 2023, and 10,000 shall vest on December 29, 2024. The fair value of the options on the grant date was estimated to be $ 224,280 . The Company recognized $ 56,326 (2022 - $ 56,326 ) in consulting expenses during the nine months ended September 30, 2023. Schedule of Stock Options Activity September 30, 2023 December 31, 2022 Number of stock options Weighted average price Number of stock options Weighted average price Balance, beginning of year 785,000 $ 4.74 712,500 $ 5.00 Granted 3,206,256 $ 1.91 72,500 $ 2.21 Cancelled ( 415,000 ) $ ( 5.18 ) - $ - Balance, end of period 3,576,256 $ 2.15 785,000 $ 4.74 19 Schedule of Share-based Payment Arrangement, Option, Exercise Price Range Range of Exercise prices Outstanding Weighted average life (years) Weighted average exercise price Exercisable on September 30, 2023 Stock options $ 1.53 - 5.50 3,576,256 8.30 $ 2.15 1,132,500 As of September 30, 2023 and December 31, 2022, Terravis Energy Inc. has the following options outstanding: Schedule of Stock Options Activity September 30, 2023 December 31, 2022 Number of stock options Weighted average price Number of stock options Weighted average price Balance, beginning of year 1,350,000 $ 0.01 - $ - Granted - $ - 1,350,000 $ 0.01 Balance, end of period 1,350,000 $ 0.01 1,350,000 $ 0.01 Schedule of Share-based Payment Arrangement, Option, Exercise Price Range Range of Exercise prices Outstanding Weighted average life (years) Weighted average exercise price Exercisable on September 30, 2023 Stock options $ 0.01 1,350,000 8.53 $ 0.01 1,350,000 17. Rental Income During the year ended December 31, 2022, the Company entered into a sublease agreement for its warehouse in Mississauga, Ontario, Canada. The sublease commenced on September 15, 2022, and will end on May 31, 2024 at $ 15,515 ($ 19,992 CAD) per month. During the year ended December 31, 2022, the Company entered into a lease agreement in relation to its West Seneca property. Initially, the Company entered into a lease agreement with a third-party from July 1 to December 31, 2022 at $ 33,750 per month. On September 23, 2022, a mutual agreement was reached to terminate the lease agreement. During the nine months ended September 30, 2023, the Company recognized rental income of $ 139,892 (2022 - $ 204,770 ). 18. Subsequent Events The Company has evaluated subsequent events through November 14, 2023. The following events occurred after the quarter-ended September 30, 2023: ● Subsequent to September 30, 2023, the Company sold a total of 71,698 shares of common stock for total net proceeds of $ 118,697 . The sale of the shares of common stock was in connection with the Form S-3 shelf registration statement, which was declared effective by the SEC on October 13, 2022 allowing the Company to issue up to $ 30,000,000 of shares of common stock and prospectus supplement covering the offering, issuance and sale of up to $ 13,000,000 of shares of common stock that may be issued and sold under the At The Market Offering Agreement dated as of September 30, 2022. ● Subsequent to September 30, 2023, 47,000 stock options with an estimated valuation of $ 168,213 were cancelled upon the termination of the employee. ● On October 31, 2023, the Company granted 10,000 non-qualified stock options to an employee with an exercise price of $ 1.44 and an expiry date of October 31, 2033. The options shall vest in full on October 31, 2035. ● On November 2, 2023, the Company closed a sale of 1,925,000 shares of common stock and 1,575,000 pre-funded warrants for a total net proceeds of $ 4,261,542 . In association with sale, the Company also issued 7,000,000 warrants convertible for 7,000,000 shares of common stock at an exercise price of $ 1.34 . The warrants are exercisable six months after issuance and will expire five and a half years from the issuance date. 20