Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
1.
Nature of Operations and Continuance of Business
Mobetize
Corp. (the “Company”) was incorporated in the state of Nevada on February 23, 2012, as Slavia, Corp. On August 13,
2013, its name changed to “Mobetize Corp.”. The Company provides Fintech solutions and services to enable and support
the convergence of global telecom and financial services providers (“Customers”) through its Global Mobile B2B Fintech
and Financial Services Marketplace (“Hub”). The Company’s activities are subject to significant risks and uncertainties,
including the need to secure additional funding to optimize the Company’s existing technology.
The
Company’s ’s unaudited consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States. These unaudited consolidated financial statements include the accounts of its wholly owned subsidiaries,
Mobetize Canada Inc., and Mobetize USA Inc. All significant intercompany transactions and balances have been eliminated. The accompanying
quarterly unaudited consolidated financial statements should be read in conjunction with the annual financial statements and accompanying
notes filed with the U.S. Securities and Exchange Commission on Form 10-K for the fiscal year ended March 31, 2017.
In
the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary
to present fairly the Company’s financial position and the results of its operations and cash flows for the periods shown.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those
estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be
expected for the full year.
On
July 11, 2017, the Company completed a consolidation of its issued and outstanding common shares on a one for one hundred (1/100)
basis and a decrease in the number of its authorized common and preferred shares. All share and per share amounts have been retroactively
restated to reflect the share consolidation.
Going
Concern
These
unaudited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue
to realize assets and discharge liabilities in the normal course of business. As of September 30, 2017, the Company has an accumulated
deficit of $8,330,831, a history of net losses and a working capital deficiency of $530,433. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent
upon continuing financial support from management, increasing sales, securing debt or equity financing, cutting operating costs,
launching viable products, and realizing profitable operations. These consolidated financial statements do not include any adjustments
to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.
2. Recently
Accounting Pronouncements
In
March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates ASU 2017-07, requiring certain
changes to the presentation of the expenses related to postretirement benefits accounted for under Topic 715. The amendments are
effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal
years. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations,
financial condition, cash flows, and financial statement disclosures.
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
3.
Joint Venture
On
January 12, 2017, the Company entered into a Gateway License Agreement and Joint Venture Agreement (“Joint Venture”)
with CPT Secure, Inc. (“CPT”), a company controlled by a shareholder of the Company, to further develop certain payment
processing technology (“CPT IP”) on a 50/50 basis. In connection with the Joint Venture, the Company issued 500,000
Series B Preferred Shares with a fair value of $125,000 on January 12, 2017, to CPT in consideration for the license to the CPT
IP which was contributed to MPAY Gateway Services Inc.. The license to the CPT IP has a term to January 11, 2019, and can be automatically
renewed for successive two year periods unless either party elects not to renew 60 days prior to expiration. The license fee of
$125,000 is being amortized over the initial term of the license. During the three months ended June 30, 2017, the Company recognized
amortization of $10,103 on the license prior to transfer, which amount has been included in research and development expense.
Effective
May 29, 2017, the Company and CPT incorporated a joint venture company, MPAY Gateway Services Inc. (“MPAY”). Upon
incorporation of MPAY, the Company transferred the remaining carrying value of the license to the CPT IP of $101,541 to MPAY,
which has been presented on the balance sheet as an investment in joint venture. During the six months ended September 30, 2017,
the Company recognized a loss on joint venture of $10,713, representing the Company’s 50% interest in the change in equity
of MPAY.
4. Equipment
Equipment,
net consisted of the following:
|
|
September
30, 2017
|
|
March
31, 2017
|
|
|
|
|
|
Computer equipment
|
|
$
|
15,460
|
|
|
$
|
14,421
|
|
Furniture
|
|
|
1,259
|
|
|
|
1,174
|
|
Total
|
|
|
16,719
|
|
|
|
15,595
|
|
Less: accumulated amortization
|
|
|
10,212
|
|
|
|
7,966
|
|
Equipment, net
|
|
$
|
6,507
|
|
|
$
|
7,629
|
|
During
the three months ended September 30, 2017, equipment cost increased by $1,124, and accumulated amortization was impacted by $591,
as a result of foreign currency translation adjustments.
5. Promissory
Note
On
September 13, 2017, the Company entered into a Bridge Loan Promissory Note with a third party, whereby the Company received proceeds
of $20,152 (CDN$25,000), which is non-interest bearing, unsecured, and matures on October 13, 2017 (Note 14). In consideration
for the loan, the Company will pay a bridge loan fee of CDN$2,500 at the maturity date.
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
6. Convertible
Promissory Notes
Date
of issuance
|
|
Principal
September
30,
2017
|
|
Principal
March
31,
2017
|
|
Interest
|
|
Maturity
|
November
21, 2016
(1)
|
|
$
|
—
|
|
|
|
40,000
|
|
|
|
6%
per annum
|
|
|
|
November
21, 2017
|
|
January
27, 2017
(2)
|
|
$
|
—
|
|
|
|
125,000
|
|
|
|
12%
per annum
|
|
|
|
January
27, 2018
|
|
January
30, 2017
(3)
|
|
$
|
—
|
|
|
|
75,000
|
|
|
|
12%
per annum
|
|
|
|
January
30, 2018
|
|
|
|
$
|
—
|
|
|
$
|
240,000
|
|
|
|
|
|
|
|
|
|
|
(1)
|
November
21, 2016 Issuance - $40,000:
|
|
•
|
Issued
net of $2,400 of prepaid interest, based on an interest rate of 6% per annum (Note7 (j))
|
|
•
|
The
conversion feature was exercisable at the option of the holder (the “Conversion
Feature”). The Conversion Feature enabled the holder to convert any portion of
their outstanding Convertible Promissory Note principal balance into common shares at
$0.25 per share on or after May 20, 2017, but no later than the maturity date.
|
|
•
|
The
Company evaluated whether separate financial instruments with the same terms as the conversion
features above would meet the characteristics of a derivative instrument as described
in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement,
as the shares delivered upon conversion are not readily convertible to cash. As the conversion
features would not meet the characteristics of a derivative instrument as described in
paragraphs ASC 815-15-25, the conversion features are not required to be separated from
the host instrument and accounted for separately. As a result, it was determined that
no beneficial conversion feature existed on the commitment date.
|
|
•
|
On
April 21, 2017, the Company issued 160,000 Series B Preferred Shares pursuant to the
conversion of $40,000 of the convertible promissory notes.
|
|
(2)
|
January
27, 2017 Issuance - $125,000:
|
|
•
|
Issued
net of $15,000 of prepaid interest, based on an interest rate of 12% per annum.
|
|
•
|
Of
the $125,000 Convertible Promissory Notes, $50,000 is owed to a Director of the Company
(Note 7(j)).
|
|
•
|
The
Conversion Feature enables the holder to convert any portion of their outstanding Convertible
Promissory Note principal balance into common shares at $0.50 per share on or after July
26, 2017, but no later than the maturity date.
|
|
•
|
The
Company has evaluated whether separate financial instruments with the same terms as the
conversion features above would meet the characteristics of a derivative instrument as
described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement,
as the shares delivered upon conversion are not readily convertible to cash. As the conversion
features would not meet the characteristics of a derivative instrument as described in
paragraphs ASC 815-15-25, the conversion features are not required to be separated from
the host instrument and accounted for separately. As a result, it was determined that
no beneficial conversion feature existed on the commitment date.
|
|
•
|
On
August 3, 2017, the Company issued 250,000 Series B Preferred Shares pursuant to the
conversion of $125,000 of the convertible promissory notes.
|
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
6. Convertible
Promissory Notes - continued
|
(3)
|
January
30, 2017 Issuance - $75,000:
|
|
•
|
Issued
net of $9,000 of prepaid interest, based on an interest rate of 12% per annum.
|
|
•
|
The
$75,000 Convertible Promissory Note is owed to a Director of the Company (Note 7(j)).
|
|
•
|
The
Conversion Feature enables the holder to convert any portion of their outstanding Convertible
Promissory Note principal balance into common shares at $0.50 per share on or after July
29, 2017, but no later than the maturity date.
|
|
•
|
The
Company has evaluated whether separate financial instruments with the same terms as the
conversion features above would meet the characteristics of a derivative instrument as
described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement,
as the shares delivered upon conversion are not readily convertible to cash. As the conversion
features would not meet the characteristics of a derivative instrument as described in
paragraphs ASC 815-15-25, the conversion features are not required to be separated from
the host instrument and accounted for separately. As a result, it was determined that
no beneficial conversion feature existed on the commitment date.
|
|
•
|
On
August 3, 2017, the Company issued 150,000 Series B Preferred Shares pursuant to the
conversion of $75,000 of the convertible promissory note.
|
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
7. Related
Party Transactions
|
|
Six months ended
September 30,
|
Transactions with related parties
|
|
2017
|
|
2016
|
(a)
Transactions incurred with the CEO or companies controlled by the CEO:
|
|
|
|
|
|
|
|
|
Management fees
|
|
$
|
63,016
|
|
|
$
|
37,500
|
|
Management fees – Stock-based
compensation
|
|
|
613
|
|
|
|
20,284
|
|
Research and development
|
|
|
75,815
|
|
|
|
58,050
|
|
General
and administrative
|
|
|
13,182
|
|
|
|
6,060
|
|
|
|
$
|
152,626
|
|
|
$
|
121,894
|
|
(b) Transactions
incurred with the former CFO’s or a company controlled by a former CFO:
|
|
|
|
|
|
|
|
|
Management fees
|
|
$
|
—
|
|
|
$
|
—
|
|
General
and administrative
|
|
|
—
|
|
|
|
8,100
|
|
|
|
$
|
—
|
|
|
$
|
8,100
|
|
(c) Transactions
incurred with the Chairman of the Company
|
|
|
|
|
|
|
|
|
Management
fees
(1)
|
|
$
|
6,000
|
|
|
$
|
27,000
|
|
Management
fees – Stock-based compensation
|
|
|
16,757
|
|
|
|
42,738
|
|
|
|
$
|
22,757
|
|
|
$
|
69,738
|
|
(d) Transactions
incurred with a Director of the Company
|
|
|
|
|
|
|
|
|
Management fees – Stock-based
compensation
|
|
$
|
6,703
|
|
|
$
|
17,095
|
|
General
and administrative – Interest on convertible promissory note
|
|
|
13,605
|
|
|
|
3,000
|
|
|
|
$
|
20,308
|
|
|
$
|
20,095
|
|
(e) Transactions
incurred with a shareholder of the Company
|
|
|
|
|
|
|
|
|
Investor
relations and promotion
|
|
$
|
77,078
|
|
|
$
|
—
|
|
|
|
$
|
77,078
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Related party balances, as at
|
|
|
September
30,
2017
|
|
|
|
March
31, 2017
|
|
(f) Amounts
owed to the former CFO (existing shareholder):
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
19,606
|
|
|
$
|
18,346
|
|
|
|
|
|
|
|
|
|
|
(g) Amounts
owed to companies controlled by the CEO:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
|
322,574
|
|
|
|
275,687
|
|
Promissory
note – June 2, 2017
(2)
|
|
|
25,000
|
|
|
|
25,000
|
|
Promissory
note – July 11, 2017
(3)
|
|
|
20,152
|
|
|
|
18,798
|
|
|
|
$
|
367,726
|
|
|
$
|
319,485
|
|
(h) Amounts
owed to the Chairman of the Company
|
|
$
|
15,000
|
|
|
$
|
9,000
|
|
|
|
|
|
|
|
|
|
|
(i) Amounts
prepaid to a company controlled by the CEO
|
|
|
|
|
|
|
|
|
Prepaid
interest on promissory notes
|
|
$
|
—
|
|
|
$
|
2,461
|
|
|
|
|
|
|
|
|
|
|
(j) Amounts
owed to a Director of the Company
|
|
|
|
|
|
|
|
|
Convertible
promissory note November 21, 2017 (Note 6
(1)
))
|
|
$
|
—
|
|
|
$
|
20,000
|
|
Convertible
promissory note January 27, 2018 (Note 6
(2)
))
|
|
|
—
|
|
|
|
50,000
|
|
Convertible
promissory note January 30, 2018 (Note 6
(3)
))
|
|
|
—
|
|
|
|
75,000
|
|
|
|
$
|
—
|
|
|
$
|
145,000
|
|
(k) Amounts
prepaid to a Director of the Company
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
|
427
|
|
|
$
|
—
|
|
Promissory
note – September 17, 2017
(4)
|
|
|
100,000
|
|
|
|
—
|
|
|
|
$
|
100,427
|
|
|
$
|
—
|
|
Prepaid
interest on convertible promissory notes
|
|
$
|
—
|
|
|
$
|
13,178
|
|
|
|
|
|
|
|
|
|
|
(l) Amounts
owed to a shareholder of the Company
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
47,845
|
|
|
$
|
17,358
|
|
|
(1)
|
On
July 1, 2016, the Company entered into an agreement with its Chairman whereby he would
provide services to the Company at a monthly rate of $1,000 for a period of two years
ending on June 30, 2018.
|
|
(2)
|
The
promissory note maturing on June 2, 2017, was issued with a twelve-month term, comprises
$25,000 principal, and bears interest at 12% per annum. The principal balance included
prepaid interest of $3,000.
|
|
(3)
|
The
promissory note maturing on July 11, 2017, was issued with a twelve-month term, comprises
$20,152 (CAD $25,000) principal, and bears interest at 12% per annum. The principal balance
included prepaid interest of $2,418 (CAD $3,000).
|
|
(4)
|
The
promissory note maturing on March 17, 2018, was issued with a 6-month term, comprises
$100,000 principal, and bears interest at 12% per annum.
|
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
8. Common
Stock and Preferred Stock
|
a)
|
Issuance
of Common Stock:
|
• On
July 11, 2017, the Company completed a consolidation of the issued and outstanding common shares on a one for one hundred (1/100)
basis, and amended the Company’s Articles of Incorporation to decrease the number of authorized shares of common stock from
525,000,000 shares with a par value $0.001 per share to 250,000,000 shares with a par value of $0.001 per share. All share and
per share amounts have been retroactively restated to reflect the share consolidation.
|
b)
|
Authorization
and Issuance of Series A Preferred Shares:
|
• The
Company is authorized to issue 250,000,000 shares of preferred stock with a par value of $0.001 per share and has designated 10,000,000
of the preferred stock as Series A Preferred Shares (“Series A Preferred Shares”). The Series A Preferred Shares have
the same rights and privileges as the common stock, with the exception that the Series A Preferred Share holder has 10 votes per
Series A Preferred Share versus one vote per share of common stock and does not have the right to sell the shares for a period
of two years from the date of issue.
• Effective
April 7, 2017, the Company amended its Articles of Incorporation to decrease the number of authorized preferred shares from 250,000,000
shares with a par value $0.001 per share to 75,000,000 with a par value $0.001 per share. There were no changes in the number
of designated or outstanding Series A Preferred Shares or Series B Preferred Shares.
|
c)
|
Authorization
and Issuance of Series B Preferred Shares:
|
• The
Company has designated 25,000,000 shares of the authorized preferred stock as Series B Preferred Shares (“Series B Preferred
Shares”). The Series B Preferred Shares have the same rights and privileges as the common stock, with the exception that
the Series B Preferred Shares have an anti-dilution provision and the Series B Preferred Share holder does not have the right
to convert Series B Preferred Shares into shares of common stock for a period of two years from the date of issue.
• On
April 21, 2017, the Company issued 160,000 Series B Preferred Shares pursuant to the conversion of $40,000 in convertible promissory
notes at a conversion price of $0.25 per share (Note 6
(1)
).
• On
April 27, 2017, the Company issued 19,568 Series B Preferred Shares with a fair value of $1.00 per share to a consultant of the
Company to settle $4,892 in amounts owing for services provided, resulting in a loss on settlement of debt of $14,676.
• On
May 29, 2017, the Company issued 15,000 Series B Preferred Shares with a fair value of $1.00 per share to a vendor pursuant to
the settlement of $15,000 in accounts payable.
• On
August 3, 2017, the Company issued 400,000 Series B Preferred Shares pursuant to the conversion of $200,000 in convertible promissory
notes at a conversion price of $0.50 per share (Note 6
(2)
and 6
(3)
).
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
9.
Share Purchase Warrants
The
following table summarizes the continuity of share purchase warrants:
|
|
Number
of warrants
|
|
Weighted
average exercise price
$
|
Balance,
March 31, 2017 and September 30, 2017
|
|
|
26,364
|
|
|
|
104
|
|
As
at September 30, 2017, the following share purchase warrants were outstanding:
Number
of warrants
outstanding
|
|
Exercise
price
$
|
|
Expiry
date
|
|
6,944
|
|
|
|
100
|
|
|
June 24, 2018
|
|
3,866
|
|
|
|
125
|
|
|
December 10, 2018
|
|
15,554
|
|
|
|
100
|
|
|
September 1, 2018
|
|
26,364
|
|
|
|
|
|
|
|
10.
Stock Options
The
Company has adopted a Stock Option Plan (“Stock Option Plan”) which permits the Company to issue stock options for
up to 3,000,000 common shares of the Company to directors, officers, employees and consultants of the Company with a maximum term
of 5 years, exercise prices equal to the minimum fair market value per common share on the date of grant, and a vesting schedule
determined by the Board of Directors at the time of granting the options.
The
following table summarizes the continuity of stock options:
|
|
Number
of stock options
|
|
Weighted
average exercise price
$
|
Balance,
March 31, 2016
|
|
|
23,812
|
|
|
|
60
|
|
Expired
|
|
|
(2,885
|
)
|
|
|
60
|
|
Cancelled
|
|
|
(727
|
)
|
|
|
60
|
|
Outstanding,
March 31, 2017 and September 30, 2017
|
|
|
20,200
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
September 30, 2017
|
|
|
17,720
|
|
|
|
60
|
|
As
at September 30, 2017, the following share purchase options were outstanding:
Number
of options outstanding
|
|
Number
of options vested
|
|
Exercise
price
$
|
|
Expiry
date
|
|
20,200
|
|
|
|
17,720
|
|
|
|
60
|
|
|
September 30,
2020
|
During
the six months ended September 30, 2017, $32,907 (2016 - $127,439) in stock-based compensation expense was recorded and allocated
amongst general and administrative, consulting fees, management fees, and research and development expenses. The intrinsic value
of the options was $nil at September 30, 2017, and March 31, 2017.
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
11. Concentration
of Risk
Revenues
are currently generated through licensing, professional services, and payment processing services provided by Mobetize to our
existing customers. During the six months ended September 30, 2017, the Company had revenues from five customers (2016 –five
customers) with 62% (2016 – 66%) of revenues generated from the Company’s largest customer. At September 30, 2017,
the Company’s accounts receivable is concentrated and due from four customers (March 31, 2017 – five customers) with
89% (March 31, 2017 – 61%) of accounts receivable due from the Company’s largest customer.
12. Commitments
and Claims
|
a)
|
The
Company has an obligation under a rental lease for its office. As of September 30, 2017,
the remaining term of the lease is 15 months with monthly payments of $4,995. The Company’s
lease includes a renewal option.
|
|
b)
|
The
Company received a Citation and Notice of Assessment dated October 14, 2016, that Stephen
J. Fowler (“Fowler”), a former Director and Chief Financial Officer of the
Company, had initiated a complaint with the State of Washington Department of Labor and
Industries for amounts allegedly due to him for unpaid wages of $45,000 in wages in addition
to assessed interest of $3,368, and a penalty of $4,500. An appeal presented by the Company
alleged that the calculation of amounts due to Fowler was incorrect and that he had improperly
obtained shares of its common stock. A hearing before the Office of Administrative Hearings
has not been set. See Note 7(f) for amounts recorded as owed to Fowler.
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The
Company received a Notice of Civil Claim dated April 26, 2017, filed in the British Columbia Supreme Court by Fowler, naming the
Company and its three present directors as defendants. Fowler asserts claims against Mobetize for unpaid expenses, and breach
of contract. He also asserts claims for breach of fiduciary duty, misrepresentation and conspiracy. The Company has advanced its
own counterclaims against Fowler, including fraudulent or negligent misrepresentation, breach of fiduciary duty, negligence and
unjust enrichment. On June 23, 2017, Mobetize filed its response to Fowler’s claims and its own counterclaims against Fowler.
No trial date has been set.
The
Company received a Complaint dated May 12, 2017, filed in the Second Judicial District Court of the State of Nevada, by Fowler
naming the Company and its three present directors as defendants. The Nevada action concerns substantially the same facts and
seeks substantially the same relief as Fowler’s British Columbia action. On June 23, 2017, the Company filed a Motion to
Dismiss or in the alternative, an Application for Preliminary Injunction to either dismiss or stay the Complaint. On October 31,
2017, the Company attended a court hearing on its Motion to Dismiss. The court has not rendered a decision on the Motion to Dismiss
and no trial date has been set.
The
Company received a Complaint dated May 3, 2017, filed in the Eight Judicial District Court of the State of Nevada by Cary Fields
(“Fields”) naming the Company and its three present directors as defendants, to obtain a preliminary injunction to
enjoin a consolidation of the Company’s common stock, and seek damages for breach of fiduciary duty, conversion and unjust
enrichment. On May 18, 2017, after due consideration, the court denied Fields application and determined not to grant a temporary
injunction. The court did not rule on the question of alleged damages to Fields. On August 4, 2017, the Company and its three
directors received an Amended Complaint seeking damages for breach of fiduciary duty, conversion and unjust enrichment. On November
17,2017 in the Eight Judicial District Court of the State of Nevada, the Company filed a Motion dismiss the Amended Complaint.
A trial date has been set for October 8, 2018.
MOBETIZE CORP.
Notes to Consolidated
Financial Statements
September 30,
2017
(Unaudited)
13. Segment
Information
The
Company has a single operating segment being the provision of Fintech Solutions and Services to businesses located in Canada and
the United States of America (“USA”). Revenues are generated in Canada and the USA while all assets are located in
Canada. During the six months ended September 30, 2017, the Company generated revenue of $56,607 (CDN$70,927) in Canada and $124,912
in the USA. The costs incurred to generate this revenue are expensed as research and development. At September 30, 2017, the Company’s
long-lived assets are located in Canada.
14. Subsequent
Events
The
Company evaluated its September 30, 2017, consolidated financial statements for subsequent events through the date the consolidated
financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure
in the consolidated financial statements except as described below.
On
October 4, 2017, the Company repaid a Bridge Loan Promissory Note of CDN$25,000 and paid a bridge loan fee of CDN$2,500 (Note
5).
On
November 7, 2017, the Company entered into a $50,000 Bridge Loan Promissory Note with Donald Duberstein. Interest accrues at the
rate of twelve percent (12%) per annum, compounded annually, based on a 365-day year and the actual number of days elapsed. Interest
is payable by the Company on a monthly basis in the amount of $500.00.