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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x       ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 333-167667

 

TWO HANDS CORPORATION

(Exact name of registrant as specified in its charter)

 

 

  Delaware   42-1770123  
  (State or Other Jurisdiction of   (I.R.S. Employer  
  Incorporation or Organization)   Identification No.)  
         
  1035 Queensway East, Mississauga, Ontario, Canada   L4Y 4C1  
  (Address of Principal Executive Offices)   (Zip Code)  
         

 

(416) 357-0399

(Registrant's telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

 1 
 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” , “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer             ¨     Accelerated filer                     ¨     
  Non-accelerated filer               x     Smaller reporting company   x
  Emerging Growth Company   ¨       

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $2,373,844.

 

As of March 23, 2023, the registrant had 193,226,548 outstanding shares of Common Stock.

 

Documents incorporated by reference: None.

 

 2 
 

 

TABLE OF CONTENTS

PART I   Page
Item 1. Business 5
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 17
Item 2. Properties 17
Item 3. Legal Proceedings 17
Item 4.  Mine Safety Disclosures 17
PART II    
Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18
Item 6. [Reserved] 19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29
Item 8. Financial Statements and Supplementary Data 29
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29
Item 9A. Controls and Procedures 31
Item 9B. Other Information 31
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 31
PART III    
Item 10. Directors, Executive Officers and Corporate Governance 32
Item 11. Executive Compensation 36
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 38
Item 13. Certain Relationships and Related Transactions and Director Independence 39
Item 14. Principal Accountant Fees and Services 40
PART IV    
Item 15. Exhibits, Financial Statement Schedules 41
Item 16. Form 10-K Summary 43
  Signatures 43
 3 
 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This report on Form 10-K contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in this Form 10-K and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

 

The following discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this Form 10-K.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 4 
 

PART I

 

ITEM 1. BUSINESS

 

Our Business

 

Overview

 

The Company is focused exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services. All three of such branches of the Company’s business share industry standard warehouse storage space and inventory. The Company’s inventory is updated continuously and generally consists of produce, meats, pantry items, bakery & pastry goods, gluten-free goods, and organic items, acquired from various different suppliers in Canada and internationally, with whom the Company and its principals have cultivated long-term relationships.

 

On November 16, 2016, the Company changed the name of its wholly owned subsidiary from I8 Interactive to Two Hands Canada Corporation.

 

The Company received approval from the Canadian Securities Exchange (the "CSE") to list its common shares (the "Common Shares") on the CSE. Trading of the Common Shares in the capital of the Company commenced on August 5, 2022, under the symbol "TWOH".

gocart.city

 

gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered. The gocart.city online platform stores all inventory in the Company’s warehouse located at its head office in Mississauga. The aim of gocart.city is to deliver fresh and high-quality food products directly to retail consumers throughout Southern Ontario. The Company recently engaged local renowned chef, Grace DiFede, to curate a new line of meal kits and bundles to sell on the gocart.city platform alongside the Company’s other grocery essentials.

 

The gocart.city platform is available online and through applications for handheld devices supporting iOS or Android. The features and functions of gocart.city include customers having the ability to search for products by category and name, customers saving items in their cart and being able to share their cart with others, and being able to opt-in to digital weekly alerts that provide information on promotions and discounts on certain products. gocart.city also includes standard payment options for customers, such as PayPal, American Express and Visa.

 

The Company also employs a social media manager to oversee and increase engagement with customers by using platforms such as Facebook, Twitter, Instagram and Google. The ads that are posted on these platforms are generic branding related to the Company, as well as the promotion of particular sale items. Moreover, the Company has agreements with SRAX, Inc. to boost such engagement.

 

Grocery Originals

 

Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse. Grocery Originals was originally intended for curbside pickup but has expanded into a full service store, that includes a deli, cold storage, a stone pizza oven, and offering a wide variety of fresh and specialty meals curated by Grace Di Fede.

 

Cuore Food Services

 

from the Company’s warehouse as well as inventory it acquires on an ad hoc basis, and focuses on bulk delivery of goods to food service business such as restaurants, hotels, event planning/hosting businesses. Orders distributed through Cuore Food Services can be made over the phone or online through a different front-end of the gocart.city platform. 

 

Research and Development

 

We did not incur any research and development costs during the fiscal year ended December 31, 2022 and 2021.

 

 5 
 

Customers

 

The Company plans to continue to expand it reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods.The Company believes its value proposition has broad appeal with value-minded customers across all income levels, demographics and geographies. The Company believes that its sustained focus on delivering ever-changing value deals will generate strong customer loyalty and brand affinity. The Company believes that its broad customer appeal supports new store growth opportunities, and it plans to continue to expand its reach to additional customers and geographies across Canada.

 

Competition

 

The Company operates in a dynamic and competitive market. Other national and regional food distribution companies, along with non-traditional competitors, such as mass merchandisers, warehouse clubs, and online retailers, represent a competitive risk to the Company’s ability to attract customers and operate profitably. The businesses the Company considers to be its main competitors are Loblaw Companies Limited, Sobeys Inc., Metro Inc. and Walmart Inc.

 

The Company will experience competition from other local grocery businesses and established chains, including well-capitalized chains or franchisors who have liquid capital available for expansion, that can utilize their existing operations as well as their financial, technological, marketing and personnel resources and high brand name recognition and awareness.

 

The Company’s indirect competition comes from other businesses in the supermarkets and grocery stores industry, and those that specialize in groceries and those that do not. The Company’s direct competitors include other grocery stores, quick service pickup and delivery grocery businesses in the associated area. Additionally, sales of groceries at other Canadian grocery stores may significantly impact the sales from the Company’s business.

 

Manufacturing and Product Sourcing

 

Most supplies used are readily available from any number of our local and international suppliers, at competitive prices. Delivery of product will vary depending on the area serviced and the number of orders per day.

 

Management's Plan of Operation

 

The Company is focused exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services.

 

The performance of the Company’s business during the COVID-19 pandemic illustrates the flexibility of its model as the Company was able to meet heightened demand with an assortment of products that met customer preferences. The Company is still early-on in its development but sees a highly scalable business with lower corporate fixed costs, providing protection in the event of an economic downturn.

 

Products and Services

 

The Company plans to continue to expand its reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods.

 

Mobile Application

 

V2 of the gocart.city mobile application will be a subsequent release. The Company plans to further expand the features of the mobile application. Following the completion of V2 of the mobile application, the Company will consider user behaviour and plans to expand the functionality and features of the mobile application on an on-going basis going forward.

 

Operations and Logistics

 

The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.

 

Sales and Marketing

 

The Company plans on utilizing and leveraging its agreement with SRAX, Inc. and Adfuel Media Inc. to market its grocery delivery application and services and expand its footprint in the Ontario region and beyond as its customer base grows.

 

 6 
 

ITEM 1A. RISK FACTORS.

 

In carrying on its business, the Company is exposed to a variety of risks, including the risks described elsewhere in this Prospectus. The Company can neither predict nor identify all such risks nor can it accurately predict the impact, if any, of such risks on its business, operations or the extent to which one or more risks or events may materially change future results of financial position from those reported or projected in any forward looking statements. Accordingly, the Company cautions the reader not to rely on reported financial information and forward-looking statements to predict actual future results. This Prospectus and the accompanying financial information should be read in conjunction with this statement concerning risks and uncertainties. Some of the risks, uncertainties and events that may affect the Company, its business, operations, and results, are given in this section. However, the list of risk factors below is not exhaustive and the factors and uncertainties that may impact the Company are not limited to those stated below. Those listed and other risks not specifically referred to may in the future materially affect the Company’s financial performance, and accordingly an investment in the Company at this time involves a high degree of risk, should be considered highly speculative in nature, and should be considered only by those who are able to bear the economic risk of their investment for an indefinite period.

 

The Company’s ability to generate revenue and achieve positive cash flow in the future is dependent upon various factors, including the level of market acceptance of its products, the degree of competition encountered by the Company, technology risks, general economic conditions, and regulatory requirements. Moreover, it is also possible that new competitors will enter the marketplace. The Company's future performance depends in part upon attracting and retaining key technical, sales and management personnel. There can be no assurance that the Company can retain these personnel. As such, these new competitors and the loss of the services of the Company's key employees could potentially have a material adverse effect on the Company's business, operating results and financial condition.

 

The following are certain risk factors relating to the business carried on by the Company which prospective investors should carefully consider before deciding whether to purchase Company Shares. The Company’s business is subject to risk factors that are both specific and general in nature and which individually, or in combination, may affect the future operating performance of the Company’s business and the value of an investment in the Company. The Company will face a number of challenges in the development of building its business. Readers should carefully consider all such risks, including those set out in the discussion below. The following is a description of the principal risk factors affecting the Company that will, in turn, affect the Company.

 

Description of Risk Factors

 

Risks Related to the Company’s Business

 

Competition to the Company

 

The Company’s business operates in a dynamic and competitive market. Other food distribution companies, along with non-traditional competitors, such as mass merchandisers, warehouse clubs, and online retailers, represent a competitive risk to the Company’s ability to attract customers and operate profitably in its markets.

 

A significant risk to the Company is the potential for reduced revenues and profit margins as a result of increased competition. A failure to maintain geographic diversification to reduce the effects of localized competition could have an adverse impact on the Company’s operating margins and results of operations. The consolidation of industry competitors may also lead to increased competition and loss of market share.

 

The Company’s independent auditors have expressed substantial doubt about its ability to continue as a going concern.

 

As of December 31, 2022, the Company had cash of $17,137 and total liabilities of $1,924,171. During the year ended December 31, 2022, the Company incurred a net loss of $21,693,111 and used cash in operating activities of $840,745, and on December 31, 2022, had a shareholders’ deficit of $4,638,208. The Company is currently funding its initial operations by way of loans from its Chief Executive Officer and others and through the issuance of Common Shares in exchange for services. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ending December 31, 2022, expressed substantial doubt about the Company’s ability to continue as a going concern.

 

If the Company is unable to raise enough capital or obtain additional financing, it may not be able to fulfill its business plan. 

 

On December 31, 2022, the Company only had $17,137 cash on hand. To date, the Company has funded its operations by way of cash advances from its Chief Executive Officer, noteholders, shareholders and others on a “as-needed” basis. As such, the Company’s operating capital is currently limited to the personal resources of its Chief Executive Officer, noteholders, shareholders and others. If the Company is unsuccessful at achieving a sufficient amount of net proceeds, it will continue to rely on loans from its Chief Executive Officer, noteholders, shareholders and others although they are under no obligation to loan any money to the Company. the Company may also raise capital in the future by relying on loans from third party lending sources. However, the Company believes it will be difficult to secure capital in the future because it has no assets to secure debt and there is currently no active trading market for its securities. The Company’s inability to obtain financing or generate sufficient cash from operations could require it to reduce or eliminate expenditures for developing products and services, or otherwise curtail or discontinue its operations, which could have a material adverse effect on the Company’s business, financial condition and results of operations. Furthermore, to the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing shareholders. If the Company raises additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of its Common Shares and the terms of such debt could impose restrictions on its operations.

 

 7 
 

The Company’s business could fail if its principal executive officer, Nadav Elituv, is unable or unwilling to devote a sufficient amount of time to its business.

 

The responsibility of developing the Company’s core business, securing the financing necessary to fully execute its business plan and fulfilling the reporting requirements of a public company all fall upon the principal executive officer, In the event Mr. Elituv is unable or unwilling to fulfill any aspect of his duties, the Company may experience a shortfall or complete lack of revenue resulting in little or no profits and the eventual closure of its business, whereby you may lose your entire investment. The loss of Mr. Elituv would have a material adverse effect on the Company’s business.

 

The Company may fail to attract, train and retain skilled and qualified employees, which could impair its ability to generate revenue, effectively service its clients and execute its growth strategy.

 

The Company’s business depends in large part upon its ability to attract and retain sufficient numbers of highly qualified individuals. The Company competes for such qualified personnel with other companies and such competition is intense. Personnel with the requisites skills and qualifications may be in short supply or generally unavailable. If the Company is unable to recruit and retain a sufficient number of qualified employees, the Company’s ability to maintain and grow its business and to effectively service its clients could be limited and the Company’s future revenue and results of operations could be materially and adversely affected. Furthermore, to the extent that the Company is unable to make necessary permanent hires to appropriately service its clients, the Company could be required to engage larger numbers of contracted personnel, which could reduce its profit margins.

 

If the Company fails to successfully manage its new product development or if the Company fails to anticipate the issues associated with such development or expansion, its business may suffer.

 

The Company has only developed two applications. The Company’s ability to anticipate and manage a variety of issues associated with any new product development or market expansion, such as market acceptance and effective management of its applications and other products. The Company’s business would suffer if it fails to successfully anticipate and manage these issues associated with product development publishing and you may lose all or part of your investment.

 

If the Company cannot attract customers, it will not generate revenues and its business will fail.

 

The Company has not generated any profit. Going forward, the Company intends to generate revenues from its gocart.city application. The Company may not be able to successfully attract or maintain customers, resulting in its business failing. If the Company’s business fails, you will lose all or part of your investment.

 

The Company may encounter difficulties managing its planned growth, which would adversely affect its business and could result in increasing costs as well as a decrease in the Company’s stock price.

 

The Company intends to establish a customer base and develop new products for them. To manage the Company’s anticipated growth, the Company must continue to improve its operational and financial systems and expand, train, retain and manage its employee base to meet new opportunities. Because of the registration of the Company’s securities, it is subject to reporting and disclosure obligations, and the Company anticipates that it will hire additional finance and administrative personnel to address these obligations. In addition, the anticipated growth of the Company’s business will place a significant strain on its existing managerial and financial resources. If the Company cannot effectively manage its growth, its business may be harmed.

The recent global coronavirus outbreak could harm the Company’s business and results of operations.

 

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies, and financial markets globally, potentially leading to an economic downturn. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for the Company’s product and harm its business and results of operations. The Company’s business and the results of its operations may specifically be impacted by COVID-19 for a variety of reasons which include: (i) the lack of clarity around whether attendance at universities will be online or in-person; (ii) staff of the Company becoming infected with COVID-19, which is particularly acute considering that the Company currently has a small number of staff; and (iii) supply shortages, which are concerning for a smaller enterprise because of the competition for premium products.

 

 8 
 

It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations at this time. The Company continues to monitor these evolving risks. Global pandemics (like the COVID-19 pandemic) and other public health threats, or a fear thereof, could adversely impact the Company’s operations, sales efforts, lead to labour shortages, cause delayed performance of contractual obligations, impair the Company’s ability to raise funds, adversely affect the Company’s supply partners, contractors, customers and/or transportation carriers, cause fluctuations in the price and demand for the Company’s products, and severely impact supply chain logistics including travel and shipping disruptions and shutdowns (including as a result of government regulation and prevention measures) affecting procurement of foods and food related products and the delivery of such products by the Company to customers. Additionally, in the case of the Company’s Cuore Food service brand, which supplies food products to public restaurants and event planning companies, any closures or restrictions imposed on restaurants or public gatherings may adversely affect the Company as its customers may not require any product during such times. It is unknown whether and how the Company may be affected if such an occurrence persists for an extended period of time, but the Company anticipates that it could have a material adverse effect on its business, operating results and financial performance. In addition, the Company may also be required to incur additional expenses and/or delays relating to such events which could have a further negative impact on its business, operating results and financial performance.

 

The outbreak of COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global markets have experienced significant volatility and weakness. The duration and impact of the COVID-19 outbreak is unknown at this time. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its operating subsidiaries in future periods.

 

The Company’s business and results of operation have been and may continue to be adversely affected by the current outbreak of COVID-19, and by measures taken to prevent its spread, including restrictions on travel, imposition of quarantines, cancellation of events, remote working, and closure of workplaces and other businesses. The Company’s business and results of operations may also be negatively impacted by the adverse effect that COVID-19 has had and may continue to have on global economic activity, which may include a period of prolonged global or regional economic slowdowns or recessions. Specific risks to the Company’s business include:

 

•Uncertain consumer demand due to the impacts of the global pandemic on local economies as well as the global economy. While sales are mainly through the Company’s gocart.city platform, the Company may incur significant sales losses as overall customer demand and consumer spending may decline in response to COVID-19 and its related economic impacts.

 

•Restrictions to protect the safety of the Company’s customers and employees may limit both the number of customers it can serve and the volume of goods it is able to fulfill through its distribution points. More severe government-imposed restrictions, including restrictions and lockdowns, could further restrict the Company’s ability to service its customers.

 

•The Company may also face supply chain challenges if there are disruptions in service at its distribution points, suppliers, or logistics providers. Increased market demand for logistic providers may continue to increase the Company’s operating costs and/or limit its ability to fulfill sales.

 

•The Company’s method of delivering grocery items to customers through contactless delivery may continue to face challenges as employees’ comfort and exposure to COVID-19 may be heightened as waves of the virus continue to occur.

 

•The Company’s cost of operating its distribution points may continue to increase due to enhanced health and safety measures taken to protect its employees, including the increased costs of personal protective equipment and disinfectants.

 

•The competition to the Company from other similar businesses since COVID-19 has increased as more businesses have started to offer delivery of grocery items and meal kits. The Company also competes directly against other meal delivery companies, including both national brands and regional brands.

 

 9 
 
•The COVID-19 health crisis may negatively affect demand for the Company’s products from restaurants if there are further government-imposed restrictions on restaurants in response to a new wave of COVID-19 infections.

 

•Changes in prices of the Company’s products due to increased cost of sales could negatively affect the Company’s overall sale of product, resulting in decreased revenues in operations and expenses that could be incurred to ensure the protection of staff. In addition, modification of payment terms with key suppliers and the risk of key suppliers shifting focus to higher volume competitors of the Company could result in customers seeking other alternatives.

 

•As the COVID-19 pandemic continues for an extended period of time, it may negatively affect the price and availability of the Company’s grocery items and/or packaging materials and impact the Company’s supply chain.

 

The extent of the impact of COVID-19 is subject to change and is dependent on many factors, including the duration of the pandemic, the success and timing of the vaccination rollout, and the measures that may be implemented by, or that may be imposed upon, the Company, its customers and suppliers in response to the pandemic, and is therefore difficult to predict. COVID-19 could also impact the Company’s ability to attract capital to finance business strategies and also could increase its cost of borrowing.

 

Material weaknesses in the Company’s internal control over financial reporting may adversely affect its Common Shares.

 

As an SEC reporting company, the Company is subject to the reporting requirements of the Exchange Act and governance requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Exchange Act requires that the Company file annual, quarterly and current reports with respect to its business and financial condition, proxy statement, and other information. The Sarbanes-Oxley Act requires, among other things, that the Company establish and maintain effective disclosure controls and procedures and internal controls and procedures for financial reporting. Section 404 of the Sarbanes-Oxley Act requires that the Company include a report of management on its internal control over financial reporting in the Company’s annual report on Form 10-K. That report must contain an assessment by management of the effectiveness of the Company’s internal control over financial reporting and must include disclosure of any material weaknesses in internal control over financial reporting that the Company has identified. Effective internal control is necessary for the Company to provide reliable financial reports and prevent fraud. If the Company cannot provide reliable financial reports or prevent fraud, the Company may not be able to manage its business as effectively as it would if an effective control environment existed, and the Company’s business and reputation with investors may be harmed. As a result, the Company’s small size and any current internal control deficiencies may adversely affect its financial condition, results of operation and access to capital. The Company has not performed an in-depth analysis to determine if historical un-discovered failures of internal controls exist and may in the future discover areas of its internal control that need improvement. Any inability to report and file its financial results accurately and timely could harm the Company’s reputation and adversely impact the trading price of its Common Shares.

 

Failure to protect the Company’s proprietary technology and intellectual property rights could substantially harm its business and results of operations.

 

The Company’s success depends to a significant degree on its ability to protect its proprietary technology, methodologies, know-how and brand. The Company will rely on a combination of contractual restrictions, and other intellectual property laws and confidentiality procedures to establish and protect its proprietary rights. However, the steps the Company will take to protect its intellectual property may be inadequate. The Company will not be able to protect its intellectual property if it is unable to enforce its rights or if it does not detect unauthorized use of the Company’s intellectual property. If the Company fails to protect its intellectual property rights adequately, its competitors may gain access to the Company’s technology and its business may be harmed. In addition, defending its intellectual property rights might entail significant expense. The Company may be unable to prevent third parties from acquiring domain names or trademarks that are similar to, infringe upon, or diminish the value of the Company’s trademarks and other proprietary rights.

 

As the Company grows its business, the Company’s plan is to enter into confidentiality and invention assignment agreements with its employees and consultants and enter into confidentiality agreements with other parties. No assurance can be given that these agreements will be effective in controlling access to and distribution of the Company’s proprietary information. Further, these agreements may not prevent the Company’s competitors from independently developing technologies that are substantially equivalent or superior to it products.

 

In order to protect the Company’s intellectual property rights, it may be required to spend significant resources to monitor and protect its intellectual property rights. Litigation may be necessary in the future to enforce the Company’s intellectual property rights and to protect its trade secrets. Litigation brought to protect and enforce the Company’s intellectual property rights could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of the Company’s intellectual property. Further, the Company’s efforts to enforce its intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of the Company’s intellectual property rights. The Company’s inability to protect its proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of its management’s attention and resources, could delay further sales or the implementation of the Company’s products, impair the functionality of its products, delay introductions of new products, result in the Company substituting inferior or more costly technologies into its products, or injure the Company’s reputation.

 

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Product Safety and Security

 

The Company is subject to potential liabilities connected with its business operations, including potential liabilities and expenses associated with product defects, food safety and product handling, and related services. Such liabilities may arise in relation to the storage, distribution, display and dispensing of products. A large majority of the Company’s sales are generated from food products and it could be vulnerable in the event of a significant outbreak of food-borne illness or increased public health concerns in connection with certain food products. Such an event could materially affect the Company’s financial performance.

 

Supply Chain Disruptions Including Impacts of Climate Change

 

The Company is exposed to potential supply chain disruptions and errors that could result in obsolete merchandise or an excess or shortage of merchandise in its retail store network. The Company’s distribution and supply chain could be negatively impacted by over reliance on key vendors, consolidation of facilities, disruptions due to severe weather conditions, natural disasters, climate change driven disruptions or other catastrophic events, and failure to manage costs and inventories. A failure to develop competitive new products, deliver high-quality products and implement and maintain effective supplier selection and procurement practices could adversely affect the Company’s ability to deliver desired products to customers and adversely affect the Company’s ability to attract and retain customers, decreasing competitive advantage. A failure to maintain an efficient supply and logistics chain may adversely affect the Company’s ability to sustain and meet growth objectives and maintain margins.

 

Business Continuity

 

The Company may be subject to unexpected or critical events and natural hazards, including severe weather events, interruption of utilities and infrastructure or occurrence of pandemics, which could cause sudden or complete cessation of its day-to-day operations. The Company is currently preparing for future waves of COVID-19 along with other pandemics that could occur. However, no such plan can eliminate the risks associated with events of this magnitude. Any failure to respond effectively or appropriately to such events could adversely affect the Company’s operations, reputation and financial results.

 

Ethical Business Conduct

 

Any failure of the Company to adhere to its policies, the law or ethical business practices could significantly affect its reputation and brands and could therefore negatively impact the Company’s financial performance. The Company’s framework for managing ethical business conduct includes the adoption of a code of business conduct and ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and are required to acknowledge and agree to on a regular basis. There can be no assurance that these measures will be effective to prevent violations of law or unethical business practices.

 

The Company could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.

 

In recent years, there has been significant litigation involving patents and other intellectual property rights in the software industry. Companies providing software are increasingly bringing and becoming subject to suits alleging infringement of proprietary rights, particularly patent rights, and the Company faces a higher risk of being the subject of intellectual property infringement claims. The Company does not currently have a patent portfolio, which could prevent it from deterring patent infringement claims through its own patent portfolio, and the Company’s competitors and others may now and in the future have significantly larger and more mature patent portfolios than the Company has. The risk of patent litigation has been amplified by the increase in the number of a type of patent holder, which the Company refers to as a non-practicing entity, whose sole business is to assert such claims and against whom its own intellectual property portfolio may provide little deterrent value. The Company could incur substantial costs in prosecuting or defending any intellectual property litigation. If the Company sues to enforce its rights or is sued by a third party that claims that the Company’s solution infringes its rights, the litigation could be expensive and could divert its management resources. As of the date of this Prospectus, the Company has not received any written notice of an infringement claim, invitation to license, or other intellectual property infringement action.

 

Any intellectual property litigation to which the Company might become a party, or for which it is required to provide indemnification, may require the Company to do one or more of the following:

 

●Cease selling or using products that incorporate the intellectual property that the Company allegedly infringe;
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●Make substantial payments for legal fees, settlement payments or other costs or damages;
●Obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or
●Redesign the allegedly infringing products to avoid infringement, which could be costly, time-consuming or impossible.

 

If the Company is required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement claims against it or any obligation to indemnify its customers for such claims, such payments or actions could harm the Company’s business.

 

The Company’s failure to protect personal information adequately and breaches in cyber security and data protection could have an adverse effect on its business.

 

A wide variety of provincial, state, national, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny as well as escalating levels of enforcement and sanctions. Any actual or perceived loss, improper retention or misuse of certain information or alleged violations of laws and regulations relating to privacy, data protection and data security, and any relevant claims, could result in enforcement action against the Company, including fines, imprisonment of company officials and public censure, claims for damages by customers and other affected individuals, damage to the Company’s reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have an adverse effect on the Company’s operations, financial performance, and business. Evolving and changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere, especially relating to classification of IP addresses, machine identification, location data, and other information, may limit or inhibit the Company’s ability to operate or expand its business, including limiting strategic partnerships that may involve the sharing of data. Any perception of privacy or security concerns or an inability to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, may result in additional cost and liability to the Company, harm its reputation and inhibit adoption of its products by current and future customers, and adversely affect the Company’s business, financial condition, and operating results.

 

The Company has implemented and maintained security measures intended to protect personally identifiable information. However, the Company’s security measures remain vulnerable to various threats posed by hackers and criminals. If the Company’s security measures are overcome and any personally identifiable information that the Company collect or store becomes subject to unauthorized access, it may be required to comply with costly and burdensome breach notification obligations. The Company may also be subject to investigations, enforcement actions and private lawsuits. In addition, any data security incident is likely to generate negative publicity and have a negative effect on the Company’s business.

 

Limitations of Director Liability and Indemnification of Directors and Officers and Employees.

 

The Company’s certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:

 

●Breach of their duty of loyalty to the Company or its shareholders;
●Act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
●Unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or
●Transactions for which the directors derived an improper personal benefit.

 

These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission. The Company’s bylaws provide that it will indemnify its directors, officers and employees to the fullest extent permitted by law. The Company’s bylaws also provide that the Company is obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. The Company believes that these bylaw provisions are necessary to attract and retain qualified persons as directors and officers. The limitation of liability in the Company’s certificate of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might provide a benefit to the Company and its shareholders. The Company’s results of operations and financial condition may be harmed to the extent it pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

 

Limitation on remedies and indemnification.

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The Company’s certificate of incorporation, as amended from time to time, provides that officers, directors, employees and other agents and their affiliates shall only be liable to the Company and its shareholders for losses, judgments, liabilities and expenses that result from the fraud or other breach of fiduciary obligations. Additionally, the Company intends to enter into corporate indemnification agreements with each of its officers and directors consistent with industry practice. Thus, certain alleged errors or omissions might not be actionable by the Company. The Company’s governing instruments also provide that, under the broadest circumstances allowed under law, the Company must indemnify its officers, directors, employees and other agents and their affiliates for losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by them in connection with the Company, including liabilities under applicable securities laws.

 

Uncertainty of Use of Available Funds

 

Although the Company has set out its intended use of available funds, these intended uses are estimates only and subject to change. While management does not contemplate any material variation, management does retain broad discretion in the application of such proceeds. The failure by the Company to apply these funds effectively could have a material adverse effect on the Company's business, including the Company's ability to achieve its stated business objectives.

 

Legal, Taxation and Accounting

 

Changes to any of the various federal and provincial laws, rules and regulations related to the Company’s business could have a material impact on its financial results. Compliance with any proposed changes could also result in significant cost to the Company. Failure to fully comply with various laws and rules and regulations may expose the Company to proceedings which may materially affect its performance.

Similarly, income tax regulations and/or accounting pronouncements may be changed in ways which could negatively affect the Company. The Company mitigates the risk of non-compliance with the various laws and rules and regulations by monitoring for newly adopted activities, improving technology systems and controls, improving internal controls to detect and prevent errors and overall application of more scrutiny to ensure compliance. In the ordinary course of business, the Company is subject to ongoing audits by tax authorities. While the Company believes that its tax filing positions are appropriate and supportable, from time to time certain matters are reviewed and challenged by the tax authorities.

 

Dependence on key management personnel and outside contractors

 

As indicated in “Employees and Specialized Skill and Knowledge”, the Company heavily relies on its officers and directors, as well as its professional advisors. The loss of their services may have a material adverse effect on the Company and its future prospects. There can be no assurance that any one or all of the officers and directors of, and contractors engaged by, the Company will continue in the employ of, or in a consulting capacity to, the Company or that they will not set up competing businesses or accept positions with competitors.

 

The Company is dependent upon the continued support and involvement of a number of key management personnel and outside contractors. Investors must be willing to rely to a significant extent on management’s discretion and judgment, as well as the expertise and competence of outside contractors. The Company does not have in place formal programs for succession and training of management. The loss of one or more of these key employees or contractors, if not replaced, could adversely affect the Company’s business, results of operations and financial condition.

 

The number of persons skilled in handling food allergies and common food service practices is limited and competition for such persons can be high. As the Company’s business activity grows, the Company will require additional qualified personnel, key financial and administrative personnel as well as additional staff. There is no assurance that the Company will be successful in attracting, training and retaining qualified personnel as competition for persons with these skill sets increases. If the Company is not successful in attracting, training and retaining qualified personnel, the efficiency of its store operations could be impaired, which could have an adverse impact on its results of operations and financial condition.

 

Risks Related to the Company’s Common Shares

 

The Company has the ability to issue additional shares of its Common Shares and shares of preferred stock without asking for shareholder approval, which could cause investments to be diluted.

 

The Company’s certificate of incorporation authorizes the Board of Directors to issue up to twelve billion Common Shares and up to one million shares of “blank check” preferred stock. The power of the Board of Directors to issue Common Shares, preferred stock or warrants or options to purchase Common Shares or preferred stock is generally not subject to shareholder approval. Accordingly, any

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additional issuance of the Company’s Common Shares, or preferred stock that may be convertible into Common Shares, may have the effect of diluting an investment, and the new securities may have rights, preferences and privileges senior to those of the Company’s Common Shares.

 

Substantial sales of the Company’s stock may impact the market price of its Common Shares.

 

Future sales of substantial amounts of the Company’s Common Shares, including shares that it may issue upon exercise of options and warrants, could adversely affect the market price of the Company’s Common Shares. Further, if the Company raises additional funds through the issuance of Common Shares or securities convertible into or exercisable for Common Shares, the percentage ownership of the Company’s shareholders will be reduced, and the price of its Common Shares may fall.

 

The Company’s Common Shares is thinly traded, and investors may be unable to sell some or all of their shares at the price they would like, or at all, and sales of large blocks of shares may depress the price of the Company’s Common Shares.

 

The Company’s Common Shares has historically been sporadically or thinly-traded, meaning that the number of persons interested in purchasing shares of the Company’s Common Shares at prevailing prices at any given time may be relatively small or nonexistent. As a consequence, there may be periods of several days or more when trading activity in shares of its Common Shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.

 

This could lead to wide fluctuations in the Company’s share price. Investors may be unable to sell their Common Shares at or above their purchase price, which may result in substantial losses. Also, as a consequence of this lack of liquidity, the trading of relatively small quantities of shares by the Company’s shareholders may disproportionately influence the price of shares of the Company’s Common Shares in either direction. The price of shares of the Company’s Common Shares could, for example, decline precipitously in the event a large number of shares of its Common Shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price.

 

The Company does not intend to pay any cash dividends on its Common Shares in the near future, so its shareholders will not be able to receive a return on their shares unless they sell their shares.

 

The Company intends to retain any future earnings to finance the development and expansion of its business. The Company does not anticipate paying any cash dividends on its Common Shares in the foreseeable future. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless the Company pays dividends, the Company’s shareholders will not be able to receive a return on their shares unless they sell such shares.

 

Penny stock rules may make buying or selling the Company’s securities difficult which may make its stock less liquid and make it harder for investors to buy and sell the Company’s shares.

 

Trading in the Company’s securities is subject to the SEC’s penny stock rules and it is anticipated that trading in the Company’s securities will continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends the Company’s securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from recommending transactions in the Company’s securities, which could severely limit the liquidity of the Company’s securities and consequently adversely affect the market price for its securities.

 

The Financial Industry Regulatory Authority (FINRA) sales practice requirements may also limit a shareholder’s ability to buy and sell the Company’s Common Shares.

 

In addition to the penny stock rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy the Company’s Common Shares, which may limit your ability to buy and sell the Company’s Common Shares and have an adverse effect on the market for shares of its Common Shares.

 

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The preparation of the Company’s consolidated financial statements involves the use of estimates, judgments and assumptions, and the Company’s consolidated financial statements may be materially affected if such estimates, judgments or assumptions prove to be inaccurate.

 

Financial statements prepared in accordance with accounting principles generally accepted in the U.S. GAAP typically require the use of estimates, judgments and assumptions that affect the reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. Significant areas of accounting requiring the application of management’s judgment include, but are not limited to, determining the fair value of assets and the timing and amount of cash flows from assets. These estimates, judgments and assumptions are inherently uncertain and, if the Company’s estimates were to prove to be wrong, the Company would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes could harm the Company’s business, including its financial condition and results of operations and the price of its securities.

 

See “Appendix A – Financial Statements and MD&A – Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that the Company believes are the most critical to an understanding of its consolidated financial statements and its business.

 

If securities industry analysts do not publish research reports on the Company, or publish unfavorable reports on the Company, then the market price and market trading volume of the Company’s Common Shares could be negatively affected.

 

Any trading market for the Company’s Common Shares will be influenced in part by any research reports that securities industry analysts publish about it. The Company does not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of the Company, the market price and market trading volume of its Common Shares could be negatively affected. In the event the Company are covered by analysts, and one or more of such analysts downgrade the Company’s securities, or otherwise reports on it unfavorably, or discontinues coverage or us, the market price and market trading volume of the Company’s Common Shares could be negatively affected.

 

The Company’s stock price is likely to be highly volatile because of several factors, including a limited public float.

 

The market price of the Company’s Common Shares has been volatile in the past and the market price of its Common Shares is likely to be highly volatile in the future. You may not be able to resell shares of the Company’s Common Shares following periods of volatility because of the market’s adverse reaction to volatility.

 

Other factors that could cause such volatility may include, among other things:

 

●Actual or anticipated fluctuations in the Company’s operating results;
●The absence of securities analysts covering the Company and distributing research and recommendations about the Company;
●The Company may have a low trading volume for a number of reasons, including that a large portion of its stock is closely held;
●Overall stock market fluctuations;
●Announcements concerning the Company’s business or those of its competitors;
●Actual or perceived limitations on the Company’s ability to raise capital when the Company requires it, and to raise such capital on favorable terms;
●Conditions or trends in the industry;
●Litigation;
●Changes in market valuations of other similar companies;
●Future sales of Common Shares;
●Departure of key personnel or failure to hire key personnel; and
●General market conditions.

 

Any of these factors could have a significant and adverse impact on the market price of the Company’s Common Shares and/or warrants. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the Company’s Common Shares and/or warrants, regardless of its actual operating performance.

 

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SRAX may sell a large number of shares, resulting in substantial diminution to the value of shares held by existing shareholders.

 

Pursuant to the non-redeemable convertible notes and Series C Convertible Preferred Stock, the Company is prohibited from delivering a conversion notice to SRAX to the extent that the issuance of shares would cause SRAX to beneficially own more than 4.99% of the Company’s then-outstanding Common Shares. These restrictions; however, do not prevent SRAX from selling Common Shares received in connection with the non-redeemable convertible notes and Series C Convertible Preferred Stock and then receiving additional Common Shares in connection with a subsequent issuance. In this way, SRAX could sell more than 4.99% of the outstanding Common Shares in a relatively short time frame while never holding more than 4.99% at any one time. As a result, existing shareholders and new investors could experience substantial diminution in the value of their Common Shares. Additionally, the Company does not have the right to control the timing and amount of any sales by SRAX of the shares issued under the non-redeemable convertible notes and Series C Convertible Preferred Stock.

 

Certain provisions of the General Corporation Law of the State of Delaware may have anti-takeover effects, which may make an acquisition of the Company by another company more difficult.

 

The Company is subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in any business combination, including mergers and asset sales, with an interested shareholder (generally, a 15% or greater shareholder) for a period of three years after the date of the transaction in which the person became an interested shareholder, unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of the Company’s Common Shares might consider in its best interest.

 

Provisions of the Company’s certificate of incorporation and bylaws may delay or prevent a takeover which may not be in the best interests of the Company’s shareholders.

 

Provisions of the Company’s certificate of incorporation and its bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of the Company’s shareholders may be called, and may delay, defer or prevent a takeover attempt. Further, the Company’s certificate of incorporation, as amended, authorizes the issuance of up to one million (1,000,000) shares of preferred stock with such rights and preferences as may be determined from time to time by the Company’s board of directors in their sole discretion. The Company’s board of directors may, without shareholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the Company’s Common Shares.

 

Substantial Number of Authorized but Unissued Shares

 

The Company has twelve billion (12,000,000,000) Common Shares that may be issued by the Board without further action or approval of the Company's shareholders. 193,226,548 of those Common Shares are currently issued and outstanding. While the Board is required to fulfill its fiduciary obligations in connection with the issuance of such shares, the shares may be issued in transactions with which not all shareholders agree, and the issuance of such shares will cause dilution to the ownership interests of the Company's shareholders.

 

Dilution

 

Future sales or issuances of equity securities could decrease the value of the Common Shares, dilute shareholders' voting power and reduce future potential earnings per Common Share. The Company intends to sell additional equity securities in subsequent offerings (including through the sale of securities convertible into Common Shares) and may issue additional equity securities to finance its operations, development, acquisition or other projects. Substantial additional financing may be required by the Company. The Company cannot predict the size of future sales and issuances of equity securities or the effect, if any, that future sales and issuances of equity securities will have on the market price of the Common Shares. Sales or issuances of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market prices for the Common Shares. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and may experience dilution in the Company’s earnings per Common Share.

 

As a result of any of these factors, the market price of the Common Shares at any given point in time may not accurately reflect the long-term value of the Company. Securities class-action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources.

 

Equity Compensation

 

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The Company has historically, to a significant extent, compensated employees, contractors and service providers with equity compensation to the extent practicable. The Company may face difficulties in the future engaging service providers, consultants or employees who are willing to be compensated with equity of the Company rather than cash, which could result in a material adverse impact on the Company and its business in the future. Additionally, compensation in the form of equity of the Company will result in current shareholders of the Company suffering dilution of their voting power, and experiencing potential dilution in the Company’s earnings per Common Share.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None

 

ITEM 2. PROPERTIES.

 

Our executive offices are located at 1035 Queensway East, Mississauga, Ontario, Canada L4Y 4C1. We rent month to month. Current rent for two locations is $5,400 CAD per month.

 

We believe that these facilities are adequate for our current and near-term future needs.

 

ITEM 3. LEGAL PROCEEDINGS

 

We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to temporary employee staffing business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general] claims. We will accrue for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

 

ITEM 4. MINE SAFETY DISCLOSURE.

 

Not applicable.

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AN ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market

 

Our common stock currently trades on the OTC Pinks under the symbol “TWOH” and the closing bid price of our common stock on March 23, 2023 was $0.0013. Our common stock currently trades on a sporadic and limited basis.

 

Record Holders

 

The number of record holders of our common stock as of March 23, 2023 was approximately 51, not including nominees of beneficial owners.

 

Cash Dividends

 

As of the date of this Report, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, the general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

 

Transfer Agent

 

The transfer agent and registrar, for our common stock and Series A Convertible Preferred Stock is Transhare Corporation. The transfer agent’s address is 17755 US Highway 19 N Ste 140, Clearwater, FL 33764 and its telephone number is (303) 662-1112.

 

Options and Warrants

 

On October 1, 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “2021 Plan”) to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company's business. Pursuant to the 2020 Plan, the Board may grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units. to eligible persons. The maximum aggregate number of shares of common stock with respect to which awards granted under the Plan shall not exceed 200,000,000. At December 31, 2022, there are 0 shares of common stock available under the 2021 Plan.

 

Anti-takeover Provisions

 

Summarized in the following paragraphs are provisions included in our Certificate of Incorporation, as amended, and our Bylaws that may have the effect of discouraging, delaying or preventing a change in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by our stockholders.

 

  ·

Effects of authorized but unissued common stock and blank check preferred stock. One of the effects of the existence of authorized but unissued common stock and undesignated preferred stock may be to enable our Board to make more difficult or to discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If the Board were to determine that a takeover proposal was not in our best interest, such shares could be issued by the Board without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.

 

In addition, our Certificate of Incorporation, as amended, grants our Board broad power to establish the rights and preferences of authorized and unissued shares of additional series of preferred stock. The creation and issuance of one or more additional series of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of those holders and may have the effect of delaying, deterring or preventing a change in control of our company.

 

 18 
 

 

  · Cumulative Voting. Our Certificate of Incorporation, as amended, does not provide for cumulative voting in the election of directors which would allow holders of less than a majority of the voting stock to elect some directors.

 

  · Vacancies. Section 223 of the Delaware General Corporation Law and our bylaws provide that all vacancies, including newly created directorships, may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.

 

  · Special Meeting of Stockholders. A special meeting of stockholders may be called by our Board or the Chairman of our Board and must be called by our Secretary at the request in writing of holders of record of a majority of our outstanding capital stock entitled to vote. The requirement that a majority of our outstanding capital stock is required to call a special meeting means that small stockholders will not have the power to call a special meeting to, for example, elect new directors.

 

  · Bylaws. Our bylaws authorize the board of directors to adopt, repeal, alter or amend our bylaws without shareholder approval.

 

  · Removal. Except as otherwise provided, a director may be removed from office with or without cause at any special meeting of stockholders by the affirmative vote of at least a majority of the voting power and outstanding stock entitled to vote.

 

RECENT SALES OF UNREGISTERED SECURITIES

 

During the quarter ended December 31, 2022, the Company issued the following unregistered securities.

 

  ● Issued 5,000,000 shares of common stock, with a fair value of $62,500, for the settlement of non-redeemable convertible notes.
 

 ITEM 6. [RESERVED].

 

 

 19 
 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.

 

The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.

 

The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.

 

In July 2021, the Company made the strategic decision to focus exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services. All three of such branches of the Company’s business share industry standard warehouse storage space and inventory. The Company’s inventory is updated continuously and generally consists of produce, meats, pantry items, bakery & pastry goods, gluten-free goods, and organic items, acquired from various different suppliers in Canada and internationally, with whom the Company and its principals have cultivated long-term relationships.

 

gocart.city

gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered. The gocart.city online platform stores all inventory in the Company’s warehouse located at its head office in Mississauga. The aim of gocart.city is to deliver fresh and high-quality food products directly to retail consumers throughout Southern Ontario. The Company recently engaged local renowned chef, Grace DiFede, to curate a new line of meal kits and bundles to sell on the gocart.city platform alongside the Company’s other grocery essentials.

 

The gocart.city platform is available online and through applications for handheld devices supporting iOS or Android. The features and functions of gocart.city include customers having the ability to search for products by category and name, customers saving items in their cart and being able to share their cart with others, and being able to opt-in to digital weekly alerts that provide information on promotions and discounts on certain products. gocart.city also includes standard payment options for customers, such as PayPal, American Express and Visa.

 

The Company also employs a social media manager to oversee and increase engagement with customers by using platforms such as Facebook, Twitter, Instagram and Google. The ads that are posted on these platforms are generic branding related to the Company, as well as the promotion of particular sale items. Moreover, the Company has agreements with SRAX, Inc. and Adfuel Media Inc. to boost such engagement.

 

Grocery Originals

Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse. Grocery Originals was originally intended for curbside pickup but has expanded into a full service store, that includes a deli, cold storage, a stone pizza oven, and offering a wide variety of fresh and specialty meals curated by Grace Di Fede.

 

Cuore Food Services

Cuore Food Services is the Company’s wholesale food distribution branch. Cuore Food Services uses inventory from the Company’s warehouse as well as inventory it acquires on an ad hoc basis, and focuses on bulk delivery of goods to food service business such as restaurants, hotels, event planning/hosting businesses. Orders distributed through Cuore Food Services can be made over the phone or online through a different front-end of the gocart.city platform.

 

The operations of the business are carried on by Two Hands Canada Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.

 

Management's Plan of Operation

 

The Company is focused exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services.

 

The performance of the Company’s business during the COVID-19 pandemic illustrates the flexibility of its model as the Company was able to meet heightened demand with an assortment of products that met customer preferences. The Company is still early-on in its development but sees a highly scalable business with lower corporate fixed costs, providing protection in the event of an economic downturn.

 20 
 

Products and Services

 

The Company plans to continue to expand it reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods.

 

Mobile Application

 

V2 of the gocart.city mobile application will be a subsequent release. The Company plans to further expand the features of the mobile application. Following the completion of V2 of the mobile application, the Company will consider user behaviour and plans to expand the functionality and features of the mobile application on an on-going basis going forward.

 

Operations and Logistics

 

The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.

 

Sales and Marketing

 

The Company plans on utilizing and leveraging its agreement with SRAX, Inc. and Adfuel Media Inc. to market its grocery delivery application and services and expand its footprint in the Ontario region and beyond as its customer base grows.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, inventories, impairment of long-term assets, stock-based compensation, derivatives, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.

 

We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the Financial Statements:

 

STOCK-BASED COMPENSATION

 

The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.

 

DERIVATIVE LIABILITY

 

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Paragraph 815-15-25-1 the conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.

 

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. 

 

The Company follows ASC Section 815-40-15 (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.

 

 21 
 

The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. 

 

The Company utilizes the binomial option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The binomial option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the remaining contractual term of the instrument granted.

 

REVENUE RECOGNITION

 

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2014. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

 

Sales, Cost of goods sold, Gross profit:

 

   Years ended December 31  Change
  

2022

$

 

2021

$

  $  %
Sales   731,302    930,096    (198,794)   (21)
Cost of goods sold   682,109    832,816    (150,707)   (18)
Gross profit   49,193    97,280    (48,087)   (49)
Gross profit %   6.7%   10.5%          

 

Breakdown of sales by branch:

 

   Years ended December 31  Change
  

2022

$

 

2021

$

  $  %
gocart.city – online delivery   142,571    161,707    (19,136)   (12)
Grocery Originals and Cuore Food Service – retail and wholesale distribution   588,731    768,389    (179,658)   (23)
Other        —      —      —   
Total sales   731,302    930,096    (198,794)   (21)
 22 
 

 

The gocart.city grocery delivery application was released in early June 2020 and gocart.city wholesale commenced sale of dry goods and produce to other businesses in July 2020. Our gross profit is less than expected due to the expiry and write-off of inventory during the year ended December 31, 2022. We have carefully reviewed our inventory and do not expect further significant write-offs for expired inventory during 2023. We expect our gross profit to increase to 15% by March 31, 2023 as we reduce coupons to obtain new customers.

 

Operating expenses:

   Years ended December 31  Change
  

2022

$

 

2021

$

  $  %
Salaries and benefits   13,760,381    400,676    13,359,705    3,334 
Occupancy expense   92,276    63,570    28,706    45 
Advertising and travel   85,097    108,929    (23,832)   (22)
Auto expenses   45,077    52,459    (7,382)   (14)
Consulting   3,321,657    2,354,036    967,621    41 
Depreciation and Amortization   5,307    1,898    3,409    180 
Design   —      14,708    (14,708)   (100)
Bad Debt   112,822    —      112,822      
Office and general expenses   140,515    115,627    24,888    22 
Professional fees   222,498    155,376    67,122    43 
Freight and Delivery   59,697    —      59,697      
Total operating expenses   17,845,327    3,267,279    14,578,048    443 

 

Our total operating expenses for the year ended December 31, 2022 was $17,845,327, compared to $3,267,279 for the year ended December 31, 2021, respectively. The increase in total operating expense is primarily due to an increase in stock-based compensation paid to officers, directors and consultants.

 

Total operating expense includes stock-based compensation for the year ended December 31, 2022 and 2021 which comprises of 0 and 240,500 shares of common stock issued valued at $0 and $810,000, respectively for consulting services.

 

Total operating expense also includes stock-based compensation for the year ended December 31, 2022 and 2021 which comprises of 90,000,000 and 47,000 shares of common stock issued valued at $13,500,000, and $123,350, respectively, for salaries and compensation for our officers and directors.

 

Salaries and benefits for the year ended December 31, 2022, comprise primarily of stock issued to Nadav Elituv, our Chief Executive Officer with a fair value of $13,504,200.

 

Salaries and benefits for the year ended December 31, 2021, include stock issued to officers and directors with a fair value of $223,850 and accrued but unpaid salary to Nadav Elituv, our Chief Executive Officer, of $129,600.

 

Advertising and travel includes expenses for online advertising, website, meals and entertainment.

 

For the year ended December 31, 2022, consulting comprises primarily stock-based compensation expense (i) $454,108 for the expenditure of advertising credits with SRAX, Inc. (ii) $2,398,569 for the write-off of advertising credits with SRAX, Inc. (iii) $152,466 for consulting fees and (iv) $316,514 paid to contractors to manage our grocery business. On June 30, 2022, the Company agree to issue 80,000 shares of Series C Convertible Preferred Stock with a fair value of $2,288,000 ($28.60 per share) for a one-year subscription with SRAX, Inc. to an online marketing platform to support the gocart.city grocery delivery application. During the three months September 30, 2022, SRAX Inc. had apparent operational issues which prevented the Company from using its prepaid advertising credits. These prepaid advertising credits had a carrying value of $2,436,811 at September 30, 2022. During the three months ended December 31, 2022, the Company received advertising services valued at $38,242 from SRAX, Inc. Given the apparent operational issues at SRAX, Inc., the Company believes at December 31, 2022, it is not probable that future material services will be received from SRAX, Inc. Therefore, the remaining prepaid advertising balance was expensed in 2022.

 

For the year ended December 31, 2021, consulting comprises primarily stock-based compensation expense (i) $1,065,818 for the expenditure of advertising credits with SRAX, Inc. (ii) $532,500 for consulting fees and (iii) $540,000 paid to contractors to manage our grocery business. On June 24, 2021, the Company agreed to issue 10,000 shares of Series C Convertible Preferred Stock with a fair value of $1,153,571 ($115.35 per share) for a one-year subscription with SRAX, Inc. to an online marketing platform to support the gocart.city grocery delivery application.

 

 23 
 

Professional fees comprise of audit, legal, filing fees and contract accountant. The increase in professional fees is primarily due to legal fees related to the prospectus dated April 21, 2022 filed with Ontario Securities Commission and British Columbia Securities Commission and our listing application with the Canadian Securities Exchange.

 

 

Other income (expense):

   Years ended December 31  Change
  

2022

$

 

2021

$

  $  %
Amortization of debt discount and interest expense   (131,828)   (357,213)   225,385    (63)
Loss on settlement of debt   (3,668,750)   (12,890,764)   9,444,014    (72)
Initial derivative expense   (36,521)   (126,322)   89,801    (71)
Change in fair value of derivative liabilities   (59,878)   208,261    (268,139)   (129)
Total operating expenses   (3,896,977)   (13,166,038)   9,269,060    (70)

 

Amortization of debt discount and interest expense for the year ended December 31, 2022 was $131,828, compared to $357,213 for the year ended December 31, 2021. Amortization of debt discount and interest expense relates to the issuance of non-redeemable convertible notes, convertible notes and promissory notes.

 

During the years ended December 31, 2022 and 2021, the Company elected to convert $103,640 and $516,404 of principal and interest of a non-redeemable convertible note into 27,410,000 and 4,552,595 shares of common stock of the Company resulting in a loss on settlement of debt of $3,668,750 and $12,811,303, respectively.

 

During the years ended December 31, 2022 and 2021, the holders of the convertible notes also elected to convert 0 shares and 214,329 shares of the Company with a fair value of $0 and $552,435 resulting in a loss on settlement of debt of $0 and $79,460, respectively.

 

Initial derivative expense of $36,521 for the year ended December 31, 2022 represents the difference between the fair value of the total embedded derivative liability of $186,521 and the cash received of $150,000 for the Series E Stock issued on October 6, 2022.

 

Initial derivative expense of $126,322 for the year ended December 31, 2021 represents the difference between the fair value of the total embedded derivative liability of $351,322 and the cash received of $225,000 for the convertible notes issued on February 23, 2021 and May 27, 2021.

 

During the year ended December 31, 2022 and 2021, the gain (loss) due to the change in fair value of derivative liabilities was $(59,878) and $208,261, respectively.

 

Net loss for the period:

   Years ended December 31  Change
  

2022

$

 

2021

$

  $  %
Net loss for the period   (21,693,111)   (16,336,037)   (5,357,074)   32 

 

Our net loss for year ended December 31, 2022 was $21,693,111, compared to $16,336,037 for the year ended December 31, 2021, respectively. Our losses during the years ended December 31, 2022 and 2021 are primarily due to costs associated with professional fees, our transfer agent, investor relations, stock-based compensation paid to officers, directors and consultants, write-off of remaining prepaid advertising credits, loss on settlement of debt and the issuance of a convertible notes.

 

QUARTERLY RESULTS OF OPERATIONS

 

The following is a summary of selected quarterly information that has been derived from the financial statements of the Company. This summary should be read in conjunction with the consolidated financial statements of the Company.

 

 24 
 

Quarter Ended 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

Sales  $168,790   $172,782   $190,691   $199,039   $324,748   $241,417   $174,774   $189,157 
Gross profit  $21,299   $13,659   $(6,278)  $20,514   $19,117   $39,808   $19,808   $18,547 
Operating expenses  $(2,759,699   $(304,452)  $(14,021,263)  $(759,913)  $(1,270,225)  $(693,259)  $(446,806)  $(856,989)
Other income (expense)  $(194,173)  $(768,587)  $(2,320,020)  $(614,198)  $(2,155,703)  $(7,397,246)  $(1,560,110)  $(2,052,979)
Net loss for the period  $(2,932,573)  $(1,059,380)  $(16,347,561)  $(1,353,597)  $(3,406,811)  $(8,050,697)  $(1,987,108)  $(2,891,421)
Basic and diluted net loss per share  $(0.02)  $(0.01)  $(0.18)  $(0.20)  $(0.63)  $(2.68)  $(1.26)  $(2.99)

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

For the year ended December 31, 2022

 

Cash flows used in operating activities

 

   Year ended December 31  Change
  

2022

$

 

2021

$

  $  %
Net cash used in operating activities   (840,745)   (557,873)   (282,872)   51 

 

Our net cash used in operating activities for the year ended December 31, 2022 and 2021 is $840,745 and $557,873, respectively. Our net loss for the year ended December 31, 2022 of $21,693,111 was the main contributing factor for our negative cash flow. We were able to mostly offset the cash used in operating activities by using our stock to pay for expenses such as amortization of prepaid expense of $3,020,527, stock-based compensation of $13,504,200, amortization of debt discount of $131,828, loss on debt settlement of $3,668,750 and initial derivative expense of $36,521.

 

Cash flows used in investing activities

 

   Year ended December 31  Change
  

2022

$

 

2021

$

  $  %
Net cash used in investing activities   (10,749)   (5,425)   (5,324)   98 

 

Our net cash (used in) provided by investing activities for the year ended December 31, 2022 and 2021 is ($10,749) and ($5,425), respectively. Our investing activities are purchases of a vehicle and computer and office equipment.

 

Cash flows from financing activities

 

   Year ended December 31  Change
   2022
$		  2021$  $  %
Net cash from financing activities   350,194    1,072,408    (722,214)   (67)

 

 

Our net cash provided by financing activities for the year ended December 31, 2022 and 2021 is $350,194 and $1,072,408, respectively.

 

In 2022, the Company received $302,680 (CAD $393,500) in cash from its line of credit with The Cellular Connection Ltd. dated April 14, 2022. In 2021, cash from financing activities is primarily due to the issuance of 40,000 shares of Series D Stock for $789,006 in cash and issuance of convertible notes for $225,000.

 

As of December 31, 2022, we had cash of $17,137, working capital (deficiency) of $(591,376) and total liabilities of $1,924,171.

 

 

 

 

 

 25 
 

Our working capital as of December 31, 2022 and 2021 is as follows:

 

   December 31, 2022  December 31, 2021
Current assets  $193,097   $1,608,848 
Current liabilities   784,473    552,998 
Working capital (Deficiency)  $(591,376)  $1,055,850 

 

The Company is continuing to focus improving cash flows from operations by reducing incentives to customers, by making purchases from different suppliers, accelerating the collection of accounts receivable, managing accounts payable balances and by paying our officers, directors, consultants and staff with our stock.

 

The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended December 31, 2022, the Company incurred a net loss of $21,693,111 and used cash in operating activities of $840,745 and on December 31, 2022, had stockholders’ deficit of $4,638,208. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ended December 31, 2022, expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

 

Over the next 12 months we expect to expend approximately $268,000 in cash for legal, accounting and related services and to implement our business plan. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts.

 

   Cash Required to Implement of Business Plan
General and Administration  $268,000 
Total Estimated Cash Expenditures  $268,000 

 

On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD $235,137 (CAD $750,000 available on the Line of Credit less CAD $514,863 of funds drawn and outstanding at March 23, 2023) in principal. If required, we expect to be able to secure additional capital through advances from our Chief Executive Officer, note holders, shareholders and others in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees, however, we do not have any written or oral agreements with any other third parties which require them to fund our operations. Although there can be no assurances that we will be able to obtain such funds in the future, the Company has been able to secure financing to continue operations since its inception on April 3, 2009. We are currently quoted on OTC Pink.. If we need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.

 

The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for developing products and services, or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.

 

Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”

 

 

 

 

 

 

 

 

 26 
 

Commitments for future capital expenditures at December 31, 2022 is as follows:

 

   Payments Due by Period
Contractual obligations  Total
$		  Less than 1 year
$		  1 - 3 years
$		  4 – 5 years
$		  After 5 years
$
Accounts payable and accrued liabilities   555,220    555,220    —      —      —   
Debt   805,785    198,916    606,869    —      —   
Deferred revenue   22,107    22,107    —      —      —   
Non-redeemable convertible notes   517,621    —      517,621    —      —   
Financial lease Obligations   —      —      —      —      —   
Operating leases(1)   23,438    8,230    15,208    —      —   
Purchase obligations   —      —      —      —      —   
Total contractual obligations   1,924,171    784,473    1,139,698    —      —   

 

Notes:

(1)Leases for retail space, equipment and warehousing is currently month to month. Deliveries are currently outsourced.

 

OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS

 

We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to up to CAD $356,500 (CAD $750,000 available on the Line of Credit less CAD $393,500 of funds drawn and outstanding at December 31, 2022) in principal. We believe our current cash balance and the Line of Credit is sufficient to fund our operations during the next 12 months The loans from our Chief Executive Officer, note holders, shareholders and others are unsecured and non-interest bearing and have no set terms of repayment. Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”

 

RELATED PARTY TRANSACTIONS

 

Years ended December 31, 2022 and 2021

 

Due to Related Party

 

As of December 31, 2022 and 2021, advances and accrued salary of $185,473 and $39,985, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment. During the year ended December 31, 2022, the Company issued advances due to related party for $167,438 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $127,616 in cash. In addition, the Company accrued salary of $195,551 due to Nadav Elituv for the year ended December 31, 2022 and issued a promissory note for $85,285 to settle due to related party.

 

During the year ended December 31, 2021, the Company issued advances due to related party for $135,378 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $127,375 in cash. In addition, the Company accrued salary of $165,046 due to Nadav Elituv for the year ended December 31, 2021, issued shares of Series A Convertible Preferred Stock with a fair value of $222,317 to settled accrued salary due and issued a promissory note for $19,572 to settle due to related party.

 

Promissory Notes – Related Party

 

As of December 31, 2022 and 2021, promissory notes – related party of $84,377 and $0 (principal $78,490 and interest of $5,887), respectively, were outstanding. The promissory notes – related party bear interest of 10% per annum, are unsecured, mature on December 31, 2025 and are due to 2130555 Ontario Limited, a Company controlled by Nadav Elituv, the Company's Chief Executive Officer.

 

During the year ended December 31, 2021, the Company issued promissory notes – related party of $19,572 for $3,400 to settle accrued liabilities and $16,172 of expenses paid on behalf of the Company.

 

Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained from non-related persons.

 27 
 

The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated at arm's length.

 

PROPOSED TRANSACTIONS

 

The Company is not anticipating any transactions.

 

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

 

Refer to Note 2 in the consolidated financial statements for the year ended December 31, 2022 and Note 2 in the consolidated financial statement for the year ended December 31, 2021 for information on accounting policies.

 

FINANCIAL INSTRUMENTS

 

The main risks of the Company’s financial instrument are exposed to are credit risk, market risk, foreign exchange risk, and liquidity risk.

 

Credit risk

 

The Company’s credit risk is primarily attributable to trade receivables. Trade receivables comprise of amounts due from other businesses from the sale of groceries and dry goods. The Company mitigates credit risk through approvals, limits and monitoring. The amounts disclosed in the consolidated balance sheet are net of allowances for expected credit losses, estimated by the Company’s management based on past experience and specific circumstances of the customer. The Company manages credit risk for cash by placing deposits at major Canadian financial institutions.

 

Market risk

 

Market risk is the risk that changes in market prices and interest rates will affect the Company’s net earnings or the value of financial instruments. These risks are generally outside the control of the Company. The objective of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns. The Company’s market risk consists of risks from changes in foreign exchange rates, interest rates and market prices that affect its financial liabilities, financial assets and future transactions.

 

Refer to Note 2 in the consolidated financial statements for the year ended December 31, 2022 and Note 2 in the consolidated financial statements.

 

Foreign Exchange risk

 

Our revenue is derived from operations in Canada. Our consolidated financial statements are presented in U.S. dollars and our liabilities other than trade payables are primarily due in U.S. dollars. The revenue we earn in Canadian dollars is adversely impacted by the increase in the value of the U.S. dollar relative to the Canadian dollar.

 

Liquidity risk

 

Liquidity risk relates to the risk the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The financial liabilities on our consolidated balance sheets consist of accounts payable and accrued liabilities, due to related party, notes payable, convertible notes, net, derivative liabilities, promissory notes, promissory notes – related party and non-redeemable convertible notes, Management monitors cash flow requirements and future cash flow forecasts to ensure it has access to funds through its existing cash and from operations to meet operational and financial obligations. The Company believes it has sufficient liquidity to meet its cash requirements for the next twelve months.

 

OUTSTANDING SHARE DATA

 

As of March 23, 2023, the following securities were outstanding:

 

Common stock: 193,226,548 shares

Series A Convertible Preferred Stock: 25,000

Series B Convertible Preferred Stock: 4,000

Series C Convertible Preferred Stock: 90,000

 

 28 
 

OFF-BALANCE SHEET TRANSACTIONS

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

The financial statements and related notes are included as part of this Annual Report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 29 
 

TWO HANDS CORPORATION

INDEX

December 31, 2022 and 2021

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
CONSOLIDATED FINANCIAL STATEMENTS F-3
Consolidated Balance Sheets F-3
Consolidated Statements of Operations and Comprehensive Income F-4
Consolidated Statement of Stockholders' Deficit F-5
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 30 
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders of Two Hands Corporation:

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Two Hands Corporation (“the Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2022 and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph Regarding Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company incurred a net loss and has a stockholders’ deficit, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 F-1 
 

Valuation of Derivative Liabilities

 

Critical Audit Matter Description

 

As described in Notes 2 and 9 to the consolidated financial statements, the Company determined that the conversion features of its convertible notes and certain warrants issued in conjunction with financing arrangements required to be accounted for as derivative liabilities. The derivative liabilities are recorded at fair value when issued and subsequently re-measured to fair value each reporting period. The Company utilized a binomial option pricing model to determine the fair value of the derivative liabilities, which uses certain assumptions related to exercise price, term, expected volatility, and risk-free interest rate.

 

How the Critical Audit Matter was Addressed in the Audit

 

We determined the assessment of the fair values of the derivative liabilities as a critical audit matter due to the significant judgements used by the Company in determining the fair value of the derivative liabilities. Auditing the valuation of the derivative liabilities involved a high degree of auditor judgement and specialized skills and knowledge were needed.

 

Our audit procedures consisted of the following, among others:

 

·Testing management’s process for developing the fair value measurement.
·Evaluating the appropriateness of the binomial option model used by the Company to value the derivative liabilities.
·Testing the reasonableness of the assumptions used by the Company in the binomial option model including exercise price, term, expected volatility, and risk-free interest rate.
·Testing the accuracy and completeness of data used by the Company in developing the assumptions use in the binomial option model.
·Developing an independent expectation for comparison to the Company’s estimate which included developing our own binomial option model and assumptions.

 

Professionals with specialized skill and knowledge were utilized by the Firm to assist in the evaluation of the Company estimate of fair value and development of our own independent expectation.

 

Issuance and Valuation of Preferred Stock, and resulting deemed dividends from the Company’s reverse stock split.

 

Critical Audit Matter Description

 

As described in Note 11 to the consolidated financial statements, the Company issued preferred stock for services and cash, and recorded deemed dividends as a result of the Company’s reverse stock split.

 

How the Critical Audit Matter was Addressed in the Audit

 

We determined the evaluation of the accounting for the issuance Preferred Stock to be a critical audit matter due to the complexity of the instruments themselves and the complexity involved in the Company’s determination of the appropriate accounting for the instrument. Auditing the accounting for the issuance of the Preferred Stock involved a high degree of auditor judgement and specialized skills and knowledge were needed.

 

Our audit procedures consisted of the following, among others:

 

·Inspecting and reviewing the designation document for the establishment of the Preferred Stock and the documents related to the issuance of the instrument to the recipients.
·Evaluating the reasonableness of the conclusions made by the Company related to the accounting treatment for embedded conversion feature and classification and presentation of the instrument as a whole in the consolidated balance sheet, including the Company’s consideration of relevant accounting standards.
·Evaluating the reasonableness of the conclusions made by the Company in regard to the timing and recognition of expense related to the issuance of Preferred Stock for future services, as well as deemed dividends resulting from the Company’s reverse stock split.
·Evaluating the reasonableness of conclusions made by the Company in regard to the recognition of gain or loss to extinguish the instrument.

 

Professionals with specialized skill and knowledge were utilized by the Firm to assist in the evaluation of the Company’s accounting for the issuance of the Preferred Stock.

  

/s/ Sadler, Gibb & Associates, LLC

 

We have served as the Company’s auditor since 2017.

Draper, UT

March 31, 2023 

 F-2 
 
TWO HANDS CORPORATION
CONSOLIDATED BALANCE SHEETS

  

       
   December 31, 2022  December 31, 2021
ASSETS      
       
Current assets          
Cash  $17,137   $533,295 
Accounts receivable, net   94,182    163,197 
VAT taxes receivable   8,157    24,563 
Inventory   73,621    154,848 
Prepaid expense   —      732,945 
Total current assets   193,097    1,608,848 
           
Property and equipment, net   13,667    6,974 
Operating lease right-of-use asset   23,438    33,612 
           
Total assets  $230,202   $1,649,434 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
Current liabilities          
Accounts payable and accrued liabilities  $555,220   $498,428 
Due to related party   185,473    39,985 
Notes payable   13,443    6,103 
Deferred revenue   22,107    —   
Current portion of operating lease right-of-use liability   8,230    8,482 
Total current liabilities   784,473    552,998 
Long-term liabilities          
Line of credit   293,298    —   
Promissory notes   229,194    210,527 
Promissory note - related party   84,377    —   
Non-redeemable convertible notes, net   517,621    517,717 
Operating lease right-of-use liability, net of current portion   15,208    25,130 
Total long-term liabilities   1,139,698    753,374 
           
Total liabilities   1,924,171    1,306,372 
           
Commitments and Contingencies   —      —   
           
Temporary equity          
Series A convertible preferred stock; $0.01 par value; 200,000 shares designated, 25,000 and 189,500 shares issued and outstanding, respectively   249,505    595,122 
Series B convertible preferred stock; $0.01 par value; 100,000 shares designated, 11,000 and 21,000 shares issued and outstanding, respectively   109,783    1,564,100 
Series C convertible preferred stock; $0.001 par value; 150,000 shares designated, 90,000 shares and 10,000 shares issued and outstanding, respectively   2,584,951    1,130,952 
Series D convertible preferred stock; $0.001 par value; 200,000 shares designated, 0 shares and 40,000 shares issued and outstanding, respectively   —      789,006 
Series E convertible preferred stock; $0.0001 par value; 300,000 shares designated, 0 shares shares issued and outstanding   —      —   
Total temporary equity   2,944,239    4,079,180 
           
Stockholder's deficit          
Preferred stock; $0.001 par value; 1,000,000 shares authorized, 0 issued and outstanding   —      —   
Common stock; $0.0001 par value; 12,000,000,000 shares authorized, 137,402,624 and 6,000,000 shares issued and outstanding, respectively   13,742    600 
Additional paid-in capital   78,895,425    58,151,817 
Common stock to be issued   336,000    336,000 
Accumulated other comprehensive income   39,141    4,870 
Accumulated deficit   (83,922,516)   (62,229,405)
Total stockholders' deficit   (4,638,208)   (3,736,118)
           
Total liabilities and stockholders' deficit  $230,202   $1,649,434 
           
The accompanying footnotes are an integral part of these financial statements.

 F-3 
 
TWO HANDS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 

           
    For the years ended December 31,
    2022    2021 
           
Sales  $731,302   $930,096 
Cost of goods sold   682,109    832,816 
Gross profit   49,193    97,280 
           
Operating expenses          
General and administrative   17,845,327    3,267,279 
Total operating expenses   17,845,327    3,267,279 
           
Loss from operations   (17,796,134)   (3,169,999)
           
Other income (expense)          
Amortization of debt discount and interest expense   (131,828)   (357,213)
Loss on settlement of debt   (3,668,750)   (12,890,764)
Initial derivative expense   (36,521)   (126,322)
Change in fair value of derivative liabilities   (59,878)   208,261 
     Total other income (expense)   (3,896,977)   (13,166,038)
           
Net loss attributable to Two Hands Corporation   (21,693,111)   (16,336,037)
           
Less: deemed dividend - Series A Stock modification   (1,396,721)   —   
Add: deemed contribution - Series B Stock modification   1,354,515    —   
Add: deemed contribution - Series C Stock modification   834,001    —   
Add: deemed contribution - Series D Stock modification   749,085    —   
Less: deemed contribution - Series E Stock   57,218    —   
           
Net loss attributable to Two Hands Corporation common shareholders  $(20,095,013)  $(16,336,037)
           
Other comprehensive income (loss)          
Foreign exchange income   30,523    —   
    Total other comprehensive income   30,523    —   
           
Comprehensive loss  $(20,064,490)  $(16,336,037)
           
Net loss per common share - basic and diluted  $(0.23)  $(5.79)
           
Weighted average number of common shares outstanding - basic and diluted   87,625,255    2,820,094 
           
The accompanying footnotes are an integral part of these financial statements.

 

 F-4 
 

TWO HANDS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the years ended December 31, 2022 and 2021

 

                                    
    Common Stock    Common Stock to be    Additional Paid-in    Accumulated Other Comprehensive    Accumulated    Total Stockholders' 
    Shares    Amount     Issued     Capital     Income     Deficit     Deficit 
Balance, December 31, 2021   6,000,000   $600   $336,000   $58,151,817   $4,870   $(62,229,405)  $(3,736,118)
Rounding on reverse split   5,558    1    —      —      —      —      1 
Stock issued for conversion of non-redeemable convertible notes   27,410,000    2,741    —      3,769,649    —      —      3,772,390 
Stock issued for officer and director compensation   90,000,000    9,000    —      13,491,000    —      —      13,500,000 
Stock issued for the conversion of Series B Stock   10,000,000    1,000    —      98,802    —      —      99,802 
Stock issued for the conversion of Series D Stock   4,000,000    400    —      39,521    —      —      39,921 
Deemed dividend - Series A Stock modification   —      —      —      (1,396,721)   —      —      (1,396,721)
Deemed contribution - Series B Stock modification   —      —      —      1,354,515    —      —      1,354,515 
Deemed contribution - Series C Stock modification   —      —      —      834,001    —      —      834,001 
Deemed contribution - Series D Stock modification   —      —      —      749,085    —      —      749,085 
Deemed contribution - Series E Stock   —      —      —      57,218    —      —      57,218 
Cancellation of Series A Stock   —      —      —      1,746,538    —      —      1,746,538 
Cancellation of common stock   (12,934)   —      —      —      —      —      —   
Foreign exchange loss   —      —      —      —      34,271    —      34,271 
Net loss attributed to Two Hands Corporation   —      —      —      —      —      (21,693,111)   (21,693,111)
Balance, December 31, 2022   137,402,624   $13,742   $336,000   $78,895,425   $39,141   $(83,922,516)  $(4,638,208)

 

 

 F-5 
 

 

    Common Stock    Common Stock to be    Additional Paid-in    Accumulated Other Comprehensive    Accumulated    Total Stockholders' 
    Shares    Amount     Issued     Capital     Income     Deficit     Deficit 
Balance, December 31, 2020   695,576   $70   $336,000   $42,773,378   $—     $(45,893,368)  $(2,783,920)
                                    
Stock issued for conversion of non-redeemable convertible notes   4,552,595    455    —      13,327,253    —      —      13,327,708 
Stock issued for conversion of convertible notes   214,329    21    —      552,413    —      —      552,434 
Stock issued for the conversion of Series C Stock   250,000    25    —      565,452    —      —      565,477 
Stock issued for consulting   240,500    24    —      809,976    —      —      810,000 
Stock issued for officer and director compensation   47,000    5    —      123,345    —      —      123,350 
Foreign exchange gain   —      —      —      —      4,870    —      4,870 
Net loss attributed to Two Hands Corporation   —      —      —      —      —      (16,336,037)   (16,336,037)
Balance, December 31, 2021   6,000,000   $600   $336,000   $58,151,817   $4,870   $(62,229,405)  $(3,736,118)

 

The accompanying footnotes are an integral part of these financial statements.

  

 F-6 
 

TWO HANDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

 

           
   For the year ended December 31,
   2022  2021
Cash flows from operating activities          
Net loss attributed to Two Hands Corporation  $(21,693,111)  $(16,336,037)
Adjustments to reconcile net loss to cash used in operating activities          
Depreciation and amortization   11,530    4,215 
Bad debt   112,822    20,960 
Stock-based compensation   13,504,200    1,043,350 
Amortization of debt discount   131,828    357,213 
Loss on settlement of debt   3,668,750    12,890,764 
Initial derivative expense   36,521    126,322 
Change in fair value of derivative liabilities   59,878    (208,261)
Reduction in ROU liability   (8,257)   (2,316)
 Change in operating assets and liabilities          
Accounts and taxes receivable   (36,855)   (159,882)
Prepaid expense   3,020,527    1,312,359 
Inventory   73,903    (156,376)
Deferred revenue   23,076    —   
Accounts payable and accrued liabilities   254,443    549,816 
Net cash used in operating activities   (840,745)   (557,873)
           
Cash flows from investing activities          
Purchase of property and equipment   (10,749)   (5,425)
Net cash used in investing activities   (10,749)   (5,425)
           
Cash flow from financing activities          
Advances by related party   167,438    135,378 
Repayment of advances to related party   (127,616)   (127,375)
Proceeds from notes payable   7,692    15,439 
Proceeds from issuance of shares   —      789,006 
Proceeds from promissory notes   302,680    19,137 
Proceeds from non-redeemable convertible   —      15,823 
Proceeds from convertible notes   —      225,000 
Net cash provided by financing activities   350,194    1,072,408 
           
Change in foreign exchange   (14,858)   2,342 
           
Net change in cash   (516,158)   511,452 
           
Cash, beginning of the period   533,295    21,843 
           
Cash, end of the period  $17,137   $533,295 
           
Cash paid during the year          
Interest paid  $—     $448 
Income taxes paid  $—     $—   
           
Supplemental disclosure of non-cash investing and financing activities          
Stock issued to settle accounts payable and accrued liabilities  $—     $496,222 
Stock issued to settle non-redeemable convertible notes  $3,772,390   $13,327,708 
Stock issued to settle convertible notes  $—     $552,435 
Stock issued for prepaid expense  $2,288,000   $1,153,571 
Initial debt discount from derivative  $—     $225,000 
Right-of-use asset  $—     $45,444 
Transfer of notes payable to promissory notes  $—     $91,192 
Transfer of accounts payable and accrued liabilities to promissory notes  $85,285   $26,050 
Transfer of due to related party to promissory notes - related party  $—     $19,572 
Deemed dividend - Series A Stock modification  $1,396,721   $—   
Deemed contribution - Series B Stock modification  $1,354,515   $—   
Deemed contribution - Series C Stock modification  $834,001   $—   
Deemed contribution - Series D Stock modification  $749,085   $—   
Deemed contribution - Series E Stock  $57,218   $—   

 

 

The accompanying footnotes are an integral part of these financial statements. 

 F-7 
 

Two Hands Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

NOTE 1 - NATURE OF OPERATIONS

 

Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.

 

The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.

 

The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.

 

In July 2021, the Company made the strategic decision to focus exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services.

i)gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered.
ii)Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse.
iii)Cuore Food Services is the Company’s wholesale food distribution branch.

 

The operations of the business are carried on by Two Hands Canada Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

BASIS OF PRESENTATION

 

The financial statements present the balance sheets and statements of operations, stockholders' equity and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.

 

GOING CONCERN

 

The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the year ended December 31, 2022, the Company incurred a net loss of $21,693,111 and used cash in operating activities of $840,745, and on December 31, 2022, had stockholders’ deficit of $4,638,208. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period one year from the date that the financial statements are issued. The Company will be dependent upon the raising of additional capital through placement of its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might result from this uncertainty. We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others; however, we do not have any oral or written agreements with them or others to loan or advance funds to us. There can be no assurances that we will be able to receive loans or advances from them or other persons in the future.

 

PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Two Hands Canada Corporation. All intercompany transactions and balances have been eliminated in consolidation.

 

USE OF ESTIMATES AND ASSUMPTIONS

 

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

 

 F-8 
 

CONCENTRATIONS

 

The following table summarizes accounts receivable and revenue concentrations:

 

          
   Accounts receivable at December 31, 2022  Revenue for the year ended December 31, 2022
Customer #1   17%   — 
Customer #2   17%   — 
Total concentration   34%   — 

 

The following table summarizes accounts payable and cost of goods sold concentrations:

 

   Accounts payable at December 31, 2022  Cost of goods sold for the year ended December 31, 2022
Supplier #1   30%   — 
Supplier #2   13%   — 
Supplier #3   —    12%
Supplier #4   —    11%
Total concentration   43%   23%

 

CASH AND CASH EQUIVALENTS

 

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

 

ACCOUNTS RECEIVABLE

 

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are reduced by an allowance for doubtful accounts, which is the Company’s best estimate of the amount of credit losses inherent in its existing accounts receivable. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company writes off accounts receivable against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

 

The allowance for doubtful accounts at December 31, 2022 and 2021 is $156,693 and $68,873, respectively.

 

INVENTORY

 

Inventory consisting of groceries and dry goods are measured at the lower of cost and net realizable value. Cost is determined pursuant

to the first-in first out (“FIFO”) method. The cost of inventory includes the purchase price, shipping and handling costs incurred to bring the inventories to their present location and condition. Inventory with a short shelf life that is not utilized within the planned period are immediately expensed in the statement of operations. Estimated gross profit rates are used to determine the cost of goods sold in interim periods. Any significant adjustment that results from the reconciliation with annual physical inventory is disclosed. At December 31, 2022 and 2021, the inventory valuation allowance was $0.

 

PROPERTY AND EQUIPMENT

 

Property and equipment is stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.

 

The costs of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:

 

Computer equipment 50% declining balance over a three year useful life

 

 F-9 
 

In the year of acquisition, one half the normal rate of depreciation is provided.

 

REVENUE RECOGNITION

 

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer.

 

During the year ended December 31, 2022 and 2021, the Company had revenue of $731,302 and $930,096 respectively. In 2022, the Company recognized revenue of $142,571 from the sale of groceries to consumers via the gocart.city online grocery delivery application and $588,731 from the sale of dry goods and produce to other businesses. In 2021, the Company recognized revenue of $161,707 from the sale of groceries to consumers via the gocart.city online grocery delivery application and $768,389 from the sale of dry goods and produce to other businesses.

 

RESEARCH AND DEVELOPMENT COSTS

 

Software development costs are included in research and development and are expensed as incurred. FASB ASC Topic 350 Intangibles—Goodwill and Other requires that software development costs incurred subsequent to reaching technological feasibility be capitalized, if material. If the process of developing a new product or major enhancement does not include a detailed program design, technological feasibility is determined only after completion of a working model. To date, the period between achieving technological feasibility and the general availability of such software has been short, and the software development costs qualifying for capitalization have been insignificant. The Company recorded research and development expense of $0 and $0 for the years ended December 31, 2022 and 2021, respectively.

 

LEASES

 

Under ASC 842, a right-of-use asset and lease liability is recorded for all leases and the statement of operations reflects the lease expense for operating leases and amortization/interest expense for financing leases.

 

The Company does not apply the recognition requirements in the standard to a lease that at commencement date has a lease term of twelve months or less and does not contain a purchase option that it is reasonably certain to exercise and to not separate lease and related non-lease components. Options to extend the leases are not included in the minimum lease terms unless they are reasonably certain to be exercised.

 

The Company leases an automobile under non-cancelable operating lease. Right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

 

DEBT DISCOUNT AND DEBT ISSUANCE COSTS

 

Debt discounts and debt issuance costs incurred in connection with the issuance of convertible notes are capitalized and amortized to interest expense based on the related debt agreements using the effective interest rate method. Unamortized discounts are netted against convertible notes.

 

DERIVATIVE LIABILITY

 

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Paragraph 815-15-25-1 the conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.

 

 F-10 
 

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. 

 

The Company follows ASC Section 815-40-15 (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.

 

The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. 

 

The Company utilizes the binomial option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The binomial option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the remaining contractual term of the instrument granted.

 

On October 1, 2021, the Company adopted a sequencing policy under Accounting Standards Codification (“ASC”) 815-40-35 Derivatives and Hedging (“ASC 815”) whereby in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities convertible or exchangeable for a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees or directors are not subject to the sequencing policy.

 

INCOME TAXES

 

The Company accounts for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("FASB ASC") 740, Income Taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.

 

NET LOSS PER SHARE

 

Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period increased to include the number of additional common shares that would have been outstanding if potentially dilutive securities had been issued. On December 31, 2022 and 2021, we excluded the common stock issuable upon conversion of non-redeemable convertible notes, convertible notes, Series A Stock, Series B Stock, Series C Stock, Series D Stock and common stock to be issued of 5,248,242,000 shares and 5,919,672,901 shares, respectively, as their effect would have been anti-dilutive.

 

FOREIGN CURRENCY TRANSLATION

 

The consolidated financial statements are presented in United States dollars. The functional currency of the consolidated entities are determined by evaluating the economic environment each entity. The functional currency of Two Hands Corporation is the United States dollar. Foreign exchange translation adjustments are reported as gains or losses resulting from foreign currency transactions and are included in results of operations.

 

 F-11 
 

Effective October 1, 2021, the Company changed the functional currency of its Company’s Canadian subsidiary, Two Hands Canada Corporation, to the Canadian dollar from United States dollar. The change in functional currency is due to the increase of Canadian dollar dominated activities over time including sales, operating costs and share subscriptions. The change in functional currency is accounted for prospectively. Two Hands Canada Corporation maintains its accounts in the Canadian dollar. Assets and liabilities are translated to United States dollars at year-end exchange rates. Income and expenses are transaction at averages exchange rate during the year. Foreign currency transaction adjustments are reported as other comprehensive income, a component of equity in the consolidated balance sheet.

 

STOCK-BASED COMPENSATION

 

The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

 

Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.

 

The Company’s financial instruments such as cash, accounts payable and accrued liabilities, non-redeemable convertible notes, notes payable and due to related parties are reported at cost, which approximates fair value due to the short-term nature of these financial instruments.

 

Derivative liabilities are measured at fair value on a recurring basis using Level 3 inputs.

 

The following tables present assets and liabilities that are measured and recognized at fair value as on a recurring basis:

 

           
    December 31, 2022
    Level 1   Level 2   Level 3
Description   $   $   $
Derivative liabilities   —   —   —

 

    December 31, 2021
    Level 1   Level 2   Level 3
Description   $   $   $
Derivative liabilities   —   —   —

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2014. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

 F-12 
 

NOTE 3 – NON-REDEEMABLE CONVERTIBLE NOTES

 

On September 1, 2016, Doug Clark, former Chief Executive Officer and related party, assigned the Side Letter Agreement (“Note”) dated June 10, 2014 with a total carrying value $382,016 to DC Design Inc. (“DC Design”). On September 1, 2016, the Company entered into an amended Side Letter Agreement with DC Design to amend and add certain terms to the Side Letter Agreement and advances from the period from June 25, 2014 to December 24, 2014. Under the terms of the amended Side Letter Agreement, the issue price of the Note is $174,252 with an interest rate 20% per annum and an original maturity date of December 31, 2017 which is subject to automatic annual renewal. In addition, on September 30, 2019, the Company and DC Design entered into an Agreement to change the original maturity date of the Note to December 31, 2021. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.003 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the note. During the year ended December 31, 2021, the Company elected to convert $39,612 of principal and interest into 13,204 shares of common stock of the Company at a conversion price of $3.00 per share. This conversion resulted in a gain on debt settlement of $6,602 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated statement of operations includes interest expense of $0 and $6,602 for the year ended December 31, 2022 and 2021, respectively, and $0 and $6,602 for the years ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $0 and $0, respectively. This Note has been paid in full.

 

On January 8, 2018, the Company entered into a Side Letter Agreement (“Note”) with a non-related investor, Stuart Turk, to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable totaling $244,065 issued by the Company during the period of July 2014 and December 2017. The issue price of the Note is $244,065 with a face value of $292,878 and the Note has an original maturity date of December 31, 2018 which is subject to automatic annual renewal. On June 29, 2021, the Company and Stuart Turk entered into an Agreement to change the original maturity date of the Note to December 31, 2025. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. If the Note is not paid on the maturity date, the outstanding face amount of the Note shall increase by 20% on January 1, 2022. During the year ended December 31, 2020, the Company elected to convert $1,400 of principal and interest into 14,000 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $58,800 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2021, the Company elected to convert $286,957 of principal and interest into 2,869,571 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $7,693,428 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2022 (prior to the reverse stock split on April 27, 2022), the Company elected to convert $71,000 of principal and interest into 710,000 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $374,000 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2022 (after the reverse stock split on April 27, 2022), the Company elected to convert $2,140 of principal and interest into 21,400,000 shares of common stock of the Company at a conversion price of $0.0001 per share. These conversions resulted in a loss on debt settlement of $2,436,750 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated statement of operations includes interest expense of $43,491 and $84,069 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $187,808 (face value of $187,808 less $0 unamortized discount) and $217,457 (face value of $217,457 less $0 unamortized discount), respectively.

 

On April 12, 2018, the Company entered into a Side Letter Agreement (“Note”) with a non-related investor, Jordan Turk, to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable totaling $45,000 issued by the Company during the period of March 19, 2018 to April 12, 2018. The issue price of the Note is $45,000 with a face value of $54,000 and the Note has an original maturity date of December 31, 2018 which is subject to automatic annual renewal. On June 29, 2021, the Company and Jordan Turk entered into an Agreement to change the original maturity date of the Note to December 31, 2025. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. During the year ended December 31, 2020, the Company elected to convert $2,000 of principal and interest into 20,000 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $62,000 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2021, the Company elected to convert $90,048 of principal and interest into 900,480 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $2,918,242 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated statement of operations includes interest expense of $0 and $15,008 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $0 and $0, respectively. This Note has been paid in full.

 

 F-13 
 

On May 10, 2018, the Company entered into a Side Letter Agreement (“Note”) with a non-related investor, Jordan Turk, to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable totaling $35,000 issued by the Company on May 9, 2018. The issue price of the Note is $35,000 with a face value of $42,000 and the Note has an original maturity date of December 31, 2018 which is subject to automatic annual renewal. On June 29, 2021, the Company and Jordan Turk entered into an Agreement to change the original maturity date of the Note to December 31, 2025. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. During the year ended December 31, 2021, the Company elected to convert $40,100 of principal and interest into 401,000 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $846,100 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2022 (prior to the reverse stock split on April 27, 2022), the Company elected to convert $30,000 of principal and interest into 300,000 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $210,000 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2022 (after the reverse stock split on April 27, 2022), the Company elected to convert $500 of principal and interest into 5,000,000 shares of common stock of the Company at a conversion price of $0.0001 per share. These conversions resulted in a loss on debt settlement of $648,000 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated statement of operations includes interest expense of $6,495 and $12,096 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $8,471 (face value of $8,471 less $0 unamortized discount) and $32,476 (face value of $32,476 less $0 unamortized discount), respectively.

 

On September 13, 2018, the Company entered into a Side Letter Agreement (“Note”) with a non-related investor, Jordan Turk, to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable totaling $40,000 issued by the Company during the period of July 10 to September 13, 2018. The issue price of the Note is $40,000 with a face value of $48,000 and the Note has an original maturity date of December 31, 2018 which is subject to automatic annual renewal. On June 29, 2021, the Company and Jordan Turk entered into an Agreement to change the original maturity date of the Note to December 31, 2025. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. The consolidated statement of operations includes interest expense of $16,589 and $13,824 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $99,533 (face value of $99,533 less $0 unamortized discount) and $82,944 (face value of $82,944 less $0 unamortized discount), respectively.

 

On January 31, 2019, the Company entered into a Side Letter Agreement (“Note”) with Stuart Turk to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable totaling $106,968 issued by the Company during the period of January 3, 2018 to December 28, 2018. The issue price of the Note is $106,968 with a face value of $128,362 and the Note has an original maturity date of December 31, 2019 which is subject to automatic annual renewal. On June 29, 2021, the Company and Stuart Turk entered into an Agreement to change the original maturity date of the Note to December 31, 2025. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. If the Note is not paid on the maturity date, the outstanding face amount of the Note shall increase by 20% on January 1, 2022. The consolidated statement of operations includes interest expense of $36,968 and $30,807 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $221,809 (face value of $221,809 less $0 unamortized discount) and $184,841 (face value of $184,841 less $0 unamortized discount), respectively.

 

On January 31, 2019, the Company entered into a Side Letter Agreement (“Note”) with a non-related investor, The Cellular Connection Ltd., to amend and add certain terms to unsecured, non-interest bearing, due on demand notes payable totaling $20,885 issued by the Company during the period of January 23, 2018 to October 16, 2018. The issue price of the Note is $20,885 with a face value of $25,062 and the Note has an original maturity date of December 31, 2019 which is subject to automatic annual renewal. On September 30, 2019, the Company and The Cellular Connection Ltd. entered into an Agreement to change the original maturity date of the Note to December 31, 2021. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0001 per share of the Company’s common stock. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the Note. During the year ended December 31, 2020, the Company elected to convert $115 of principal and interest into 1,150 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $3,795 due to the requirement to record the share issuance at fair value on the date the shares were issued. During the year ended December 31, 2021, the Company elected to convert $35,952 of principal and interest into 359,517 shares of common stock of the Company at a conversion price of $0.10 per share. These conversions resulted in a loss on debt settlement of $1,357,400 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated statement of operations includes interest expense of $0 and $5,992 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $0 and $0, respectively. This Note has been paid in full.

 

 F-14 
 

On January 20, 2021, the Company entered into a Side Letter Agreement (“Note”) with a non-related investor, Francesco Bisignano, for cash proceeds of $15,823. The issue price of the Note is $15,823 with a face value of $23,735. At the option of the Company, the Company may convert principal and interest at a fixed conversion price of $0.0034 per share of the Company’s common stock.. During the year ended December 31, 2021, the Company elected to convert $23,735 of principal and interest into 8,823 shares of common stock of the Company at a conversion price of $3.40 per share. This conversion resulted in a loss on debt settlement of $2,736 due to the requirement to record the share issuance at fair value on the date the shares were issued. The consolidated statement of operations includes interest expense of $0 and $7,912 for the year ended December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, the carrying amount of the Note is $0 and $0, respectively. This Note has been paid in full.

 

NOTE 4 – LEASES

 

The Company entered into an operating lease agreement on October 14, 2021 for an automobile, resulting in the recording of an initial liability and corresponding right-of-use asset of $35,906. The weighted-average remaining non-cancelable lease term for the Company’s operating lease was 2.75 years at December 31, 2022. The weighted-average discount rate was 3.96% at December 31, 2022.

 

The Company’s operating leases expires in 2025. The following shows the undiscounted cash flows for the remaining periods under operating lease at December 31, 2022:

 

   
Periods ending December 31,  Operating Lease Commitments
 2023   $10,212 
 2024     10,212 
 2025    7,659 
 Total operating lease commitments    28,083 
 Less: imputed interest    (4,645)
 Total right-of-use liability   $23,438 

 

The Company’s discounted current right-of-use lease liability and discounted non-current right-of-use lease liability at December 31, 2022 is $8,230 and $15,208, respectively.

 

NOTE 5 – LINE OF CREDIT

 

On April 14, 2022, the Company entered into a binding Grid Promissory Note and Credit Facility Agreement (the “Line of Credit”) with The Cellular Connection Ltd. (the “Lender”) Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD $750,000 in principal in increments of at least CAD $50,000 upon five business days’ notice. The line of credit is due on May 1, 2024 and the outstanding principal bears interest at 8% per annum, payable monthly. Any indebtedness under the Line of Credit are secured against accounts receivable and inventory of the Company, and is convertible into shares of common stock of the Company at the Company’s option any time after twelve months from the first advance at a conversion price of $0.10 per share, subject to a restriction on the Lender holding more than 4.99% of the Company’s Common Shares. As of December 31, 2022 and 2021, the Line of Credit of $293,298 (principal $289,970 ((CAD $393,500) and interest of $3,328) and $0, respectively, was outstanding. The consolidated statement of operations includes interest expense of $3,328 and $0 for the year ended December 31, 2022 and 2021, respectively. As at March 23, 2023, $376,787 (CAD $514,863) have been borrowed by the Company pursuant to the Line of Credit.

 

NOTE 6 – NOTES PAYABLE

 

As of December 31, 2022 and 2021, notes payable due to Stuart Turk, Jordan Turk, and The Cellular Connection Limited, a corporation controlled by Stuart Turk, totaling $13,443 and $6,103, respectively, were outstanding. The balances are non-interest bearing, unsecured and have no specified terms of repayment.

 

During the year ended December 31, 2021, $15,439 for expenses paid on behalf of the Company and the Company settled notes payable of $91,192 by issuing promissory notes.

 

NOTE 7 – PROMISSORY NOTES

 

Promissory Notes

 

As of December 31, 2022 and 2021, promissory notes of $229,194 (principal $186,672 and interest of $42,522) and $210,527 (principal $186,672 and interest of $23,855), respectively, were outstanding. The promissory notes bears interest of 10% per annum, are unsecured and mature on December 31, 2025.

 

 F-15 
 

During the year ended December 31, 2021, the Company issued promissory notes of $136,379 for $19,137 of cash advanced to the Company and $91,192 to settle notes payable and $26,050 to settle accounts payable. The Company issued shares of Series B Convertible Preferred Stock with a fair value of $27,022 to settle a promissory note and accrued interest. Promissory note holders on June 29, 2021 agreed to extend the maturity of notes to December 31, 2025.

 

Promissory Notes – Related Party

 

As of December 31, 2022, promissory note – related party of $84,377 (principal $78,490 and interest of $5,887) and $0, respectively, were outstanding. The promissory notes – related party bear interest of 10% per annum, are unsecured, mature on December 31, 2025 and are due to 2130555 Ontario Limited, a Company controlled by Nadav Elituv, the Company's Chief Executive Officer.

 

During the year ended December 31, 2021, the Company issued promissory notes – related party of $19,572 for $3,400 to settle accrued liabilities and $16,172 of expenses paid on behalf of the Company.

 

NOTE 8 – CONVERTIBLE NOTE

 

Power Up Lending Group Ltd.

 

On July 13, 2020 the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. (“Holder”) relating to the issuance and sale of a Senior Convertible Note (the “Note”) with an original principal amount of $53,000 less transaction costs of $3,000 bearing an 8% annual interest rate and maturing July 13, 2021 for $50,000 in cash. After 180 days after the issue date, the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the lowest three average trading price during the ten trading day period ending on the latest trading day prior to the conversion date. The Company may prepay the Note in cash, if repaid within 90 days of date of issue, at 118% of the original principal amount plus interest, between 91 days and 120 days at 123% of the original principal amount plus interest, between 121 days and 180 days at 129% of the original principal amount plus interest and after 181 days 175% of the original principal amount plus interest. From January 15, 2021 to January 19, 2021, the Holder converted 30,622,223 shares of common stock of the Company with a fair value of $98,262 to settle principal and interest of $55,120. The conversions resulted in the settlement of derivative liabilities of $64,501 and a loss on settlement of debt of $25,604. This Note has been paid in full.

 

On September 11, 2020 the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. (“Holder”) relating to the issuance and sale of a Senior Convertible Note (the “Note”) with an original principal amount of $78,000 less transaction costs of $3,000 bearing an 8% annual interest rate and maturing March 11, 2022 for $75,000 in cash. After 180 days after the issue date, the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the lowest three average trading price during the ten trading day period ending on the latest trading day prior to the conversion date. The Company may prepay the Note in cash, if repaid within 90 days of date of issue, at 118% of the original principal amount plus interest, between 91 days and 120 days at 123% of the original principal amount plus interest, between 121 days and 180 days at 129% of the original principal amount plus interest and after 181 days 175% of the original principal amount plus interest. From March 15, 2021 to March 16, 2021, the Holder converted 33,050,000 shares of common stock of the Company with a fair value of $119,865 to settle principal and interest of $81,120. The conversions resulted in the settlement of derivative liabilities of $89,884 and a loss on settlement of debt of $17,437. This Note has been paid in full.

 

Redstart Holdings Corp.

 

On February 23, 2021, the Company entered into a Securities Purchase Agreement with Redstart Holdings Corp. (“Holder”) relating to the issuance and sale of a Convertible Note (the “Note”) with an original principal amount of $153,000 less transaction costs of $3,000 bearing an 8% annual interest rate and maturing August 23, 2022 for $150,000 in cash. After 180 days after the issue date, the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the lowest three average trading price during the ten trading day period ending on the latest trading day prior to the conversion date. The Company may prepay the Note in cash, if repaid within 90 days of date of issue, at 118% of the original principal amount plus interest, between 91 days and 120 days at 123% of the original principal amount plus interest, between 121 days and 180 days at 129% of the original principal amount plus interest and after 181 days 175% of the original principal amount plus interest. From August 25, 2021 to August 30, 2021, the Holder converted 83,195,322 shares of common stock of the Company with a fair value of $228,323 to settle principal and interest of $159,120. The conversions resulted in the settlement of derivative liabilities of $108,249 and a loss on settlement of debt of $40,086. This Note has been paid in full.

 

Geneva Roth Remark Holdings Inc.

 

 F-16 
 

On May 27, 2021, the Company entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings Inc. (“Holder”) relating to the issuance and sale of a Convertible Note (the “Note”) with an original principal amount of $78,750 less transaction costs of $3,750 bearing an 8% annual interest rate and maturing May 27, 2022 for $75,000 in cash. After 180 days after the issue date, the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the lowest three average trading price during the ten trading day period ending on the latest trading day prior to the conversion date. The Company may prepay the Note in cash, if repaid within 90 days of date of issue, at 118% of the original principal amount plus interest, between 91 days and 120 days at 123% of the original principal amount plus interest, between 121 days and 180 days at 129% of the original principal amount plus interest and after 181 days 175% of the original principal amount plus interest. From December 1, 2021 to December 2, 2021, the Holder converted 67,461,539 shares of common stock of the Company with a fair value of $105,985 to settle principal and interest of $81,900. The conversions resulted in the settlement of derivative liabilities of $52,689 and a gain on settlement of debt of $3,667. This Note has been paid in full.

 

NOTE 9 - CONVERTIBLE OPTION DERIVATIVE LIABILITIES

 

The Convertible Promissory Notes with Power Up Lending Group Ltd., Redstart Holdings Corp., Geneva Roth Remark Holdings Inc. issued July 13, 2020, September 11, 2020, February 23, 2021 and May 27, 2021 and Series E Preferred Stock issued on October 6, 2022 are accounted for under ASC 815.  The variable conversion price is not considered predominantly based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s convertible option derivative liabilities have been measured at fair value using the binomial model.

 

The inputs into the binomial models are as follows:

 

                         
  

February 23,

2021

 

May 27,

2021

 

December 2,

2021

 

October 6,

2022

 

December 1,

2022

Closing share price  $6.80   $2.60   $1.40   $0.0948   $0.0118 
Conversion price  $3.70   $1.70   $1.10   $0.0740   $0.0075 
Risk free rate   0.13%   0.13%   0.08%   4.20%   4.65%
Expected volatility   276%   194%   152%   226%   266%
Dividend yield   0%   0%   0%   0%   0%
Expected life (years)   1.5    1.0    0.48    1.50    1.35 

 

The increase in the fair value of the conversion option derivative liability of $59,878 is recorded as a loss in the consolidated statements of operations for the year ended December 31, 2022.

 

During the year ended December 31, 2021, the convertible option derivative liability was reduced by $315,322 for settlement of derivative liabilities due to conversion of the Notes into common stock by the Holders. The decrease in the fair value of the conversion option derivative liability of $208,261 is recorded as a gain in the consolidated statements of operations for the year ended December 31, 2021.

 

NOTE 10– RELATED PARTY TRANSACTIONS

 

As of December 31, 2022 and 2021, advances and accrued salary of $185,473 and $39,985, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment.

 

During the year ended December 31, 2022, the Company issued advances due to related party for $167,438 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $127,616 in cash. In addition, the Company accrued salary of $195,551 due to Nadav Elituv for the year ended December 31, 2022 and issued a promissory note for $85,285 to settle due to related party.

 

During the year ended December 31, 2021, the Company issued advances due to related party for $135,378 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $127,375 in cash. In addition, the Company accrued salary of $165,046 due to Nadav Elituv for the year ended December 31, 2021, issued 60,000 shares of Series A Convertible Preferred Stock with a fair value of $222,317 to settled salary due and issued a promissory note for $19,572 to settle due to related party.

 

During the years ended December 31, 2022 and 2021, the Company paid Linus Creative Services, a business controlled by Bradley Southam, a director of the Company, $26,307 and $10,054, respectively, for advertising services.

 

Employment Agreements

 

 F-17 
 

On August 7, 2020, the Company executed an employment agreement for the period from July 1, 2020 to June 30, 2021 with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 50,000,000 shares of Common Stock of the Company and an annual salary of $151,200 payable monthly on the first day of each month from available funds. On December 31, 2021, there were no shares of common stock due Nadav Elituv under the employment agreement.

 

On July 1, 2021, the Company executed an employment agreement for the period from July 1, 2021 to June 30, 2022 with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 30,000 shares of Series A Convertible Preferred Stock of the Company, 60,000,000 shares of Common Stock of the Company and an annual salary of $216,000 payable monthly on the first day of each month from available funds, commencing on July 1, 2021. On October 1, 2021, the Company and Nadav Elituv amended the employment agreement to (i) cancel annual salary of $216,000 payable monthly and (ii) enter in to a consulting agreement to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of $17,400 (CAD $22,000 per month) for services for the period from October 1, 2021 to June 30, 2022.

 

On March 26, 2022, the Company and Nadav Elituv further amended the employment agreement to (i) change the termination date from June 30, 2022 to December 31, 2022; (ii) pay an additional 10,500 shares of Series A Convertible Preferred Stock of the Company and (iii) pay an additional 50,000,000 shares of Common Stock of the Company.

 

On July 1, 2022, the term of the consulting contract with 2130555 Ontario Limited was extended to June 30, 2023.

 

Stock-based compensation – salaries expense related to these employment agreements for the year ended December 31, 2022 and 2021 is $13,504,200 and $198,850, respectively. Stock-based compensation – salaries expense was recognized ratably over the requisite service period. (See Note 12).

 

NOTE 11 - INCOME TAXES

 

A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

          
   2022  2021
Net loss before income taxes per consolidated financial statements  $(21,693,111)  $(16,336,037)
       Income tax rate   21%   21%
   Income tax recovery   (4,555,500)   (3,430,600)
   Non-deductible share-based payments   3,470,200    497,400 
   Non-deductible interest   27,600    75,000 
   Loss on settlement of debt   770,400    2,707,100 
   Initial derivative expense   7,700    26,500 
   Change in fair value of derivative expense   12,600    (43,100)
   Valuation allowance change   267,000    167,700 
   Income tax expense (recovery)  $—     $—   

 

The significant component of deferred income tax assets on December 31, 2022 and 2021 is as follows:

 

          
   2022  2021
Net operating loss carry-forward  $1,327,700   $1,060,700 
       Valuation allowance   (1,327,700)   (1,060,700)
   Net deferred income tax asset  $—     $—   

 

The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

 

As of December 31, 2022 and 2021 the Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the year ended December 31, 2022 and 2021 and no interest or penalties have been accrued as of December 31, 2022 and 2021. As of December 31, 2022 and 2021, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 F-18 
 

The tax years from 2009 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities.

 

NOTE 12 – PREFERRED STOCK

 

On August 6, 2013, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating two hundred thousand (200,000) shares as Series A Convertible Preferred Stock (“Series A Stock”). Each share of Series A Stock is convertible into one thousand (1,000) shares of common stock of the Company. On April 21, 2022, the Company amended its articles to amend the terms of its Series A Convertible Preferred Stock to become non-voting shares. Previously Series A Stock were entitled to the number of votes equal to the aggregate number of shares of common stock into which the Holder’s share of Series A Stock is convertible, multiplied by one hundred (100).

 

On December 12, 2019, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating one hundred thousand (100,000) shares as Series B Convertible Preferred Stock (“Series B Stock”). After a one year holding period, each share of Series B Stock is convertible into one thousand (1,000) shares of common stock of the Company. Series B Stock is non-voting.

 

On October 7, 2020, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating thirty thousand (30,000) shares as Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Stock”). Each share of Series C Stock (i) has a liquidation value of $100, subject to various anti-dilution protections (ii) is convertible into shares of common stock of the Company six months after the date of issuance at a price of $0.25 per share effective June 30, 2022, subject to various anti-dilution protections (iii) on conversion will receive an aggregate number of shares of common stock as is determined by dividing the liquidation value by the conversion price. Series C Stock are non-voting. On June 24, 2021, the board of directors approved the increase in the number of designated shares of Series C Convertible Preferred Stock from 5,000 to 30,000 and reduction of the conversion price from $0.0035 per share to $0.002 per share. On April 27, 2022, a 1 for 1,000 reverse stock split of the Company’s common stock took effect which increased the conversion rate of from $0.002 per share to $2.00 per share. On June 30, 2022, the Company made an amendment to the Certificate of Designation of its Series C Stock which lowered the fixed conversion price from $2.00 per share to $0.25 per share.

 

On March 31, 2021, the Company issued 30,000 shares of Series A Convertible Preferred Stock with a fair value of $110,000 ($3.67 per share) to settle accrued salary due to Nadav Elituv, the Chief Executive Officer of the Company.

 

On July 1, 2021, the Company issued 30,000 shares of Series A Convertible Preferred Stock with a fair value of $110,000 ($3.67 per share) for stock-based compensation due to Nadav Elituv, the Chief Executive Officer of the Company.

 

From September 1, 2021 to September 17, 2021, the Company issued 40,000 shares of Series D Convertible Preferred Stock for $789,006 ($1,000,000 CAD) in cash.

 

On September 1, 2021, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating two hundred thousand (200,000) shares as Series D Convertible Preferred Stock, par value $0.001 per share (“Series D Stock”). Each share of Series D Stock is convertible into one hundred (100) shares of common stock of the Company six months after the date of issuance. Series D Stock are non-voting.

 

On September 30, 2021, the Company issued 30,000 shares of Series A Convertible Preferred Stock with a fair value of $97,500 ($3.25 per share) to settle accrued liabilities for compensation due to Nadav Elituv, the Chief Executive Officer of the Company.

 

On November 15, 2021, the Company issued 69,500 shares of Series A Convertible Preferred Stock with a fair value of $244,622 ($3.52 per share) to settle accrued liabilities for compensation due to Nadav Elituv, the Chief Executive Officer of the Company.

 

On November 15, 2021, the Company issued 17,000 shares of Series B Convertible Preferred Stock with a fair value of $44,100 ($2.59 per share) to settle accounts payable and promissory note.

 

On March 26, 2022, the Company issued 10,500 shares of Series A Convertible Preferred Stock with a fair value of $4,200 ($2.50 per share) for compensation due to Nadav Elituv, the Chief Executive Officer of the Company.

 

 F-19 
 

On April 27, 2022, a 1 for 1,000 reverse stock split of the Company’s common stock took effect which increased the conversion rate of (i) Series A Stock from 1 (one) share of Series A Stock for 1 (one) share of common stock (pre-reverse stock-split) to 1 (one) share of Series A Stock for 1,000 (one thousand) shares of common stock (post-reverse stock-split) (ii) Series B Stock from 1 (one) share of Series B Stock for 1 (one) share of common stock (pre-reverse stock-split) to 1 (one) share of Series B Stock for 1,000 (one thousand) shares of common stock (post-reverse stock-split) and (iii) Series D Stock from 1 (one) share of Series D Stock for 1 (one) share of common stock (pre-reverse stock-split) to 1 (one) share of Series D Stock for 100 (one hundred) shares of common stock (post-reverse stock-split). The Company accounted for the increase in the conversion rates as an extinguishment and recorded a deemed dividend (contribution) in accordance with ASC 260-10-599-2. As such, on April 27, 2022, the shares of Series A Stock, Series B Stock and Series D Stock were recorded at fair value of $1,966,043, $209,585 and $39,921, respectively, and resulting in a deemed dividend (contribution) of $1,396,721, ($1,354,515) and ($749,085), respectively.

 

On June 30, 2022, the Company made an amendment to the Certificate of Designation of its Series C Stock which lowered the fixed conversion price from $2.00 per share to $0.25 per share. The Company accounted for the amendment as an extinguishment and recorded a deemed dividend in accordance with ASC 260-10-599-2. As such, on June 30, 2022, the shares of Series C Stock recorded at fair value of 296,951 resulting in a deemed contribution of $834,001.

 

On June 30, 2022 the Company issued 80,000 of Series C Convertible Preferred Stock with a fair value of $2,288,000 for prepaid advertising expense.

 

On July 26, 2022, Nadav Elituv, our Chief Executive Officer, returned 175,000 shares of Series A Stock to treasury for cancellation for no consideration resulting in a $1,746,538 reduction in the carrying value of Series A Stock.

 

On October 4, 2022, the Company filed a Certificate of Designation with the Delaware Secretary of State that had the effect of designating 300,000 shares of preferred stock as Series E Convertible Preferred Stock (“Series E Stock”). Series E Stock are non-voting, have a par value of $0.0001 per share and have a stated value of $1.00 per share. Each share of Series E Stock carries an annual cumulative dividend of 10% of the stated value. The Company may redeem Series E Stock in cash, if redeemed within 60 days of issuance date, at 110% of the stated value plus accrued unpaid dividends and between 61 days and 180 days at 115% of the stated value plus unpaid accrued dividends. After 180 days of the issuance date, the Company does not have the right to redeem Series E Stock. After 180 days after the issue date, Series E Stock at the stated value together with any unpaid accrued dividends are convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 75% of the market price defined as the lowest three average trading price during the ten trading day period ending on the latest trading day prior to the conversion date. After 18 months following the issuance date, the Company must redeem for cash Series E Stock at its stated value plus any accrued unpaid dividends and the default adjustment, if any.

 

1800 Diagonal Lending LLC

 

On October 6, 2022, the Company entered into a Series E Preferred Stock Purchase Agreement with 1800 Diagonal Lending LLC (“Holder”) relating to the issuance and sale of 169,675 shares of Series E Preferred Stock (the “Series E Stock”) with an original purchase price of $154,250 less transaction costs of $4,250 for $150,000 in cash. Series E Stock has an unconditional obligation to be redeemed for cash 18 months after the date of issue at the current stated value (initial stated value is $1.00 per share) plus unpaid accrued dividend. At inception the carrying value of the Series E Stock was $0 ($150,000 cash received less discount of $150,000) and the initial fair value of the embedded derivative was $186,521 (recorded as discount of $150,000 and initial derivative expense of $36,521). After 180 days after the issue date, the Series E Stock together with any unpaid accrued dividend is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 75% of the market price defined as the lowest three average trading price during the ten trading day period ending on the latest trading day prior to the conversion date. The Company may prepay the Series E Stock in cash, if repaid within 60 days of date of issue, at 110% of the original purchase price plus unpaid accrued dividend, between 61 days and 180 days at 115% of the original purchase price plus unpaid accrued dividend and after 180 days the Company does not have the right to prepay in cash. On December 1, 2022, the Company exercised its option for redeem Series E Stock for $189,182 in cash. The redemption resulted in the settlement of Series E Stock of $2,858 (stated value of $169,675 plus unpaid accrued dividend of $2,603 less discount of $169,420) and derivative liabilities of $246,400 and a contribution to additional paid-in capital on redemption of $60,076. On December 1, 2022, the Company paid the Holder $189,182 in cash to redeem and cancel 169,675 shares of Series E Preferred Stock (see Note 8).

 

Series A Stock, Series B Stock, Series C Stock, Series D Stock and Series E Stock has been classified as temporary equity (outside of permanent equity) on the consolidated balance sheet on December 31, 2022 and 2021 because other tainting contracts such as convertible notes have inadequate available authorized shares of the Company for settlement.

 

NOTE 13 - STOCKHOLDERS' EQUITY

 

The Company is authorized to issue an aggregate of 12,000,000,000 common shares with a par value of $0.0001 per share and 1,000,000 shares of preferred stock with a par value of $0.0001 per share.

 

 F-20 
 

On March 21, 2022, pursuant to stockholder consent, our Board of Directors authorized an amendment (the "Amendment") to our Certificate of Incorporation, as amended, to affect a reverse stock split of the issued and outstanding shares of our common stock, par value $0.0001, on a 1 for 1,000 basis. We filed the Amendment with the Delaware Secretary of State on March 21, 2022. On April 25, 2022 the Financial Industry Regulatory Authority, Inc. notified us that the reverse stock split would take effect on April 27, 2022. All common stock share and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

 

During the year ended December 31, 2022, the Company elected to convert $103,640 of principal and interest of non-redeemable convertible notes into 27,410,000 shares of common stock of the Company with a fair value of $3,772,390 resulting in a loss of extinguishment of debt of $3,668,750.

 

On April 27, 2022, the Company issued 90,000,000 shares of common stock with a fair value of $13,500,000 to Nadav Elituv, the Company's Chief Executive Officer, due under his employment agreement dated July 1, 2021, amended on October 1, 2021 and March 26, 2022.

 

On April 28, 2022, the Holders of Series B Stock elected to convert 4,000 shares of Series B Stock into 4,000,000 shares of common stock resulting in a $39,521 reduction in the carrying value of Series B Stock.

 

On May 4, 2022, the Holders of Series D Stock elected to convert 40,000 shares of Series D Stock into 4,000,000 shares of common stock resulting in a $39,521 reduction in the carrying value of Series D Stock.

 

On September 26, 2022, the Holder of Series B Stock elected to convert 6,000 shares of Series B Stock into 6,000,000 shares of common stock resulting in a $59,281 reduction in the carrying value of Series B Stock.

 

During the year ended December 31, 2021, the Company elected to convert $516,404 of principal and interest of non-redeemable convertible notes into 4,552,595 shares of common stock of the Company with a fair value of $13,327,708 resulting in a loss of extinguishment of debt of $12,811,304.

 

During the year ended December 31, 2021, the Holders of the Senior Convertible Notes issued on July 13, 2020, September 11, 2020, February 26, 2021 and May 27, 2021 elected to convert $377,260 of principal and interest into 214,329 shares of common stock of the Company with a fair value of $552,434 resulting in a loss of extinguishment of debt of $79,460.

 

During the year ended December 31, 2021, the Holders of Series C Stock election to convert 5,000 shares of Series C Stock into 250,000,000 shares of common stock.

 

During the year ended December 31, 2021, the Company issued 240,500 shares of common stock for stock-based compensation for consulting services with a fair value of $810,000.

 

During the year ended December 31, 2021, the Company issued 47,000 shares of common stock for stock-based compensation for officers and directors with a fair value of $123,350.

 

Common stock to be issued

 

On December 31, 2022 and 2021, the Company had an obligation to issue 32,000 shares of common stock valued at $336,000 and 32,000 shares of common stock valued at $336,000, respectively, for stock-based compensation – consulting services. These shares relate to an agreement dated August 1, 2020 for services to be provided from August 1, 2020 to July 31, 2022 whereby the Company shall pay 50,000 shares of Common Stock of the Company with a fair value of $525,000 for consulting. The shares are expensed the earlier of (i) the date of issue of shares or (ii) on a straight line over the life of the contract.

 

NOTE 14 – SUBSEQUENT EVENTS

 

For the period from January 1, 2023 to March 23, 2023, the Company elected to convert $4,150 of principal and interest of non-redeemable convertible notes into 41,500,000 shares of common stock of the Company with a fair value of $121,700 resulting in a loss of extinguishment of debt of $117,500.

 

From January 1, 2023 to March 23, 2023, the Company received cash advances of $306,698 (CAD$414,863) in accordance with the terms of the Grid Promissory Note and Credit Facility Agreement with The Cellular Connection Ltd.

 

From January 1, 2023 to March 23, 2023, the Company received cash advances of $62,140 (CAD$84,000). These advances are non-interest bearing, unsecured and have not specific terms of repayment.

 

 F-21 
 

On January 15, 2023, the Company executed an employment agreement for the period from January 1, 2023 to December 31, 2023 with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay an annual salary of $600,000 from available funds.

 

On February 2, 2023, the Company agreed to issue 977,889 shares of common stock to settle advances with a carrying value of CAD $48,894 due to Nadav Elituv, the Chief Executive Officer of the Company.

 

On February 2, 2023, the Company agreed to issue 6,346,035 shares of common stock to settle consulting fees with a carrying value of CAD $317,302 due to 2130555 Ontario Limited. 2130555 Ontario Limited is controlled by Nadav Elituv, the Chief Executive Officer of the Company.

 

On March 3, 2023, the Holder of Series B Stock elected to convert 7,000 shares of Series B Stock into 7,000,000 shares of common stock resulting in a $69,162 reduction in the carrying value of Series B Stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 F-22 
 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

We have had no changes in or disagreements with our accountants. None of our principal independent accountants have resigned or declined to stand for re-election.

 

ITEM 9A(T). CONTROLS AND PROCEDURES.

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2022. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report for the reasons discussed below.

 

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013). As a result of this assessment, management concluded that, as of December 31, 2022, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2023: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting, which are included within disclosure controls and procedures, that occurred during our fiscal quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION.

 

None.

 

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

 

Not applicable.

 31 
 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

 Our bylaws state the number of the directors of the Company shall be determined by resolution of the Board of Directors. The Board of Directors currently consists of three (3) directors who are expected to hold office until our nest meeting of the shareholders. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified, or his earlier death, resignation or removal. Officers are elected by and serve at the discretion of the Board of Directors.

 

The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of the date of this Report:

 

The names of our director and executive officers as of the date of this Report, their respective ages, positions, and biographies are set forth below. Our executive officers are appointed by, and serve at the discretion of, our board of directors.

 

Name   Age     Position(s)
Nadav Elituv (1)     59    

CEO, President., Secretary, Treasurer and Director

(Principal Executive Officer)

Steven Gryfe     54    

Chief Financial Officer

(Principal Financial and Accounting Officer)

Ryan Wilson (1)     47     Director
Bradley Southam (1)     51     Director
Yan Namer     51     Director

 

(1) Members of the Audit Committee 

 

Professional Experience

 

The biographies of each executive officer below contain information regarding the person’s service as an executive officer, business experience, director positions held currently or at any time during the last five years, and information regarding involvement in certain legal or administrative proceedings, if applicable.

 

A description of the principal occupation for the past five years and summary of the experience of the directors and officers of the Company is as follows:

 

Nadav Elituv, President, Secretary, Treasurer & Director

 

Nadav Elituv has been serving as the Company’s Chief Executive Officer, President, Secretary, Treasurer and as a member of the Board of Directors since June 2014. Since August 2008, Mr. Elituv has served as the President and Founder of Imagin8. Imagin8 is a startup and leading developer of hand and body motion-based interactive digital technologies that are designed to enhance new consumer experiences from touch-screens to floor-screens. Mr. Elituv is the results-driven leader of an innovative digital technology enterprise, for over twenty years. With a track record for building, developing and motivating high-performance teams and is an expert in high-tech systems. This includes the design and implementation of computer-vision and gesture-recognition software. Mr. Elituv has solid career experience driving strategic initiatives and meeting critical business mandates.

 

Mr. Elituv attended Concordia University and York University. Mr. Elituv is a full time employee of the Company. Mr. Elituv has not entered into a non-disclosure or a non-competition agreement with the Company.

 

Steven Gryfe, Chief Financial Officer

 

Steven Gryfe was appointed Chief Financial Officer on June 18, 2019. Mr. Gryfe has had a career over twenty years in the technology field in the roles of sales and marketing and as Chief Operating Officer of On the Go Technologies Group. While at On the Go Technologies Group, Mr. Gryfe was instrumental in its growth from revenue of $91,584 in 2003 to over $30 million in 2006. Mr. Gryfe was also President and CEO of HCQ Technologies from 2008 until 2011. He has also had an active role in community serving as President and GM of Toronto Avenue Road Hockey Association.

 

Mr. Gryfe earned a Bachelor of Arts from Carleton University. He is a full time employee of the Company. Mr. Gryfe has not entered into a non-disclosure or a non-competition agreement with the Company.

 

 32 
 

Ryan Wilson, Director

 

Ryan Wilson has been serving as a member of the Company’s Board of Directors since January 31, 2019. Mr. Wilson has an extensive career in the digital field spanning more than twenty years of his career advancing digital initiatives, with a track record that speaks for itself, including digital marketing, digital strategy and digital transformation through innovation for financial services. Most recently acting as Principal Consultant for e-commerce digital innovation at msg Global Solutions, starting back in May 2017, msg Global Solutions specializes in SAP enterprise implementations. Prior to that, Ryan spent over four years defining the digital experiences for Ontario Teachers’ Pension Plan from March 2013 to May 2017 primarily influencing leadership teams and building implementation teams for site and app development. From developer to director Mr. Wilson has been involved in all aspects of digital development. Currently focusing on technologies such as Block Chains, NLP (natural language processing), AI and machine learning, at an insurrect innovation lab. Using design thinking methodologies and an agile approach, Mr. Wilson’s career has centered around implementing pilot projects, planning migrations, post implementation iterations, risk planning, and digital transformation.

 

Mr. Wilson earned a Bachelor of Arts from Trent University. He will devote approximately 5% of his working time to the Company, and has not entered into a non-disclosure or a non-competition agreement with the Company.

 

Bradley Southam, Director

 

Bradley Southam was appointed to the Board of Directors on June 11, 2019. Mr. Southam has a career for over nineteen years in the digital marketing, strategy and design services industry. Most recently he has been the owner and creative director of Linus Creative Services. Mr. Southam is the vice chair of the Cambridge Arts and culture advisory committee, and a board member of the grand river film festival. Previously Mr. Southam was creative director with “Go Motion and Design” a division of On the Go Technologies Group, which was a publicly traded company on the US OTC from 2005 to 2008.

 

Mr. Southam earned a Bachelor of Fine Arts from York University, and a graphic design degree from Central Saint Martins in London, UK. He will devote approximately 5% of his working time to the Company, and has not entered into a non-disclosure or a non-competition agreement with the Company.

 

Yan Namer, Director

 

Yan Namer was appointed to the Board of Directors on April 14, 2022. Mr. Namer is currently the CEO of a CSE listed company called empatho. Prior to this, Mr. Namer has had a career with various companies in different industries, which include application technology, artificial intelligence, and distribution.

 

Mr. Namer earned a Bachelor of Commerce degree from EDC Business School in Paris, France, and earned a Master of Business Administration from Université d'Évry in Paris, France. He will devote approximately 5% of his working time to the Company, and has not entered into a non-disclosure or a non-competition agreement with the Company.

 

Mr. Namer resigned as a director of the Company on March 30, 2023.

 

Family Relationships

 

There are no family relationships between any of our officers and directors.

 

Significant Employees

 

We do not have any significant employees other than our current executive officers named in this Report.

  

Involvement in Certain Legal Proceedings

 

Our directors and executive officers have not been personally involved in any of the following events during the past ten years:

 

  ● any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
  ● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
  ● being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
  ● being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
  ● being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
  ● being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

 33 
 

Conflicts of Interest

 

Investors should be aware of the following potential conflicts of interest:

 

  ● None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities.

 

 

Board Leadership Structure and the Board’s Role in Risk Oversight

 

The Board of Directors currently does not have an independent Chairman. Our Chief Executive Officer acts as the Chairman of the Board. The Board determined that in the best interest of the Company the most effective leadership structure at this time is not to separate the roles of Chairman and Chief Executive Officer. A combined structure provides the Company with a single leader who represents the Company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below. Should the Board conclude otherwise, the Board will separate the roles and appoint an independent Chairman.

 

 

  ● This structure creates efficiency in the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connected to the overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of Directors allowing for any concerns or risks of any individual director to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure, and Mr. Elituv’s continuation in the combined role of the Acting Chairman and Chief Executive Officer is in the best interest of the stockholders.

 

  ● The Company believes that the combined structure is necessary and allows for efficient and effective oversight, given the Company’s relatively small size, its corporate strategy and focus.

 

 

The Board of Directors does not have a specific role in risk oversight of the Company. The Chairman, President and Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.

 

 Independent Directors

 

Our Board of Directors has determined that Ryan Wilson and Bradley Southam are “independent directors” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). As of March 24, 2023, our common stock is quoted on the OTC Pinks tier of the OTC Markets.

   

Committees of the Board

 

The Board of Directors has the responsibility for establishing broad corporate policies and reviewing our overall performance rather than day-to-day operations. The Board's primary responsibility is to oversee management of our company and, in so doing, serve the best interests of our company and our stockholders. Our full Board of Directors performs all of the functions normally designated to a Compensation Committee and Nominating Committee.

 

Audit Committee

 

Audit Committee

 

The primary function of the Audit Committee is to assist the Board in its oversight responsibilities of the integrity of the Company’s financial statements; the Company’s compliance with legal and regulatory requirements as they relate to the Company’s financial statements; the qualifications, independence and performance of the Company’s external auditor; the enterprise risk management process; internal control over financial reporting and disclosure controls and procedures; the performance of the Company’s internal audit function; and performing additional duties set out or otherwise delegated to the Audit Committee by the Board.

 

 34 
 

On October 26, 2021, the Company’s Board of Directors established an Audit Committee and adopted an Audit Committee Charter. The Company’s Board of Directors appointed Nadav Elituv, Ryan Wilson and Bradley Southam to serve as members of the Audit Committee until the Company’s next annual meeting of shareholders. The Audit Committee, does not have a member who would qualify as an “audit committee financial expert” within the definition of Item 407(d)(5)(ii) of Regulation S-K.

Procedure of Nominating Directors

 

There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.

 

The Board of Directors will consider candidates for director positions that are recommended by any of our stockholders. The recommended candidate should be submitted to us in writing addressed to 1035 Queensway East, Mississauga, Ontario L4Y 4C1. The recommendation shall include the following information: name of candidate; address, phone, and fax number of candidate; a statement signed by the candidate certifying that the candidate wishes to be considered for nomination to our Board of Directors and stating why the candidate believes that he or she meets the director qualification criteria and would otherwise be a valuable addition to our Board of Directors; a summary of the candidate's work experience for the prior five years and the number of shares of our stock beneficially owned by the candidate.

 

The Board will evaluate the recommended candidate and will determine whether or not to proceed with the candidate in accordance with our procedures. We reserve the right to change our procedures at any time to comply with the requirements of applicable laws.

 

Code of Ethics

 

 We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We will provide a copy of our Code of Ethics to any person, free of charge, upon written request to Nadav Elituv at Two Hands Corporation, 1035 Queensway East, Mississauga, Ontario, Canada L4Y 4C1.

  

 

 

 35 
 

 

ITEM 11. EXECUTIVE COMPENSATION.

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

Name & Principal Position  Year  Salary ($)  Bonus
($)		  Stock Awards ($)  Option Awards ($)  Non-Equity Incentive Plan Compensation ($)  Nonqualified Deferred Compensation Earnings ($)  All Other Compensation ($)  Total ($)
Nadav Elituv,
Principal
Executive
Officer,
President,
Chairman
and
Director		   2022   $195,551   $—     $13,504,200   $—     $—     $—     $—     $13,699,751 
    2021   $129,600   $—     $198,850   $—     $—     $—     $—     $328,450 
Steven Gryfe, Chief Executive Officer   2022   $—     $—     $—     $—     $—     $—     $—     $—   
    2021   $—     $—     $11,500   $—     $—     $—     $—     $11,500 

  

No shares of common stock of the Company have been sold by the Officers other than reported on Form 4, Statement of Changes of Beneficial Ownership of Securities, filed with the Securities Exchange Commission and remain in book-entry held by the Company’s transfer agent.

 

Stock Option Grants

 

We have not granted any stock options to the executive officers or directors since our inception.

 

Outstanding Equity Awards at Fiscal Year-End

 

On December 31, 2022, there were no unexercised options and no equity incentive plan awards for each name executive officer.

 

We do not have any qualified or non-qualified defined benefit plans or nonqualified defined contribution plans or other deferred compensation plans. There are no contracts, agreements, plans or arrangements that provide for payment to our named executive officer following or in connection with the resignation, retirement or termination of the named executive officer, a change in control of our Company, or a change in the named executive officer's responsibilities following a change in control.

 

Employment Agreements

 

On August 7, 2020, the Company executed an employment agreement for the period from July 1, 2020 to June 30, 2021 with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 50,000,000 shares of Common Stock of the Company and an annual salary of $151,200 payable monthly on the first day of each month from available funds. On December 31, 2021, there were no shares of common stock due Nadav Elituv under the employment agreement.

 

On July 1, 2021, the Company executed an employment agreement for the period from July 1, 2021 to June 30, 2022 with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 30,000 shares of Series A Convertible Preferred Stock of the Company, 60,000,000 shares of Common Stock of the Company and an annual salary of $216,000 payable monthly on the first day of each month from available funds, commencing on July 1, 2021. On October 1, 2021, the Company and Nadav Elituv amended the employment agreement to (i) cancel annual salary of $216,000 payable monthly and (ii) enter in to a consulting agreement to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of $17,400 (CAD $22,000 per month) for services for the period from October 1, 2021 to June 30, 2022.

 

 36 
 

On March 26, 2022, the Company and Nadav Elituv further amended the employment agreement to (i) change the termination date from June 30, 2022 to December 31, 2022; (ii) pay an additional 10,500 shares of Series A Convertible Preferred Stock of the Company and (iii) pay an additional 50,000,000 shares of Common Stock of the Company.

 

On July 1, 2022, the term of the consulting contract with 2130555 Ontario Limited was extended to June 30, 2023.

 

COMPENSATION OF DIRECTORS

 

The following table summarizes compensation paid to all of our directors who were not our named executive officers during the fiscal year ended December 31, 2022:

 

Name  Fees Earned of Paid in Cash ($)  Stock Awards ($)  Option Awards ($)  All Other Compensation ($)  Total ($)
Ryan Wilson, Director  $—     $—     $—     $—     $—   
Bradley Southam, Director  $26,307   $—     $—     $—     $26,307 
Yan Namer, Director  $—     $—     $—     $—     $—   

 

During the years ended December 31, 2022 and 2021, the Company paid Linus Creative Services, a business controlled by Bradley Southam, a director of the Company, $26,307 and $10,054, respectively, for advertising services.

 

DIRECTOR COMPENSATION

 

We did not provide any cash compensation to directors for their service as directors during the last fiscal year.

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

During the fiscal year ended December 31, 2022, Nadav Elituv, Ryan Wilson, Bradley Southam and Brandon Milner served as our directors. We do not have a separately standing compensation committee and our board of directors did not perform similar functions as there was no executive compensation paid from our inception on April 3, 2009 through the end of our most recently completed fiscal year ended December 31, 2022. Our board of directors performs the functions of a compensation committee, however as of date of this Report, the board of directors have not have any set compensation.

 

During the fiscal year ended December 31, 2022, none of our executive officers:

 

·served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire the board of directors) of another entity, one of whose executive officers served as a member of our board of directors;
·served as a director of another entity, one of whose executive officers served as a member of our board of directors; or
·served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire the board of directors) of another entity, one of whose executive officers served as a member of our board of directors.

 

 

 

 

 

 

 

 

 

 

 

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information as of March 23, 2023, as to shares of our shares of common stock beneficially owned by: (1) each person who is known by us to own beneficially more than 5% of our shares of common stock, (2) our named executive officer listed in the summary compensation table, (3) each of our directors and (4) all of our directors and executive officers as a group.

 

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

 

    Common Stock   Series A Convertible Preferred Stock
Beneficial Owner (1)   Number of Shares Beneficially Owned   Percentage of Class (2)   Number of Shares Beneficially Owned   Percentage of Class (3)
                 
Nadav Elituv, Chief Executive Officer and Director                  122,400,427 (4)   56.09%   25,000 (5)   100%
                 
Ryan Wilson, Director             42,501   0.02%   -   -
                 
Bradley Southam, Director                  42,503   0.02%   -   -
                 
Yan Namer, Director                  -   0.00%   -   -
                 
Steven Gryfe, CFO   42,502   0.02%   -   -
                 
All directors and executive officers (4 persons)   122,527,933   56.15%   25,000   100%

 

Notes:

 

  (1) Unless otherwise noted, the address of the reporting person is c/o Two Hands Corporation, 1035 Queensway East, Mississauga, Ontario, Canada L4Y 4C1.

 

  (2) Based on 193,226,548 shares of common stock outstanding as of March 23, 2023 and shares of common stock that the reporting person has the right to acquire within 60 days from the date thereof.

 

  (3) Based on 25,000 shares of Series A Convertible Preferred Stock outstanding as of March 23, 2023.

 

  (4) Includes 91,054,392 shares of common stock held personally by Mr. Elituv individually, 25,000,000 shares of common stock issuable up on the conversion of 25,000 shares of Series A Convertible Preferred Stock and 6,346,035 shares of common stock held by 2130555 Ontario Limited.

 

  (5) Each share of our Series A Convertible Preferred Stock converts into 1,000 shares of our common stock. Series A Convertible Preferred Stock are non-voting.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

On October 1, 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “2021 Plan”) to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company's business. Pursuant to the 2020 Plan, the Board may grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units. to eligible persons. The maximum aggregate number of shares of common stock with respect to which awards granted under the Plan shall not exceed 200,000,000. At December 31, 2021, there are 0 shares of common stock available under the 2021 Plan.

 

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Disclosure of Commission Position of Indemnification for Securities Act Liabilities

 

In accordance with the provisions in our articles of incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.

 

Insofar as indemnification for liabilities arising under the U.S. Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the U.S. Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the U.S. Securities Act and will be governed by the final adjudication of such issue. 

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Our Policy Concerning Transactions with Related Persons

 

Under Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a “significant shareholder”), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.

 

We recognize that transactions between us and any of our Directors or Executives or with a third party in which one of our officers, directors or significant shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our Company and stockholders.

 

The Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such transactions, as reported or disclosed to the Committee by the independent auditors, employees, officers, members of the Board of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated party. 

 

Transactions

 

As of December 31, 2022 and 2021, advances and accrued salary of $185,473 and $39,985, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment.

 

During the year ended December 31, 2022, the Company issued advances due to related party for $167,438 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $127,616 in cash. In addition, the Company accrued salary of $195,551 due to Nadav Elituv for the year ended December 31, 2022 and issued a promissory note for $85,285 to settle due to related party.

 

Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained from non-related persons.

 

The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated at arm's length.

 

Director Independence 

 

Our Board of Directors has determined that Ryan Wilson and Bradley Southam are “independent directors” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). As of the of this Report, our common stock is quoted on the OTC Pinks tier of the OTC Markets.

 

 39 
 

Indemnification

  

In accordance with the provisions in our Certificate of Incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Fees related to services performed by Sadler, Gibb & Associates, LLC for the years ended December 31, 2022 and 2021 were as follows:

 

   2022  2021
Audit Fees  $66,500   $61,450 
Audit-Related Fees   0    0 
Tax Fees   0    0 
All Other Fees   0    0 
Total  $66,500   $61,450 

 

Pre-Approval Policies

 

The Board's policy is to pre-approve all audit services and all non-audit services before they commence, including the fees and terms thereof, to be provided by our independent auditor. All of the services provided during the fiscal year ended December 31, 2022 were pre-approved. No audit, review or attest services were approved in accordance with Section 2-01(c)(7)(i)(C) of Regulation S-X during the fiscal year ended December 31, 2022.

 

During the approval process, the Board considered the impact of the types of services and the related fees on the independence of the independent registered public accounting firm. The services and fees were deemed compatible with the maintenance of that firm's independence, including compliance with rules and regulations of the SEC. Throughout the year, the Board will review any revisions to the estimates of audit fees initially estimated for the engagement.

 

 40 
 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

a. The following documents are filed as part of this annual report on Form 10-K:

 

1. FINANCIAL STATEMENTS

 

The following documents are filed in Part II, Item 8 of this annual report on Form 10-K:

 

Reports of Independent Registered Public Accounting Firm

 

Consolidated Balance Sheets on December 31, 2022 and 2021

 

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

 

Consolidated Statement of Stockholders' Deficit for the years ended December 31, 2022 and 2021

 

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

 

Notes to Consolidated Financial Statements

 

2. FINANCIAL STATEMENT SCHEDULES

 

All financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise included.

 

 41 
 

3. EXHIBITS

 

The exhibits listed below are filed with or incorporated by reference in this annual report on Form 10-K.

 

      Incorporated by reference
Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date
3.1 Certificate of Incorporation, dated April 3, 2009   S-1   3.1 6/22/2010
3.2 Bylaws, dated April 3, 2009   S-1   3.2 6/22/2010
3.3 Certificate of Amendment to the Certificate of Incorporation, dated August 8, 2013   10-Q 6/30/2013 3.3 8/14/2013
3.4 Certificate of Amendment to the Certificate of Incorporation, dated July 27, 2016   8-K 9/1/2016 3.1 9/1/2016
3.5 Certificate of Amendment to the Certificate of Incorporation, dated August 27, 2018   8-K 9/10/2018 3.1 9/10/2018
3.6 Certificate of Amendment to the Certificate of Incorporation, dated November 18, 2019   8-K 12/12/2019 3.1 12/12/2019
3.7 Certificate of Amendment to the Certificate of Incorporation, dated July 16, 2021   8-K 7/16/2021 3.1 7/22/2021
3.8 Certificate of Amendment to the Certificate of Incorporation, dated January 3, 2022   8-K 1/3/2022 3.1 1/6/2022
3.9

Certificate of Amendment to the Certificate of Incorporation, As Amended, dated

March 21, 2022

   8-K 4/25/2022 3.1 4/26/2022
4.1 Specimen Stock Certificate   S-1   4.1 6/22/2010
4.2 Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, dated August 6, 2013   10-Q 6/30/2013 4.2 8/14/2013
4.3 Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, dated December 12, 2019  

8-K

 

12/12/2019

 

3.1

 

12/19/2019

 

4.4 Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated October 7, 2020   8-K 10/07/2020 3.1 10/08/2020
4.5 Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated June 24, 2021      8-K 6/24/2021 3.1 7/1/2021
4.6 Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, dated September 1, 2021   8-K 9/1/2021 3.1 9/1/2021
4.7 Amended and Restated Designation of Series A Convertible Preferred Stock of Two Hands Corporation, dated April 21, 2022   8-K 4/21/2022 3.1 4/26/2022
4.8 Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated July 5, 2022  10-Q  6/30/2022  4.8 8/15/2022 
4.9 Certificate of Designation, Preference and Rights of Series E Preferred Stock, dated October 3, 2022   8-K 10/4/2022 3.1 10/11/2022
10.1 Innovative Product Opportunities Inc. Trust Agreement   S-1   10.1 6/22/2010
10.2 Side Letter Agreement, The Cellular Connection Ltd., dated January 8, 2018   10-K 12/31/2017 10.2 3/29/2018
10.3 Side Letter Agreement, Stuart Turk, dated January 8, 2018   10-K 12/31/2017 10.3 3/29/2018
10.4 Side Letter Agreement, Jordan Turk, dated April 12, 2018   10-Q 3/31/2018 10.4 5/21/2018
10.5 Side Letter Agreement, Jordan Turk, dated May 10, 2018   10-Q 3/31/2018 10.5 5/21/2018
10.6 Side Letter Agreement, Jordan Turk, dated September 13, 2018   10-K

12/31/2018

 

 10.6 4/1/2019
10.7 Side Letter Agreement, The Cellular Connection Ltd., dated January 31, 2019   10-K 12/31/2018 10.7 4/1/2019
10.8 Side Letter Agreement, Stuart Turk, dated January 31, 2019   10-K 12/31/2018 10.8 4/1/2019
31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X        
32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X        
17.1

Correspondence on departure of director - Resignation letter of Yan Namer dated March 30, 2023

 X        
101.INS XBRL Instance Document – the instance document does not appear in the Interactive Data Files as its XBRL tags are embedded within the Inline XBRL document X        
101.SCH XBRL Taxonomy Extension Schema Document X        
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X        
101.LAB XBRL Taxonomy Extension Label Linkbase Document X        
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X        
101.DEF XBRL Taxonomy Extension Definition Linkbase Definition X        
104 Cover page formatted as Inline XBRL and contained in Exhibit 101 X        

 

 42 
 

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

 

ITEM 16. FORM 10-K SUMMARY. None

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  

   
  TWO HANDS CORPORATION
   
Dated: March 31, 2023

By: /s/ Nadav Elituv

Name: Nadav Elituv

Title: President, Chief Executive Officer and Director

(Principal Executive Officer)

   
 

By: /s/ Steven Gryfe

Name: Steven Gryfe

Title: Chief Financial Officer

(Principal Financial and Accounting Officer)

  

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

 

 

SIGNATURE TITLE DATE
     
     

By: /s/ Nadav Elituv

Nadav Elituv

President, Chief Executive Officer

and Director

(Principal Executive Officer)

 March 31, 2023
     

By: /s/ Steven Gryfe

Steven Gryfe

Chief Financial Officer

(Principal Financial and Accounting Officer)

 March 31, 2023
     

By: /s/ Ryan Wilson

Ryan Wilson

 Director March 31, 2023
     

By: /s/ Bradley Southam

Bradley Southam

 Director March 31, 2023
     

 

  

 43 

 

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