| Business, Going Concern, Liquidity and Summary of Significant Accounting Policies | 1.
BUSINESS, GOING CONCERN, LIQUIDITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description
of Business and Current Financial Condition Medifocus
Inc. (the “Company” or “Medifocus”) was incorporated under the Business Corporations Act (Ontario) on
April 25, 2005. Medifocus develops and commercializes minimally invasive focused heat systems for the treatment of cancerous and
benign tumors, and enlarged prostate, medically known as Benign Prostate Hyperplasia (“BPH”). The
Company owns two focused heat technology platforms with comprehensive US and international patent protection:
● The
Endo-thermotherapy Platform-from which Prolieve Thermodilatation System (“Prolieve”) was developed, can potentially
be used to treat cancers in prostate, rectal, cervical and esophageal, and
● The
Adaptive Phased Array (“APA”) Microwave Focusing Platform-invented by MIT, licensed to Medifocus, directs precisely
focused microwave energy at tumor center to induce shrinkage or eradication of tumors without undue harm to surrounding tissue.
The Company’s APA 1000 Breast Cancer Treatment System, developed from the APA technology platform is currently in pivotal
Phase-III clinical trials. Going
Concern Consideration Effective
April 1, 2016, the Company adopted ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40) The
Company’s operations are subject to certain risks and uncertainties including, among others, current and potential competitors
with greater resources, lack of operating history and uncertainty of future profitability and possible fluctuations in financial
results. Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the
Company’s Prolieve operation, research and development and financing activities. The Company believes these expenditures
are essential for the commercialization of its technologies. The Company expects its operating losses to continue in the near
future as it continues its Prolieve sales and marketing activities. Due to continued operating losses, there is substantial doubt
regarding the Company’s ability to continue as a going concern. The Company’s ability to achieve profitability is
dependent upon its ability to operate its Prolieve business profitably and to obtain governmental approvals, produce, and market
and sell its new product candidates. There can be no assurance that the Company will be able to commercialize its technology successfully
or that profitability will ever be achieved. The operating results of the Company have fluctuated significantly in the past. The
Company expects that its operating results will fluctuate significantly in the future and will depend on a number of factors,
many of which are outside the Company’s control. The
Company will need substantial additional funding in order to sustain its operation, to complete the development, testing and commercialization
of its product candidates. The commitment to these projects will require additional external funding, at least until the Company
is able to generate sufficient cash flow from the sale of one or more of its products to support its continued operations. If
adequate funding is not available, the Company may be required to delay, scale back or eliminate certain aspects of its operations
or attempt to obtain funds through unfavorable arrangements with partners or others that may force it to relinquish rights to
certain of its technologies, products or potential markets or that could impose onerous financial or other terms. Furthermore,
if the Company cannot fund its ongoing development and other operating requirements, particularly those associated with its obligations
to conduct clinical trials under its licensing agreements, it will be in breach of these licensing agreements and could therefore
lose its license rights, which could have material adverse effects on its business. The Company is not in compliance with the
provisions of outstanding debt agreements, and it has not remitted quarterly royalty payments to Boston Scientific Corporation
pursuant to the terms of its purchase agreement for Prolieve. The Company has not paid interest owing to certain debt holders
of the convertible debentures, and is in default of the terms of the debentures. Subsequent to March 31, 2019, certain debt holders
have launched action against the Company related to the outstanding debt. Additionally, any unfavorable judgements on the existing
claims against the Company can potentially cause significant financial hardship and other damages to the Company. Additionally,
the Company has uncertain ongoing litigation which could cause significant financial hardship to the company’s resources,
see note 8 for further analysis Management
is continuing its efforts to obtain additional funds through equity financing and through the negotiation of debt agreements to
ensure that the Company can meet its obligations and sustain operations. Additionally, the Company has reduced costs of operations,
as the Company has eliminated certain positions that do not hold value to the Company. Management has also reduced debt by settling
the debt with common shares. Although, the Company’s positive cash flows from operating activities is a positive sign for
the Company, it is not enough to eliminate the risk of uncertainty in the Company’s future. These
factors raise substantial doubt about the ability of the Company to continue as a going concern.
The consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue
in existence. Such adjustments could be material. Basis
of Presentation and Principles of Consolidation The
accompanying consolidated financial statements of Medifocus, Inc. have been prepared in accordance with generally accepted accounting
principles in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiary
Celsion (Canada) Inc. All intercompany transactions have been eliminated. There were no transactions for Celsion (Canada) Inc.
for the years ended March 31, 2019, 2018 and 2017. Unless
otherwise noted, all references to “$” or “dollar” refer to the United States dollar. The Company operates
in a single business segment, focused heat systems for targeted thermotherapy of surface, subsurface and deep seated localized
and regional cancers. Substantially all of the Company’s revenue is generated, and assets are located, in the United States. Foreign
Currency Effective
April 1, 2013, the Company changed its reporting currency from the Canadian dollar (“CAD”) to the U.S. dollar in anticipation
of filing its financial statements with the U.S. Securities and Exchange Commission. Effective April 1, 2014, the Company changed
its functional currency and that of its wholly owned subsidiary to the U.S. dollar. As a result, all translation adjustments prior
to April 1, 2014 were recognized into other income (expense) in the year ending March 31, 2015. Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting period. The consolidated financial statements
include significant estimates for the expected economic life and value of our licensed technology, allowance for doubtful accounts,
value of contingent consideration, value of our debt issuances, accruals for estimated product returns, allowance for inventory
obsolescence, allowance for our net operating loss carry forward, contingencies and related valuation allowance for tax
purposes, stock-based compensation related to employees and directors, consultants and advisors. Because of the use of
estimates inherent in the financial reporting process, actual results could differ significantly from those estimates. Currency
Risk The
Company held its cash balances within banks in Canada in Canadian dollars and with banks in United States in United States dollars.
The Company’s operations are mainly conducted in United States of America however the Company has transactions in Canada
which are affected by the fluctuation of the currency rates. The value of the United States dollar against the Canadian dollar
may fluctuate with the changes in economic conditions. During
the year ended March 31, 2019, in comparison to the prior year, the Canadian dollar strengthened in relation to the US dollar and
upon the translation of the Company’s debt and accrued expenses held in Canadian dollars, the Company recorded a currency
gain of $50,404 (2018- Loss of $42,040 and 2017- Gain of $26,621), in other income (expense) on the consolidated statements of
operations and comprehensive loss. Credit
risk and economic dependence Credit
risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge
an obligation. The financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable.
The Company maintains cash with high credit quality financial institutions located in the United States and Canada. The
Company provides credit to its customers in the normal course of its operations. It carries out, on a continuing basis, credit
checks on its customers. The Company’s operations rely significantly on one supplier and Company can not easily source alternative
suppliers. Credit
Concentration One
customer represented a concentration of approximately 15% of total trade receivables for the years ended March 31, 2019 and 2018.
No individual customer represented more than 10% of revenues for the years ended March 31, 2019, 2018 and 2017. The Company’s
sales are primarily in the United States. Vendor
Concentration and Vendor Deposits The
Company currently purchases 100% of its Prolieve catheter inventory from one supplier. Alternative suppliers and alternative catheters
are not currently available. As of March 31, 2019 and 2018, the Company maintained a deposit of $0 and $221,330, respectively,
with its vendor. Fair
Value Measurements The
Company’s consolidated statements of financial position include various financial instruments (primarily cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, payable to Boston Scientific Corporation, accrued interest payable, and
notes payable) recorded at cost, which approximates their fair value. Fair value is the price that would be received from the
sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement
date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs
used in measuring fair value. These tiers include:
● Level
1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
The fair value hierarchy gives the highest priority to Level 1 inputs.
● Level
2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.
● Level
3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest
priority to Level 3 inputs. In
connection with the acquisition of Prolieve, the Company owes additional purchase consideration of up to $2.5 million (contingent
consideration) based on the sales of Prolieve products after their acquisition. The contingent consideration is measured at fair
value on a recurring basis using Level 3 inputs, and the fair value is determined using unobservable inputs such as the
discount rate. The change in the fair value of the contingent consideration of $35,878, $54,185 and $83,189 for the years ended
March 31, 2019, 2018 and 2017, respectively, is reflected as loss from change in fair value of contingent consideration
in the accompanying consolidated statements of operations and comprehensive loss. See note 2. The
Company has no financial assets and liabilities measured at fair value on a non-recurring basis. The Company’s long-lived
assets are measured at fair value on a non-recurring basis only when an impairment is deemed to occur. Fair
Value of Financial Instruments The
carrying amounts of financial instruments classified as current assets or liabilities, including accounts receivable, accounts
payable and accrued expenses approximate fair value because of the short maturity of these instruments. Other
Comprehensive (Loss) Income and Accumulated Other Comprehensive (Loss) Income Other
comprehensive (loss) income includes the total of the Company’s net loss and all other changes in equity other than transactions
with owners, including changes in equity for cumulative translation adjustments resulting from the consolidation of foreign subsidiary
as the financial statements of the subsidiary was previously accounted for using the local currency as the functional currency.
The Company did not recognize any foreign currency translation losses during the years ended March 31, 2019, 2018 and 2017. Cash
and Cash Equivalents The
Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. All interest
bearing and non-interest bearing accounts are guaranteed by the FDIC up to $250,000. The Company may maintain cash balances in
excess of FDIC coverage. Management considers this to be a normal business risk. Accounts
Receivable – Trade and Harmonized Sales Tax Trade The
Company extends credit to customers on an unsecured basis and payment terms are typically 30 days from delivery or service. The
Company’s receivables are primarily related to Prolieve products and services. Management uses the aging account method
to assess the company’s allowance for doubtful accounts. The aging account method uses the number of days outstanding for
the underlying invoices that have been past due. Receivables are written off when it is determined that the underlying invoices
are uncollectible. The
Company maintained an allowance for doubtful accounts of $36,523 and $46,363 as of March 31, 2019 and 2018, respectively. Harmonized
Sales Tax During
the year ended March 31, 2016 the Company had a receivable from a Canadian tax agency for a harmonized sales tax, however, management
was uncertain as to the collectability of the asset. During the year ended March 31, 2016, the Company decided to write-off the
entire balance until the receivable is collected. During the year ended March 31, 2017, the collectability was ensured and the
Company recovered a significant portion of the receivable. As the recovery (write-off) is considered by the Company as an infrequent
occurrence and it is not part of the trade receivable balance, the transaction is included as a gain in other income (expense)
in the statements of operations and comprehensive loss for the years ended March 31, 2017. Accounts
Receivable consisted of the following as of March 31, 2019 and 2018.
March
31, 2019 March
31, 2018
Accounts
receivable trade $ 529,542 $ 585,835
Accounts
receivable - Harmonized sales tax 6,364 5,387
Allowance
for doubtful accounts (36,523 ) (46,363 )
$ 499,383 $ 544,859 Inventory
Inventory
is valued at the lower of cost or market and consists primarily of console units and single-use treatment catheters. Current inventory
of catheters and consoles consist of the direct costs of acquiring the inventory from vendors. Certain non-current inventory of
console units, which were originally held for sale, were classified as property and equipment during the year ended March 31,
2016 as the Company began using the console units in operations. The carrying amount was adjusted prior to the transfer of the
assets for any depreciation expense that would have been recognized since acquisition had the asset been classified as held for
sale. The Company recognized a loss on impairment of long-lived assets in other income (expense) of the statement of operations
and comprehensive loss in the amount of $99,020, during the year ended March 31, 2016, related to this transaction. Inventory
is relieved using the first-in, first-out method and consists of the following at March 31, 2019 and March 31, 2018.
March
31, 2019 March
31, 2018
Finished
Goods – Catheters $ 104,994 $ 199,361
Finished
Goods – Consoles 4,712 4,712
Total
Inventory $ 109,706 $ 204,073 Property
and Equipment Property
and equipment is stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the
related assets, ranging from three to seven years, using the straight-line method. Major renewals and improvements are capitalized
and ordinary repairs and maintenance are expensed as incurred. The
Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted
cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the
amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. Equity
Method Investments During
the year ended March 31, 2018, the Company entered into a sale agreement of their rights to the Gene Therapy platform along
with a $50,000 deposit for consideration of $100,000 to ThermeGene Corporation which was offset by approximately $64,000 in
payables leaving a remaining receivable balance of approximately $36,000. The Company recorded a $50,000 gain in connection
with the sale of the platform. The Company received 10% of the purchaser’s shares, ThermeGene, which are valued at $0,
which will remain anti-dilutive until ThermeGene Corporation raises $2,000,000. During the year ended March 31, 2019, the
receivable in the amount of approximately $36,000 was deemed uncollectable. The write off is included in other income
(expense) in the accompanying consolidated statements of operations and comprehensive loss. Convertible Debt Instruments When the Company has determined that the
embedded conversion options should not be bifurcated from their host instruments the Company accounts for convertible debt instruments
in accordance with ASC 470-20 Debt with Conversion and Other Options. The Company records, when necessary, discounts to convertible
notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value
of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the
note. The Company amortizes any debt discount over the term of the notes, using the straight-line method, which approximates the
effective interest method. The Company records, when necessary, any induced conversion expense, at the time of conversion for
the difference between the reduced conversion price per share and the original conversion price per share. Settlement of Debt for Shares Settlements of debt are recorded by the
Company as a reduction of the liability and an increase in common stock on the date of the transaction. Any difference in the
fair value of the Company’s stock and debt being settled is treated as a gain or loss in the Company’s consolidated
statements of operations and comprehensive loss. At the reporting date, if the Company’s stock has not yet been issued this
stock is classified as common stock issuable. Common stock issuable is classified as equity in accordance with ASC 850-40 “Derivatives
and Hedging – Contracts in Entity’s Own Equity”. Contingent
Consideration In
accordance with ASC 805, upon the purchase of Prolieve, the Company recognized a contingent consideration obligation as part of
the consideration transferred in exchange for the acquired business. The initial measurement of the contingent consideration obligation
was based on its estimated fair value. The contingent consideration obligation has been re-measured to fair value at each reporting
date and will continue to be re-measured until the contingency is resolved, which is estimated to be during the year ended March
31, 2020. The contingent consideration is $11,139 and $251,935 as of March 31, 2019 and March 31, 2018, respectively. Intangible
Assets Intangible
assets consist of intellectual property and customer relationships for our Prolieve business acquired in July 2012. These intangible
assets were originally recorded at fair value and are amortized on a straight line basis over their estimated useful lives of
10 years. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable, in a manner similar to that for property and equipment. As
of March 31, 2019, management determined, during the review of intangible assets, that the life of their intellectual property
and customer relationships should be extended until the year March 31, 2029. Revenue
Recognition The
Company sells products and provides services which are used in the treatment of BPH. The Company recognizes revenue, net of sales
taxes, from the sale of Prolieve consoles and catheters upon shipment to the customer. Revenue from the sale of products is measured
at the fair value of the consideration received or receivable, net of any estimated returns. Revenue from the mobile service is
recognized upon completion of the services, which is generally upon treatment of the patient. The
Company does not have a return policy that allows customers to return product, however the Company has allowed returns on a limited
customer by customer basis. The Company’s estimate for returns is based upon its historical experience with actual returns,
however such returns have historically been limited. While such experience has allowed for reasonable estimation in the past,
history may not always be an accurate indicator of future returns. The Company continually monitors its estimates for returns
and makes adjustments when it believes that actual product returns may differ from the established accruals, if any. We record
a provision for estimated returns in the same period as the related revenue is recorded. Costs
of Sales—Products Costs
of goods sold primarily include the cost of products sold to customers on a first-in first-out basis, along with amortization
expense of our intellectual property, warranty costs, warehousing costs, freight and handling charges. Warehousing costs include
payroll and benefit costs. Costs
of Sales—Services Costs
of services consist primarily of the costs to provide mobile services to our patients, including catheter cost, amortization expense
of our intellectual property, depreciation of our mobile consoles and vehicle fleet, and payroll and benefit costs. Product
Warranty Liabilities Prolieve
products are covered by warranties against defects in material and workmanship for periods of up to 12 months. We record a liability
for warranty claims at the time of sale based on the trend in the historical ratio of product failure rates, material usage and
service delivery costs to sales, the historical length of time between the sale and resulting warranty claim and other factors.
The accrued liability for warranty provisions was approximately $4,800 and $6,300 as of March 31, 2019 and March 31, 2018, respectively. Research
and Development Expenses Research
and development costs are expensed as incurred. Income
Taxes Income
taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in
results of operations in the period that the tax rate change occurs. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized. A
tax position is recognized as a benefit only if it is “more likely than not” that the tax position taken would be
sustained in a tax examination, presuming that a tax examination will occur. The Company recognizes interest and/or penalties
related to income tax matters in the income tax expense category. Stock-Based
Compensation ASC
718 “Compensation - Stock Compensation,” prescribes accounting and reporting standards for all share-based payment
transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue
shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based
payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements
based on their fair values. That expense is recognized over the period during which an employee is required to provide services
in exchange for the award, known as the requisite service period (usually the vesting period), on a graded vesting basis. The Company accounts for stock-based compensation
issued to non-employees and consultants in accordance with the provisions of ASC 505-50 “Equity - Based Payments to Non-Employees.”
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:
(a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction
is determined at the earlier of performance commitment date or performance completion date. The estimated fair value of the options
and warrants that are ultimately expected to vest based on performance related conditions, as well as the options and warrants
that are expected to vest based on future service, is recorded over the instrument’s requisite service period and charged
to stock-based compensation. In determining the amount of options and warrants that are expected to vest, the Company takes into
account, voluntary termination behavior as well as trends of actual option and warrant forfeitures. Profit
Sharing Plan The
Company sponsors a defined contribution retirement plan through a Section 401(k) profit sharing plan. Employees may contribute
up to 15% of their pre-tax compensation. Participants are eligible for matching Company contributions up to 3% of eligible compensation
dependent on the level of voluntary contributions. Company matching contributions totaled approximately $15,000, $15,000 and $25,000
for the years ended March 31, 2019, 2018 and 2017, respectively. Shipping
and Handling The
Company incurs shipping and handling costs related to their Prolieve operations. The Company includes these expenses into
the costs of sales on the Company’s consolidated statement of operations. Shipping and handling
costs totaled approximately $37,000, $35,000 and $34,000 for the years ended March 31, 2019, 2018 and 2017, respectively. Net
Loss Per Share Basic
net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of shares
of common shares outstanding during the period. For
periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive
potential common shares is anti-dilutive due to the net losses. Outstanding stock options of 10,700,000, 10,700,000 and 6,500,000
and outstanding stock purchase warrants of 0, 0 and 18,013,250 to purchase commons shares for the years ended March 31, 2019,
2018 and 2017, respectively, were considered anti-dilutive and therefore were not included in the calculation of diluted shares.
Additionally, for the years ended March 31, 2019, 2018 and 2017, convertible promissory notes convertible into 21,640,000, 21,640,000
and 22,160,000, respectively, shares of common stock were also considered anti-dilutive and therefore were not included in the
calculation of diluted shares. Newly
Adopted Accounting Pronouncements ASU
No. 2014-09, Revenue from Contracts with Customers (Topic 606), ASU
No. 2016-01 , Financial Instruments-Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial
Liabilities ASU
No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU
No. 2017-09, Compensation-Stock Compensation (Topic 718): “Scope of Modification Accounting”. Recent
Accounting Pronouncements ASU
No. 2018-13, Fair Value Measurement (Topic 820). ASU
No. 2018-11 and 2018-10, Leases (Topic 842). ASU
No. 2018-07, Compensation-Stock Compensation (Topic 718) Emerging
Growth Company Status The Company is an “emerging growth
company” as defined in section 3(a) of the Exchange Act, as amended by the United States Jumpstart Our Business Startups
Act, enacted on April 5, 2012 (the “JOBS Act”), and will continue to qualify as an “emerging growth company”
until the earliest to occur of: (a) the last day of the fiscal year during which the Company has total annual gross revenues of
$1,000,000,000 (as such amount is indexed for inflation every 5 years by the SEC) or more; (b) the last day of the Company’s
fiscal year following the fifth anniversary of the date of the first sale of the Company’s common equity securities pursuant
to an effective registration statement under the Securities Act; (c) the date on which the Company has, during the previous 3-year
period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a ‘large accelerated
filer’, as defined in Exchange Act Rule 12b–2. Generally,
a company that registers any class of its securities under section 12 of the Exchange Act is required to include in the second
and all subsequent annual reports filed by it under the Exchange Act, a management report on internal controls over financial
reporting and, subject to an exemption available to companies that meet the definition of a “smaller reporting company”
in Exchange Act Rule 12b-2, an auditor attestation report on management’s assessment of internal controls over financial
reporting. However, for so long as the Company will continue to qualify as an emerging growth company, the Company will be exempt
from the requirement to include an auditor attestation report in the Company’s annual reports filed under the Exchange Act,
even if the Company does not qualify as a “smaller reporting company”. In addition, section 103(a)(3) of the Sarbanes-Oxley
Act of 2002 has been amended by the JOBS Act to provide that, among other things, auditors of an emerging growth company are exempt
from any rules of the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the
auditor’s report in which the auditor would be required to provide additional information about the audit and the financial
statements of the Company. Any
U.S. domestic issuer that is an emerging growth company is able to avail itself to the reduced disclosure obligations regarding
executive compensation in periodic reports and proxy statements, and to not present to its shareholders a nonbinding advisory
vote on executive compensation, obtain approval of any golden parachute payments not previously approved, or present the relationship
between executive compensation actually paid and the Company’s financial performance. As a foreign private issuer, the Company
is not subject to such requirements, and will not become subject to such requirements even if the Company was to cease to be an
emerging growth company. As
a reporting issuer under the securities legislation of the Canadian provinces of Ontario, British Columbia, and Alberta, the Company
is required to comply with all new or revised accounting standards that apply to Canadian public companies. Pursuant to Section
107(b) of the JOBS Act, an emerging growth company may elect to utilize an extended transi |
