UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2020
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period from ______________ to_______________

Commission file number: 000-56074

BIOTRICITY INC.

(Exact name of registrant as specified in its charter)

Nevada	30-0983531
State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

275 Shoreline Drive, Suite 150

Redwood City, California 94065

(Address of principal executive offices)

(650) 832-1626

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 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]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 34,326,813 shares of Common Stock, $0.001 par value, at November 12, 2020. As at that same date, the Company also has 3,219,518 Exchangeable Shares outstanding that convert directly into common shares, which when combined with its Common Stock produce an amount equivalent to 37,546,331 outstanding voting securities.

BIOTRICITY INC.

Part I – Financial Information
Item 1 – Condensed Consolidated Financial Statements	3
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	29
Item 4 – Controls and Procedures	29
Part II – Other Information	30
Item 1 – Legal Proceedings	30
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3 – Defaults Upon Senior Securities	30
Item 4 – Mine Safety Disclosures	30
Item 5 – Other Information	30
Item 6 – Exhibits	30
Signatures	31

2

PART 1

FINANCIAL INFORMATION

Item 1 – Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets at September 30, 2020 (unaudited) and March 31, 2020 (audited)	4
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended September 30, 2020 and 2019 (unaudited)	5
Condensed Consolidated Statements of Stockholders’ Deficiency for the three and six months ended September 30, 2020 and 2019 (unaudited)	6-7
Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2020 and 2019 (unaudited)	8
Notes to the Condensed Consolidated Financial Statements	9

3

BIOTRICITY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT SEPTEMBER 30, 2020 (unaudited) and MARCH 31, 2020 (audited)

(Expressed in US Dollars)

	As at September 30, 2020 (unaudited)			As at March 31, 2020 (audited)
	$			$
CURRENT ASSETS
Cash		470,174			949,848
Accounts receivable, net		1,015,824			486,187
Inventory		179,297			85,720
Deposits and other receivables		164,446			137,074
Total current assets		1,827,741			1,658,829
NON-CURRENT ASSETS
Deposits		-			33,000
Long-term accounts receivable		72,650			48,115
Operating lease right-of-use assets [Note 10]		165,296			264,472
TOTAL ASSETS		2,067,687			2,004,416
CURRENT LIABILITIES
Accounts payable and accrued liabilities [Note 4]		1,978,098			1,521,689
Convertible promissory notes and short term loans [Note 5]		2,420,171			2,068,302
Derivative liabilities [Note 7]		2,539,968			-
Operating lease obligations, current [Note 10]		168,194			213,030
Total current liabilities		7,106,421			3,803,021
NON CURRENT LIABILITIES
Federally guaranteed loans [Note 6]		1,570,990			-
Derivative liabilities [Note 7]		803,352			1,144,733
Operating lease obligations, long term [Note 10]		-			57,055
TOTAL LIABILITIES		9,480,683			5,004,809
STOCKHOLDERS’ DEFICIENCY
Preferred stock, $0.001 par value, 10,000,000 authorized as at September 30 and March 31, 2020, respectively, 1 share issued and outstanding as at September 30 and March 31, 2020, respectively [Note 8]		1			1
Series A Preferred stock, $0.001 par value (20,000 shares designated as authorized as at September 30 and March 31, 2020); 8,045 and 7,830 shares issued and outstanding as at September 30 and March 31, 2020, respectively [Note 8]		8			8
Common stock, $0.001 par value, 125,000,000 authorized as at September 30 and March 31, 2020, respectively. Issued and outstanding common shares: 33,647,809 and 32,593,769 as at September 30 and March 31, 2020, respectively, and exchangeable shares of 3,608,522 and 3,788,062 as at September 30 and March 31, 2020 [Note 8]		37,257			36,382
Shares to be issued (412,500 and 178,750 shares of common stock as at September 30 and March 31, 2020, respectively) [Note 8]		400,591			169,490
Additional paid-in-capital		46,100,177			44,015,397
Accumulated other comprehensive loss		(1,036,848	)		(857,307	)
Accumulated deficit		(52,914,182	)		(46,364,364	)
TOTAL STOCKHOLDERS’ DEFICIENCY		(7,412,996	)		(3,000,393	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY		2,067,687			2,004,416

See accompanying notes to unaudited condensed consolidated interim financial statements

4

BIOTRICITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in US Dollars)

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Six Months Ended September 30, 2020			Six Months Ended September 30, 2019
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
	$			$			$			$
REVENUE		744,585			345,906			1,196,483			672,906
Cost of revenue		420,096			114,216			611,558			226,302
NET REVENUE		324,489			231,690			584,925			446,604
EXPENSES
General and administrative expenses [Notes 7, 8 and 9]		2,781,198			2,021,279			5,986,431			4,112,297
Research and development expenses		402,340			218,525			826,223			432,021
TOTAL OPERATING EXPENSES		3,183,538			2,239,804			6,812,654			4,544,318
Other income [Note 3]		(9,608	)		-			(16,967	)		-
Accretion and amortization expense [Note 5]		342,103			-			342,103			-
Change in fair value of derivative liabilities [Note 6]		(229,337	)		-			(433,479	)		-
NET LOSS BEFORE INCOME TAXES		(2,962,207	)		(2,008,114	)		(6,119,386	)		(4,097,714	)
Income taxes		-			-			-			-
NET LOSS		(2,962,207	)		(2,008,114	)		(6,119,386	)		(4,097,714	)
Less: Preferred Stock Dividends [Note 8]		193,217			-			430,432			-
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS		(3,155,424	)		(2,008,114	)		(6,549,818	)		(4,097,714	)
Translation adjustment		(74,540	)		(16,329	)		(179,541	)		(38,915	)
COMPREHENSIVE LOSS		(3,229,964	)		(2,024,443	)		(6,729,359	)		(4,136,629	)
LOSS PER SHARE, BASIC AND DILUTED		(0.085	)		(0.056	)		(0.177	)		(0.115	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		37,172,815			35,659,133			36,971,662			35,650,380

See accompanying notes to unaudited condensed consolidated interim financial statements

5

BIOTRICITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

	Preferred stock				Common stock and exchangeable common shares				Shares to be Issued				Additional paid in capital		Accumulated other comprehensive (loss) income			Accumulated deficit			Total
	Shares		$		Shares		$		Shares		$		$		$			$			$
June 30, 2020		8,046		9		37,172,831		37,173		25,000		22,194		45,676,539		(962,308	)		(49,758,758	)		(4,985,151	)
Issuance of shares for services		-		-		83,500		84		290,000		310,456		132,682		-			-			443,222
Issuance of shares on exercise of warrants		-		-		-		-		97,500		67,941		-		-			-			67,941
Issuance of warrants for services		-		-		-		-		-		-		55,082		-			-			55,082
Stock based compensation - ESOP		-		-		-		-		-		-		235,874		-			-			235,874
Translation adjustment		-		-		-		-		-		-		-		(74,540	)		-			(74,540	)
Net loss before dividends		-		-		-		-		-		-		-		-			(2,962,207	)		(2,962,207	)
Preferred stock dividends		-		-		-		-		-		-		-		-			(193,217	)		(193,217	)
September 30, 2020 (unaudited)		8,046		9		37,256,331		37,257		412,500		400,591		46,100,177		(1,036,848	)		(52,914,182	)		(7,412,996	)

	Preferred stock				Common stock and exchangeable common shares				Shares to be Issued						Additional paid in capital		Accumulated other comprehensive (loss) income			Accumulated deficit			Total
	Shares		$		Shares		$		Shares			$			$		$			$			$
June 30, 2019		1		1		35,415,076		35,415		412,500			309,375			34,296,458		(777,549	)		(37,129,096	)		(3,265,396	)
Issuance of shares for private placement		-		-		25,000		25		-			-			14,538		-			-			14,563
Issuance of shares for services		-		-		651,677		652		(406,250	)		(305,750	)		447,635		-			-			142,536
Issuance of warrants for services		-		-		-		-		-			-			79,669		-			-			79,669
Stock based compensation - ESOP		-		-		-		-		-			-			154,996		-			-			154,996
Translation adjustment		-		-		-		-		-			-			-		(16,329	)		-			(16,329	)
Net loss before dividends		-		-		-		-		-			-			-		-			(2,008,114	)		(2,008,114	)
Preferred stock dividends		-		-		-		-		-			-			-		-			-			-
September 30, 2019 (unaudited)		1		1		36,091,753		36,092		6,250			3,625			34,993,295		(793,878	)		(39,137,210	)		(4,898,075	)

6

BIOTRICITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

	Preferred stock				Common stock and exchangeable common shares				Shares to be Issued				Additional paid in capital			Accumulated other comprehensive (loss) income			Accumulated deficit			Total
	Shares		$		Shares		$		Shares		$		$			$			$			$
March 31, 2020		7,831		9		36,381,831		36,382		178,750		169,490		44,015,397			(857,307	)		(46,364,364	)		(3,000,393	)
Issuance of preferred stock		215		-		-		-		-		-		215,000			-			-			215,000
Derivative liabilities adjustment		-		-		-		-		-		-		(41,749	)		-			-			(41,749	)
Net issuance of shares for services		-		-		874,500		875		136,250		163,160		1,342,941			-			-			1,506,976
Issuance of shares on exercise of warrants		-		-		-		-		97,500		67,941		-			-			-			67,941
Issuance of warrants for services		-		-		-		-		-		-		100,195			-			-			100,195
Stock based compensation - ESOP		-		-		-		-		-		-		468,393			-			-			468,393
Translation adjustment		-		-		-		-		-		-		-			(179,541	)		-			(179,541	)
Net loss before dividends		-		-		-		-		-		-		-			-			(6,119,386	)		(6,119,386	)
Preferred stock dividends		-		-		-		-		-		-		-			-			(430,432	)		(430,432	)
September 30, 2020 (unaudited)		8,046		9		37,256,331		37,257		412,500		400,591		46,100,177			(1,036,848	)		(52,914,182	)		(7,412,996	)

	Preferred stock				Common stock and exchangeable common shares				Shares to be Issued						Additional paid in capital		Accumulated other comprehensive (loss) income			Accumulated deficit			Total
	Shares		$		Shares		$		Shares			$			$		$			$			$
March 31, 2019		1		1		35,361,656		35,362		62,085			91,497			33,889,917		(754,963	)		(35,039,496	)		(1,777,681	)
Issuance of preferred stock		-		-		-		-		-			-			-		-			-			-
Derivative liabilities adjustment		-		-		-		-		-			-			-		-			-			-
Issuance of shares for private placement		-		-		47,585		48		-			-			28,518		-			-			28,565
Issuance of shares for services		-		-		682,512		683		(55,835	)		(87,872	)		481,351		-			-			394,161
Issuance of shares on exercise of warrants		-		-		-		-		-			-			-		-			-			-
Issuance of warrants for services		-		-		-		-		-			-			99,624		-			-			99,624
Stock based compensation - ESOP		-		-		-		-		-			-			493,885		-			-			493,885
Translation adjustment		-		-		-		-		-			-			-		(38,915	)		-			(38,915	)
Net loss before dividends		-		-		-		-		-			-			-		-			(4,097,714	)		(4,097,714	)
Preferred stock dividends		-		-		-		-		-			-			-		-			-			-
September 30, 2019 (unaudited)		1		1		36,091,753		36,092		6,250			3,625			34,993,295		(793,878	)		(39,137,210	)		(4,898,075	)

See accompanying notes to unaudited condensed consolidated interim financial statements

7

BIOTRICITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in US Dollars)

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
	(unaudited)			(unaudited)
	$			$
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss before dividends		(6,119,386	)		(4,097,714	)
Adjustments to reconcile net loss to net cash used in operations
Stock based compensation		468,393			493,885
Issuance of shares for services		1,506,976			394,161
Issuance of warrants for services		100,195			99,624
Accretion and amortization expense		342,103			-
Change in fair value of derivative liabilities		(433,479	)		-
Changes in operating assets and liabilities:
Accounts receivable		(554,173	)		(278,336	)
Inventory		(93,577	)		(8,042	)
Deposits and other receivables		5,755			62,583
Accounts payable and accrued liabilities		247,919			542,866
Net cash used in operating activities		(4,529,273	)		(2,790,973	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares, net		-			28,565
Issuance of preferred shares		215,000			-
Proceeds from federally guaranteed loans		1,570,900			-
Proceeds from exercise of stock options and warrants		67,941			-
Proceeds from convertible promissory notes, net		2,905,760			2,775,575
Proceeds from short term loans		44,000			-
Repayment of convertible promissory notes issued in prior years		(349,678	)		-
Preferred stock dividend paid		(275,815	)		-
Net cash provided by financing activities		4,178,788			2,804,140
Effect of foreign currency translation		(128,509	)		(34,082	)
Net increase (decrease) in cash during the period		(350,485	)		13,167
Cash, beginning of period		949,848			63,647
Cash, end of period		470,174			42,732

See accompanying notes to unaudited condensed consolidated interim financial statements

8

BIOTRICITY INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 (Unaudited)

(Expressed in US dollars)

1. NATURE OF OPERATIONS

Biotricity Inc. (formerly MetaSolutions, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on August 29, 2012. iMedical Innovations Inc. (“iMedical”) was incorporated on July 3, 2014 under the laws of the Province of Ontario, Canada and became a wholly-owned subsidiary of Biotricity through reverse take-over.

Both the Company and iMedical are engaged in research and development activities within the remote monitoring segment of preventative care. They are focused on a realizable healthcare business model that has an existing market and commercialization pathway. As such, its efforts to date have been devoted in building technology that enables access to this market through the development of a tangible product.

2. BASIS OF PRESENTATION, MEASUREMENT AND CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Article 8 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with Biotricity’s audited consolidated financial statements for the years ended March 31, 2020 and 2019 and their accompanying notes.

The accompanying unaudited condensed consolidated financial statements are expressed in United States dollars (“USD”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position and results of operations for the interim periods presented have been reflected herein. Operating results for the interim periods presented herein are not necessarily indicative of the results that may be expected for the year ending March 31, 2021. The Company’s fiscal year-end is March 31.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated.

Liquidity and Basis of Presentation

The Company is an emerging growth entity that is in the early stages of commercializing its first product and is concurrently in development mode, operating a research and development program in order to develop, obtain regulatory approval for, and commercialize other proposed products. The Company has incurred recurring losses from operations, and as at September 30, 2020, has an accumulated deficit of $52,914,182 and a working capital deficiency of $5,276,690. The Company launched its first commercial sales program as part of a limited market release, during the year ended March 31, 2019, using an experienced professional in-house sales team. A full market release ensued during the year ended March 31, 2020. Management anticipates the Company will attain profitable status and improve its liquidity through continued business development and after additional equity or debt capitalization of the Company. The Company has developed and continues to pursue sources of funding that management believes if successful would be sufficient to support the Company’s operating plan and alleviate any substantial doubt as to its ability to meet its obligations at least for a period of one year from the date of these consolidated financial statements. The Company raised $3,030,620 in promissory notes and short term loans during the year ended March 31, 2020. From December 2019 to June 2020, the Company also issued 8,045 Series A preferred shares, issuing 6,100 of these for cash proceeds of $6,100,000 and 1,945 of these were issued on conversion of $1,945,000 of promissory notes and accrued interest. The Company has also received a Coronavirus relief loan for economic support during COVID-19, including $1,570,900 received during the three months ended June 30, 2020 (see Note 6 – Federally Guaranteed Loans). In July 2020, the Company launched a further private placement offering of convertible notes, which had raised net cash proceeds of $2,905,760 as at September 30, 2020 (Note 5).

9

The Company’s operating plan is predicated on a variety of assumptions including, but not limited to, the level of product demand, cost estimates, its ability to continue to raise additional financing and the state of the general economic environment in which the Company operates. There can be no assurance that these assumptions will prove to be accurate in all material respects, or that the Company will be able to successfully execute its operating plan. In the absence of additional appropriate financing, the Company may have to modify its operating plan or slow down the pace of development and commercialization of its proposed products.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant estimates and assumptions include: deferred income tax assets and related valuation allowance, accruals and valuation of derivatives, convertible promissory notes, stock options, and assumptions used in the going concern assessment. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

Earnings (Loss) Per Share

The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. There were no potentially dilutive shares outstanding as at September 30, 2020 and 2019.

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

● Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.

● Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.

● Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates. These financial instruments include cash, accounts receivable, deposits and other receivables, convertible promissory notes, and accounts payable and accrued liabilities. The Company’s cash and derivative liabilities, which are carried at fair values, are classified as a Level 1 and Level 3, respectively. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.

10

Leases

The Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line items right-of-use asset, lease obligation, current, and lease obligation, long-term in the consolidated balance sheet.

Right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in our consolidated statement of income. The Company determines the lease term by agreement with lessor. As our lease do not provide an implicit interest rate, the Company uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Refer to Note 10 for further discussion.

Government loan

Loans that were received from the federal government, which contain certain operating conditions and with terms of over twelve months, are recorded by the Company as long term liabilities.

Convertible Promissory Notes Payable and Derivative Instruments

The Company has adopted the provisions of ASU 2017-11 to account for the down round features of warrants issued with private placements effective as of April 1, 2017. In doing so, warrants with a down round feature previously treated as derivative liabilities in the consolidated balance sheet and measured at fair value are henceforth treated as equity, with no adjustment for changes in fair value at each reporting period. Previously, the Company accounted for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free-standing derivative financial instruments. ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are deemed to be conventional, as defined by ASC 815-40. The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options 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. Debt discounts under these arrangements are amortized over the term of the related debt.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new guidance effectively on April 1, 2020. The Company identified and updated existing internal controls and procedures to ensure compliance with the new guidance, but such modifications were not deemed to be material to the Company’s overall system of internal control. While the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements, it required changes to the Company’s process of estimating expected credit losses on trade receivables.

11

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. One of the changes in the ASU requires a presentation of changes in stockholders’ equity in the form of a reconciliation, either as a separate financial statement or in the notes to the financial statements, for the current and comparative year-to-date interim periods. The Company presented changes in stockholders’ equity as separate financial statements for the current and comparative year-to-date interim periods beginning on April 1, 2019. The additional elements of the ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis. That model replaces the probable, incurred loss model for those assets. Through the amendments in that Update, the Board added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance. ASU 2019-11 is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impacts of the provisions of ASU 2019-12 on its financial condition, results of operations, and cash flows.

In March 2020, the FASB issued ASU No. 2030-20 Codification Improvements to Financial Instruments, An Amendment of the FASB Accounting Standards Codification: a)in ASU No. 2016-01, b) in Subtopic 820-10, c) for depository and lending institutions clarification in disclosure requirements, d) in Subtopic 470-50, e) in Subtopic 820-10, f) Interaction of Topic 842 and Topic 326, g) Interaction of the guidance in Topic 326 and Subtopic 860-20.The amendments in this Update represent changes to clarify or improve the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. For public business entities updates under the following paragraphs: a), b), d) and e) are effective upon issuance of this final update. The effective date for c) is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not expect that the new guidance will significantly impact its consolidated financial statements.

The Company continues to evaluate the impact of the new accounting pronouncement, including enhanced disclosure requirements, on our business processes, controls and systems.

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4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	As at September 30, 2020 $		As at March 31, 2020 $
Accounts payable		1,294,694		1,094,072
Accrued liabilities		683,404		427,617
		1,978,098		1,521,689

Accounts payable as at September 30, 2020, and March 31, 2020 include 404,666 and 379,881, respectively, due to a shareholder and executive of the Company, primarily as a result of that individual’s role as an employee. These amounts are unsecured, non-interest bearing and payable on demand. As at September 30, 2020, included in accrued liabilities, dividend payable was $232,544 (March 31, 2020 - $77,927).

5. CONVERTIBLE PROMISSORY NOTES AND SHORT TERM LOANS

During the three months ended September 30, 2020, the Company issued $3,302,000 in a new series of convertible promissory notes (the “Notes”) sold under subscription agreements to accredited investors. The Notes mature one year from the final closing date of the offering and accrue interest at 12% per annum. The Notes will automatically convert into common stock (in each case, subject to the trading volume of the Company’s common stock being a minimum of $500,000 for each trading day in the 20 consecutive trading days immediately preceding the conversion date), upon the earlier to occur of (i) the Company’s common stock being listed on a national securities exchange, in which event the conversion price will be equal to 75% of the volume weighted average price of the common stock for the 20 trading days prior to the conversion date, or (ii) upon the closing of the Company’s next equity round of financing for gross proceeds of greater than $5,000,000, in which event the conversion price will be equal to 75% of the price per share of the common stock (or of the conversion price in the event of the sale of securities convertible into common stock) sold in such financing. The Company may, at its discretion redeem the notes for 115% of their face value plus accrued interest. The Company is obligated to issue warrants that accompany the convertible notes and provide 50% warrant coverage. The warrants have a 3-year term from date of issuance and an exercise price that is 120% of the 20-day volume weighted average price of the Company’s common shares at the time final closing. The Company is obligated to pay the placement agent of the Notes a 12% cash fee. Net proceeds to the Company from convertible note issuances to September 30, 2020 amounted to $2,905,760 after payment of the placement agent fee. The Company is also obligated to issue warrants to the placement agent that have a 10-year term and cover 12% of funds raised, with an exercise price that is 120% of the 20-day volume weighted average price of the Company’s common shares at the time final closing. Both the noteholder and placement agent warrants will not be issued until final closing, since their exercise price is variable and will not be struck until that date. The Company determined that the conversion and redemption features, investor warrants and placement agent warrants contained in those Notes represented a single compound derivative liability that meets the requirements for liability classification under ASC 815. The Company accounted for these obligations by determining the fair value of the related derivative liability associated with the embedded conversion and redemption features, as well as investor warrants and placement agent warrants. The initial fair value of the derivative liabilities was $2,590,317 (Note 7). The Company recognized debt issuance cost in the amount of $893,336 and treated this as a deduction from the convertible note liabilities directly, as a contra-liability, and amortized the debt issuance cost over the term of the Notes. The Company recognized initial debt discount in amount of $2,093,190 and accreted the interest over the remaining lives of those Notes. For the three months ended September 30, 2020, the Company recorded amortization of debt issuance cost in the amount of $129,563, interest accretion for the debt discount in the amount of $215,540 as well as $84,676 interest accruals for those Notes. In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.

	Total
	$
Face value of convertible notes issued		3,302,000
Debt discount		(2,093,190	)
Debt issuance cost		(893,366.00	)
Day 1 value of convertible notes issued		315,444
Accretion of debt discount during three months ended September 30, 2020		215,540
Amortization of debt issuance cost during three months ended September 30, 2020		129,563
Total accretion and amortization expenses		345,103
Balance as at September 30, 2020		660,547

As at September 30, 2020, the Company also had promissory notes issued in prior years outstanding of $566,623 (March 31, 2020 – $916,301). During the six months ended September 30, 2020, one noteholder converted a $100,000 note and $15,000 accrued interest into 115 Series A preferred shares (Note 7), the Company repaid $96,913 to another noteholder, and the Company repaid $152,765 to another noteholder; in the latter case, that noteholder further paid $67,941 to exercise warrants previously held to subscribe to 97,500 shares of the Company’s common stock that will be issued subsequent to the period ended September 30, 2020 (Note 8). The promissory notes generally have a term of 1-year term, at interest rates of between 10%, and 12% with allowance for the Company to repay early, and the possibility to convert into equity on the basis of mutual consent. Management has evaluated the terms of these notes issued in prior years in accordance with the guidance provided by ASC 470 and ASC 815 and concluded that there is no derivative or beneficial conversion feature attached to these notes.

During the three months ended September 30, 2020, the Company raised short term loan in amount of $44,000. As at September 30, 2020, the Company had short term loan outstanding of $1,196,001 (March 31, 2020 – $1,152,001).

General and administrative expenses include interest expense on the above debt instruments of $109,699 and $37,456 for the three months ended September 30, 2020 and 2019, respectively.

6. FEDERALLY GUARANTEED LOANS

Economic Injury Disaster Loan (“EIDL”)

In April 2020, the Company received $370,900 from the U.S. Small Business Administration (SBA) under the captioned program. The loan has a term of 30 years and an interest rate of 3.75%, without the requirement for payment in its first 12 months. The Company may prepay the loan without penalty at will.

Payment Protection Program (“PPP”) Loan

In May 2020, Biotricity received loan proceeds of $1.2 million (the “PPP Loan”) under the Paycheck Protection Program established by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (“SBA”). The unsecured PPL Loan is evidenced by a promissory note (the “Note”), between the Company and the lending financial institution (the “Lender”). The Note has a two-year term, bears interest at the rate of 1.0% per annum, and may be prepaid at any time without payment of any premium. No payments of principal or interest are due during the six-month period beginning on the date of the Note (the “Deferral Period”). The principal and accrued interest under the Note is forgivable under certain specified circumstances if the Company uses the PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with PPP requirements. In order to obtain forgiveness of the PPP Loan, the Company must submit a request and provide satisfactory documentation regarding its compliance with applicable requirements. The Company must repay any unforgiven principal amount of the Note, with interest, on a monthly basis following the Deferral Period. The Company intends to use the PPP Loan for qualifying expenses, though no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

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7. DERIVATIVE LIABILITIES

On December 19, 2019 and January 9, 2020, the Company issued 7,830 Series A preferred shares; 6,000 of these were issued for cash proceeds of $6,000,000 and 1,830 of these were issued on conversion of $1,830,000 of promissory notes that had previously been issued for cash proceeds in October 2019. On May 22, 2020, another 215 Series A preferred shares were issued as a result of a combined transaction that included the conversion of $100,000 in promissory notes and $15,000 in accrued interest for 115 preferred shares (Note 5), as well as a purchase of 100 preferred shares for cash proceeds of $100,000.

The Company analyzed the compound features of variable conversion and redemption embedded in the preferred shares, for potential derivative accounting treatment on the basis of ASC 820 (Fair Value in Financial Instruments), ASC 815 (Accounting for Derivative Instruments and Hedging Activities), Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05, and determined that the embedded derivatives should be bundled and valued as a single, compound embedded derivative, bifurcated from the underlying equity instrument, treated as a derivative liability, and measured at fair value.

	Total
	$
Derivative liabilities as at March 31, 2019		-
Derivative fair value at issuance		1,083,952
Change in fair value of derivatives		60,781
Derivative liabilities as at March 31, 2020	$	1,144,733
Derivative fair value at issuance		41,749
Change in fair value of derivatives for the three months ended June 30, 2020		(204,142	)
Change in fair value of derivatives for the three months ended September 30, 2020		(178,988	)
Derivative liabilities related to preferred shares as at September 30, 2020	$	803,352

The lattice methodology was used to value the derivative components embedded in the preferred shares, using the following assumptions:

	Assumptions
Dividend yield		12	%
Risk-free rate for term		0.62% – 1.14	%
Volatility		120.8% – 127.4	%
Remaining terms (Years)		0.01 – 1.0
Stock price ($ per share)	$	0.650 – $1.367

For the three months ended September 30, 2020, pursuant to issuing $3,302,000 in convertible notes (Note 5) that have embedded conversion rights, redemption features and variable-priced investor warrants and placement agent warrants, the Company analyzed the compound features of variable conversion and redemption embedded in the convertible notes, for potential derivative accounting treatment on the basis of ASC 820 (Fair Value in Financial Instruments), ASC 815 (Accounting for Derivative Instruments and Hedging Activities), Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05, and determined that the embedded derivatives should be bundled and valued as a single, compound embedded derivative, bifurcated from the underlying note, treated as a derivative liability, and measured at fair value.

	Total
	$
Derivative liabilities as at March 31, 2020	$	-
Derivative fair value at issuance		2,590,317
Change in fair value of derivative liabilities during the three months ended September 30, 2020		(50,349	)
Derivative liabilities related to the convertible notes as at September 30, 2020	$	2,539,968

The lattice methodology was used to value the derivative components embedded in the convertible notes, using the following range of assumptions:

	Assumptions
Dividend yield		12	%
Risk-free rate for term		0.62% – 1.14	%
Volatility		110.5% – 129.8	%
Remaining terms (Years)		0.01 – 1.0
Stock price ($ per share)	$	1.11 – $1.56

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8. STOCKHOLDERS’ DEFICIENCY

a) Authorized stock

As at September 30, 2020, the Company is authorized to issue 125,000,000 (March 31, 2020 – 125,000,000) shares of common stock ($0.001 par value) and 10,000,000 (March 31, 2020 – 10,000,000) shares of preferred stock ($0.001 par value).

At September 30, 2020, there were 33,647,809 (March 31, 2020 – 32,593,769) shares of common stock issued and outstanding. Additionally, at September 30, 2020, there were 3,608,522 (March 31, 2020 – 3,788,062) outstanding exchangeable shares. There is currently one share of the Special Voting Preferred Stock issued and outstanding, held by one holder of record, which is the Trustee in accordance with the terms of the Trust Agreement. The Company has also issued a Series A preferred stock, $0.001 par value; 20,000 shares have been designated as authorized (as at September 30 and March 31, 2020); 8,045 and 7,830 preferred shares were issued and outstanding as at September 30 and March 31, 2020, respectively.

b) Exchange Agreement

On February 2, 2016, the Company was formed through reverse-take-over:

● The Company issued approximately 1.197 shares of its common stock in exchange for each common share of iMedical held by the iMedical shareholders who in general terms, are not residents of Canada (for the purposes of the Income Tax Act (Canada). Accordingly, the Company issued 13,376,947 shares;

● Shareholders of iMedical who in general terms, are Canadian residents (for the purposes of the Income Tax Act (Canada)) received approximately 1.197 Exchangeable Shares in the capital of Exchangeco in exchange for each common share of iMedical held. Accordingly, the Company issued 9,123,031 Exchangeable Shares;

● Each outstanding option to purchase common shares in iMedical (whether vested or unvested) was exchanged, without any further action or consideration on the part of the holder of such option, for approximately 1.197 economically equivalent replacement options with an inverse adjustment to the exercise price of the replacement option to reflect the exchange ratio of approximately 1.197:1;

● Each outstanding warrant to purchase common shares in iMedical was adjusted, in accordance with the terms thereof, such that it entitles the holder to receive approximately 1.197 shares of the common stock of the Company for each warrant, with an inverse adjustment to the exercise price of the warrants to reflect the exchange ratio of approximately 1.197:1

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● Each outstanding advisor warrant to purchase common shares in iMedical was adjusted, in accordance with the terms thereof, such that it entitles the holder to receive approximately 1.197 shares of the common stock of the Company for each advisor warrant, with an inverse adjustment to the exercise price of the Advisor Warrants to reflect the exchange ratio of approximately 1.197:1; and

● The outstanding 11% secured convertible promissory notes of iMedical were adjusted, in accordance with the adjustment provisions thereof, as and from closing, so as to permit the holders to convert (and in some circumstances permit the Company to force the conversion of) the convertible promissory notes into shares of the common stock of the Company at a 25% discount to purchase price per share in Biotricity’s next offering.

Issuance of common stock, exchangeable shares and cancellation of shares in connection with the reverse takeover transaction as explained above represents recapitalization of capital retroactively adjusting the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree.

c) Share issuances

Share issuances during the year ended March 31, 2020

On December 19, 2019, the Company issued 6,000 shares of Series A preferred stock in a private placement for gross proceeds of $6,000,000 (Note 7). The shares are convertible into common stock of the Company at a conversion price equal to the greater of $0.001 or a 15% discount to the 5-day volume weighted price at the time of conversion. The conversion rights commence 24 months after issuance, but conversion is limited to 5% of the aggregate purchase price of the holder on a monthly basis thereafter. Alternatively, the shares are convertible into common stock at a 15% discount to any qualified future common stock financing conducted by the Company. The Company may redeem the shares after 1 year for 110% of the purchase price plus accrued dividends. The preferred stock bears a dividend rate of 12% per annum. On January 9, 2020, the Company issued a further 1,830 of Series A preferred stock with same terms on conversion of $1,830,000 of promissory notes that had previously been issued for cash proceeds in 2019 (see Note 7). During the year ended March 31, 2020, the Company accrued dividends in amount of $257,927 and made a payment in amount of $180,000.

In May and July 2019, the Company issued 47,585 shares of common stock under a registered offering outstanding in the previous fiscal year, which raised proceeds of $28,565.

During the year ended March 31, 2019, the Company issued a total of 972,950 shares of common stock and recognized its obligations to issue a total of 178,750 shares of common stock to various consultants and advisors, with a cumulative fair value of $666,129 and $169,490, respectively, or $835,619 in total; these costs were recognized as general and administrative and research and development expenses, as applicable, in the statement of operations, with corresponding credit to common stock, shares to be issued, and additional paid-in-capital, respectively.

During the year ended March 31, 2020, the Company also issued an aggregate of 525,023 shares of its common stock to investors as part of the one-for-one exchange of previously issued exchangeable shares into the Company’s Common Stock, which is a non-cash transaction. No options or warrants were exercised during this period.

Share issuances during the three and six months ended September 30, 2020

During the three months ended September 30, 2020, the Company issued an aggregate of 83,500 shares, pursuant to existing obligations related to services rendered by consultants and advisors. Total fair value of these common shares, in the amount of $132,766, was determined by using the market date price on the date of issuance, recorded in general and administrative expenses and research and development expenses with corresponding credit to common stock and additional paid in capital.

During the six months ended September 30, 2020, the Company issued an aggregate of 874,500 shares, fair valued at $1,343,816.

d) Shares to be issued

As of September 30, 2020, the Company has recognized its contractual obligations to issue a total of 412,500 shares of common stock to advisors. The fair value of these shares amounted to $400,591 and has been expensed to general and administrative and research and development expenses in the consolidated statements of operations, with a corresponding credit to additional paid-in-capital. A further 97,500 shares were to be issued after September 30, 2020, in order to complete the exercise of shares which was paid for prior to September 30, 2020 (Note 5). The fair value of shares to be issued was determined by using the market price of the common stock as at the date of issuance.

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e) Warrant issuances and exercises

Warrant issuances during the year ended March 31, 2020

During the year ended March 31, 2020, the Company issued 1,021,430 warrants, respectively, as compensation for advisor and consultant services and certain promissory noteholders, which were fair valued at $277,053. Warrants issued to advisors and consultants were expensed in general and administrative expenses and amounted to $184,637, for the year ended March 31, 2020. Warrants issued to promissory notes holders were credited to additional paid-in capital in amount of $92,416. Their fair value has been estimated using a multi-nomial lattice model with an expected life of 2 to 3 years, risk free rates of 0.22% to 1.71%, stock price of $0.52 to $0.974 and expected volatility of 114.3% to 132.2%.

Warrant issuances during the three and six months ended September 30, 2020

During the three months ended June 30, 2020, the Company issued 50,000 warrants as compensation for advisor and consultant services, which were fair valued at $38,411 and expensed in general and administrative expenses and research and development expenses, with a corresponding credit to additional paid in capital. Their fair value has been estimated using a multi-nomial lattice model with an expected life of 3 years, a risk free rate ranging from 0.259% to 0.692%, stock price in range of $0.970 to $1.367 and expected volatility of 125.4% to 131.90%. During the three months ended June 30, 2020, the Company also expensed in general and administrative expenses and research and development expenses, an amount of $6,972, related to warrants issued in prior periods that vested in the current period.

During the three months ended September 30, 2020, the Company issued 72,917 warrants as compensation for advisor and consultant services, which were fair valued at $48,110 and expensed in general and administrative expenses and research and development expenses, with a corresponding credit to additional paid in capital. Their fair value has been estimated using a multi-nomial lattice model with an expected life up to 6 years, a risk free rate ranging from 0.167% to 0.640%, stock price of $1.11 and expected volatility of 121.1% to 127.6%. During the three months ended September 30, 2020, the Company also expensed in general and administrative expenses and research and development expenses, an amount of $6,972, for those warrants issued in prior periods that vested in the current period.

Warrant exercises

No warrants were exercised during the fiscal year ended March 31, 2020. During the three and six months ended September 30, 2020, 97,500 warrants were exercised, with shares for this exercise accounted for as shares to be issued subsequent to September 30, 2020 (Note 5).

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Warrant issuances, exercises and expirations or cancellations during the three months ended September 30, 2020 and preceding periods resulted in warrants outstanding at the end of those respective periods as follows:

	Broker Warrants			Consultant Warrants			Warrants Issued on Conversion of Convertible Notes			Private Placement Warrants			Total
As at March 31, 2018		384,152			669,972	*		2,734,530			1,163,722			4,952,376
Less: Exercised		(62,838	)		-			-			-			(62,838	)
Less: Expired/cancelled		-			(31,250	)		-			-			(31,250	)
Add: Issued		-			65,000			-			-			65,000
As at June 30, 2018		321,314			703,722	*		2,734,530			1,163,722			4,923,288
Less: Exercised		-			-			-			-			-
Less: Expired/cancelled		-			-			-			-
Add: Issued		-			393,333			-			-			393,333
As at September 30 2018		321,314			1,097,055	*		2,734,530			1,163,722			5,316,621
Less: Exercised		-			-			-			-			-
Less: Expired/cancelled		-			(126,250	)**		-			-			(126,250	)
Add: Issued		-			50,000			-			-			50,000
As at December 31, 2018		321,314			1,020,805	*		2,734,530			1,163,722			5,240,371
Less: Exercised		-			-			-			-			-
Less: Expired/cancelled		-			(184,916	)**		-			-			(184,916	)
Add: Issued		-			341,268			-			-			341,268
As at March 31, 2019		321,314			1,177,157	*		2,734,530			1,163,722			5,396,723
Less: Exercised		-			-			-			(458,196	)		(458,196	)
Less: Expired/cancelled		-			(5,000	)		-			-			(5,000	)
Add: Issued		-			83,750			-			-			83,750
As at June 30, 2019		321,314			1,255,907	*		2,734,530			705,526			5,017,277
Less: Exercised		-			-			-			-			-
Less: Expired/cancelled		-			(10,000	)		-			-			(10,000	)
Add: Issued		-			311,350			-			-			311,350
As at September 30, 2019		321,314			1,557,257	*		2,734,530			705,526			5,318,627
Less: Exercised		-			-			-			-			-
Less: Exercised		-			-			-			-			-
Less: Expired/cancelled		-			(35,000	)		-			-			(35,000	)
Add: Issued		-			568,000			-			-			568,000
As at December 31, 2019		321,314			2,090,257	*		2,734,530			705,526			5,851,627
Less: Exercised		-			-			-			-			-
Less: Expired/cancelled		-			(98,750	)		-			-			(98,750	)
Add: Issued		-			58,330			-			-			58,330
As at March 31, 2020		321,314			2,049,837	*		2,734,530			705,526			5,811,207
Less: Expired/cancelled		(128,676	)		(65,000	)		(911,510	)		(705,526	)		(1,810,712	)
Add: Issued		-			50,000			-			-			50,000
As at June 30, 2020		192,638			2,034,837	*		1,823,020			-			4,050,495
Less: Exercised		-			(97,500	)		-			-			(97,500	)
Less: Expired/cancelled		-			(205,000	)		-			-			(205,000	)
Add: Issued		-			72,917			-			-			72,917
As at September 30, 2020		192,638			1,805,254	*		1,823,020			-			3,820,912
Exercise Price	$	0.78-$3.00		$	0.48-$7.59			2.00			3.00
Expiration Date		December 2021 to July 2022			October 2020 to June 2030			March 2021 to November 2022			not applicable

*Consultant Warrants include warrants issued to directors and officers of the Company who were not members of the Company’s options plan at the time of issuance. As at September 30, 2020, Consultant Warrants include an aggregate of 688,806 warrants provided to an officer of the Company as compensation while not a member of any Company options plan.

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f) Stock-based compensation

2015 Equity Incentive Plan

On March 30, 2015, iMedical approved Directors, Officers and Employees Stock Option Plan, under which it authorized and issued 3,000,000 options. This plan was established to enable the Company to attract and retain the services of highly qualified and experience directors, officers, employees and consultants and to give such person an interest in the success of the Company. As of March 31, 2018, and March 31, 2017, there were no outstanding vested options and 137,500 unvested options at an exercise price of $.0001 under this plan. These options now represent the right to purchase shares of the Company’s common stock using the same exchange ratio of approximately 1.1969:1, thus there were 164,590 (35,907 had been cancelled) adjusted unvested options as at March 31, 2018. These remaining 164,590 options were exercised during the year ended March 31, 2019. No other grants will be made under this plan.

The following table summarizes the stock option activities of the Company:

	Number of options			Weighted average exercise price ($)
Granted		3,591,000			0.0001
Exercised		(3,390,503	)		0.0001
Outstanding as of December 31, 2015		200,497			0.0001
Cancelled during 2016		(35,907	)		0.0001
Outstanding as of March 31, 2018		164,590			0.0001
Exercised		(164,590	)		0.0001
Outstanding as of September 30, 2020 and March 31, 2019		-

The fair value of options at the issuance date were determined at $2,257,953 which were fully expensed during the twelve months ended December 31, 2015 based on vesting period and were included in general and administrative expenses with corresponding credit to additional paid-in-capital. During the twelve months ended December 31, 2015, 3,390,503 (2,832,500 Pre-exchange Agreement) options were exercised by those employees who met the vesting conditions; 50% of the grants either vest immediately or at the time of U.S. Food and Drug Administration (FDA) filing date and 50% will vest upon Liquidity Trigger. Liquidity Trigger means the day on which the board of directors resolve in favor of i) the Company is able to raise a certain level of financing; ii) a reverse takeover transaction that results in the Company being a reporting issuer, and iii) initial public offering that results in the Company being a reporting issuer.

2016 Equity Incentive Plan

On February 2, 2016, the Board of Directors of the Company approved 2016 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Plan seeks to achieve this purpose by providing for awards in the form of options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, performance shares, performance units and other stock-based awards.

The Plan shall continue in effect until its termination by the board of directors or committee formed by the board; provided, however, that all awards shall be granted, if at all, on or before the day immediately preceding the tenth (10th) anniversary of the effective date. The maximum number of shares of stock that may be issued under the Plan shall be equal to 3,750,000 shares; provided that the maximum number of shares of stock that may be issued under the Plan pursuant to awards shall automatically and without any further Company or shareholder approval, increase on January 1 of each year for not more than 10 years from the effective date, so the number of shares that may be issued is an amount no greater than 15% of the Company’s outstanding shares of stock and shares of stock underlying any outstanding exchangeable shares as of such January 1; provided further that no such increase shall be effective if it would violate any applicable law or stock exchange rule or regulation, or result in adverse tax consequences to the Company or any participant that would not otherwise result but for the increase.

During July 2016, the Company granted an officer options to purchase an aggregate of 2,499,998 shares of common stock at an exercise price of $2.20 subject to a 3 year vesting period, with the fair value of the options being expensed over a 3 year period. Two additional employees were also granted 175,000 options to purchase shares of common stock at an exercise price of $2.24 with a 1 year vesting period, with the fair value of the options being expensed over a 1 year period. One additional employee was also granted 35,000 options to purchase shares of common stock at an exercise price of $2.24 with a 2 year vesting period, with the fair value of the options expensed over a 2 year period.

During the year ended March 31, 2018, an additional 1,437,500 stock options were granted with a weighted average remaining contractual life from 2.76 to 9.51 years.

During the year ended March 31, 2019, an additional 270,521 stock options were granted with a weighted average remaining contractual life from 2.76 to 9.51 years. During the year ended March 31, 2019, the Company recorded stock based compensation of $1,451,261 in connection with ESOP 2016 Plan under general and administrative expenses with corresponding credit to additional paid in capital.

Based on the 2016 Option Plan, the Company is authorized to issue employee options with a 10-year term. On March 31, 2020, the Company’s Board of Directors approved the amendment of certain prior options grants, issued to current employees, previously issued with a 3-year term, such that the respective options issued under these agreements would have their term extended to 10 years. The Company revalued these options use g a lattice model with an expected life of 10 years, risk free rates of 0.46% to 0.75%, stock price of $0.974 and expected volatility of 132.2%, in order to recognize the additional expense associated with the longer term and recognized a one-time charge of $1,600,515 in share-based compensation, with a corresponding adjustment to adjusted paid in capital.

During the year ended March 31, 2020, an additional 88,100 stock options were granted with a weighted average remaining contractual life from 2.76 to 9.51 years. The Company recorded stock-based compensation of $2,408,713 in connection with ESOP 2016 Plan under general and administrative expenses with corresponding credit to additional paid in capital.

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During the three and six months ended September 30, 2020, the Company granted 45,600 and 1,857,477 of options, respectively (the latter included 1,400,000 options to an executive and director of the Company and an additional 367,647 options to another director). Their fair value, has been estimated using a multi-nomial lattice model with an expected life of up to 10 years, a risk free rate ranging from 0.17% to 0.692%, stock price in range of $0.970 to $1.367, and expected volatility of 121.9% to 131.90%.

The following table summarizes the stock option activities of the Company:

	Number of options			Weighted average exercise price ($)
Granted		4,147,498			3.2306
Exercised		-			-
Outstanding as of March 31, 2018		4,147,498			3.2306
Granted		270,521			1.8096
Exercised		-			-
Outstanding as of March 31, 2019		4,418,019			3.1436
Granted		88,100			0.7763
Expired		(112,509	)		2.723
Outstanding as of March 31, 2020		4,393,610			3.1069
Granted		1,857,477			1,1757
Exercised		-			-
Outstanding as of September 30, 2020		6,251,056			2.5331

During the three and six months ended September 30, 2020, the Company recorded stock-based compensation of $235,874 and $468,393, in connection with the 2016 equity incentive plan ($154,996 and $493,885 for the respective comparative periods ended September 30, 2019) under general and administrative expenses with a corresponding credit to additional paid in capital.

The fair value of each option granted is estimated at the time of grant using multi-nomial lattice model using the following assumptions:

	2019		2017-2018		2016-2017		2015-2016
Exercise price ($)		2.00		1.24-7.59		2.00 – 2.58		0.0001
Risk free interest rate (%)		2.27 to 2.54		1.98-2.81		0.45 - 1.47		0.04 - 1.07
Expected term (Years)		3		3		1 - 3		10
Expected volatility (%)		112.5 -141.10		97.8-145.99		101 – 105		94
Expected dividend yield (%)		0		0		0		0
Fair value of option ($)		0.28		0.6		0.88		0.74
Expected forfeiture (attrition) rate (%)		0.00		0.00		0.00 – 5.00		5.00 - 20.00

9. RELATED PARTY TRANSACTIONS AND BALANCES

The Company’s transactions with parties that may be considered to be related parties were carried out on normal commercial terms and in the course of the Company’s business, and are as follows:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Six Months Ended September 30, 2020		Six Months Ended September 30, 2019
	$		$		$		$
Salary and allowance*		149,250		144,139		299,750		279,191
Stock based compensation**		190,931		124,774		426,975		433,529
Total		340,181		268,913		726,725		712,720

The above expenses were recorded under general and administrative expenses.

* Salary and allowance include salary, car allowance, vacation pay, bonus, allowances and other compensation paid or payable to a key executive and shareholder of the Company.

** Stock based compensation represent the fair value of the options, warrants and equity incentive plans for a key executive and shareholder of the Company.

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10. LEASE

The Company has one operating lease primarily for office and administration.

The Company adopted ASC 842 – Leases using the modified retrospective cumulative catch-up approach beginning on April 1, 2019. Under this approach, the Company did not restate its comparative amounts and recognized a right-of-use asset equal to the present value of the future lease payments. The Company elected to apply the practical expedient to only transition contracts which were previously identified as leases and elected to not recognize right-of-use assets and lease obligations for leases of low value assets.

When measuring the lease obligations, the Company discounted lease payments using its incremental borrowing rate at April 1, 2019. The weighted-average-rate applied is 10%.

	$
Operating lease right-of-use asset - initial recognition		413,236
Amortization		(247,940	)
Balance at September 30, 2020		165,296
Operating lease obligation - initial recognition		413,236
Repayment and interest accretion		(245,042	)
Balance at September 30, 2020		168,194
Current portion of operating lease obligation		168,194
Noncurrent portion of operating lease obligation		-

The operating lease expense was $54,168 and $109,468, respectively for the three and six months ended September 30, 2020, and was included in the general and administrative expenses.

The following table represents the contractual undiscounted cash flows for lease obligations as at September 30, 2020.

	$
Less than one year		172,589
Beyond one year		-
Total undiscounted lease obligations		172,589

11. CONTINGENCIES

There are no claims against the company that were assessed as significant, which were outstanding as at September 30, 2020 and, consequently, no provision for such has been recognized in the consolidated financial statements.

12. SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events up to November 13, 2020, the date the condensed consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following material subsequent events:

From October 9, 2020 to October 30, 2020, the Company entered into subscription agreements with accredited investors for the sale to the investors of Notes in the aggregate principal amount of $765,000, in further closings of its 12% convertible note offering to accredited investors, conducted through a placement agent.

In October 2020, an exchangeable shareholder holding 389,004 exchangeable shares exchanged these for an equivalent number of common shares of the Company. Also in October 2020, the Company issued 290,000 common shares as compensation for services provided by contractors.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information contained herein, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Important assumptions and other factors that could cause actual results to differ materially from those in the forward-looking statements, include but are not limited to: (a) any fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; (f) competition in the Company’s existing and potential future product lines of business; (g) the Company’s ability to obtain financing on acceptable terms if and when needed; (h) uncertainty as to the Company’s future profitability; (i) uncertainty as to the future profitability of acquired businesses or product lines; and (j) uncertainty as to any future expansion of the Company. Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure of such assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. The Company assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements, except as may be required under applicable law. Past results are no guaranty of future performance. Any such forward-looking statements speak only as of the dates they are made. When used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends,” “will” and similar expressions are intended to identify forward-looking statements.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and footnotes thereto included in this Quarterly Report on Form 10-Q (the “Financial Statements”).

Company Overview

Biotricity Inc. (“Company”, “Biotricity”, “we”, “us” or “our”)

Biotricity Inc. (the “Company”, “Biotricity”, “we”, “us”, “our”) is a medical technology company focused on biometric data monitoring solutions. Our aim is to deliver innovative, remote monitoring solutions to the medical, healthcare, and consumer markets, with a focus on diagnostic and post-diagnostic solutions for lifestyle and chronic illnesses. We approach the diagnostic side of remote patient monitoring by applying innovation within existing business models where reimbursement is established. We believe this approach reduces the risk associated with traditional medical device development and accelerates the path to revenue. In post-diagnostic markets, we intend to apply medical grade biometrics to enable consumers to self-manage, thereby driving patient compliance and reducing healthcare costs. We intend to first focus on a segment of the diagnostic mobile cardiac telemetry market, otherwise known as MCT, while providing our chosen markets with the capability to also perform other cardiac studies.

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We developed our FDA-approved Bioflux® MCT technology, comprised of a monitoring device and software components, which we made available to the market under limited release on April 6, 2018, in order to assess, establish and develop sales processes and market dynamics. The fiscal year ended March 30, 2020 marked the Company’s first year of expanded commercialization efforts, focused on sales growth and expansion. We have expanded our sales efforts to 16 states, with intention to expand further and compete in the broader US market using an insourcing business model. Our technology has a large potential total addressable market, which can include hospitals, clinics and physicians’ offices, as well as other IDTFs. We believe our solution’s insourcing model, which empowers physicians with state-of-the-art technology and charges technology service fees for its use, has the benefit of a reduced operating overhead for the Company, and enables a more efficient market penetration and distribution strategy. This, when combined with the value the Company’s solution in the diagnosis of cardiac arrhythmias, enhancement of patient outcomes, improved patient compliance, and the corresponding reduction of healthcare costs, is driving growth and increasing revenues.

We are a technology company focused on earning utilization-based recurring technology fee revenue. The Company’s ability to grow this type of revenue is predicated on the size and quality of its sales force and their ability to penetrate the market and place devices with clinically focused, repeat users of its cardiac study technology. The Company plans to grow its sales force in order to address new markets and achieve sales penetration in the markets currently served. The Company has also developed or is developing several other ancillary technologies, which will require application for further FDA clearances, which the Company anticipates applying for within the next to twelve months. Among these are:

● advanced ECG analysis software that can analyze and synthesize patient ECG monitoring data with the purpose of distilling it down to the important information that requires clinical intervention, while reducing the amount of human intervention necessary in the process;

● the Biotres patch solution, which will be a novel product in the field of Holter monitoring;

● the Bioflux® 2.0, which is the next generation of our award winning Bioflux®

During the six months ended September 30, 2020, the Company announced that it received a 510(k) clearance from the FDA for its Bioflux Software II System, engineered to improve workflows and reduce estimated analysis time from 5 minutes to 30 seconds. ECG monitoring requires significant human oversight to review and interpret incoming patient data to discern actionable events for clinical intervention, highlighting the necessity of driving operational efficiency. This improvement in analysis time reduces operational costs and allows the company to continue to focus on excellent customer service and industry-leading response times to physicians and their at-risk patients. Additionally, these advances mean we can focus our resources on high-level operations and sales to help drive greater revenue.

The COVID-19 pandemic has highlighted the importance of telemedicine and remote patient monitoring technologies. During the six months ended September 30, 2020, the Company also announced that it has negotiated the terms of an agreement to license, with the exclusive right to acquire, MD Matrix Inc. (“MDM”) and its telemedicine platform, which also provides capabilities of real-time streaming of medical devices. The terms of the agreement of understanding expire ninety days after its execution, and there cannot be any assurance that the Company will enter into a definitive agreement with MDM. Telemedicine offers patients the ability to communicate directly with their health care providers without the need of leaving their home. The telemedicine solution is intended to align with the Company’s Bioflux product and facilitate remote visits and remote prescriptions for cardiac diagnostics, but it will also serve as a means of establishing referral and other synergies across the network of doctors and patients that use the technologies we are building within the Biotricity ecosystem. The intention is to continue to provide improved care to patients that may otherwise elect not to go to medical facilities, and continue to provide economic benefits and costs savings to healthcare service providers and payers that reimburse.

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Critical Accounting Policies

The unaudited condensed consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in United States Dollars. Significant accounting policies are summarized below:

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant estimates and assumptions include: deferred income tax assets and related valuation allowance, accruals and valuation of derivatives, convertible promissory notes, stock options and warrants, as well as assumptions used by management in its assessment of liquidity. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

Earnings (Loss) Per Share

We have adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. There were no potentially dilutive shares outstanding as at September30, 2020.

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

● Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.

● Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.

● Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates. These financial instruments include cash, accounts receivable, deposits and other receivables, convertible promissory notes and short-term loans, accounts payable and accrued liabilities, and derivative liabilities. The Company’s cash and derivative liabilities, which are carried at fair values, are classified as a Level 1 and Level 3, respectively. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.

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Leases

On April 1, 2019, the Company adopted Accounting Standards Codification Topic 842, “Leases” (“ASC 842”) to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to previous accounting guidance. The Company adopted ASC 842 utilizing the transition practical expedient added by the Financial Accounting Standards Board (“FASB”), which eliminates the requirement that entities apply the new lease standard to the comparative periods presented in the year of adoption.

The Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line items right-of-use asset, lease obligation, current, and lease obligation, long-term in the consolidated balance sheet. Right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in our consolidated statement of income. The Company determines the lease term by agreement with lessor. As our lease does not provide an implicit interest rate, the Company uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

Government loan

For loans received from federal government that contains certain operating conditions and with terms over twelve month time, the Company records those loans as long term liabilities.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new guidance effectively on April 1, 2020. The Company identified and updated existing internal controls and procedures to ensure compliance with the new guidance, but such modifications were not deemed to be material to the Company’s overall system of internal control. While the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements, it required changes to the Company’s process of estimating expected credit losses on trade receivables.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. One of the changes in the ASU requires a presentation of changes in stockholders’ equity in the form of a reconciliation, either as a separate financial statement or in the notes to the financial statements, for the current and comparative year-to-date interim periods. The Company presented changes in stockholders’ equity as separate financial statements for the current and comparative year-to-date interim periods beginning on April 1, 2019. The additional elements of the ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis. That model replaces the probable, incurred loss model for those assets. Through the amendments in that Update, the Board added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance. ASU 2019-11 is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and related disclosures.

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In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impacts of the provisions of ASU 2019-12 on its financial condition, results of operations, and cash flows.

In March 2020, the FASB issued ASU No. 2030-20 Codification Improvements to Financial Instruments, An Amendment of the FASB Accounting Standards Codification: a)in ASU No. 2016-01, b) in Subtopic 820-10, c) for depository and lending institutions clarification in disclosure requirements, d) in Subtopic 470-50, e) in Subtopic 820-10, f) Interaction of Topic 842 and Topic 326, g) Interaction of the guidance in Topic 326 and Subtopic 860-20.The amendments in this Update represent changes to clarify or improve the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. For public business entities updates under the following paragraphs: a), b), d) and e) are effective upon issuance of this final update. The effective date for c) is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not expect that the new guidance will significantly impact its consolidated financial statements.

Results of Operations

The fiscal year ended March 31, 2020 was the first year of full market release of the Bioflux MCT device for commercialization, launched in limited market release in April 2018, after receiving its second and final required FDA clearance in December 2017. To commence commercialization, we ordered device inventory from our FDA-approved manufacturer and hired a small, captive sales force, with deep experience in cardiac technology sales. We expanded on our limited market release, which identified potential anchor clients who could be early adopters of our technology, by increasing our sales force and geographic footprint during fiscal 2020, and had launched sales in 13 U.S. states by March 31, 2020. The Company has experienced sequential growth month over month, every month since it commenced commercialization, with the exception of the month of April 2020 when the US implemented extra-ordinary measures to close large portions of its economy in order to stem the tide of the COVID-19 pandemic.

During the three months ended September 30, 2020, the Company earned combined device sales and technology fee income totaling $744,585 – a 64.8% increase over the immediately preceding three month period and a 115.3% increase over the corresponding period of the prior year. During the six months ended September 30, 2020, the Company earned revenues of $1,196,483 compared to $672,906 in the corresponding prior year period – a 77.8% increase. During the half-year ended September 30, 2020, the Company earned 84.4% of the revenues earned in the full fiscal year ended March 31, 2020. The Company achieved these revenue results despite experiencing an approximately 30% decrease in its business activities due to the worldwide pandemic that acutely affected the U.S. during the month of April 2020, the first month of the Company’s 2021 fiscal year. In support of management’s belief that the Company has a resilient business model, and its hypothesis that the pandemic has served to accelerate strong market trends favoring remote patient monitoring, April pandemic slowness resulted in pent-up demand for Biotricity’s technology services in the months of May and June, when it resumed its upward month-over-month trajectory in sales pipeline growth. The Company also introduced innovative sales programs designed to limit the need for in-person patient visits and provide streamlined logistics in making our technology available for patient use, and the growth trajectory has continued through to October 2020, which was the highest revenue earning month on record.

During the three months ended September 30, 2020, Biotricity incurred a net loss of $3.2 million (0.085 cents loss per share). During the period of initial commercialization of the Bioflux and the build out of the Company’s expanded technology eco-system, we devoted, and expect to continue to devote, significant resources in hiring a high-caliber sales force. We also devoted and expect to continue to devote capital to our research and development programs and incur additional operating losses as we build the infrastructure required to support rapidly increasing sales volumes.

During the three and six months ended September 30, 2020, the Company experienced a gross margin of 43.6% and 48.9%. Management expects that the cost of devices sold, as well as cellular and other costs associated with technology fees, will become lower as a percentage of revenues as business sales volumes expand.

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Three and Six Months Ended September 30, 2020 and 2019

Operating Revenues and Expenses

Operating Expenses

Total operating expenses for the three and six months ended September 30, 2020 were $3.2 million and $6.8 million compared to $2.2 million and $4.5 million, respectively, for the corresponding periods of the prior year, as further described below.

General and administrative expenses

Our general and administrative expenses for the three and six months ended September 30, 2020 increased to $2.8 million and $6.0 million, compared to $2.0 million and $4.1 million, respectively, for the corresponding prior year periods. For the first three and six months of the current fiscal year, approximately $0.8 million and $1.0 million of these respective increases are directly attributable to investments made by the Company in building its professional sales force and its infrastructure in order to better handle the volume increases it is experiencing.

Research and development expenses

During the three and six months ended September 30, 2020 we incurred research and development expenses of $0.4 million and $0.8 million, respectively, compared to $0.2 million and $0.4 million in the prior year. The increase in research and development activity is directly related the development of new technologies for our ecosystem and our pursuit of FDA clearance of new products, as well as the development of continuous product enhancements to our existing products.

Accretion and amortization expense related to convertible notes

During the three and six months ended September 30, 2020, we incurred accretion and amortization expense related to debt financing of $0.3 million.

Change in fair value of derivative liabilities

During the three and six months ended September 30, 2020, the Company recognized a gain of $0.2 million and $0.4 million, respectively related to the change in fair value of derivative liabilities related to preferred shares and convertible notes.

Net Loss

As a result of the foregoing, the net loss attributable to common stockholders for the three and six months ended September 30, 2020 was $3.2 million and $6.5 million compared $2.0 million and $4.1 million, respectively, during the corresponding fiscal period of 2019.

Translation Adjustment

Translation adjustment for the three and six months ended September 30, 2020 was a loss of approximately $0.18 million. This translation adjustment represents gains and losses that result from the translation of currency in the financial statements from our functional currency of Canadian dollars to the reporting currency in U.S. dollars over the course of the reporting period.

Liquidity and Capital Resources

The Company is in commercialization mode, while continuing to pursue the development of its next generation MCT product as well as new products that are being developed.

We generally require cash to:

● purchase devices that will be placed in the field for pilot projects and to produce revenue,

● launch sales initiatives,

● fund our operations and working capital requirements,

● develop and execute our product development and market introduction plans,

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● fund research and development efforts, and

● pay any expense obligations as they come due.

The Company is an emerging growth entity that is in the early stages of commercializing its first product and is concurrently in development mode, operating a research and development program in order to develop, obtain regulatory approval for, and commercialize other proposed products. As a result of its early-revenue-stage operations, the Company has incurred recurring losses from operations, and as at September 30, 2020, has an accumulated deficit of $52.9 million and a working capital deficiency of $5.3 million. The Company launched its first commercial sales program as part of a limited market release, during the year ended March 31, 2019, using an experienced professional in-house sales team. A full market release ensued during the year ended March 31, 2020. Management anticipates the Company will continue on its revenue growth trajectory and improve its liquidity through continued business development and after additional equity or debt capitalization of the Company. The Company has developed and continues to pursue sources of funding that management believes if successful would be sufficient to support the Company’s operating plan and alleviate any substantial doubt as to its ability to meet its obligations at least for a period of one year from the date of these consolidated financial statements. The Company raised $3,030,620 in promissory notes and short term loans during the year ended March 31, 2020. Starting in December 2019, the Company has issued 8,045 Series A preferred shares, issuing 6,100 of these for cash proceeds of $6,100,000 and 1,945 of these were issued on conversion of $1,945,000 of promissory notes and accrued interest. The Company has also received government funding provided for economic support during COVID-19, including $1.6 million raised during the three months ended June 30, 2020. In July 2020, the Company launched a further private placement offering of convertible notes, which has raised net cash proceeds of $2.9 million as at September 30, 2020 ($3.5 million by October 31, 2020).

As we proceed with the commercialization of the Bioflux product development, we expect to continue to devote significant resources on capital expenditures, as well as research and development costs and operations, marketing and sales expenditures.

We expect to require additional funds to further develop our business plan, including the anticipated commercialization of the Bioflux and other technologies that will form part of its eco-systems. Based on our current operating plans, we will require approximately $8million (more in order to accelerate commercialization further and faster) to grow our sales team and order devices that will be placed in the field to produce revenue. A portion of these funds will also go towards the further development of Bioflux in its next generation, in addition to including marketing, sales, regulatory and clinical costs to better introduce the product into the market place. We anticipate that we will need to raise additional funds through equity or debt offerings or otherwise in order to meet our expected future liquidity requirements.

Based on the above facts and assumptions, we believe our existing cash and cash equivalents, along with anticipated near-term debt and equity financings, will continue to be sufficient to meet our needs. However, we will need to seek additional debt or equity capital to respond to business opportunities and challenges, including our ongoing operating expenses, protecting our intellectual property, developing or acquiring new lines of business and enhancing our operating infrastructure. The terms of our future financings may be dilutive to, or otherwise adversely affect, holders of our common stock. We may also seek additional funds through arrangements with collaborators or other third parties. There can be no assurance we will be able to raise this additional capital on acceptable terms, or at all. If we are unable to obtain additional funding on a timely basis, we may be required to modify our operating plan and otherwise curtail or slow the pace of development and commercialization of our proposed product lines.

Net Cash Used in Operating Activities

During the six months ended September 30, 2020, we used cash in operating activities of $4.5 million compared to $2.8 million for the corresponding period of the prior year. These activities involved expenditures for sales, infrastructure and business development, as well s marketing and operating activities, and continued research and product development.

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Net Cash from Financing Activities

Net cash provided by financing activities was $4.2 million for the six months ended September, 2020 compared to $2.8 million for the three months ended September 30, 2019.

Net Cash Used in Investing Activities

The Company did not use any net cash in investing activities in the six month periods ended September 30, 2020 and 2019.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company’s desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

At the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, as well as recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to the Company.

Changes in Internal Controls

There were no changes in the Company’s internal controls over financial reporting that occurred during the three-month period ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended September 30. 2020, the Company issued 373,500 common shares, valued in the aggregate amount of $451,765 (determined by the market date price on the date of issuance) as compensation for consultants and advisors in exchange for the provision of marketing and other general and administrative services.

The securities referenced above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.

During the three months ended September 30, 2020, the also Company issued $3,302,000 in a new series of convertible promissory notes (the “Notes”) sold under subscription agreements to accredited investors. The Notes mature one year from the final closing date of the offering and accrue interest at 12% per annum. The Notes will automatically convert into common stock (in each case, subject to the trading volume of the Company’s common stock being a minimum of $500,000 for each trading day in the 20 consecutive trading days immediately preceding the conversion date), upon the earlier to occur of (i) the Company’s common stock being listed on a national securities exchange, in which event the conversion price will be equal to 75% of the volume weighted average price of the common stock for the 20 trading days prior to the conversion date, or (ii) upon the closing of the Company’s next equity round of financing for gross proceeds of greater than $5,000,000, in which event the conversion price will be equal to 75% of the price per share of the common stock (or of the conversion price in the event of the sale of securities convertible into common stock) sold in such financing. The Company may, at its discretion redeem the notes for 115% of their face value plus accrued interest. The Company is obligated to issue warrants that accompany the convertible notes and provide 50% warrant coverage. The warrants have a 3-year term from date of issuance and an exercise price that is 120% of the 20-day volume weighted average price of the Company’s common shares at the time final closing. The Company is obligated to pay the placement agent of these Notes a 12% cash fee. Net proceeds to the Company from convertible note issuances to September 30, 2020 amounted to $2,905,760 after payment of the placement agent fee. The Company is also obligated to issue warrants to the placement agent that have a 10-year term and cover 12% of funds raised, with an exercise price that is 120% of the 20-day volume weighted average price of the Company’s common shares at the time final closing. Both the noteholder and placement agent warrants will not be issued until final closing, since their exercise price is variable and will not be struck until that date. In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

101.1 XBRL Instance.*

101.SCH XBRL Taxonomy Extension Schema.*

101.CAL XBRL Taxonomy Extension Calculation.*

101.DEF XBRL Taxonomy Extension Definition.*

101.LAB XBRL Taxonomy Extension Labels.*

101.PREXBRL Taxonomy Extension Presentation.*

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 13^th day of November 2020.

BIOTRICITY INC.

By:	/s/ Waqaas Al-Siddiq
Name:	Waqaas Al-Siddiq
Title:	Chief Executive Officer
	(principal executive officer)

By:	/s/ John Ayanoglou
Name:	John Ayanoglou
Title:	Chief Financial Officer
	(principal financial and accounting officer)

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