0001213900-23-066982.txt : 20230814
0001213900-23-066982.hdr.sgml : 20230814
20230814160136
ACCESSION NUMBER: 0001213900-23-066982
CONFORMED SUBMISSION TYPE: 6-K
PUBLIC DOCUMENT COUNT: 95
CONFORMED PERIOD OF REPORT: 20230630
FILED AS OF DATE: 20230814
DATE AS OF CHANGE: 20230814
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Versus Systems Inc.
CENTRAL INDEX KEY: 0001701963
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
IRS NUMBER: 000000000
STATE OF INCORPORATION: A1
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 6-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-39885
FILM NUMBER: 231169577
BUSINESS ADDRESS:
STREET 1: #302-1620
STREET 2: W.8TH AVE
CITY: VANCOUVER
STATE: A1
ZIP: V6J 1V4
BUSINESS PHONE: 604-719-5614
MAIL ADDRESS:
STREET 1: #302-1620
STREET 2: W.8TH AVE
CITY: VANCOUVER
STATE: A1
ZIP: V6J 1V4
6-K
1
ea183090-6k_versussys.htm
REPORT OF FOREIGN PRIVATE ISSUER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission File Number 001-39885
VERSUS SYSTEMS INC. (Translation of registrant’s name into English)
1558 West Hastings Street
Vancouver BC V6G 3J4 Canada
(Address of principal
executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒
Form 40-F ☐
EXPLANATORY NOTE
On
August 14, 2023, Versus Systems Inc. filed on SEDAR in Canada its Consolidated Financial Statements for the six-month periods ended June
30, 2023 and 2022 and the related Management’s Discussion and Analysis for the six-month periods ended June 30, 2023 and 2022,
copies of which are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively. Also attached is a copy of the Form 52-109F2 –
Certification of Interim Filings – CFO (IPO/RTO) furnished herewith as Exhibit 99.3 and Form 52-109F2 – Certification of
Interim Filings – CEO (IPO/RTO) furnished herewith as Exhibit 99.4.
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.
VERSUS SYSTEMS INC.
Date: August 14, 2023
By:
/s/ Matthew Pierce
Matthew Pierce
Chief Executive Officer
2
EX-99.1
2
ea183090ex99-1_versussys.htm
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2023 AND 2022
Condensed Interim Consolidated Statements of Financial Position
(Expressed in US Dollars)
(Unaudited – prepared by management)
June 30,
2023
December 31, 2022
($)
($)
ASSETS
Current assets
Cash
3,193,827
1,178,846
Receivables, net of allowance (Note 5)
21,386
60,749
Deferred financing costs (Note 3)
135,162
-
Prepaids
290,564
223,226
Total current assets
3,640,939
1,462,821
Restricted deposit (Note 6)
8,672
8,489
Deposits
100,000
100,000
Property and equipment, net (Note 7)
18,504
172,841
Intangible assets (Note 10)
5,700,984
7,058,366
Total Assets
9,469,099
8,802,517
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 11, Note 12 and Note 14)
292,270
522,012
Deferred revenue
10,553
69,273
Notes payable - Related Party (Note 12)
1,984,225
2,604,713
Lease liability (Note 19)
-
128,560
Total current liabilities
2,287,048
3,324,558
Non-current liabilities
Lease liability (Note 19)
-
-
Notes payable - Related Party (Note 12)
-
-
Total liabilities
2,287,048
3,324,558
Equity (Deficit)
Share capital (Note 13)
Common shares
128,823,181
122,353,525
Class “A” shares
28,247
28,247
Reserves (Note 13)
13,350,541
14,506,758
Cumulative Translation Adjustment
183,167
154,970
Deficit
(128,418,368
)
(125,182,412
)
13,966,768
11,861,088
Non-controlling interest (Note 8)
(6,784,717
)
(6,383,129
)
7,182,051
5,477,959
Total Liabilities and Equity
9,469,099
8,802,517
Nature of operations (Note 1)
Commitments (Note 19)
Subsequent events (Note 20)
These unaudited condensed interim consolidated
financial statements were authorized for issue by the Board of Directors on August 14, 2023. They are signed on behalf of the Board of
Directors by:
“Matthew Pierce”
“Brian Tingle”
Director
Director
The
accompanying notes are an integral part of these condensed interim consolidated financial statements.
2
Versus Systems Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive
Loss
(Expressed in US Dollars)
(Unaudited – prepared by management)
Three Months Ended
Three Months Ended
Six Months
Ended
Six Months
Ended
June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
($)
($)
($)
($)
REVENUES
Revenues
56,053
250,661
214,003
574,417
EXPENSES
Amortization (Note 7)
39,790
65,870
113,391
140,364
Amortization of intangible assets (Note 10)
685,598
629,989
1,371,951
1,267,679
Consulting fees (Note 3)
180,667
186,714
354,063
335,121
Foreign exchange (gain) loss
66,596
(155,605
)
80,948
(46,772
)
Office and miscellaneous expenses
223,735
229,585
344,002
419,215
Interest expense
20,288
30,482
44,913
67,050
Professional fees (Note 14)
89,282
232,637
317,087
667,641
Salaries and wages (Note 14)
778,326
1,600,138
1,995,779
3,058,050
Sales and marketing
43,485
29,406
79,975
78,255
Software delivery costs
148,045
364,982
305,655
602,005
Share-based compensation (Note 13)
90,896
375,919
(1,156,217
)
884,322
Total operating loss
(2,310,655
)
(3,339,456
)
(3,637,544
)
(6,898,513
)
Finance expense (Note 12)
-
(19,739
)
-
(44,097
)
Change in fair value of warrant liability (Note 3)
-
133,052
-
361,049
Net loss
(2,310,655
)
(3,226,143
)
(3,637,544
)
(6,581,561
)
Other comprehensive loss:
Foreign currency translation (gain) loss
(18,849
)
-
(28,197
)
-
Loss and comprehensive loss
(2,291,806
)
(3,226,143
)
(3,609,347
)
(6,581,561
)
Total other comprehensive loss attributable to:
Shareholders
(18,849
)
-
(28,197
)
-
Non-controlling interest
-
-
-
-
(18,849
)
-
(28,197
)
-
Total comprehensive loss attributable to:
Shareholders
(2,022,912
)
(2,740,734
)
(3,207,759
)
(5,322,635
)
Non-controlling interest
(268,894
)
(485,409
)
(401,588
)
(1,258,926
)
(2,291,806
)
(3,226,143
)
(3,609,347
)
(6,581,561
)
Basic and diluted loss per common share attributable to Versus Systems Inc.
(0.19
)
(1.95
)
(0.34
)
(4.20
)
Weighted average common shares outstanding
10,714,171
1,380,724
9,486,337
1,265,052
The accompanying notes are an integral part of
these condensed interim consolidated financial statements.
3
Versus Systems Inc.
Condensed Interim Consolidated Statements of Changes in Equity (Deficit)
(Expressed in US Dollars)
(Unaudited – prepared by management)
Number
of
common
shares
Number
of
Class
“A”
Shares
Common
Shares
Commitment
to issue
shares
Class
“A”
Shares
Reserves
Currency
Translation
Adjustment
Deficit
Equity
Non-
controlling
Interest
Total
Equity
(Deficit)
($)
($)
($)
($)
($)
($)
($)
($)
($)
Balance at December 31,
2021
1,036,951
338
110,226,715
2,703,326
28,247
10,661,294
-
(100,995,334
)
22,624,249
(8,621,581
)
14,002,668
Shares issued in public offering
331,042
-
7,876,960
-
-
-
-
-
7,876,960
-
7,876,960
Shares issued in acquisition
4,196
-
419,783
(419,783
)
-
-
-
-
-
-
-
Share issuance costs
-
-
(900,720
)
-
-
-
-
-
(900,720
)
-
(900,720
)
Holdco shares exchanged for
common shares
11,441
-
186,294
-
-
-
-
(4,562,631
)
(4,376,337
)
4,376,337
-
Stock-based compensation
-
-
-
-
-
884,322
-
-
884,322
-
884,322
Loss and comprehensive loss
-
-
-
-
-
-
-
(5,322,635
)
(5,322,635
)
(1,258,926
)
(6,581,561
)
Balance at June 30, 2022
1,383,630
338
117,809,033
2,283,543
28,247
11,545,616
-
(110,880,600
)
20,785,839
(5,504,170
)
15,281,669
Shares issued in public offering
2,376,249
-
4,255,400
-
-
-
-
-
4,255,400
-
4,255,400
Shares issued in private
placement
412,292
-
1,119,373
-
-
-
-
-
1,119,373
-
1,119,373
Shares issued in acquisition
-
-
5,662
(2,283,543
)
-
2,277,881
-
-
-
-
-
Share issuance costs
-
-
(835,942
)
-
-
-
-
-
(835,942
)
-
(835,942
)
Stock-based compensation
-
-
-
-
-
683,261
-
-
683,261
-
683,261
Cumulative translation adjustment
-
-
-
-
-
-
154,970
-
154,970
-
154,970
Loss and comprehensive loss
-
-
-
-
-
-
-
(14,301,812
)
(14,301,812
)
(878,959
)
(15,180,771
)
Balance at December 31,
2022
4,172,171
338
122,353,525
-
28,247
14,506,758
154,970
(125,182,412
)
11,861,088
(6,383,129
)
5,477,959
Exercise of warrants
4,042,000
-
4,446,200
-
-
-
-
-
4,446,200
-
4,446,200
Shares issued in public offering
2,500,000
-
2,250,000
-
-
-
-
-
2,250,000
-
2,250,000
Share issuance costs
-
-
(226,544
)
-
-
-
-
-
(226,544
)
-
(226,544
)
Stock-based compensation
-
-
-
-
-
(1,156,217
)
-
-
(1,156,217
)
-
(1,156,217
)
Cumulative translation adjustment
-
-
-
-
-
-
28,197
-
28,197
-
28,197
Loss and comprehensive loss
-
-
-
-
-
-
-
(3,235,956
)
(3,235,956
)
(401,588
)
(3,637,544
)
Balance at June 30, 2023
10,714,171
338
128,823,181
-
28,247
13,350,541
183,167
(128,418,368
)
13,966,768
(6,784,717
)
7,182,051
The accompanying notes are an integral part of
these condensed interim consolidated financial statements.
4
Versus Systems Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited – prepared by management)
Six Months Ended June 30,
2023
Six Months Ended June 30,
2022
($)
($)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Loss for the period
(3,637,544
)
(6,581,561
)
Items not affecting cash:
Amortization (Note 7)
113,391
140,364
Amortization of intangible assets (Note 10)
1,371,951
1,267,679
Finance expense
-
44,097
Loss on sale of equipment
51,771
-
Accrued interest
2,582
12,820
Effect of foreign exchange
56,500
(272,633
)
Change in fair value of warrant liability
-
(361,049
)
Share-based compensation
(1,156,217
)
884,322
Changes in non-cash working capital items:
Receivables
39,363
85,657
Prepaids and other assets
(67,338
)
(189,596
)
Deferred revenue
(58,720
)
(109,851
)
Accounts payable and accrued liabilities
(229,742
)
(326,737
)
Cash used in operating activities
(3,514,003
)
(5,406,488
)
FINANCING ACTIVITIES
Repayment of notes payable – related party
(664,697
)
(64,854
)
Proceeds from warrant exercises
4,446,200
-
Proceeds from share issuances
2,250,000
7,876,960
Payments for lease liabilities
(131,142
)
(128,608
)
Payments of share issuance costs
(361,706
)
(725,907
)
Cash provided by financing activities
5,538,655
6,957,591
INVESTING ACTIVITIES
Purchase of equipment
-
(17,849
)
Proceeds from sale of equipment
4,899
-
Development of intangible assets
(14,569
)
(1,318,712
)
Cash used in investing activities
(9,670
)
(1,336,561
)
Change in cash during the period
2,014,981
214,542
Cash - Beginning of period
1,178,846
1,678,156
Cash - End of period
3,193,827
1,892,698
Supplemental Cash Flow Information (Note 18)
The accompanying notes are an integral part of
these condensed interim consolidated financial statements.
5
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
1.
NATURE OF OPERATIONS
Versus Systems Inc. (the “Company”)
was continued under the Business Corporations Act (British Columbia) effective January 2, 2007. The Company’s head office and registered
and records office is 1558 West Hastings Street, Vancouver, BC, V6C 3J4, Canada. The Company’s common stock is traded on the NASDAQ
under the symbol “VS”. The Company’s Unit A warrants are traded on NASDAQ under “VSSYW”. On November 9,
2022, the Company completed a one-for-15 reverse stock split of the Company’s common shares. All share and per share data are presented
to reflect the reverse share split on a retroactive basis.
The Company is engaged in the technology
sector and has developed a proprietary prizing and promotions tool allowing game developers and creators of live events, games, apps,
and other content to offer real world prizes inside their content. The ability to win prizes drives increased levels of consumer engagement
creating an attractive platform for advertisers.
In June 2021, the Company completed
its acquisition of multimedia, production, and interactive gaming company Xcite Interactive, a provider of online audience engagement
through its owned and operated XEO technology platform. The company partners with multiple professional sports franchises across Major
League Baseball (MLB), National Hockey League (NHL), National Basketball Association (NBA) and the National Football League (NFL) as well
as the Olympics, World Cup, and other global sporting events to drive in-stadium audience engagement as well as a software licensing business
to drive audience engagement.
These condensed interim consolidated
financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue
in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.
Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As
of June 30, 2023, the Company has not achieved positive cash flow from operations and is not able to finance day to day activities through
operations and as such, there is substantial doubt as to the Company’s ability to continue as a going concern. The Company’s
continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds therefrom and/or raise
equity capital or borrowings sufficient to meet current and future obligations. These condensed interim consolidated financial statements
do not include any adjustments as to the recoverability and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.
2.
BASIS OF PRESENTATION
Statement of compliance
These condensed interim consolidated
financial statements, including comparatives, have been prepared in accordance with International Audit Standards (IAS) 34, Interim Financial
Reporting, as issued by the International Accounting Standards Board (IASB) and the interpretations of the IFRS Interpretations committee.
They do not include all disclosures required by International Financial Reporting Standards (IFRS) for annual financial statements, and
therefore should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December
31, 2022, prepared in accordance with IFRS as issued by the IASB.
These condensed interim consolidated
financial statements were authorized for issue by the Board of Directors on August 14, 2023.
6
2.
BASIS OF PRESENTATION (continued)
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
Basis of measurement
These condensed interim consolidated
financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments
at fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting
except for cash flow information.
Functional and presentation currency
These condensed interim consolidated
financial statements are presented in United States dollars, unless otherwise noted, which is the functional currency of the Company and
its subsidiaries.
Basis of consolidation
These condensed interim consolidated
financial statements include the accounts of Versus Systems Inc. and its subsidiaries, from the date control was acquired. Control exists
when the Company possesses power over an investee, has exposure to variable returns from the investee and has the ability to use its power
over the investee to affect its returns. All inter-company balances and transactions, and any unrealized income and expenses arising from
inter-company transactions, are eliminated on consolidation. For partially owned subsidiaries, the interest attributable to non-controlling
shareholders is reflected in non-controlling interest. Adjustments to non-controlling interest are accounted for as transactions with
owners and adjustments that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.
Name of Subsidiary
Place of Incorporation
Proportion of Ownership Interest
Principal Activity
Versus Systems (Holdco) Inc.
United States of America
81.9
%
Holding Company
Versus Systems UK, Ltd.
United Kingdom
81.9
%
Sales Company
Versus LLC
United States of America
81.9
%
Technology Company
Xcite Interactive, Inc.
United States of America
100.0
%
Technology Company
Significant Accounting Judgments,
Estimates and Assumptions
The preparation of these condensed
interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the condensed interim consolidated financial statements. Estimates and assumptions are
continually evaluated and are based on historical experience and management’s assessment of current events and other facts and circumstances
that are considered to be relevant. Actual results could differ from these estimates.
Significant assumptions about the
future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a
material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate
to, but are not limited to, the following:
i)
Deferred income taxes
Deferred tax assets, including those
arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings
in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend
on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to
obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates,
the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.
ii)
Economic recoverability and probability of future economic
benefits of intangible assets
7
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
2.
BASIS OF PRESENTATION (continued)
Management has determined that intangible
asset costs which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria
in its assessments of economic recoverability and probability of future economic benefits including anticipated cash flows and estimated
economic life.
iii)
Valuation of share-based compensation
The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including
expected price volatility, interest rate, and forfeiture rate. Input assumptions changes can materially affect the fair value estimate
and the Company’s earnings and equity reserves.
iv)
Depreciation and Amortization
The Company’s intangible assets
and equipment are depreciated and amortized on a straight-line basis, taking into account the estimated useful lives of the assets and
residual values. Changes to these estimates may affect the carrying value of these assets, net loss, and comprehensive income (loss) in
future periods.
v)
Determination of functional currency
The functional currency of the Company
and its subsidiaries is the currency of the primary economic environment in which each entity operates. Determination of the functional
currency may involve certain judgments to determine the primary economic environment. The functional currency may change if there is a
change in events and conditions which determines the primary economic environment.
vi)
Revenue Recognition
The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation.
vii)
Business combinations
Judgement was used in determining
whether the acquisition of Xcite Interactive, Inc. was a business combination or an asset acquisition. Estimates were made as to the fair
value of assets and liabilities acquired. In certain circumstances, such as the valuation of equipment, intangible assets and goodwill
acquired, the Company may rely on independent third-party valuators. The Company measured all the assets acquired and liabilities assumed
at their acquisition-date fair values.
The excess of the consideration paid
over the acquisition-date fair values of the net assets acquired, was recognized as goodwill as of the acquisition date in business combination.
viii)
Subsequent Valuation of Intangibles Assets and Goodwill
The Company used three generally accepted
principles to calculate the fair value of acquired intangible assets and goodwill from the Xcite acquisition: the income approach, the
market approach, and the cost approach. The calculated fair value of each acquired asset is used in the Company’s annual impairment
testing. Impairment loss is the amount by which the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable
amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or CGU.
8
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES
Basic and diluted loss per share
Basic earnings (loss) per share is
computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during
the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.
The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds
from such exercises were used to acquire common stock at the average market price during the reporting periods. Potentially dilutive options
and warrants excluded from diluted loss per share as of June 30, 2023 totalled 1,905,618 (December 31, 2022 – 7,081,173).
Property and
equipment
Property and
equipment is recorded at cost less accumulated amortization and any impairments. Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:
Asset
Rate
Computers
Straight line, 3 years
Right of use assets
Shorter of useful life or lease term
Financial instruments
Classification
The Company classifies its financial
instruments in the following categories: at fair value through profit and loss (FVTPL), at fair value through other comprehensive income
(loss) (FVTOCI), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification
of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow
characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition
the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as FVTOCI. Financial liabilities
are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives)
or the Company has opted to measure them at FVTPL.
Measurement
The following table shows the classification
of financial instruments:
Financial assets/liabilities
Classification IFRS 9
Cash
FVTPL
Receivables
Amortized cost
Restricted deposit
Amortized cost
Deposit
Amortized cost
Accounts payable and accrued liabilities
Amortized cost
Notes payable
Amortized cost
9
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES
Financial assets and liabilities
at amortized cost
Financial assets and liabilities at
amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized
cost less any impairment.
Financial assets and liabilities
at FVTPL
Financial assets and liabilities carried
at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and
losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in
the period in which they arise.
Impairment of financial assets
at amortized cost
An ‘expected credit loss’
impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value
of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount
and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated
with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance
account and the resulting loss is recognized in profit or loss for the period.
In a subsequent period, if the amount
of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.
Intangible assets excluding goodwill
Derecognition of financial assets
The Company derecognizes financial
assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and
substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally
recognized in profit or loss.
As at June 30, 2023, the Company does
not have any derivative financial assets and liabilities.
Intangible assets
acquired separately are carried at cost at the time of initial recognition. Intangible assets acquired in a business combination and
recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Expenditure on research
activities is recognized as an expense in the period in which it is incurred.
Intangibles with a finite useful life
are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which
the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration
of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and
future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.
If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows
used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine
the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life
of the intangible to the Company, the useful life is considered indefinite.
10
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangibles with a finite useful
life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are
consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting
period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the
remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. The
Company’s intangible asset is amortized on a straight-line basis over 3 years. In the year development costs are incurred,
amortization is based on a half year.
Goodwill
The Company allocates goodwill arising
from business combinations to each cash generating unit (CGU) or group of CGUs that are expected to receive the benefits from the business
combination. The carrying amount of the CGU or group of CGUs to which goodwill has been allocated is tested annually for impairment or
when there is an indication that the goodwill may be impaired. Any impairment is recognized as an expense immediately. Should there be
a recovery in the value of a CGU, any impairment of goodwill previously recorded is not subsequently reversed.
Deferred financing costs
Deferred financing costs consist primarily
of direct incremental costs related to the Company’s public offering of its common stock. Upon completion of the Company’s
financing any deferred costs are offset against the proceeds. The Company incurred $0 during the year ended December 31, 2022, and $135,162
during the period ended June 30, 2023.
Impairment of intangible assets
excluding goodwill
An internally-generated intangible
asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following
have been demonstrated:
(a)
the technical feasibility of
completing the intangible asset so that it will be available for use or sale;
(b)
the intention to complete the intangible asset and use or sell it;
(c)
the ability to use or sell the intangible asset;
(d)
how the intangible asset will
generate probable future economic benefits;
(e)
the availability of adequate
technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(f)
the ability to measure reliably
the expenditure attributable to the intangible asset during its development.
The amount initially recognized for
internally-generated intangible assets is the sum of the costs incurred from the date when the intangible assets first meet the recognition
criteria listed above. If no future economic benefit is expected before the end of the life of assets, the residual book value is expensed.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost. Where no internally-generated intangible
asset can be recognized, development costs are recognized as an expense in the period in which it is incurred.
At the end of each reporting period,
the Company reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have
suffered impairment losses. If any such indication exists, the recoverable amount of the cash-generating unit (CGU) to which the asset
belongs is estimated in order to determine the extent of the impairment losses (if any).
11
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Where a reasonable and consistent
basis of allocation can be identified, corporate assets (assets other than goodwill that contribute to the future cash flows of both
the CGU under review and other CGUs) are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of
CGUs for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset
(or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
Where impairment losses subsequently
reverse, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, such that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment losses been recognized for the asset
(or CGU) in prior years. A reversal of impairment losses is recognized immediately in profit or loss.
Income taxes
Tax expense recognized in profit or
loss comprises the sum of current tax and deferred tax not recognized in other comprehensive income or directly in equity.
Current income tax
Current income tax assets and/or liabilities
comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at
the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the condensed interim consolidated
financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.
Deferred income tax
Deferred income taxes are calculated
based on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they
are enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognized
to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities
are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or
liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized
in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive
income or equity, respectively.
Leases
Leases are recognized as a right-of-use
asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Assets and liabilities
arising from a lease are initially measured on a present value basis.
12
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Right-of-use assets are measured at
cost comprising the following:
- the amount of the initial measurement
of lease liability;
- any lease payments made at or before
the commencement date less any lease incentives received;
- any initial direct costs; and
- restoration costs.
The Company assesses whether a contract
is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with
respect to all lease agreements in which it is the lessee. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Company uses its incremental borrowing rate.
As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, there
are no lease liabilities or right-of-use assets recognized.
Lease liability
The lease liability is subsequently
measured by increasing its carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing
the carrying amount to reflect lease payments made. The right-of-use asset is depreciated over the shorter of the lease term and the useful
life of the underlying asset. The Company applies IAS 36, Impairment of Assets, to determine whether the asset is impaired and account
for any identified impairment loss. As a practical expedient, IFRS 16 permits a lease not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient,
and accordingly allocates the consideration in the contract to lease and non-lease components based on the stand-alone price of the lease
component and aggregate stand-alone price of the non-lease components.
Variable rents that do not depend
on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized
as an expense in the period in which the event or condition that triggers those payments occurs and are presented as such in the statements
of income and comprehensive income.
Provisions
A provision is recognized if, as
a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.
13
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES
(continued)
Government grants
Government
grants are recognized when there is reasonable assurance that the Company will comply with any conditions attached to the grant and
the grant will be received. Government grants are recognized in profit or loss to offset the corresponding expenses on a systematic
basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to
compensate, which in the case of grants related to assets requires setting up the grant as deferred income or deducting it from the
carrying amount of the asset.
Non-controlling interest
Non-controlling interest in the Company’s
less than wholly owned subsidiary is classified as a separate component of equity. On initial recognition, non-controlling interest is
measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original
transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share
of changes to the subsidiary’s equity.
Changes in the Company’s ownership
interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling
interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference
between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration
paid is recognized directly in equity and attributed to owners of the Company.
Valuation of equity units issued
in private placements
The Company has adopted a residual
value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first
allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable
component.
The fair value of the common shares
issued in private placements is determined to be the more easily measurable component and are valued at their fair value. The balance,
if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. If the warrants
are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in
the warrant reserve.
Warrants issued in equity financing
transactions
The Company engages in equity financing
transactions to obtain funds necessary to continue operations. These equity financing transactions may involve issuance of common shares
or units. Each unit comprises a certain number of shares and a certain number of warrants. Depending on the terms and conditions of each
equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the
transaction.
Warrants that are part of units are
assigned a value based on the residual value, if any, and included in reserves.
As of February 1, 2021, the warrants
were considered a derivative liability since the obligation to issue shares was not fixed in the Company’s functional currency.
The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the consolidated statement
of loss and comprehensive loss. A $9,743,659 warrant derivative loss was recorded in the consolidated statement of loss and comprehensive
loss beginning February 1, 2021 when the Company changed its functional currency. As of June 30, 2023, the associated warrants have expired
and the remaining balance of the warrant liability is $0.
14
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based payments and derivative financial assets (e.g. investments in warrants). Option pricing
models require the input of subjective assumptions including expected price volatility, interest rates, and forfeiture rates. Changes
in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.
Share-based compensation
The Company grants stock options to
acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when
the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.
The fair value of stock options is
measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration
paid for the shares on the exercise of stock options is credited to capital stock.
In situations where equity
instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be
specifically identified, they are measured at fair value of the share-based payment.
Otherwise, share-based payments are measured at
the fair value of goods or services received.
Revenue recognition
In general, the Company recognizes
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where
there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there
are no significant remaining performance obligations for each of the Company’s activities as described below. Foreseeable losses,
if any, are recognized in the year or period in which the loss is determined.
The Company earns revenue in three
primary ways: 1) the sales of software-as-a-service (SAAS) from its interactive production software platform, 2) development and maintenance
of custom-built software or other professional services, or 3) the sale of advertising.
The Company recognizes SAAS revenues
from its interactive production sales over the life of the contract as its performance obligations are satisfied. Payment terms vary by
contract and can be periodic or one-time payments.
The Company recognizes revenues received
from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance
obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance
obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a
single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes
revenue by measuring the progress toward complete satisfaction of that performance obligation.
For revenues received from the sales
of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising
inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such
as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of
advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.
15
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation. As the Company’s performance obligations are satisfied
within 12 months, the Company has elected the practical expedients under IFRS 15, which allows the Company not to record any significant
financing component as a result of financing any of its arrangements and not to capitalize cost incurred to obtain a contract.
Deferred revenue
Revenue recognition of sales is recorded
on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred revenue
based on the proportion of time remaining under the service arrangement as of the reporting date.
Foreign exchange
The functional currency is the currency
of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional
currency for the Company and its subsidiaries is the United States dollar. The functional currency determinations were conducted through
an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.
Foreign currency transactions in currencies
other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions. Foreign currency transaction
gains and losses are generally recognized in profit or loss and presented within gain (loss) on foreign exchange.
At the end of each reporting period,
the monetary assets and liabilities of the Company and its subsidiaries that are denominated in foreign currencies are translated at the
rate of exchange at the date of the statement of financial position. Non-monetary assets and liabilities that are denominated in foreign
currencies are translated at historical rates. Revenues and expenses that are denominated in foreign currencies are translated at the
exchange rates approximating those in effect on the date of the transactions. Foreign currency translation gains and losses are recognized
in other comprehensive income and accumulated in equity within the currency translation reserve.
Comprehensive Income (Loss)
Comprehensive income (loss)
consists of net income (loss) and other comprehensive income (loss) and represents the change in shareholders’ equity
(deficit) which results from transactions and events from sources other than the Company’s shareholders. Comprehensive loss
differs from net loss for the period ended June 30, 2023 due to the effects of foreign translation gains and losses. Comprehensive
loss differs from net loss for the year ended December 31, 2022 due to the effects of foreign translation gains and losses.
16
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
4.
CHANGE IN FUNCTIONAL AND PRESENTATION CURRENCY
The Company changed its functional
currency from the Canadian dollar (CAD) to the United States dollar (USD) as of February 1, 2021. The change in functional currency coincided
with the January 2021 initial public offering and listing on the Nasdaq. Considering Versus’ business activities, comprised primarily
of United States dollar revenue and expenditures as well as United States dollar denominated financings, management determined that the
functional currency of the Company is the United States dollar. All assets, liabilities, share capital, and other components of shareholders’
equity (deficit) were translated into United States dollars at the exchange rate at the date of change. These changes have been accounted
for prospectively. Concurrent with the change in functional currency, on February 1, 2021, the Company changed its presentation currency
from the Canadian dollar to the United States dollar. This change in presentation currency is to better reflect the Company’s business
activities, comprised primarily of United States dollar transactions. The condensed interim consolidated financial statements for all
periods presented have been translated into the new presentation currency in accordance with IAS 21, The Effects of Changes in Foreign
Exchange Rates. The condensed interim consolidated statements of loss and comprehensive loss have been translated into the presentation
currency using the average exchange rates prevailing during each quarterly reporting period. All assets and liabilities previously reported
in Canadian dollars have been translated into United States dollars as at February 1, 2021 using the period-end noon exchange rates of
0.782 CAD/USD. As a practical measure, the comparative shareholders’ equity (deficit) balances were translated at the February 1,
2021 exchange rate of 1.2824 CAD/USD. All resulting translation exchange differences have been recognized within other comprehensive income
in the foreign currency translation reserve. The effect of applying different exchange rates for the change in functional currency and
presentation currency have been included as a reconciling item within the statement of changes in shareholders’ equity (deficit)
as at February 1, 2021.
5.
RECEIVABLES
As of June 30, 2023, accounts receivable
consists of customer receivables of $1,093 (net an allowance for doubtful accounts of $300) and GST receivable of $20,293. As of December
31, 2022, accounts receivable consists of customer receivables of $46,592 (net an allowance for doubtful accounts of $6,100) and GST receivable
of $14,157.
6.
RESTRICTED DEPOSIT
As at June 30, 2023, restricted deposits
consisted of $8,672 (December 31, 2022 - $8,489) held in a guaranteed investment certificate as collateral for a corporate credit card.
17
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
7.
PROPERTY AND EQUIPMENT
Computers
Right of Use Asset
Total
($)
($)
($)
Cost
At December 31, 2021
181,390
913,405
1,094,795
Additions
65,329
-
65,329
At December 31, 2022
246,719
913,405
1,160,124
Additions
-
-
-
Disposals
(192,361
)
-
(192,361
)
At June 30, 2023
54,358
913,405
967,763
Accumulated amortization
At December 31, 2021
113,079
654,771
767,850
Amortization for the period
39,667
179,766
219,433
At December 31, 2022
152,746
834,537
987,283
Amortization for the period
18,800
78,868
97,668
Disposals
(135,692
)
-
(135,692
)
At June 30, 2023
35,854
913,405
949,259
Carrying amounts
At December 31, 2021
68,311
258,634
326,945
At December 31, 2022
93,973
78,868
172,841
At June 30, 2023
18,504
0
18,504
On April 30, 2023, the Company vacated
its leased office space in Los Angeles, CA in accordance with the termination of the lease. Upon vacating the office space, the Company
sold or disposed of excess office furniture and equipment, including a majority of the Company’s computers that are no longer needed
by the current workforce.
As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, the
remaining right-of-use asset balance is $0.
8.
NON-CONTROLLING INTEREST IN
VERSUS LLC
As of December 31, 2018, the Company
held a 41.3% ownership interest in Versus LLC, a privately held limited liability company organized under the laws of the state of Nevada.
The Company consolidates Versus LLC as a result of having full control over the voting shares. Versus LLC is a technology company that
is developing a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of
their games to their players.
On May 21, 2019, the Company acquired
an additional 25.2% interest in Versus LLC in exchange for 38,268 common shares of the Company and 19,134 share purchase warrants. The
common shares and the share purchase warrants were determined to have a fair value of $1,403,675 and $116,595, respectively. As a result,
the Company increased its ownership interest to 66.5% and recorded the excess purchase price over net identifiable liabilities of $3,575,884
against reserves. The effect on non-controlling interest was a reduction of $2,053,199.
18
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
8.
NON-CONTROLLING INTEREST IN
VERSUS LLC (continued)
On June 21, 2019, the Company
acquired an additional 0.3% interest in Versus LLC in exchange for 189 common shares of the Company and 95 share purchase warrants.
The common shares and the share purchase warrants were determined to have a fair value of $6,906 and $2,527, respectively. As a
result, the Company increased its ownership interest to 66.8% and recorded the excess purchase price over net identifiable assets of
$26,448 against reserves. The effect on non-controlling interest was a reduction of $19,433.
On March 1, 2022, the Company acquired
an additional 15.1% interest in Versus LLC in exchange for 11,441 common shares of the Company. The common shares were determined to have
a fair value of $186,294. As a result, the Company increased its ownership interest to 81.9% and recorded the excess purchase price over
net identifiable assets of $4,562,631 against reserves. The effect on non-controlling interest was a reduction of $4,376,337.
The following table presents summarized
financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2023 and June 30, 2022 and the
six month periods then ended:
2023
2022
Non-controlling interest percentage
18.1%
18.1%
($)
($)
Assets
Current
1,010,211
1,855,473
Non-current
2,046,995
2,811,260
3,057,206
4,666,733
Liabilities
Current
140,523
642,901
Non-current
42,485,061
36,149,724
42,625,584
36,792,624
Net liabilities
(39,568,378
)
(32,125,891
)
Non-controlling interest
(6,784,717
)
(5,504,169
)
Net loss
(2,218,719
)
(5,256,557
)
Net loss attributed to non-controlling interest
(401,588
)
(1,258,926
)
9.
ACQUISITION OF XCITE INTERACTIVE, INC.
A) Summary of the Acquisition
On June 3, 2021, the Company closed
its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the
Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration
for the issuance of 0.0234 of a common shares of the Company for each Xcite common share. The Company issued a total of 100,461 common
shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $101.40. The Company issued an additional
2,917 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt
at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional
$2,865 on July 26, 2021.
19
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
9.
ACQUISITION OF XCITE INTERACTIVE, INC. (continued)
The acquisition was accounted for
using the acquisition method pursuant to IFRS 3, “Business Combinations”. Under the acquisition method, assets and liabilities
are measured at their estimated fair value on the date of acquisition with the exception of income tax, stock-based compensation, lease
liabilities and ROU assets. The total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed.
The following table summarizes the
details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition.
B)
Consideration
Common shares
$
12,890,029
Cash
112,225
Working capital adjustment
(163,902
)
PPP shares
346,031
Total Consideration
$
13,184,383
Identifiable Assets Acquired and Liabilities Assumed
Cash
$
27,124
Accounts Receivable
37,719
Property, Plant and Equipment
34,496
Intangible Assets
7,140,000
Other Assets
12,409
Accounts Payable and Accrued Liabilities
(524,853
)
Other Liabilities
(123,171
)
Total Identifiable Assets
$
6,603,724
Goodwill
$
6,580,659
Goodwill recognized is attributable to the synergies expected
to be achieved. Goodwill is not deductible for tax purposes.
C) Impairment of Goodwill and
Intangible Assets
The Company conducts an annual impairment
analysis in accordance with IAS 36 Impairment of Assets. A number of factors influenced the performance of Xcite Interactive in 2022 and
beyond, including reduced revenue projections, the time and cost involved in creating custom games, the departure of key Xcite employees,
and the competitive landscape of the fan engagement industry. As a result, the Company engaged a third-party to conduct an impairment
analysis as of December 31, 2022.
The analysis determined that the recoverable
amount was $4,425,000 resulting in an impairment of $8,254,000. The goodwill balance of $6,580,660 was written down to $0. The additional
impairment of $1,673,340 was attributed on a pro-rata basis to the intangible assets related the Xcite acquisition. These assets include
customer relationships, tradename, and developed technology.
D)
Revenue and Profit Contribution
The acquired business contributed revenues of $193,944 and
$560,431 for the six month period ended June 30, 2023 and 2022, respectively.
20
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
10.
INTANGIBLE ASSETS
Intangible assets are comprised of
a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of their games
to their players. The Company continues to develop new apps, therefore additional costs were capitalized during the six month period ended
June 30, 2023.
Software
Customer
Relationships
Tradename
Developed
Technology
Total
Cost
At December 31, 2021
12,251,450
4,840,000
750,000
1,550,000
19,391,450
Additions
2,496,621
-
-
-
2,496,621
Impairments
-
(1,194,378
)
(235,555
)
(243,407
)
(1,673,340
)
At December 31, 2022
14,748,071
3,645,622
514,445
1,306,593
20,214,731
Additions
14,569
-
-
-
14,569
At June 30, 2023
14,762,640
3,645,622
514,445
1,306,593
20,229,300
Accumulated amortization
At December 31, 2021
9,614,894
345,715
-
258,333
10,218,942
Amortization
1,729,326
691,430
-
516,667
2,937,423
At December 31, 2022
11,334,220
1,037,145
-
775,000
13,156,365
Amortization
957,620
177,198
-
237,133
1,371,951
At June 30, 2023
12,301,840
1,214,343
-
1,012,133
14,528,316
Carrying amounts
At December 31, 2021
2,636,556
4,494,285
750,000
1,291,667
9,172,507
At December 31, 2022
3,403,851
2,608,477
514,445
531,593
7,058,366
At June 30, 2023
2,460,800
2,431,279
514,445
294,460
5,700,984
11.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company’s accounts payable
and accrued liabilities are comprised of the following:
June 30,
2023
December 31,
2022
($)
($)
Accounts payable (Note 12)
70,662
138,276
Due to related parties (Note 12 and Note 14)
185,538
304,623
Accrued liabilities (Note 12)
36,070
79,113
292,270
522,012
21
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
12.
NOTES PAYABLE – RELATED PARTY
During the six month period ended June 30, 2023, the Company repaid $664,697 of principal. As at June 30, 2023, the Company had recorded
$19,288 in accrued interest which was included in accounts payable and accrued liabilities.
During the year ended December 31,
2022, the Company repaid $64,550 of principal. As at December 31, 2022, the Company had recorded $23,456 in accrued interest which was
included in accounts payable and accrued liabilities.
During the six month period ended
June 30, 2023, the Company recorded finance expense of $0 (December 31, 2022 - $60,770). As of June 30, 2023, all notes are fully accreted.
Amount
($)
Balance, December 31, 2021
2,786,183
Foreign currency adjustment
(177,690
)
Repayments
(64,550
)
Finance expense
60,770
Balance, December 31, 2022
2,604,713
Foreign currency adjustment
44,209
Repayments
(664,697
)
Balance, June 30, 2023
1,984,225
Current
1,984,225
Non-current
0
13.
SHARE CAPITAL AND RESERVES
a)
Authorized share capital
We are authorized to issue an unlimited
number of Class A Shares. The Class A Shares do not have any special rights or restrictions attached. As of June 30, 2023, there were
338 Class A Shares issued and outstanding.
b)
Issued share capital
During the six month period ended June 30, 2023, the Company:
i)
Issued 2,500,000 shares at a price of $0.90 per share for
total proceeds of $2,250,000 in a registered direct offering. In connection with the offering, the Company incurred $226,544 in issuance
costs as part of the transaction.
ii)
Issued 4,042,000 common shares
pursuant to exercise of 4,042,000 warrants at a price of $1.10 per share for total proceeds of $4,446,200.
Escrow
At June 30, 2023, 21 common shares
(December 31, 2022 – 21) of the Company are held in escrow due to misplaced share certificates originally issued to three individual
shareholders.
22
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
13.
SHARE CAPITAL AND RESERVES (continued)
During the year ended December 31,
2022, the Company:
i)
Issued 291,667 units at a price of $24.00 per unit for total
proceeds of $7,000,000. Each unit consisted of one common share and one warrant, to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance costs as part of the transaction.
ii)
Issued 11,441 shares, which were converted from Versus Holdco
shares.
iii)
Issued 39,375 shares at a price of $22.20 per unit for total
proceeds of $874,125 as a result of the underwriter exercising the overallotment.
iv)
Issued 4,196 shares related to the Xcite acquisition and the
vesting of key employee shares.
v)
Issued 276,334 units at a price of $7.80 per unit for total
proceeds of $2,155,195. The offering consisted of 140,000 common shares and 136,334 pre-funded warrants. In connection with the offering,
the Company incurred $313,482 in issuance costs as part of the transaction.
vi)
Issued 412,293 shares at $2.72 per share in a private placement
offering for total proceeds of $1,119,373.
vii)
Issued 2,100,000 units at a price of $1.00 per unit for total
proceeds of $2,099,866. The offering consisted of 300,000 common shares and 1,800,000 pre-funded warrants. In connection with the offering,
the Company incurred $522,460 in issuance costs as part of the transaction.
c) Stock
options
The Company may grant incentive stock
options to its officers, directors, employees, and consultants. The Company has implemented a rolling Stock Option Plan (the “Plan”)
whereby the Company can issue up to 10% of the issued and outstanding common shares of the Company. Options have a maximum term of ten
years and vesting is determined by the Board of Directors.
A continuity schedule of outstanding
stock options is as follows:
Number Outstanding
Weighted Average Exercise Price
($)
Balance –December 31, 2021
129,451
63.60
Granted
104,520
6.19
Exercised
-
-
Forfeited
(6,183
)
92.81
Balance –December 31, 2022
227,788
37.13
Granted
400,000
0.90
Exercised
-
-
Forfeited
(133,705
)
29.63
Balance – June 30, 2023
494,083
9.83
23
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
13.
SHARE CAPITAL AND RESERVES (continued)
During the six months ended June 30,
2023, 400,000 stock options were granted by the Company. During the six months ended June 30, 2023, the Company recorded a share-based
compensation adjustment of ($1,156,217) (June 30, 2022 - $884,322) relating to options forfeited as a result of the Company’s corporate
restructuring in January 2023.
During the year ended December 31,
2022, 104,520 stock options were granted by the Company. During the year ended December 31, 2022, the Company recorded share-based compensation
of $1,567,583 relating to options vested during the period.
The Company used the following assumptions in calculating
the fair value of stock options for the period ended:
June 30,
2023
December 31,
2022
Risk-free interest rate
3.93
%
2.14% – 4.03%
Expected life of options
5.0 years
5.0 years
Expected dividend yield
Nil
Nil
Volatility
132.65
%
96.90% – 112.40%
At June 30, 2023, the Company had
incentive stock options outstanding as follows:
Expiry Date
Options
Outstanding
Exercise
Price
Weighted Average Remaining Life
($)
(years)
September 4, 2023
521
44.55
0.17
April 2, 2024
6,877
37.80
0.75
June 27, 2024
417
38.40
1.00
September 27, 2024
15,418
67.95
1.25
October 22, 2024
834
60.45
1.33
July 24, 2025
8,873
44.70
2.08
July 31, 2025
8,761
44.70
2.08
August 10, 2025
833
44.70
2.17
June 1, 2026
3,788
105.60
2.92
June 29, 2026
700
84.75
3.00
August 19, 2026
24,071
63.00
3.17
May 10, 2027
300
11.85
3.92
August 17, 2027
52,387
6.00
4.17
September 20, 2027
2,240
3.45
4.25
February 13, 2028
368,063
0.90
4.75
494,083
9.83
4.31
24
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
13.
SHARE CAPITAL AND RESERVES (continued)
d)
Share purchase warrants
A continuity schedule of outstanding
share purchase warrants is as follows:
Number
Outstanding
Weighted Average
Exercise Price
($)
Balance – December 31, 2021
299,077
102.45
Exercised
-
-
Expired
(186,586
)
96.30
Issued
5,166,044
3.42
Balance – December 31, 2022
5,278,535
5.74
Exercised
(4,042,000
)
1.10
Expired
-
-
Issued
175,000
0.90
Balance – June 30, 2023(1)
1,411,535
18.44
(1)
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
During the six month period ended June 30, 2023, the Company:
i)
Issued 175,000 placement agent warrants in conjunction with
a registered direct offering on February 2, 2023, with an exercise price of $0.90 per share.
During the year ended December 31, 2022, the Company:
ii)
Completed a public offering on February 28, 2022, and issued
291,669 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted of one common share and one warrant,
to purchase one common share at $28.80 per share until February 28, 2027.
iii)
Issued 39,375 units on March 24, 2022, at a price of $22.20
per unit for total proceeds of $874,125 because the underwriter exercised its overallotment option. Each unit consisted of one common
share and one warrant, to purchase one common share at $28.80 per share until February 28, 2027.
iv)
Issued 414,500 warrants on July 18, 2022, to purchase common
shares, each exercisable for one common share at an exercise price of $7.80 per share in an offer to an investor.
v)
Completed a public offering on December 9, 2022 and issued
2,100,000 units for total proceeds of $2,099,866. Each unit consists of (1) either (a) one common share or (b) one pre-funded warrant
to purchase one common share and (2) two warrants to purchase one common share each, at a public offering price of $1.00 per unit. The
unit will have an exercise price of $1.10 per share, are exercisable immediately upon issuance, and will expire five years following
the date of issuance. An additional 220,500 warrants were provided to placement agents with an exercise price of $1.25 per share.
25
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
13.
SHARE CAPITAL AND RESERVES (continued)
The Company used the following assumptions
in calculating the fair value of the warrants for the period ended:
June 30, 2023
Risk-free interest rate
4.13% - 4.49%
Expected life of warrants
2.58 – 4.67 years
Expected dividend yield
Nil
Volatility
132.78
%
Weighted average fair value per warrant
$
0.21
At June 30, 2023, the Company had share
purchase warrants outstanding as follows:
Expiry Date
Warrants
Outstanding
Exercise
Price
Weighted Average
Remaining Life
($)
(years)
January 20, 2026(1)
112,491
112.50
2.58
February 28, 2027
331,044
28.80
3.67
December 6, 2027
220,500
1.25
4.42
December 9, 2027
158,000
1.10
4.42
January 18, 2028
414,500
7.80
4.58
February 2, 2028
175,000
0.90
4.67
1,411,535
18.44
4.17
(1)
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
26
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
14.
RELATED PARTY TRANSACTIONS
The following summarizes the Company’s
related party transactions, not disclosed elsewhere in these condensed interim consolidated financial statements, during the six months
ended June 30, 2023 and 2022. Key management personnel includes the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and certain
directors and officers and companies controlled or significantly influenced by them.
Key Management Personnel
2023
2022
($)
($)
Short-term employee benefits paid or accrued to the CEO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
177,178
177,165
Short-term employee benefits paid or accrued to the CFO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
183,898
182,680
Short-term employee benefits paid or accrued to a member of the advisory board of the Company, including share-based compensation vested for incentive stock options and performance warrants.
54,518
113,759
Short-term employee benefits paid or accrued to the Chief Technology Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
156,193
154,095
Short-term employee benefits paid or accrued to a Director of the Company, including share-based compensation vested for incentive stock options and performance warrants.
138,473
146,835
Short-term employee benefits paid or accrued to the Chief People Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
108,973
101,675
Short-term employee benefits paid or accrued to the Chief Innovation Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
-
87,500
Short-term employee benefits paid or accrued to other directors and officers of the Company, including share-based compensation vested for incentive stock options and performance warrants.
48,777
356,775
Total
868,010
1,320,484
Other Related Party Payments
Office sharing and occupancy costs
of $37,595 during the six months ended June 30, 2023 (December 31, 2022 - $64,741) were paid or accrued to a corporation that shares management
in common with the Company.
Amounts Outstanding
a)
At June 30, 2023, a total of $185,538 (December 31, 2022 -
$304,623) was included in accounts payable and accrued liabilities owing to officers, directors, or companies controlled by them. These
amounts are unsecured and non-interest bearing (Note 11).
b)
At June 30, 2023, a total of $1,984,225 (December 31, 2022
- $2,604,713) of notes are payable to a director of the Company (Note 12).
27
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
15.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Financial risk management
Financial instruments measured at fair
value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to
estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 –
Unadjusted quoted prices in active markets for identical
assets or liabilities;
Level 2 –
Inputs other than quoted prices that are observable
for the asset or liability either directly or indirectly; and
Level 3 –
Inputs that are not based on observable market data.
The Board of Directors
has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s financial
instruments consist of cash, receivables, restricted deposit, accounts payable and accrued liabilities and notes payable.
The fair value of cash, receivables,
accounts payable and accrued liabilities approximate their book values because of the short-term nature of these instruments.
Credit risk
Credit risk
is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its payment obligations. The Company
has no material counterparties to its financial instruments with the exception of the financial institutions which hold its cash. The
Company manages its credit risk by ensuring that its cash is placed with a major financial institution with strong investment grade ratings
by a primary ratings agency. The Company’s receivables consist of goods and services due from customers and tax due from the Canadian
government.
Financial instrument risk exposure
The Company
is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management
processes.
Liquidity risk
The Company’s
cash is invested in business accounts which are available on demand. The Company has raised additional capital during the six months
ended June 30, 2023.
Interest rate risk
The Company’s
bank account earns interest income at variable rates and the notes payable bear interest at the prime lending rate. The fair value of
its portfolio is relatively unaffected by changes in short-term interest rates. A 1% change in interest rates would have no significant
impact on profit or loss for the six month period ended June 30, 2023.
Foreign exchange risk
Foreign currency exchange rate risk
is the risk that the fair value of financial instruments or future cash flows will fluctuate because of changes in foreign exchange rates.
The Company operates in Canada and the United States.
28
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
15.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
The Company was exposed to the following
foreign currency risk as at June 30, 2023 and December 31, 2022:
June 30,
2023
December 31,
2022
($)
($)
Cash
2,202,570
245,858
Accounts payable and accrued liabilities
(146,360
)
(93,630
)
2,056,210
152,228
As at June 30, 2023, with other variables
unchanged, , a +/- 10% change in the United States dollar to Canadian dollar exchange rate would impact the Company’s net loss by
$205,600 (December 31, 2022 - $15,200).
29
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
16.
Management of
Capital
The Company manages its capital structure
and makes adjustments to it, based on the funds available to the Company. Capital consists of items within equity (deficit). The Board
of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's
management to sustain future development of the business. The Company is not subject to any externally imposed capital requirements.
The Company remains dependent on external
financing to fund its activities. In order to sustain its operations, the Company will spend its existing cash on hand and raise additional
amounts as needed until the business generates sufficient revenues to be self-sustaining. Management reviews its capital management approach
on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
In order to maximize ongoing corporate
development efforts, the Company does not pay out dividends. The Company’s investment policy is to keep its cash treasury invested
in certificates of deposit with major financial institutions.
There have been no changes to the
Company’s approach to capital management during the six month period ended June 30, 2023.
17.
GEOGRAPHICAL SEGMENTED INFORMATION
The Company is engaged in three business
activities, the live events business, which includes partnering with multiple professional sports franchises to drive in-stadium audience
engagement; a software licensing business creating a recurring revenue stream; and a business-to-business software platform that allows
video game publishers and developers to offer prize-based matches of their games to their players.
Details of
identifiable assets by geographic segments are as follows:
Restricted
deposits
Deposits
Goodwill
Property and
equipment
Intangible
assets
June 30, 2023
Canada
$
8,672
$
-
$
-
$
-
$
-
USA
-
100,000
-
18,504
5,700,984
$
8,672
$
100,000
-
$
18,504
$
5,700,984
June 30, 2022
Canada
$
8,922
$
-
$
-
$
-
$
-
USA
-
100,000
6,580,660
268,642
9,387,325
$
8,922
$
100,000
6,580,660
$
268,642
$
9,387,325
18.
SUPPLEMENTAL CASH FLOW INFORMATION
June 30,
2023
June 30,
2022
($)
($)
Non-cash investing and financing activities:
Shares issued to acquire Holdco shares
-
11,441
Shares issued in connection with Xcite acquisition
-
4,196
30
VERSUS SYSTEMS INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023
(Expressed in United States dollars)
(Unaudited)
19.
LEASE OBLIGATIONS AND COMMITMENTS
Lease Liabilities
$
Lease liabilities recognized as of January 1, 2022
367,884
Lease payments made
(260,184
)
Interest expense on lease liabilities
20,860
Lease liabilities recognized as of January 1, 2023
128,560
Lease payments made
(131,576
)
Interest expense on lease liabilities
3,016
0
Less: current portion
(0
)
At June 30, 2023 – non-current portion
0
On August 1, 2015, the Company entered
into a cost sharing arrangement agreement for the provision of office space and various administrative services. In May of 2018, the Company
extended the cost sharing arrangement to July of 2022 at a monthly fee of CAD $7,000 plus GST per month.
On September
6, 2017, the Company entered into a rental agreement for office space in Los Angeles, California. Under the terms of the agreement the
Company paid $17,324 per month commencing on October 1, 2017 until April 30, 2023.
On April 30,
2023, the Company vacated its leased office space in Los Angeles, CA in accordance with the termination of the lease. As of June 30,
2023, the Company operates using a fully remote workforce and does not have any long-term lease agreements for office space or other
long-term assets. As such, the remaining right-of-use asset balance is $0.
20.
SUBSEQUENT EVENTS
The Company has evaluated subsequent
events after the balance sheet date of June 30, 2023 through August 14, 2023, the date the condensed interim consolidated financial statements
were issued. Based upon its evaluation, management has determined that no subsequent events have occurred that would require recognition
in the accompanying consolidated financial statements or disclosure in the notes thereto, except as follows:
1.
Subsequent to June 30, 2023, the Company extended CAD$670,000
in notes payable to director Brian Tingle.
EX-99.2
3
ea183090ex99-2_versussys.htm
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2023 AND 2022
Exhibit
99.2
VERSUS
SYSTEMS INC.
MANAGEMENT’S
DISCUSSION AND ANALYSIS
(Expressed
in United States Dollars)
SIX
MONTH PERIOD ENDED
JUNE
30, 2023
REPORT
DATE – AUGUST 14, 2023
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Introduction
Versus
Systems Inc., (the “Company), a corporation formed under the laws of British Columbia, was formed by way of an amalgamation under
the name McAdam Resources, Inc. in the Province of Ontario on December 1, 1988 and subsequently extra provincially registered in British
Columbia on February 2, 1989. The Company changed its name to Boulder Mining Corporation on May 9, 1995 in Ontario and on September 25,
1996 in British Columbia. The Company continued into British Columbia on January 2, 2007 and concurrently changed its name to Opal Energy
Corp. The Company changed its name to Versus Systems Inc. on June 30, 2016, and concurrently ceased or divested its mining related business
and began operating its current software platform business. On June 3rd, 2021, the Company acquired Xcite Interactive, Inc.
a Company that created a fan engagement software platform for live events. The Company operates through its majority-owned subsidiary,
Versus LLC, a Nevada limited liability Company that was organized on August 21, 2013 and through its wholly owned subsidiary, Xcite Interactive,
Inc. The principal executive offices in Canada are located at 1558 Hastings Street, Vancouver, British Columbia V6G 3J4 Canada, and the
telephone number is (604) 639-4457. The Company’s principal executive offices in the United States are located at 1370 N. St Andrews
Pl, Los Angeles, CA 90028, and the telephone number at that address is (424) 226-8588. Our website address is www.versussystems.com.
In
accordance with Form 51-102F1, the following Management’s Discussion & Analysis (MD&A) provides a review of activities,
results of operations and financial condition of the Company for the six months ended June 30, 2023. The following discussion and analysis
should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2022
and 2021 which were prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and Interpretations of the International Financial Reporting Interpretations Committee (IFRIC). All monetary amounts,
unless otherwise indicated, are expressed in United States dollars.
Forward-Looking
Statements
Except
for statements of historical fact, this MD&A contains certain “forward-looking information” within the meaning of applicable
securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”,
“intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain
events or conditions “may” or “will” occur. In particular, forward-looking information in this MD&A includes,
but is not limited to, statements with respect to future events and is subject to certain risks, uncertainties and assumptions. Although
we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations
will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that
the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking
information is based on the opinions and estimates of management at the date the statements are made and is subject to a variety of risks
and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking
information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking
statements include, but are not limited to: limited operating history; regulatory risks; changes in laws, regulations and guidelines;
failure to retain existing users or add new users; reliance on management and key personnel; lack of demand; competition; rapid technological
change; online commerce security risks; and the other factors described herein under “Risks and Uncertainties” as well as in
our public filings available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The
forward-looking information contained in this MD&A is expressly qualified by this cautionary statement. We undertake no duty to update
any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise
required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
Page | 2
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Our
Mission
Our
mission is to work with teams, and brands, to give consumers the best interactive and rewarded experiences possible - whether they are
at live events, playing games, or watching streaming content.
Our
Company
We
offer a suite of proprietary business-to-business software tools that drive user engagement through gamification, interactivity, and
rewards. These tools allow our partners to offer in-game prizing and rewards, including merchandise, coupons, digital goods, and sweepstakes
entries - inside their websites, their venues, or their streaming media content. Our customers, who are mostly sports teams, venues,
and advertising agencies, typically use our products, including “Winfinite”, “XEO”, and our suite of skill-based
games as part of their live events or as part of an advertising campaign with the goal of engaging fans, increasing consented first-party
data, and increasing sales.
End
users of our products earn prizes by registering on our system and completing in-content challenges like trivia, polls, or casual, skill-based
mobile games. Players can use our system to play a variety of games and earn wide range of prize types, including coupons, sweepstakes-style
prizes, consumer packaged goods (“CPG”) downloadable content (“DLC”), or web3 prizing. We are constantly upgrading
our gamification and rewards products, including our in-venue XEO and Filter Fan Cam products for live events, and our stand-alone “Winfinite”
product that can be used by brands, advertising agencies, and content partners to reach potential customers anytime, anywhere, on any
device. We also have a growing IP portfolio that creates future licensing and product development opportunities including our recently
allowed Artificial Intelligence (“AI”) and Machine Learning (“ML”) series of patent claims.
With
the acquisition of Xcite Interactive in June of 2021, we acquired a number of key pieces of technology as well as relationships that
have helped to drive our engagement and rewards business, including a live events fan engagement business that has partnered with professional
sports franchises across the National Football League (“NFL”), the National Basketball Association (“NBA”), the
National Hockey League (“NHL”) and others to increase audience engagement using interactive gaming functions like trivia,
polling, and casual games that can be played alongside live experiences whether a player is at-home, in a restaurant, or in-venue at
the event itself. Our three largest customers in 2023 are the Sacramento Kings, the San Jose Sharks, and the New Jersey Devils. The Xcite
acquisition also helped us to grow our software licensing business - taking the in-venue fan engagement tools and methods developed by
Xcite and its team over decades, and productizing those tools in a scalable way that allows content partners of all types and sizes to
engage with fans and customers in measurable, effective ways, collecting consented user data and driving new, incremental sales.
We
now have three principal stand-alone scalable software products that can be used across a wide variety of applications. Our eXtreme Engagement
Online or “XEO” platform is designed primarily for in-venue main-board work in stadiums and arenas. Our Filter Fan Cam (“FFC”)
platform is an Augmented Reality filtering tool that can be used for mobile and in-venue, applications. And we have recently launched
our stand-alone gaming and prizing product that we call “Winfinite,” which allows brands, media companies, and advertising
agencies to reach out to customers directly on their mobile devices, increasing engagement, driving consented user data, and increasing
sales both in-store and online via ecommerce channels. We license these three software products to teams, leagues, ad agencies, ecommerce
partners, and other content creators - creating a recurring revenue stream that supplements our professional services and advertising
revenues. In addition to providing improved consumer engagement with games and features like trivia and polling, XEO, FFC, and Winfinite
provide improved analytics and flexibility for our content partners that want to engage directly with fans and future customers in real-time.
Page | 3
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Our
Company (continued)
We
are able to provide our customers with improved fan engagement, data, and increased product sales by not only reaching out to those fans
that are in-venue on game day, but also to those watching at home on TV, or other devices. With XEO, FFC, and Winfinite, fans can interact
with teams, their favorite influencers, or their favorite brands, while competing for prizes and rewards anytime, no matter where they
are. The Versus engagement and rewards model now extends beyond college and professional sports to awards shows, reality TV, or even
streaming content on platforms like YouTube, Twitter, and Twitch. We have also worked with event sponsors, conventions, theme parks and
restaurants to drive engagement and sales.
We
believe our products provide real benefit for three key target groups: content providers, brands and agencies, and fans/players/customers.
By providing interactivity and in-content rewards, content providers see more frequent sessions and longer session times from their users
and viewers. Consumer brands offering sponsorships and in-content prizes or rewards within our interactive experiences see improved brand
recall and brand affinity, as well as prolonged and increased interest from players and consumers who view their goods as a positive
“win” within their viewing experience. Customers are more likely to share their data and make repeat purchases both in-venue
and online via ecommerce when brands use this gamification and rewards model. Players, viewers, and consumers who interact alongside
their favorite content, especially players who play for real-world rewards, show an increased desire to interact with such content, which
increases the value of the content as a supplier of prizing opportunities, of the brands that offer the prizes, and of the experience
itself as an interactive and desirable challenge for players and viewers.
We
monetize our gamification and rewards products in a number of ways including: Licensing the technology to our partners for events, campaigns,
or seasons; adding a Cost Per Click (“CPC”), or Cost Per Action (“CPA”), “performance marketing”
element that scales with each game played, each reward redeemed, or each new registered user added. We can also charge our partners for
professional services like developing bespoke game elements or creating custom data reports.
Our
revenues have principally come from software licensing and professional services provided to professional sports franchises, as well
as from fan engagement events like rodeos, boxing matches, and other live events including Nascar, corporate conferences, and other global
sporting events.
Our
technology facilitates advertising that is part of the entertainment itself — part of the narrative, not as a distraction.
By creating an environment that makes brands part of a desired experience — winning prizes or rewards — we
empower content providers and brands to engage consumers more effectively and for more extended periods of time.
Our
Products and Services
We
provide the following products and services to our partners and customers:
●
Professional
Services: Integration, Customization, and Production. Our patented platform can be
integrated into games and interactive media through a number of methods including web-frames,
and Software Development Kits (“SDKs”), including SDKs for iOS, Android, Unity,
C++ and others. We have worked with partners such as HP to develop bespoke instances of our
rewards platform, as we did with their OMEN Rewards system available inside HP OMEN and Pavilion
gaming desktop and laptops. We also offer professional design, development and platform integration
services to content partners who seek more bespoke solutions. A majority of our professional
sports team partners, and some of our advertising partners, use some degree of customization
in the application of our engagement platforms. We also offer live-event production services,
and sweepstakes/prizing support to assist with the implementation of our products.
Page | 4
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Our
Products and Services (continued)
●
Analytics
and support for in-venue products XEO and FFC. Our in-venue fan engagement
products are used at a variety of live-event and other entertainment focused properties like
stadiums and arenas, but they can also be used at conferences, theme parks, and restaurants
to increase audience and customer engagement. Content partners, including professional sports
teams, can use XEO and FFC in conjunction with their existing video screens, “jumbotrons”,
“halo boards”, “main boards”, as well as branded apps to reach potential
customers with games and interactive experiences that enhance the live event.
●
Support
and Analytics for Winfinite, our Click-Play-Win Product. Winfinite is
a Click-Play-Win interactive advertising tool that increases awareness, affinity, data, and
incremental sales. It allows content creators, marketers, agencies, and other advertisers
to increase customer acquisition and loyalty through a combination of games and rewards.
Our customers use Click Play Win to create interactive advertisements that offer coupons
and rewards. The product is compatible with a number of digital platforms and can be integrated
into customers’ existing advertising campaigns. Click-Play-Win is designed to increase
customer transactions and also increase the collection of zero-party data, which is first-party
data that is consensually provided by consumers directly to advertisers. Consumers are incented
to provide their data inside Winfinite as they register to play games for prizes and rewards
that may include coupons, real-world goods and services, sweepstakes entries, and digital
goods including downloadable content for games, digital collectibles, and web3 products.
●
Advertising
services. In connection with the placement or licensing of our engagement and rewards
platforms, we market our services to brand partners to place their products, discounts, or
coupons into Versus-enabled content so that users, viewers and players can earn those rewards
for their in-game or in-app behavior. When providing those services, we typically charge
the brand only when a player attempts to win one of the brand’s proffered prizes, or
when a new customer has registered and consented to be contacted by the brand in the future.
However, in certain cases we may also charge on a CPC, CPE or a CPA model.
Corporate
History and Structure
Versus
Systems Inc., a corporation formed under the laws of British Columbia, was formed by way of an amalgamation under the name McAdam Resources,
Inc. in the Province of Ontario on December 1, 1988 and subsequently extra-provincially registered in British Columbia on February 2,
1989. We changed our name to Boulder Mining Corporation on May 9, 1995 in Ontario and on September 25, 1996 in British Columbia.
We continued into British Columbia on January 2, 2007 and concurrently changed our name to Opal Energy Corp. We changed our name
to Versus Systems Inc. on June 30, 2016, and concurrently ceased or divested our mining related business and began operating our
current software platform business.
In
June 2021, we completed the acquisition of multimedia, production, and interactive gaming company Xcite Interactive, a provider
of online audience engagement through its owned and operated XEO technology platform. We now provide products and services to multiple
professional sports franchises across MLB, the NHL, the NBA and the NFL to drive in-stadium audience engagement as well as a software
licensing business to drive audience engagement.
We
operate through our majority-owned subsidiary, Versus LLC, a Nevada limited liability company that was organized on August 21, 2013,
and through our wholly owned subsidiary, Xcite Interactive Inc, a Delaware company that was reorganized as such on April 1, 2019.
Our
principal executive offices in Canada are located at 1558 Hastings Street, Vancouver, British Columbia V6G 3J4 Canada, and our telephone
number at that address is (604) 639-4457. Our principal executive offices in the United States are located at 1370 N. St Andrews
Pl, Los Angeles, CA 90028, and our telephone number at that address is (424) 226-8588. Our website address is www.versussystems.com.
The information on or accessed through our website is not incorporated in this prospectus.
Page | 5
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Corporate
History and Structure (continued)
The
SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issues that file electronically with the SEC.
The
following chart reflects our organizational structure (including the jurisdiction of formation or incorporation of the various entities):
Name of Subsidiary
Country of Incorporation
Proportion of Ownership Interest
Versus Systems (Holdco), Inc.
United States of America
81.9
%
Versus Systems UK, Ltd
United Kingdom
81.9
%
Versus, LLC
United States of America
81.9
%
Xcite Interactive, Inc.
United States of America
100
%
Non-Controlling
Interest in Versus LLC
As
at December 31, 2018, the Company held a 41.3% ownership interest in Versus LLC, a privately held limited liability Company organized
under the laws of the state of Nevada. The Company consolidates Versus LLC as a result of having full control over the voting shares.
Versus LLC is a technology Company that is developing a business-to-business software platform that allows video game publishers and
developers to offer prize-based matches of their games to their players.
On
May 21, 2019, the Company acquired an additional 25.2% interest in Versus LLC in exchange for 38,268 common shares of the Company and
19,134 share purchase warrants. The common shares and the share purchase warrants were determined to have a fair value of $1,403,675
and $116,595, respectively. As a result, the Company increased its ownership interest to 66.5% and recorded the excess purchase price
over net identifiable liabilities of $3,575,884 against reserves. The effect on non-controlling interest was a reduction of $2,053,199.
On
June 21, 2019, the Company acquired an additional 0.3% interest in Versus LLC in exchange for 189 common shares of the Company and 95
share purchase warrants. The common shares and the share purchase warrants were determined to have a fair value of $6,906 and $2,527,
respectively. As a result, the Company increased its ownership
interest
to 66.8% and recorded the excess purchase price over net identifiable assets of $26,448 against reserves. The effect on non-controlling
interest was a reduction of $19,433.
On
March 1, 2022, the Company acquired an additional 15.1% interest in Versus LLC in exchange for 11,441 common shares of the Company. The
common shares were determined to have a fair value of $186,294. As a result, the Company increased its ownership interest to 81.9% and
recorded the excess purchase price over net identifiable assets of $4,562,631 against reserves. The effect on non-controlling interest
was a reduction of $4,376,337.
Recent
Business Developments and Milestones
U.S.
Patent Filings
Versus
has filed multiple patent claims with the U.S. Patent and Trademark Office to expand upon its existing portfolio of prizing, promotion
and financial technologies that enable brands to reach the rapidly growing competitive gaming audience of players, spectators and broadcasters.
Page | 6
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Recent
Business Developments and Milestones (continued)
The
Versus patent claims, extending and expanding on claims filed in the United States in 2014 and internationally through the patent co-operation
treaty in 2015, describe a system that seeks to match competitive game players and spectators with prizing from their favourite brands
through a unique conditional prize matching system.
On
May 9, 2023, pursuant to a Versus filing made in 2021, the U.S. Patent and Trademark Office (USPTO) has issued U.S. Patent No. 11,645,560,
titled “Processing In-Content Challenges for Online Gaming System.” This issued patent protects methods for using machine learning
and artificial intelligence to contextualize and personalize both digital and real-world rewards inside interactive media. The claims
include advertising campaign optimization and player value optimization.
On
October 25, 2022, pursuant to a Versus filing made in 2020, the U.S. Patent and Trademark Office (USPTO) has issued U.S. Patent No. 11,482,081,
titled “Promoting Competitive Balance in Multiplayer Gaming.” This issued patent protects multiple systems and methods for
managing multiplayer games and tournaments where players may be playing at different times, or on different gaming devices, with different
levels of internet connectivity, or if the players are at different levels of eligibility with respect to a pool of prizes which may
include digital and physical goods. The covered claims describe multiple ways to manage multiplayer gaming events (contests, tournaments,
or other game types) wherein the game manager may want to provide prizes and/or rewards to players in fair ways despite the unequal nature
of asynchronous play with varied players on varied devices.
On
July 26, 2022, Versus announced that, pursuant to a Versus filing made in 2019, the U.S. Patent and Trademark Office (USPTO) has issued
U.S. Patent No. 11,376,498, titled “Managing In-Content Challenges for Multi-Player Games.” This issued patent protects several
methods for managing first and second-screen games inside of apps, television broadcasts, and streaming media, with a focus on how to
provide different digital and physical prizes to different players based on their performance in games and eligibility criteria such
as age and location. Versus uses these patented technologies in-venue, at NFL, NHL, NBA, NCAA, and other sporting events.
On January 12, 2021, we were issued U.S. Patent No. 10,888,789, titled “Managing Rewards in Interactive Media Across Geographical
Locations.” This issued patent includes multiple covered claims dealing with the management of prizing in gaming tournaments when
players are playing in different geographies, which may affect their eligibility for prizing. The covered claims include a number of
ways that Versus products use geotargeting, geofencing, and a database of state and local regulations to manage their “dynamic
regulatory compliance” engine such that players in different locations will be served game and prize combinations that are tailored
for their location.
On
March 14, 2019, Versus announced that, pursuant to a Versus filing made in 2015, the U.S. Patent and Trademark Office (USPTO) has issued
U.S. Patent No. 10,242,538, titled “Systems and Methods for Creating and Maintaining Real Money Tournaments for Video Games.”
The issued patent protects a number of proprietary systems and methods for awarding real money, physical goods, digital currencies, and
downloadable content to players inside video games and other interactive media. Versus uses these patented technologies within their
WINFINITE prizing platform, allowing players to play for real-world prizes inside their favorite games.
Overall
Performance and Results of Operations
Three
Month Period June 30, 2023
During
the three month period ended June 30, 2023 (the “Current Quarter), the Company incurred a loss for the period of $2,291,806 compared
to $3,226,142 for the three month period ended June 30, 2022 (the Comparative Quarter). The decrease in net loss can be attributed to
a corporate restructuring which resulted in reduced salaries and wages, professional fees, software costs and stock compensation. Operating
expenses for the Current Quarter were $2,366,708 compared to $3,590,116 for the Comparative Quarter which represented an overall decrease
of $1,223,408 or 34%.
Page | 7
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Summary
of Quarterly Results
The
following table sets out selected unaudited financial information for the eight most recent quarters. The financial data has been prepared
in accordance with IFRS.
Three Months Ended
June 30,
2023
March 31,
2023
December 31, 2022
September 30,
2022
($)
($)
($)
($)
Sales
56,053
157,950
217,604
316,819
Loss from Operations
(2,310,655
)
(1,326,889
)
(11,866,327
)
(3,297,779
)
Loss attributable to shareholders
(2,022,912
)
(1,184,847
)
(11,064,835
)
(3,082,009
)
Loss attributable to non-controlling interest
(268,894
)
(132,694
)
(450,894
)
(428,065
)
Loss for the period
(2,291,806
)
(1,317,541
)
(11,670,698
)
(3,510,074
)
Basic and Diluted Loss per Share
(0.19
)
(0.14
)
(5.76
)
(1.86
)
Three Months Ended
June 30,
2022
March 31,
2022
December 31, 2021
September 30,
2021
($)
($)
($)
($)
Sales
250,661
323,756
393,267
304,684
Loss from Operations
(3,339,455
)
(3,559,057
)
(3,406,750
)
(3,268,932
)
Loss attributable to shareholders
(2,740,734
)
(2,581,900
)
(1,519,381
)
(572,952
)
Loss attributable to non-controlling interest
(485,409
)
(773,517
)
(982,211
)
(1,005,002
)
Loss for the period
(3,226,143
)
(3,355,418
)
(2,501,592
)
(1,577,954
)
Basic and Diluted Loss per Share
(1.95
)
(2.10
)
(0.90
)
(0.57
)
Note
1: There were no material variations in the results of the Company over the prior eight reporting periods with the exception of the
following:
●
During
the three-month period ended June 30, 2023, the loss for the period decreased (excluding
stock compensation expense) due to savings related to salaries and wages, software costs,
and professional fees, partially offset by a decrease in revenue.
●
During
the three-month period ended March 31, 2023, the loss for the period decreased due to savings
related to salaries and wages, software costs, professional fees, and stock compensation
expense as a result of a corporate restructuring which included downsizing our workforce
and curtailing certain development programs.
●
During
the three-month period ended December 31, 2022, the loss for the period increased due to
the impairment of goodwill and other intangibles and increased intangible amortization expense,
offset by decreases to share based compensation.
Page | 8
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Summary
of Quarterly Results (continued)
●
During
the three-month period ended September 30, 2022, the loss for the period increased due to
an increase in consulting fees, a lawsuit settlement accrual, and a one-time write off related
to Xcite holdback shares, offset by decreases in software delivery costs, professional fees,
and salaries and wages.
●
During
the three-month period ended June 30, 2022, the loss for the period decreased due to a decrease
in professional fees and share based compensation, offset by an increase in salaries and
wages and software delivery costs.
●
During
the three-month period ended March 31, 2022, the loss for the period increased due to an
increase in salaries and wages and share based compensation.
●
During
the three-month period ended December 31, 2021, the loss for the period increased due to
an increase in salaries and wages and share based compensation.
●
During
the three-month period ended September 30, 2021, the loss for the period decreased due to
an increase in salaries and wages and share based compensation, offset by a change in fair
value of the warrant liability.
Liquidity
and Capital Resources
The
Company had cash of $3,193,827 and a working capital surplus of $1,353,891 as at June 30, 2023, compared to a cash position of $1,178,846
and working capital deficit of $1,861,737 as at December 31, 2022. The increase in the Company’s cash position and decrease in
working capital deficit was related to cash raised from the exercise of warrants and a registered direct offering and decreases in payroll
related expenses due to a company restructuring.
Financing
activities
During
the six months ended June 30, 2023, the Company:
i)
issued,
2,500,000 shares at a price of $0.90 per share for total proceeds of $2,250,000 in a registered
direct offering. In connection with the offering, the Company incurred $226,544 in issuance
costs as part of the transaction.
ii)
issued,
4,042,000 common shares pursuant to the exercise of 4,042,000 warrants at a price of $1.10
per share for total proceeds of $4,446,200.
During
the year ended December 31, 2022, the Company:
i)
issued,
291,667 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted
of one common share and one warrant, to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance
costs as part of the transaction.
ii)
issued,
11,441 shares, which were converted from Versus Holdco shares.
iii)
issued,
39,375 shares at a price of $22.20 per unit for total proceeds of $874,125 as a result of
the underwriter exercising the overallotment.
Page | 9
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Liquidity
and Capital Resources (continued)
iv)
issued,
4,196 shares related to the Xcite acquisition and the vesting of key employee shares.
v)
issued,
276,334 units at a price of $7.80 per unit for total proceeds of $2,155,195. The offering
consisted of 140,000 common shares and 136,334 pre-funded warrants. In connection with the
offering, the Company incurred $313,482 in issuance costs as part of the transaction.
vi)
issued,
412,293 shares at $2.72 per share in a private placement offering for total proceeds of $1,119,373.
vii)
issued,
2,100,000 units at a price of $1.00 per unit for total proceeds of $2,099,866. The offering
consisted of 300,000 common shares and 1,800,000 pre-funded warrants. In connection with
the offering, the Company incurred $522,460 in issuance costs as part of the transaction.
During
the six months ended June 30, 2022, the Company:
i)
issued,
291,667 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted
of one common share and one warrant to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance
costs as part of the transaction.
ii)
issued,
11,441 shares, which were converted from Versus Holdco shares.
iii)
issued,
39,375 shares at a price of $22.20 per unit for total proceeds of $874,125 as a result of
the underwriter exercising the overallotment.
During
the six month period ended June 30, 2023, the Company repaid $664,697 of principal. As at June 30, 2023, the Company had recorded $19,288
in accrued interest which was included in accounts payable and accrued liabilities.
During
the year ended December 31, 2022, the Company repaid $64,550 of principal. As at December 31, 2022, the Company had recorded $23,456
in accrued interest which was included in accounts payable and accrued liabilities.
Page | 10
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Selected
Annual Information
The
following table sets out selected financial information for the Company for each of the fiscal years ended December 31, 2022, 2021 and
2020. The selected annual information should only be read in conjunction with the Company’s audited annual financial statements for the
fiscal years ended December 31, 2022, 2021 and 2020 including the notes thereto.
Statement
of Operations, Comprehensive Loss and Deficit Data:
Year Ended
December 31,
2022
Year Ended
December 31,
2021
Year Ended
December 31,
2020
($)
($)
($)
Revenue
1,108,840
768,650
1,390,018
Other expense
-
-
(13,890
)
Loss from operations
(22,062,618
)
(15,481,964
)
(6,241,830
)
Loss and comprehensive loss
(21,607,363
)
(17,847,892
)
(7,358,342
)
Loss per share, basic and diluted
(11.63
)
(15.15
)
(8.85
)
Balance
Sheet Data:
As at
December 31,
2022
As at
December 31,
2021
As at
December 31,
2020
($)
($)
($)
Current Assets
1,462,821
2,354,512
3,164,636
Total Assets
8,802,517
18,543,692
5,491,157
Current Liabilities
3,324,558
3,372,894
3,959,642
Long Term Debt
-
678,515
2,237,751
Non-Controlling Interest (Deficit)
(6,383,129
)
(8,621,581
)
(5,193,701
)
Shareholders’ Equity (Deficiency)
5,477,959
14,002,668
(1,138,350
)
Page | 11
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Transactions
with Related Parties
The
following summarizes the Company’s related party transactions, not disclosed elsewhere in these consolidated financial statements,
during the six months ended June 30, 2023 and 2022. Key management personnel includes the Chief Executive Officer (CEO), Chief Financial
Officer (CFO) and certain directors and officers and companies controlled or significantly influenced by them.
Key
Management Personnel
2023
2022
($)
($)
Short-term employee benefits paid or accrued to the CEO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
177,178
177,165
Short-term employee benefits paid or accrued to the CFO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
183,898
182,680
Short-term employee benefits paid or accrued to a member of the advisory board of the Company, including share-based compensation vested for incentive stock options and performance warrants.
54,518
113,759
Short-term employee benefits paid or accrued to the Chief Technology Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
156,193
154,095
Short-term employee benefits paid or accrued to a Director of the Company, including share-based compensation vested for incentive stock options and performance warrants.
138,473
146,835
Short-term employee benefits paid or accrued to the Chief People Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
108,973
101,675
Short-term employee benefits paid or accrued to the Chief Innovation Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
-
87,500
Short-term employee benefits paid or accrued to other directors and officers of the Company, including share-based compensation vested for incentive stock options and performance warrants.
48,777
356,775
Total
868,010
1,320,484
Other
Related Party Payments
Office
sharing and occupancy costs of $37,595 during the six months ended June 30, 2023 (December 31, 2022 - $64,741) were paid or accrued to
a corporation that shares management in common with the Company.
Amounts
Outstanding
a)
At
June 30, 2023, a total of $185,538 (December 31, 2022 - $304,623) was included in accounts
payable and accrued liabilities owing to officers, directors, or companies controlled by
them. These amounts are unsecured and non-interest bearing.
b)
At
June 30, 2023, a total of $1,984,225 (December 31, 2022 - $2,604,713) of notes are payable
to a director of the Company.
Page | 12
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Disclosure
of Outstanding Share Data
We
are authorized to issue an unlimited number of Class A Shares. The Class A Shares do not have any special rights or restrictions attached.
As of June 30, 2023, there were 338 Class A Shares issued and outstanding.
Shares
Issued and Outstanding
As
at June 30, 2023, there are 10,714,171 common shares and 338 Class “A” shares, Series 1 issued and outstanding.
Warrants
As
at the Report Date, there are share purchase warrants outstanding as follows:
Expiry Date
Warrants
Outstanding
Exercise
Price
($)
January 20, 2026(1)
112,491
112.50
February 28, 2027
331,044
28.80
December 6, 2027
220,500
1.25
December 9, 2027
158,000
1.10
January 18, 2028
414,500
7.80
February 2, 2028
175,000
0.90
1,411,535
18.44
(1)
Unit
A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares
to be issued and exercise price upon the exercise of the warrants.
Page | 13
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Disclosure
of Outstanding Share Data (continued)
Stock
Options
As
at the Report Date, there are stock options outstanding as follows:
Expiry Date
Options
Outstanding
Exercise
Price
($)
September 4, 2023
521
44.55
April 2, 2024
6,877
37.80
June 27, 2024
417
38.40
September 27, 2024
15,418
67.95
October 22, 2024
834
60.45
July 24, 2025
8,873
44.70
July 31, 2025
8,761
44.70
August 10, 2025
833
44.70
June 1, 2026
3,788
105.60
June 29, 2026
700
84.75
August 19, 2026
24,071
63.00
May 10, 2027
300
11.85
August 17, 2027
52,387
6.00
September 20, 2027
2,240
3.45
February 13, 2028
368,063
0.90
494,083
9.83
Page | 14
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Off
Balance Sheet Arrangements
The
Company is not a party to any off-balance sheet arrangements or transactions.
Lease
Obligations and Commitments
$
Lease liabilities recognized as of January 1, 2022
367,884
Lease payments made
(260,184
)
Interest expense on lease liabilities
20,860
Lease liabilities recognized as of January 1, 2023
128,560
Lease payments made
(131,576
)
Interest expense on lease liabilities
3,016
0
Less: current portion
(0
)
At June 30, 2023 – non-current portion
0
On
August 1, 2015, the Company entered into a cost sharing arrangement agreement for the provision of office space and various administrative
services. In May of 2018, the Company extended the cost sharing arrangement to July of 2022 at a monthly fee of CAD $7,000 plus GST per
month.
On
September 6, 2017, the Company entered into a rental agreement for office space in Los Angeles, USA. Under the terms of the agreement
the Company will pay $17,324 per month commencing on October 1, 2017 until April 30, 2023.
On
April 30, 2023, the Company vacated its leased office space in Los Angeles, CA in accordance with the termination of the lease. As of
June 30, 2023, the Company operates using a fully remote workforce and does not have any long-term lease agreements for office space
or other long-term assets. As such, the remaining right-of-use asset balance is $0.
Subsequent
Events
The
Company has evaluated subsequent events after the balance sheet date of June 30, 2023 through August 14, 2023, the date the consolidated
financial statements were issued. Based upon its evaluation, management has determined that no subsequent events have occurred that would
require recognition in the accompanying consolidated financial statements or disclosure in the notes thereto, except as follows:
1.
Subsequent
to June 30, 2023, the Company extended CAD$670,000 in notes payable to director Brian Tingle.
New
standards, amendments and interpretations to existing standards adopted by the Company
No
new standards were adopted in the current quarter.
Page | 15
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Financial
Instruments and Risk Management
Financial risk management
Financial
instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability
of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Financial
Instruments and Risk Management (continued)
Level
1 –
Unadjusted quoted
prices in active markets for identical assets or liabilities;
Level
2 –
Inputs other than
quoted prices that are observable for the asset or liability either directly or indirectly; and
Level
3 –
Inputs that
are not based on observable market data.
The
Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The
Company’s financial instruments consist of cash, receivables, restricted deposits, accounts payable and accrued liabilities and
notes payable.
The
fair value of cash, receivables, accounts payable and accrued liabilities approximate their book values because of the short-term nature
of these instruments.
Credit
risk
Credit
risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its payment obligations.
The Company has no material counterparties to its financial instruments with the exception of the financial institutions which hold its
cash. The Company manages its credit risk by ensuring that its cash is placed with a major financial institution with strong investment
grade ratings by a primary ratings agency. The Company’s receivables consist of goods and services due from customers and tax due
from the Canadian government.
Financial
instrument risk exposure
The
Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management
processes.
Liquidity
risk
The
Company’s cash is invested in business accounts which are available on demand, the Company has a working capital surplus of $1,353,891
as at June 30, 2023. Accordingly, the Company is exposed to liquidity risk.
Interest
rate risk
The
Company’s bank account earns interest income at variable rates. The fair value of its portfolio is relatively unaffected by changes
in short-term interest rates. Interest rate risk is minimal as the Company does not have significant interest bearing assets or any variable
interest bearing liabilities that are tied into market rates.
Foreign
exchange risk
Foreign
currency exchange rate risk is the risk that the fair value of financial instruments or future cash flows will fluctuate as a result
of changes in foreign exchange rates. The Company operates in Canada and the United States.
The
Company was exposed to the following foreign currency risk as at June 30, 2023 and December 31, 2022:
June 30, 2023
December 31, 2022
($)
($)
Cash
2,202,570
245,858
Accounts payable and accrued liabilities
(146,360
)
(93,630
)
2,056,210
152,228
Page | 16
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Financial
Instruments and Risk Management (continued)
As
at June 30, 2023, with other variables unchanged, a +/- 10% change in the Canadian dollar to United States dollar exchange rate would
impact the Company’s net loss by $205,600 (December 31, 2022 - $15,200).
Management’s
Responsibility for Financial Statements
The
Company’s management is responsible for the preparation and presentation of the consolidated financial statements and the MD&A.
The consolidated financial statements have been prepared in accordance with IFRS. The MD&A has been prepared in accordance with the
requirements of securities regulators, including National Instrument 51-102 of the Canadian Securities Administrators.
Management
of Capital
The
Company manages its capital structure and makes adjustments to it, based on the funds available to the Company. Capital consists of total
shareholders’ equity (deficit), less amounts accumulated in shareholders’ equity (deficit) related to share-based payments
to employees and consultants. The Board of Directors does not establish quantitative return on capital criteria for management, but rather
relies on the expertise of the Company’s management to sustain future development of the business. The Company is not subject to any
externally imposed capital requirements.
The
Company remains dependent on external financing to fund its activities. In order to sustain its operations, the Company will spend its
existing cash on hand and raise additional amounts as needed until the business generates sufficient revenues to be self-sustaining.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the
Company, is reasonable.
In
order to maximize ongoing corporate development efforts, the Company does not pay out dividends. The Company’s investment policy
is to keep its cash treasury invested in certificates of deposit with major financial institutions.
There
have been no changes to the Company’s approach to capital management during the six months ended June 30, 2023.
Risks
and Uncertainties
Versus
is publicly traded development stage Company in the technology sector and, as such, is exposed to a number of risks and uncertainties
that are not uncommon to other companies in the same business. Some of the possible risks include, but are not limited to, the following:
Risks
Related to the Company’s Business
As
we have incurred recurring losses and negative operating cash flows since our inception, and there is no assurance that we will be able
to continue as a going concern absent additional financing, which we may not be able to obtain on favorable terms or at all.
We
have incurred net losses since our incorporation in 2016 and we cannot be certain if or when we will produce sufficient revenue from
our operations to support our costs. Even if profitability is achieved in the future, we may not be able to sustain profitability on
a consistent basis. We expect to continue to incur substantial losses and negative cash flow from operations for the foreseeable future.
Our future is dependent upon our ability to obtain financing and upon future profitable operations from the sale of our existing and
future products.
Page | 17
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
Our
ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating
performance and investor sentiment. If we are unable to raise additional capital when required or on acceptable terms, we may have
to significantly delay, scale back or discontinue our operations or obtain funds by entering into agreements on unattractive terms,
which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we
have business relationships, at least until additional funding is obtained. If we do not have sufficient funds to continue
operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders
losing some or all of their investment in us.
We
do not have any credit facilities as a source of future funds, and there can be no assurance that we will be able to raise sufficient
additional capital on acceptable terms, or at all. We may seek additional capital through a combination of private and public equity
offerings, debt financings and strategic collaborations. If we raise additional funds through the issuance of equity or convertible debt
securities, the percentage ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights,
preferences or privileges senior to those of existing stockholders. Debt financing, if obtained, may involve agreements that include
covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, could increase our expenses
and require that our assets secure such debt. Moreover, any debt we incur must be repaid regardless of our operating results.
We
are an early, commercial-stage company with a limited operating history.
We
were incorporated in 2016 and we have had limited sales to date. As such, we have limited historical financial data upon which to base
our projected revenue, planned operating expenses or upon which to evaluate our business and our commercial prospects. Based on our limited
experience in developing and marketing our existing products and services as well as launching new products, we may not be able to effectively:
●
drive
adoption of our current and future products and services;
●
attract
and retain customers for our products and services;
●
provide
appropriate levels of customer training and support for our products and services;
●
implement
an effective marketing strategy to promote awareness of our products and services;
●
develop,
manufacture and commercialize new products or achieve an acceptable return on our manufacturing or research and development efforts
and expenses;
●
anticipate
and adapt to changes in our market or predict future performance;
●
accommodate
customer expectations and demands with respect to our products and services;
●
grow
our market share by marketing and selling our products and services to new and additional market segments;
●
maintain
and develop strategic relationships with vendors and manufacturers to acquire necessary materials for the production of our existing
or future products;
●
adapt
or scale our manufacturing activities to meet potential demand at a reasonable cost;
●
avoid
infringement and misappropriation of third-party intellectual property;
Page | 18
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
●
obtain
any necessary licenses to third-party intellectual property on commercially reasonable terms;
●
obtain
valid and enforceable patents that give us a competitive advantage;
●
protect
our proprietary technology; and
●
attract,
retain and motivate qualified personnel.
If
our products and services fail to achieve and sustain sufficient market acceptance, we will not generate expected revenue and our business
may not succeed.
We
cannot be sure that our current or future services will gain acceptance in the marketplace at levels sufficient to support our costs.
We must successfully develop and commercialize our technology for use in a variety of life science and other applications. Even if we
are able to implement our technology and develop products successfully, we and/or our sales and distribution partners may fail to achieve
or sustain market acceptance of our products across the full range of our intended life science and other applications. Our sequencing
instruments require sequencing kits in order to produce sequencing data at sufficient levels to generate expected revenue. We will have
to increase our internal capabilities and to collaborate with other partners in order to successfully expand sales of our sequencing
kits in the markets we seek to reach, which we may be unable to do at the scale required to support our business.
The
Company has a relatively limited operating history and limited revenues to date and thus are subject to risks of business development
and you have only a limited basis on which to evaluate our ability to achieve our business objective.
Because
the Company has a relatively limited operating history and limited revenues to date, investors should consider and evaluate the Company’s
operating prospects in light of the risks and uncertainties frequently encountered by early-stage operating companies in rapidly evolving
markets. These risks include:
●
that
Versus may not have sufficient capital to achieve the Company’s growth strategy;
●
that
Versus may not develop the Company’s product and service offerings in a manner that enables it to be profitable and meet the
Company’s customers’ requirements;
●
that
the Company’s growth strategy may not be successful; and
●
that
fluctuations in the Company’s operating results will be significant relative to the Company’s revenues.
The
Company’s future growth will depend substantially on the Company’s ability to address these and the other risks
described in this section. If the Company does not successfully address these risks, the Company’s business could be
significantly harmed. To date, the Company has had minimal revenues. Even if Versus does achieve profitability, the Company cannot
predict the level of such profitability. If the Company sustains losses over an extended period of time, the Company may be unable
to continue the Company’s business.
Page | 19
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
Our
recent organizational changes and cost cutting measures may not be successful.
In
January 2023, we implemented reduction-in-force affecting approximately 45% of our workforce. The objective of this workforce
reduction was to realign our workforce to meet our needs and to improve operating efficiency and reduce our cash burn. However,
these restructuring and cost cutting activities may yield unintended consequences and costs, such as attrition beyond our intended
reduction-in-force, a reduction in morale among our remaining employees, and the risk we may not achieve the anticipated benefits of
such reduction-in-force measure, all of which may have an adverse effect on our results of operations or financial condition. In
addition, while positions have been eliminated, certain functions necessary to our reduced operations remain, and we may be
unsuccessful in distributing the duties and obligations of departed employees among our remaining employees. We may also discover
the reductions in workforce and cost cutting measures will make it difficult for us to resume development activities we have
suspended or pursue new initiatives, requiring us to hire qualified replacement personnel, which may require us to incur additional
and unanticipated costs and expenses. As a result of the loss of services of a significant percentage of our personnel, including
several of our executive officers, we may be unable to continue our operations and meet our ongoing obligations. Any of these
unintended consequences may have a material adverse impact on our business, financial condition, and results of
operations.
Future
acquisitions or strategic investments could disrupt the Company’s business and harm the Company’s business, results of operations
or financial condition.
The
Company may in the future explore potential acquisitions of companies or strategic investments to strengthen the Company’s business.
Even if the Company identifies an appropriate acquisition candidate, the Company may not be successful in negotiating the terms or financing
of the acquisition, and the Company’s due diligence may fail to identify all of the problems, liabilities or other shortcomings
or challenges of an acquired business.
Acquisitions
involve numerous risks, any of which could harm the Company’s business, including:
●
straining
the Company’s financial resources to acquire a Company;
●
anticipated
benefits may not materialize as rapidly as the Company expect, or at all;
●
diversion
of management time and focus from operating the Company’s business to address acquisition integration challenges;
●
retention
of employees from the acquired Company;
●
cultural
challenges associated with integrating employees from the acquired Company into the Company’s organization;
●
integration
of the acquired Company’s accounting, management information, human resources and other administrative systems;
●
the
need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective
controls, procedures and policies; and
●
litigation
or other claims in connection with the acquired Company, including claims from terminated employees, former shareholders or other
third parties.
Failure
to appropriately mitigate these risks or other issues related to such strategic investments and acquisitions could result in reducing
or completely eliminating any anticipated benefits of transactions, and harm the Company’s business generally. Future acquisitions
could also result in dilutive issuances of the Company’s equity securities, the incurrence of debt, contingent liabilities, amortization
expenses or the impairment of goodwill, any of which could have a material adverse effect on the Company’s business, results of
operations or financial condition.
Page | 20
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
The
Company may require additional funding for the Company’s growth plans, and such funding may result in a dilution to investors.
The
Company attempted to estimate the Company’s funding requirements in order to implement the Company’s growth plans. If the
costs of implementing such plans should exceed these estimates significantly or if the Company comes across opportunities to grow through
expansion plans that cannot be predicted at this time, and the Company’s funds generated from the Company’s operations prove
insufficient for such purposes, the Company may need to raise additional funds to meet these funding requirements.
These
additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources. The Company cannot
assure investors that the Company will be able to obtain any additional financing on terms that are acceptable to the Company, or at
all. If the Company fails to obtain additional financing on terms that are acceptable to the Company, the Company will not be able to
implement such plans fully if at all. Such financing even if obtained, may be accompanied by conditions that limit the Company’s
ability to pay dividends or require the Company to seek lenders’ consent for payment of dividends, or restrict the Company’s
freedom to operate the Company’s business by requiring lender’s consent for certain corporate actions.
Further,
if the Company raises additional funds by way of a rights offering or through the issuance of new shares, any shareholders who are unable
or unwilling to participate in such an additional round of fund raising may suffer dilution in their investment.
The
Company may not have sufficient capital to fund the Company’s ongoing operations, effectively pursue the Company’s strategy
or sustain the Company’s growth initiatives.
The
Company’s remaining liquidity and capital resources may not be sufficient to allow the Company to fund the Company’s ongoing
operations, effectively pursue the Company’s strategy or sustain the Company’s growth initiatives. The report of the Company’s
independent registered public accounting firm on the Company’s consolidated financial statements for the years ended December 31,
2022 and 2021 stated that the Company’s negative cash flows from operations, inability to finance the Company’s day-to-day
operations through operations and expectation of further losses indicates that a material uncertainty exists that may cast significant
doubt on the Company’s ability to continue as a going concern. If the Company requires additional capital resources, the Company
may seek such funds directly from third party sources; however, the Company may not be able to obtain sufficient equity capital and/or
debt financing from third parties to allow the Company to fund the Company’s expected ongoing operations or the Company may not
be able to obtain such equity capital or debt financing on acceptable terms or conditions. Factors affecting the availability of equity
capital or debt financing to the Company on acceptable terms and conditions include:
●
the
Company’s current and future financial results and position;
●
the
market’s, investors’ and lenders’ view of the Company’s industry and products;
●
the
perception in the equity and debt markets of the Company’s ability to execute the Company’s business plan or achieve
the Company’s operating results expectations; and
●
the
price, volatility and trading volume and history of the Company’s common shares.
Page | 21
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
If
the Company is unable to obtain the equity capital or debt financing necessary to fund the Company’s ongoing operations, pursue
the Company’s strategy and sustain the Company’s growth initiatives, the Company may be forced to scale back the Company’s
operations or the Company’s expansion initiatives, and the Company’s business and operating results will be materially adversely
affected.
The
Company’s operations are significantly dependent on changes in public and customer tastes and discretionary spending patterns.
The Company’s inability to successfully anticipate customer preferences or to gain popularity for games may negatively impact the
Company’s profitability.
The
Company’s success depends significantly on public and customer tastes and preferences, which can be unpredictable. If the Company
is unable to successfully anticipate customer preferences or increase the popularity of the games that have embedded at the Company’s
platform, the per capita revenue and overall customer expenditures may decrease, and thereby negatively impact the Company’s profitability.
In response to such developments, the Company may need to increase the Company’s marketing and product development efforts and
expenditures, the Company may also adjust the Company’s product pricing, the Company may modify the platform itself, or take other
actions, which may further erode the Company’s profit margins or otherwise adversely affect the Company’s results of operations
and financial condition. In particular, the Company may need to expend considerable cost and effort in carrying out extensive research
and development to assess the potential interest in the Company’s platform and to remain abreast with continually evolving technology
and trends.
While
the Company may incur significant expenditures of this nature, including in the future as the Company continues to expand the Company’s
operations, there can be no assurance that any such expenditures or investments by the Company will yield expected or commensurate returns
or results, within a reasonable or anticipated time, or at all.
If
the Company cannot continue to develop, acquire, market and offer new products and services or enhancements to existing products and
services that meet customer requirements, the Company’s operating results could suffer.
The
process of developing and acquiring new technology products and services and enhancing existing offerings is complex, costly and uncertain.
If the Company fails to anticipate customers’ rapidly changing needs and expectations, the Company’s market share and results
of operations could suffer. The Company must make long-term investments, develop, acquire or obtain appropriate intellectual property
and commit significant resources before knowing whether the Company’s predictions will accurately reflect customer demand for the
Company’s products and services. If the Company misjudges customer needs in the future, the Company’s new products and services
may not succeed and the Company’s revenues and earnings may be harmed. Additionally, any delay in the development, acquisition,
marketing or launch of a new offering or enhancement to an existing offering could result in customer attrition or impede the Company’s
ability to attract new customers, causing a decline in the Company’s revenue or earnings.
The
Company makes significant investments in new products and services that may not achieve expected returns.
We
have made and will continue to make significant investments in research, development and marketing for existing products, services and
technologies, including developing tools for brand managers that allow for building interactive consumer experiences featuring mobile
games, new feature sets for our core products, and entirely new products and platforms that we are developing for specific customers,
as well as new technology or new applications of existing technology. Investments
in new technology are speculative. Commercial success depends on many factors, including but not limited to innovativeness, developer
support, and effective distribution and marketing. If customers do not perceive the Company’s latest offerings as providing significant
new functionality or other value, they may reduce their purchases of the Company’s services or products, unfavorably affecting
the Company’s revenue and profits. The Company may not achieve significant revenue from new product, service or distribution channel
investments, or new applications of existing new product, service or distribution channel investments, for several years, if at all.
New products and services may not be profitable, and even if they are profitable, operating margins for some new products and businesses
may not be as high as the margins the Company has experienced historically. Furthermore, developing new technologies is complex and can
require long development and testing periods. Significant delays in new releases or significant problems in creating new products or
offering new services could adversely affect the Company’s revenue and profits.
Page | 22
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
If
the Company fails to retain existing users or add new users, the Company’s results of operations and financial condition may be
materially and adversely affected
The
size of the Company’s users’ level of engagement are critical to the Company’s success. The Company’s
financial performance will be significantly determined by the Company’s success in adding, retaining, and engaging active
users of the Company’s products. To the extent that the Company’s active user growth rate slows, the Company’s
business performance will become increasingly dependent on the Company’s ability to increase levels of user engagement in
current and new markets. If people do not perceive the Company’s products to be useful, reliable, and trustworthy, the Company
may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement. A
decrease in user retention, growth, or engagement could render the Company less attractive to video game publishers and developers
which may have a material and adverse impact on the Company’s revenue, business, financial condition, and results of
operations. Any number of factors could potentially negatively affect user retention, growth, and engagement, including
if:
●
users
increasingly engage with competing products;
●
the
Company fails to introduce new and improved products or if the Company introduces new products or services that are not favorably
received;
●
the
Company is unable to successfully balance the Company’s efforts to provide a compelling user experience with the decisions
made by the Company with respect to the frequency, prominence, and size of ads and other commercial content that the Company displays;
●
there
are changes in user sentiment about the quality or usefulness of the Company’s products or concerns related to privacy and
sharing, safety, security, or other factors;
●
the
Company is unable to manage and prioritize information to ensure users are presented with content that is interesting, useful, and relevant
to them;
●
there
are adverse changes in the Company’s products that are mandated by legislation, regulatory authorities, or litigation, including
settlements or consent decrees;
●
technical
or other problems prevent the Company from delivering the Company’s products in a rapid and reliable manner or otherwise affect
the user experience;
●
the
Company adopts policies or procedures related to areas such as sharing the Company’s user data that are perceived negatively
by the Company’s users or the general public.
●
the
Company fails to provide adequate customer service to users, developers, or advertisers; or
●
the
Company, the Company’s software developers, or other companies in the Company’s industry are the subject of adverse media
reports or other negative publicity.
Page | 23
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
If
the Company is unable to build and/or maintain relationships with publishers and developers, the Company’s revenue, financial results,
and future growth potential may be adversely affected.
If
the Company fails to keep up with industry trends or technological developments, the Company’s business, results of operations
and financial condition may be materially and adversely affected.
The
gaming industry is rapidly evolving and subject to continuous technological changes. The Company’s success depends on the Company’s
ability to continue to develop and implement services and solutions that anticipate and respond to rapid and continuing changes in technology
and industry developments and offerings to serve the evolving needs of the Company’s customers. The Company’s growth strategy
is focused on responding to these types of developments by driving innovation that will enable the Company to expand the Company’s
business into new growth areas. If Versus does not sufficiently invest in new technology and industry developments or evolve and expand
the Company’s business at sufficient speed and scale, or if Versus does not make the right strategic investments to respond to
these developments and successfully drive innovation, the Company’s services and solutions, the Company’s results of operations,
and the Company’s ability to develop and maintain a competitive advantage and continue to grow could be negatively affected. In
addition, the Company operates in a quickly evolving environment in which there currently are, and the Company expects will continue
to be, new technology entrants. New services or technologies offered by competitors or new entrants may make the Company’s offerings
less differentiated or less competitive, when compared to other alternatives, which may adversely affect the Company’s results
of operations. Technological innovations may also require substantial capital expenditures in product development as well as in modification
of products, services or infrastructure. The Company cannot assure investors that the Company can obtain financing to cover such expenditures.
Failure to adapt the Company’s products and services to such changes in an effective and timely manner could materially and adversely
affect the Company’s business, financial condition and results of operations.
The
Company is subject to cybersecurity risks.
Cybersecurity
risks and attacks continue to increase. Cybersecurity attacks are evolving and not always predictable. Attacks include malicious
software, threats to information technology infrastructure, denial-of-service attacks on websites, attempts to gain unauthorized access
to data, and other breaches. Data breaches can originate with authorized or unauthorized persons. Authorized persons could inadvertently
or intentionally release confidential or proprietary information, and recipients could misuse data. Such events could lead to interruption
of the Company’s operations or business, unauthorized release or use of information, compromise of data, damage to the Company’s
reputation, damage to the Company’s customers or vendors, and increased costs to prevent, respond to or mitigate any events.
The
Company is a holding Company and depends upon the Company’s subsidiaries for the Company’s cash flows.
The
Company is a holding company. All of the Company’s operations are conducted, and almost all of the Company’s assets are owned,
by the Company’s subsidiaries. Consequently, the Company’s cash flows and the Company’s ability to meet the Company’s
obligations depend upon the cash flows of the Company’s subsidiaries and the payment of funds by these subsidiaries to the Company
in the form of dividends, distributions or otherwise. The ability of the Company’s subsidiaries to make any payments to the Company
depends on their earnings, the terms of their indebtedness, including the terms of any credit facilities, of which there are currently
none, and legal restrictions. While there are no restrictions on the ability of the Company’s subsidiaries to make any payments
to the Company, such restrictions may arise in the future. Any failure to receive dividends or distributions from the Company’s
subsidiaries when needed could have a material adverse effect on the Company’s business, results of operations or financial condition.
Page | 24
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
The
Company’s insurance coverage may not adequately protect the Company against all future risks, which may adversely affect the Company’s
business and prospects.
The
Company maintains insurance coverage, including for fire, acts of god and perils, terrorism, burglary, money, fidelity guarantee,
professional liability including errors and omissions and breach of contract, commercial property, commercial general liability,
cyber events including incident response costs, legal, forensic and breach management costs, cyber-crimes, system damage,
rectification costs, business interruption and reputational harm, as well as directors’ and officers’ liability
insurance and employee health and medical insurance, with standard exclusions in each instance. While the Company maintains
insurance in amounts that the Company considers reasonably sufficient for a business of the Company’s nature and scale, with
insurers that the Company considers reliable and credit worthy, the Company may face losses and liabilities that are uninsurable by
their nature, or that are not covered, fully or at all, under the Company’s existing insurance policies. Moreover, coverage
under such insurance policies would generally be subject to certain standard or negotiated exclusions or qualifications and,
therefore, any future insurance claims by the Company may not be honored by the Company’s insurers in full, or at all. In
addition, the Company’s premium payments under the Company’s insurance policies may require a significant investment by
the Company.
To
the extent that the Company suffers loss or damage that is not covered by insurance or that exceeds the Company’s insurance coverage,
the loss will have to be borne by the Company and the Company’s business, cash flow, financial condition, results of operations
and prospects may be adversely affected.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect the Company’s business, investments
and results of operations.
The
Company is subject to laws and regulations enacted by national, regional and local governments. In particular, the Company is
required to comply with certain United States Securities Exchange Commission and other legal requirements. Compliance with, and
monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their
interpretation and application may also change from time to time and those changes could have a material adverse effect on the
Company’s business, investments and results of operations. In addition, a failure to comply with applicable laws or
regulations, as interpreted and applied, could have a material adverse effect on the Company’s business and results of
operations.
The
Company is dependent upon the Company’s executive officers and directors and their departure could adversely affect the Company’s
ability to operate.
The
Company’s operations are dependent upon a relatively small group of individuals and, in particular, the Company’s executive
officers and directors. The Company believes that the Company’s success depends on the continued service of the Company’s
executive officers and directors. The Company does not have key-man insurance on the life of any of the Company’s directors or
executive officers. The unexpected loss of the services of one or more of the Company’s directors or executive officers could have
a detrimental effect on the Company.
The
Company’s executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests
that conflict with the Company’s interests.
The
Company has not adopted a policy that expressly prohibits the Company’s directors, executive officers, security holders or affiliates
from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by the Company or in
any transaction to which the Company is a party or has an interest. The Company does not have a policy that expressly prohibits any such
persons from engaging for their own account in business activities of the types conducted by the Company. Accordingly, such persons or
entities may have a conflict between their interests and ours.
Page | 25
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
The
Company’s business may be harmed if the Company’s licensing partners, or other third parties with whom Versus does business,
act in ways that put the Company’s brand at risk.
The
Company offers a business-to-business software platform that allows video game publishers and developers, as well as other interactive
media content creators, to offer in-game prizing and rewards, based on the completion of in-content challenges. The Company anticipates
that the Company’s business partners shall be given access to sensitive and proprietary information or control over the Company’s
intellectual property in order to provide services and support to the Company’s teams. These third parties may misappropriate the
Company’s information or intellectual property and engage in unauthorized use of it or otherwise act in a way that places the Company’s
brand at risk. The failure of these third parties to provide adequate services and technologies, the failure of third parties to adequately
maintain or update their services and technologies or the misappropriation or misuse of this information or intellectual property could
result in a disruption to the Company’s business operations or an adverse effect on the Company’s reputation, and may negatively
impact the Company’s business.
If
the Company fails to keep the Company’s existing users highly engaged, to acquire new users, to successfully implement an award-prizes
model for the Company’s user community, the Company’s business, profitability and prospects may be adversely affected.
The
Company’s success depends on the Company’s ability to maintain and grow the number of users playing the Company’s partners’
games and other media and keeping the Company’s users highly engaged. Of particular importance is the successful deployment and
expansion of the Company’s award-prizes model to the Company’s gaming community for purposes of creating predictable recurring
revenues.
A
decline in the number of the Company’s users may adversely affect the engagement level of the Company’s users, the vibrancy
of the Company’s user community, or the popularity of the Company’s award-prizes model, which may in turn reduce the Company’s
monetization opportunities, and have a material and adverse effect on the Company’s business, financial condition and results of
operations. If the Company is unable to attract and retain users, the Company’s revenues may decline and the Company’s results
of operations and financial condition may suffer.
The
Company’s failure to protect the Company’s intellectual property rights may undermine the Company’s competitive position.
The
Company believes that the Company’s patents, copyrights, trademarks and other intellectual property are essential to the Company’s
success. Please see “Business—Intellectual Property” for more details. The Company depends to a large extent on the
Company’s ability to develop and maintain the intellectual property rights relating to the Company’s existing portfolio of
prizing, promotion and financial technologies that enable brands to reach the rapidly-growing competitive gaming audience of players,
spectators and broadcasters. The Company has devoted considerable time and energy to the development and improvement of the Company’s
portfolio of prizing, promotion and financial technologies intellectual property.
The
Company relies primarily on a combination of patents, copyrights, trademarks and trade secrets laws, and contractual restrictions for
the protection of the intellectual property used in the Company’s business. Nevertheless, these provide only limited protection
and the actions the Company take to protect the Company’s intellectual property rights may not be adequate. The Company’s
trade secrets may become known or be independently discovered by the Company’s competitors. The Company may have no or limited
rights to stop the use of the Company’s information by others. Moreover, to the extent that the Company’s employees or third
parties with whom Versus does business use intellectual property owned by others in their work for the Company, disputes may arise as
to the rights to such intellectual property. Preventing any unauthorized use of the Company’s intellectual property is difficult
and costly and the steps the Company take may be inadequate to prevent the misappropriation of the Company’s intellectual property.
In the event that the Company resorts to litigation to enforce the Company’s intellectual property rights, such litigation could
result in substantial costs and a diversion of the Company’s managerial and financial resources. The Company can provide no assurance
that the Company will prevail in such litigation. Any failure in protecting or enforcing the Company’s intellectual property rights
could have a material adverse effect on the Company’s business, financial condition and results of operations.
Page | 26
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
The
Company’s services or solutions could infringe upon the intellectual property rights of others or the Company might lose the Company’s
ability to utilize the intellectual property of others.
The
Company cannot be sure that the Company’s services and solutions do not infringe on the intellectual property rights of third
parties, and these third parties could claim that the Company or the Company’s clients are infringing upon their intellectual
property rights. These claims could harm the Company’s reputation, cause the Company to incur substantial costs or prevent the
Company from offering some services or solutions in the future. Any related proceedings could require the Company to expend
significant resources over an extended period of time. Any claims or litigation in this area could be time-consuming and costly,
damage the Company’s reputation and/or require the company to incur additional costs to obtain the right to continue to offer
a service or solution to the Company’s clients. If the Company cannot secure this right at all or on reasonable terms, or the
Company cannot substitute alternative technology, the Company’s results of operations could be materially adversely affected.
The risk of infringement claims against the Company may increase as the Company expands the Company’s industry software
solutions.
In
recent years, individuals and firms have purchased intellectual property assets in order to assert claims of infringement against technology
providers and customers that use such technology. Any such action naming the Company or the Company’s clients could be costly to
defend or lead to an expensive settlement or judgment against the Company. Moreover, such an action could result in an injunction being
ordered against the Company’s client or the Company’s own services or operations, causing further damages.
In
addition, the Company relies on third-party software in providing some of the Company’s services and solutions. If the Company
loses the ability to continue using such software for any reason, including in the event that the software is found to infringe the rights
of others, the Company will need to obtain substitute software or seek alternative means of obtaining the technology necessary to continue
to provide such services and solutions. The Company’s inability to replace such software, or to replace such software in a timely
or cost-effective manner, could materially adversely affect the Company’s results of operations.
Third
parties may register trademarks or domain names or purchase internet search engine keywords that are similar to the Company’s trademarks,
brands or websites, or misappropriate the Company’s data and copy the Company’s platform, all of which could cause confusion
to the Company’s users, divert online customers away from the Company’s products and services or harm the Company’s
reputation.
Competitors
and other third parties may purchase trademarks that are similar to the Company’s trademarks and keywords that are confusingly
similar to the Company’s brands or websites in internet search engine advertising programs and in the header and text of the resulting
sponsored links or advertisements in order to divert potential customers from the Company to their websites. Preventing such unauthorized
use is inherently difficult. If the Company is unable to prevent such unauthorized use, competitors and other third parties may continue
to drive potential online customers away from the Company’s platform to competing, irrelevant or potentially offensive platform,
which could harm the Company’s reputation and cause the Company to lose revenue.
Page | 27
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Business (continued)
The
Company’s business is highly dependent on the proper functioning and improvement of its information technology systems and infrastructure.
The Company’s business and operating results may be harmed by service disruptions, or by the Company’s failure to timely
and effectively scale up and adjust the Company’s existing technology and infrastructure.
The
Company’s business depends on the continuous and reliable operation of the Company’s information technology, or IT,
systems. The Company’s IT systems are vulnerable to damage or interruption as a result of fires, floods, earthquakes, power
losses, telecommunications failures, undetected errors in software, computer viruses, hacking and other attempts to harm the
Company’s IT systems. Disruptions, failures, unscheduled service interruptions or a decrease in connection speeds could damage
the Company’s reputation and cause the Company’s customers and end-users to migrate to the Company’s
competitors’ platforms. If the Company experiences frequent or constant service disruptions, whether caused by failures of the
Company’s own IT systems or those of third-party service providers, the Company’s user experience may be negatively
affected, which in turn may have a material and adverse effect on the Company’s reputation and business. The Company may not
be successful in minimizing the frequency or duration of service interruptions. As the number of the Company’s end-users
increases and more user data are generated on the Company’s platform, the Company may be required to expand and adjust the
Company’s technology and infrastructure to continue to reliably store and process content.
The
Company uses third-party services and technologies in connection with the Company’s business, and any disruption to the provision
of these services and technologies to the Company could result in adverse publicity and a slowdown in the growth of the Company’s
users, which could materially and adversely affect the Company’s business, financial condition and results of operations.
The
Company’s business partially depends on services provided by, and relationships with, various third parties. The Company exercises
no control over the third parties with whom the Company has business arrangements. If such third parties increase their prices, fail
to provide their services effectively, terminate their service or agreements or discontinue their relationships with the Company, the
Company could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on the
Company’s business, financial condition and results of operations.
In
most cases, the Company relies on third party consumer-brand partners to fulfil the prizes and rewards for the Company’s end users,
players, viewers and participants. Disruption of this fulfilment could result in a poor user experience, adverse publicity, and a slowdown
in growth of users, which could materially and adversely affect the Company’s business, financial condition and results of operations.
The
Company’s business depends on rewards, earned by users, being fulfilled correctly by third party consumer-brands with whom the
Company has business arrangements. While the Company has agreements with those consumer-brands, the Company does not exercise control
over those companies. If, for any reason, the Company’s customers do not fulfil the prizes or rewards in a manner that the Company’s
end users, players and/or viewers expect, the Company may suffer in the perception of those end users. This could result in loss of players,
poor public relations, or lawsuits. Such event(s) would have a material adverse effect(s) on the Company’s business, financial
condition and may result in a loss of operations.
Risks
Related to International Operations
The
risks related to international operations, in particular in countries outside of the United States, could negatively affect the Company’s
results.
The
Company expects to incur up to 10% of the Company’s total expenses from transactions denominated in currencies other than the United
States dollar, such as the Canadian dollar, and the British pound. As such, the Company’s operations may be adversely affected
by changes in foreign government policies and legislation or social instability and other factors which are not within the Company’s
control, including, but not limited to, recessions in foreign economies, expropriation, nationalization and limitation or restriction
on repatriation of funds, assets or earnings, longer receivables collection periods and greater difficulty in collecting accounts receivable,
changes in consumer tastes and trends, renegotiation or nullification of existing contracts or licenses, changes in gaming policies,
regulatory requirements or the personnel administering them, currency fluctuations and devaluations, exchange controls, economic sanctions
and royalty and tax increases, risk of terrorist activities, revolution, border disputes, implementation of tariffs and other trade barriers
and protectionist practices, taxation policies, including royalty and tax increases and retroactive tax claims, volatility of financial
markets and fluctuations in foreign exchange rates, difficulties in the protection of intellectual property particularly in countries
with fewer intellectual property protections, the effects that evolving regulations regarding data privacy may have on the Company’s
online operations, adverse changes in the creditworthiness of parties with whom the Company has significant receivables or forward currency
exchange contracts, labor disputes and other risks arising out of foreign governmental sovereignty over the areas
in which the Company’s operations are conducted. The Company’s operations may also be adversely affected by social, political
and economic instability and by laws and policies of such foreign jurisdictions affecting foreign trade, taxation and investment. If
the Company’s operations are disrupted and/or the economic integrity of the Company’s contracts is threatened for unexpected
reasons, the Company’s business may be harmed.
Page | 28
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to International Operations (continued)
The
Company’s international activities may require protracted negotiations with host governments, national companies and third parties.
Foreign government regulations may favor or require the awarding of contracts to local contractors or require foreign contractors to
employ citizens of, or purchase supplies from, a particular jurisdiction. In the event of a dispute arising in connection with the Company’s
operations in a foreign jurisdiction where the Company conducts business, the Company may be subject to the exclusive jurisdiction of
foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of United States or enforcing
United States judgments in such other jurisdictions. The Company may also be hindered or prevented from enforcing the Company’s
rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. Accordingly, the Company’s
activities in foreign jurisdictions could be substantially affected by factors beyond the Company’s control, any of which could
have a material adverse effect on it. The Company believes that management’s experience to date in commercializing the Company’s
products, services and solutions in China, Japan, the United Kingdom, the European Union, and other countries and regions around the
world may be of assistance in helping to reduce these risks. Some countries in which the Company may operate may be considered politically
and economically unstable.
Doing
business in the industries in which the Company operates often requires compliance with numerous and extensive procedures and formalities.
These procedures and formalities may result in unexpected or lengthy delays in commencing important business activities. In some cases,
failure to follow such formalities or obtain relevant evidence may call into question the validity of the entity or the actions taken.
The Company’s management is unable to predict the effect of additional corporate and regulatory formalities which may be adopted
in the future including whether any such laws or regulations would materially increase the Company’s cost of doing business or
affect the Company’s operations in any area.
The
Company may in the future enter into agreements and conduct activities outside of the jurisdictions where the Company currently carries
on business, which expansion may present challenges and risks that the Company has not faced in the past, any of which could adversely
affect the Company’s results of operations and/or the Company’s financial condition.
The
Company is subject to foreign exchange and currency risks that could adversely affect the Company’s operations, and the Company’s
ability to mitigate the Company’s foreign exchange risk through hedging transactions may be limited.
The
Company expects to incur up to 10% of the Company’s expenses in currencies other than the United States dollar; however, a substantial
portion of the Company’s operating expenses are incurred in United States dollars. Fluctuations in the exchange rate between the
U.S. dollar and other currencies may have a material adverse effect on the Company’s business, financial condition and operating
results. The Company’s consolidated financial results are affected by foreign currency exchange rate fluctuations. Foreign currency
exchange rate exposures arise from current transactions and anticipated transactions denominated in currencies other than United States
dollars and from the translation of foreign-currency-denominated balance sheet accounts into United States dollar-denominated balance
sheet accounts. The Company is exposed to currency exchange rate fluctuations because portions of the Company’s revenue and expenses
are denominated in currencies other than the United States dollar, particularly the Canadian dollar. Exchange rate fluctuations could
adversely affect the Company’s operating results and cash flows and the value of the Company’s assets outside of the United
States. If a foreign currency is devalued in a jurisdiction in which the Company is paid in such currency, then the Company’s customers
may be required to pay higher amounts for the Company’s products or services, which they may be unable or unwilling to pay. Changes
in exchange rates and the Company’s limited
ability or inability to successfully hedge exchange rate risk could have an adverse impact on the Company’s liquidity and results
of operations.
Page | 29
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to International Operations (continued)
The
Company may be unable to operate in new jurisdictions where the Company’s customers operate because of new regulations.
The
Company is subject to regulation in any jurisdiction where the Company’s customers access the Company’s systems. To expand
into any such jurisdiction the Company may need to operate according to local regulations. In some cases this may require the Company
to be licensed, or obtain approvals for the Company’s products or services. If Versus does not receive, or receive a revocation
of a license in a particular jurisdiction for the Company’s products or services, the Company would not be able to sell or place
the Company’s products or services in that jurisdiction. Any such outcome could materially and adversely affect the Company’s
results of operations and any growth plans for the Company’s business.
Privacy
concerns could result in regulatory changes and impose additional costs and liabilities on the Company, limit the Company’s use
of information, and adversely affect the Company’s business.
Personal
privacy has become a significant issue in the United States and many other countries in which the Company currently operates and may
operate in the future. Many federal, state, and foreign legislatures and government agencies have imposed or are considering imposing
restrictions and requirements about the collection, use, and disclosure of personal information obtained from individuals. Changes to
laws or regulations affecting privacy could impose additional costs and liability on the Company and could limit the Company’s
use of such information to add value for customers. If the Company were required to change the Company’s business activities or
revise or eliminate services, or to implement burdensome compliance measures, the Company’s business and results of operations
could be harmed. In addition, the Company may be subject to fines, penalties, and potential litigation if the Company fails to comply
with applicable privacy regulations, any of which could adversely affect the Company’s business, liquidity and results of operations.
The
Company’s results of operations could be affected by natural events in the locations in which the Company operate or where the
Company’s customers or suppliers operate.
The
Company, the Company’s customers, and the Company’s suppliers have operations in locations subject to natural
occurrences such as severe weather and other geological events, including hurricanes, earthquakes, or floods that could disrupt
operations. Any serious disruption at any of the Company’s facilities or the facilities of the Company’s customers or
suppliers due to a natural disaster could have a material adverse effect on the Company’s revenues and increase the
Company’s costs and expenses. If there is a natural disaster or other serious disruption at any of the Company’s
facilities, it could impair the Company’s ability to adequately supply the Company’s customers, cause a significant
disruption to the Company’s operations, cause the Company to incur significant costs to relocate or re-establish these
functions and negatively impact the Company’s operating results. While the Company intends to seek insurance against certain
business interruption risks, such insurance may not adequately compensate the Company for any losses incurred as a result of natural
or other disasters. In addition, any natural disaster that results in a prolonged disruption to the operations of the
Company’s customers or suppliers may adversely affect the Company’s business, results of operations or financial
condition.
Page | 30
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to International Operations (continued)
The
Company is subject to various laws relating to trade, export controls, and foreign corrupt practices, the violation of which could adversely
affect the Company’s operations, reputation, business, prospects, operating results and financial condition.
The
Company is subject to risks associated with doing business outside of the United States, including exposure to complex foreign and
U.S. regulations such as the Foreign Corrupt Practices Act, or the FCPA, and other anti-corruption laws which generally prohibit
U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining
business. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions and other
penalties. It may be difficult to oversee the conduct of any contractors, third-party partners, representatives or agents who are
not the Company’s employees, potentially exposing the Company to greater risk from their actions. If the Company’s
employees or agents fail to comply with applicable laws or company policies governing the Company’s international operations,
the Company may face legal proceedings and actions which could result in civil penalties, administration actions and criminal
sanctions. Any determination that the Company has violated any anti-corruption laws could have a material adverse impact on the
Company’s business. Changes in trade sanctions laws may restrict the Company’s business practices, including cessation
of business activities in sanctioned countries or with sanctioned entities.
Violations
of these laws and regulations could result in significant fines, criminal sanctions against the Company, the Company’s officers
or the Company’s employees, requirements to obtain export licenses, disgorgement of profits, cessation of business activities in
sanctioned countries, prohibitions on the conduct of the Company’s business and the Company’s inability to market and sell
the Company’s products or services in one or more countries. Additionally, any such violations could materially damage the Company’s
reputation, brand, international expansion efforts, ability to attract and retain employees and the Company’s business, prospects,
operating results and financial condition.
Regulations
that may be adopted with respect to the internet and electronic commerce may decrease the growth in the use of the internet and lead
to the decrease in the demand for the Company’s services.
The
Company may become subject to any number of laws and regulations that may be adopted with respect to the internet and electronic
commerce. New laws and regulations that address issues such as user privacy, pricing, online content regulation, taxation,
advertising, intellectual property, information security, and the characteristics and quality of online products and services may be
enacted. As well, current laws, which predate or are incompatible with the internet and electronic commerce, may be applied and
enforced in a manner that restricts the electronic commerce market. The application of such pre-existing laws regulating
communications or commerce in the context of the internet and electronic commerce is uncertain. Moreover, it may take years to
determine the extent to which existing laws relating to issues such as intellectual property ownership and infringement, libel and
personal privacy are applicable to the internet. The adoption of new laws or regulations relating to the internet, or particular
applications or interpretations of existing laws, could decrease the growth in the use of the internet, decrease the demand for the
Company’s services, increase the Company’s cost of doing business or could otherwise have a material adverse effect on
the Company’s business, revenues, operating results and financial condition.
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants
The
Company’s common shares and Unit A Warrants are listed on The Nasdaq Capital Market and there can be no assurance that the Company
will be able to comply with The Nasdaq Capital Market’s continued listing standards.
The
Company’s common shares and Unit A Warrants commenced trading on The Nasdaq Capital Market on January 22, 2021. However, there
can be no assurance any broker will be interested in trading the Company’s common shares and/or Unit A Warrants. Therefore, it
may be difficult to sell the Company’s common shares and/or Unit A Warrants if investors desire or need to do so. The Company
cannot provide any assurance that an active and liquid trading market in the Company’s securities will develop or, if
developed, that such market will continue. In addition, there is no guarantee that the Company will be able to maintain such
listings for any period of time by perpetually satisfying The Nasdaq Capital Market’s continued listing requirements. The
Company’s failure to continue to meet these requirements may result in the Company’s securities being delisted from The
Nasdaq Capital Market.
The
trading price of our common shares has been, and is likely to continue to be highly volatile and could be subject to wide fluctuations
in response to various factors, some of which are beyond our control.
Our
share price is highly volatile. During the period from July 1, 2022 to June 30, 2023, the closing price of our common shares ranged
from a high of $8.12 per share to a low of $0.41 per share. The stock market in general has experienced extreme volatility that has often
been unrelated to the operating performance of particular companies; however, the fluctuation in the price of our common shares is still
larger than the stock market in general. As a result of this volatility, you may not be able to sell your common shares at or above the
offering price and you may lose some or all of your investment. In addition to the general volatility risks of the market, our common
shares, we may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition
or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common shares. As a company with
a relatively small public float, the common shares may experience greater stock price volatility, extreme price run-ups, lower trading
volume, large spreads in bid and asked prices, and less liquidity than large-capitalization companies. The aspects of the trading in
the common shares may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult
for prospective investors to assess the value of our common shares. Because of the low public float and the absence of any significant
trading volume, the public offering price may not reflect the price at which you would be able to sell shares if you want to sell any
shares you own or buy shares if you wish to buy share. If the trading volumes of the common shares are low, persons buying or selling
in relatively small quantities may easily influence the prices of the common shares. A low volume of trades could also cause the price
of the common shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Broad market
fluctuations and general economic and political conditions may also adversely affect the market price of the common shares. The volatility
also could adversely affect the ability of the Company to issue additional common shares or other securities and the ability to obtain
stock market based financing in the future. No assurance can be given that an active market in our common shares will develop or be sustained.
Page | 32
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
The
market prices of the Company’s common shares and Unit A Warrants are likely to be highly volatile because of several factors, including
a limited public float.
The
market prices of the Company’s common shares and Unit A Warrants have experienced significant price and volume fluctuations and
the prices of such securities are likely to be highly volatile in the future. You may not be able to resell the Company’s common
shares or Unit A Warrants following periods of volatility because of the market’s adverse reaction to volatility. Other factors
that could cause such volatility may include, among other things:
●
actual
or anticipated fluctuations in the Company’s operating results;
●
the
absence of securities analysts covering the Company and distributing research and recommendations about the Company;
●
the
Company may have a low trading volume for a number of reasons, including that a large portion of the Company’s stock is closely
held;
●
overall
stock market fluctuations;
●
announcements
concerning the Company’s business or those of the Company’s competitors;
●
actual
or perceived limitations on the Company’s ability to raise capital when the Company requires it, and to raise such capital
on favorable terms;
●
conditions
or trends in the industry;
●
litigation;
●
changes
in market valuations of other similar companies;
●
future
sales of common shares;
●
departure
of key personnel or failure to hire key personnel; and
●
general
market conditions.
Any
of these factors could have a significant and adverse impact on the market prices of the Company’s common shares and/or the
Company’s Unit A Warrants. In addition, the stock market in general has at times experienced extreme volatility and rapid
decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market
fluctuations may adversely affect the trading prices of the Company’s common shares and/or Unit A Warrants, regardless of the
Company’s actual operating performance.
If
we fail to maintain compliance with the minimum listing requirements, our common shares will be subject to delisting. Our ability to
publicly or privately sell equity securities and the liquidity of our common shares could be adversely affected if our common shares
are delisted.
The
Nasdaq continued listing standards require, among other things, that the minimum price of a listed company’s stock be at or above
$1.00. If the minimum bid price is below $1.00 for a period of more than 30 consecutive trading days, the listed company will fail to
be in compliance with Nasdaq’s listing rules and, if it does not regain compliance within the grace period, will be subject to
delisting. The bid price of our common shares has recently closed below the minimum $1.00 per share requirement and on January 23, 2023
we received a notification of noncompliance from Nasdaq. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were afforded 180 calendar
days, or until July 24, 2023, to regain compliance with the bid price requirement.
On
July 25, 2023, we received notice from Nasdaq indicating that, while we have not regained compliance with the Nasdaq’s minimum
bid price requirement, Nasdaq has determined that we are eligible for an additional 180-day period, or until January 22, 2024, to regain
compliance. According to the notification from Nasdaq, the Staff’s determination was based on (i) our meeting the continued listing
requirement for market value of our publicly-held shares and all other Nasdaq initial listing standards, with the exception of the minimum
bid price requirement, and (ii) our written notice to Nasdaq of our intention to cure the deficiency during the second compliance period
by effecting a reverse stock split, if necessary. If at any time during this second 180-day compliance period, the closing bid price
of our common stock is at least $1 per share for a minimum of 10 consecutive business days, Nasdaq will provide us with written confirmation
of compliance. If compliance cannot be demonstrated by January 22, 2024, Nasdaq will provide written notification that our common stock
will be delisted. At that time, we may appeal Nasdaq’s determination to a Hearings Panel.
Page | 33
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
If
we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq
will provide notice that our common shares will be subject to delisting. Delisting from Nasdaq could adversely affect our ability to
consummate a strategic transaction and raise additional financing through the public or private sale of equity securities, and would
significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our common shares.
Delisting could also have other negative results, including the potential loss of confidence by employees and the loss of institutional
investor interest.
The
Company’s common shares have in the past been a “penny stock” under US Securities Exchange Commission rules, and the
Company’s Unit A Warrants may be subject to the “penny stock” rules in the future. It may be more difficult to resell
securities classified as “penny stock.”
In
the past, the Company’s common shares were a “penny stock” under applicable SEC rules (generally defined as non-exchange
traded stock with a per-share price below US$5.00). While the Company’s common shares and Unit A Warrants are not currently considered
“penny stock” because they are listed on The Nasdaq Capital Market, if the Company is unable to maintain that listing and
the Company’s common shares and/or the Company’s Unit A Warrants are no longer listed on The Nasdaq Capital Market, unless
the Company maintain a per-share price above US$5.00,
The
Company’s common shares and/or Unit A Warrants will be considered “penny stock.” These rules impose additional sales
practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as
“established customers” or “accredited investors.” For example, Broker dealers must determine the appropriateness
for non-qualifying persons of investments in penny stocks. Broker dealers must also provide, prior to a transaction in a penny stock
not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,
disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the
market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is
a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.
Legal
remedies available to an investor in “penny stocks” may include the following:
●
If
a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities
laws, the investor may be able to cancel the purchase and receive a refund of the investment.
●
If
a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms
that committed the fraud for damages.
These
requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes
subject to the penny stock rules. The additional burdens imposed upon broker dealers by such requirements may discourage broker-dealers
from effecting transactions in the Company’s securities, which could severely limit the market price and liquidity of the Company’s
securities. These requirements may restrict the ability of broker-dealers to sell the Company’s common shares or the Company’s
warrants and may affect your ability to resell the Company’s common shares and the Company’s Unit A Warrants.
Many
brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest
in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial
risk generally associated with these investments.
For
these reasons, penny stocks may have a limited market and, consequently, limited liquidity. The Company can give no assurance at what
time, if ever, the Company’s common shares or the Company’s Unit A Warrants will not be classified as a “penny stock”
in the future.
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
The
Company is subject to the continued listing criteria of Nasdaq, and the Company’s failure to satisfy these criteria may result
in delisting of the Company’s common shares or Unit A Warrants from The Nasdaq Capital Market and could also jeopardize the Company’s
continued ability to trade in the United States on The Nasdaq Capital Market.
The
Company’s common shares and Unit A Warrants are currently listed for trading on The Nasdaq Capital Market. In order to maintain
the listing on Nasdaq or any other securities exchange the Company may trade on, the Company must maintain certain financial and share
distribution targets, including maintaining a minimum number of public shareholders. In addition to objective standards, Nasdaq may delist
the Company’s securities if, in the exchange’s opinion, the Company’s financial condition and/or operating results
appear unsatisfactory; if it appears that the extent of public distribution or the aggregate market value of the security has become
so reduced as to make continued listing inadvisable; if the Company sells or disposes of the Company’s principal operating assets
or ceases to be an operating company; if the Company fails to comply with the listing requirements; or if any other event occurs or any
condition exists which, in their opinion, makes continued listing on the exchange inadvisable.
If
the Nasdaq were to delist the Company’s common shares, investors may face material adverse consequences, including, but not limited
to, a lack of trading market for the Company’s common shares, reduced liquidity, decreased analyst coverage, and/or an inability
for the Company to obtain additional financing to fund the Company’s operations.
If
the benefits of any proposed acquisition do not meet the expectations of investors, shareholders or financial analysts, the market price
of the Company’s common shares and/or Unit A Warrants may decline.
If
the benefits of any proposed acquisition do not meet the expectations of investors or securities analysts, the market price of the Company’s
common shares and/or Unit A Warrants prior to the closing of the proposed acquisition may decline. The market values of the Company’s
common shares and/or Unit A Warrants at the time of the proposed acquisition may vary significantly from their prices on the date the
acquisition target was identified.
In
addition, broad market and industry factors may materially harm the market price of the Company’s common shares and/or Unit A Warrants
irrespective of the Company’s operating performance. The stock market in general has experienced price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices
and valuations of these stocks, and of the Company’s securities, may not be predictable. A loss of investor confidence in the market
for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress the price of the
Company’s common shares and/or Unit A Warrants regardless of the Company’s business, prospects, financial conditions or results
of operations. A decline in the market price of the Company’s securities also could adversely affect the Company’s ability
to issue additional securities and the Company’s ability to obtain additional financing in the future.
Shares
eligible for future sale may adversely affect the market.
From
time to time, certain of the Company’s shareholders may be eligible to sell all or some of their common shares by means of ordinary
brokerage transactions in the open market pursuant to Rule 144 promulgated under the US Securities Act of 1933, as amended, or the Securities
Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate shareholders may sell freely after six months, subject
only to the current public information requirement. Affiliates may sell after six months, subject to the Rule 144 volume, manner of sale
(for equity securities), current public information, and notice requirements. Of the approximately 10,714,171 common shares outstanding
as of June 30, 2023, approximately 10,207,113 shares are tradable without restriction. Given the limited trading of the Company’s
common shares, resale of even a small number of the Company’s common shares pursuant to Rule 144 or an effective registration statement
may adversely affect the market price of the Company’s common shares.
Page | 35
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
The
Company has never paid dividends on the Company’s common shares and may not do so in the future.
Holders
of the Company’s common shares are entitled to receive such dividends as may be declared by the Company’s board of directors.
To date, the Company has paid no cash dividends on the Company’s common shares and Versus does not expect to pay cash dividends
on the Company’s common shares in the foreseeable future. The Company intends to retain future earnings, if any, to provide funds
for operations of the Company’s business. Therefore, any return investors in the Company’s common shares may have will be
in the form of appreciation, if any, in the market value of their common shares.
Holders
of the Company’s warrants will have no rights as a common shareholder until they acquire the Company’s common shares.
Until
acquiring the Company’s common shares upon exercise warrants, warrant holders will have no rights as a shareholder in respect of
the common shares underlying such warrants. Upon exercise of warrants, holders will be entitled to exercise the rights of a common shareholder
only as to matters for which the record date occurs after the exercise date.
The
Company’s articles and certain Canadian legislation contain provisions that may have the effect of delaying or preventing a change
in control.
Certain
provisions of the Company’s articles could discourage potential acquisition proposals, delay or prevent a change in control
and limit the price that certain investors may be willing to pay for the Company’s common shares. The material differences
between the British Columbia Business Corporations Act, or BCBCA, and Delaware General Corporation Law, or DGCL, that may have the
greatest such effect include, but are not limited to, the following: (i) for certain corporate transactions (such as mergers and
amalgamations or amendments to the Company’s articles) the BCBCA generally requires the voting threshold to be a special
resolution approved by 66 2/3% of shareholders, whereas DGCL generally only requires a majority vote; and (ii) under the BCBCA a
holder of 5% or more of the company’s common shares can requisition a special meeting of shareholders, whereas such right does
not exist under the DGCL.
In
addition, a non-Canadian must file an application for review with the Minister responsible for the Investment Canada Act and obtain approval
of the Minister prior to acquiring control of a “Canadian Business” within the meaning of the Investment Canada Act, where
prescribed financial thresholds are exceeded. Finally, limitations on the ability to acquire and hold the Company’s common shares
may be imposed by the Competition Act (Canada). The Competition Act (Canada) establishes a pre-merger notification regime for certain
types of merger transactions that exceed certain statutory shareholding and financial thresholds. Transactions that are subject to notification
cannot be closed until the required materials are filed and the applicable statutory waiting period has expired or been waived by the
Commissioner. However, the Competition Act (Canada) permits the Commissioner of Competition to review any acquisition or establishment,
directly or indirectly, including through the acquisition of shares, of control over or of a significant interest in the Company, whether
or not it is subject to mandatory notification. Otherwise, there are no limitations either under the laws of Canada or British Columbia,
or in the Company’s articles on the rights of non-Canadians to hold or vote the Company’s common shares. Any of these provisions
may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to the Company’s
shareholders. The Company cannot predict whether investors will find the Company’s company and the Company’s common shares
less attractive because the Company is governed by Canadian laws.
Page | 36
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
Because
the Company is a corporation incorporated under the laws of British Columbia and some of the Company’s directors and officers are
residents of Canada, it may be difficult for investors in the United States to enforce civil liabilities against the Company based solely
upon the U.S. federal securities laws. Similarly, it may be difficult for Canadian investors to enforce civil liabilities against the
Company’s directors and officers residing outside of Canada.
The
Company is a corporation incorporated under the laws of British Columbia. Some of the Company’s directors and officers and
other experts named herein are residents of Canada and all or a substantial portion of the Company’s assets and those of such
persons are located outside the United States. Consequently, it may be difficult for U.S. investors to effect service of process
within the United States upon the Company or the Company’s directors or officers who are not residents of the United States,
or to realize in the United States upon judgments of courts of the United States predicated upon civil liabilities under the U.S.
federal securities laws. Investors should not assume that Canadian courts: (1) would enforce judgments of U.S. courts obtained in
actions against the Company or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or
the securities or blue sky laws of any state within the United States or (2) would enforce, in original actions, liabilities against
the Company or such persons predicated upon the U.S. federal securities laws or any such state securities or blue sky
laws.
As
the Company is a reporting Company under the Exchange Act, the Company will be obligated to develop and maintain proper and effective
internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor
confidence in the Company and, as a result, the value of the Company’s common shares.
The
Company is required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other
things, the effectiveness of the Company’s internal control over financial reporting. This assessment includes disclosure of any
material weaknesses identified by the Company’s management in the Company’s internal control over financial reporting. The
Company’s independent registered public accounting firm will not be required to attest to the effectiveness of the Company’s
internal control over financial reporting until the Company’s first annual report required to be filed with the SEC following the
date the Company is no longer an emerging growth company, as defined in the JOBS Act. The Company will be required to disclose significant
changes made in the Company’s internal control procedures on a quarterly basis.
The
Company is beginning the costly and challenging process of compiling the system and processing documentation necessary to perform the
evaluation needed to comply with Section 404, and the Company may not be able to complete the Company’s evaluation, testing and
any required remediation in a timely fashion. The Company’s compliance with Section 404 requires that the Company incur substantial
accounting expense and expend significant management efforts. While the Company currently has an internal audit group, the Company may
need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge
and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
During
the evaluation and testing process of the Company’s internal controls, if the Company identifies one or more material
weaknesses in the Company’s internal control over financial reporting, the Company will be unable to assert that the
Company’s internal control over financial reporting is effective. The Company cannot provide assurance that there will not be
material weaknesses or significant deficiencies in the Company’s internal control over financial reporting in the future. Any
failure to maintain internal control over financial reporting could severely inhibit the Company’s ability to accurately
report the Company’s financial condition or results of operations. If the Company is unable to conclude that the
Company’s internal control over financial reporting is effective, the Company could lose investor confidence in the accuracy
and completeness of the Company’s financial reports, the market price of the Company’s common shares could decline, and
the Company could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy
any material weakness in the Company’s internal control over financial reporting, or to implement or maintain other effective
control systems required of public companies, could also restrict the Company’s future access to the capital
markets.
Page | 37
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
The
Company is an emerging growth Company within the meaning of the US Securities Act, and if the Company takes advantage of certain exemptions
from disclosure requirements available to emerging growth companies, this could make the Company’s securities less attractive to
investors and may make it more difficult to compare the Company’s performance with other public companies.
The
Company is an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and the
Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being required to comply with the auditor internal
controls attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in the
Company’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on
executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the
Company’s shareholders may not have access to certain information they may deem important. The Company could be an emerging
growth company for up to five years, although circumstances could cause the Company to lose that status earlier, including if the
market value of the Company’s common shares held by non-affiliates exceeds US$700 million as of any November 30 before that
time, in which case the Company would no longer be an emerging growth company as of the following May 31. The Company cannot predict
whether investors will find the Company’s securities less attractive because the Company will rely on these exemptions. If
some investors find the Company’s securities less attractive as a result of the Company’s reliance on these exemptions,
the trading prices of the Company’s securities may be lower than they otherwise would be, there may be a less active trading
market for the Company’s securities and the trading prices of the Company’s securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it
has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or
revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
The
Company will continue to incur increased costs as a result of operating as a reporting Company under the Exchange Act, and the Company’s
management will continue to be required to devote substantial time to compliance with the Company’s reporting Company responsibilities
and corporate governance practices.
As
a reporting company under the US Exchange Act, and particularly after the Company is no longer an “emerging growth
company,” the Company will continue to incur significant legal, accounting and other expenses The Sarbanes-Oxley Act, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Capital Market and other
applicable securities rules and regulations impose various requirements on public companies. The Company is also obligated to file
with the Canadian securities regulators similar reports pursuant to securities laws and regulations applicable in all the provinces
and territories of Canada in which the Company will be a reporting issuer. Compliance with these laws and regulations has increased
and will continue to increase the Company’s legal and financial compliance costs and make some activities more difficult,
time-consuming or costly. The Company’s management and other personnel must devote a substantial amount of time to compliance
with these requirements. Moreover, these rules and regulations increase the Company’s legal and financial compliance costs and
make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more
expensive for the Company to obtain directors’ and officers’ liability insurance, which could make it more difficult for
the Company to attract and retain qualified members of the Company’s board of directors. The Company cannot predict or
estimate the amount of additional future costs the Company will incur as a public company or the timing of such costs.
Page | 38
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SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
The
Company is a foreign private issuer under the rules and regulations of the SEC and, thus, are exempt from a number of rules under the
Exchange Act and are permitted to file less information with the SEC than a Company incorporated in the U.S.
As
a foreign private issuer under the Exchange Act, the Company is exempt from certain rules under the Exchange Act, including the
proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations. Moreover, the Company is not
required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies with
securities registered under the Exchange Act; the Company is not required to file financial statements prepared in accordance with
U.S. generally accepted accounting principles; and the Company is not required to comply with SEC Regulation FD, which imposes
certain restrictions on the selective disclosure of material information. In addition, the Company’s officers, directors and
principal shareholders are not subject to the reporting or short-swing profit recovery provisions of Section 16 of the Exchange Act
or the rules under the Exchange Act with respect to their purchases and sales of the Company’s common shares. Accordingly, you
may receive less information about the Company than you would receive about a company incorporated in the United States and may be
afforded less protection under the U.S. federal securities laws than you would be afforded with respect to a company incorporated in
the United States. If the Company loses the status as a foreign private issuer at some future time, the Company will no longer be
exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if the Company
were a company incorporated in the United States. The costs incurred in fulfilling these additional regulatory requirements could be
substantial.
Additionally,
pursuant to the Nasdaq Listing Rules, as a foreign private issuer, the Company may elect to follow the Company’s home country practice
in lieu of the corporate governance requirements of the Nasdaq Listing Rules, with the exception of those rules that are required to
be followed pursuant to the provisions of the Nasdaq Listing Rules.
The
Company has elected to follow Canadian practices in lieu of the requirements of the Nasdaq Listing Rules to the extent permitted under
Nasdaq Listing Rule 5615(a)(3).
U.S.
Holders of the Company’s common shares may suffer adverse tax consequences if the Company is treated as a passive foreign investment
Company.
A
non-U.S. corporation generally will be treated as a passive foreign investment company, or PFIC, for U.S. federal income tax
purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income (such as interest
income) or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year
is attributable to assets that produce or are held for the production of passive income. Based on the current and anticipated
composition of the income, assets and operations of the Company and its subsidiaries, Versus does not believe that the Company will
be a PFIC for U.S. federal income tax purposes for the current taxable year or for future taxable years. However, the application of
the PFIC rules is subject to uncertainty in several respects, and a separate determination must be made after the close of each
taxable year as to whether the Company is a PFIC for that year. Changes in the composition of the Company’s income or assets
may cause the Company to become a PFIC. Accordingly, there can be no assurance that the Company will not be a PFIC for any taxable
year. If the Company is a PFIC for any taxable year during which a U.S. Holder (as that term is defined below in “Material
U.S. Federal Income Tax Considerations for U.S. Holders) holds the Company’s common shares, such U.S. Holder may be subject to
adverse tax consequences. In particular, absent certain elections, a U.S. Holder would generally be subject to U.S. federal income
tax at ordinary income tax rates, plus a possible interest charge, in respect of a gain derived from a disposition of the
Company’s common shares, as well as certain distributions by the Company. The PFIC rules are complex, and each prospective
investor is strongly urged to consult its tax advisors regarding the application of these rules to such investor’s particular
circumstances. See “Material United States Federal Income Tax Considerations for U.S. Holders”.
Page | 39
VERSUS
SYSTEMS INC.
Management’s
Discussion and Analysis
Six
Month Period Ended June 30, 2023
Risks
Related to the Company’s Common Shares and the Company’s Warrants (continued)
Changes
to tax laws may have an adverse impact on the Company and holders of the Company’s common shares.
Changes
in tax laws, including amendments to tax laws, changes in the interpretation of tax laws, or changes in the administrative pronouncements
or positions by the Canada Revenue Agency, or CRA, may have a material adverse effect on the Company. In addition, tax authorities could
disagree with the Company on tax filing positions taken by the Company and any reassessment of the Company’s tax filings could
result in material adjustments of tax expense, income taxes payable and deferred income taxes.
Changes
in tax laws, including amendments to tax laws, changes in the interpretation of tax laws or changes in the administrative
pronouncements or positions by the CRA, may also have a material adverse effect on the Company’s shareholders and their
investment in the Company’s common shares. Purchasers of the Company’s common shares should consult their tax advisors
regarding the potential tax consequences associated with the acquisition, holding and disposition of the Company’s common
shares in their particular circumstances.
Additional
Information
Additional
information relating to the Company is available on the Company’s website at www.versussystems.com and under the Company’s profile
on SEDAR at www.sedar.com.
Corporate
Information
Directors:
Matthew
Pierce
Brian
Tingle
Michelle
Gahagan
Paul
Vlasic
Keyvan
Peymani
Jennifer
Prince
Shannon
Pruitt
Officers:
Matthew
Pierce, Chief Executive Officer
Craig
Finster, President and Chief Financial Officer
I, Craig Finster, Chief Financial Officer
of Versus Systems Inc., certify the following:
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Versus Systems Inc. (the “issuer”) for the interim period ended June 30, 2023.
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
Date: August 14, 2023
/s/ Craig Finster
Chief Financial Officer
EX-99.4
5
ea183090ex99-4_versussys.htm
52-109F2 - CERTIFICATION OF INTERIM FILINGS - CEO (IPO/RTO)
Exhibit 99.4
Form 52-109F2 – IPO/RTO
Certification of Interim Filings Following
an Initial Public Offering, Reverse Takeover
or
Becoming a Non-Venture Issuer
I, Matthew Pierce, Chief Executive
Officer of Versus Systems Inc., certify the following:
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Versus Systems Inc. (the “issuer”) for the interim period ended June 30, 2023.
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
Fiscal period values are FY, Q1, Q2, and Q3. 1st, 2nd and 3rd quarter 10-Q or 10-QT statements have value Q1, Q2, and Q3 respectively, with 10-K, 10-KT or other fiscal year statements having FY.
This is focus fiscal year of the document report in YYYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
The amount received or receivable from the issuance of the entity's shares in excess of nominal value and amounts received from other transactions involving the entity's stock or stockholders.
The amount of a present economic resource controlled by the entity as a result of past events. Economic resource is a right that has the potential to produce economic benefits.
The amount of cash on hand and demand deposits, along with short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. [Refer: Cash; Cash equivalents]
The amount of assets that the entity (a) expects to realise or intends to sell or consume in its normal operating cycle; (b) holds primarily for the purpose of trading; (c) expects to realise within twelve months after the reporting period; or (d) classifies as cash or cash equivalents (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. [Refer: Assets]
Expiry date 2023-01-01: The amount of liabilities that: (a) the entity expects to settle in its normal operating cycle; (b) the entity holds primarily for the purpose of trading; (c) are due to be settled within twelve months after the reporting period; or (d) the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period.
Effective 2023-01-01: The amount of liabilities that: (a) the entity expects to settle in its normal operating cycle; (b) the entity holds primarily for the purpose of trading; (c) are due to be settled within twelve months after the reporting period; or (d) the entity does not have the right at the end of the reporting period to defer settlement for at least twelve months after the reporting period.
The amounts of income taxes recoverable in future periods in respect of: (a) deductible temporary differences; (b) the carryforward of unused tax losses; and (c) the carryforward of unused tax credits. [Refer: Temporary differences [member]; Unused tax credits [member]; Unused tax losses [member]]
The amount of tangible assets that: (a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and (b) are expected to be used during more than one period.
A component of equity representing the accumulated change in the value of foreign currency basis spreads of financial instruments when excluding them from the designation of these financial instruments as hedging instruments.
The amount of profit (loss) attributable to ordinary equity holders of the parent entity (the numerator) divided by the weighted average number of ordinary shares outstanding during the period (the denominator).
The comprehensive income from continuing operations attributable to non-controlling interests. [Refer: Comprehensive income from continuing operations; Non-controlling interests]
The gains (losses) recognised in other comprehensive income on change in value of foreign currency basis spreads, net of tax, before reclassification adjustments. [Refer: Other comprehensive income]
The amount of income and expense (including reclassification adjustments) that is not recognised in profit or loss as required or permitted by IFRSs. [Refer: IFRSs [member]]
The amount of other comprehensive income, net of tax, after reclassification adjustments, related to exchange differences when financial statements of foreign operations are translated. [Refer: Other comprehensive income]
The total of income less expenses from continuing and discontinued operations, excluding the components of other comprehensive income. [Refer: Other comprehensive income]
The income arising in the course of an entity's ordinary activities. Income is increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.
Share of the other comprehensive income of associates and joint ventures accounted for using the equity method that will not be reclassified to profit or loss, net of tax.
The number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor.
The amount of profit (loss) attributable to ordinary equity holders of the parent entity (the numerator), divided by the weighted average number of ordinary shares outstanding during the period (the denominator), both adjusted for the effects of all dilutive potential ordinary shares. [Refer: Ordinary shares [member]; Weighted average [member]]
The amount of reclassification adjustments related to exchange differences when the financial statements of foreign operations are translated, net of tax. Reclassification adjustments are amounts reclassified to profit (loss) in the current period that were recognised in other comprehensive income in the current or previous periods. [Refer: Other comprehensive income]
Adjustments for decrease (increase) in other operating receivables to reconcile profit (loss) to net cash flow from (used in) operating activities. [Refer: Profit (loss)]
Adjustments for depreciation and amortisation expense to reconcile profit (loss) to net cash flow from (used in) operating activities. [Refer: Depreciation and amortisation expense; Profit (loss)]
Adjustments for the increase (decrease) in deferred income including contract liabilities to reconcile profit (loss) to net cash flow from (used in) operating activities. [Refer: Deferred income including contract liabilities; Profit (loss)]
Adjustments for increase (decrease) in trade and other payables to reconcile profit (loss) to net cash flow from (used in) operating activities. [Refer: Trade and other payables; Profit (loss)]
The amount of cash on hand and demand deposits, along with short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. [Refer: Cash; Cash equivalents]
The cash flows from (used in) financing activities, which are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.
The cash flows from (used in) investing activities, which are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.
The cash flows from (used in) operating activities, which are the principal revenue-producing activities of the entity and other activities that are not investing or financing activities. [Refer: Revenue]
The amount of impairment loss recognised in profit or loss for investment property. [Refer: Impairment loss recognised in profit or loss; Investment property]
The increase (decrease) in cash and cash equivalents before the effect of exchange rate changes on cash and cash equivalents held in foreign currencies. [Refer: Cash and cash equivalents; Effect of exchange rate changes on cash and cash equivalents]
The total of income less expenses from continuing and discontinued operations, excluding the components of other comprehensive income. [Refer: Other comprehensive income]
Assuming that the purchase of equipment is a long-term or noncurrent asset that will be used in a business, the purchase will not be reported on the profit and loss statement.
Versus Systems Inc. (the “Company”)
was continued under the Business Corporations Act (British Columbia) effective January 2, 2007. The Company’s head office and registered
and records office is 1558 West Hastings Street, Vancouver, BC, V6C 3J4, Canada. The Company’s common stock is traded on the NASDAQ
under the symbol “VS”. The Company’s Unit A warrants are traded on NASDAQ under “VSSYW”. On November 9,
2022, the Company completed a one-for-15 reverse stock split of the Company’s common shares. All share and per share data are presented
to reflect the reverse share split on a retroactive basis.
The Company is engaged in the technology
sector and has developed a proprietary prizing and promotions tool allowing game developers and creators of live events, games, apps,
and other content to offer real world prizes inside their content. The ability to win prizes drives increased levels of consumer engagement
creating an attractive platform for advertisers.
In June 2021, the Company completed
its acquisition of multimedia, production, and interactive gaming company Xcite Interactive, a provider of online audience engagement
through its owned and operated XEO technology platform. The company partners with multiple professional sports franchises across Major
League Baseball (MLB), National Hockey League (NHL), National Basketball Association (NBA) and the National Football League (NFL) as well
as the Olympics, World Cup, and other global sporting events to drive in-stadium audience engagement as well as a software licensing business
to drive audience engagement.
These condensed interim consolidated
financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue
in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.
Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As
of June 30, 2023, the Company has not achieved positive cash flow from operations and is not able to finance day to day activities through
operations and as such, there is substantial doubt as to the Company’s ability to continue as a going concern. The Company’s
continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds therefrom and/or raise
equity capital or borrowings sufficient to meet current and future obligations. These condensed interim consolidated financial statements
do not include any adjustments as to the recoverability and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.
These condensed interim consolidated
financial statements, including comparatives, have been prepared in accordance with International Audit Standards (IAS) 34, Interim Financial
Reporting, as issued by the International Accounting Standards Board (IASB) and the interpretations of the IFRS Interpretations committee.
They do not include all disclosures required by International Financial Reporting Standards (IFRS) for annual financial statements, and
therefore should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December
31, 2022, prepared in accordance with IFRS as issued by the IASB.
These condensed interim consolidated
financial statements were authorized for issue by the Board of Directors on August 14, 2023.
Basis of measurement
These condensed interim consolidated
financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments
at fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting
except for cash flow information.
Functional and presentation currency
These condensed interim consolidated
financial statements are presented in United States dollars, unless otherwise noted, which is the functional currency of the Company and
its subsidiaries.
Basis of consolidation
These condensed interim consolidated
financial statements include the accounts of Versus Systems Inc. and its subsidiaries, from the date control was acquired. Control exists
when the Company possesses power over an investee, has exposure to variable returns from the investee and has the ability to use its power
over the investee to affect its returns. All inter-company balances and transactions, and any unrealized income and expenses arising from
inter-company transactions, are eliminated on consolidation. For partially owned subsidiaries, the interest attributable to non-controlling
shareholders is reflected in non-controlling interest. Adjustments to non-controlling interest are accounted for as transactions with
owners and adjustments that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.
Name of Subsidiary
Place of Incorporation
Proportion of Ownership Interest
Principal Activity
Versus Systems (Holdco) Inc.
United States of America
81.9
%
Holding Company
Versus Systems UK, Ltd.
United Kingdom
81.9
%
Sales Company
Versus LLC
United States of America
81.9
%
Technology Company
Xcite Interactive, Inc.
United States of America
100.0
%
Technology Company
Significant Accounting Judgments,
Estimates and Assumptions
The preparation of these condensed
interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the condensed interim consolidated financial statements. Estimates and assumptions are
continually evaluated and are based on historical experience and management’s assessment of current events and other facts and circumstances
that are considered to be relevant. Actual results could differ from these estimates.
Significant assumptions about the
future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a
material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate
to, but are not limited to, the following:
i)
Deferred income taxes
Deferred tax assets, including those
arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings
in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend
on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to
obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates,
the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.
ii)
Economic recoverability and probability of future economic
benefits of intangible assets
Management has determined that intangible
asset costs which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria
in its assessments of economic recoverability and probability of future economic benefits including anticipated cash flows and estimated
economic life.
iii)
Valuation of share-based compensation
The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including
expected price volatility, interest rate, and forfeiture rate. Input assumptions changes can materially affect the fair value estimate
and the Company’s earnings and equity reserves.
iv)
Depreciation and Amortization
The Company’s intangible assets
and equipment are depreciated and amortized on a straight-line basis, taking into account the estimated useful lives of the assets and
residual values. Changes to these estimates may affect the carrying value of these assets, net loss, and comprehensive income (loss) in
future periods.
v)
Determination of functional currency
The functional currency of the Company
and its subsidiaries is the currency of the primary economic environment in which each entity operates. Determination of the functional
currency may involve certain judgments to determine the primary economic environment. The functional currency may change if there is a
change in events and conditions which determines the primary economic environment.
vi)
Revenue Recognition
The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation.
vii)
Business combinations
Judgement was used in determining
whether the acquisition of Xcite Interactive, Inc. was a business combination or an asset acquisition. Estimates were made as to the fair
value of assets and liabilities acquired. In certain circumstances, such as the valuation of equipment, intangible assets and goodwill
acquired, the Company may rely on independent third-party valuators. The Company measured all the assets acquired and liabilities assumed
at their acquisition-date fair values.
The excess of the consideration paid
over the acquisition-date fair values of the net assets acquired, was recognized as goodwill as of the acquisition date in business combination.
viii)
Subsequent Valuation of Intangibles Assets and Goodwill
The Company used three generally accepted
principles to calculate the fair value of acquired intangible assets and goodwill from the Xcite acquisition: the income approach, the
market approach, and the cost approach. The calculated fair value of each acquired asset is used in the Company’s annual impairment
testing. Impairment loss is the amount by which the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable
amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or CGU.
Basic earnings (loss) per share is
computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during
the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.
The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds
from such exercises were used to acquire common stock at the average market price during the reporting periods. Potentially dilutive options
and warrants excluded from diluted loss per share as of June 30, 2023 totalled 1,905,618 (December 31, 2022 – 7,081,173).
Property and
equipment
Property and
equipment is recorded at cost less accumulated amortization and any impairments. Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:
Asset
Rate
Computers
Straight line, 3 years
Right of use assets
Shorter of useful life or lease term
Financial instruments
Classification
The Company classifies its financial
instruments in the following categories: at fair value through profit and loss (FVTPL), at fair value through other comprehensive income
(loss) (FVTOCI), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification
of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow
characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition
the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as FVTOCI. Financial liabilities
are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives)
or the Company has opted to measure them at FVTPL.
Measurement
The following table shows the classification
of financial instruments:
Financial assets/liabilities
Classification IFRS 9
Cash
FVTPL
Receivables
Amortized cost
Restricted deposit
Amortized cost
Deposit
Amortized cost
Accounts payable and accrued liabilities
Amortized cost
Notes payable
Amortized cost
Financial assets and liabilities
at amortized cost
Financial assets and liabilities at
amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized
cost less any impairment.
Financial assets and liabilities
at FVTPL
Financial assets and liabilities carried
at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and
losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in
the period in which they arise.
Impairment of financial assets
at amortized cost
An ‘expected credit loss’
impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value
of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount
and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated
with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance
account and the resulting loss is recognized in profit or loss for the period.
In a subsequent period, if the amount
of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.
Intangible assets excluding goodwill
Derecognition of financial assets
The Company derecognizes financial
assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and
substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally
recognized in profit or loss.
As at June 30, 2023, the Company does
not have any derivative financial assets and liabilities.
Intangible assets
acquired separately are carried at cost at the time of initial recognition. Intangible assets acquired in a business combination and
recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Expenditure on research
activities is recognized as an expense in the period in which it is incurred.
Intangibles with a finite useful life
are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which
the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration
of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and
future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.
If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows
used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine
the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life
of the intangible to the Company, the useful life is considered indefinite.
Intangibles with a finite useful
life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are
consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting
period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the
remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. The
Company’s intangible asset is amortized on a straight-line basis over 3 years. In the year development costs are incurred,
amortization is based on a half year.
Goodwill
The Company allocates goodwill arising
from business combinations to each cash generating unit (CGU) or group of CGUs that are expected to receive the benefits from the business
combination. The carrying amount of the CGU or group of CGUs to which goodwill has been allocated is tested annually for impairment or
when there is an indication that the goodwill may be impaired. Any impairment is recognized as an expense immediately. Should there be
a recovery in the value of a CGU, any impairment of goodwill previously recorded is not subsequently reversed.
Deferred financing costs
Deferred financing costs consist primarily
of direct incremental costs related to the Company’s public offering of its common stock. Upon completion of the Company’s
financing any deferred costs are offset against the proceeds. The Company incurred $0 during the year ended December 31, 2022, and $135,162
during the period ended June 30, 2023.
Impairment of intangible assets
excluding goodwill
An internally-generated intangible
asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following
have been demonstrated:
(a)
the technical feasibility of
completing the intangible asset so that it will be available for use or sale;
(b)
the intention to complete the intangible asset and use or sell it;
(c)
the ability to use or sell the intangible asset;
(d)
how the intangible asset will
generate probable future economic benefits;
(e)
the availability of adequate
technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(f)
the ability to measure reliably
the expenditure attributable to the intangible asset during its development.
The amount initially recognized for
internally-generated intangible assets is the sum of the costs incurred from the date when the intangible assets first meet the recognition
criteria listed above. If no future economic benefit is expected before the end of the life of assets, the residual book value is expensed.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost. Where no internally-generated intangible
asset can be recognized, development costs are recognized as an expense in the period in which it is incurred.
At the end of each reporting period,
the Company reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have
suffered impairment losses. If any such indication exists, the recoverable amount of the cash-generating unit (CGU) to which the asset
belongs is estimated in order to determine the extent of the impairment losses (if any).
Where a reasonable and consistent
basis of allocation can be identified, corporate assets (assets other than goodwill that contribute to the future cash flows of both
the CGU under review and other CGUs) are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of
CGUs for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset
(or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
Where impairment losses subsequently
reverse, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, such that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment losses been recognized for the asset
(or CGU) in prior years. A reversal of impairment losses is recognized immediately in profit or loss.
Income taxes
Tax expense recognized in profit or
loss comprises the sum of current tax and deferred tax not recognized in other comprehensive income or directly in equity.
Current income tax
Current income tax assets and/or liabilities
comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at
the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the condensed interim consolidated
financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.
Deferred income tax
Deferred income taxes are calculated
based on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they
are enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognized
to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities
are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or
liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized
in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive
income or equity, respectively.
Leases
Leases are recognized as a right-of-use
asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Assets and liabilities
arising from a lease are initially measured on a present value basis.
Right-of-use assets are measured at
cost comprising the following:
- the amount of the initial measurement
of lease liability;
- any lease payments made at or before
the commencement date less any lease incentives received;
- any initial direct costs; and
- restoration costs.
The Company assesses whether a contract
is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with
respect to all lease agreements in which it is the lessee. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Company uses its incremental borrowing rate.
As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, there
are no lease liabilities or right-of-use assets recognized.
Lease liability
The lease liability is subsequently
measured by increasing its carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing
the carrying amount to reflect lease payments made. The right-of-use asset is depreciated over the shorter of the lease term and the useful
life of the underlying asset. The Company applies IAS 36, Impairment of Assets, to determine whether the asset is impaired and account
for any identified impairment loss. As a practical expedient, IFRS 16 permits a lease not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient,
and accordingly allocates the consideration in the contract to lease and non-lease components based on the stand-alone price of the lease
component and aggregate stand-alone price of the non-lease components.
Variable rents that do not depend
on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized
as an expense in the period in which the event or condition that triggers those payments occurs and are presented as such in the statements
of income and comprehensive income.
Provisions
A provision is recognized if, as
a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.
Government grants
Government
grants are recognized when there is reasonable assurance that the Company will comply with any conditions attached to the grant and
the grant will be received. Government grants are recognized in profit or loss to offset the corresponding expenses on a systematic
basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to
compensate, which in the case of grants related to assets requires setting up the grant as deferred income or deducting it from the
carrying amount of the asset.
Non-controlling interest
Non-controlling interest in the Company’s
less than wholly owned subsidiary is classified as a separate component of equity. On initial recognition, non-controlling interest is
measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original
transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share
of changes to the subsidiary’s equity.
Changes in the Company’s ownership
interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling
interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference
between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration
paid is recognized directly in equity and attributed to owners of the Company.
Valuation of equity units issued
in private placements
The Company has adopted a residual
value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first
allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable
component.
The fair value of the common shares
issued in private placements is determined to be the more easily measurable component and are valued at their fair value. The balance,
if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. If the warrants
are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in
the warrant reserve.
Warrants issued in equity financing
transactions
The Company engages in equity financing
transactions to obtain funds necessary to continue operations. These equity financing transactions may involve issuance of common shares
or units. Each unit comprises a certain number of shares and a certain number of warrants. Depending on the terms and conditions of each
equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the
transaction.
Warrants that are part of units are
assigned a value based on the residual value, if any, and included in reserves.
As of February 1, 2021, the warrants
were considered a derivative liability since the obligation to issue shares was not fixed in the Company’s functional currency.
The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the consolidated statement
of loss and comprehensive loss. A $9,743,659 warrant derivative loss was recorded in the consolidated statement of loss and comprehensive
loss beginning February 1, 2021 when the Company changed its functional currency. As of June 30, 2023, the associated warrants have expired
and the remaining balance of the warrant liability is $0.
The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based payments and derivative financial assets (e.g. investments in warrants). Option pricing
models require the input of subjective assumptions including expected price volatility, interest rates, and forfeiture rates. Changes
in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.
Share-based compensation
The Company grants stock options to
acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when
the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.
The fair value of stock options is
measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration
paid for the shares on the exercise of stock options is credited to capital stock.
In situations where equity
instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be
specifically identified, they are measured at fair value of the share-based payment.
Otherwise, share-based payments are measured at
the fair value of goods or services received.
Revenue recognition
In general, the Company recognizes
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where
there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there
are no significant remaining performance obligations for each of the Company’s activities as described below. Foreseeable losses,
if any, are recognized in the year or period in which the loss is determined.
The Company earns revenue in three
primary ways: 1) the sales of software-as-a-service (SAAS) from its interactive production software platform, 2) development and maintenance
of custom-built software or other professional services, or 3) the sale of advertising.
The Company recognizes SAAS revenues
from its interactive production sales over the life of the contract as its performance obligations are satisfied. Payment terms vary by
contract and can be periodic or one-time payments.
The Company recognizes revenues received
from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance
obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance
obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a
single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes
revenue by measuring the progress toward complete satisfaction of that performance obligation.
For revenues received from the sales
of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising
inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such
as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of
advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.
The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation. As the Company’s performance obligations are satisfied
within 12 months, the Company has elected the practical expedients under IFRS 15, which allows the Company not to record any significant
financing component as a result of financing any of its arrangements and not to capitalize cost incurred to obtain a contract.
Deferred revenue
Revenue recognition of sales is recorded
on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred revenue
based on the proportion of time remaining under the service arrangement as of the reporting date.
Foreign exchange
The functional currency is the currency
of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional
currency for the Company and its subsidiaries is the United States dollar. The functional currency determinations were conducted through
an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.
Foreign currency transactions in currencies
other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions. Foreign currency transaction
gains and losses are generally recognized in profit or loss and presented within gain (loss) on foreign exchange.
At the end of each reporting period,
the monetary assets and liabilities of the Company and its subsidiaries that are denominated in foreign currencies are translated at the
rate of exchange at the date of the statement of financial position. Non-monetary assets and liabilities that are denominated in foreign
currencies are translated at historical rates. Revenues and expenses that are denominated in foreign currencies are translated at the
exchange rates approximating those in effect on the date of the transactions. Foreign currency translation gains and losses are recognized
in other comprehensive income and accumulated in equity within the currency translation reserve.
Comprehensive Income (Loss)
Comprehensive income (loss)
consists of net income (loss) and other comprehensive income (loss) and represents the change in shareholders’ equity
(deficit) which results from transactions and events from sources other than the Company’s shareholders. Comprehensive loss
differs from net loss for the period ended June 30, 2023 due to the effects of foreign translation gains and losses. Comprehensive
loss differs from net loss for the year ended December 31, 2022 due to the effects of foreign translation gains and losses.
The Company changed its functional
currency from the Canadian dollar (CAD) to the United States dollar (USD) as of February 1, 2021. The change in functional currency coincided
with the January 2021 initial public offering and listing on the Nasdaq. Considering Versus’ business activities, comprised primarily
of United States dollar revenue and expenditures as well as United States dollar denominated financings, management determined that the
functional currency of the Company is the United States dollar. All assets, liabilities, share capital, and other components of shareholders’
equity (deficit) were translated into United States dollars at the exchange rate at the date of change. These changes have been accounted
for prospectively. Concurrent with the change in functional currency, on February 1, 2021, the Company changed its presentation currency
from the Canadian dollar to the United States dollar. This change in presentation currency is to better reflect the Company’s business
activities, comprised primarily of United States dollar transactions. The condensed interim consolidated financial statements for all
periods presented have been translated into the new presentation currency in accordance with IAS 21, The Effects of Changes in Foreign
Exchange Rates. The condensed interim consolidated statements of loss and comprehensive loss have been translated into the presentation
currency using the average exchange rates prevailing during each quarterly reporting period. All assets and liabilities previously reported
in Canadian dollars have been translated into United States dollars as at February 1, 2021 using the period-end noon exchange rates of
0.782 CAD/USD. As a practical measure, the comparative shareholders’ equity (deficit) balances were translated at the February 1,
2021 exchange rate of 1.2824 CAD/USD. All resulting translation exchange differences have been recognized within other comprehensive income
in the foreign currency translation reserve. The effect of applying different exchange rates for the change in functional currency and
presentation currency have been included as a reconciling item within the statement of changes in shareholders’ equity (deficit)
as at February 1, 2021.
As of June 30, 2023, accounts receivable
consists of customer receivables of $1,093 (net an allowance for doubtful accounts of $300) and GST receivable of $20,293. As of December
31, 2022, accounts receivable consists of customer receivables of $46,592 (net an allowance for doubtful accounts of $6,100) and GST receivable
of $14,157.
As at June 30, 2023, restricted deposits
consisted of $8,672 (December 31, 2022 - $8,489) held in a guaranteed investment certificate as collateral for a corporate credit card.
On April 30, 2023, the Company vacated
its leased office space in Los Angeles, CA in accordance with the termination of the lease. Upon vacating the office space, the Company
sold or disposed of excess office furniture and equipment, including a majority of the Company’s computers that are no longer needed
by the current workforce.
As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, the
remaining right-of-use asset balance is $0.
As of December 31, 2018, the Company
held a 41.3% ownership interest in Versus LLC, a privately held limited liability company organized under the laws of the state of Nevada.
The Company consolidates Versus LLC as a result of having full control over the voting shares. Versus LLC is a technology company that
is developing a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of
their games to their players.
On May 21, 2019, the Company acquired
an additional 25.2% interest in Versus LLC in exchange for 38,268 common shares of the Company and 19,134 share purchase warrants. The
common shares and the share purchase warrants were determined to have a fair value of $1,403,675 and $116,595, respectively. As a result,
the Company increased its ownership interest to 66.5% and recorded the excess purchase price over net identifiable liabilities of $3,575,884
against reserves. The effect on non-controlling interest was a reduction of $2,053,199.
On June 21, 2019, the Company
acquired an additional 0.3% interest in Versus LLC in exchange for 189 common shares of the Company and 95 share purchase warrants.
The common shares and the share purchase warrants were determined to have a fair value of $6,906 and $2,527, respectively. As a
result, the Company increased its ownership interest to 66.8% and recorded the excess purchase price over net identifiable assets of
$26,448 against reserves. The effect on non-controlling interest was a reduction of $19,433.
On March 1, 2022, the Company acquired
an additional 15.1% interest in Versus LLC in exchange for 11,441 common shares of the Company. The common shares were determined to have
a fair value of $186,294. As a result, the Company increased its ownership interest to 81.9% and recorded the excess purchase price over
net identifiable assets of $4,562,631 against reserves. The effect on non-controlling interest was a reduction of $4,376,337.
The following table presents summarized
financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2023 and June 30, 2022 and the
six month periods then ended:
On June 3, 2021, the Company closed
its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the
Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration
for the issuance of 0.0234 of a common shares of the Company for each Xcite common share. The Company issued a total of 100,461 common
shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $101.40. The Company issued an additional
2,917 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt
at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional
$2,865 on July 26, 2021.
The acquisition was accounted for
using the acquisition method pursuant to IFRS 3, “Business Combinations”. Under the acquisition method, assets and liabilities
are measured at their estimated fair value on the date of acquisition with the exception of income tax, stock-based compensation, lease
liabilities and ROU assets. The total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed.
The following table summarizes the
details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition.
B)
Consideration
Common shares
$
12,890,029
Cash
112,225
Working capital adjustment
(163,902
)
PPP shares
346,031
Total Consideration
$
13,184,383
Identifiable Assets Acquired and Liabilities Assumed
Cash
$
27,124
Accounts Receivable
37,719
Property, Plant and Equipment
34,496
Intangible Assets
7,140,000
Other Assets
12,409
Accounts Payable and Accrued Liabilities
(524,853
)
Other Liabilities
(123,171
)
Total Identifiable Assets
$
6,603,724
Goodwill
$
6,580,659
Goodwill recognized is attributable to the synergies expected
to be achieved. Goodwill is not deductible for tax purposes.
C) Impairment of Goodwill and
Intangible Assets
The Company conducts an annual impairment
analysis in accordance with IAS 36 Impairment of Assets. A number of factors influenced the performance of Xcite Interactive in 2022 and
beyond, including reduced revenue projections, the time and cost involved in creating custom games, the departure of key Xcite employees,
and the competitive landscape of the fan engagement industry. As a result, the Company engaged a third-party to conduct an impairment
analysis as of December 31, 2022.
The analysis determined that the recoverable
amount was $4,425,000 resulting in an impairment of $8,254,000. The goodwill balance of $6,580,660 was written down to $0. The additional
impairment of $1,673,340 was attributed on a pro-rata basis to the intangible assets related the Xcite acquisition. These assets include
customer relationships, tradename, and developed technology.
D)
Revenue and Profit Contribution
The acquired business contributed revenues of $193,944 and
$560,431 for the six month period ended June 30, 2023 and 2022, respectively.
Intangible assets are comprised of
a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of their games
to their players. The Company continues to develop new apps, therefore additional costs were capitalized during the six month period ended
June 30, 2023.
During the six month period ended June 30, 2023, the Company repaid $664,697 of principal. As at June 30, 2023, the Company had recorded
$19,288 in accrued interest which was included in accounts payable and accrued liabilities.
During the year ended December 31,
2022, the Company repaid $64,550 of principal. As at December 31, 2022, the Company had recorded $23,456 in accrued interest which was
included in accounts payable and accrued liabilities.
During the six month period ended
June 30, 2023, the Company recorded finance expense of $0 (December 31, 2022 - $60,770). As of June 30, 2023, all notes are fully accreted.
We are authorized to issue an unlimited
number of Class A Shares. The Class A Shares do not have any special rights or restrictions attached. As of June 30, 2023, there were
338 Class A Shares issued and outstanding.
b)
Issued share capital
During the six month period ended June 30, 2023, the Company:
i)
Issued 2,500,000 shares at a price of $0.90 per share for
total proceeds of $2,250,000 in a registered direct offering. In connection with the offering, the Company incurred $226,544 in issuance
costs as part of the transaction.
ii)
Issued 4,042,000 common shares
pursuant to exercise of 4,042,000 warrants at a price of $1.10 per share for total proceeds of $4,446,200.
Escrow
At June 30, 2023, 21 common shares
(December 31, 2022 – 21) of the Company are held in escrow due to misplaced share certificates originally issued to three individual
shareholders.
During the year ended December 31,
2022, the Company:
i)
Issued 291,667 units at a price of $24.00 per unit for total
proceeds of $7,000,000. Each unit consisted of one common share and one warrant, to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance costs as part of the transaction.
ii)
Issued 11,441 shares, which were converted from Versus Holdco
shares.
iii)
Issued 39,375 shares at a price of $22.20 per unit for total
proceeds of $874,125 as a result of the underwriter exercising the overallotment.
iv)
Issued 4,196 shares related to the Xcite acquisition and the
vesting of key employee shares.
v)
Issued 276,334 units at a price of $7.80 per unit for total
proceeds of $2,155,195. The offering consisted of 140,000 common shares and 136,334 pre-funded warrants. In connection with the offering,
the Company incurred $313,482 in issuance costs as part of the transaction.
vi)
Issued 412,293 shares at $2.72 per share in a private placement
offering for total proceeds of $1,119,373.
vii)
Issued 2,100,000 units at a price of $1.00 per unit for total
proceeds of $2,099,866. The offering consisted of 300,000 common shares and 1,800,000 pre-funded warrants. In connection with the offering,
the Company incurred $522,460 in issuance costs as part of the transaction.
c) Stock
options
The Company may grant incentive stock
options to its officers, directors, employees, and consultants. The Company has implemented a rolling Stock Option Plan (the “Plan”)
whereby the Company can issue up to 10% of the issued and outstanding common shares of the Company. Options have a maximum term of ten
years and vesting is determined by the Board of Directors.
A continuity schedule of outstanding
stock options is as follows:
Number Outstanding
Weighted Average Exercise Price
($)
Balance –December 31, 2021
129,451
63.60
Granted
104,520
6.19
Exercised
-
-
Forfeited
(6,183
)
92.81
Balance –December 31, 2022
227,788
37.13
Granted
400,000
0.90
Exercised
-
-
Forfeited
(133,705
)
29.63
Balance – June 30, 2023
494,083
9.83
During the six months ended June 30,
2023, 400,000 stock options were granted by the Company. During the six months ended June 30, 2023, the Company recorded a share-based
compensation adjustment of ($1,156,217) (June 30, 2022 - $884,322) relating to options forfeited as a result of the Company’s corporate
restructuring in January 2023.
During the year ended December 31,
2022, 104,520 stock options were granted by the Company. During the year ended December 31, 2022, the Company recorded share-based compensation
of $1,567,583 relating to options vested during the period.
The Company used the following assumptions in calculating
the fair value of stock options for the period ended:
June 30,
2023
December 31,
2022
Risk-free interest rate
3.93
%
2.14% – 4.03%
Expected life of options
5.0 years
5.0 years
Expected dividend yield
Nil
Nil
Volatility
132.65
%
96.90% – 112.40%
At June 30, 2023, the Company had
incentive stock options outstanding as follows:
Expiry Date
Options
Outstanding
Exercise
Price
Weighted Average Remaining Life
($)
(years)
September 4, 2023
521
44.55
0.17
April 2, 2024
6,877
37.80
0.75
June 27, 2024
417
38.40
1.00
September 27, 2024
15,418
67.95
1.25
October 22, 2024
834
60.45
1.33
July 24, 2025
8,873
44.70
2.08
July 31, 2025
8,761
44.70
2.08
August 10, 2025
833
44.70
2.17
June 1, 2026
3,788
105.60
2.92
June 29, 2026
700
84.75
3.00
August 19, 2026
24,071
63.00
3.17
May 10, 2027
300
11.85
3.92
August 17, 2027
52,387
6.00
4.17
September 20, 2027
2,240
3.45
4.25
February 13, 2028
368,063
0.90
4.75
494,083
9.83
4.31
d)
Share purchase warrants
A continuity schedule of outstanding
share purchase warrants is as follows:
Number
Outstanding
Weighted Average
Exercise Price
($)
Balance – December 31, 2021
299,077
102.45
Exercised
-
-
Expired
(186,586
)
96.30
Issued
5,166,044
3.42
Balance – December 31, 2022
5,278,535
5.74
Exercised
(4,042,000
)
1.10
Expired
-
-
Issued
175,000
0.90
Balance – June 30, 2023(1)
1,411,535
18.44
(1)
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
During the six month period ended June 30, 2023, the Company:
i)
Issued 175,000 placement agent warrants in conjunction with
a registered direct offering on February 2, 2023, with an exercise price of $0.90 per share.
During the year ended December 31, 2022, the Company:
ii)
Completed a public offering on February 28, 2022, and issued
291,669 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted of one common share and one warrant,
to purchase one common share at $28.80 per share until February 28, 2027.
iii)
Issued 39,375 units on March 24, 2022, at a price of $22.20
per unit for total proceeds of $874,125 because the underwriter exercised its overallotment option. Each unit consisted of one common
share and one warrant, to purchase one common share at $28.80 per share until February 28, 2027.
iv)
Issued 414,500 warrants on July 18, 2022, to purchase common
shares, each exercisable for one common share at an exercise price of $7.80 per share in an offer to an investor.
v)
Completed a public offering on December 9, 2022 and issued
2,100,000 units for total proceeds of $2,099,866. Each unit consists of (1) either (a) one common share or (b) one pre-funded warrant
to purchase one common share and (2) two warrants to purchase one common share each, at a public offering price of $1.00 per unit. The
unit will have an exercise price of $1.10 per share, are exercisable immediately upon issuance, and will expire five years following
the date of issuance. An additional 220,500 warrants were provided to placement agents with an exercise price of $1.25 per share.
The Company used the following assumptions
in calculating the fair value of the warrants for the period ended:
June 30, 2023
Risk-free interest rate
4.13% - 4.49%
Expected life of warrants
2.58 – 4.67 years
Expected dividend yield
Nil
Volatility
132.78
%
Weighted average fair value per warrant
$
0.21
At June 30, 2023, the Company had share
purchase warrants outstanding as follows:
Expiry Date
Warrants
Outstanding
Exercise
Price
Weighted Average
Remaining Life
($)
(years)
January 20, 2026(1)
112,491
112.50
2.58
February 28, 2027
331,044
28.80
3.67
December 6, 2027
220,500
1.25
4.42
December 9, 2027
158,000
1.10
4.42
January 18, 2028
414,500
7.80
4.58
February 2, 2028
175,000
0.90
4.67
1,411,535
18.44
4.17
(1)
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
The following summarizes the Company’s
related party transactions, not disclosed elsewhere in these condensed interim consolidated financial statements, during the six months
ended June 30, 2023 and 2022. Key management personnel includes the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and certain
directors and officers and companies controlled or significantly influenced by them.
Key Management Personnel
2023
2022
($)
($)
Short-term employee benefits paid or accrued to the CEO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
177,178
177,165
Short-term employee benefits paid or accrued to the CFO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
183,898
182,680
Short-term employee benefits paid or accrued to a member of the advisory board of the Company, including share-based compensation vested for incentive stock options and performance warrants.
54,518
113,759
Short-term employee benefits paid or accrued to the Chief Technology Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
156,193
154,095
Short-term employee benefits paid or accrued to a Director of the Company, including share-based compensation vested for incentive stock options and performance warrants.
138,473
146,835
Short-term employee benefits paid or accrued to the Chief People Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
108,973
101,675
Short-term employee benefits paid or accrued to the Chief Innovation Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
-
87,500
Short-term employee benefits paid or accrued to other directors and officers of the Company, including share-based compensation vested for incentive stock options and performance warrants.
48,777
356,775
Total
868,010
1,320,484
Other Related Party Payments
Office sharing and occupancy costs
of $37,595 during the six months ended June 30, 2023 (December 31, 2022 - $64,741) were paid or accrued to a corporation that shares management
in common with the Company.
Amounts Outstanding
a)
At June 30, 2023, a total of $185,538 (December 31, 2022 -
$304,623) was included in accounts payable and accrued liabilities owing to officers, directors, or companies controlled by them. These
amounts are unsecured and non-interest bearing (Note 11).
b)
At June 30, 2023, a total of $1,984,225 (December 31, 2022
- $2,604,713) of notes are payable to a director of the Company (Note 12).
Financial instruments measured at fair
value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to
estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 –
Unadjusted quoted prices in active markets for identical
assets or liabilities;
Level 2 –
Inputs other than quoted prices that are observable
for the asset or liability either directly or indirectly; and
Level 3 –
Inputs that are not based on observable market data.
The Board of Directors
has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s financial
instruments consist of cash, receivables, restricted deposit, accounts payable and accrued liabilities and notes payable.
The fair value of cash, receivables,
accounts payable and accrued liabilities approximate their book values because of the short-term nature of these instruments.
Credit risk
Credit risk
is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its payment obligations. The Company
has no material counterparties to its financial instruments with the exception of the financial institutions which hold its cash. The
Company manages its credit risk by ensuring that its cash is placed with a major financial institution with strong investment grade ratings
by a primary ratings agency. The Company’s receivables consist of goods and services due from customers and tax due from the Canadian
government.
Financial instrument risk exposure
The Company
is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management
processes.
Liquidity risk
The Company’s
cash is invested in business accounts which are available on demand. The Company has raised additional capital during the six months
ended June 30, 2023.
Interest rate risk
The Company’s
bank account earns interest income at variable rates and the notes payable bear interest at the prime lending rate. The fair value of
its portfolio is relatively unaffected by changes in short-term interest rates. A 1% change in interest rates would have no significant
impact on profit or loss for the six month period ended June 30, 2023.
Foreign exchange risk
Foreign currency exchange rate risk
is the risk that the fair value of financial instruments or future cash flows will fluctuate because of changes in foreign exchange rates.
The Company operates in Canada and the United States.
The Company was exposed to the following
foreign currency risk as at June 30, 2023 and December 31, 2022:
June 30,
2023
December 31,
2022
($)
($)
Cash
2,202,570
245,858
Accounts payable and accrued liabilities
(146,360
)
(93,630
)
2,056,210
152,228
As at June 30, 2023, with other variables
unchanged, , a +/- 10% change in the United States dollar to Canadian dollar exchange rate would impact the Company’s net loss by
$205,600 (December 31, 2022 - $15,200).
The Company manages its capital structure
and makes adjustments to it, based on the funds available to the Company. Capital consists of items within equity (deficit). The Board
of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's
management to sustain future development of the business. The Company is not subject to any externally imposed capital requirements.
The Company remains dependent on external
financing to fund its activities. In order to sustain its operations, the Company will spend its existing cash on hand and raise additional
amounts as needed until the business generates sufficient revenues to be self-sustaining. Management reviews its capital management approach
on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
In order to maximize ongoing corporate
development efforts, the Company does not pay out dividends. The Company’s investment policy is to keep its cash treasury invested
in certificates of deposit with major financial institutions.
There have been no changes to the
Company’s approach to capital management during the six month period ended June 30, 2023.
The Company is engaged in three business
activities, the live events business, which includes partnering with multiple professional sports franchises to drive in-stadium audience
engagement; a software licensing business creating a recurring revenue stream; and a business-to-business software platform that allows
video game publishers and developers to offer prize-based matches of their games to their players.
Details of
identifiable assets by geographic segments are as follows:
Lease liabilities recognized as of January 1, 2022
367,884
Lease payments made
(260,184
)
Interest expense on lease liabilities
20,860
Lease liabilities recognized as of January 1, 2023
128,560
Lease payments made
(131,576
)
Interest expense on lease liabilities
3,016
0
Less: current portion
(0
)
At June 30, 2023 – non-current portion
0
On August 1, 2015, the Company entered
into a cost sharing arrangement agreement for the provision of office space and various administrative services. In May of 2018, the Company
extended the cost sharing arrangement to July of 2022 at a monthly fee of CAD $7,000 plus GST per month.
On September
6, 2017, the Company entered into a rental agreement for office space in Los Angeles, California. Under the terms of the agreement the
Company paid $17,324 per month commencing on October 1, 2017 until April 30, 2023.
On April 30,
2023, the Company vacated its leased office space in Los Angeles, CA in accordance with the termination of the lease. As of June 30,
2023, the Company operates using a fully remote workforce and does not have any long-term lease agreements for office space or other
long-term assets. As such, the remaining right-of-use asset balance is $0.
The Company has evaluated subsequent
events after the balance sheet date of June 30, 2023 through August 14, 2023, the date the condensed interim consolidated financial statements
were issued. Based upon its evaluation, management has determined that no subsequent events have occurred that would require recognition
in the accompanying consolidated financial statements or disclosure in the notes thereto, except as follows:
1.
Subsequent to June 30, 2023, the Company extended CAD$670,000
in notes payable to director Brian Tingle.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Basic earnings (loss) per share is
computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during
the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.
The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds
from such exercises were used to acquire common stock at the average market price during the reporting periods. Potentially dilutive options
and warrants excluded from diluted loss per share as of June 30, 2023 totalled 1,905,618 (December 31, 2022 – 7,081,173).
Property and
equipment is recorded at cost less accumulated amortization and any impairments. Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:
The Company classifies its financial
instruments in the following categories: at fair value through profit and loss (FVTPL), at fair value through other comprehensive income
(loss) (FVTOCI), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification
of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow
characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition
the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as FVTOCI. Financial liabilities
are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives)
or the Company has opted to measure them at FVTPL.
Measurement
The following table shows the classification
of financial instruments:
Financial assets/liabilities
Classification IFRS 9
Cash
FVTPL
Receivables
Amortized cost
Restricted deposit
Amortized cost
Deposit
Amortized cost
Accounts payable and accrued liabilities
Amortized cost
Notes payable
Amortized cost
Financial assets and liabilities
at amortized cost
Financial assets and liabilities at
amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized
cost less any impairment.
Financial assets and liabilities
at FVTPL
Financial assets and liabilities carried
at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and
losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in
the period in which they arise.
Impairment of financial assets
at amortized cost
An ‘expected credit loss’
impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value
of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount
and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated
with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance
account and the resulting loss is recognized in profit or loss for the period.
In a subsequent period, if the amount
of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.
The Company derecognizes financial
assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and
substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally
recognized in profit or loss.
As at June 30, 2023, the Company does
not have any derivative financial assets and liabilities.
Intangible assets
acquired separately are carried at cost at the time of initial recognition. Intangible assets acquired in a business combination and
recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Expenditure on research
activities is recognized as an expense in the period in which it is incurred.
Intangibles with a finite useful life
are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which
the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration
of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and
future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.
If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows
used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine
the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life
of the intangible to the Company, the useful life is considered indefinite.
Intangibles with a finite useful
life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are
consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting
period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the
remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. The
Company’s intangible asset is amortized on a straight-line basis over 3 years. In the year development costs are incurred,
amortization is based on a half year.
The Company allocates goodwill arising
from business combinations to each cash generating unit (CGU) or group of CGUs that are expected to receive the benefits from the business
combination. The carrying amount of the CGU or group of CGUs to which goodwill has been allocated is tested annually for impairment or
when there is an indication that the goodwill may be impaired. Any impairment is recognized as an expense immediately. Should there be
a recovery in the value of a CGU, any impairment of goodwill previously recorded is not subsequently reversed.
Deferred financing costs consist primarily
of direct incremental costs related to the Company’s public offering of its common stock. Upon completion of the Company’s
financing any deferred costs are offset against the proceeds. The Company incurred $0 during the year ended December 31, 2022, and $135,162
during the period ended June 30, 2023.
Impairment of intangible assets
excluding goodwill
An internally-generated intangible
asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following
have been demonstrated:
(a)
the technical feasibility of
completing the intangible asset so that it will be available for use or sale;
(b)
the intention to complete the intangible asset and use or sell it;
(c)
the ability to use or sell the intangible asset;
(d)
how the intangible asset will
generate probable future economic benefits;
(e)
the availability of adequate
technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(f)
the ability to measure reliably
the expenditure attributable to the intangible asset during its development.
The amount initially recognized for
internally-generated intangible assets is the sum of the costs incurred from the date when the intangible assets first meet the recognition
criteria listed above. If no future economic benefit is expected before the end of the life of assets, the residual book value is expensed.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost. Where no internally-generated intangible
asset can be recognized, development costs are recognized as an expense in the period in which it is incurred.
At the end of each reporting period,
the Company reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have
suffered impairment losses. If any such indication exists, the recoverable amount of the cash-generating unit (CGU) to which the asset
belongs is estimated in order to determine the extent of the impairment losses (if any).
Where a reasonable and consistent
basis of allocation can be identified, corporate assets (assets other than goodwill that contribute to the future cash flows of both
the CGU under review and other CGUs) are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of
CGUs for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset
(or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
Where impairment losses subsequently
reverse, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, such that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment losses been recognized for the asset
(or CGU) in prior years. A reversal of impairment losses is recognized immediately in profit or loss.
Tax expense recognized in profit or
loss comprises the sum of current tax and deferred tax not recognized in other comprehensive income or directly in equity.
Current income tax assets and/or liabilities
comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at
the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the condensed interim consolidated
financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.
Deferred income taxes are calculated
based on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they
are enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognized
to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities
are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or
liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized
in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive
income or equity, respectively
Leases are recognized as a right-of-use
asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Assets and liabilities
arising from a lease are initially measured on a present value basis.
Right-of-use assets are measured at
cost comprising the following:
- the amount of the initial measurement
of lease liability;
- any lease payments made at or before
the commencement date less any lease incentives received;
- any initial direct costs; and
- restoration costs.
The Company assesses whether a contract
is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with
respect to all lease agreements in which it is the lessee. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Company uses its incremental borrowing rate.
As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, there
are no lease liabilities or right-of-use assets recognized.
The lease liability is subsequently
measured by increasing its carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing
the carrying amount to reflect lease payments made. The right-of-use asset is depreciated over the shorter of the lease term and the useful
life of the underlying asset. The Company applies IAS 36, Impairment of Assets, to determine whether the asset is impaired and account
for any identified impairment loss. As a practical expedient, IFRS 16 permits a lease not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient,
and accordingly allocates the consideration in the contract to lease and non-lease components based on the stand-alone price of the lease
component and aggregate stand-alone price of the non-lease components.
Variable rents that do not depend
on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized
as an expense in the period in which the event or condition that triggers those payments occurs and are presented as such in the statements
of income and comprehensive income.
A provision is recognized if, as
a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.
Government
grants are recognized when there is reasonable assurance that the Company will comply with any conditions attached to the grant and
the grant will be received. Government grants are recognized in profit or loss to offset the corresponding expenses on a systematic
basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to
compensate, which in the case of grants related to assets requires setting up the grant as deferred income or deducting it from the
carrying amount of the asset.
Non-controlling interest in the Company’s
less than wholly owned subsidiary is classified as a separate component of equity. On initial recognition, non-controlling interest is
measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original
transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share
of changes to the subsidiary’s equity.
Changes in the Company’s ownership
interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling
interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference
between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration
paid is recognized directly in equity and attributed to owners of the Company.
Valuation of equity units issued
in private placements
The Company has adopted a residual
value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first
allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable
component.
The fair value of the common shares
issued in private placements is determined to be the more easily measurable component and are valued at their fair value. The balance,
if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. If the warrants
are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in
the warrant reserve.
The Company engages in equity financing
transactions to obtain funds necessary to continue operations. These equity financing transactions may involve issuance of common shares
or units. Each unit comprises a certain number of shares and a certain number of warrants. Depending on the terms and conditions of each
equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the
transaction.
Warrants that are part of units are
assigned a value based on the residual value, if any, and included in reserves.
As of February 1, 2021, the warrants
were considered a derivative liability since the obligation to issue shares was not fixed in the Company’s functional currency.
The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the consolidated statement
of loss and comprehensive loss. A $9,743,659 warrant derivative loss was recorded in the consolidated statement of loss and comprehensive
loss beginning February 1, 2021 when the Company changed its functional currency. As of June 30, 2023, the associated warrants have expired
and the remaining balance of the warrant liability is $0.
The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based payments and derivative financial assets (e.g. investments in warrants). Option pricing
models require the input of subjective assumptions including expected price volatility, interest rates, and forfeiture rates. Changes
in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.
The Company grants stock options to
acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when
the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.
The fair value of stock options is
measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration
paid for the shares on the exercise of stock options is credited to capital stock.
In situations where equity
instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be
specifically identified, they are measured at fair value of the share-based payment.
Otherwise, share-based payments are measured at
the fair value of goods or services received.
In general, the Company recognizes
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where
there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there
are no significant remaining performance obligations for each of the Company’s activities as described below. Foreseeable losses,
if any, are recognized in the year or period in which the loss is determined.
The Company earns revenue in three
primary ways: 1) the sales of software-as-a-service (SAAS) from its interactive production software platform, 2) development and maintenance
of custom-built software or other professional services, or 3) the sale of advertising.
The Company recognizes SAAS revenues
from its interactive production sales over the life of the contract as its performance obligations are satisfied. Payment terms vary by
contract and can be periodic or one-time payments.
The Company recognizes revenues received
from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance
obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance
obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a
single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes
revenue by measuring the progress toward complete satisfaction of that performance obligation.
For revenues received from the sales
of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising
inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such
as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of
advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.
The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation. As the Company’s performance obligations are satisfied
within 12 months, the Company has elected the practical expedients under IFRS 15, which allows the Company not to record any significant
financing component as a result of financing any of its arrangements and not to capitalize cost incurred to obtain a contract.
Revenue recognition of sales is recorded
on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred revenue
based on the proportion of time remaining under the service arrangement as of the reporting date.
The functional currency is the currency
of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional
currency for the Company and its subsidiaries is the United States dollar. The functional currency determinations were conducted through
an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.
Foreign currency transactions in currencies
other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions. Foreign currency transaction
gains and losses are generally recognized in profit or loss and presented within gain (loss) on foreign exchange.
At the end of each reporting period,
the monetary assets and liabilities of the Company and its subsidiaries that are denominated in foreign currencies are translated at the
rate of exchange at the date of the statement of financial position. Non-monetary assets and liabilities that are denominated in foreign
currencies are translated at historical rates. Revenues and expenses that are denominated in foreign currencies are translated at the
exchange rates approximating those in effect on the date of the transactions. Foreign currency translation gains and losses are recognized
in other comprehensive income and accumulated in equity within the currency translation reserve.
Comprehensive income (loss)
consists of net income (loss) and other comprehensive income (loss) and represents the change in shareholders’ equity
(deficit) which results from transactions and events from sources other than the Company’s shareholders. Comprehensive loss
differs from net loss for the period ended June 30, 2023 due to the effects of foreign translation gains and losses. Comprehensive
loss differs from net loss for the year ended December 31, 2022 due to the effects of foreign translation gains and losses.
Expiry date 2023-01-01: The description of the entity's accounting policy for deferred income tax. [Refer: Deferred tax expense (income)]
Effective 2023-01-01: The description of the entity's material accounting policy information for deferred income tax. [Refer: Deferred tax expense (income)]
Expiry date 2023-01-01: The description of the entity's accounting policy for earnings per share.
Effective 2023-01-01: The description of the entity's material accounting policy information for earnings per share.
Expiry date 2023-01-01: The description of the entity's accounting policy for finance costs. [Refer: Finance costs]
Effective 2023-01-01: The description of the entity's material accounting policy information for finance costs. [Refer: Finance costs]
Expiry date 2023-01-01: The description of the entity's accounting policy for financial instruments. [Refer: Financial instruments, class [member]]
Effective 2023-01-01: The description of the entity's material accounting policy information for financial instruments. [Refer: Financial instruments, class [member]]
Expiry date 2023-01-01: The description of the entity's accounting policy for foreign currency translation.
Effective 2023-01-01: The description of the entity's material accounting policy information for foreign currency translation.
The description of the entity's accounting policy for government grants, including the methods of presentation adopted in the financial statements. [Refer: Government [member]; Government grants]
Expiry date 2023-01-01: The description of the entity's accounting policy for the impairment of assets.
Effective 2023-01-01: The description of the entity's material accounting policy information for the impairment of assets.
Expiry date 2023-01-01: The description of the entity's accounting policy for income tax.
Effective 2023-01-01: The description of the entity's material accounting policy information for income tax.
Expiry date 2023-01-01: The description of the entity's accounting policy for intangible assets and goodwill. [Refer: Intangible assets and goodwill]
Effective 2023-01-01: The description of the entity's material accounting policy information for intangible assets and goodwill. [Refer: Intangible assets and goodwill]
Expiry date 2023-01-01: The description of the entity's accounting policy for intangible assets other than goodwill. [Refer: Intangible assets other than goodwill]
Effective 2023-01-01: The description of the entity's material accounting policy information for intangible assets other than goodwill. [Refer: Intangible assets other than goodwill]
Expiry date 2023-01-01: The description of the entity's accounting policy for leases. A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.
Effective 2023-01-01: The description of the entity's material accounting policy information for leases. A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.
Expiry date 2023-01-01: The description of the entity's accounting policy for property, plant and equipment. [Refer: Property, plant and equipment]
Effective 2023-01-01: The description of the entity's material accounting policy information for property, plant and equipment. [Refer: Property, plant and equipment]
Expiry date 2023-01-01: The description of the entity's accounting policy for provisions. [Refer: Provisions]
Effective 2023-01-01: The description of the entity's material accounting policy information for provisions. [Refer: Provisions]
Expiry date 2023-01-01: The description of the entity's accounting policy for recognising revenue. [Refer: Revenue]
Effective 2023-01-01: The description of the entity's material accounting policy information for recognising revenue. [Refer: Revenue]
Expiry date 2023-01-01: The description of the entity's accounting policy for transactions in which the entity: (a) receives goods or services from the supplier of those goods or services (including an employee) in a share-based payment arrangement; or (b) incurs an obligation to settle the transaction with the supplier in a share-based payment arrangement when another group entity receives those goods or services. [Refer: Share-based payment arrangements [member]]
Effective 2023-01-01: The description of the entity's material accounting policy information for transactions in which the entity: (a) receives goods or services from the supplier of those goods or services (including an employee) in a share-based payment arrangement; or (b) incurs an obligation to settle the transaction with the supplier in a share-based payment arrangement when another group entity receives those goods or services. [Refer: Share-based payment arrangements [member]]
Adjustments to non-controlling interest are accounted for as transactions with
owners and adjustments that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.
Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:
The following table presents summarized
financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2023 and June 30, 2022 and the
six month periods then ended:
The following table summarizes the
details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition.
Common shares
$
12,890,029
Cash
112,225
Working capital adjustment
(163,902
)
PPP shares
346,031
Total Consideration
$
13,184,383
Identifiable Assets Acquired and Liabilities Assumed
Intangible assets are comprised of
a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of their games
to their players. The Company continues to develop new apps, therefore additional costs were capitalized during the six month period ended
June 30, 2023.
During the six month period ended
June 30, 2023, the Company recorded finance expense of $0 (December 31, 2022 - $60,770). As of June 30, 2023, all notes are fully accreted.
A continuity schedule of outstanding
share purchase warrants is as follows:
Number
Outstanding
Weighted Average
Exercise Price
($)
Balance – December 31, 2021
299,077
102.45
Exercised
-
-
Expired
(186,586
)
96.30
Issued
5,166,044
3.42
Balance – December 31, 2022
5,278,535
5.74
Exercised
(4,042,000
)
1.10
Expired
-
-
Issued
175,000
0.90
Balance – June 30, 2023(1)
1,411,535
18.44
(1)
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
At June 30, 2023, the Company had share
purchase warrants outstanding as follows:
Expiry Date
Warrants
Outstanding
Exercise
Price
Weighted Average
Remaining Life
($)
(years)
January 20, 2026(1)
112,491
112.50
2.58
February 28, 2027
331,044
28.80
3.67
December 6, 2027
220,500
1.25
4.42
December 9, 2027
158,000
1.10
4.42
January 18, 2028
414,500
7.80
4.58
February 2, 2028
175,000
0.90
4.67
1,411,535
18.44
4.17
(1)
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
The disclosure of information about indirect, by reference to the fair value of the equity instruments granted, measurement of the fair value of goods or services received as consideration for the entity's share options.
Key management personnel includes the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and certain
directors and officers and companies controlled or significantly influenced by them.
2023
2022
($)
($)
Short-term employee benefits paid or accrued to the CEO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
177,178
177,165
Short-term employee benefits paid or accrued to the CFO of the Company, including share-based compensation vested for incentive stock options and performance warrants.
183,898
182,680
Short-term employee benefits paid or accrued to a member of the advisory board of the Company, including share-based compensation vested for incentive stock options and performance warrants.
54,518
113,759
Short-term employee benefits paid or accrued to the Chief Technology Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
156,193
154,095
Short-term employee benefits paid or accrued to a Director of the Company, including share-based compensation vested for incentive stock options and performance warrants.
138,473
146,835
Short-term employee benefits paid or accrued to the Chief People Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
108,973
101,675
Short-term employee benefits paid or accrued to the Chief Innovation Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.
-
87,500
Short-term employee benefits paid or accrued to other directors and officers of the Company, including share-based compensation vested for incentive stock options and performance warrants.
The disclosure of amounts incurred by the entity for provision of key management personnel services that are provided by separate management entities. [Refer: Key management personnel of entity or parent [member]; Separate management entities [member]]
The disclosure of the credit risk exposure. Credit risk exposure is the credit risk inherent in an entity’s financial assets and commitments to extend credit.
The amounts of income taxes recoverable in future periods in respect of: (a) deductible temporary differences; (b) the carryforward of unused tax losses; and (c) the carryforward of unused tax credits. [Refer: Temporary differences [member]; Unused tax credits [member]; Unused tax losses [member].
All assets and liabilities previously reported
in Canadian dollars have been translated into United States dollars as at February 1, 2021 using the period-end noon exchange rates of
0.782 CAD/USD. As a practical measure, the comparative shareholders’ equity (deficit) balances were translated at the February 1,
2021 exchange rate of 1.2824 CAD/USD. All resulting translation exchange differences have been recognized within other comprehensive income
in the foreign currency translation reserve.
The amount of assets that represent a lessee's right to use an underlying asset for the lease term. Underlying asset is an asset that is the subject of a lease, for which the right to use that asset has been provided by a lessor to a lessee.
The amount of additions to property, plant and equipment other than those acquired through business combinations. [Refer: Business combinations [member]; Property, plant and equipment]
The common shares were determined to have
a fair value of $186,294. As a result, the Company increased its ownership interest to 81.9% and recorded the excess purchase price over
net identifiable assets of $4,562,631 against reserves. The effect on non-controlling interest was a reduction of $4,376,337.
The common shares and the share purchase warrants were determined to have a fair value of $6,906 and $2,527, respectively. As a
result, the Company increased its ownership interest to 66.8% and recorded the excess purchase price over net identifiable assets of
$26,448 against reserves. The effect on non-controlling interest was a reduction of $19,433.
The
common shares and the share purchase warrants were determined to have a fair value of $1,403,675 and $116,595, respectively. As a result,
the Company increased its ownership interest to 66.5% and recorded the excess purchase price over net identifiable liabilities of $3,575,884
against reserves. The effect on non-controlling interest was a reduction of $2,053,199.
Non-Controlling Interest in Versus LLC (Details) - Schedule of Financial Information before Intragroup Eliminations for Non-Wholly Owned Subsidiary - USD ($)
The amount recognised as of the acquisition date for current assets acquired in a business combination. [Refer: Current assets; Business combinations [member]]
The amount recognised as of the acquisition date for current liabilities assumed in a business combination. [Refer: Current liabilities; Business combinations [member]]
The amount of non-controlling interest in the acquiree recognised at the acquisition date for business combinations in which the acquirer holds less than 100 per cent of the equity interests in the acquiree at the acquisition date. [Refer: Business combinations [member]]
The amount recognised as of the acquisition date for non-current assets acquired in a business combination. [Refer: Non-current assets; Business combinations [member]]
The amount recognised as of the acquisition date for non-current liabilities assumed in a business combination. [Refer: Non-current liabilities; Business combinations [member]]
On June 3, 2021, the Company closed
its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the
Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration
for the issuance of 0.0234 of a common shares of the Company for each Xcite common share. The Company issued a total of 100,461 common
shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $101.40. The Company issued an additional
2,917 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt
at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional
$2,865 on July 26, 2021.
The amount of impairment loss recognised in other comprehensive income. Impairment loss on a revalued asset is recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. [Refer: Impairment loss; Revaluation surplus; Other comprehensive income]
Adjustments for decrease (increase) in other assets to reconcile profit (loss) to net cash flow from (used in) operating activities. [Refer: Other assets; Profit (loss)]
Adjustments for increase (decrease) in other liabilities to reconcile profit (loss) to net cash flow from (used in) operating activities. [Refer: Other liabilities; Profit (loss)]
The amount of consideration paid or received in respect of both obtaining and losing control of subsidiaries or other businesses. [Refer: Subsidiaries [member]]
The amount recognised as of the acquisition date for net identifiable assets acquired or liabilities assumed in a business combination. [Refer: Business combinations [member]]
The amount of intangible assets that the entity does not separately disclose in the same statement or note. [Refer: Intangible assets other than goodwill]
The amount of amortisation of intangible assets other than goodwill. [Refer: Depreciation and amortisation expense; Intangible assets other than goodwill]
i)Issued 2,500,000 shares at a price of $0.90 per share for
total proceeds of $2,250,000 in a registered direct offering. In connection with the offering, the Company incurred $226,544 in issuance
costs as part of the transaction.
ii)Issued 4,042,000 common shares
pursuant to exercise of 4,042,000 warrants at a price of $1.10 per share for total proceeds of $4,446,200.
EscrowAt June 30, 2023, 21 common shares
(December 31, 2022 – 21) of the Company are held in escrow due to misplaced share certificates originally issued to three individual
shareholders.
i)Issued 291,667 units at a price of $24.00 per unit for total
proceeds of $7,000,000. Each unit consisted of one common share and one warrant, to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance costs as part of the transaction.
ii)Issued 11,441 shares, which were converted from Versus Holdco
shares.
iii)Issued 39,375 shares at a price of $22.20 per unit for total
proceeds of $874,125 as a result of the underwriter exercising the overallotment.
iv)Issued 4,196 shares related to the Xcite acquisition and the
vesting of key employee shares.
v)Issued 276,334 units at a price of $7.80 per unit for total
proceeds of $2,155,195. The offering consisted of 140,000 common shares and 136,334 pre-funded warrants. In connection with the offering,
the Company incurred $313,482 in issuance costs as part of the transaction.
vi)Issued 412,293 shares at $2.72 per share in a private placement
offering for total proceeds of $1,119,373.
vii)Issued 2,100,000 units at a price of $1.00 per unit for total
proceeds of $2,099,866. The offering consisted of 300,000 common shares and 1,800,000 pre-funded warrants. In connection with the offering,
the Company incurred $522,460 in issuance costs as part of the transaction.
ii)Completed a public offering on February 28, 2022, and issued
291,669 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted of one common share and one warrant,
to purchase one common share at $28.80 per share until February 28, 2027.
iii)Issued 39,375 units on March 24, 2022, at a price of $22.20
per unit for total proceeds of $874,125 because the underwriter exercised its overallotment option. Each unit consisted of one common
share and one warrant, to purchase one common share at $28.80 per share until February 28, 2027.
iv)Issued 414,500 warrants on July 18, 2022, to purchase common
shares, each exercisable for one common share at an exercise price of $7.80 per share in an offer to an investor.
v)Completed a public offering on December 9, 2022 and issued
2,100,000 units for total proceeds of $2,099,866. Each unit consists of (1) either (a) one common share or (b) one pre-funded warrant
to purchase one common share and (2) two warrants to purchase one common share each, at a public offering price of $1.00 per unit. The
unit will have an exercise price of $1.10 per share, are exercisable immediately upon issuance, and will expire five years following
the date of issuance. An additional 220,500 warrants were provided to placement agents with an exercise price of $1.25 per share.
The expected volatility of the share price used to calculate the fair value of the share options granted. Expected volatility is a measure of the amount by which a price is expected to fluctuate during a period. The measure of volatility used in option pricing models is the annualised standard deviation of the continuously compounded rates of return on the share over a period of time.
The implied yield currently available on zero-coupon government issues of the country in whose currency the exercise price for share options granted is expressed, with a remaining term equal to the expected term of the option being valued (based on the option's remaining contractual life and taking into account the effects of expected early exercise). [Refer: Government [member]]
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.
The amount of compensation to key management personnel in the form of share-based payments. [Refer: Key management personnel of entity or parent [member]]
The amount of assets representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. [Refer: Business combinations [member]]
The amount of assets that represent a lessee's right to use an underlying asset for the lease term. Underlying asset is an asset that is the subject of a lease, for which the right to use that asset has been provided by a lessor to a lessee.
The amount of liabilities related to the entity's leases. Lease is a contract, or part of a contract, that conveys the right to use an underlying asset for a period of time in exchange for consideration.
The amount of liabilities related to the entity's leases. Lease is a contract, or part of a contract, that conveys the right to use an underlying asset for a period of time in exchange for consideration.
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SYSTEMS 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cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b>1.</b></td><td style="text-align: justify"><b>NATURE OF OPERATIONS</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Versus Systems Inc. (the “Company”)
was continued under the Business Corporations Act (British Columbia) effective January 2, 2007. The Company’s head office and registered
and records office is 1558 West Hastings Street, Vancouver, BC, V6C 3J4, Canada. The Company’s common stock is traded on the NASDAQ
under the symbol “VS”. The Company’s Unit A warrants are traded on NASDAQ under “VSSYW”. On November 9,
2022, the Company completed a one-for-15 reverse stock split of the Company’s common shares. All share and per share data are presented
to reflect the reverse share split on a retroactive basis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company is engaged in the technology
sector and has developed a proprietary prizing and promotions tool allowing game developers and creators of live events, games, apps,
and other content to offer real world prizes inside their content. The ability to win prizes drives increased levels of consumer engagement
creating an attractive platform for advertisers.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In June 2021, the Company completed
its acquisition of multimedia, production, and interactive gaming company Xcite Interactive, a provider of online audience engagement
through its owned and operated XEO technology platform. The company partners with multiple professional sports franchises across Major
League Baseball (MLB), National Hockey League (NHL), National Basketball Association (NBA) and the National Football League (NFL) as well
as the Olympics, World Cup, and other global sporting events to drive in-stadium audience engagement as well as a software licensing business
to drive audience engagement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify">These condensed interim consolidated
financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue
in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.
Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As
of June 30, 2023, the Company has not achieved positive cash flow from operations and is not able to finance day to day activities through
operations and as such, there is substantial doubt as to the Company’s ability to continue as a going concern. The Company’s
continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds therefrom and/or raise
equity capital or borrowings sufficient to meet current and future obligations. These condensed interim consolidated financial statements
do not include any adjustments as to the recoverability and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.</p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b>2.</b></td><td style="text-align: justify"><b>BASIS OF PRESENTATION</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Statement of compliance </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These condensed interim consolidated
financial statements, including comparatives, have been prepared in accordance with International Audit Standards (IAS) 34, Interim Financial
Reporting, as issued by the International Accounting Standards Board (IASB) and the interpretations of the IFRS Interpretations committee.
They do not include all disclosures required by International Financial Reporting Standards (IFRS) for annual financial statements, and
therefore should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December
31, 2022, prepared in accordance with IFRS as issued by the IASB.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify">These condensed interim consolidated
financial statements were authorized for issue by the Board of Directors on August 14, 2023.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Basis of measurement</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These condensed interim consolidated
financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments
at fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting
except for cash flow information.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Functional and presentation currency</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These condensed interim consolidated
financial statements are presented in United States dollars, unless otherwise noted, which is the functional currency of the Company and
its subsidiaries.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify"><b>Basis of consolidation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">These condensed interim consolidated
financial statements include the accounts of Versus Systems Inc. and its subsidiaries, from the date control was acquired. Control exists
when the Company possesses power over an investee, has exposure to variable returns from the investee and has the ability to use its power
over the investee to affect its returns. All inter-company balances and transactions, and any unrealized income and expenses arising from
inter-company transactions, are eliminated on consolidation. For partially owned subsidiaries, the interest attributable to non-controlling
shareholders is reflected in non-controlling interest. Adjustments to non-controlling interest are accounted for as transactions with
owners and adjustments that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left"><b>Name of Subsidiary</b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid"><b>Place of Incorporation</b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Proportion of <br/> Ownership Interest</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid"><b>Principal Activity</b></td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 25%; text-align: left">Versus Systems (Holdco) Inc.</td><td style="width: 1%"> </td>
<td style="width: 24%; text-align: left">United States of America</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 22%; text-align: right">81.9</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 24%; text-align: left">Holding Company</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Versus Systems UK, Ltd.</td><td> </td>
<td style="text-align: left">United Kingdom</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">81.9</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">Sales Company</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Versus LLC</td><td> </td>
<td style="text-align: left">United States of America</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">81.9</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">Technology Company</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Xcite Interactive, Inc.</td><td> </td>
<td style="text-align: left">United States of America</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100.0</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">Technology Company</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Significant Accounting Judgments,
Estimates and Assumptions</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.5pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The preparation of these condensed
interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the condensed interim consolidated financial statements. Estimates and assumptions are
continually evaluated and are based on historical experience and management’s assessment of current events and other facts and circumstances
that are considered to be relevant. Actual results could differ from these estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Significant assumptions about the
future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a
material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate
to, but are not limited to, the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">i)</td><td style="text-align: justify">Deferred income taxes</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred tax assets, including those
arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings
in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend
on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to
obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates,
the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">ii)</td><td style="text-align: justify">Economic recoverability and probability of future economic
benefits of intangible assets</td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Management has determined that intangible
asset costs which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria
in its assessments of economic recoverability and probability of future economic benefits including anticipated cash flows and estimated
economic life.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">iii)</td><td style="text-align: justify">Valuation of share-based compensation</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including
expected price volatility, interest rate, and forfeiture rate. Input assumptions changes can materially affect the fair value estimate
and the Company’s earnings and equity reserves.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">iv)</td><td style="text-align: justify">Depreciation and Amortization</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 59.85pt; text-align: justify; text-indent: -23.85pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s intangible assets
and equipment are depreciated and amortized on a straight-line basis, taking into account the estimated useful lives of the assets and
residual values. Changes to these estimates may affect the carrying value of these assets, net loss, and comprehensive income (loss) in
future periods.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">v)</td><td style="text-align: justify">Determination of functional currency</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The functional currency of the Company
and its subsidiaries is the currency of the primary economic environment in which each entity operates. Determination of the functional
currency may involve certain judgments to determine the primary economic environment. The functional currency may change if there is a
change in events and conditions which determines the primary economic environment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">vi)</td><td style="text-align: justify">Revenue Recognition</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">vii)</td><td style="text-align: justify">Business combinations</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.9in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Judgement was used in determining
whether the acquisition of Xcite Interactive, Inc. was a business combination or an asset acquisition. Estimates were made as to the fair
value of assets and liabilities acquired. In certain circumstances, such as the valuation of equipment, intangible assets and goodwill
acquired, the Company may rely on independent third-party valuators. The Company measured all the assets acquired and liabilities assumed
at their acquisition-date fair values.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The excess of the consideration paid
over the acquisition-date fair values of the net assets acquired, was recognized as goodwill as of the acquisition date in business combination.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">viii)</td><td style="text-align: justify">Subsequent Valuation of Intangibles Assets and Goodwill</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.9in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company used three generally accepted
principles to calculate the fair value of acquired intangible assets and goodwill from the Xcite acquisition: the income approach, the
market approach, and the cost approach. The calculated fair value of each acquired asset is used in the Company’s annual impairment
testing. Impairment loss is the amount by which the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable
amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or CGU.</p>Adjustments to non-controlling interest are accounted for as transactions with
owners and adjustments that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left"><b>Name of Subsidiary</b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid"><b>Place of Incorporation</b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Proportion of <br/> Ownership Interest</b></td><td style="padding-bottom: 1.5pt"><b> </b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid"><b>Principal Activity</b></td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 25%; text-align: left">Versus Systems (Holdco) Inc.</td><td style="width: 1%"> </td>
<td style="width: 24%; text-align: left">United States of America</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 22%; text-align: right">81.9</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 24%; text-align: left">Holding Company</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Versus Systems UK, Ltd.</td><td> </td>
<td style="text-align: left">United Kingdom</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">81.9</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">Sales Company</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Versus LLC</td><td> </td>
<td style="text-align: left">United States of America</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">81.9</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">Technology Company</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Xcite Interactive, Inc.</td><td> </td>
<td style="text-align: left">United States of America</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100.0</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left">Technology Company</td></tr>
</table>United States of America0.819Holding CompanyUnited Kingdom0.819Sales CompanyUnited States of America0.819Technology CompanyUnited States of America1Technology Company<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b>3.</b></td><td style="text-align: justify"><b>SIGNIFICANT ACCOUNTING POLICIES</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Basic and diluted loss per share </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Basic earnings (loss) per share is
computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during
the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.
The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds
from such exercises were used to acquire common stock at the average market price during the reporting periods. Potentially dilutive options
and warrants excluded from diluted loss per share as of June 30, 2023 totalled 1,905,618 (December 31, 2022 – 7,081,173).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify; text-indent: -0.75pt"><b>Property and
equipment</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify; text-indent: -0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify; text-indent: -0.75pt">Property and
equipment is recorded at cost less accumulated amortization and any impairments. Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; width: 50%; font-weight: bold; text-align: left">Asset</td><td style="width: 1%; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 49%; font-weight: bold; text-align: center">Rate</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Computers</td><td> </td>
<td style="text-align: left">Straight line, 3 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Right of use assets</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">Shorter of useful life or lease term</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Financial instruments</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Classification </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company classifies its financial
instruments in the following categories: at fair value through profit and loss (FVTPL), at fair value through other comprehensive income
(loss) (FVTOCI), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification
of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow
characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition
the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as FVTOCI. Financial liabilities
are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives)
or the Company has opted to measure them at FVTPL.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Measurement</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following table shows the classification
of financial instruments:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 50%; text-align: justify">Financial assets/liabilities</td><td style="width: 1%"> </td>
<td style="width: 49%; text-align: justify">Classification IFRS 9</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Cash</td><td> </td>
<td style="text-align: justify">FVTPL</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Receivables</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Restricted deposit</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Deposit</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Accounts payable and accrued liabilities</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Notes payable</td><td style="padding-bottom: 4pt"> </td>
<td style="text-align: justify; padding-bottom: 4pt">Amortized cost</td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Financial assets and liabilities
at amortized cost</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets and liabilities at
amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized
cost less any impairment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Financial assets and liabilities
at FVTPL</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets and liabilities carried
at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and
losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in
the period in which they arise.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Impairment of financial assets
at amortized cost</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">An ‘expected credit loss’
impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value
of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount
and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated
with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance
account and the resulting loss is recognized in profit or loss for the period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In a subsequent period, if the amount
of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Intangible assets excluding goodwill</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Derecognition of financial assets</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company derecognizes financial
assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and
substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally
recognized in profit or loss.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As at June 30, 2023, the Company does
not have any derivative financial assets and liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangible assets
acquired separately are carried at cost at the time of initial recognition. Intangible assets acquired in a business combination and
recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Expenditure on research
activities is recognized as an expense in the period in which it is incurred.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangibles with a finite useful life
are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which
the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration
of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and
future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.
If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows
used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine
the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life
of the intangible to the Company, the useful life is considered indefinite.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangibles with a finite useful
life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are
consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting
period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the
remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. The
Company’s intangible asset is amortized on a straight-line basis over 3 years. In the year development costs are incurred,
amortization is based on a half year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Goodwill</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company allocates goodwill arising
from business combinations to each cash generating unit (CGU) or group of CGUs that are expected to receive the benefits from the business
combination. The carrying amount of the CGU or group of CGUs to which goodwill has been allocated is tested annually for impairment or
when there is an indication that the goodwill may be impaired. Any impairment is recognized as an expense immediately. Should there be
a recovery in the value of a CGU, any impairment of goodwill previously recorded is not subsequently reversed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Deferred financing costs</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred financing costs consist primarily
of direct incremental costs related to the Company’s public offering of its common stock. Upon completion of the Company’s
financing any deferred costs are offset against the proceeds. The Company incurred $0 during the year ended December 31, 2022, and $135,162
during the period ended June 30, 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Impairment of intangible assets
excluding goodwill</b> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">An internally-generated intangible
asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following
have been demonstrated:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(a)</span></td><td style="text-align: justify"><span style="font-size: 10pt">the technical feasibility of
completing the intangible asset so that it will be available for use or sale;</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.5in"> </td>
<td style="width: 0.25in"><span style="font-size: 10pt">(b)</span></td>
<td style="text-align: justify"><p style="margin-top: 0; margin-bottom: 0"><span style="font-size: 10pt">the intention to complete the intangible asset and use or sell it;</span></p>
<p style="margin-top: 0; margin-bottom: 0"><span style="font-size: 10pt"> </span></p></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify"><span style="font-size: 10pt">(c)</span></td>
<td style="text-align: justify"><span style="font-size: 10pt">the ability to use or sell the intangible asset;</span></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(d)</span></td><td style="text-align: justify"><span style="font-size: 10pt">how the intangible asset will
generate probable future economic benefits;</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(e)</span></td><td style="text-align: justify"><span style="font-size: 10pt">the availability of adequate
technical, financial and other resources to complete the development and to use or sell the intangible asset; and</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(f)</span></td><td style="text-align: justify"><span style="font-size: 10pt">the ability to measure reliably
the expenditure attributable to the intangible asset during its development.</span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The amount initially recognized for
internally-generated intangible assets is the sum of the costs incurred from the date when the intangible assets first meet the recognition
criteria listed above. If no future economic benefit is expected before the end of the life of assets, the residual book value is expensed.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost. Where no internally-generated intangible
asset can be recognized, development costs are recognized as an expense in the period in which it is incurred.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At the end of each reporting period,
the Company reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have
suffered impairment losses. If any such indication exists, the recoverable amount of the cash-generating unit (CGU) to which the asset
belongs is estimated in order to determine the extent of the impairment losses (if any).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Where a reasonable and consistent
basis of allocation can be identified, corporate assets (assets other than goodwill that contribute to the future cash flows of both
the CGU under review and other CGUs) are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of
CGUs for which a reasonable and consistent allocation basis can be identified.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">If the recoverable amount of an asset
(or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Where impairment losses subsequently
reverse, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, such that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment losses been recognized for the asset
(or CGU) in prior years. A reversal of impairment losses is recognized immediately in profit or loss.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Income taxes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Tax expense recognized in profit or
loss comprises the sum of current tax and deferred tax not recognized in other comprehensive income or directly in equity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Current income tax</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Current income tax assets and/or liabilities
comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at
the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the condensed interim consolidated
financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Deferred income tax</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred income taxes are calculated
based on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they
are enacted or substantively enacted by the end of the reporting period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred tax assets are recognized
to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities
are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Changes in deferred tax assets or
liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized
in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive
income or equity, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Leases</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Leases are recognized as a right-of-use
asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Assets and liabilities
arising from a lease are initially measured on a present value basis.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Right-of-use assets are measured at
cost comprising the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- the amount of the initial measurement
of lease liability;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- any lease payments made at or before
the commencement date less any lease incentives received;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- any initial direct costs; and</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- restoration costs.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company assesses whether a contract
is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with
respect to all lease agreements in which it is the lessee. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Company uses its incremental borrowing rate.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, there
are no lease liabilities or right-of-use assets recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Lease liability </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The lease liability is subsequently
measured by increasing its carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing
the carrying amount to reflect lease payments made. The right-of-use asset is depreciated over the shorter of the lease term and the useful
life of the underlying asset. The Company applies IAS 36, Impairment of Assets, to determine whether the asset is impaired and account
for any identified impairment loss. As a practical expedient, IFRS 16 permits a lease not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient,
and accordingly allocates the consideration in the contract to lease and non-lease components based on the stand-alone price of the lease
component and aggregate stand-alone price of the non-lease components. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Variable rents that do not depend
on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized
as an expense in the period in which the event or condition that triggers those payments occurs and are presented as such in the statements
of income and comprehensive income.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Provisions</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">A provision is recognized if, as
a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Government grants</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; "> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; ">Government
grants are recognized when there is reasonable assurance that the Company will comply with any conditions attached to the grant and
the grant will be received. Government grants are recognized in profit or loss to offset the corresponding expenses on a systematic
basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to
compensate, which in the case of grants related to assets requires setting up the grant as deferred income or deducting it from the
carrying amount of the asset.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Non-controlling interest </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Non-controlling interest in the Company’s
less than wholly owned subsidiary is classified as a separate component of equity. On initial recognition, non-controlling interest is
measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original
transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share
of changes to the subsidiary’s equity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Changes in the Company’s ownership
interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling
interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference
between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration
paid is recognized directly in equity and attributed to owners of the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Valuation of equity units issued
in private placements</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company has adopted a residual
value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first
allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable
component.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of the common shares
issued in private placements is determined to be the more easily measurable component and are valued at their fair value. The balance,
if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. If the warrants
are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in
the warrant reserve.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Warrants issued in equity financing
transactions <br/>
<br/>
</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company engages in equity financing
transactions to obtain funds necessary to continue operations. These equity financing transactions may involve issuance of common shares
or units. Each unit comprises a certain number of shares and a certain number of warrants. Depending on the terms and conditions of each
equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the
transaction.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Warrants that are part of units are
assigned a value based on the residual value, if any, and included in reserves.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of February 1, 2021, the warrants
were considered a derivative liability since the obligation to issue shares was not fixed in the Company’s functional currency.
The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the consolidated statement
of loss and comprehensive loss. A $9,743,659 warrant derivative loss was recorded in the consolidated statement of loss and comprehensive
loss beginning February 1, 2021 when the Company changed its functional currency. As of June 30, 2023, the associated warrants have expired
and the remaining balance of the warrant liability is $0.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based payments and derivative financial assets (e.g. investments in warrants). Option pricing
models require the input of subjective assumptions including expected price volatility, interest rates, and forfeiture rates. Changes
in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Share-based compensation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company grants stock options to
acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when
the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of stock options is
measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration
paid for the shares on the exercise of stock options is credited to capital stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In situations where equity
instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be
specifically identified, they are measured at fair value of the share-based payment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Otherwise, share-based payments are measured at
the fair value of goods or services received.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Revenue recognition </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In general, the Company recognizes
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where
there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there
are no significant remaining performance obligations for each of the Company’s activities as described below. Foreseeable losses,
if any, are recognized in the year or period in which the loss is determined.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company earns revenue in three
primary ways: 1) the sales of software-as-a-service (SAAS) from its interactive production software platform, 2) development and maintenance
of custom-built software or other professional services, or 3) the sale of advertising.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognizes SAAS revenues
from its interactive production sales over the life of the contract as its performance obligations are satisfied. Payment terms vary by
contract and can be periodic or one-time payments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognizes revenues received
from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance
obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance
obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a
single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes
revenue by measuring the progress toward complete satisfaction of that performance obligation. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For revenues received from the sales
of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising
inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such
as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of
advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation. As the Company’s performance obligations are satisfied
within 12 months, the Company has elected the practical expedients under IFRS 15, which allows the Company not to record any significant
financing component as a result of financing any of its arrangements and not to capitalize cost incurred to obtain a contract.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Deferred revenue</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.35pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Revenue recognition of sales is recorded
on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred revenue
based on the proportion of time remaining under the service arrangement as of the reporting date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Foreign exchange</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.5in"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The functional currency is the currency
of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional
currency for the Company and its subsidiaries is the United States dollar. The functional currency determinations were conducted through
an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Foreign currency transactions in currencies
other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions. Foreign currency transaction
gains and losses are generally recognized in profit or loss and presented within gain (loss) on foreign exchange.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At the end of each reporting period,
the monetary assets and liabilities of the Company and its subsidiaries that are denominated in foreign currencies are translated at the
rate of exchange at the date of the statement of financial position. Non-monetary assets and liabilities that are denominated in foreign
currencies are translated at historical rates. Revenues and expenses that are denominated in foreign currencies are translated at the
exchange rates approximating those in effect on the date of the transactions. Foreign currency translation gains and losses are recognized
in other comprehensive income and accumulated in equity within the currency translation reserve.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Comprehensive Income (Loss)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Comprehensive income (loss)
consists of net income (loss) and other comprehensive income (loss) and represents the change in shareholders’ equity
(deficit) which results from transactions and events from sources other than the Company’s shareholders. Comprehensive loss
differs from net loss for the period ended June 30, 2023 due to the effects of foreign translation gains and losses. Comprehensive
loss differs from net loss for the year ended December 31, 2022 due to the effects of foreign translation gains and losses.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Basic and diluted loss per share </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Basic earnings (loss) per share is
computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during
the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.
The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds
from such exercises were used to acquire common stock at the average market price during the reporting periods. Potentially dilutive options
and warrants excluded from diluted loss per share as of June 30, 2023 totalled 1,905,618 (December 31, 2022 – 7,081,173).</p>19056187081173<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify; text-indent: -0.75pt"><b>Property and
equipment</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify; text-indent: -0.75pt">Property and
equipment is recorded at cost less accumulated amortization and any impairments. Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:</p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; width: 50%; font-weight: bold; text-align: left">Asset</td><td style="width: 1%; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 49%; font-weight: bold; text-align: center">Rate</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Computers</td><td> </td>
<td style="text-align: left">Straight line, 3 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Right of use assets</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">Shorter of useful life or lease term</td></tr>
</table>Amortization is calculated based on the estimated residual
value and estimated economic life of the specific assets using the straight-line method over the period indicated below:<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; width: 50%; font-weight: bold; text-align: left">Asset</td><td style="width: 1%; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 49%; font-weight: bold; text-align: center">Rate</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Computers</td><td> </td>
<td style="text-align: left">Straight line, 3 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Right of use assets</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; padding-bottom: 1.5pt">Shorter of useful life or lease term</td></tr>
</table>Straight line, 3 yearsShorter of useful life or lease term<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Financial instruments</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Classification </i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company classifies its financial
instruments in the following categories: at fair value through profit and loss (FVTPL), at fair value through other comprehensive income
(loss) (FVTOCI), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification
of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow
characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition
the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as FVTOCI. Financial liabilities
are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives)
or the Company has opted to measure them at FVTPL.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Measurement</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following table shows the classification
of financial instruments:</p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 50%; text-align: justify">Financial assets/liabilities</td><td style="width: 1%"> </td>
<td style="width: 49%; text-align: justify">Classification IFRS 9</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Cash</td><td> </td>
<td style="text-align: justify">FVTPL</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Receivables</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Restricted deposit</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Deposit</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Accounts payable and accrued liabilities</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Notes payable</td><td style="padding-bottom: 4pt"> </td>
<td style="text-align: justify; padding-bottom: 4pt">Amortized cost</td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Financial assets and liabilities
at amortized cost</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets and liabilities at
amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized
cost less any impairment.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Financial assets and liabilities
at FVTPL</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial assets and liabilities carried
at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and
losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in
the period in which they arise.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Impairment of financial assets
at amortized cost</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">An ‘expected credit loss’
impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value
of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount
and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated
with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance
account and the resulting loss is recognized in profit or loss for the period.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In a subsequent period, if the amount
of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.</p>The following table shows the classification
of financial instruments:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 50%; text-align: justify">Financial assets/liabilities</td><td style="width: 1%"> </td>
<td style="width: 49%; text-align: justify">Classification IFRS 9</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Cash</td><td> </td>
<td style="text-align: justify">FVTPL</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Receivables</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Restricted deposit</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Deposit</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Accounts payable and accrued liabilities</td><td> </td>
<td style="text-align: justify">Amortized cost</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Notes payable</td><td style="padding-bottom: 4pt"> </td>
<td style="text-align: justify; padding-bottom: 4pt">Amortized cost</td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>FVTPLAmortized costAmortized costAmortized costAmortized costAmortized cost<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Intangible assets excluding goodwill</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Derecognition of financial assets</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company derecognizes financial
assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and
substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally
recognized in profit or loss.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As at June 30, 2023, the Company does
not have any derivative financial assets and liabilities.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangible assets
acquired separately are carried at cost at the time of initial recognition. Intangible assets acquired in a business combination and
recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Expenditure on research
activities is recognized as an expense in the period in which it is incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangibles with a finite useful life
are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which
the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration
of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and
future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.
If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows
used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine
the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life
of the intangible to the Company, the useful life is considered indefinite.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangibles with a finite useful
life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are
consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting
period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the
remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. The
Company’s intangible asset is amortized on a straight-line basis over 3 years. In the year development costs are incurred,
amortization is based on a half year.</p>P3Y<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Goodwill</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company allocates goodwill arising
from business combinations to each cash generating unit (CGU) or group of CGUs that are expected to receive the benefits from the business
combination. The carrying amount of the CGU or group of CGUs to which goodwill has been allocated is tested annually for impairment or
when there is an indication that the goodwill may be impaired. Any impairment is recognized as an expense immediately. Should there be
a recovery in the value of a CGU, any impairment of goodwill previously recorded is not subsequently reversed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Deferred financing costs</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred financing costs consist primarily
of direct incremental costs related to the Company’s public offering of its common stock. Upon completion of the Company’s
financing any deferred costs are offset against the proceeds. The Company incurred $0 during the year ended December 31, 2022, and $135,162
during the period ended June 30, 2023.</p>0135162<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Impairment of intangible assets
excluding goodwill</b> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">An internally-generated intangible
asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following
have been demonstrated:</p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(a)</span></td><td style="text-align: justify"><span style="font-size: 10pt">the technical feasibility of
completing the intangible asset so that it will be available for use or sale;</span></td>
</tr></table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.5in"> </td>
<td style="width: 0.25in"><span style="font-size: 10pt">(b)</span></td>
<td style="text-align: justify"><p style="margin-top: 0; margin-bottom: 0"><span style="font-size: 10pt">the intention to complete the intangible asset and use or sell it;</span></p>
<p style="margin-top: 0; margin-bottom: 0"><span style="font-size: 10pt"> </span></p></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="text-align: justify"><span style="font-size: 10pt">(c)</span></td>
<td style="text-align: justify"><span style="font-size: 10pt">the ability to use or sell the intangible asset;</span></td></tr>
</table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(d)</span></td><td style="text-align: justify"><span style="font-size: 10pt">how the intangible asset will
generate probable future economic benefits;</span></td>
</tr></table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(e)</span></td><td style="text-align: justify"><span style="font-size: 10pt">the availability of adequate
technical, financial and other resources to complete the development and to use or sell the intangible asset; and</span></td>
</tr></table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">(f)</span></td><td style="text-align: justify"><span style="font-size: 10pt">the ability to measure reliably
the expenditure attributable to the intangible asset during its development.</span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The amount initially recognized for
internally-generated intangible assets is the sum of the costs incurred from the date when the intangible assets first meet the recognition
criteria listed above. If no future economic benefit is expected before the end of the life of assets, the residual book value is expensed.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost. Where no internally-generated intangible
asset can be recognized, development costs are recognized as an expense in the period in which it is incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At the end of each reporting period,
the Company reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have
suffered impairment losses. If any such indication exists, the recoverable amount of the cash-generating unit (CGU) to which the asset
belongs is estimated in order to determine the extent of the impairment losses (if any).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Where a reasonable and consistent
basis of allocation can be identified, corporate assets (assets other than goodwill that contribute to the future cash flows of both
the CGU under review and other CGUs) are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of
CGUs for which a reasonable and consistent allocation basis can be identified.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">If the recoverable amount of an asset
(or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Where impairment losses subsequently
reverse, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, such that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment losses been recognized for the asset
(or CGU) in prior years. A reversal of impairment losses is recognized immediately in profit or loss.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Income taxes</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Tax expense recognized in profit or
loss comprises the sum of current tax and deferred tax not recognized in other comprehensive income or directly in equity.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Current income tax</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Current income tax assets and/or liabilities
comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at
the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the condensed interim consolidated
financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Deferred income tax</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred income taxes are calculated
based on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they
are enacted or substantively enacted by the end of the reporting period.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Deferred tax assets are recognized
to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities
are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.</p>Changes in deferred tax assets or
liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized
in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive
income or equity, respectively<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Leases</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Leases are recognized as a right-of-use
asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Assets and liabilities
arising from a lease are initially measured on a present value basis.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Right-of-use assets are measured at
cost comprising the following:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- the amount of the initial measurement
of lease liability;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- any lease payments made at or before
the commencement date less any lease incentives received;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- any initial direct costs; and</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">- restoration costs.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company assesses whether a contract
is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with
respect to all lease agreements in which it is the lessee. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Company uses its incremental borrowing rate.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, there
are no lease liabilities or right-of-use assets recognized.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Lease liability </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The lease liability is subsequently
measured by increasing its carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing
the carrying amount to reflect lease payments made. The right-of-use asset is depreciated over the shorter of the lease term and the useful
life of the underlying asset. The Company applies IAS 36, Impairment of Assets, to determine whether the asset is impaired and account
for any identified impairment loss. As a practical expedient, IFRS 16 permits a lease not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient,
and accordingly allocates the consideration in the contract to lease and non-lease components based on the stand-alone price of the lease
component and aggregate stand-alone price of the non-lease components. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Variable rents that do not depend
on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognized
as an expense in the period in which the event or condition that triggers those payments occurs and are presented as such in the statements
of income and comprehensive income.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Provisions</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">A provision is recognized if, as
a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Government grants</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; ">Government
grants are recognized when there is reasonable assurance that the Company will comply with any conditions attached to the grant and
the grant will be received. Government grants are recognized in profit or loss to offset the corresponding expenses on a systematic
basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to
compensate, which in the case of grants related to assets requires setting up the grant as deferred income or deducting it from the
carrying amount of the asset.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Non-controlling interest </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Non-controlling interest in the Company’s
less than wholly owned subsidiary is classified as a separate component of equity. On initial recognition, non-controlling interest is
measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original
transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share
of changes to the subsidiary’s equity.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Changes in the Company’s ownership
interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling
interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference
between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration
paid is recognized directly in equity and attributed to owners of the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Valuation of equity units issued
in private placements</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company has adopted a residual
value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first
allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable
component.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of the common shares
issued in private placements is determined to be the more easily measurable component and are valued at their fair value. The balance,
if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. If the warrants
are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in
the warrant reserve.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Warrants issued in equity financing
transactions <br/>
<br/>
</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company engages in equity financing
transactions to obtain funds necessary to continue operations. These equity financing transactions may involve issuance of common shares
or units. Each unit comprises a certain number of shares and a certain number of warrants. Depending on the terms and conditions of each
equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the
transaction.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Warrants that are part of units are
assigned a value based on the residual value, if any, and included in reserves.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of February 1, 2021, the warrants
were considered a derivative liability since the obligation to issue shares was not fixed in the Company’s functional currency.
The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the consolidated statement
of loss and comprehensive loss. A $9,743,659 warrant derivative loss was recorded in the consolidated statement of loss and comprehensive
loss beginning February 1, 2021 when the Company changed its functional currency. As of June 30, 2023, the associated warrants have expired
and the remaining balance of the warrant liability is $0.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company uses the Black-Scholes
Option Pricing Model for valuation of share-based payments and derivative financial assets (e.g. investments in warrants). Option pricing
models require the input of subjective assumptions including expected price volatility, interest rates, and forfeiture rates. Changes
in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.</p>97436590<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Share-based compensation</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company grants stock options to
acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when
the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of stock options is
measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration
paid for the shares on the exercise of stock options is credited to capital stock.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In situations where equity
instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be
specifically identified, they are measured at fair value of the share-based payment.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Otherwise, share-based payments are measured at
the fair value of goods or services received.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Revenue recognition </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In general, the Company recognizes
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where
there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there
are no significant remaining performance obligations for each of the Company’s activities as described below. Foreseeable losses,
if any, are recognized in the year or period in which the loss is determined.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company earns revenue in three
primary ways: 1) the sales of software-as-a-service (SAAS) from its interactive production software platform, 2) development and maintenance
of custom-built software or other professional services, or 3) the sale of advertising.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognizes SAAS revenues
from its interactive production sales over the life of the contract as its performance obligations are satisfied. Payment terms vary by
contract and can be periodic or one-time payments.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company recognizes revenues received
from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance
obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance
obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a
single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes
revenue by measuring the progress toward complete satisfaction of that performance obligation. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">For revenues received from the sales
of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising
inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such
as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of
advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s contracts with
customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance
obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products
and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine
the stand-alone selling price, for each distinct performance obligation. As the Company’s performance obligations are satisfied
within 12 months, the Company has elected the practical expedients under IFRS 15, which allows the Company not to record any significant
financing component as a result of financing any of its arrangements and not to capitalize cost incurred to obtain a contract.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Deferred revenue</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Revenue recognition of sales is recorded
on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred revenue
based on the proportion of time remaining under the service arrangement as of the reporting date.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Foreign exchange</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The functional currency is the currency
of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional
currency for the Company and its subsidiaries is the United States dollar. The functional currency determinations were conducted through
an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Foreign currency transactions in currencies
other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions. Foreign currency transaction
gains and losses are generally recognized in profit or loss and presented within gain (loss) on foreign exchange.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At the end of each reporting period,
the monetary assets and liabilities of the Company and its subsidiaries that are denominated in foreign currencies are translated at the
rate of exchange at the date of the statement of financial position. Non-monetary assets and liabilities that are denominated in foreign
currencies are translated at historical rates. Revenues and expenses that are denominated in foreign currencies are translated at the
exchange rates approximating those in effect on the date of the transactions. Foreign currency translation gains and losses are recognized
in other comprehensive income and accumulated in equity within the currency translation reserve.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b>Comprehensive Income (Loss)</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Comprehensive income (loss)
consists of net income (loss) and other comprehensive income (loss) and represents the change in shareholders’ equity
(deficit) which results from transactions and events from sources other than the Company’s shareholders. Comprehensive loss
differs from net loss for the period ended June 30, 2023 due to the effects of foreign translation gains and losses. Comprehensive
loss differs from net loss for the year ended December 31, 2022 due to the effects of foreign translation gains and losses.</p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.25in"><span style="font-size: 10pt"><b>4.</b></span></td>
<td>
<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <b>CHANGE IN FUNCTIONAL AND PRESENTATION CURRENCY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company changed its functional
currency from the Canadian dollar (CAD) to the United States dollar (USD) as of February 1, 2021. The change in functional currency coincided
with the January 2021 initial public offering and listing on the Nasdaq. Considering Versus’ business activities, comprised primarily
of United States dollar revenue and expenditures as well as United States dollar denominated financings, management determined that the
functional currency of the Company is the United States dollar. All assets, liabilities, share capital, and other components of shareholders’
equity (deficit) were translated into United States dollars at the exchange rate at the date of change. These changes have been accounted
for prospectively. Concurrent with the change in functional currency, on February 1, 2021, the Company changed its presentation currency
from the Canadian dollar to the United States dollar. This change in presentation currency is to better reflect the Company’s business
activities, comprised primarily of United States dollar transactions. The condensed interim consolidated financial statements for all
periods presented have been translated into the new presentation currency in accordance with IAS 21, The Effects of Changes in Foreign
Exchange Rates. The condensed interim consolidated statements of loss and comprehensive loss have been translated into the presentation
currency using the average exchange rates prevailing during each quarterly reporting period. All assets and liabilities previously reported
in Canadian dollars have been translated into United States dollars as at February 1, 2021 using the period-end noon exchange rates of
0.782 CAD/USD. As a practical measure, the comparative shareholders’ equity (deficit) balances were translated at the February 1,
2021 exchange rate of 1.2824 CAD/USD. All resulting translation exchange differences have been recognized within other comprehensive income
in the foreign currency translation reserve. The effect of applying different exchange rates for the change in functional currency and
presentation currency have been included as a reconciling item within the statement of changes in shareholders’ equity (deficit)
as at February 1, 2021.</p>All assets and liabilities previously reported
in Canadian dollars have been translated into United States dollars as at February 1, 2021 using the period-end noon exchange rates of
0.782 CAD/USD. As a practical measure, the comparative shareholders’ equity (deficit) balances were translated at the February 1,
2021 exchange rate of 1.2824 CAD/USD. All resulting translation exchange differences have been recognized within other comprehensive income
in the foreign currency translation reserve.<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt"><b>5.</b></span></td><td style="text-align: justify"><span style="font-size: 10pt"><b>RECEIVABLES</b></span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of June 30, 2023, accounts receivable
consists of customer receivables of $1,093 (net an allowance for doubtful accounts of $300) and GST receivable of $20,293. As of December
31, 2022, accounts receivable consists of customer receivables of $46,592 (net an allowance for doubtful accounts of $6,100) and GST receivable
of $14,157.</p>10933002029346592610014157<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b>6.</b></td><td style="text-align: justify"><b>RESTRICTED DEPOSIT</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As at June 30, 2023, restricted deposits
consisted of $8,672 (December 31, 2022 - $8,489) held in a guaranteed investment certificate as collateral for a corporate credit card.</p>86728489<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b>7.</b></td><td style="text-align: justify"><b>PROPERTY AND EQUIPMENT</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Computers</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Right of Use<br/> Asset</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Total</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold">Cost</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%; padding-left: 0in">At December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">181,390</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">913,405</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,094,795</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt; padding-left: 0.125in">Additions</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">65,329</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-126">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">65,329</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0in">At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">246,719</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">913,405</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,160,124</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in">Additions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-127">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-128">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-129">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 0.125in">Disposals</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(192,361</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-130">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(192,361</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 0in">At June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">54,358</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">913,405</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">967,763</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: left; padding-left: 0in">Accumulated amortization</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0in">At December 31, 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">113,079</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">654,771</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">767,850</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in">Amortization for the period</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">39,667</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">179,766</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">219,433</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">152,746</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">834,537</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">987,283</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-left: 0.125in">Amortization for the period</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18,800</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,868</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">97,668</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 0.125in">Disposals</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(135,692</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-131">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(135,692</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 0in">At June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">35,854</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">913,405</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">949,259</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: left; padding-left: 0in">Carrying amounts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 0in">At December 31, 2021</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">68,311</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">258,634</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">326,945</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt; padding-left: 0in">At December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">93,973</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">78,868</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">172,841</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 0in">At June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">18,504</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">0</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">18,504</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On April 30, 2023, the Company vacated
its leased office space in Los Angeles, CA in accordance with the termination of the lease. Upon vacating the office space, the Company
sold or disposed of excess office furniture and equipment, including a majority of the Company’s computers that are no longer needed
by the current workforce.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of June 30, 2023, the Company operates
using a fully remote workforce and does not have any long-term lease agreements for office space or other long-term assets. As such, the
remaining right-of-use asset balance is $0.</p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Computers</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Right of Use<br/> Asset</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Total</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold">Cost</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%; padding-left: 0in">At December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">181,390</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">913,405</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,094,795</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt; padding-left: 0.125in">Additions</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">65,329</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-126">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">65,329</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0in">At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">246,719</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">913,405</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,160,124</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in">Additions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-127">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-128">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-129">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 0.125in">Disposals</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(192,361</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-130">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(192,361</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 0in">At June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">54,358</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">913,405</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">967,763</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: left; padding-left: 0in">Accumulated amortization</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0in">At December 31, 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">113,079</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">654,771</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">767,850</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in">Amortization for the period</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">39,667</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">179,766</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">219,433</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">152,746</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">834,537</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">987,283</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-left: 0.125in">Amortization for the period</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18,800</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,868</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">97,668</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 0.125in">Disposals</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(135,692</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-131">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(135,692</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 0in">At June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">35,854</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">913,405</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">949,259</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: left; padding-left: 0in">Carrying amounts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 0in">At December 31, 2021</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">68,311</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">258,634</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">326,945</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt; padding-left: 0in">At December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">93,973</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">78,868</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">172,841</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 0in">At June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">18,504</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">0</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">18,504</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
</table>181390913405109479565329653292467199134051160124192361192361543589134059677631130796547717678503966717976621943315274683453798728318800788689766813569213569235854913405949259683112586343269459397378868172841185040185040<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-size: 10pt"><b>8.</b></span></td><td style="text-align: justify"><span style="font-size: 10pt"><b>NON-CONTROLLING INTEREST IN
VERSUS LLC</b></span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">As of December 31, 2018, the Company
held a 41.3% ownership interest in Versus LLC, a privately held limited liability company organized under the laws of the state of Nevada.
The Company consolidates Versus LLC as a result of having full control over the voting shares. Versus LLC is a technology company that
is developing a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of
their games to their players.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On May 21, 2019, the Company acquired
an additional 25.2% interest in Versus LLC in exchange for 38,268 common shares of the Company and 19,134 share purchase warrants. The
common shares and the share purchase warrants were determined to have a fair value of $1,403,675 and $116,595, respectively. As a result,
the Company increased its ownership interest to 66.5% and recorded the excess purchase price over net identifiable liabilities of $3,575,884
against reserves. The effect on non-controlling interest was a reduction of $2,053,199.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 21, 2019, the Company
acquired an additional 0.3% interest in Versus LLC in exchange for 189 common shares of the Company and 95 share purchase warrants.
The common shares and the share purchase warrants were determined to have a fair value of $6,906 and $2,527, respectively. As a
result, the Company increased its ownership interest to 66.8% and recorded the excess purchase price over net identifiable assets of
$26,448 against reserves. The effect on non-controlling interest was a reduction of $19,433.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On March 1, 2022, the Company acquired
an additional 15.1% interest in Versus LLC in exchange for 11,441 common shares of the Company. The common shares were determined to have
a fair value of $186,294. As a result, the Company increased its ownership interest to 81.9% and recorded the excess purchase price over
net identifiable assets of $4,562,631 against reserves. The effect on non-controlling interest was a reduction of $4,376,337.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following table presents summarized
financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2023 and June 30, 2022 and the
six month periods then ended:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Non-controlling interest percentage</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">18.1%</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">18.1%</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify">Assets</td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Current</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,010,211</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,855,473</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt">Non-current</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,046,995</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,811,260</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">3,057,206</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">4,666,733</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify">Liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,523</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">642,901</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Non-current</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">42,485,061</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">36,149,724</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">42,625,584</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">36,792,624</td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt">Net liabilities</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(39,568,378</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(32,125,891</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt">Non-controlling interest</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(6,784,717</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(5,504,169</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt">Net loss</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(2,218,719</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(5,256,557</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt"><b>Net loss attributed to non-controlling interest</b></td><td style="font-weight: bold; padding-bottom: 1.5pt"><b> </b></td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><b> </b></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><b>(401,588</b></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><b>)</b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"><b> </b></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><b>(1,258,926</b></td><td style="padding-bottom: 1.5pt; text-align: left"><b>)</b></td></tr>
</table>0.4130.2523826819134The
common shares and the share purchase warrants were determined to have a fair value of $1,403,675 and $116,595, respectively. As a result,
the Company increased its ownership interest to 66.5% and recorded the excess purchase price over net identifiable liabilities of $3,575,884
against reserves. The effect on non-controlling interest was a reduction of $2,053,199.0.00318995The common shares and the share purchase warrants were determined to have a fair value of $6,906 and $2,527, respectively. As a
result, the Company increased its ownership interest to 66.8% and recorded the excess purchase price over net identifiable assets of
$26,448 against reserves. The effect on non-controlling interest was a reduction of $19,433.0.15111441The common shares were determined to have
a fair value of $186,294. As a result, the Company increased its ownership interest to 81.9% and recorded the excess purchase price over
net identifiable assets of $4,562,631 against reserves. The effect on non-controlling interest was a reduction of $4,376,337.The following table presents summarized
financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2023 and June 30, 2022 and the
six month periods then ended:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Non-controlling interest percentage</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">18.1%</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">18.1%</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify">Assets</td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Current</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,010,211</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,855,473</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt">Non-current</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,046,995</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,811,260</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">3,057,206</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">4,666,733</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify">Liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">140,523</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">642,901</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Non-current</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">42,485,061</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">36,149,724</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">42,625,584</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">36,792,624</td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt">Net liabilities</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(39,568,378</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(32,125,891</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt">Non-controlling interest</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(6,784,717</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(5,504,169</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt">Net loss</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(2,218,719</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(5,256,557</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt"><b>Net loss attributed to non-controlling interest</b></td><td style="font-weight: bold; padding-bottom: 1.5pt"><b> </b></td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><b> </b></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><b>(401,588</b></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><b>)</b></td><td style="padding-bottom: 1.5pt"><b> </b></td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"><b> </b></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><b>(1,258,926</b></td><td style="padding-bottom: 1.5pt; text-align: left"><b>)</b></td></tr>
</table>0.1810.18110102111855473204699528112603057206466673314052364290142485061361497244262558436792624-39568378-3212589167847175504169-2218719-5256557-401588-1258926<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><b>9.</b></td><td style="text-align: justify"><b>ACQUISITION OF XCITE INTERACTIVE, INC.</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b><i>A) Summary of the Acquisition </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">On June 3, 2021, the Company closed
its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the
Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration
for the issuance of 0.0234 of a common shares of the Company for each Xcite common share. The Company issued a total of 100,461 common
shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $101.40. The Company issued an additional
2,917 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt
at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional
$2,865 on July 26, 2021.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The acquisition was accounted for
using the acquisition method pursuant to IFRS 3, “Business Combinations”. Under the acquisition method, assets and liabilities
are measured at their estimated fair value on the date of acquisition with the exception of income tax, stock-based compensation, lease
liabilities and ROU assets. The total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following table summarizes the
details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><b><i>B)</i></b></td><td style="text-align: justify"><b><i>Consideration</i></b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Common shares</td><td> </td>
<td style="text-align: left"><b>$</b></td>
<td style="text-align: right">12,890,029</td><td> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="width: 88%">Cash</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">112,225</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Working capital adjustment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(163,902</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">PPP shares</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">346,031</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total Consideration</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">13,184,383</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Identifiable Assets Acquired and Liabilities Assumed</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Cash</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">27,124</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Accounts Receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,719</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Property, Plant and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">34,496</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Intangible Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,140,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Other Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,409</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Accounts Payable and Accrued Liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(524,853</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Other Liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(123,171</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Total Identifiable Assets</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,603,724</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Goodwill </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6,580,659</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in">Goodwill recognized is attributable to the synergies expected
to be achieved. Goodwill is not deductible for tax purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-align: justify"><b><i>C) Impairment of Goodwill and
Intangible Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-align: justify">The Company conducts an annual impairment
analysis in accordance with IAS 36 Impairment of Assets. A number of factors influenced the performance of Xcite Interactive in 2022 and
beyond, including reduced revenue projections, the time and cost involved in creating custom games, the departure of key Xcite employees,
and the competitive landscape of the fan engagement industry. As a result, the Company engaged a third-party to conduct an impairment
analysis as of December 31, 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-align: justify">The analysis determined that the recoverable
amount was $4,425,000 resulting in an impairment of $8,254,000. The goodwill balance of $6,580,660 was written down to $0. The additional
impairment of $1,673,340 was attributed on a pro-rata basis to the intangible assets related the Xcite acquisition. These assets include
customer relationships, tradename, and developed technology.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><b><i>D)</i></b></td><td style="text-align: justify"><b><i>Revenue and Profit Contribution</i></b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in">The acquired business contributed revenues of $193,944 and
$560,431 for the six month period ended June 30, 2023 and 2022, respectively.</p>On June 3, 2021, the Company closed
its acquisition of all the issued and outstanding common shares of Xcite Interactive Inc. (Xcite) in exchange for common shares of the
Company. Pursuant to the terms of the acquisition, the Company acquired all the issued and outstanding Xcite common shares in consideration
for the issuance of 0.0234 of a common shares of the Company for each Xcite common share. The Company issued a total of 100,461 common
shares with a fair value of $10.7 million, based on the June 3, 2021 closing share price of $101.40. The Company issued an additional
2,917 shares on July 26, 2021, related to the Payment Protection Program (PPP) loan escrow account that was included in the Xcite debt
at the time of the acquisition. In addition, $109,360 of cash was awarded to non-accredited investors of Xcite on June 3, 2021, and additional
$2,865 on July 26, 2021.The following table summarizes the
details of the consideration and the recognized amounts of assets acquired and liabilities assumed at the date of the acquisition.<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Common shares</td><td> </td>
<td style="text-align: left"><b>$</b></td>
<td style="text-align: right">12,890,029</td><td> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="width: 88%">Cash</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">112,225</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Working capital adjustment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(163,902</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">PPP shares</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">346,031</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total Consideration</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">13,184,383</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Identifiable Assets Acquired and Liabilities Assumed</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Cash</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">27,124</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Accounts Receivable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,719</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Property, Plant and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">34,496</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Intangible Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,140,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Other Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,409</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Accounts Payable and Accrued Liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(524,853</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Other Liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(123,171</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Total Identifiable Assets</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,603,724</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Goodwill </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">6,580,659</td><td style="text-align: left"> </td></tr>
</table>12890029112225-16390234603113184383271243771934496714000012409-524853-1231716603724658065944250008254000658066001673340193944560431<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><b>10.</b></td><td style="text-align: justify"><b>INTANGIBLE ASSETS</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Intangible assets are comprised of
a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of their games
to their players. The Company continues to develop new apps, therefore additional costs were capitalized during the six month period ended
June 30, 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Software</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Customer<br/>
Relationships</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Tradename</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Developed<br/>
Technology</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Total</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify">Cost</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: justify; padding-left: 5.4pt">At December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">12,251,450</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">4,840,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">750,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,550,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">19,391,450</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">Additions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,496,621</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-132">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-133">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-134">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,496,621</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Impairments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-135">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,194,378</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(235,555</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(243,407</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,673,340</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,748,071</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,645,622</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">514,445</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,306,593</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,214,731</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Additions</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14,569</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-136">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-137">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-138">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14,569</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-left: 5.4pt">At June 30, 2023</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">14,762,640</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">3,645,622</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">514,445</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">1,306,593</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">20,229,300</td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-left: 0in">Accumulated amortization</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,614,894</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">345,715</td><td style="text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-139">-</div></td><td style="font-weight: bold; text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">258,333</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,218,942</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,729,326</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">691,430</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-140">-</div></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">516,667</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,937,423</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,334,220</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,037,145</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-141">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">775,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,156,365</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">957,620</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">177,198</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-142">-</div></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">237,133</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,371,951</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-left: 5.4pt">At June 30, 2023</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">12,301,840</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">1,214,343</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-143">-</div></td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">1,012,133</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">14,528,316</td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-left: 0in">Carrying amounts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,636,556</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,494,285</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">750,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,291,667</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,172,507</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">At December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,403,851</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,608,477</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">514,445</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">531,593</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,058,366</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-left: 5.4pt">At June 30, 2023</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">2,460,800</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">2,431,279</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">514,445</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">294,460</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">5,700,984</td><td style="font-weight: bold; text-align: left"> </td></tr>
</table>Intangible assets are comprised of
a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of their games
to their players. The Company continues to develop new apps, therefore additional costs were capitalized during the six month period ended
June 30, 2023.<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Software</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Customer<br/>
Relationships</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Tradename</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Developed<br/>
Technology</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b> </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Total</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify">Cost</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: justify; padding-left: 5.4pt">At December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">12,251,450</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">4,840,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">750,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,550,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">19,391,450</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">Additions</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,496,621</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-132">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-133">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-134">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,496,621</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Impairments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-135">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,194,378</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(235,555</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(243,407</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,673,340</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">14,748,071</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,645,622</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">514,445</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,306,593</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,214,731</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Additions</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14,569</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-136">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-137">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-138">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">14,569</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-left: 5.4pt">At June 30, 2023</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">14,762,640</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">3,645,622</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">514,445</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">1,306,593</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">20,229,300</td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-left: 0in">Accumulated amortization</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,614,894</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">345,715</td><td style="text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-139">-</div></td><td style="font-weight: bold; text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">258,333</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,218,942</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,729,326</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">691,430</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-140">-</div></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">516,667</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,937,423</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,334,220</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,037,145</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-141">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">775,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,156,365</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">Amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">957,620</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">177,198</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-142">-</div></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">237,133</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,371,951</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-left: 5.4pt">At June 30, 2023</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">12,301,840</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">1,214,343</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"><div style="-sec-ix-hidden: hidden-fact-143">-</div></td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">1,012,133</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">14,528,316</td><td style="font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: justify; padding-left: 0in">Carrying amounts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-left: 5.4pt">At December 31, 2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,636,556</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,494,285</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">750,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,291,667</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,172,507</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">At December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,403,851</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,608,477</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">514,445</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">531,593</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">7,058,366</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; text-align: justify; padding-left: 5.4pt">At June 30, 2023</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">2,460,800</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">2,431,279</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">514,445</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">294,460</td><td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">5,700,984</td><td style="font-weight: bold; text-align: left"> </td></tr>
</table>12251450484000075000015500001939145024966212496621-1194378-235555-243407-16733401474807136456225144451306593202147311456914569147626403645622514445130659320229300961489434571525833310218942172932669143051666729374231133422010371457750001315636595762017719823713313719511230184012143431012133145283162636556449428575000012916679172507340385126084775144455315937058366246080024312795144452944605700984<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>11.</b></td><td style="text-align: justify"><b>ACCOUNTS PAYABLE AND ACCRUED LIABILITIES</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s accounts payable
and accrued liabilities are comprised of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap; text-align: center"> </td><td style="white-space: nowrap; border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, <br/>
2023</td><td style="white-space: nowrap; text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="white-space: nowrap; border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31,<br/>
2022</td><td style="white-space: nowrap; text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Accounts payable (Note 12)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">70,662</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">138,276</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Due to related parties (Note 12 and Note 14)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">185,538</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">304,623</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Accrued liabilities (Note 12)</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">36,070</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">79,113</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">292,270</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">522,012</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>The Company’s accounts payable
and accrued liabilities are comprised of the following:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap; text-align: center"> </td><td style="white-space: nowrap; border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, <br/>
2023</td><td style="white-space: nowrap; text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="white-space: nowrap; border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31,<br/>
2022</td><td style="white-space: nowrap; text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Accounts payable (Note 12)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">70,662</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">138,276</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Due to related parties (Note 12 and Note 14)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">185,538</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">304,623</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Accrued liabilities (Note 12)</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">36,070</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">79,113</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">292,270</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">522,012</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>706621382761855383046233607079113292270522012<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>12.</b></td><td style="text-align: justify"><b>NOTES PAYABLE – RELATED PARTY</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><br/>
During the six month period ended June 30, 2023, the Company repaid $664,697 of principal. As at June 30, 2023, the Company had recorded
$19,288 in accrued interest which was included in accounts payable and accrued liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended December 31,
2022, the Company repaid $64,550 of principal. As at December 31, 2022, the Company had recorded $23,456 in accrued interest which was
included in accounts payable and accrued liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the six month period ended
June 30, 2023, the Company recorded finance expense of $0 (December 31, 2022 - $60,770). As of June 30, 2023, all notes are fully accreted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Amount</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>($)</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; padding-left: 5.4pt">Balance, December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2,786,183</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-left: 5.4pt">Foreign currency adjustment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(177,690</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt">Repayments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(64,550</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">Finance expense</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">60,770</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt">Balance, December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,604,713</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-left: 5.4pt">Foreign currency adjustment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44,209</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 5.4pt">Repayments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(664,697</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 5.4pt">Balance, June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1,984,225</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 5.4pt">Current</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1,984,225</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-left: 5.4pt">Non-current</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">0</td><td style="font-weight: bold; text-align: left"> </td></tr>
</table>664697192886455023456During the six month period ended
June 30, 2023, the Company recorded finance expense of $0 (December 31, 2022 - $60,770). As of June 30, 2023, all notes are fully accreted.<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Amount</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>($)</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; padding-left: 5.4pt">Balance, December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2,786,183</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-left: 5.4pt">Foreign currency adjustment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(177,690</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt">Repayments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(64,550</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">Finance expense</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">60,770</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt">Balance, December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,604,713</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-left: 5.4pt">Foreign currency adjustment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44,209</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 5.4pt">Repayments</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(664,697</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 5.4pt">Balance, June 30, 2023</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1,984,225</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 1.5pt; padding-left: 5.4pt">Current</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">1,984,225</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="font-weight: bold; padding-left: 5.4pt">Non-current</td><td style="font-weight: bold"> </td>
<td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right">0</td><td style="font-weight: bold; text-align: left"> </td></tr>
</table>0607702786183-177690-6455060770260471344209-664697198422519842250<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>13.</b></td><td style="text-align: justify"><b>SHARE CAPITAL AND RESERVES</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><b>a)</b></td><td style="text-align: justify"><b>Authorized share capital</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 58.5pt; text-align: justify; text-indent: -31.5pt"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">We are authorized to issue an unlimited
number of Class A Shares. The Class A Shares do not have any special rights or restrictions attached. As of June 30, 2023, there were
338 Class A Shares issued and outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify; text-indent: -22.65pt"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><b>b)</b></td><td style="text-align: justify"><b>Issued share capital</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><br/>
During the six month period ended June 30, 2023, the Company:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">i)</td><td style="text-align: justify">Issued 2,500,000 shares at a price of $0.90 per share for
total proceeds of $2,250,000 in a registered direct offering. In connection with the offering, the Company incurred $226,544 in issuance
costs as part of the transaction.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">ii)</td><td style="text-align: justify"><span style="font-size: 10pt">Issued 4,042,000 common shares
pursuant to exercise of 4,042,000 warrants at a price of $1.10 per share for total</span> proceeds of $4,446,200.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="text-decoration:underline">Escrow</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">At June 30, 2023, 21 common shares
(December 31, 2022 – 21) of the Company are held in escrow due to misplaced share certificates originally issued to three individual
shareholders.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.65pt; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended December 31,
2022, the Company:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">i)</td><td style="text-align: justify">Issued 291,667 units at a price of $24.00 per unit for total
proceeds of $7,000,000. Each unit consisted of one common share and one warrant, to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance costs as part of the transaction.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">ii)</td><td style="text-align: justify">Issued 11,441 shares, which were converted from Versus Holdco
shares.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">iii)</td><td style="text-align: justify">Issued 39,375 shares at a price of $22.20 per unit for total
proceeds of $874,125 as a result of the underwriter exercising the overallotment.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">iv)</td><td style="text-align: justify">Issued 4,196 shares related to the Xcite acquisition and the
vesting of key employee shares.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">v)</td><td style="text-align: justify">Issued 276,334 units at a price of $7.80 per unit for total
proceeds of $2,155,195. The offering consisted of 140,000 common shares and 136,334 pre-funded warrants. In connection with the offering,
the Company incurred $313,482 in issuance costs as part of the transaction.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">vi)</td><td style="text-align: justify">Issued 412,293 shares at $2.72 per share in a private placement
offering for total proceeds of $1,119,373.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">vii)</td><td style="text-align: justify">Issued 2,100,000 units at a price of $1.00 per unit for total
proceeds of $2,099,866. The offering consisted of 300,000 common shares and 1,800,000 pre-funded warrants. In connection with the offering,
the Company incurred $522,460 in issuance costs as part of the transaction.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.8in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify"><b>c) Stock
options</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company may grant incentive stock
options to its officers, directors, employees, and consultants. The Company has implemented a rolling Stock Option Plan (the “Plan”)
whereby the Company can issue up to 10% of the issued and outstanding common shares of the Company. Options have a maximum term of ten
years and vesting is determined by the Board of Directors. <br/>
<br/>
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0in; text-indent: 0.25in">A continuity schedule of outstanding
stock options is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number Outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average<br/> Exercise Price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2" style="text-align: justify"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify; padding-left: 0in">Balance –December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">129,451</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">63.60</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">104,520</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.19</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-144">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-145">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; text-indent: 7.9pt; padding-left: 5.4pt">Forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,183</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">92.81</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 0in">Balance –December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">227,788</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37.13</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">400,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.90</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-146">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-147">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; text-indent: 7.9pt; padding-left: 5.4pt">Forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(133,705</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">29.63</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 0in">Balance – June 30, 2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">494,083</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9.83</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the six months ended June 30,
2023, 400,000 stock options were granted by the Company. During the six months ended June 30, 2023, the Company recorded a share-based
compensation adjustment of ($1,156,217) (June 30, 2022 - $884,322) relating to options forfeited as a result of the Company’s corporate
restructuring in January 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">During the year ended December 31,
2022, 104,520 stock options were granted by the Company. During the year ended December 31, 2022, the Company recorded share-based compensation
of $1,567,583 relating to options vested during the period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company used the following assumptions in calculating
the fair value of stock options for the period ended:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.6pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, <br/>
2022</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: left">Risk-free interest rate</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right">3.93</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"><span style="font-size: 10pt">2.14% – 4.03%</span></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Expected life of options</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">5.0 years</span></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">5.0 years</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expected dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-148; font-size: 10pt">Nil</span></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-149; font-size: 10pt">Nil</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Volatility</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">132.65</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">96.90% – 112.40%</span></td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">At June 30, 2023, the Company had
incentive stock options outstanding as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Expiry Date</td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Options<br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Outstanding</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Exercise <br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Price</b> </p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average<br/> Remaining Life</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: right"></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">($)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">(years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%">September 4, 2023</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">521</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">44.55</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: center">0.17</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>April 2, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,877</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37.80</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">0.75</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>June 27, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">417</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">38.40</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">1.00</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>September 27, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,418</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">67.95</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">1.25</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>October 22, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">834</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">60.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">1.33</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>July 24, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,873</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44.70</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.08</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>July 31, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,761</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44.70</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.08</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>August 10, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">833</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44.70</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.17</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>June 1, 2026</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,788</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">105.60</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.92</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>June 29, 2026</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">700</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">84.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.00</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>August 19, 2026</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,071</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">63.00</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.17</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>May 10, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">300</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.85</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.92</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>August 17, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">52,387</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.00</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.17</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>September 20, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,240</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.25</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">February 13, 2028</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">368,063</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.90</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: center">4.75</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">494,083</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9.83</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: center">4.31</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><b>d)</b></td><td style="text-align: justify"><b>Share purchase warrants</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0in; text-indent: 0.5in">A continuity schedule of outstanding
share purchase warrants is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.3pt; text-indent: 21.35pt"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap; text-align: center"> </td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">Number <br/>
Outstanding</td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">Weighted Average<br/>
Exercise Price</td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: justify"> </td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">($)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Balance – December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">299,077</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">102.45</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-150">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-151">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expired</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(186,586</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">96.30</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt">Issued</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,166,044</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3.42</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Balance – December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,278,535</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.74</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(4,042,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.10</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expired</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-152">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-153">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt">Issued</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">175,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.90</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt"><span style="font-size: 10pt">Balance – June 30, 2023<sup>(1)</sup></span></td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,411,535</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">18.44</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>
<p style="margin-top: 0; margin-bottom: 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in"><span style="font-size: 10pt"><sup>(1)</sup></span></td> <td style="text-align: justify"><span style="font-size: 10pt">Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.</span></td></tr> </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-indent: 0.25in">During the six month period ended June 30, 2023, the Company:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">i)</td><td style="text-align: justify">Issued 175,000 placement agent warrants in conjunction with
a registered direct offering on February 2, 2023, with an exercise price of $0.90 per share.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-indent: 0.25in">During the year ended December 31, 2022, the Company:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">ii)</td><td style="text-align: justify">Completed a public offering on February 28, 2022, and issued
291,669 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted of one common share and one warrant,
to purchase one common share at $28.80 per share until February 28, 2027.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">iii)</td><td style="text-align: justify">Issued 39,375 units on March 24, 2022, at a price of $22.20
per unit for total proceeds of $874,125 because the underwriter exercised its overallotment option. Each unit consisted of one common
share and one warrant, to purchase one common share at $28.80 per share until February 28, 2027.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">iv)</td><td style="text-align: justify">Issued 414,500 warrants on July 18, 2022, to purchase common
shares, each exercisable for one common share at an exercise price of $7.80 per share in an offer to an investor.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">v)</td><td style="text-align: justify">Completed a public offering on December 9, 2022 and issued
2,100,000 units for total proceeds of $2,099,866. Each unit consists of (1) either (a) one common share or (b) one pre-funded warrant
to purchase one common share and (2) two warrants to purchase one common share each, at a public offering price of $1.00 per unit. The
unit will have an exercise price of $1.10 per share, are exercisable immediately upon issuance, and will expire five years following
the date of issuance. An additional 220,500 warrants were provided to placement agents with an exercise price of $1.25 per share.</td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt; text-align: justify; text-indent: -0.5in"> </p><p style="margin-left: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify">The Company used the following assumptions
in calculating the fair value of the warrants for the period ended:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Risk-free interest rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">4.13% - 4.49%</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Expected life of warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">2.58 – 4.67 years</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expected dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-154; font-size: 10pt">Nil</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="width: 88%">Volatility</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">132.78</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Weighted average fair value per warrant</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.21</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;text-align: justify"><b> </b></p>
<p style="margin-left: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify">At June 30, 2023, the Company had share
purchase warrants outstanding as follows:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Expiry Date</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Warrants<br/>
</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Outstanding</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Exercise <br/>
</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Price</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average<br/>
Remaining Life</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(years)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%"><span style="font-size: 10pt">January 20, 2026<sup>(1)</sup></span></td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">112,491</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">112.50</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: center">2.58</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>February 28, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">331,044</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28.80</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.67</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 6, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">220,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.25</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.42</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 9, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">158,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.10</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.42</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>January 18, 2028</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">414,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7.80</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.58</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">February 2, 2028</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">175,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.90</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: center">4.67</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,411,535</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18.44</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.17</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in"><span style="font-size: 10pt"><sup>(1)</sup></span></td> <td style="text-align: justify"><span style="font-size: 10pt">Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.</span></td></tr> </table>338338i)Issued 2,500,000 shares at a price of $0.90 per share for
total proceeds of $2,250,000 in a registered direct offering. In connection with the offering, the Company incurred $226,544 in issuance
costs as part of the transaction.
ii)Issued 4,042,000 common shares
pursuant to exercise of 4,042,000 warrants at a price of $1.10 per share for total proceeds of $4,446,200.
EscrowAt June 30, 2023, 21 common shares
(December 31, 2022 – 21) of the Company are held in escrow due to misplaced share certificates originally issued to three individual
shareholders. i)Issued 291,667 units at a price of $24.00 per unit for total
proceeds of $7,000,000. Each unit consisted of one common share and one warrant, to purchase one common share at $28.80 per share until
February 28, 2027. In connection with the offering, the Company incurred $900,720 in issuance costs as part of the transaction.
ii)Issued 11,441 shares, which were converted from Versus Holdco
shares.
iii)Issued 39,375 shares at a price of $22.20 per unit for total
proceeds of $874,125 as a result of the underwriter exercising the overallotment.
iv)Issued 4,196 shares related to the Xcite acquisition and the
vesting of key employee shares.
v)Issued 276,334 units at a price of $7.80 per unit for total
proceeds of $2,155,195. The offering consisted of 140,000 common shares and 136,334 pre-funded warrants. In connection with the offering,
the Company incurred $313,482 in issuance costs as part of the transaction.
vi)Issued 412,293 shares at $2.72 per share in a private placement
offering for total proceeds of $1,119,373.
vii)Issued 2,100,000 units at a price of $1.00 per unit for total
proceeds of $2,099,866. The offering consisted of 300,000 common shares and 1,800,000 pre-funded warrants. In connection with the offering,
the Company incurred $522,460 in issuance costs as part of the transaction.
0.10P10YA continuity schedule of outstanding
stock options is as follows:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number Outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average<br/> Exercise Price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2" style="text-align: justify"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify; padding-left: 0in">Balance –December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">129,451</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">63.60</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">104,520</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.19</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-144">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-145">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; text-indent: 7.9pt; padding-left: 5.4pt">Forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,183</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">92.81</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 0in">Balance –December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">227,788</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37.13</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">400,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.90</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; text-indent: 7.9pt; padding-left: 5.4pt">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-146">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-147">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; text-indent: 7.9pt; padding-left: 5.4pt">Forfeited</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(133,705</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">29.63</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 0in">Balance – June 30, 2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">494,083</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9.83</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>12945163.61045206.19-618392.8122778837.134000000.9-13370529.634940839.8340000011562178843221045201567583The Company used the following assumptions in calculating
the fair value of stock options for the period ended:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, <br/>
2022</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; text-align: left">Risk-free interest rate</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right">3.93</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 12%; text-align: right"><span style="font-size: 10pt">2.14% – 4.03%</span></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Expected life of options</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">5.0 years</span></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">5.0 years</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expected dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-148; font-size: 10pt">Nil</span></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-149; font-size: 10pt">Nil</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Volatility</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">132.65</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">96.90% – 112.40%</span></td><td style="text-align: left"> </td></tr>
</table>0.03930.02140.0403P5YP5Y1.32650.9691.124At June 30, 2023, the Company had
incentive stock options outstanding as follows:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Expiry Date</td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Options<br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Outstanding</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Exercise <br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Price</b> </p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average<br/> Remaining Life</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: right"></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">($)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">(years)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%">September 4, 2023</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">521</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">44.55</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: center">0.17</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>April 2, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,877</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37.80</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">0.75</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>June 27, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">417</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">38.40</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">1.00</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>September 27, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,418</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">67.95</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">1.25</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>October 22, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">834</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">60.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">1.33</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>July 24, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,873</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44.70</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.08</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>July 31, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,761</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44.70</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.08</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>August 10, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">833</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">44.70</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.17</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>June 1, 2026</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,788</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">105.60</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">2.92</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>June 29, 2026</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">700</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">84.75</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.00</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>August 19, 2026</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,071</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">63.00</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.17</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>May 10, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">300</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.85</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.92</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>August 17, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">52,387</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6.00</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.17</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>September 20, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,240</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.45</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.25</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">February 13, 2028</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">368,063</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.90</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: center">4.75</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">494,083</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9.83</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: center">4.31</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>52144.55P0Y2M1D687737.8P0Y9M41738.4P1Y1541867.95P1Y3M83460.45P1Y3M29D887344.7P2Y29D876144.7P2Y29D83344.7P2Y2M1D3788105.6P2Y11M1D70084.75P3Y2407163P3Y2M1D30011.85P3Y11M1D523876P4Y2M1D22403.45P4Y3M3680630.9P4Y9M4940839.83P4Y3M21DA continuity schedule of outstanding
share purchase warrants is as follows:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap; text-align: center"> </td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">Number <br/>
Outstanding</td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">Weighted Average<br/>
Exercise Price</td><td style="white-space: nowrap; text-align: center; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: justify"> </td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">($)</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Balance – December 31, 2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">299,077</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">102.45</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-150">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-151">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expired</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(186,586</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">96.30</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt">Issued</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,166,044</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3.42</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Balance – December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,278,535</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.74</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">Exercised</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(4,042,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.10</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Expired</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-152">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-153">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt">Issued</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">175,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.90</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt"><span style="font-size: 10pt">Balance – June 30, 2023<sup>(1)</sup></span></td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,411,535</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">18.44</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in"><span style="font-size: 10pt"><sup>(1)</sup></span></td> <td style="text-align: justify"><span style="font-size: 10pt">Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.</span></td></tr> </table>299077102.45-18658696.351660443.4252785355.74-40420001.11750000.9141153518.4416873411750000.9ii)Completed a public offering on February 28, 2022, and issued
291,669 units at a price of $24.00 per unit for total proceeds of $7,000,000. Each unit consisted of one common share and one warrant,
to purchase one common share at $28.80 per share until February 28, 2027.
iii)Issued 39,375 units on March 24, 2022, at a price of $22.20
per unit for total proceeds of $874,125 because the underwriter exercised its overallotment option. Each unit consisted of one common
share and one warrant, to purchase one common share at $28.80 per share until February 28, 2027.
iv)Issued 414,500 warrants on July 18, 2022, to purchase common
shares, each exercisable for one common share at an exercise price of $7.80 per share in an offer to an investor.
v)Completed a public offering on December 9, 2022 and issued
2,100,000 units for total proceeds of $2,099,866. Each unit consists of (1) either (a) one common share or (b) one pre-funded warrant
to purchase one common share and (2) two warrants to purchase one common share each, at a public offering price of $1.00 per unit. The
unit will have an exercise price of $1.10 per share, are exercisable immediately upon issuance, and will expire five years following
the date of issuance. An additional 220,500 warrants were provided to placement agents with an exercise price of $1.25 per share.
The Company used the following assumptions
in calculating the fair value of the warrants for the period ended:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Risk-free interest rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">4.13% - 4.49%</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Expected life of warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="font-size: 10pt">2.58 – 4.67 years</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Expected dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-154; font-size: 10pt">Nil</span></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="width: 88%">Volatility</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">132.78</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Weighted average fair value per warrant</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.21</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>0.04130.0449P2Y6M29DP4Y8M1D1.32780.21At June 30, 2023, the Company had share
purchase warrants outstanding as follows:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Expiry Date</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Warrants<br/>
</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Outstanding</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Exercise <br/>
</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Price</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted Average<br/>
Remaining Life</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(years)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%"><span style="font-size: 10pt">January 20, 2026<sup>(1)</sup></span></td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">112,491</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">112.50</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: center">2.58</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>February 28, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">331,044</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">28.80</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">3.67</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 6, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">220,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.25</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.42</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 9, 2027</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">158,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.10</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.42</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>January 18, 2028</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">414,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7.80</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.58</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">February 2, 2028</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">175,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.90</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: center">4.67</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,411,535</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18.44</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: center">4.17</td><td style="text-align: left"> </td></tr>
</table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in"><span style="font-size: 10pt"><sup>(1)</sup></span></td> <td style="text-align: justify"><span style="font-size: 10pt">Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.</span></td></tr> </table>112491112.5P2Y6M29D33104428.8P3Y8M1D2205001.25P4Y5M1D1580001.1P4Y5M1D4145007.8P4Y6M29D1750000.9P4Y8M1D141153518.44P4Y2M1D1687341<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>14.</b></td><td style="text-align: justify"><b>RELATED PARTY TRANSACTIONS</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The following summarizes the Company’s
related party transactions, not disclosed elsewhere in these condensed interim consolidated financial statements, during the six months
ended June 30, 2023 and 2022. Key management personnel includes the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and certain
directors and officers and companies controlled or significantly influenced by them.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Key Management Personnel</i></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left">Short-term employee benefits paid or accrued to the CEO of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">177,178</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">177,165</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the CFO of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">183,898</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">182,680</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to a member of the advisory board of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">54,518</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">113,759</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the Chief Technology Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">156,193</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">154,095</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to a Director of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">138,473</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">146,835</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the Chief People Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">108,973</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">101,675</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the Chief Innovation <br/>Officer of the Company, including share-based compensation vested for <br/>incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-155">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">87,500</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to other directors and officers of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">48,777</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">356,775</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in">Total</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">868,010</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,320,484</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><span style="text-decoration:underline">Other Related Party Payments</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Office sharing and occupancy costs
of $37,595 during the six months ended June 30, 2023 (December 31, 2022 - $64,741) were paid or accrued to a corporation that shares management
in common with the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Amounts Outstanding</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">a)</span></td><td style="text-align: justify">At June 30, 2023, a total of $185,538 (December 31, 2022 -
$304,623) was included in accounts payable and accrued liabilities owing to officers, directors, or companies controlled by them. These
amounts are unsecured and non-interest bearing (Note 11).</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">b)</span></td><td style="text-align: justify">At June 30, 2023, a total of $1,984,225 (December 31, 2022
- $2,604,713) of notes are payable to a director of the Company (Note 12).</td>
</tr></table>Key management personnel includes the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and certain
directors and officers and companies controlled or significantly influenced by them.<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left">Short-term employee benefits paid or accrued to the CEO of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">177,178</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">177,165</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the CFO of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">183,898</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">182,680</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to a member of the advisory board of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">54,518</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">113,759</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the Chief Technology Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">156,193</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">154,095</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to a Director of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">138,473</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">146,835</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the Chief People Officer of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">108,973</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">101,675</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to the Chief Innovation <br/>Officer of the Company, including share-based compensation vested for <br/>incentive stock options and performance warrants.</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-155">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">87,500</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Short-term employee benefits paid or accrued to other directors and officers of the Company, including share-based compensation vested for incentive stock options and performance warrants.</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">48,777</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">356,775</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in">Total</td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">868,010</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,320,484</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>1771781771651838981826805451811375915619315409513847314683510897310167587500487773567758680101320484375956474118553830462319842252604713<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>15.</b></td><td style="text-align: justify"><b>FINANCIAL INSTRUMENTS AND RISK MANAGEMENT</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt .25in; text-indent: 148.5pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Financial risk management</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Financial instruments measured at fair
value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to
estimate the fair values. The three levels of the fair value hierarchy are:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.6in; text-align: left">Level 1 – </td><td style="text-align: justify">Unadjusted quoted prices in active markets for identical
assets or liabilities;</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.6in; text-align: left">Level 2 – </td><td style="text-align: justify"> Inputs other than quoted prices that are observable
for the asset or liability either directly or indirectly; and</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt; text-indent: -58.5pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.5pt; text-indent: -40.5pt"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.6in; text-align: left">Level 3 –</td><td style="text-align: justify"> Inputs that are not based on observable market data.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Board of Directors
has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s financial
instruments consist of cash, receivables, restricted deposit, accounts payable and accrued liabilities and notes payable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The fair value of cash, receivables,
accounts payable and accrued liabilities approximate their book values because of the short-term nature of these instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Credit risk</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Credit risk
is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its payment obligations. The Company
has no material counterparties to its financial instruments with the exception of the financial institutions which hold its cash. The
Company manages its credit risk by ensuring that its cash is placed with a major financial institution with strong investment grade ratings
by a primary ratings agency. The Company’s receivables consist of goods and services due from customers and tax due from the Canadian
government.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Financial instrument risk exposure</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company
is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management
processes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Liquidity risk</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s
cash is invested in business accounts which are available on demand. The Company has raised additional capital during the six months
ended June 30, 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Interest rate risk</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company’s
bank account earns interest income at variable rates and the notes payable bear interest at the prime lending rate. The fair value of
its portfolio is relatively unaffected by changes in short-term interest rates. A 1% change in interest rates would have no significant
impact on profit or loss for the six month period ended June 30, 2023.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i>Foreign exchange risk</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Foreign currency exchange rate risk
is the risk that the fair value of financial instruments or future cash flows will fluctuate because of changes in foreign exchange rates.
The Company operates in Canada and the United States.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify">The Company was exposed to the following
foreign currency risk as at June 30, 2023 and December 31, 2022:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 32.5pt; text-align: justify; text-indent: -15.5pt"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>June 30,<br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>2023</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>December 31,<br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>2022</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; padding-left: 5.4pt">Cash</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2,202,570</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">245,858</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">Accounts payable and accrued liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(146,360</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(93,630</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,056,210</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">152,228</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify">As at June 30, 2023, with other variables
unchanged, , a +/- 10% change in the United States dollar to Canadian dollar exchange rate would impact the Company’s net loss by
$205,600 (December 31, 2022 - $15,200).</p>0.01The Company was exposed to the following
foreign currency risk as at June 30, 2023 and December 31, 2022:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>June 30,<br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>2023</b></p></td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>December 31,<br/> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>2022</b></p></td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; padding-left: 5.4pt">Cash</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">2,202,570</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">245,858</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 5.4pt">Accounts payable and accrued liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(146,360</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(93,630</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,056,210</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">152,228</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>2202570245858-146360-9363020562101522280.1020560015200<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><span style="text-transform: uppercase"><b>16.</b></span></td><td style="text-align: justify"><span style="text-transform: uppercase"><b>Management of
Capital</b></span></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 26.95pt; text-align: justify; text-indent: -26.95pt"><span style="text-transform: uppercase"><b> </b></span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company manages its capital structure
and makes adjustments to it, based on the funds available to the Company. Capital consists of items within equity (deficit). The Board
of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's
management to sustain future development of the business. The Company is not subject to any externally imposed capital requirements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company remains dependent on external
financing to fund its activities. In order to sustain its operations, the Company will spend its existing cash on hand and raise additional
amounts as needed until the business generates sufficient revenues to be self-sustaining. Management reviews its capital management approach
on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">In order to maximize ongoing corporate
development efforts, the Company does not pay out dividends. The Company’s investment policy is to keep its cash treasury invested
in certificates of deposit with major financial institutions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">There have been no changes to the
Company’s approach to capital management during the six month period ended June 30, 2023.</p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.25in"><span style="text-transform: uppercase"><b>17.</b></span></td><td style="text-align: justify"><span style="text-transform: uppercase"><b>GEOGRAPHICAL SEGMENTED INFORMATION </b></span></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">The Company is engaged in three business
activities, the live events business, which includes partnering with multiple professional sports franchises to drive in-stadium audience
engagement; a software licensing business creating a recurring revenue stream; and a business-to-business software platform that allows
video game publishers and developers to offer prize-based matches of their games to their players.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 26.95pt; text-align: justify"> </p>
<p style="margin-left: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify">Details of
identifiable assets by geographic segments are as follows:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Restricted<br/>
deposits</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Deposits</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Goodwill</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Property and<br/>
equipment</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Intangible<br/>
assets</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify">June 30, 2023</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: justify; padding-left: 5.4pt">Canada</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,672</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-156">-</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-157">-</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-158">-</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-159">-</div></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">USA</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-160">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">100,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-161">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">18,504</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,700,984</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 4pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">8,672</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">100,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-162">-</div></td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">18,504</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,700,984</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">June 30, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt">Canada</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">8,922</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-163">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-164">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-165">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-166">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">USA</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-167">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">100,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,580,660</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">268,642</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,387,325</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 4pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">8,922</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">100,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">6,580,660</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">268,642</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9,387,325</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>Details of
identifiable assets by geographic segments are as follows:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Restricted<br/>
deposits</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Deposits</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Goodwill</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Property and<br/>
equipment</td><td style="text-align: center; padding-bottom: 1.5pt"> </td><td style="text-align: center; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Intangible<br/>
assets</td><td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify">June 30, 2023</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 40%; text-align: justify; padding-left: 5.4pt">Canada</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">8,672</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-156">-</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-157">-</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-158">-</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-159">-</div></td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">USA</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-160">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">100,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-161">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">18,504</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,700,984</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 4pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">8,672</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">100,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-162">-</div></td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">18,504</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,700,984</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify">June 30, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt">Canada</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">8,922</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-163">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-164">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-165">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-166">-</div></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 5.4pt">USA</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-167">-</div></td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">100,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,580,660</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">268,642</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,387,325</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: justify; padding-bottom: 4pt; padding-left: 5.4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">8,922</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">100,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">6,580,660</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">268,642</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9,387,325</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>86721000001850457009848672100000185045700984892210000065806602686429387325892210000065806602686429387325<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.25in"><span style="text-transform: uppercase"><b>18.</b></span></td><td style="text-align: justify"><span style="text-transform: uppercase"><b>SUPPLEMENTAL CASH FLOW INFORMATION </b></span></td></tr></table>
<p style="margin-top: 0; margin-bottom: 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
2022</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold">Non-cash investing and financing activities:</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left; text-indent: -7.1pt; padding-left: 15.9pt">Shares issued to acquire Holdco shares</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-168"> -</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">11,441</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; text-indent: -7.1pt; padding-left: 15.9pt">Shares issued in connection with Xcite acquisition</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-169">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,196</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; text-indent: -15.9pt; padding-left: 15.9pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>SUPPLEMENTAL CASH FLOW INFORMATION<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,<br/>
2022</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: right">($)</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold">Non-cash investing and financing activities:</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left; text-indent: -7.1pt; padding-left: 15.9pt">Shares issued to acquire Holdco shares</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-168"> -</div></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">11,441</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; text-indent: -7.1pt; padding-left: 15.9pt">Shares issued in connection with Xcite acquisition</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-169">-</div></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,196</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; text-indent: -15.9pt; padding-left: 15.9pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right"> </td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>114414196<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>19.</b></td><td style="text-align: justify"><b>LEASE OBLIGATIONS AND COMMITMENTS</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-left: -0.25in; text-align: justify; text-indent: 0.5in"><b>Lease Liabilities</b></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">$</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">Lease liabilities recognized as of January 1, 2022</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">367,884</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Lease payments made</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(260,184</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Interest expense on lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">20,860</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Lease liabilities recognized as of January 1, 2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">128,560</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Lease payments made</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(131,576</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Interest expense on lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,016</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 4pt">At June 30, 2023 – non-current portion</td><td style="font-weight: bold; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">0</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="margin-left: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify">On August 1, 2015, the Company entered
into a cost sharing arrangement agreement for the provision of office space and various administrative services. In May of 2018, the Company
extended the cost sharing arrangement to July of 2022 at a monthly fee of CAD $7,000 plus GST per month.</p>
<p style="margin-left: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify">On September
6, 2017, the Company entered into a rental agreement for office space in Los Angeles, California. Under the terms of the agreement the
Company paid $17,324 per month commencing on October 1, 2017 until April 30, 2023.</p>
<p style="margin-left: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify">On April 30,
2023, the Company vacated its leased office space in Los Angeles, CA in accordance with the termination of the lease. As of June 30,
2023, the Company operates using a fully remote workforce and does not have any long-term lease agreements for office space or other
long-term assets. As such, the remaining right-of-use asset balance is $0.</p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2" style="text-align: center">$</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">Lease liabilities recognized as of January 1, 2022</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">367,884</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Lease payments made</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(260,184</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Interest expense on lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">20,860</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Lease liabilities recognized as of January 1, 2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">128,560</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Lease payments made</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(131,576</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Interest expense on lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,016</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: right"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 4pt">At June 30, 2023 – non-current portion</td><td style="font-weight: bold; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left"> </td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">0</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left"> </td></tr>
</table>367884-26018420860128560-13157630160007000Under the terms of the agreement the
Company paid $17,324 per month commencing on October 1, 2017 until April 30, 2023.0<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left"><b>20.</b></td><td style="text-align: justify"><b>SUBSEQUENT EVENTS</b></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25IN; text-align: justify">The Company has evaluated subsequent
events after the balance sheet date of June 30, 2023 through August 14, 2023, the date the condensed interim consolidated financial statements
were issued. Based upon its evaluation, management has determined that no subsequent events have occurred that would require recognition
in the accompanying consolidated financial statements or disclosure in the notes thereto, except as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left">1.</td><td style="text-align: justify">Subsequent to June 30, 2023, the Company extended CAD$670,000
in notes payable to director Brian Tingle.</td>
</tr></table>670000-0.19-0.34-1.95-4.20false--12-31Q220232023-06-300001701963Unit A warrant balance is 1,687,341 as of June 30, 2023; however, table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.Unit A warrant balance is 1,687,341 as of June 30, 2023; however, the table above reflects 15:1 post-consolidated common shares to be issued and exercise price upon the exercise of the warrants.EXCEL
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