Biotricity (BTCY) - 2020 Q4 - Annual Report

Part I Business Biotricity Inc. specializes in biometric data monitoring solutions, with its Bioflux MCT product targeting diagnostic and post-diagnostic care - The company focuses on biometric data monitoring solutions, with its initial product, Bioflux MCT, targeting the diagnostic mobile cardiac telemetry market[12] - Bioflux MCT was commercially launched in April 2018. After a limited market release, the company expanded its sales force in fiscal 2019, leading to double-digit sales growth and an over 80% re-order rate[13] - The company is developing new products, including Biotres (an ECG Holter solution) and advanced ECG analysis software, to expand its technology ecosystem[40][41] - Biotricity's business model is an 'insourcing' model, selling devices to physicians and earning recurring technology service fees from its back-office software solution, which differs from the traditional outsourcing model of competitors[37] Risk Factors The company faces significant business, industry, and securities risks, including limited operating history, intense competition, extensive regulation, and stock volatility - Business Risks: The company has a limited operating history, an accumulated deficit of $46.4 million as of March 31, 2020, and requires additional capital to fund operations and growth. The COVID-19 pandemic also poses a significant risk to operations[103][105][110][154] - Industry & Regulatory Risks: The business is subject to intense competition and extensive FDA regulation for its Class II medical devices. Failure to obtain or maintain regulatory approvals or adequate third-party reimbursement could materially harm the business[120][121][130][175] - Securities Risks: The company's common stock is quoted on the OTCQB market, has limited liquidity, and is subject to the SEC's 'penny stock' rules, which can hinder trading. The market price may be volatile[200][201][217] - Control Risk: The CEO, Mr. Al-Siddiq, beneficially owns approximately 23.06% of outstanding shares, giving him substantial influence over corporate actions and director elections[208] Unresolved Staff Comments The company reports no unresolved staff comments - Not applicable[224] Properties The company leases approximately 3,500 sq ft in Redwood City, CA, and 5,000 sq ft in Toronto, ON, for its executive offices - The company leases office space in Redwood City, CA (approx. 3,500 sq ft) and Toronto, ON (approx. 5,000 sq ft)[225] Legal Proceedings The company is not currently involved in any material legal or governmental regulatory proceedings - The company is not currently involved in any material legal proceedings[227] Mine Safety Disclosures This item is not applicable to the company - Not applicable[228] Part II Market for Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's common stock trades on OTCQB, with 33.4 million shares outstanding as of July 2020, and capital was raised through notes and preferred shares - The company's common stock is traded on the OTCQB under the symbol 'BTCY'[231] Common Stock Market Price Information | Period (FY 2020) | High ($) | Low ($) | | :--- | :--- | :--- | | Fourth Quarter | 2.25 | 0.661 | | Third Quarter | 0.849 | 0.2601 | | Second Quarter | 0.75 | 0.48 | | First Quarter | 0.98 | 0.535 | - As of July 10, 2020, there were 33,384,753 shares of common stock outstanding[234] - During fiscal year 2020, the company raised $3.1 million in promissory notes and short-term loans and issued 7,830 Series A preferred shares for $6.0 million in cash and conversion of $1.83 million in notes[240] Selected Financial Data This item is not applicable as the company is a smaller reporting company - Not applicable to a smaller reporting company[253] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) In FY2020, revenue grew to $1.42 million with a 256% increase, but operating expenses led to an $11.3 million net loss, requiring additional capital for operations Consolidated Statements of Operations Data | Metric | FY Ended Mar 31, 2020 | FY Ended Mar 31, 2019 | | :--- | :--- | :--- | | Revenue | $1,417,725 | $398,200 | | Gross Profit | $692,454 | $59,865 | | Total Operating Expenses | $11,623,138 | $8,651,930 | | General & Administrative | $10,259,903 | $7,342,739 | | Research & Development | $1,363,235 | $1,309,191 | | Net Loss | ($11,324,869) | ($8,592,065) | | Loss Per Share | ($0.315) | ($0.257) | - Revenue increased 256% year-over-year, from $398,200 in FY2019 to $1,417,725 in FY2020, driven by the full market release of the Bioflux device[289] - The company has an accumulated deficit of $46,364,364 as of March 31, 2020 and requires additional capital to fund its growth plans, estimating a need for approximately $8 million[299][304] - Net cash used in operating activities was $7.9 million in FY2020, compared to $5.2 million in FY2019. Net cash provided by financing activities was $8.9 million in FY2020, primarily from the issuance of preferred shares and promissory notes[307][308] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company is a smaller reporting company - Not applicable to a smaller reporting company[311] Financial Statements and Supplementary Data Audited financial statements and supplementary data for FY2020 and FY2019 are included, starting on page F-1 - Financial statements are provided starting on page F-1 of the report[312] Changes in and Disagreements with Accountants on Accounting and Financial Disclosures The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None reported[312] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2020 - Management concluded that disclosure controls and procedures were effective as of the end of the fiscal year[314] - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2020, based on the COSO framework[316] - No material changes to internal controls over financial reporting occurred during the fiscal year ended March 31, 2020[319] Other Information The company reports no other information for this item - None[321] Part III Directors and Executive Officers and Corporate Governance This section details the company's executive officers and directors, including their biographies and corporate governance structures like board committees and independence - The executive team is led by founder Waqaas Al-Siddiq as President, CEO, and Chairman, and John Ayanoglou as CFO[325][335] - The Board of Directors includes members with experience in finance, medical devices, and corporate governance, such as Dr. Norman M. Betts, Patricia Kennedy, David A. Rosa, and Steve Salmon[327][329][332][334] - The Board has established an audit committee and a compensation committee. Three directors, Dr. Betts, Ms. Kennedy, and Mr. Rosa, are considered independent under NASDAQ rules[349][353] Executive Compensation This section details executive compensation for FY2020 and FY2019, including salary, bonus, and option awards for the CEO and CFO, and compensation for non-employee directors Summary Compensation Table | Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Waqaas Al-Siddiq (CEO) | 2020 | 390,000 | 195,000 | 1,330,151 | 1,912,151 | | | 2019 | 360,000 | 150,000 | 1,235,040 | 1,775,248 | | John Ayanoglou (CFO) | 2020 | 200,000 | - | 75,272 | 275,272 | | | 2019 | 152,870 | - | 116,217 | 312,837 | - CEO Waqaas Al-Siddiq's employment agreement provides for a base salary of $390,000 and a potential bonus of up to 50% of his salary[341] - Non-employee directors receive compensation in the form of cash fees, stock awards, and option awards[347][348] Security Ownership of Certain Beneficial Owners and Management This section details beneficial ownership of common stock as of July 2020, with CEO Waqaas Al-Siddiq holding 23.06% and all directors and executive officers as a group holding 28.72% Security Ownership Table | Name of Beneficial Owner | % of Shares Beneficially Owned | | :--- | :--- | | Waqaas Al-Siddiq (CEO) | 23.06% | | Isa Khalid Abdulla Al-Khalifa | 7.57% | | All directors and executive officers as a group (6 persons) | 28.72% | Certain Relationships and Related Transactions, and Director Independence The company reports no disclosable related party transactions and confirms the independence of three directors under NASDAQ rules - The company reported no disclosable related party transactions[365] - Directors Dr. Betts, Ms. Kennedy, and Mr. Rosa are determined to be independent[353] Principal Accountant Fees and Services This section details fees paid to the principal accountant for FY2020 and FY2019, primarily for audit services, with all services pre-approved by the Board Fees Paid to Principal Accountant | Fee Category | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Audit Fees | 72,600 | 72,775 | | Audit-Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | - | - | | Total Fees | 72,600 | 72,775 | Part IV Exhibits, Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including corporate governance documents, securities agreements, material contracts, and SOX certifications - Lists key corporate documents, including Articles of Incorporation (Exhibit 3.1) and By-Laws (Exhibit 3.2)[371] - Includes forms of various financing instruments, such as convertible notes and warrants (Exhibits 4.3 - 4.12)[371] - Contains material agreements, such as the 2016 Equity Incentive Plan (Exhibit 10.5) and the CEO's Employment Agreement (Exhibit 10.9)[371][372] - Includes required CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act (Exhibits 31.1, 31.2, 32.1, 32.2)[372] Consolidated Financial Statements Report of Independent Registered Public Accounting Firm The independent auditor issued an unqualified opinion on the financial statements for FY2020 and FY2019, noting conformity with U.S. GAAP and the adoption of ASC 842 - The auditor issued an unqualified opinion, stating the financial statements are fairly presented in accordance with U.S. GAAP[381] - The report highlights the adoption of the new lease accounting standard, ASC 842, as of April 1, 2019[382] Consolidated Financial Statements Tables The consolidated financial statements show $2.0 million in total assets, a $3.0 million stockholders' deficiency, $1.42 million revenue, and an $11.3 million net loss for FY2020 Consolidated Balance Sheet | Balance Sheet (As of March 31, 2020) | Amount ($) | | :--- | :--- | | Total Current Assets | 1,658,829 | | Total Assets | 2,004,416 | | Total Current Liabilities | 3,803,021 | | Total Liabilities | 5,004,809 | | Total Stockholders' Deficiency | (3,000,393) | Consolidated Statement of Operations | Statement of Operations (Year Ended March 31, 2020) | Amount ($) | | :--- | :--- | | Revenue | 1,417,725 | | Gross Profit | 692,454 | | Total Operating Expenses | 11,623,138 | | Net Loss Attributed to Common Stockholders | (11,324,869) | Consolidated Statement of Cash Flows | Statement of Cash Flows (Year Ended March 31, 2020) | Amount ($) | | :--- | :--- | | Net cash used in operating activities | (7,862,779) | | Net cash provided by financing activities | 8,879,168 | | Net increase in cash | 1,016,388 | | Cash, end of year | 949,848 | Notes to Consolidated Financial Statements The notes detail liquidity challenges, recurring losses, and reliance on financing, including $3.1 million from notes and $6.0 million from preferred stock in FY2020, and the adoption of ASC 842 - The company has incurred recurring losses, with an accumulated deficit of $46.4 million and a working capital deficiency of $2.1 million as of March 31, 2020, indicating a reliance on external financing to continue operations[405] - In FY2020, the company raised $3.1 million in promissory notes and short-term loans. It also issued 7,830 Series A preferred shares for $6.0 million in cash and the conversion of $1.83 million in notes[405][440][456] - The company adopted the new lease accounting standard ASC 842 on April 1, 2019, recognizing a right-of-use asset of $264,472 and a lease obligation of $270,085 as of March 31, 2020[492][494] - Subsequent to year-end, in April and May 2020, the company received a $1.2 million Paycheck Protection Program (PPP) loan and a $379,000 Emergency Injury Disaster Loan (EIDL) under the CARES Act[497]