Biotricity (BTCY) - 2021 Q4 - Annual Report

PART I ITEM 1. BUSINESS Biotricity Inc. is a medical technology company specializing in biometric data monitoring solutions, particularly in the diagnostic mobile cardiac telemetry (MCT) market with its FDA-approved Bioflux® technology - Biotricity Inc. is a medical technology company focused on biometric data monitoring solutions, with an initial focus on the diagnostic mobile cardiac telemetry (MCT) market[11] - The company's FDA-approved Bioflux® MCT technology, comprising a monitoring device and software, was made available for limited release in April 2018 and expanded commercialization in fiscal year ended March 30, 2020[12] - Biotricity operates on an insourcing business model, selling Bioflux devices to physicians and earning recurring technology service fees for the use of its back-office software, which reduces operating overhead and enhances market penetration[12][33] - The company is developing several ancillary technologies, including advanced ECG analysis software, the Biotres patch solution (Holter monitoring), and Bioflux® 2.0, with plans for further FDA clearances[14] - Biotricity is developing telemedicine technology with real-time streaming capabilities for medical devices, aiming to align with Bioflux and facilitate remote cardiac diagnostics and patient care[15] - The global ECG market is growing at a CAGR of 5.6%, driven by an aging population, increased chronic diseases, and improved diagnostic technology. The US market accounted for approximately 27% of the global ECG market as of 2015[18][23] - MCT is preferred by physicians over Holter/Extended Holter and Event Loop solutions due to its real-time continuous monitoring, arrhythmia detection, and cellular communication, which enhances patient safety and reduces physician liability[26][27] - The Bioflux MCT solution offers a complete, turn-key system with a GSM-enabled device, ECG reporting software, and physician-based monitoring, providing a revenue model for physicians with recurring reimbursements[33][34] - Biotricity received 510(k) clearance from the FDA for its Bioflux software in October 2016 and for its Bioflux device in December 2017, enabling its entry into the U.S. market[39] - The company plans to expand its technology platform into future markets such as blood pressure, diabetes, sleep apnea, chronic pain, and fetal monitoring, with Bioheart focusing on preventative care and Bionatal on remote fetal cardiac monitoring[44][45][46][47] - Biotricity faces competition from six main players in the MCT market, including BioTelemetry (acquired by Philips) and Preventice (acquired by Boston Scientific), which primarily use an outsourced business model. Biotricity differentiates itself with an insourced, usage-based model and a device with a screen for better patient feedback[52][53][54][55] - The company primarily relies on trade secret protection for its proprietary information and has filed an industrial design patent in Canada, with plans for additional patents[59][62] Research and Development Costs | Fiscal Year Ended | R&D Costs ($) | |:------------------|:--------------| | March 31, 2021 | 2.1 million | | March 31, 2020 | 1.4 million | - Biotricity's products are subject to extensive regulation by the U.S. FDA and other governmental agencies, with its custom software and hardware classified as Class II medical devices, requiring 510(k) premarket clearance[67][73][84] - The company assembles devices at its Redwood City, California facility and uses Providence Enterprises as an FDA-qualified contract manufacturer, while also relying on a limited number of principal suppliers for components[91][92][93] Employee and Consultant Count (as of report date) | Category | Count | |:-----------|:------| | Employees | 44 | | Consultants| 20 | ITEM 1A. RISK FACTORS The company faces significant risks due to its limited operating history, unproven profitability, and dependence on physician adoption and third-party reimbursement for its cardiac monitoring solutions - The company has a limited operating history and has not been profitable, with an accumulated deficit of $62,817,688 as of March 31, 2021, making future profitability uncertain[100][104] - Success is dependent on convincing physicians to utilize its cardiac monitoring solution, which is influenced by factors like sufficient and timely reimbursement, education on MCT benefits, product reliability, and competitive pricing[111][112] - The company is subject to extensive governmental regulations (FDA, Health Canada) for manufacturing, labeling, and marketing, with potential for reclassification of Class II devices to Class III, significantly increasing costs and delays[114][115][116] - The ability of customers to obtain and maintain adequate third-party reimbursement for services using Biotricity's products is critical, as commercial payors may consider the technology experimental, leading to refusal of reimbursement[124][125][128][130][131] - Product defects, interruptions in telecommunications/data services, and potential product liability claims could adversely affect operations, reputation, and financial results[137][138][139][140][143] - Additional capital of approximately $15 million is required to fund operations, sales expansion, and product development, with no assurance that such funds will be available on acceptable terms, potentially leading to dilution for current stockholders[145][146][147] - The medical technology industry is highly competitive and subject to rapid technological change, with larger competitors possessing greater financial and marketing resources[163][164] - The company relies on trade secrets and intellectual property protection, but there's a risk of misappropriation, infringement claims, or inability to obtain/enforce patents, which could harm competitiveness[170][171][173][174] - Compliance with federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, Stark law, False Claims Act) and privacy regulations (HIPAA) is critical, with potential for substantial penalties if violations occur[178][179][181][182][183] - The common stock trades on the OTCQB market, which has limited liquidity and is subject to price volatility. There is no assurance of NASDAQ listing, and the stock is subject to SEC's 'penny stock' rules, which can hinder trading[188][189][190][205][206][207] - The CEO, Waqaas Al-Siddiq, beneficially owns approximately 20.69% of outstanding shares, giving him substantial influence over corporate decisions and potentially creating conflicts of interest[195][196] ITEM 1B. UNRESOLVED STAFF COMMENTS The company has no unresolved staff comments to report - Not applicable[212] ITEM 2. PROPERTIES Biotricity Inc. operates from leased executive offices in Redwood City, California (3,500 sq ft) and Toronto, Canada (5,000 sq ft) - The company's principal executive office is a leased 3,500 square feet premises at 275 Shoreline Drive, Redwood City, California[213] - Additional executive offices are leased at 75 International Blvd., Suite 300, Toronto, ON Canada M9W 6L9, comprising approximately 5,000 square feet[213] - Biotricity does not own any real estate and considers its current leased facilities adequate for its needs, including development work[213] ITEM 3. LEGAL PROCEEDINGS Biotricity Inc. is not currently involved in any legal or governmental regulatory proceedings that would have a material adverse effect on the company or its business - The company is not currently a party to any legal or governmental regulatory proceedings[215] - There are no pending or potential legal or governmental regulatory proceedings proposed to be initiated against the company that would have a material adverse effect[215] ITEM 4. MINE SAFETY DISCLOSURES. This item is not applicable to Biotricity Inc. - Not applicable[216] PART II ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Biotricity's common stock trades on the OTCQB marketplace under the symbol "BTCY" with a closing price of $3.95 per share as of June 18, 2021, with 37,850,064 common shares and 1,466,718 exchangeable shares outstanding - Biotricity's common stock is traded on the OTCQB marketplace under the symbol "BTCY" since February 1, 2016[219] Common Stock and Shareholder Information (as of June 18, 2021) | Category | Count | |:--------------------------|:-------------| | Common Shares Outstanding | 37,850,064 | | Exchangeable Shares | 1,466,718 | | Shareholders of Record | ~132 | | Special Voting Preferred Stock | 1 | | Series A Preferred Shares | 8,045 | - Series A preferred shares earn dividends at a rate of 12% per annum. The company does not anticipate paying cash dividends on common stock in the foreseeable future, intending to retain earnings for growth and operations[222][210] Common Stock Issuances (Fiscal Year Ended March 31, 2021) | Purpose | Shares Issued | Fair Value ($) | |:--------------------------------------|:--------------|:---------------| | Consultant Compensation | 1,900,042 | 2.5 million | | Convertible Note Conversion | 733,085 | 1.0 million | | Obligation for Future Issuance | 18,402 | - | | Restricted Shares to Directors | 250,000 | 242,500 | | Exchange of Exchangeable Shares | 898,084 | Non-cash | - The company adopted an equity incentive plan effective February 2, 2016, authorizing up to 5,443,761 shares of common stock for issuance, with an automatic annual increase for up to 10 years, not exceeding 15% of outstanding common and exchangeable shares[227][228] Equity Compensation Plan Information (as of March 31, 2021) | Category | Number of Securities Underlying Warrants and Rights | Weighted Average Exercise Price ($) | |:----------------------------------------------------------------------|:----------------------------------------------------|:------------------------------------| | Warrants granted to Directors and Officers | 858,806 | 1.485 | | Other Warrant Compensation (Brokers, Placement Agents, Contractors, Consultants, Investors): | | | | - Broker and PA | 1,258,495 | 1.848 | | - Consultant | 1,271,749 | 1.474 | | - Convertible Note | 7,454,152 | 1.302 | | Total | 17,847,458 | - | ITEM 6. SELECTED FINANCIAL DATA This section is not applicable to Biotricity Inc. as it is a smaller reporting company - Not applicable to a smaller reporting company[238] ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Biotricity Inc. is an early-stage healthcare technology company focused on remote patient monitoring solutions, particularly its Bioflux MCT device, experiencing significant revenue growth in FY2021 but incurring substantial net losses and a working capital deficiency - Biotricity is a healthcare technology company developing software and hardware solutions for chronic health issues, with its first product being the Bioflux wearable medical cardiac solution for remote patient monitoring[243] - Revenue is recognized when promised goods or services (device sales and technology fees) are transferred to customers, with technology fees recognized when a patient's cardiac study is complete[244][245] - Inventory is valued at the lower of cost or net realizable value, with write-downs recorded for obsolete or excess inventory[247] - The company uses estimates and assumptions for financial reporting, particularly for deferred income tax assets, derivatives, convertible promissory notes, stock options, and going concern assessment[248] - Fair value measurements for financial instruments are categorized into Level 1, Level 2, and Level 3 based on observability of inputs, with cash classified as Level 1 and derivative liabilities as Level 3[254][255][257] - The company adopted ASC 842 for leases, recognizing right-of-use assets and lease liabilities on the balance sheet for most leases[259][260] - Research and development costs are expensed as incurred, with milestone payments to third parties expensed before regulatory approval and capitalized thereafter[262] - Stock-based compensation is recognized based on fair values, net of estimated forfeitures, over the requisite service period[263] - The company adopted ASU 2017-11 for down round features of warrants, treating them as equity, and accounts for convertible notes and embedded conversion options under ASC 815 and ASC 470-20[266] Key Financial Performance (Fiscal Years Ended March 31) | Metric | FY2021 ($) | FY2020 ($) | Change (%) | |:------------------------------------------|:---------------|:---------------|:-----------| | Revenue | 3,384,767 | 1,417,725 | 139% | | Cost of Revenue | 1,871,125 | 931,951 | 101% | | Gross Profit | 1,513,642 | 485,774 | 212% | | General and Administrative Expenses | 12,806,306 | 10,053,223 | 27% | | Research and Development Expenses | 2,059,130 | 1,363,235 | 51% | | Total Operating Expenses | 14,865,436 | 11,416,458 | 30% | | Accretion and Amortization Expenses | 2,481,155 | 92,416 | 2584% | | Change in Fair Value of Derivative Liabilities | (408,872) (gain)| 60,781 (expense)| - | | Net Loss Attributable to Common Stockholders | (16,453,324) | (11,324,870) | 45% | | Loss Per Share (Basic and Diluted) | (0.438) | (0.315) | 39% | | Translation Adjustment | 223,121 (gain) | (102,344) (loss)| - | - The company is in commercialization mode for Bioflux and continues product development, incurring recurring losses and an accumulated deficit of $62,817,688 and a working capital deficiency of $6,168,700 as of March 31, 2021[282][284] - Biotricity requires approximately $15 million in additional funds to support its operating plan, including sales team growth, device orders, and further Bioflux development, and anticipates needing more capital for accelerated growth[287][288] Cash Flow Activities (Fiscal Years Ended March 31) | Cash Flow Category | FY2021 ($) | FY2020 ($) | |:--------------------------------|:---------------|:---------------| | Net Cash Used in Operating Activities | (11,080,831) | (7,862,779) | | Net Cash Provided by Financing Activities | 12,203,480 | 8,879,169 | | Net Cash Used in Investing Activities | 0 | 0 | | Cash, End of Period | 2,201,562 | 949,848 | - The company has no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition[293] ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This item is not applicable to Biotricity Inc. as it is a smaller reporting company - Not applicable to a smaller reporting company[294] ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The company's financial statements and corresponding notes are included in the report starting on page F-1 - Financial statements and supplementary data are found beginning on page F-1 of the Annual Report on Form 10-K[295] ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES There are no changes in or disagreements with accountants on accounting and financial disclosures to report - None[295] ITEM 9A. CONTROLS AND PROCEDURES Biotricity's management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, providing reasonable assurance for timely and accurate reporting - As of March 31, 2021, the company's Chief Executive Officer and principal financial officer concluded that disclosure controls and procedures were effective in ensuring material information is accumulated, communicated, recorded, processed, summarized, and reported timely[295][297] - Management is responsible for establishing and maintaining adequate internal control over financial reporting and concluded that it was effective as of March 31, 2021, based on the COSO framework[298][299] - As a smaller reporting company and an Emerging Growth Company (EGC), Biotricity is exempt from the requirement for an independent registered public accounting firm's attestation report on internal control over financial reporting[300] - No material changes in internal controls over financial reporting occurred during the fiscal year ended March 31, 2021[302] ITEM 9B. OTHER INFORMATION There is no other information to report under this item - None[304] PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Biotricity's executive officers include Waqaas Al-Siddiq (President, CEO, Chairman) and John Ayanoglou (CFO), supported by a board of directors comprising Dr. Norman M. Betts, Patricia Kennedy, David A. Rosa, and Steve Salmon Executive Officers and Directors | Name | Age | Position | |:-----------------|:----|:------------------------------------------| | Waqaas Al-Siddiq | 35 | President, CEO, Chairman of the Board | | Dr. Norman M. Betts | 65 | Director | | Patricia Kennedy | 60 | Director | | David A. Rosa | 55 | Director | | Steve Salmon | 60 | Director | | John Ayanoglou | 55 | Chief Financial Officer | - Waqaas Al-Siddiq is the founder of iMedical and has served as Chairman and CEO since July 2014, bringing experience in remote monitoring and capital raising[308] - John Ayanoglou has served as CFO since October 2017, with prior CFO experience in publicly-listed companies and a background in financial services[314] - Patricia J. Kennedy filed a Form 4 late, reporting the issuance of 125,000 shares of common stock for board services[316] - The Board of Directors has three standing committees: Audit, Compensation, and Nominating and Corporate Governance, with members elected annually[332] - The Audit Committee is responsible for selecting independent auditors, ensuring their independence, reviewing financial results, and overseeing risk assessment. It consists of Norman Betts (Chairman), David A. Rosa, and Patricia Kennedy, all deemed financially literate and independent[333][334][335] - The Compensation Committee reviews and approves executive and director compensation, administers equity incentive plans, and establishes compensation policies. It consists of David Rosa (Chairman) and Steve Salmon[336][337] - The Nominating and Corporate Governance Committee identifies and screens director candidates, recommends nominees, and oversees corporate governance practices. It consists of David Rosa (Chairman) and Patricia Kennedy[338][339] - Biotricity adopted a Code of Business Conduct and Ethics on April 12, 2016, applicable to its principal executive, financial, and accounting officers[340] - Dr. Betts, Steve Salmon, Ms. Kennedy, and Mr. Rosa are considered independent directors based on NASDAQ's definition[343] ITEM 11. EXECUTIVE COMPENSATION Executive compensation for Waqaas Al-Siddiq (CEO) and John Ayanoglou (CFO) includes base salary, bonuses, and significant option/warrant awards, with Mr. Al-Siddiq's total compensation for FY2021 at $891,286 and Mr. Ayanoglou's at $422,677 Summary Executive Compensation (Fiscal Years Ended March 31) | Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($) | Other Compensation ($) | Total ($) | |:----------------------------|:------------|:-----------|:----------|:------------------|:-----------------------|:----------| | Waqaas Al-Siddiq, CEO | 2021 | 390,000 | 195,000 | 294,286 | 12,000 | 891,286 | | | 2020 | 390,000 | 195,000 | 1,330,151 | 12,000 | 1,912,151 | | John Ayanoglou, CFO | 2021 | 225,000 | - | 194,677 | 3,000 | 422,677 | | | 2020 | 200,000 | - | 75,272 | - | 275,272 | Outstanding Equity Awards for Named Executive Officers (as of March 31, 2021) | Name | Number of Securities Underlying Options Exercisable () | Number of Securities Underlying Options Unexercisable () | Option Exercise Price ($) | Option Expiration Date | |:-----------------|:--------------------------------------------------------|:----------------------------------------------------------|:--------------------------|:-----------------------| | Waqaas Al-Siddiq | 4,149,988 | 1,050,000 | 1.05 to 1.44 | July 2026 to April 2030 | | John Ayanoglou | 838,806 | - | 0.48 to 3.50 | April 2027 to March 2031 | - Waqaas Al-Siddiq's employment agreement, effective April 10, 2020, sets his annual salary at $390,000, with eligibility for a cash and/or equity bonus of up to 50% of his salary. He is entitled to 12 months of severance if terminated without just cause or for good reason[323] - John Ayanoglou's initial base salary as CFO (effective October 27, 2017) was $200,000, increasing to $300,000 for calendar 2021. He receives warrants to purchase common stock annually, vesting monthly over 12 months[324] Non-Employee Director Compensation (Fiscal Years Ended March 31) | Name | Fiscal Year | Cash Paid ($) | Stock Awards ($) | Other Compensation ($) | Total ($) | |:-----------------|:------------|:--------------|:-----------------|:-----------------------|:----------| | Dr. Norman M. Betts | 2021 | 24,000 | 125,000 | - | 149,000 | | | 2020 | 24,000 | 87,500 | - | 111,500 | | Patricia Kennedy | 2021 | 24,000 | 125,000 | - | 149,000 | | | 2020 | 24,000 | 87,500 | - | 111,500 | | David A. Rosa | 2021 | 36,000 | 289,486 | - | 257,000 | | | 2020 | 24,000 | 87,500 | - | 119,500 | | Steve Salmon | 2021 | 24,000 | - | - | 24,000 | | | 2020 | - | - | - | - | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of June 18, 2021, Waqaas Al-Siddiq, the CEO, is the largest beneficial owner with 20.69% of common stock, including options, while directors and executive officers as a group collectively own 25.64% Beneficial Ownership of Common Stock (as of June 18, 2021) | Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | % of Shares of Common Stock Beneficially Owned | |:------------------------------|:------------------------------------------|:-----------------------------------------------| | Waqaas Al-Siddiq | 8,949,810 | 20.69% | | Isa Khalid Abdulla Al-Khalifa | 2,814,594 | 7.21% | | Riazul Huda | 1,806,315 | 4.63% | | John Ayanoglou | 930,473 | 2.38% | | Norman M. Betts | 352,500 | * | | Patricia Kennedy | 263,021 | * | | David A. Rosa | 595,147 | * | | Steve Salmon | - | * | | All directors and executive officers as a group (6 persons) | 11,090,951 | 25.64% | *Less than 1% - The table assumes 39,014,942 shares outstanding as of June 18, 2021, including common stock and exchangeable share common stock equivalents[347] - Waqaas Al-Siddiq's ownership includes options to purchase 4,237,474 shares exercisable within 60 days[348] ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE There are no certain relationships and related transactions to report, with director independence discussed in Item 10 - None[352] ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Biotricity paid $79,730 in audit fees for the fiscal year ended March 31, 2021, an increase from $72,600 in the prior year, with all audit and permissible non-audit services pre-approved by the Board Principal Accountant Fees (Fiscal Years Ended March 31) | Fee Category | FY2021 ($) | FY2020 ($) | |:-------------|:-----------|:-----------| | Audit Fees | 79,730 | 72,600 | | Total Fees | 79,730 | 72,600 | - Audit fees consist of audit and review services, consents, and review of SEC-filed documents[354] - The Board pre-approves all audit and permitted non-audit services by the independent auditors, including annual approval of scope and fee estimates for year-end audits[355] - To date, the company has not engaged its auditors for any non-audit related services[355] PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES This section lists all exhibits and financial statement schedules filed as part of the 10-K report, including organizational documents, various agreements, forms of securities, and corporate governance documents - The exhibits include organizational documents such as Amended and Restated Articles of Incorporation and By-Laws[358] - Various agreements are listed, including the Exchange Agreement, Voting and Exchange Trust Agreement, Support Agreement, and Software Development and Services Agreement[358][359] - Forms of securities like Secured Convertible Debenture, Warrants, Convertible Promissory Notes, and Subscription Agreements are included[358][359] - Corporate governance documents such as the 2016 Equity Incentive Plan, Employment Agreements, Code of Business Conduct and Ethics, and committee charters (Audit, Compensation, Nominating and Corporate Governance) are part of the exhibits[358][359] SIGNATURES The 10-K report was duly signed on June 21, 2021, by Biotricity Inc.'s Chief Executive Officer and President, Waqaas Al-Siddiq, and Chief Financial Officer, John Ayanoglou, along with the directors - The report was signed on June 21, 2021[362][364] - Signatories include Waqaas Al-Siddiq (Chairman, President, and Chief Executive Officer) and John Ayanoglou (Chief Financial Officer), as well as directors Norman M. Betts, David A. Rosa, Patricia Kennedy, and Steve Salmon[363][364] Consolidated Financial Statements Report of Independent Registered Public Accounting Firm SRCO Professional Corporation issued an unqualified opinion on Biotricity Inc.'s consolidated financial statements for FY2021 and FY2020, affirming fair presentation in accordance with US GAAP, with derivative liabilities valuation identified as a critical audit matter - SRCO Professional Corporation issued an unqualified opinion on Biotricity Inc.'s consolidated financial statements for the years ended March 31, 2021 and 2020, affirming fair presentation in accordance with US GAAP[367] - The valuation of derivative liabilities was identified as a critical audit matter due to the use of complex models and non-observable inputs requiring management's estimation and judgment[373] - The audit procedures for derivative liabilities included reviewing underlying instrument terms, testing management's valuation process, evaluating methodologies, and assessing the reasonableness of assumptions and inputs[374] Consolidated Balance Sheets As of March 31, 2021, Biotricity Inc. reported total assets of $4.44 million, an increase from $2.00 million in 2020, while total liabilities significantly increased to $11.27 million from $5.00 million, and stockholders' deficiency worsened to $(6.83) million from $(3.00) million Consolidated Balance Sheet Highlights (as of March 31) | Category | 2021 ($) | 2020 ($) | Change ($) | Change (%) | |:-------------------------------|:-------------|:-------------|:-------------|:-----------| | CURRENT ASSETS | | | | | | Cash | 2,201,562 | 949,848 | 1,251,714 | 131.7% | | Accounts receivable, net | 1,520,836 | 486,187 | 1,034,649 | 212.8% | | Inventory | 272,493 | 85,720 | 186,773 | 217.9% | | Total current assets | 4,321,555 | 1,658,829 | 2,662,726 | 160.5% | | TOTAL ASSETS | 4,438,033| 2,004,416| 2,433,617| 121.4% | | CURRENT LIABILITIES | | | | | | Accounts payable and accrued liabilities | 2,520,124 | 1,521,689 | 998,435 | 65.6% | | Convertible promissory notes and short term loans | 4,278,018 | 2,068,302 | 2,209,716 | 106.8% | | Derivative liabilities | 3,633,856 | 0 | 3,633,856 | - | | Total current liabilities | 10,490,255 | 3,803,021 | 6,687,234 | 175.8% | | TOTAL LIABILITIES | 11,271,197| 5,004,809| 6,266,388| 125.2% | | TOTAL STOCKHOLDERS' DEFICIENCY | (6,833,164)| (3,000,393)| (3,832,771)| 127.7% | | Accumulated deficit | (62,817,688) | (46,364,364) | (16,453,324) | 35.5% | Consolidated Statements of Operations and Comprehensive Loss For FY2021, Biotricity Inc. reported a significant increase in revenue to $3.38 million, up 139% from $1.42 million in 2020, but total operating expenses also rose to $14.87 million, leading to a net loss of $(16.45) million, a 45% increase from the prior year Consolidated Statements of Operations and Comprehensive Loss (Fiscal Years Ended March 31) | Metric | FY2021 ($) | FY2020 ($) | Change ($) | Change (%) | |:------------------------------------------|:---------------|:---------------|:-------------|:-----------| | Revenue | 3,384,767 | 1,417,725 | 1,967,042 | 138.7% | | Cost of Revenue | 1,871,125 | 931,951 | 939,174 | 100.8% | | Gross profit | 1,513,642 | 485,774 | 1,027,868 | 211.6% | | General and administrative expenses | 12,806,306 | 10,053,223 | 2,753,083 | 27.4% | | Research and development expenses | 2,059,130 | 1,363,235 | 695,895 | 51.0% | | Total operating expenses | 14,865,436 | 11,416,458 | 3,448,978 | 30.2% | | Accretion and amortization expenses | 2,481,155 | 92,416 | 2,388,739 | 2584.8% | | Change in fair value of derivative liabilities | (408,872) | 60,781 | (469,653) | - | | Net Loss Attributable to Common Stockholders | (16,453,324) | (11,324,870) | (5,128,454) | 45.3% | | Loss Per Share, Basic and Diluted | (0.438) | (0.315) | (0.123) | 39.0% | | Weighted Average Number of Common Shares Outstanding | 37,522,978 | 35,956,180 | 1,566,798 | 4.4% | Consolidated Statements of Stockholders' Deficiency Biotricity Inc.'s stockholders' deficiency significantly increased from $(3.00) million in March 2020 to $(6.83) million in March 2021, primarily due to a net loss of $(15.49) million and preferred stock dividends of $(0.96) million Consolidated Statements of Stockholders' Deficiency (Fiscal Years Ended March 31) | Category | Balance, March 31, 2019 ($) | Balance, March 31, 2020 ($) | Balance, March 31, 2021 ($) | |:------------------------------------------|:----------------------------|:----------------------------|:----------------------------| | Preferred Stock | 1 | 9 | 9 | | Common Stock and Exchangeable Shares | 35,362 | 36,382 | 39,015 | | Shares to be Issued | 91,498 | 169,490 | 280,960 | | Additional Paid-in Capital | 33,889,916 | 44,015,397 | 56,298,726 | | Accumulated Other Comprehensive (Loss) Income | (754,963) | (857,307) | (634,186) | | Accumulated Deficit | (35,039,495) | (46,364,364) | (62,817,688) | | Total Stockholders' Deficiency | (1,777,681) | (3,000,393) | (6,833,164) | - Net loss before preferred stock dividends for FY2021 was $(15,491,176), contributing significantly to the accumulated deficit[381] - Preferred stock dividends of $(962,148) were recorded in FY2021[381] - Additional paid-in capital increased due to issuance of investor warrants ($5,758,572), private placement warrants ($1,258,878), and common shares for services and exercise of warrants ($2,485,493)[381] Consolidated Statements of Cash Flows For FY2021, Biotricity Inc. experienced a net cash outflow from operating activities of $(11.08) million, offset by a significant increase in net cash provided by financing activities to $12.20 million, ending the period with $2.20 million in cash Consolidated Statements of Cash Flows (Fiscal Years Ended March 31) | Cash Flow Category | FY2021 ($) | FY2020 ($) | Change ($) | Change (%) | |:----------------------------------------|:---------------|:---------------|:-------------|:-----------| | Net Cash Used in Operating Activities | (11,080,831) | (7,862,779) | (3,218,052) | 40.9% | | Net Cash Provided by Financing Activities | 12,203,480 | 8,879,169 | 3,324,311 | 37.4% | | Net Cash Used in Investing Activities | 0 | 0 | 0 | 0.0% | | Effect of Foreign Currency Translation | 129,065 | (130,189) | 259,254 | - | | Net Decrease in Cash During the Period | 1,190,590 | 1,016,389 | 174,201 | 17.1% | | Cash, End of Period | 2,201,562 | 949,848 | 1,251,714 | 131.8% | - Operating cash outflow was primarily due to selling expenses, research, product development, business development, marketing, and general operations[290] - Financing cash inflow was mainly from the issuance of $11.4 million (net proceeds) in convertible and promissory notes, and $1.6 million from federally guaranteed loans[291] - Interest paid was $204,161 in FY2021, down from $335,352 in FY2020[384] Notes to Consolidated Financial Statements 1. NATURE OF OPERATIONS Biotricity Inc., incorporated in Nevada in 2012, and its wholly-owned Canadian subsidiary iMedical Innovations Inc., are engaged in research and development within the remote monitoring segment of preventative care, focusing on building technology for an existing healthcare market - Biotricity Inc. was incorporated on August 29, 2012, in Nevada, and iMedical Innovations Inc. became a wholly-owned subsidiary through a reverse take-over on February 2, 2016[386] - Both entities focus on research and development in remote monitoring for preventative care, aiming to build technology for an existing healthcare market with a commercialization pathway[387] 2. BASIS OF PRESENTATION, MEASUREMENT AND CONSOLIDATION The consolidated financial statements are prepared in accordance with US GAAP and expressed in USD, including accounts of wholly-owned subsidiaries with intercompany transactions eliminated - Consolidated financial statements are prepared in accordance with US GAAP and expressed in United States dollars, including wholly-owned subsidiaries with eliminated intercompany accounts[388] - The company is an emerging growth entity in early commercialization, with recurring losses, an accumulated deficit of $62,817,688, and a working capital deficiency of $6,168,700 as of March 31, 2021[391] - Management is pursuing funding sources (e.g., private placements, government loans) to support operations and alleviate substantial doubt about its ability to meet obligations for at least one year[391] - The COVID-19 pandemic's ultimate impact on operations remains unknown but is anticipated to have a material adverse impact on the business, financial condition, and results of operations[395][396] 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Biotricity's significant accounting policies include revenue recognition under ASC 606 for device sales and technology fees, inventory valuation, and the use of estimates for financial statement preparation, along with specific accounting for EPS, foreign currency, receivables, fair value, leases, income taxes, R&D, stock-based compensation, and convertible notes - Revenue is recognized under ASC 606 when promised goods or services (Bioflux device sales and technology fees) are transferred to customers, with technology fees recognized upon completion of a patient's cardiac study[397][398][399] - Inventory is stated at the lower of cost or net realizable value, with write-downs recorded for obsolete or excess inventory[401] - The preparation of financial statements requires management to make estimates and assumptions, particularly for deferred income tax assets, derivatives, convertible promissory notes, and stock options[402] - Basic and diluted earnings per share are calculated in accordance with ASC Topic 260-10, excluding anti-dilutive shares[403] - Foreign currency transactions are translated into the functional currency at prevailing exchange rates, with monetary assets and liabilities translated at balance sheet date rates[406] - Accounts receivable are reported net of an estimated allowance for doubtful accounts, based on historical experience and risk assessment[407] - Fair value measurements are defined by ASC 820 and categorized into Level 1 (quoted market prices), Level 2 (similar assets in active markets), and Level 3 (unobservable inputs)[408][409] - Operating leases are accounted for under ASC 842, recognizing right-of-use assets and corresponding lease liabilities based on the present value of future minimum lease payments[413][414] - Income taxes are accounted for under ASC 740, recognizing deferred tax assets and liabilities for timing differences, with a valuation allowance established when necessary[415] - Research and development costs are charged to operations as incurred, with milestone payments expensed before regulatory approval and capitalized thereafter[416] - Stock-based payments are recognized in the statement of operations based on their fair values, net of estimated forfeitures, over the vesting period (ASC 718)[417][418] - The company adopted ASU 2017-11 for down round features of warrants, treating them as equity. Convertible notes and embedded conversion options are accounted for under ASC 815 and ASC 470-20[420] - The company is evaluating the impact of recently issued accounting pronouncements, including ASU 2016-13 (Credit Losses), ASU 2019-07 (SEC Sections Updates), ASU 2019-12 (Income Taxes), ASU 2030-20 (Financial Instruments Improvements), and ASU 2021-04 (Equity-Classified Written Call Options)[421][422][423][424][425] 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES As of March 31, 2021, Biotricity's accounts payable and accrued liabilities totaled $2,520,124, an increase from $1,521,689 in 2020, including amounts due to a shareholder who is also a director and executive of the company Accounts Payable and Accrued Liabilities (as of March 31) | Category | 2021 ($) | 2020 ($) | |:----------------------|:------------|:------------| | Trade and other payables | 1,041,385 | 1,094,072 | | Accrued liabilities | 1,478,739 | 427,617 | | Total | 2,520,124| 1,521,689| - Included in these liabilities are $182,995 (2021) and $379,881 (2020) due to a shareholder who is a director and executive of the company[429] 5. CONVERTIBLE PROMISSORY NOTES AND SHORT TERM LOANS Biotricity issued $12.59 million in face value of Series A and Series B convertible promissory notes during FY2021, raising $11.38 million in net cash proceeds, with significant debt discounts and derivative liabilities recognized - During FY2021, the company issued $11,275,500 (face value) in Series A convertible promissory notes and $500,000 in additional promissory notes, and $1,312,500 (face value) in Series B convertible promissory notes[432][434][448] - Net cash proceeds from Series A Notes issuance amounted to $10,135,690, and from Series B Notes issuance amounted to $1,240,000[442][452] - The notes generally have a 1-year term with interest rates between 10% and 12%, and allow for conversion into equity, often at a discount to the volume-weighted average price or future financing price[431][437][438][439][440][449][450] - The company recognized debt issuance costs of $2,311,854 and initial debt discounts of $9,400,503 for the Series A and B Notes[447][453][454] - Embedded conversion and redemption features, along with investor and placement agent warrants, were initially accounted for as derivative liabilities (totaling $7,429,236 at issuance) and later transferred to equity when warrant exercise prices became fixed[445][446][452][454] - During FY2021, $739,000 (face value) of Series A Notes were converted into 751,487 common shares, resulting in a loss on conversion of $103,375[447][473] Convertible Notes Summary (as of March 31, 2021) | Metric | Amount ($) | |:------------------------------------------|:-------------| | Face value of Series A and Series B Notes issued | 12,588,000 | | Debt discount | (9,400,503) | | Debt issuance cost | (2,311,854) | | Day 1 value of convertible notes issued | 875,643 | | Accretion of debt discount | 1,802,807 | | Amortization of debt issuance cost | 678,348 | | Total accretion and amortization expenses | 2,481,155 | | Conversion to common shares | (739,000) | | Balance at March 31, 2021 | 2,617,798 | 6. FEDERALLY GUARANTEED LOANS Biotricity received $370,900 from an Economic Injury Disaster Loan (EIDL) in April 2020 and $1,200,000 from a Paycheck Protection Program (PPP) Loan in May 2020, with the PPP Loan subsequently forgiven in May 2021 - In April 2020, the company received a $370,900 Economic Injury Disaster Loan (EIDL) from the U.S. Small Business Administration (SBA) with a 30-year term and 3.75% interest[456] - In May 2020, Biotricity received a $1,200,000 Paycheck Protection Program (PPP) Loan under the CARES Act, bearing 1.0% interest[457] - The PPP Loan was forgiven by the SBA in May 2021, and the forgiveness was recognized as a $1,156,453 reduction to payroll expense and $43,547 reduction to rent expense for the fiscal year ended March 31, 2021[457][458][502] 7. DERIVATIVE LIABILITIES Biotricity recognized derivative liabilities related to the variable conversion and redemption features of its Series A preferred shares and convertible notes, as well as associated warrants, measured at fair value using lattice and Monte Carlo methodologies - The company issued Series A preferred shares in December 2019 and January 2020, and additional shares in May 2020, with embedded variable conversion and redemption features[459][460] - These embedded derivatives were bundled and valued as a single, compound embedded derivative, bifurcated from the underlying equity instrument, and treated as a derivative liability measured at fair value[461] Derivative Liabilities (as of March 31) | Category | 2021 ($) | 2020 ($) | |:------------------------------------------|:------------|:------------| | Derivative liabilities | 410,042 | 1,144,733 | | Derivative fair value at issuance (FY2021) | 41,749 | - | | Change in fair value of derivatives | (776,440) | - | - The lattice methodology was used to value preferred share derivative components, and Monte Carlo methodology for convertible note and warrant derivative components[463] Derivative Liabilities from Convertible Notes and Warrants (FY2021) | Category | Amount ($) | |:------------------------------------------|:-------------| | Derivative fair value at issuance: | | | - Series A notes | 6,932,194 | | - Series B notes | 497,042 | | Total initial fair value | 7,429,236| | Fair value change upon end of warrants derivative treatment | (82,444) | | Carrying amount of warrants transferred equity | (3,937,664) | | Conversion to common shares | (225,284) | | Change in fair value of derivative liabilities | 450,012 | | Balance at March 31, 2021 | 3,633,856| - Upon finalization of the exercise price for warrants (January 8, 2021), the related derivative liabilities were marked to market and transferred to equity[446][462] 8. STOCKHOLDERS' DEFICIENCY Biotricity's stockholders' deficiency reflects its authorized capital of 125 million common shares and 10 million preferred shares, with significant share issuances for private placements, services, and convertible note conversions, and stock-based compensation recognized for options granted - As of March 31, 2021, the company is authorized to issue 125,000,000 common shares ($0.001 par value) and 10,000,000 preferred shares ($0.001 par value), with 20,000 designated as Series A preferred stock[464] Outstanding Shares (as of March 31) | Share Type | 2021 (shares) | 2020 (shares) | |:-----------------------|:--------------|:--------------| | Common Shares | 36,124,964 | 32,593,751 | | Exchangeable Shares | 2,889,978 | 3,788,064 | | Total Common & Exchangeable | 39,014,942 | 36,381,815 | | Series A Preferred Stock | 8,045 | 7,830 | | Special Voting Preferred Stock | 1 | 1 | - The reverse takeover transaction on February 2, 2016, involved the exchange of iMedical shares for Biotricity common stock or exchangeable shares, and adjustments to options and warrants[466][467][468] - During FY2021, the company recorded preferred stock dividends of $962,148 and made payments of $602,969[472] - 733,085 common shares were issued in FY2021 from convertible note conversions, with an additional 18,402 shares to be issued, resulting in a loss on conversion of $103,375[473] - 1,900,042 common shares were issued for services and warrant exercises in FY2021[474] - The company recognized an obligation to issue 18,402 common shares to convertible note holders and 250,000 common shares to directors as of March 31, 2021[475] - In FY2021, 97,500 warrants were exercised for $67,941. The company issued 449,583 warrants for advisor/consultant services and 1,065,857 warrants to brokers, and 5,631,132 warrants to convertible note holders[478][479] Warrants Outstanding (as of March 31) | Category | 2021 (warrants) | 2020 (warrants) | |:---------------------------------------|:----------------|:----------------| | Broker Warrants | 1,258,495 | 321,314 | | Consultant and Noteholder Warrants | 2,130,555 | 2,049,837 | | Warrants Issued on Convertible Notes | 7,454,152 | 2,734,530 | | Private Placement Warrants | 0 | 1,163,722 | | Total | 10,843,202 | 6,269,403 | - The 2016 Equity Incentive Plan authorizes stock options. In FY2020, the term of certain prior options was extended to 10 years, resulting in a one-time charge of $1,600,515 in stock-based compensation. In FY2021, $790,535 in stock-based compensation was recorded[481][483][484][485] Stock Option Activities (as of March 31) | Activity | Number of Options (2021) | Exercise Price ($) (2021) | |:-------------------------|:-------------------------|:--------------------------| | Outstanding as of March 31, 2020 | 4,393,610 | 3.1069 | | Granted | 2,610,647 | 1.0072 | | Outstanding as of March 31, 2021 | 7,004,256 | 2.3268 | 9. INCOME TAXES Biotricity Inc. reported no income tax recovery for FY2021 and FY2020 due to non-deductible expenses and a full valuation allowance against deferred tax assets, despite having significant non-capital losses available to offset future taxable income Income Tax Recovery (Fiscal Years Ended March 31) | Category | FY2021 ($) | FY2020 ($) | |:------------------------------|:--------------|:--------------| | Net loss | (15,491,176) | (11,066,942) | | Expected income tax recovery | (4,027,706) | (2,877,405) | | Non-deductible expenses | 1,313,530 | 912,038 | | Other temporary differences | (38,579) | (43,975) | | Change in valuation allowance | 2,752,755 | 2,009,342 | | Income tax recovery | - | - | Deferred Tax Assets (as of March 31) | Category | 2021 ($) | 2020 ($) | |:------------------------------|:--------------|:--------------| | Non-capital loss carry forwards | 7,311,800 | 4,636,203 | | Other temporary differences | 41,256 | 79,834 | | Valuation allowance | (7,353,056) | (4,716,037) | | Total | - | - | - A full valuation allowance was established against deferred tax assets due to negative evidence from incurred losses, indicating that realization of these assets is not more likely than not[490] - As of March 31, 2021, the company has approximately $28,122,308 in non-capital losses available to offset future taxable income, expiring between 2035 and 2038[491] - The company is not subject to any uncertain tax positions as of March 31, 2021 and 2020[492] 10. COMMITMENTS AND CONTINGENCIES As of March 31, 2021, Biotricity Inc. has no significant outstanding claims or provisions for such claims recognized in its consolidated financial statements - There are no significant claims against the company outstanding as of March 31, 2021, and no provision for such claims has been recognized[493] 11. OPERATING LEASE RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS Biotricity Inc. has one operating lease for office and administration, with a right-of-use asset balance of $66,120 and a current lease obligation of $58,257 as of March 31, 2021 - The company has one operating lease for office and administration, with a weighted-average discount rate of 10% applied to lease payments[494] Operating Lease Right-of-Use Asset and Lease Obligation (as of March 31, 2021) | Category | Amount ($) | |:------------------------------------------|:-----------| | Operating lease right-of-use asset - initial recognition | 413,236 | | Amortization | (347,116) | | Balance at March 31, 2021 (ROU Asset) | 66,120 | | Operating lease obligation - initial recognition | 413,236 | | Repayment and interest accretion | (354,979) | | Balance at March 31, 2021 (Lease Obligation) | 58,257 | | Current portion of operating lease obligation | 58,257 | | Noncurrent portion of operating lease obligation | Nil | - The operating lease expense for the year ended March 31, 2021, was $213,826, included in general and administrative expenses[495] Contractual Undiscounted Lease Obligations (as of March 31, 2021) | Period | Amount ($) | |:-------------------|:-----------| | Less than one year | 58,731 | | Beyond one year | - | | Total | 58,731 | 12. KEY MANAGEMENT COMPENSATION Key management compensation for Biotricity Inc. totaled $2,503,773 for the fiscal year ended March 31, 2021, a decrease from $3,247,343 in 2020, including salaries, allowances, and stock-based compensation for directors, shareholders, and executive officers Key Management Compensation (Fiscal Years Ended March 31) | Category | FY2021 ($) | FY2020 ($) | |:-------------------------|:--------------|:--------------| | Salary and allowance | 981,000 | 854,000 | | Stock based compensation | 1,522,773 | 2,393,343 | | Total | 2,503,773 | 3,247,343 | - Salary and allowance include salary, consulting fees, car allowance, vacation pay, bonus, and other allowances paid or payable to a shareholder, directors, and executive officers[499] - Stock-based compensation represents the fair value of options, shares, warrants, and equity incentive plan awards for directors, shareholders, and executive officers[500] 13. SUBSEQUENT EVENTS Subsequent to March 31, 2021, Biotricity Inc. received forgiveness for its $1,200,000 PPP Loan in May 2021, which had been accrued in the financial results, and an additional $499,000 from an EIDL - In May 2021, the $1,200,000 PPP Loan was forgiven by the SBA, with the impact already accrued in the financial results as of March 31, 2021[502] - The company received an additional $499,000 in an Economic Injury Disaster Loan (EIDL) subsequent to year-end[503]