TWO HANDS CORPORATION Two Hands Corporation (the "Company") was incorporated in the state ofDelaware onApril 3, 2009 and onJuly 26, 2016 , changed its name fromInnovative Product Opportunities Inc. toTwo Hands Corporation . TheTwo Hands co-parenting application launched onJuly 2018 and theTwo Hands Gone application launched InFebruary 2019 . The Company ceased work on these applications in 2021. The gocart.city online consumer grocery delivery application was released in earlyJune 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses inJuly 2020 . InJuly 2021 , the Company made the strategic decision to focus exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services. All three of such branches of the Company's business share industry standard warehouse storage space and inventory. The Company's inventory is updated continuously and generally consists of produce, meats, pantry items, bakery & pastry goods, gluten-free goods, and organic items, acquired from various different suppliers inCanada and internationally, with whom the Company and its principals have cultivated long-term relationships.
gocart.city
gocart.city is the Company's online delivery marketplace, allowing consumers to shop online and have their groceries delivered. The gocart.city online platform stores all inventory in the Company's warehouse located at its head office inMississauga . The aim of gocart.city is to deliver fresh and high-quality food products directly to retail consumers throughoutSouthern Ontario . The Company recently engaged local renowned chef,Grace DiFede , to curate a new line of meal kits and bundles to sell on the gocart.city platform alongside the Company's other grocery essentials. The gocart.city platform is available online and through applications for handheld devices supporting iOS or Android. The features and functions of gocart.city include customers having the ability to search for products by category and name, customers saving items in their cart and being able to share their cart with others, and being able to opt-in to digital weekly alerts that provide information on promotions and discounts on certain products. gocart.city also includes standard payment options for customers, such as PayPal, American Express andVisa . The Company also employs a social media manager to oversee and increase engagement with customers by using platforms such as Facebook, Twitter, Instagram and Google. The ads that are posted on these platforms are generic branding related to the Company, as well as the promotion of particular sale items. Moreover, the Company has agreements with SRAX, Inc. andAdfuel Media Inc. to boost such engagement.
Grocery Originals
Grocery Originals is the Company's brick-and-mortar grocery store located inMississauga Ontario at the site of the Company's warehouse. Grocery Originals was originally intended for curbside pickup but has expanded into a full service store, that includes a deli, cold storage, a stone pizza oven, and offering a wide variety of fresh and specialty meals curated byGrace Di Fede .
Cuore Food Services
Cuore Food Services is the Company's wholesale food distribution branch. Cuore Food Services uses inventory from the Company's warehouse as well as inventory it acquires on an ad hoc basis, and focuses on bulk delivery of goods to food service business such as restaurants, hotels, event planning/hosting businesses. Orders distributed through Cuore Food Services can be made over the phone or online through a different front-end of the gocart.city platform. The operations of the business are carried on byI8 Interactive Corporation , a wholly-owned subsidiary of the Company, incorporated under the laws ofCanada onFebruary 7, 2014 .
Management's Plan of Operation
The Company is focused exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services. The performance of the Company's business during the COVID-19 pandemic illustrates the flexibility of its model as the Company was able to meet heightened demand with an assortment of products that met customer preferences. The Company is still early-on in its development but sees a highly scalable business with lower corporate fixed costs, providing protection in the event of an economic downturn. 18 Products and Services
The Company plans to continue to expand it reach to additional customers and
geographies across
Mobile Application
V2 of the gocart.city mobile application will be a subsequent release. The Company plans to further expand the features of the mobile application. Following the completion of V2 of the mobile application, the Company will consider user behaviour and plans to expand the functionality and features of the mobile application on an on-going basis going forward.
Operations and Logistics
The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.
Sales and Marketing
The Company plans on utilizing and leveraging its agreement with SRAX, Inc. andAdfuel Media Inc. to market its grocery delivery application and services and expand its footprint in theOntario region and beyond as its customer base grows.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted inthe United States requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, inventories, impairment of long-term assets, stock-based compensation, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the Financial Statements:
STOCK-BASED COMPENSATION The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered. DERIVATIVE LIABILITY
In accordance withFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Paragraph 815-15-25-1 the conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The Company follows ASC Section 815-40-15 ("Section 815-40-15") to determine whether an instrument (or an embedded feature) is indexed to the Company's own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. 19 The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. The Company utilizes the binomial option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The binomial option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the remaining contractual term of the instrument granted. REVENUE RECOGNITION In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery
to a customer.
RECENT ACCOUNTING PRONOUNCEMENTS
InAugust 2020 , the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning afterDecember 15, 2023 , which means it will be effective for our fiscal year beginningJanuary 1, 2014 . Early adoption is permitted but no earlier than fiscal years beginning afterDecember 15, 2020 , including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.
Other recent accounting pronouncements issued by the FASB, including its
COMPARISON OF RESULTS FOR THE YEARS ENDED
Sales, Cost of goods sold, Gross profit:
Years ended December 31 Change
2021 2020
$ $ $ %
Sales 930,096 159,025 771,071 485
Cost of goods sold 832,816 138,405 694,411 502
Gross profit 97,280 20,620 76,660 372
Gross profit % 10.5 % 13.0 %
Breakdown of sales by branch:
Years ended December 31 Change
2021 2020
$ $ $ %
gocart.city - online delivery 161,707 42,593 119,114 280
Grocery Originals and Cuore Food
Service - retail and wholesale
distribution 768,389 112,751 655,638 581
Other - 3,681 (3,681 ) (100 )
Total sales 930,096 159,025 771,071 485
20
The gocart.city grocery delivery application was released in early June 2020 and
gocart.city wholesale commenced sale of dry goods and produce to other
businesses in July 2020 . Our current gross profit is within expectations of the
Company as we provide incentives such as coupons to obtain new customers.
Operating expenses:
Years ended December 31 Change
2021 2020
$ $ $ %
Salaries and benefits 400,676 1,972,400 (1,571,724 ) (80 )
Occupancy expense 63,570 26,573 36,997 139
Advertising and travel 108,929 86,976 21,953 25
Auto expenses 52,459 8,717 43,742 502
Consulting 2,354,036 3,095,802 (741,766 ) (24 )
Depreciation and Amortization 1,898 1,482 416 28
Design 14,708 11,321 3,387 30
Office and general expenses 115,627 105,902 9,725 9
Professional fees 155,376 216,436 (61,060 ) (28 )
Research and development - - -
Total operating expenses 3,267,279 5,525,609 (2,258,330 ) (41 )
Our total operating expenses for the year ended
Total operating expense includes stock-based compensation for the year endedDecember 31, 2021 and 2020 which comprises of 240,500,000 and 97,500,000 shares of common stock issued valued at$810,000 and$1,025,100 , respectively for consulting services. OnDecember 19, 2019 , the Company issued 4,000 shares of Series B Convertible Preferred Stock with a fair value of$1,520,000 ($380 per share) for consulting services to be provided fromDecember 19, 2019 toDecember 19, 2020 . OnJune 24, 2021 , the Company agreed to issue 10,000 shares of Series C Convertible Preferred Stock with a fair value of$1,153,571 ($115.35 per share) for a one-year subscription with SRAX, Inc. to an online marketing platform to support the gocart.city grocery delivery application. OnOctober 7, 2020 , the Company agree to issue 5,000 shares of Series C Convertible Preferred Stock with a fair value of$542,847 ($108.57 per share) for a one-year subscription with SRAX, Inc. to an online marketing platform to support the gocart.city grocery delivery application. Total operating expense also includes stock-based compensation for the year endedDecember 31, 2021 and 2020 which comprises of 47,000,000 and 154,000,000 shares of common stock issued valued at$123,350 , and$1,896,800 , respectively, for salaries and compensation for our officers and directors. Salaries and benefits for the year endedDecember 31, 2021 , comprise primarily of stock issued to officers and directors with a fair value of$233,350 and salary to Nadav Elituv, our Chief Executive Officer, of$129,600 . Salaries and benefits for the year endedDecember 31, 2020 , comprise primarily of stock issued to officers and directors with a fair value of$1,896,800 and accrued but unpaid salary to Nadav Elituv, our Chief Executive Officer, of$75,600 .
Advertising and travel includes expenses for online advertising, website, meals and entertainment.
For the year endedDecember 31, 2021 , consulting comprises primarily stock-based compensation expense (i)$1,065,818 for the expenditure of advertising credits with SRAX, Inc. (ii)$532,500 for consulting fees and (iii)$540,000 paid to contractors to manage our grocery business. For the year endedDecember 31, 2020 , consulting comprises primarily stock-based compensation expense (i)$265,934 for the expenditure of advertising credits with SRAX, Inc. (ii)$1,869,515 for consulting fees and startup costs and (iii)$887,500 paid to contractors to manage our grocery business. The increase in office and general expense is due to rent and administrative costs at our 1035 Queensway East,Mississauga, Ontario, Canada location. There are no comparable expenses in 2020. 21 Professional fees comprise of audit, legal, filing fees and contract accountant. Other income (expense): Years ended December 31 Change 2021 2020 $ $ $ % Amortization of debt discount and interest expense (357,213 ) (239,312 ) (117,901 ) 49 Loss on settlement of debt (12,890,764 ) (2,053,055 ) (10,837,709 ) 528 Initial derivative expense (126,322 ) (258,863 ) 132,541 (51 ) Change in fair value of derivative liabilities 208,261 390,157 (181,896 ) (47 ) Total operating expenses (13,166,038 ) (2,161,073 )
(11,004,965 ) 509 Amortization of debt discount and interest expense for the year endedDecember 31, 2021 was$357,213 , compared to$239,312 for the year endedDecember 31, 2020 . Amortization of debt discount and interest expense relates to the issuance of non-redeemable convertible notes, convertible notes and promissory notes.
During the years ended
During the years ended
On
Initial derivative expense of
Initial derivative expense of
During the year endedDecember 31, 2021 and 2020, the gain (loss) due to the change in fair value of derivative liabilities was$208,261 and 390,157, respectively. Net loss for the period: Years ended December 31 Change 2021 2020 $ $ $ % Net loss for the period (16,336,037 ) (7,666,062 ) (8,669,975) 113
Our net loss for year endedDecember 31, 2021 was$16,336,037 , compared to$7,666,062 for the year endedDecember 31, 2020 , respectively. Our losses during the years endedDecember 31, 2021 and 2020 are primarily due to costs associated with professional fees, our transfer agent, investor relations, stock-based compensation paid to officers, directors and consultants, loss on settlement of debt and the issuance of a convertible notes.
QUARTERLY RESULTS OF OPERATIONS
The following is a summary of selected quarterly information that has been derived from the financial statements of the Company. This summary should be read in conjunction with the consolidated financial statements of the Company.
22
December 31, September 30, June 30, March 31, Quarter Ended 2021 2021 2021 2021
2020 2020 2020 2020 Sales$324,748 $241,417 $174,774 $189,157 $96,194 $54,838 $7,993 $0 Gross profit$19,117 $39,808 $19,808 $18,547 $16,320 $2,344 $1,956 $0
Operating expenses (
(
($626,383 ) ($629,210 ) ($320,193 ) ($585,287 ) (expense) Net loss for the ($3,406,811 ) ($8,050,697 ) ($1,987,108 ) ($2,891,421 ) ($1,446,995 ) ($2,253,010 ) ($1,513,767 ) ($2,452,290 ) period Basic and diluted net ($0.001 ) ($0.003 ) ($0.00 ) ($0.00 )
($0.003 ) ($0.012 ) ($0.02 ) ($0.16 ) loss per share
LIQUIDITY AND CAPITAL RESOURCES
For the year ended
Cash flows used in operating activities
Year ended December 31 Change
2021 2020
$ $ $ %Net cash used in operating activities (555,557 ) (314,429 ) (241,128 ) 77
Our net cash used in operating activities for the year endedDecember 31, 2021 and 2020 is$555,557 and$314,429 , respectively. Our net loss for the year endedDecember 31, 2021 of$16,336,037 was the main contributing factor for our negative cash flow. We were able to mostly offset the cash used in operating activities by using our stock to pay for expenses such as amortization of prepaid expense of$1,328,317 , stock-based compensation of$1,043,350 , amortization of debt discount of$357,213 , loss on debt settlement of$12,890,764 and initial derivative expense of$126,322 .
Cash flows used in investing activities
Year ended December 31 Change
2021 2020
$ $ $ %Net cash used in investing activities (5,425 ) (2,229 ) (3,196 ) 143
Our net cash (used in) provided by investing activities for the year ended
Cash flows from financing activities
Year ended December 31 Change
2021 2020
$ $ $ %Net cash from financing activities 1,070,092 338,380 731,712 216
Our net cash provided by financing activities for the year endedDecember 31, 2021 and 2020 is$1,070,092 and$338,380 , respectively. The increase in cash from financing activities is due to the issuance of 40,000 shares of Series
D Stock for$789,006 in cash. As ofDecember 31, 2021 , we had cash of$533,295 , working capital of$1,055,850 and total liabilities of$1,306,372 . We believe our current cash balance is sufficient to fund our operations during the next 12 months (i) as the Company does not expect significant cash outlays for advertising in the next year as there are$564,677 in advertising credits with SRAX, Inc. included in prepaid expense (ii) because onJune 29, 2021 debt holders with carrying value of$1,190,320 agreed to extend the maturity of debt previously classified as current liabilities toDecember 31, 2025 and (iii) we expect to reduce the cash expended on contractors in the next year as we plan to pay them in shares of the Company. 23
Our working capital as of
December 31, 2021 December 31, 2020
Current assets $ 1,608,848 $ 963,653
Current liabilities 552,998 607,930
Working capital $ 1,055,850 $ 355,723
The Company is continuing to focus improving cash flows from operations by reducing incentives to customers, by making purchases from different suppliers, accelerating the collection of accounts receivable, managing accounts payable balances and by paying our officers, directors, consultants and staff with
our stock.
The Company's financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year endedDecember 31, 2021 , the Company incurred a net loss of$16,336,037 and used cash in operating activities of$555,557 and onDecember 31, 2021 , had stockholders' deficit of$3,736,118 . These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year of the date that the financial statements are issued. The Company's independent registered public accounting firm, in their report on the Company's financial statements for the year endedDecember 31, 2021 , expressed substantial doubt about the Company's ability to continue as a going concern. The Company's financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue
as a going concern. Over the next 12 months we expect to expend approximately$281,500 in cash to implement our business plan. Cash Required to Implement of Business Plan
Estimated remaining prospectus costs $
50,000
Mobile application development
5,000
Operations and Logistics 40,000
General and Administration 186,500Total Estimated Cash Expenditures $
281,500 We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. We believe we have sufficient cash to pay for our business plan and to pay for our other overhead costs for the next twelve months. If required, we expect to be able to secure additional capital through advances from our Chief Executive Officer, note holders, shareholders and others in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees, however, we do not have any written or oral agreements with any third parties which require them to fund our operations. Although there can be no assurances that we will be able to obtain such funds in the future, the Company has been able to secure financing to continue operations since its inception onApril 3, 2009 . We may be able to use our accounts receivable to secure additional debt and we are currently quoted on OTC Pink. The Company is unable to predict the effect, if any, that the coronavirus COVID-19 global pandemic may have on its access to the financing markets. If we need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely. The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for developing products and services, or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders. 24 We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. We expect that we will be required to raise an additional$500,000 in cash by issuing new debt or equity for operating costs in order to implement our business plan in the next twelve months. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the personal resources of our Chief Executive Officer, note holders, shareholders and others. The loans from our Chief Executive Officer, note holders, shareholders and others are unsecured and non-interest bearing and have no set terms of repayment. Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board sinceFebruary 17, 2011 . The stock currently trades under the symbol "TWOH.OB." Commitments for future capital expenditures atDecember 31, 2021 is as follows: Payments Due by Period Less than 1 Total year 1 - 3 years 4 - 5 years After 5 years
Contractual obligations $ $ $ $ $ Accounts payable and accrued liabilities 498,428 498,428 - - - Debt 256,615 46,088 45,552 164,975 - Non-redeemable convertible notes 517,717 - - 517,717 - Financial lease Obligations - - -
- -
Operating leases(1) 33,612 8,482 25,130 - -
Purchase obligations - - - - -
Total contractual
obligations 1,306,372 552,998 70,682 682,692 -
Notes:
(1) Leases for retail space, equipment and warehousing is currently month to
month. Deliveries are currently outsourced.
OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS
We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. We expect that we will be required to raise an additional$200,000 in cash by issuing new debt or equity for operating costs in order to implement our business plan in the next twelve months. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the personal resources of our Chief Executive Officer, note holders, shareholders and others. The loans from our Chief Executive Officer, note holders, shareholders and others are unsecured and non-interest bearing and have no set terms of repayment. Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board sinceFebruary 17, 2011 . The stock currently trades under the symbol "TWOH.OB." RELATED PARTY TRANSACTIONS
Years ended
Due toRelated Party As ofDecember 31, 2021 and 2020, advances and accrued salary of$39,985 and$106,928 , respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment. During the year endedDecember 31, 2021 , the Company issued advances due to related party for$135,378 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with$127,375 in cash. In addition, the Company accrued salary of$165,046 due to Nadav Elituv for the year endedDecember 31, 2021 , issued shares of Series A Convertible Preferred Stock with a fair value of$222,317 to settled accrued salary due and issued a promissory note for$19,572 to settle due to related party.
During the year ended
25
Promissory Notes -
As ofDecember 31, 2021 and 2020, promissory notes - related party of$0 and$194,485 (principal$172,876 and interest of$21,609 ), respectively, were outstanding. The promissory notes - related party bear interest of 10% per annum, are unsecured, mature onDecember 31, 2025 and are due to Nadav Elituv, the Company's Chief Executive Officer. The Company issued shares of Series A Convertible Preferred Stock with a fair value of$229,885 to settle promissory notes and accrued interest. During the year endedDecember 31, 2021 , the Company issued promissory notes - related party of$19,572 for$3,400 to settle accrued liabilities and$16,172 of expenses paid on behalf of the Company. Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained
from non-related persons.
The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated
at arm's length. PROPOSED TRANSACTIONS
The Company is not anticipating any transactions.
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
Refer to Note 2 in the consolidated financial statements for the year ended
FINANCIAL INSTRUMENTS
The main risks of the Company's financial instrument are exposed to are credit risk, market risk, foreign exchange risk, and liquidity risk.
Credit risk The Company's credit risk is primarily attributable to trade receivables. Trade receivables comprise of amounts due from other businesses from the sale of groceries and dry goods. The Company mitigates credit risk through approvals, limits and monitoring. The amounts disclosed in the consolidated balance sheet are net of allowances for expected credit losses, estimated by the Company's management based on past experience and specific circumstances of the customer. The Company manages credit risk for cash by placing deposits at major Canadian financial institutions. Market risk Market risk is the risk that changes in market prices and interest rates will affect the Company's net earnings or the value of financial instruments. These risks are generally outside the control of the Company. The objective of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns. The Company's market risk consists of risks from changes in foreign exchange rates, interest rates and market prices that affect its financial liabilities, financial assets and future transactions.
Refer to Note 2 in the consolidated financial statements for the year ended
Foreign Exchange risk Our revenue is derived from operations inCanada . Our consolidated financial statements are presented inU.S. dollars and our liabilities other than trade payable are primarily due inU.S. dollars. The revenue we earn in Canadian dollars is adversely impacted by the increase in the value of theU.S. dollar relative to the Canadian dollar. OnJune 29, 2021 debt holders with carrying value of$1,190,320 agreed to extend the maturity of debt previously classified as current liabilities toDecember 31, 2025 . Liquidity risk
Liquidity risk relates to the risk the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The financial liabilities on our consolidated balance sheets consist of accounts payable and accrued liabilities, due to related party, notes payable, convertible notes, net, derivative liabilities, promissory notes, promissory notes - related party and non-redeemable convertible notes, Management monitors cash flow requirements and future cash flow forecasts to ensure it has access to funds through its existing cash and from operations to meet operational and financial obligations. OnJune 29, 2021 debt holders with carrying value of$1,190,320 agreed to extend the maturity of debt previously classified as current liabilities toDecember 31, 2025 . The Company believes it has sufficient liquidity to meet its cash requirements for the next twelve months. 26 OUTSTANDING SHARE DATA
As of
Common stock: 7,010,000,000 shares
Series A Convertible Preferred Stock: 189,500
Series B Convertible Preferred Stock: 21,000
Series C Convertible Preferred Stock: 10,000
Series D Convertible Preferred Stock: 40,000
OFF-BALANCE SHEET TRANSACTIONS
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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