QUTX 10-Q
Quantum X Inc. (QUTX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from _________ to __________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code)
| |
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| x | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
x
| 1 |
Securities registered under Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered |
| N/A | N/A |
Securities registered under Section 12(g) of the Act:
(Title of class)
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 9, 2023, the issuer had shares of its common stock issued and outstanding, par value $0.0001 per share.
| 2 |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Form 10-K filed on April 3, 2023, and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this report, and in our Form 10-K filed on April 3, 2023.
| 3 |
TWO HANDS CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2023
TABLE OF CONTENTS
| PART I | PAGE | |
| Item 1. | Financial Statements (Unaudited) | 5 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 |
| Item 4. | Controls and Procedures | 27 |
| PART II | ||
| Item 1. | Legal Proceedings | 28 |
| Item 1A. | Risk Factors | 28 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
| Item 3. | Defaults Upon Senior Securities | 28 |
| Item 4. | Mining Safety Disclosures | 28 |
| Item 5. | Other Information | 28 |
| Item 6. | Exhibits | 29 |
| Signatures | 31 |
| 4 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| VAT taxes receivable | ||||||||
| Inventory | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related party | ||||||||
| Notes payable | ||||||||
| Deferred revenue | ||||||||
| Current portion of operating lease right-of-use liability | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Line of credit | ||||||||
| Promissory notes | ||||||||
| Promissory note - related party | ||||||||
| Non-redeemable convertible notes, net | ||||||||
| Operating lease right-of-use liability, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Temporary equity | ||||||||
| Series A convertible preferred stock; $ par value; shares designated, shares issued and outstanding, respectively | ||||||||
| Series B convertible preferred stock; $ par value; shares designated, and shares issued and outstanding, respectively | ||||||||
| Series C convertible preferred stock; $ par value; shares designated, shares and shares issued and outstanding, respectively | ||||||||
| Series D convertible preferred stock; $ par value; shares designated, shares issued and outstanding, respectively | ||||||||
| Series E convertible preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Total temporary equity | ||||||||
| Stockholder's deficit | ||||||||
| Preferred stock; $ par value; shares authorized, issued and outstanding | ||||||||
| Common stock; $ par value; shares authorized, and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
| The accompanying footnotes are an integral part of these unaudited condensed financial statements. | ||||||||
| 5 |
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
| (Unaudited) |
| For the three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Sales | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Amortization of debt discount and interest expense | ( | ) | ( | ) | ||||
| Loss on settlement of debt | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Foreign exchange income | ( | ) | ( | ) | ||||
| Total other comprehensive income | ( | ) | ( | ) | ||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
| The accompanying footnotes are an integral part of these unaudited condensed financial statements. | ||||||||
| 6 |
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT |
| For the three months ended March 31, 2023 and 2022 |
| (Unaudited) |
| Common Stock | Common Stock to be Issued | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Issued | Capital | Income | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Stock issued for conversion of non-redeemable convertible notes | ||||||||||||||||||||||||||||
| Stock issued for settlement of debt - related party | ||||||||||||||||||||||||||||
| Stock issued for the conversion of Series B convertible preferred stock | ||||||||||||||||||||||||||||
| Foreign exchange loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Common Stock | Common Stock to be Issued | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Issued | Capital | Income | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Stock issued for conversion of non-redeemable convertible notes | ||||||||||||||||||||||||||||
| Foreign exchange loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| The accompanying footnotes are an integral part of these unaudited condensed financial statements. | ||||||||||||||||||||||||||||
| 7 |
| TWO HANDS CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| For the three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Bad debt | ||||||||
| Stock-based compensation | ||||||||
| Amortization of debt discount | ||||||||
| Loss on settlement of debt | ||||||||
| Change in operating assets and liabilities | ||||||||
| Accounts and taxes receivable | ( | ) | ( | ) | ||||
| Prepaid expense | ||||||||
| Inventory | ||||||||
| Deferred revenue | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Operating lease right-of-use liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Net cash used in investing activities | ||||||||
| Cash flow from financing activities | ||||||||
| Advances by related party | ||||||||
| Repayment of advances to related party | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Proceeds from promissory notes | ||||||||
| Net cash provided by financing activities | ||||||||
| Change in foreign exchange | ||||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
| Cash paid during the year | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Stock issued to settle due to related party | $ | $ | ||||||
| Stock issued to settle promissory note - related party | $ | $ | ||||||
| Stock issued to settle non-redeemable convertible notes | $ | $ | ||||||
| Transfer of due to related party to promissory notes - related party | $ | $ | ||||||
| The accompanying footnotes are an integral part of these unaudited condensed financial statements. | ||||||||
| 8 |
TWO HANDS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.
The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.
The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.
In July 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.
| i) | gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered. |
| ii) | Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse. |
| iii) | Cuore Food Services is the Company’s wholesale food distribution branch. |
On May 1, 2023, the Company sold its gocarty.city and Grocery Originals branches. The Company will continue the business of Cuore Food Services.
The operations of the business are carried on by Two Hands Canada Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.
The Company received approval from the Canadian Securities Exchange (the "CSE") to list its common shares (the "Common Shares") on the CSE. Trading of the Common Shares in the capital of the Company commenced on August 5, 2022, under the symbol "TWOH".
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Two Hands Corporation have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2022 of Two Hands Corporation in our Form 10-K filed on April 3, 2023.
The interim financial statements present the balance sheets, statements of operations, stockholders’ deficit and cash flows of Two Hands Corporation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of March 31, 2023 and the results of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year.
GOING CONCERN
The
Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern.
This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three months
ended March 31, 2023, the Company incurred a net loss of $
| 9 |
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Two Hands Canada Corporation. All intercompany transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
CONCENTRATIONS
The following table summarizes accounts receivable and revenue concentrations:
Accounts receivable at March 31, 2023 | Revenue for the three months ended March 31, 2023 | |||||||
| Customer #1 | % | |||||||
| Customer #2 | % | |||||||
| Total concentration | % | % | ||||||
The following table summarizes accounts payable and cost of goods sold concentrations:
Accounts payable at March 31, 2023 | Cost of goods sold for the three months ended March 31, 2023 | |||||||
| Supplier #1 | % | |||||||
| Supplier #2 | % | |||||||
| Supplier #3 | % | |||||||
| Supplier #4 | % | |||||||
| Supplier #5 | % | |||||||
| Supplier #6 | % | |||||||
| Total concentration | % | % | ||||||
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are reduced by an allowance for doubtful accounts, which is the Company’s best estimate of the amount of credit losses inherent in its existing accounts receivable. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company writes off accounts receivable against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
The
allowance for doubtful accounts at March 31, 2023 and December 31, 2022 is $
| 10 |
INVENTORY
Inventory consisting of groceries and dry goods are measured at the lower of cost and net realizable value. Cost is determined pursuant
to the
first-in first out (“FIFO”) method. The cost of inventory includes the purchase price, shipping and handling costs incurred
to bring the inventories to their present location and condition. Inventory with a short shelf life that is not utilized within the planned
period are immediately expensed in the statement of operations. Estimated gross profit rates are used to determine the cost of goods
sold in interim periods. Any significant adjustment that results from the reconciliation with annual physical inventory is disclosed.
At March 31, 2023 and December 31, 2022, the inventory valuation allowance was $
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.
The costs of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:
Computer
equipment
In the year of acquisition, one half the normal rate of depreciation is provided.
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.
During
the three months ended March 31, 2023 and 2022, the Company had revenue of $
LEASES
Under ASC 842, a right-of-use asset and lease liability is recorded for all leases and the statement of operations reflects the lease expense for operating leases and amortization/interest expense for financing leases.
The Company does not apply the recognition requirements in the standard to a lease that at commencement date has a lease term of twelve months or less and does not contain a purchase option that it is reasonably certain to exercise and to not separate lease and related non-lease components. Options to extend the leases are not included in the minimum lease terms unless they are reasonably certain to be exercised.
The Company leases an automobile under non-cancelable operating lease. Right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
| 11 |
DEBT DISCOUNT AND DEBT ISSUANCE COSTS
Debt discounts and debt issuance costs incurred in connection with the issuance of convertible notes are capitalized and amortized to interest expense based on the related debt agreements using the effective interest rate method. Unamortized discounts are netted against convertible notes.
DERIVATIVE LIABILITY
In accordance with Financial 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.
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.
On October 1, 2021, the Company adopted a sequencing policy under Accounting Standards Codification (“ASC”) 815-40-35 Derivatives and Hedging (“ASC 815”) whereby in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities convertible or exchangeable for a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees or directors are not subject to the sequencing policy.
INCOME TAXES
The Company accounts for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("FASB ASC") 740, Income Taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period increased to include the number of additional common shares that would have been outstanding if potentially dilutive securities had been issued. On March 31, 2023 and December 31, 2022, we excluded the common stock issuable upon conversion of non-redeemable convertible notes, convertible notes, Series A Stock, Series B Stock, Series C Stock and common stock to be issued of shares and shares, respectively, as their effect would have been anti-dilutive.
| 12 |
FOREIGN CURRENCY TRANSLATION
The consolidated financial statements are presented in United States dollars. The functional currency of the consolidated entities are determined by evaluating the economic environment each entity. The functional currency of Two Hands Corporation is the United States dollar. Foreign exchange translation adjustments are reported as gains or losses resulting from foreign currency transactions and are included in results of operations.
Effective October 1, 2021, the Company changed the functional currency of its Company’s Canadian subsidiary, Two Hands Canada Corporation, to the Canadian dollar from United States dollar. The change in functional currency is due to the increase of Canadian dollar dominated activities over time including sales, operating costs and share subscriptions. The change in functional currency is accounted for prospectively. Two Hands Canada Corporation maintains its accounts in the Canadian dollar. Assets and liabilities are translated to United States dollars at year-end exchange rates. Income and expenses are transaction at averages exchange rate during the year. Foreign currency transaction adjustments are reported as other comprehensive income, a component of equity in the consolidated balance sheet.
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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.
The Company’s financial instruments such as cash, accounts payable and accrued liabilities, non-redeemable convertible notes, notes payable and due to related parties are reported at cost, which approximates fair value due to the short-term nature of these financial instruments.
Derivative liabilities are measured at fair value on a recurring basis using Level 3 inputs.
The following tables present assets and liabilities that are measured and recognized at fair value as on a recurring basis:
| March 31, 2023 | ||||||
| Level 1 | Level 2 | Level 3 | ||||
| Description | $ | $ | $ | |||
| Derivative liabilities | ||||||
| December 31, 2022 | ||||||
| Level 1 | Level 2 | Level 3 | ||||
| Description | $ | $ | $ | |||
| Derivative liabilities | ||||||
| 13 |
RECENT ACCOUNTING PRONOUNCEMENTS
In August 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 after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2024. Early adoption is permitted but no earlier than fiscal years beginning after December 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 Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
NOTE 3 – NON-REDEEMABLE CONVERTIBLE NOTES
| 14 |
NOTE 4 – LEASES
The
Company entered into an operating lease agreement on October 14, 2021 for an automobile, resulting in the recording of an initial liability
and corresponding right-of-use asset of $
The Company’s operating lease expires in 2025. The following shows future lease payments for the remaining periods under operating lease at March 31, 2023:
| Periods ending December 31, | Operating Lease Commitments | |||||
| 2023 | $ | |||||
| 2024 | ||||||
| 2025 | ||||||
| Total operating lease commitments | ||||||
| Less: imputed interest | ( | ) | ||||
| Total right-of-use liability | $ | |||||
The
Company’s discounted current right-of-use lease liability and discounted non-current right-of-use lease liability at March 31,
2023 is $
NOTE 5 – LINE OF CREDIT
On
April 14, 2022, the Company entered into a binding Grid Promissory Note and Credit Facility Agreement (the “Line of Credit”)
with The Cellular Connection Ltd. (the “Lender”) Pursuant to the Line of Credit, the Company can borrow from the Lender up
to CAD $
NOTE 6 – NOTES PAYABLE
As
of March 31, 2023 and December 31, 2022, notes payable due to Piero Manzini, and The Cellular Connection Limited, a corporation controlled
by Stuart Turk, totaling $
NOTE 7 – PROMISSORY NOTES
Promissory Notes
| 15 |
As
of March 31, 2023 and December 31, 2022, promissory notes of $
Promissory Notes – Related Party
As
of March 31, 2023 and December 31, 2022, promissory note – related party of $
NOTE 8 – RELATED PARTY TRANSACTIONS
As
of March 31, 2023 and December 31, 2022, advances and accrued salary of $
During
the three months ended March 31, 2023 and 2022, the Company issued advances due to related party for $
During
the three months ended March 31, 2022, the Company issued advances due to related party for $
During
the three months ended March 31, 2023 and 2022, the Company paid Linus Creative Services, a business controlled by Bradley Southam, a
director of the Company, $
Employment Agreements
On March 26, 2022, the Company and Nadav Elituv further amended the employment agreement to (i) change the termination date from June 30, 2022 to December 31, 2022; (ii) pay an additional shares of Series A Convertible Preferred Stock of the Company and (iii) pay an additional shares of Common Stock of the Company.
On July 1, 2022, the term of the consulting contract with 2130555 Ontario Limited was extended to June 30, 2023.
Stock-based compensation – salaries expense related to these employment agreements for the three months ended March 31, 2023 and 2022 is $ and $, respectively. Stock-based compensation – salaries expense was recognized ratably over the requisite service period. (See Note 10).
NOTE 9 – PREFERRED STOCK
On
August 6, 2013, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating two hundred thousand
() shares as Series A Convertible Preferred Stock (“Series A Stock”).
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On
December 12, 2019, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating one hundred
thousand () shares as Series B Convertible Preferred Stock (“Series B Stock”). After a one year holding period,
On
October 7, 2020, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating thirty thousand
(30,000) shares as Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Stock”). Each share of Series
C Stock (i) has a liquidation value of $100, subject to various anti-dilution protections (ii) is convertible into shares of common stock
of the Company six months after the date of issuance at a price of $ per share effective June 30, 2022, subject to various anti-dilution
protections (iii) on conversion will receive an aggregate number of shares of common stock as is determined by dividing the liquidation
value by the conversion price. Series C Stock are non-voting. On June 24, 2021, the board of directors approved the increase in the number
of designated shares of Series C Convertible Preferred Stock from 5,000 to 30,000 and reduction of the conversion price from $0.0035
per share to $
On
September 1, 2021, the Company filed a Certificate of Designation with the Delaware Secretary of State thereby designating two hundred
thousand () shares as Series D Convertible Preferred Stock, par value $0.001 per share (“Series D Stock”).
On
June 30, 2022, the Company made an amendment to the Certificate of Designation of its Series C Stock which lowered the fixed conversion
price from $
On
October 4, 2022, the Company filed a Certificate of Designation with the Delaware Secretary of State that had the effect of designating
shares of preferred stock as Series E Convertible Preferred Stock (“Series E Stock”). Series E Stock are non-voting,
have a par value of $
On
March 26, 2022, the Company issued shares of Series A Convertible Preferred Stock with a fair value of $
On April 27, 2022, a 1 for 1,000 reverse stock split of the Company’s common stock took effect which increased the conversion rate of
(i)
Series A Stock from 1 (one) share of Series A Stock for 1 (one) share of common stock (pre-reverse stock-split) to 1 (one) share of Series
A Stock for 1,000 (one thousand) shares of common stock (post-reverse stock-split) (ii) Series B Stock from 1 (one) share of Series B
Stock for 1 (one) share of common stock (pre-reverse stock-split) to 1 (one) share of Series B Stock for 1,000 (one thousand) shares
of common stock (post-reverse stock-split) and (iii) Series D Stock from 1 (one) share of Series D Stock for 1 (one) share of common
stock (pre-reverse stock-split) to 1 (one) share of Series D Stock for 100 (one hundred) shares of common stock (post-reverse stock-split).
The Company accounted for the increase in the conversion rates as an extinguishment and recorded a deemed dividend (contribution) in
accordance with ASC 260-10-599-2. As such, on April 27, 2022, the shares of Series A Stock, Series B Stock and Series D Stock were recorded
at fair value of $
On
June 30, 2022, the Company made an amendment to the Certificate of Designation of its Series C Stock which lowered the fixed conversion
price from $2.00 per share to $0.25 per share. The Company accounted for the amendment as an extinguishment and recorded a deemed dividend
in accordance with ASC 260-10-599-2. As such, on June 30, 2022, the shares of Series C Stock recorded at fair value of resulting
in a deemed contribution of $
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Series A Stock, Series B Stock, Series C Stock, Series D Stock and Series E Stock has been classified as temporary equity (outside of permanent equity) on the consolidated balance sheet on March 31, 2023 and December 31, 2022 because other tainting contracts such as convertible notes have inadequate available authorized shares of the Company for settlement.
NOTE 10 - STOCKHOLDERS' EQUITY
The Company is authorized to issue an aggregate of common shares with a par value of $ per share and shares of preferred stock with a par value of $0.0001 per share.
On March 21, 2022, pursuant to stockholder consent, our Board of Directors authorized an amendment (the "Amendment") to our Certificate of Incorporation, as amended, to affect a reverse stock split of the issued and outstanding shares of our common stock, par value $0.0001, on a 1 for 1,000 basis. We filed the Amendment with the Delaware Secretary of State on March 21, 2022. On April 25, 2022 the Financial Industry Regulatory Authority, Inc. notified us that the reverse stock split would take effect on April 27, 2022. All common stock share and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.
For
the three months ended March 31, 2023, the Company elected to convert $
On
February 2, 2023, the Company agreed to issue shares of common stock with a fair value of $
On
February 2, 2023, the Company agreed to issue shares of common stock with a fair value of $
On
March 3, 2023, the Holder of Series B Stock elected to convert shares of Series B Stock into shares of common stock resulting
in a $
Common stock to be issued
On
March 31, 2023 and December 31, 2022, the Company had an obligation to issue shares of common stock valued at $ and
shares of common stock valued at $336,000, respectively, for stock-based compensation – consulting services. These shares relate
to an agreement dated August 1, 2020 for services to be provided from August 1, 2020 to July 31, 2022 whereby the Company shall pay
shares of Common Stock of the Company with a fair value of $
NOTE 11 - SUBSEQUENT EVENTS
From
April 1, 2023 to May 9, 2023, the Company elected to convert $
On
May 1, 2023, the Company sold its gocart.city business, e-commerce site, branding, Grocery Original store and related inventory to a
private purchaser for estimated proceeds of CAD$
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.
The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.
The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.
In July 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 in Canada 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 in Mississauga. The aim of gocart.city is to deliver fresh and high-quality food products directly to retail consumers throughout Southern 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 and Visa.
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. and Adfuel Media Inc. to boost such engagement.
The Company sold the gocarty.city branch on May 1, 2023.
Grocery Originals
Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga 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 by Grace Di Fede.
The Company sold the Grocery Originals branch on May 1, 2023.
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.
On May 1, 2023, the Company sold its gocarty.city and Grocery Originals branches. The Company will continue the business of Cuore Food Services.
The operations of the business are carried on by Two Hands Canada Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.
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Management's Plan of Operation
The Company is focused exclusively on the grocery market through its on-demand grocery business: Cuore Food Services.
Products and Services
The Company plans to continue to expand it reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods.
Operations and Logistics
The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the 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, derivatives, 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 with Financial 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.
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.
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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
In August 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 after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2014. Early adoption is permitted but no earlier than fiscal years beginning after December 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 Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
Sales, Cost of goods sold, Gross profit:
| Three months ended March 31, | Change | |||||||||||||||
2023 $ | 2022 $ | $ | % | |||||||||||||
| Sales | 175,445 | 199,039 | (23,594 | ) | (12 | ) | ||||||||||
| Cost of goods sold | 159,996 | 178,525 | (18,529 | ) | (10 | ) | ||||||||||
| Gross profit | 15,449 | 20,514 | (5,065 | ) | (25 | ) | ||||||||||
| Gross profit % | 8,8 | % | 10.3 | % | ||||||||||||
Breakdown of sales by branch:
| Three months ended March 31, | Change | |||||||||||||||
2023 $ | 2022 $ | $ | % | |||||||||||||
| gocart.city – online delivery | 12,805 | 66,628 | (53,823 | ) | (81 | ) | ||||||||||
| Grocery Originals and Cuore Food Service – retail and wholesale distribution | 162,640 | 132,411 | 30,229 | 23 | ||||||||||||
| Total sales | 175,445 | 199,039 | (23,594 | ) | (12 | ) | ||||||||||
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 revenue from gocart.city – online delivery has decrease from the previous period because we (1) have decreased advertising expenditures as part of our overall plan to reduce expenses and (2) have concentrated our efforts on our wholesale business.
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Operating expenses:
| Three months ended March 31, | Change | |||||||||||||||
2023 $ | 2022 $ | $ | % | |||||||||||||
| Salaries and benefits | 195,571 | 62,806 | 132,765 | 211 | ||||||||||||
| Occupancy expense | 18,427 | 28,645 | (10,218 | ) | (36 | ) | ||||||||||
| Advertising and travel | 6,595 | 47,118 | (40,523 | ) | (86 | ) | ||||||||||
| Auto expenses | 8,121 | 12,017 | (3,896 | ) | (32 | ) | ||||||||||
| Consulting | 60,081 | 424,144 | (364,063 | ) | (86 | ) | ||||||||||
| Depreciation and Amortization | 3,305 | 2,959 | 346 | 12 | ||||||||||||
| Bad debt | 3,003 | — | 3,003 | — | ||||||||||||
| Office and general expenses | 13,325 | 74,733 | (61,408 | ) | (82 | ) | ||||||||||
| Professional fees | 52,597 | 82,321 | (29,724 | ) | (36 | ) | ||||||||||
| Freight and delivery | 4,681 | 25,170 | (20,489 | ) | (81 | ) | ||||||||||
| Total operating expenses | 365,706 | 759,913 | (394,207 | ) | (52 | ) | ||||||||||
Our total operating expenses for the three months ended March 31, 2023 was $365,706, compared to $759,913 for the three months ended March 31, 2022, respectively. The decrease in total operating expense is primarily due to an decrease in expenditure for prepaid advertising credits with SRAX Inc.
Salaries and benefits for the three months ended March 31, 2023, comprise primarily of accrued but unpaid salary due to Nadav Elituv, our Chief Executive Officer, of $150,000.
Salaries and benefits for the three months ended March 31, 2022, comprise primarily of stock issued to Nadav Elituv, our Chief Executive Officer with a fair value of $4,200.
Advertising and travel includes expenses for online advertising, website, meals and entertainment.
For the three months ended March 31, 2023, consulting comprises primarily stock-based compensation expense (i) $0 for the expenditure of advertising credits with SRAX, Inc. (ii) $48,787 for consulting fees and (iii) $11,294 paid to contractors to manage our grocery business.
For the three months ended March 31, 2022, consulting comprises primarily stock-based compensation expense (i) $272,682 for the expenditure of advertising credits with SRAX, Inc. (ii) $64,727 for consulting fees and (iii) $82,535 paid to contractors to manage our grocery business.
Professional fees comprise of audit, legal, filing fees and contract accountant. The decrease in professional fees is primarily due to to legal fees related to the prospectus dated April 21, 2022 filed with Ontario Securities Commission and British Columbia Securities Commission and our listing application with the Canadian Securities Exchange.
Other income (expense):
| Three months ended March 31, | Change | |||||||||||||||
2023 $ | 2022 $ | $ | % | |||||||||||||
| Amortization of debt discount and interest expense | (37,677 | ) | (30,198 | ) | (7,479 | ) | 25 | |||||||||
| Loss on settlement of debt | (117,550 | ) | (584,000 | ) | 466,450 | (80 | ) | |||||||||
| Total operating expenses | (155,227 | ) | (614,198 | ) | 458,971 | (75 | ) | |||||||||
Amortization of debt discount and interest expense for the three months ended March 31, 2023 was $37,677, compared to $30,918 for the three months ended March 31, 2022. Amortization of debt discount and interest expense relates to the issuance of non-redeemable convertible notes and promissory notes.
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During the three months ended March 31, 2023 and 2022, the Company elected to convert $4,150 and $101,000 of principal and interest of a non-redeemable convertible note into 41,500,000 and 1,010,000 shares of common stock of the Company resulting in a loss on settlement of debt of $117,550 and $584,000, respectively.
Net loss for the period:
| Three months ended March 31, | Change | |||||||||||||||
2023 $ | 2022 $ | $ | % | |||||||||||||
| Net loss for the period | (505,484 | ) | (1,353,597 | ) | 848,113 | (63 | ) | |||||||||
Our net loss for the three months ended March 31, 2023 was $505,484, compared to $1,353,597 for the three months ended March 31, 2022, respectively. Our losses during the three months ended March 31, 2023 and 2022 are primarily due to costs associated with professional fees, compensation due to our CEO, interest expense and loss on settlement of debt.
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.
| Quarter Ended | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 |
| Sales | $175,446 | $168,790 | $172,782 | $190,691 | $199,039 | $324,748 | $241,417 | $174,774 |
| Gross profit | $15,449 | $21,299 | $13,659 | $(6,278) | $20,514 | $19,117 | $39,808 | $19,808 |
| Operating expenses | ($365,706) | ($2,759,699) | ($304,452) | ($14,021,263) | ($759,913) | ($1,270,225) | ($693,259) | ($446,806) |
| Other income (expense) | ($155,227) | ($194,173) | ($768,587) | ($2,320,020) | ($614,198) | ($2,155,703) | ($7,397,246) | ($1,560,110) |
| Net loss for the period | ($505,484) | ($2,932,573) | ($1,059,380) | ($16,347,561) | ($1,353,597) | ($3,406,811) | ($8,050,697) | ($1,987,108) |
| Basic and diluted net loss per share | ($0.00) | ($0.02) | ($0.01) | ($0.18) | ($0.20) | ($0.63) | ($2.68) | ($1.26) |
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2023
Cash flows used in operating activities
| Three months ended March 31, | Change | |||||||||||||||
2023 $ | 2022 $ | $ | % | |||||||||||||
| Net cash used in operating activities | (198,659 | ) | (273,817 | ) | 75,158 | (27 | ) | |||||||||
Our net cash used in operating activities for the three months ended March 31, 2023 and 2022 is $198,659 and $273,817, respectively. Our net loss for the three months ended March 31, 2023 of $505,484 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 debt discount of $37,677 and loss on debt settlement of $117,550.
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Cash flows used in investing activities
| Three months ended March 31, | Change | |||||||||||||||
| 2023 $ | 2022 $ | $ | % | |||||||||||||
| Net cash used in investing activities | — | — | — | — | ||||||||||||
Our net cash (used in) provided by investing activities for the three months ended March 31, 2023 and 2022 is $0.
Cash flows from financing activities
| Three months ended March 31, | Change | |||||||||||||||
| 2023 $ | 2022 $ | $ | % | |||||||||||||
| Net cash from financing activities | 182,727 | 10,920 | 171,807 | 1,573 | ||||||||||||
Our net cash provided by financing activities for the three months ended March 31, 2023 and 2022 is $182,727 and $10,920, respectively.
During the three months ended, the Company received $105,053 (CAD $142,117) in cash from its line of credit with The Cellular Connection Ltd. dated April 14, 2022 and cash advances of $70,696. The cash advances are non-interest bearing, unsecured and have no specific terms of repayment.
As of March 31, 2023, we had cash of $1,258, working capital (deficiency) of $(651,218) and total liabilities of $2,032,040.
Our working capital as of March 31, 2023 and December 31, 2022 is as follows:
March 31, 2023 | December 31, 2022 | |||||||
| Current assets | $ | 188,075 | $ | 193,097 | ||||
| Current liabilities | 839,293 | 784,473 | ||||||
| Working capital (Deficiency) | $ | (651,218 | ) | $ | (591,376 | ) | ||
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, reducing expenses, 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 three months ended March 31, 2023, the Company incurred a net loss of $505,484 and used cash in operating activities of $198,659 and on March 31, 2023, had stockholders’ deficit of $4,684,426. 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 three months ended March 31, 2023, 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 spend approximately $268,000 in cash for legal, accounting and related services and to implement our business plan. 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.
| Cash Required to Implement of Business Plan | ||||
| General and Administration | $ | 268,000 | ||
| Total Estimated Cash Expenditures | $ | 268,000 | ||
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On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD $211,983 (CAD $750,000 available on the Line of Credit less CAD $538,017 of funds drawn and outstanding at May 9, 2023) in principal. 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 other 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 on April 3, 2009. We are currently quoted on OTC Pink.. 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.
Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”
Commitments for future capital expenditures at March 31, 2023 is as follows:
| Payments Due by Period | ||||||||||||||||||||
| Contractual obligations | Total
$ | Less
than 1 year $ | 1
- 3 years $ | 4
– 5 years $ | After
5 years $ | |||||||||||||||
| Accounts payable and accrued liabilities | 522,031 | 522,031 | — | — | — | |||||||||||||||
| Debt | 934,086 | 293,476 | 640,610 | — | — | |||||||||||||||
| Deferred revenue | 15,449 | 15,449 | — | — | — | |||||||||||||||
| Non-redeemable convertible notes | 538,997 | — | 538,997 | — | — | |||||||||||||||
| Financial lease Obligations | — | — | — | — | — | |||||||||||||||
| Operating leases(1) | 21,477 | 8,337 | 13,140 | — | — | |||||||||||||||
| Purchase obligations | — | — | — | — | — | |||||||||||||||
| Total contractual obligations | 2,032,040 | 839,293 | 1,192,747 | — | — | |||||||||||||||
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. On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to up to CAD $211,983 (CAD $750,000 available on the Line of Credit less CAD $538,017 of funds drawn and outstanding at May 9, 2023) in principal. We believe our current cash balance and the Line of Credit is sufficient to fund our operations during the next 12 months 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 since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”
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RELATED PARTY TRANSACTIONS
Three months ended March 31, 2023 and 2022
Due to Related Party
As of March 31, 2023 and December 31, 2022, advances and accrued salary of $209,313 and $185,473, 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 three months ended March 31, 2023 and 2022, the Company issued advances due to related party for $22,334 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $15,356 in cash. In addition, the Company accrued salary of $198,787 due to Nadav Elituv. On February 2, 2022, the Company issued common stock to settle due to related party with a carrying value of $188,871 (Note 10).
During the three months ended March 31, 2022, the Company issued advances due to related party for $48,102 of expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $37,182 in cash. In addition, the Company accrued salary of $47,744 due to Nadav Elituv for the three months ended March 31, 2022 and issued a promissory note for $85,285 to settle due to related party.
Promissory Notes – Related Party
As of March 31, 2023 and December 31, 2022, promissory note – related party of $712 (principal $0 and interest of $712) and $84,377 (principal $78,490 and interest of $5,887), respectively, were outstanding. The promissory notes – related party bear interest of 10% per annum, are unsecured, mature on December 31, 2025 and are due to 2130555 Ontario Limited, a Company controlled by Nadav Elituv, the Company's Chief Executive Officer. On February 2, 2023, the Company issued common stock to settle promissory note – related party and interest with a carrying value $85,922 (Note 10).
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 three months ended March 31, 2023 and Note 2 in the consolidated financial statement for the year ended December 31, 2022 for information on accounting policies.
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.
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Refer to Note 2 in the consolidated financial statements for the three months ended March 31, 2023 and Note 2 in the consolidated financial statements for the year ended December 31, 2022 for information on market risk.
Foreign Exchange risk
Our revenue is derived from operations in Canada. Our consolidated financial statements are presented in U.S. dollars and our liabilities other than trade payables are primarily due in U.S. dollars. The revenue we earn in Canadian dollars is adversely impacted by the increase in the value of the U.S. dollar relative to the Canadian dollar.
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. The Company believes it has sufficient liquidity to meet its cash requirements for the next twelve months.
OUTSTANDING SHARE DATA
As of May 9, 2023, the following securities were outstanding:
Common stock: 259,226,548 shares
Series A Convertible Preferred Stock: 25,000
Series B Convertible Preferred Stock: 4,000
Series C Convertible Preferred Stock: 90,000
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
ITEM 4T. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
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We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2023, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2023 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against our Company or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
ITEM 1A. RISK FACTORS
A smaller reporting company is not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
For the three months ended March 31, 2023, the Company elected to convert $4,150 of principal and interest of non-redeemable convertible notes into 41,500,000 shares of common stock of the Company with a fair value of $121,700 resulting in a loss of extinguishment of debt of $117,500.
On February 2, 2023, the Company agreed to issue 977,889 shares of common stock with a fair value of $3,912 to settle advances with a carrying value of $36,690 (CAD $48,894) due to Nadav Elituv, the Chief Executive Officer of the Company resulting an increase in additional paid-in capital of $32,778.
On February 2, 2023, the Company agreed to issue 6,346,035 shares of common stock with a fair value of $25,384 to settle consulting fees with a carrying value of $238,794 (CAD $317,302) due to 2130555 Ontario Limited resulting an increase in additional paid-in capital of $212,720. 2130555 Ontario Limited is controlled by Nadav Elituv, the Chief Executive Officer of the Company.
On March 3, 2023, the Holder of Series B Stock elected to convert 7,000 shares of Series B Stock into 7,000,000 shares of common stock resulting in a $69,162 reduction in the carrying value of Series B Stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the quarter ended March 31, 2023, we did not have any defaults upon senior securities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
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ITEM 6. EXHIBITS
| Incorporated by reference | ||||||
| Exhibit | Exhibit Description | Filed herewith | Form | Period ending | Exhibit | Filing date |
| 3.1 | Certificate of Incorporation, dated April 3, 2009 | S-1 | 3.1 | 6/22/2010 | ||
| 3.2 | Bylaws, dated April 3, 2009 | S-1 | 3.2 | 6/22/2010 | ||
| 3.3 | Certificate of Amendment to the Certificate of Incorporation, dated August 8, 2013 | 10-Q | 6/30/2013 | 3.3 | 8/14/2013 | |
| 3.4 | Certificate of Amendment to the Certificate of Incorporation, dated July 27, 2016 | 8-K | 9/1/2016 | 3.1 | 9/1/2016 | |
| 3.5 | Certificate of Amendment to the Certificate of Incorporation, dated August 27, 2018 | 8-K | 9/10/2018 | 3.1 | 9/10/2018 | |
| 3.6 | Certificate of Amendment to the Certificate of Incorporation, dated November 18, 2019 | 8-K | 12/12/2019 | 3.1 | 12/12/2019 | |
| 3.7 | Certificate of Amendment to the Certificate of Incorporation, dated July 16, 2021 | 8-K | 7/16/2021 | 3.1 | 7/22/2021 | |
| 3.8 | Certificate of Amendment to the Certificate of Incorporation, dated January 3, 2022 | 8-K | 1/3/2022 | 3.1 | 1/6/2022 | |
| 3.9 | Certificate of Amendment to the Certificate of Incorporation, As Amended, dated March 21, 2022 |
8-K | 4/25/2022 | 3.1 | 4/26/2022 | |
| 4.1 | Specimen Stock Certificate | S-1 | 4.1 | 6/22/2010 | ||
| 4.2 | Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, dated August 6, 2013 | 10-Q | 6/30/2013 | 4.2 | 8/14/2013 | |
| 4.3 | Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, dated December 12, 2019 | 8-K
|
12/12/2019
|
3.1
|
12/19/2019
| |
| 4.4 | Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated October 7, 2020 | 8-K | 10/07/2020 | 3.1 | 10/08/2020 | |
| 4.5 | Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated June 24, 2021 | 8-K | 6/24/2021 | 3.1 | 7/1/2021 | |
| 4.6 | Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, dated September 1, 2021 | 8-K | 9/1/2021 | 3.1 | 9/1/2021 | |
| 4.7 | Amended and Restated Designation of Series A Convertible Preferred Stock of Two Hands Corporation, dated April 21, 2022 | 8-K | 4/21/2022 | 3.1 | 4/26/2022 | |
| 4.8 | Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated July 5, 2022 | 10-Q | 6/30/2022 | 4.8 | 8/15/2022 | |
| 4.9 | Certificate of Designation, Preference and Rights of Series E Preferred Stock, dated October 3, 2022 | 8-K | 10/4/2022 | 3.1 | 10/11/2022 | |
| 10.1 | Innovative Product Opportunities Inc. Trust Agreement | S-1 | 10.1 | 6/22/2010 | ||
| 10.2 | Side Letter Agreement, The Cellular Connection Ltd., dated January 8, 2018 | 10-K | 12/31/2017 | 10.2 | 3/29/2018 | |
| 10.3 | Side Letter Agreement, Stuart Turk, dated January 8, 2018 | 10-K | 12/31/2017 | 10.3 | 3/29/2018 | |
| 10.4 | Side Letter Agreement, Jordan Turk, dated April 12, 2018 | 10-Q | 3/31/2018 | 10.4 | 5/21/2018 | |
| 10.5 | Side Letter Agreement, Jordan Turk, dated May 10, 2018 | 10-Q | 3/31/2018 | 10.5 | 5/21/2018 | |
| 10.6 | Side Letter Agreement, Jordan Turk, dated September 13, 2018 | 10-K | 12/31/2018
|
10.6 | 4/1/2019 | |
| 10.7 | Side Letter Agreement, The Cellular Connection Ltd., dated January 31, 2019 | 10-K | 12/31/2018 | 10.7 | 4/1/2019 | |
| 10.8 | Side Letter Agreement, Stuart Turk, dated January 31, 2019 | 10-K | 12/31/2018 | 10.8 | 4/1/2019 | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
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| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data Files as its XBRL tags are embedded within the Inline XBRL document | X | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Definition | X | ||||
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 | X |
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TWO HANDS CORPORATION
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| May 15, 2023 | By: /s/ Nadav Elituv Nadav Elituv, President, Chief Executive Officer and Director (Principal Executive Officer) |
By: /s/ Steven Gryfe Steven Gryfe, Chief Financial Officer (Principal Financial and Accounting Officer) |
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