Abaxx (ABXXF) 40FR12BInitial registration of securities (Canada)

Exhibit 99.54

ABAXX TECHNOLOGIES INC.

CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022, AND 2021

(EXPRESSED IN CANADIAN DOLLARS)

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Abaxx Technologies Inc.

Opinion

We have audited the consolidated financial statements of Abaxx Technologies Inc. (the Entity), which comprise:

(Hereinafter referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2022 and December 31, 2021 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our auditor’s report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

© 2023 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Abaxx Technologies Inc. March 31, 2023

Material Uncertainty Related to Going Concern

We draw attention to Note 2(b) in the financial statements, which indicates that the Company has incurred a net loss from continuing operations of $18.3 million and net cash outflows from operating activities of $15.3 million during the year ended December 31, 2022 and, as of that date, the Company’s accumulated deficit was $57.0 million. The Company has incurred significant losses to date and is dependent on its ability to raise additional financing to fund its operations for the foreseeable future if it is to remain a going concern.

As stated in Note 2(b) in the financial statements, these events or conditions, along with other matters as set forth in Note 2(b) in the financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Entity’s ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the “Material Uncertainty related to Going Concern” section of the auditor’s report, we have determined the matter described below to be the key audit matters to be communicated in our auditor’s report.

Evaluation of the measurement of fair value of level 3 investments

Description of the matter

We draw your attention to Note 5 and Note 12 of the financial statements. As of December 31, 2022, the Company recorded investments at fair value of $2.13 million which are classified as level 3 in the fair value hierarchy. The fair value of level 3 investments is determined through the application of valuation techniques, which involves the exercise of judgement and the use of assumptions including revenue multiples and discounts for lack of marketability.

Why the matter is a key audit matter

We identified the measurement of fair value of certain level 3 investments as a key audit matter as this matter represented an area of significant risk of material misstatement given the high degree of estimation uncertainty related to the level 3 investment. Significant auditor judgment was required to evaluate the assumptions used to determine the fair value of the investment. Further, specialized skills, industry knowledge and relevant experience were required to apply the audit procedures and evaluate the results of those procedures.

How the matter was addressed in the audit

The following are the primary procedures we performed to address this key audit matter:

We evaluated the design and implementation of certain internal controls over management review of the valuations.

We involved our valuation professionals with specialized skills, knowledge and relevant experience to assess the assumptions utilized to value the level 3 investment including the revenue multiples of comparable companies and the discount for lack of marketability. Our valuation professionals assessed the revenue multiple by comparing it to the multiples implied by trading prices of comparable companies and assessed the discount for lack of marketability by considering empirical studies.

Abaxx Technologies Inc. March 31, 2023

Other Information

Management is responsible for the other information. Other information comprises:

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor’s report.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Abaxx Technologies Inc. March 31, 2023

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Abaxx Technologies Inc. March 31, 2023

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditor’s report is Christopher D. Cornell.

Toronto, Canada
March 31, 2023

The accompanying notes are an integral part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated financial statements

Abaxx Technologies Inc.

Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)

The accompanying notes are an integral part of these consolidated financial statements

Abaxx Technologies Inc.

Consolidated Statement of Changes in Equity
(Expressed in Canadian Dollars)

The accompanying notes are an integral part of these consolidated financial statements

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Abaxx Technologies Inc. (“Abaxx” or the “Company”) is a company incorporated under the Alberta Business Corporations Act. Its corporate headquarters is located at 18 King Street East, Suite 902, Toronto, Ontario, M5C 1C4 and its registered office is located at 855- 2nd Street S.W., Suite 3500, Bankers Hall East Tower, Calgary, Alberta, T2P 4J8. The common shares of the Company are listed on the Aequitas NEO Exchange under the trading symbol “ABXX”.

Abaxx is a technology company engaged in development and deployment of trust enabling internet protocols.

The Board of Directors approved the consolidated financial statements on March 31, 2023.

The significant accounting policies of the Company are set out below. These policies have been consistently applied to each of the years presented, unless otherwise indicated.

The consolidated financial statements have been prepared in accordance with and using accounting policies in full compliance with the International Financial Reporting Standards (“IFRS”) and International Accounting Standards (“IAS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), effective for the Company’s reporting for the years ended December 31, 2022, and 2021. The accounting policies set out below have been applied consistently to the years presented in these consolidated financial statements unless otherwise noted below.

These Consolidated Financial Statements have been prepared on a going concern basis which presumes that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of its operations.

As of December 31, 2022, the Company had working capital of $8,667,368 (December 31, 2021 – $22,489,359) and an accumulated deficit of $56,978,202 (December 31, 2021 - $35,624,447). During the year ended December 31, 2022, the Company continued to build infrastructure toward the launch of its exchange and clearing house businesses, and as such used cash in operating activities of $15,300,725 (December 31, 2021 - $12,297,675) resulting primarily from the loss from operations $18,285,810 (December 31, 2021 - $12,905,032) offset by items not affecting cash such as loss on investment in associate and share-based compensation. The Company has insufficient cash on hand to fund its planned operations for the next twelve months. The Company’s ability to continue as a going concern is dependent upon its ability to generate sufficient revenues and positive cash flows from its operating activities and/or obtain sufficient funding to meet its obligations.

The Company will need to obtain further funding in the form of asset sales, issuance of debt, equity or a combination thereof to continue operations for the foreseeable future. There can be no assurance that additional funding will be available to the Company, or, if available, that this funding will be on acceptable terms. If positive operating cash flows are not achieved, or adequate funding is not available, the Company may be required to delay or reduce the scope of any or all of its operations. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

These Consolidated Financial Statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. Should the Company be unable to generate sufficient cash flow from operating and/or financing activities, the carrying value of the Company’s assets could be subject to material adjustments and other adjustments may be necessary to these Consolidated Financial Statements should such events impair the Company’s ability to continue as a going concern.

These consolidated financial statements have been prepared on a historical cost basis other than certain of the Company’s financial instruments that are measured at fair value as outlined in note 1(d).

The functional currency of the Company is the Canadian dollar which is also the presentation currency of the consolidated financial statements. The functional currency of the Company’s subsidiaries are noted in the table below.

The consolidated financial statements include the accounts of the Company and its subsidiary companies after eliminating intercompany balances and transactions. Subsidiaries are entities over which the Company has the power to govern the financial and operating policies, generally accompanying a shareholding of more than 50% of the voting rights. At December 31, 2022, and 2021 (except as noted below), the Company’s subsidiaries and consolidation basis are as follows:

Below is a summary showing the classification and measurement bases of the Company’s financial instruments:

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Financial assets

Financial assets are classified as either financial assets at fair value through profit and loss (“FVTPL”), amortized cost, or fair valve through other comprehensive income (“FVTOCI”). The Company determines the classification of its financial assets at initial recognition.

Expected credit loss impairment model

IFRS 9 introduced a single expected credit loss impairment model, which is based on changes in credit quality since initial application. The Company has classified subscription receivable, and other receivables into this category.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

Business model assessment

The Company assesses the objective of its business model for holding a financial asset at a level of aggregation which best reflects the way the business is managed, and information is provided to management. Information considered in this assessment includes stated policies and objectives.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Contractual cash flow assessment

The cash flows of financial assets are assessed as to whether they are solely payments of principal and interest on the basis of their contractual terms. For this purpose, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending risks and costs. In performing this assessment, the Company considers factors that would alter the timing and amount of cash flows such as prepayment and extension features, terms that might limit the Company’s claim to cash flows, and any features that modify consideration for the time value of money.

Derecognition of financial assets

The Company derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire.

Financial liabilities

Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition.

Financial liabilities are classified as measured at amortized cost unless they fall into one of the following categories: financial liabilities at FVTPL, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition, financial guarantee contracts, commitments to provide a loan at a below-market interest rate, or contingent consideration recognized by an acquirer in a business combination.

The Company’s accounts payable and accrued liabilities do not fall into any of the exemptions and are therefore classified as measured at amortized cost.

Financial liabilities are classified as FVTPL if they fall into one of the five exemptions detailed above. The Company’s derivative liability is measured at FVTPL.

Recognition and initial measurement

The Company recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss. Where an instrument contains both a liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability component measured initially at fair value and the equity component assigned the residual amount.

Classification and subsequent measurement

Subsequent to initial recognition, all financial liabilities are measured at amortized cost using the effective interest rate method or fair value. Interest, gains and losses relating to a financial liability are recognized in profit or loss.

Transaction costs

Transaction costs associated with financial instruments, carried at FVTPL, are expensed as incurred, while transaction costs associated with all other financial instruments are included in the initial carrying amount of the asset or the liability.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Subsequent measurement

Instruments classified as FVTPL are measured at fair value with unrealized gains and losses recognized in profit or loss. Instruments classified as amortized cost are measured at amortized cost using the effective interest rate method. Instruments classified as FVTOCI are measured at fair value with unrealized gains and losses recognized in other comprehensive income.

Derecognition

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred, or liabilities assumed, is recognized in profit or loss.

The functional currency is the currency of the primary economic environment in which the Company operates. The determination of functional currency was performed by the Company on an entity-by-entity basis and is based on various judgmental factors such as the influence on labour, material and other costs of goods or services received by the Company’s subsidiaries, management determined that the functional currency for the parent is the Canadian dollar and the functional currency for the Company’s subsidiaries in United States dollar.

Monetary assets and liabilities denominated in currencies other than functional currencies are translated into functional currencies at the rate of exchange in effect at the consolidated statement of financial position date. Non-monetary assets and liabilities are translated at the historical rates. Expenses are translated at the transaction date exchange rate. Foreign currency gains and losses resulting from translation are reflected in net comprehensive loss for the year.

The assets and liabilities of entities with a functional currency that differs from the presentation currency are translated to the presentation currency as follows:

Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net investment in the foreign operation, are recognized in other comprehensive income in the foreign currency translation reserve.

Cash and cash equivalents consist of cash deposited in banks and highly liquid short-term interest bearing investments, that includes mutual funds in money market funds.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Short term investments comprise of physical gold, bonds and shares of other publicly trading securities and are recorded at fair value as of the date of the statement of financial position. The fair value adjustment is recorded under gain on fair value of short term investments in the consolidated statements of operations and comprehensive loss.

The Company’s income tax expense consists of current and deferred tax expense. Current and deferred tax are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.

Current tax is recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting year end and includes any adjustment to taxes payable in respect of previous years.

Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable earnings. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized and the liability is settled. The effect of a change in the enacted or substantively enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to which the adjustment relates.

Deferred tax assets are recognized to the extent future recovery is probable. At each reporting year end, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Basic loss per share is computed by dividing the loss for the year available to common shareholders by the weighted average number of shares outstanding during the year. Diluted loss per share is computed similarly to basic loss per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options, restricted share units and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the year. Options, restricted share units and warrants are anti-dilutive and, therefore, have not been taken into account in the per share calculations.

A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The Company had no material provisions at December 31, 2022, and 2021.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The Company operates equity settled share-based remuneration plans for its eligible directors, officers, employees and consultants. The fair value of equity-settled share options granted to employees is recognized as an expense over the vesting period with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company.

The fair value is measured at the grant date and is recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option-pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior period if share options ultimately exercised are different to that estimated on vesting.

The fair value of share-based payments to non-employees are based on the fair value of the goods or services received. If the Company cannot estimate reliably the fair value of the goods or services received, the Company measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted at the date the Company receives the goods or services.

Common shares and preferred shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity. The proceeds from the exercise of stock options or warrants together with amounts previously recorded in reserves over the vesting periods are recorded as share capital. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS 12, Income Taxes.

Proceeds received on the issuance of units, comprised of common shares and warrants are allocated to warrants based on relative value method and common shares based on the residual method.

The Company holds equity investments in an associate. An associate is an entity over which the Company has significant influence and is neither a controlled subsidiary nor a jointly controlled entity. The Company has significant influence when it has the power to participate in the financial and operating policy decisions of the associate but does not have control or joint control over those policies.

The Company accounts for equity investments using the equity method. Under the equity method, the Company’s investment in an associate is initially recognized at cost and is subsequently increased or decreased to recognize the Company’s share of earnings or losses of the associate, and for impairment losses after the initial recognition date. The Company’s share of an associate’s losses that are in excess of its investment in the associate are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. The Company’s share of earnings or losses of associates are recognized through net income or loss during the year. Cash distribution received from an associate are accounted for as a reduction in the carrying amount of the Company’s investment in the associate.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in an associate is impaired. Objective evidence includes observable data indicating that there is a measurable decrease in the estimated future cash flows of the associate’s operations. When there is objective evidence that an investment in an associate is impaired, the carrying amount of such investment is compared to its recoverable amount, being the greater of its fair value less costs of disposal and value in use (i.e., present value of its future cash flows). If the recoverable amount of an investment in an associate is less than its carrying amount, then an impairment loss is recognized in that period. When an impairment loss reverses in a subsequent period, the carrying amount of the investment in an associate is increased to the revised estimate of the recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had an impairment loss not been previously recognized. A reversal of an impairment loss is recognized through net income or loss in the period in which the reversal occurs.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether the Company has the right to obtain substantially all of the economic benefits from use of the asset during the term of the arrangement and whether the Company has the right to direct the use of the asset.

At inception or on modification of a contract that contains a lease component, the Company will allocate the consideration in the contract to each lease component relative to each component’s stand-alone value.

When the Company is a lessee, it will recognize a right-of-use asset and a lease liability at the commencement date of a lease. The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the date the leased asset is available for use to the end of the lease term or useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the net present value of the lease payments discounted by either the interest rate implicit in the lease or if that rate cannot be readily determined, the Company’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in our estimate or assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination option. Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases are charged directly to the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences.

Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Share-based payments

Management is required to make certain estimates when determining the fair value of stock options awards, and the number of awards that are expected to vest. These estimates affect the amount recognized as share-based compensation in the statement of loss and comprehensive loss, based on estimates of forfeiture and expected lives of the underlying stock options.

Warrants

Management is required to make certain estimates on all inputs in the Black-Scholes option-pricing model, when determining the fair value of warrants included in unit financings.

Fair value of financial instruments

The Company uses judgment to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine (a) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis; and (b) for disclosing the fair value of financial instruments subsequently carried at amortized cost. These valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.

Consolidation

Judgment is applied in assessing whether the Company exercises control and/or has significant influence over the entities in which the Company directly or indirectly owns an interest. The Company has control when it has the power over the subsidiary, has exposure to rights or variable returns and has the ability to use its power to affect the returns. Significant influence is defined as the power to participate in the financial and operational decisions of the subsidiaries. Where the Company is determined to have control, these entities are consolidated. Additionally, judgment is applied in determining the effective date on which control or significant influence was obtained.

Investment in associate.

The values relating to investment in associate involve significant estimates and assumptions, including future cash flows and discount rates. It is tested for impairment annually or more frequently if the circumstances or assumptions change significantly.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The following summarizes the methods and assumptions used in estimating the fair value of the Company’s financial instruments where measurement is required. Fair value amounts represent point-in-time estimates and may not reflect fair value in the future. The measurements are subjective in nature, involve uncertainties and are a matter of judgment. The methods and assumptions used to develop fair value measurements, for those financial instruments where fair value is recognized in the consolidated statement of financial position, have been prioritized into three levels as per the fair value hierarchy.

Level one includes quoted prices (unadjusted) in active markets for identical assets or liabilities. Level two includes inputs that are observable other than quoted prices included in level one. Level three includes inputs that are not based on observable market data.

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2022 and earlier application is permitted; however, the Company has not early adopted the new and amended standards in preparing these consolidated financial statements.

The following new and amended standards are not expected to have a significant impact on the Company’s consolidated financial statements.

The Company held short term investments at the year end and the balances are as follows:

During the year ended December 31, 2022, the Company invested $6,450,373, into gold, (December 31, 2021, $1,966,334). The Company has classified this investment as short term as it plans to liquidate within the next twelve months.

During the year ended December 31, 2022, the Company recognized $350,874, as a loss on change in fair market value of its gold investments (December 31, 2021, $66,005 gain), in its consolidated statement of operations and comprehensive loss.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

During the year ended December 31, 2022, due to fluctuations in the fair market value of fixed income investments, the Company has recorded a gain on the fair value of fixed income investments of $21,088, (December 31, 2021, $602,486 gain) in the consolidated statement of operations and comprehensive loss. The Company also sold its fixed income investments and received proceeds of $516,054 (December 31, 2021, $225,426).

The maturity date of GIC investments is March 18, 2023, and they bear interest of 0.5%.

During the year ended December 31, 2022, the Company recognized investment income of $392, (December 31, 2021, $425,411) in its consolidated statement of operations and comprehensive loss.

The following schedule presents the changes in the convertible note receivables:

In September 2018, the Company purchased an unsecured convertible note from an arms-length party, Smart Crowd Holding Limited (“SCHL”) in the amount of USD $140,000 ($181,888).

The note matures on the earlier of i) a liquidity event ii) or the optional conversion date of December 31, 2023. The liquidity event is defined as any of the following events:

The convertible note receivable is measured at fair value through profit or loss. As at December 31, 2022, the convertible note receivable was valued at $594,700 (December 31, 2021, $639,978). There was $45,278 write down in the fair value recognized during the year ended December 31, 2022 (December 31, 2021, $160,998 write down). The convertible note has not been repaid or converted into shares as of December 31, 2022.

On October 22, 2021, the Company through its wholly owned subsidiary Abaxx Technologies Corp. purchased rights to certain preferred shares from an arm’s length party, PrivacyCode Inc (“PrivacyCode”) in the amount of USD $500,000 ($622,400).

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The convertible note matures on the earlier of i) the liquidity event ii) or the if there is an equity financing the note will automatically convert to preferred shares. The liquidity event is defined as change of control, a direct listing, or an Initial Public Offering.

The convertible note receivable is measured at fair value through profit or loss. As at December 31, 2022, the convertible note receivable was valued at $695,421, (December 31, 2021, $633,900). There was $18,221 increase in the fair value recognized during the year ended December 31, 2022 (December 31, 2021, $11,500). The convertible note has not been repaid or converted into shares as of December 31, 2022.

The following schedule presents the changes in the investments at fair value:

Pasig and Hudson, a Singapore company, is a private company that provides consulting, advisory, and development services in blockchain and other non-traditional banking solutions.

During the year ended December 31, 2018, the Company purchased 2,699,410 common stock of Pasig and Hudson Private Limited (“P&H”), representing 18% of the outstanding common stock, for total consideration of USD $600,000 in cash and 1,250,000 of common shares of the Company at a fair value of $500,000.

The Company reports the interest in P&H at fair value with changes in fair value recorded through the Company’s statements of operations and comprehensive loss. As at December 31, 2022, the fair value of the Company’s investment in P&H was estimated at $1,967,894, (December 31, 2021, $2,026,066). A fair value change of $58,172 loss was recognized in the carrying amount of investment in P&H during the year ended December 31, 2022 (December 31, 2021, $58,787).

On February 11, 2021, the Company through its wholly owned subsidiary Abaxx Technologies Corp. acquired 673,360 Class C preference shares, representing a 2.68% equity voting stake in AirCarbon Pte. Ltd (“AirCarbon”) for total consideration of USD $500,000 ($635,600). The Company also acquired an option to purchase a minimum of 1,346,720 additional common shares and when added to the initial investment, up to a maximum of 10% of the issued share capital of AirCarbon, for an agreed price of USD $0.742545 per share. The Company exercised this option on July 14, 2021, by acquiring an additional 1,515,970 class C preference shares for USD $1,125,676 ($1,406,757), increasing Abaxx’s ownership in the company to 7.5% on a fully diluted basis. Subsequent to the exercise of its option in Air Carbon, Abaxx under the terms of an agreement with Base Carbon, transferred 1,488,745 of its Air Carbon shares for cash consideration to Base Carbon at a cost of US$1,105,460 (US$0.742545 per share) resulting in no gain or loss for Abaxx.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The Company recognizes its investment in AirCarbon at fair value with changes in fair value recorded through the Company’s statements of operations and comprehensive loss. The Company does not have significant influence over AirCarbon, it holds less than 20% of the issued shares and shares one director in common on the board of directors.

On September 2, 2022, the Company disposed of 575,585 preference shares for net proceeds of $731,372 (US$561,083). The carrying value on the date of disposal of the preference shares disposed of was $625,748 and the Company realized a gain of $105,624.

During the year ended December 31, 2022, the Company recorded an increase of $131,905 in the fair value of its investment in AirCarbon, as a result of the most recent valuation of the Class C preference shares, (December 31, 2021, $nil).

Base Carbon Inc.

Base (for the Benefit of Air, Sea, Earth) Carbon Inc. (“Base Carbon”) is a globally diversified asset development firm in the business of sourcing, financing, developing, and trading carbon credits. Base Carbon’s mandate is to be the preferred carbon project partner for financing, streaming, technology, and access to markets. Base Carbon is an early-stage business with revenue streams that are still being developed as the business was recently launched. Abaxx Technology Crop. was a founding shareholder of Base Carbon and at December 31, 2022, holds approximately 15.6% (December 31, 2021, 19.68%) of shares outstanding that was acquired for $2,490,695 (December 31, 2021, $3,146,457). The quoted market value for these shares in Base Carbon at December 31, 2022, was $9,669,815. This value has not been adjusted on the balance sheet due to IFRS equity accounting as an investment in associate.

The Company has representation on the board of directors of Base Carbon and holds over 15% of the voting power of the Base Carbon. The Base Carbon Royalty provides that Base Carbon would pay Abaxx a 2.5% royalty for the usage of software it developed. The royalty is indefinite in term and Base Carbon has the right to buy back the royalty upon the payment of US$150,000,000 (above or in excess any royalty already paid) to Abaxx. As of December 31, 2022, no amounts have been accrued and no amounts have been recorded as receivable by the Company under the royalty agreement.

Base Carbon continues to be classified as an associate and accounted for under the equity method of accounting as the Company retain significant influence over financial and operating matters of the associated company.

During the year ended December 31, 2022, the Company distributed 5,091,827 common shares (the “Base Carbon Shares”) of Base Carbon Corp. (“Base Carbon”) from its holdings to shareholders of Abaxx as a return of capital (the “Return of Capital”). The Return of Capital was completed in connection with a capital reorganization and the then anticipated completion of Base Carbon’s reverse takeover transaction and listing on the NEO Exchange Inc.

The distribution of the Base Carbon Shares was paid on March 3, 2022, to Abaxx shareholders of record at the close of business on March 1, 2022 (the “Record Date”). The Base Carbon Shares were distributed on a pro rata basis. No fractional shares or cash in lieu thereof (or any other form of payment) were payable in connection with the Return of Capital. Any fractional interests in Base Carbon Shares were rounded down to the nearest whole number of shares. Based upon the number of common shares of Abaxx outstanding, and ignoring the effect of rounding for fractional interests, one (1) Base Carbon Share paid for every fourteen (14) Abaxx common shares held on the Record Date (approximately 0.0714 Base Carbon Shares per Abaxx common share).

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Abaxx shareholders were not required to pay for any Base Carbon Shares that were received under this distribution, nor were they required to surrender or exchange any Abaxx common shares in order to receive the Base Carbon Shares, or to have taken any other action in connection with the distribution. After the completion of the Return of Capital, Abaxx holds 19,339,593 common shares of Base Carbon.

The Company accounted for the return of capital at a fair value of $4,328,053 and this resulted in a fair value gain on distributed assets of $3,672,291 during the year ended December 31, 2022 (December 31, 2021, $nil).

During the year ended December 31, 2022, the Company recorded a share of loss in associate of $2,173,843, (December 31, 2021, $381,941).

The authorized share capital consists of an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid. Common shares issued are as follows:

Common Shares

Authorized

Unlimited number of common shares without par value.

Issued

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

In connection with the offering, the Company incurred underwriter and legal fees of $1,395,911. Proceeds were allocated to common shares and warrants using the relative fair value method. The fair value of warrants was valued at $3,881,098 and estimated based on the Black Scholes pricing model using a share price of $3.85, exercise price $5.10, dividend yield 0%, expected volatility 89.13%, risk free interest rate 0.32%, and an expected life of 24 months.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Stock options:

The Company had the following stock option transactions for the year ended December 31, 2022, and December 31, 2021:

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The following table reflects the stock options issued and outstanding as of December 31, 2022:

Restricted share units:  

The Company established a restricted stock unit plan (“RSU Plan”) which was approved by the Company’s shareholders. The RSU Plan, which is administered by the Board of Directors, is intended to provide an incentive and retention mechanism to foster the interest of eligible directors, officers, employees and consultants of the Company in the success of the Company.

Awards granted under the RSU Plan shall be settled at the sole discretion of the Company, either: (i) through the issue from treasury of the number of RSU shares represented by such vested award; or (ii) in the case of awards in respect of RSU shares that are common shares, through the purchase on the secondary market by the Company of the number of RSU shares represented by such vested award and delivery to such RSU holder.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

During the year ended December 31, 2022, share based compensation totaling $3,304,638, (December 31, 2021, $2,582,798) was recognized in the statement of operations and comprehensive loss in connection with stock options and RSUs.

Warrants transactions summarized for the year ended December 31, 2022, and 2021, are as follows:

For the year ended December 31, 2022, and 2021, basic and diluted loss per share has been calculated based on the loss attributable to common shareholders and the weighted average number of common shares outstanding. Diluted loss per share did not include the effect of stock options, restricted share units or warrants, as they are anti-dilutive.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The Company manages its capital with the following objectives:

The Company monitors its capital structure and adjusts according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general.

The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing basis.

The Company considers its capital to be equity, comprising share capital, contributed surplus, reserves, non-controlling interest, cumulative other comprehensive loss, and deficit, which totaled $10,802,283 as of December 31, 2022, (December 31, 2021, $27,940,805).

The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. There were no changes in the Company’s approach to capital risk management during the year ended December 31, 2022, and the Company is not subject to any externally imposed capital requirements.

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements for invested assets are categorized into levels within a fair value hierarchy based on the nature of valuation inputs (Level 1, 2 or 3).

The fair value of other financial assets and financial liabilities is considered to be the carrying value when they are of short duration or when the instrument’s interest rate approximates current observable market rates.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The fair value of cash and cash equivalents, short term investments, and funds in trust approximates their carrying amounts due to the relatively short period to maturity.

Where other financial assets and financial liabilities are of longer duration, then fair value is determined using the discounted cash flow method using discount rates based on adjusted observable market rates.

The table below summarizes the assets and liabilities that are included at their fair values in the Company’s consolidated statement of financial position as at December 31, 2022, and December 31, 2021. These assets and liabilities have been categorized into hierarchical levels, according to the significance and reliability of the inputs used in determining fair value measurements. The fair value hierarchy has the following levels:

The following table illustrates the classification of the Company’s financial instruments within the fair value hierarchy as at December 31, 2022, and 2021.

Significant inputs

The fair value of P&H investment as of December 31, 2022 was determined through the application of market approach. The measurement of fair value of P&H involves inputs such as revenue and the assumptions including enterprise value / revenue multiple of comparable public companies and discount for lack of marketability. A 10% fluctuation in the projected revenue would result in a $196,789 gain or loss on fair value adjustment in the consolidated financial statements.

At December 31, 2022, the measurement basis for the AirCarbon investment at fair value was approximated to cost. A 10% fluctuation in the cost would result in a $16,702 gain or loss on fair value adjustment in the consolidated financial statements.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The measurement basis for the Smart Crowd convertible note receivable was the expected share price and the probability of a fund raiser. A 10% fluctuation in the expected share price would result in a $59,470 gain or loss on fair value adjustment in the consolidated financial statements.

The measurement basis for the PrivacyCode convertible note receivable was the expected share price and the probability of a fund raiser. A 10% fluctuation in the probability of a fundraise would result in a $69,542 gain or loss on the fair value adjustment in the consolidated financial statements.

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations.

The Company’s credit risk is attributable to cash and cash equivalents, subscription receivable, short term investments, funds held in trust, convertible note receivable, and other receivables. Cash and cash equivalents are on deposit with Canadian and Singaporean chartered banks, from which management believes the risk of loss is remote. Other receivables are due from the Ministry of Revenue from which management believes the risk of loss to be remote. Convertible note receivable is due from an arm’s length third party from which management believes the risk of loss to be remote. The Company’s maximum exposure to credit risk as at December 31, 2022, and 2021 is the carrying value of cash and cash equivalents, short term investments, subscription receivable, funds held in trust, convertible note receivable, and other receivables.

Interest rate risk

The Company has cash and cash equivalents bearing fixed interest rates and no variable interest-bearing debt. The Company’s current policy is to invest excess cash in investment-grade short term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2022, the Company had current assets of $11,868,484 (December 31, 2021,

$23,842,120) to settle current liabilities of $3,201,116 (December 31, 2021, $1,352,761). The ability of the Company to continue as a going concern is dependent on its ability to secure additional equity or other financing. All of the Company’s financial liabilities have contractual maturities of less than one year and are subject to normal trade terms.

Market risk

Market risk is the risk of loss that may arise from changes in market forces such as interest rates and foreign exchange rates.

Foreign currency risk

The Company’s functional and reporting currency is the Canadian dollar. Major purchases and investments are transacted in United States dollar. The Company is exposed to foreign currency risk with respect to the cash balance of $4,292,721 (December 31, 2021, $18,632,994) which is denominated in United States dollars.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Sensitivity analysis

Based on management’s knowledge and experience of the financial markets, the Company believes the following movements are reasonably possible over a 12-month period:

i) The Company has no variable interest-bearing debt at December 31, 2022, and 2021.

ii) The Company has cash and accounts payable denominated in United States dollars. Sensitivity to a plus or minus 5 percentage point change in exchange rate would lead to a $93,984 (December 31, 2021, $955,328) gain (loss) in the reported comprehensive loss.

The Company considers key management to be officers and directors. During the year ended December 31, 2022, $336,800 (December 31, 2021, $227,169) of fees were paid to key management and companies controlled by or related to key management.

Key management and directors received $364,083 and $312,174 respectively in share-based compensation during the year ended December 31, 2022 (December 31, 2021, $593,083 and $334,587, respectively).

On February 28, 2022, senior management and directors exercised, 101,125 stock options, at an exercise price of $0.49, 290,425 stock options, at an exercise price of $1.00, and 101,125 stock options, at an exercise price of $1.24.

During the year ended December 31, 2022, the Company recharged $750,000 (December 31, 2021, $nil) for certain expenses to Base Carbon, an associate entity of the Company.

During the year ended December 31, 2022, the Company distributed common shares in Base Carbon, an associate entity to shareholders of the Company. See note 6 for transactions with the Company’s investment in associate.

The following table reconciles the expected income tax provision at the statutory tax rate of 26.50% to the amounts recognized in the consolidated statement of loss for the year ended December 31, 2022, and December 31, 2021:

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The tax effect of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2022, and 2021 are as follows: 

Deferred taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following unrecognized deductible temporary differences.

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the group can utilize the benefits therefrom.

The Company’s Canadian non-capital losses carried forward of $12,547,677 expire from 2035 to 2042. The Company has foreign non-capital losses expire as follows:

The losses in Singapore have an indefinite life and the losses in Barbados have a seven year carry forward.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

Royalty Payments

During the year ended December 31, 2019, the Company entered into a Royalty Agreement (“Royalty”) with its subsidiary Abaxx Singapore. The Royalty payment contains the following terms:

As of December 31, 2022, Abaxx Singapore has not achieved any revenue and as such no amounts have been accrued in the consolidated financial statements.

In addition, the Royalty permits the Company to purchase an increase in the royalty payments by 1% for USD$10,000,000 by February 1, 2024.

As of December 31, 2022, the Company has not made any payments to Abaxx Singapore to increase the royalty earnings percentage.

The Company has a royalty agreement with Base Carbon that would pay Abaxx a 2.5% royalty on gross revenue for previous financial assistance and the usage of software it developed. The royalty is indefinite in term and Base Carbon has the right to buy back the royalty upon the payment of US$150,000,000 to Abaxx.

Transfer of Intellectual Property and License Agreement

The Company has developed proprietary digital technology and intellectual property for application to exchange trading and clearing for commodities and financial products including liquid natural gas as well as other tradable commodities and applications. (“Exchange Technology”).

During the year ended December 31, 2019, the Company entered into a Master Licensing Agreement (“MLA”) with its majority owned affiliate Abaxx Singapore. As a result of this agreement, the Company was assigned exclusive title rights of use as well as the sub-license rights to the Exchange Technology by way of a master license agreement.

The Company maintains ownership of the intellectual property licensing in the MLA.

Abaxx Singapore has agreed to pay the Company earnings if in the future it sub-licenses the Exchange Technology, in which case as a result of the MLA royalty fees would be as follows:

Payments from Abaxx Singapore under these agreements are due monthly to the Company. As of December 31, 2022, no amounts have been accrued by Abaxx Singapore and no amounts have been recorded as receivable by the Company under either a royalty agreement or the MLA.

Abaxx Technologies Inc.

Notes to Consolidated financial statements

For the year ended December 31, 2022, and 2021
(Expressed in Canadian Dollars)

The Company has not recorded the benefits under either of these agreements as an asset due to the intellectual property being still under development, no revenues have been generated and commercial viability of the Exchange Technology has not yet been determined.

As of the year ended December 31, 2022, this agreement does not have any impact on the consolidated financial statements of the Company.

Contingency

The Company is a party to the claims & litigation arising in the normal course of business. Due to the inherent uncertainties of litigation and/or the early stage of certain proceedings, the final outcomes of all ongoing litigation and claims cannot be predicted with certainty and the amount of any potential losses cannot be estimated reliably. The resolution of any future matters could materially affect the Company’s financial position, results of operations or cash flows.

As part of the December 14, 2020, reverse takeover with New Millennium Iron Corp., the Company took on a legacy legal claim and this is a lawsuit filed by a former NML consultant in the amount of $1,500,000. The Company believes that the consultant was appropriately compensated and is contesting this claim.

In management’s opinion, based on its current knowledge and after consultation with counsel, the ultimate disposition of this action will not have a material adverse effect on the consolidated financial condition or the consolidated cash flows of the Company. However, because of the factors listed above, as well as other uncertainties inherent in litigation, there is a possibility that the ultimate resolution of the legal action may be material to the Company’s consolidated results of operations for any reporting period.

The Company operates in a single segment, being the development and deployment of trust enabling Internet protocols. As at December 31, 2022, and 2021, the Company’s core assets, intellectual property, and development work, is conducted in Singapore.

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