Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 3 Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

Consolidation

The accompanying consolidated financial statements include the accounts of our current and former wholly owned subsidiaries, Blockchain.tv, Inc. and SovRryn Holdings Inc (“Sovryn”) Sovryn is consolidated up until December 31, 2023. All the intercompany balances and transactions have been eliminated in the consolidation.

Significant accounting estimates and assumptions

The preparation of the consolidated financial statements requires the use of estimates and assumptions to be made in applying the accounting policies that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. The estimates and related assumptions are based on previous experiences and other factors considered reasonable under the circumstances, the results of which form the basis for making the assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Significant accounts that require estimates include promissory notes, convertible notes and senior secured notes due to the use of discount rates.

● Fair value of equity classified conversion feature and warrants

In determining the fair values of the equity classified conversion feature and warrants pursuant to debt financing transactions, the Company applies a market-based valuation technique using the most recent private placement price as a proxy for fair value. This valuation approach is considered a Level 3 fair value measurement within the fair value hierarchy due to the use of unobservable inputs.

● Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of a previous event, if it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the obligation. The amount recognized is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligations. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate of the expected future cash flows.

● Contingencies

Contingencies can be either possible assets or possible liabilities arising from past events, which, by their nature, will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence and potential impact of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.

● Going concern

The Company evaluates its ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements – Going Concern. This assessment requires significant judgment and involves the evaluation of relevant conditions and events that are known or reasonably knowable at the date the financial statements are issued, including the Company’s current financial condition, obligations due within one year, expected future cash flows, access to capital, and management’s plans.

The assessment involves inherent uncertainty, as it requires management to project future conditions and the effectiveness of any plans intended to address potential liquidity shortfalls. If substantial doubt about the Company’s ability to continue as a going concern is identified, management evaluates whether its plans will mitigate that doubt, and appropriate disclosures are made in the financial statements.

Consolidation

The accompanying consolidated financial statements include the accounts of our current and former wholly owned subsidiaries, Blockchain.tv, Inc. and SovRryn Holdings Inc (“Sovryn”). Blockchain.tv Inc. is dormant has not had operations since its inception. Sovryn is consolidated up until January 31, 2023 and recognized as a discontinued operation. All the intercompany balances and transactions have been eliminated in the consolidation. The functional and reporting currency of the Company and its subsidiaries are U.S. Dollar. 

Segment reporting

Operating segments are defined as components of an entity where discrete financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. We identified our Chief Executive Officer as the chief operating decision maker. We operate in one operating segment. Our operating decision maker allocates resources and assesses performance at the consolidated level. 

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

● Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities. 

● Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets. 

● Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Fair value estimates presented herein are based on market assumptions and information available to management as of the reporting date. The carrying amounts of certain financial instruments approximate their fair values due to their short-term maturities or because their stated interest rates approximate market rates. These instruments include accounts payable and accrued expenses, interest payable on senior secured notes, promissory notes, convertible notes and senior secured notes. 

Convertible notes and other debt instruments

In connection with the issuance of promissory and convertible notes, in certain instances we issued common share purchase warrants (the “Warrants”) that entitle the holder to purchase shares of our Common Stock at a specified fixed exercise price at any time within a time period specified within each Warrant. We evaluated the embedded conversion feature, if any, and the warrants and concluded that they qualified as equity instruments under Accounting Standards Codification (ASC) 815, Derivatives and Hedging, and ASC 815-40, Contracts in Entity’s Own Equity. The fair value of the Warrants were separated from the promissory and convertible notes and accounted for as a reduction of the carrying amount of the note with an increase to additional paid-in capital.

With respect to the embedded conversion features in the senior secured notes, although they qualify as derivatives under ASC 815, the Company concluded that no reliable basis exists to determine their fair value as of the reporting date. Accordingly, no value has been assigned to the conversion features, and the derivative liability recognized pertains solely to the freestanding warrants.

The fair value of the Warrants that represented a discount was amortized and included in the consolidated statements of operation over the term of each note using the effective interest method.

Series A and C Convertible Preferred Stock

The Series A and C convertible preferred stock (“Series A Preferred Stock” and “Series C Preferred Stock”) were accounted for as mezzanine equity.

Loss per share

Net Loss Per Share

The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share.

Basic loss per share from continuing operation of common stock is computed by dividing net loss $2,800,549 [2023 - $5,291,588] from continuing operation by the weighted average number of shares of common stock 1,603,095,243 [2023 - $1,603,095,243], outstanding during the period.

Basic loss per share from discontinuing operation of common stock is computed by dividing net loss from discontinuing operation by the weighted average number of shares of common stock outstanding during the period.

Diluted loss per share from continuing operation of common stock is computed similarly to basic loss per share from continuing operations except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive.

Diluted loss per share from discontinuing operation of common stock is computed similarly to basic loss per share from discontinuing operations except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive.

Credit losses

In June 2016, the FASB issued ASU 326, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. We have adopted the ASU in year ended December 31, 2023.

Related Party Transactions

We follow FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions.

Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Discontinued operations

Discontinued operations are components of an entity that either have been disposed or abandoned or is classified as held for sale. Additionally, in order to qualify as a discontinued operation, the disposal or abandonment must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results.

Income taxes

The Company accounts for income taxes in accordance with ASC 740. The Company provides for Federal, State and Provincial income taxes payable, as well as for those deferred because of the timing differences between reporting income and expenses for consolidated financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The effect of a change in tax rates is recognized as income or expense in the period of the change. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount that is more likely than not to be realized.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve the disclosures regarding a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The Company is required to adopt the guidance in the fourth quarter of fiscal 2025, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) to provide disaggregated income tax disclosures on rate reconciliation and income taxes paid. The Company is required to adopt the guidance in the fourth quarter of fiscal 2026, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated financial statements.

The Company continue to evaluate the impact of the new accounting pronouncement, including enhanced disclosure requirements, on our business processes, controls and systems.