NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2024 AND 2023 

SensaSure Technologies, Inc. (“SensaSure”, “Company”, “we”, “us” or “our”) was incorporated on September 8, 2020 under the laws of the State of Nevada.

Sensabues AB (“Sensabues”) was incorporated in the Kingdom of Sweden in November 2009. Until November 1, 2023, Sensabues owned the core intellectual properties for the design of sample collection devices and the methodologies to collect, extract and detect the non-volatile substances presented within aerosols in exhaled breath. These aerosols, which originate from the lungs and blood, are captured using electret-based filter technologies.  This non-invasive breath-based biological sample collection and testing methodology is called ExaBreath (“EB”) technology.

On December 21, 2020, the Company completed a reverse recapitalization via a share exchange agreement with Sensabues and the shareholders who owned 270,339 common shares that represented 72.82% of the total issued and outstanding common shares in Sensabues. Under the share exchange agreement, the shareholders of Sensabues, agreed to exchange their shares of Sensabues for common shares of SensaSure at an exchange ratio of approximate 1:49.99. Pursuant to the share exchange transactions (see share exchange agreement noted above), SensaSure issued a total of 13,515,183 common shares and the then- shareholders of Sensabues hold their ownership of Sensabues through SensaSure (Note 8 (b)). Upon completion of the share exchange transaction, SensaSure became the controlling shareholder that owned 74.82% the total issued and outstanding common shares in Sensabues and parent company of Sensabues. No goodwill or other intangible assets were recorded during the reverse capitalization.

During April 2021, the Company increased its ownership interest in Sensabues pursuant to private placements completed by Sensabues where 277,296 common shares and 93,032 common shares were issued to the Company and noncontrolling interests respectively. (Note 8 (b)).

During the nine months ended January 31, 2023, the Company increased its ownership interest in Sensabues pursuant to private placements completed by Sensabues where 2,200,000 common shares and 440 common shares were issued to the Company and noncontrolling interests respectively. (Note 8 (b)).

On October 31, 2023, the Company owned 93.53% (93.53% - April 30, 2023) of the total issued and outstanding common shares in Sensabues.

During the three months ended January 31, 2024, the Company began winding-up the business of Sensabues to reduce operating expenses associated with maintaining the exhale breath technology patents. Since then, management of the Company has been in the process of establishing a new business segment to develop energy related businesses which led to the entry into that certain agreement and plan of merger with Verde Bio Holdings, Inc., a Nevada corporation (“Verde”), and Formation Minerals Inc., a Nevada corporation and our wholly-owned subsidiary (“Merger Sub”), as of December 11, 2023, as amended as of February 8, 2024 (the “Merger Agreement”), providing for the merger of Merger Sub with and into Verde, with Verde continuing as the surviving entity (the “Merger”). Subject to the satisfaction or waiver of the closing condition, we expect to close the Merger in the second quarter of calendar year 2024. As of February 26, 2024, the Sensabues business is no longer under the control of the Company and will cease to exist upon the completion of bankruptcy procedures. Following the Merger, we intend to focus on the acquisition and management of high quality, cash flowing oil and gas minerals and royalties under Verde’s current business plan.

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the years ended April 30, 2023 and 2022 and their accompanying notes.

The accompanying unaudited condensed interim consolidated financial statements are expressed in United States dollars (“USD”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position and results of operations for the interim periods presented have been reflected herein. Operating results for the interim periods presented herein are not necessarily indicative of the results that may be expected for the year ending April 30, 2024. The Company’s fiscal year-end is April 30.

During the three months ended January 31, 2024, Sensabues was in the process of winding up, therefore the Company lost control of Sensabues for accounting purposes. Sensabues was deconsolidated from the Company’s financial statements retroactively as of November 1, 2023. Any revenue earned or expenses incurred by Sensabues that occurred prior to deconsolidation, on November 1, 2023, is included within the Condensed Consolidated Statement of Loss, Condensed Consolidated Statement of Comprehensive Loss and Condensed Consolidated Statement of Cash Flows.

The unaudited condensed interim consolidated financial statements include the accounts of the Company and Merger Sub. Intercompany accounts and transactions have been eliminated.

Certain prior quarter amounts have been reclassified for consistency with the current period presentation. These reclassifications have no effect on the reported results of the operations or cash flows.

Prior to November 1, 2023, Sensabues and SensaSure were deemed to be under common control. Accordingly, the combination of the two entities was accounted for as a reorganization of entities under common control in accordance with ASC 805 guidelines, whereby the resulting controlling entity, namely, SensaSure recognized the assets and liabilities of the Sensabues transferred at their carrying amounts with a carry-over basis. The reorganization of entities under common control was retrospectively applied to the financial statements of all prior periods when the financial statements are issued for a period that includes the date the share exchange transaction occurred. Equity interests in Sensabues held by parties other than SensaSure are presented as non-controlling interests in equity.

Sensabues was deconsolidated from the Company’s financial statements prospectively as of November 1, 2023, pursuant to the winding-up of Sensabues. As a result, the Company lost control of the Sensabues. At January 31, 2024, the assets and liabilities were no longer included within the Company’s consolidated balance sheet. The additional paid-in capital, foreign currency translation reserves, accumulated deficits, non-controlling interests and the development reserve that related to Sensabues were no longer included within the Company’s consolidated balance sheet. The interim condensed consolidated statements of loss included the six months of activities related to Sensabues prior to the winding-up.

Formation Minerals, Inc., is a Nevada corporation and a wholly-owned subsidiary of the Company, formed on December 11, 2023 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Other than the entry into the Merger Agreement, Formation Minerals Inc. has not conducted any activities and had any accounting transactions through January 31, 2024 or the date hereof.

Until November 2023, SensaSure was a medical technology or “MedTech” company that supplied a simple device and method to collect a breath sample for lab-based analysis. Exhaled breath contains aerosols which originate from the lungs and blood. These aerosols contain revealing information for analytics, diagnostics, and therapeutics. SensaSure’s patented method is called ExaBreath, and it can collect, extract, detect and identify non-volatile compounds present in exhaled breath by utilizing existing lab-based testing infrastructure and procedures. ExaBreath is applicable in toxicology, pharmacology, and clinical biochemistry. Sensabues, SensaSure’s then-wholly-owned subsidiary, owned the core intellectual properties for the design of sample collection devices and the methodologies to collect, extract and detect the non-volatile substances presented within aerosols in exhaled breath. During the nine months ended January 31, 2024, due to the difficulties in raising adequate capital, the significant cost of maintaining the patents, and delays in engaging appropriate commercialization partners, the management of SensaSure believed that the current business of commercializing the exhale breath technology patents was no longer feasible. SensaSure began winding-up the business of Sensabues to reduce operating expenses associated with maintaining the exhale breath technology patents. Since then, management of SensaSure has been in the process of establishing a new business segment to develop energy related businesses which led to the entry into the Merger Agreement. (Note 1).

The Company has incurred recurring losses from operations, and as at January 31, 2024 and April 30, 2023, had an accumulated deficit of $3,483,139 and $6,027,209, respectively, a working capital deficiency of $617,853 and $1,061,593, respectively. The Company, during year ended April 30, 2023, obtained working capital loans from related parties in the amount of $39,979. During nine months ended January 31, 2024, the Company obtained working capital loans from related parties and third party in the amount of $100,172. On March 30, 2021, Sensabues, through an agreement with a vendor that is controlled by a then-director of Sensabues, modified the payment term of payable balance in the amount of $333,744 to settle the payable balance in seven installments, the payable balance became due on April 30, 2023. For three months ended January 31, 2024, the balance owed by Sensabues was deconsolidated from the interim condensed consolidated balance sheet. (Note 7 (c)).

The Company’s operating plan is predicated on a variety of assumptions including, but not limited to, the market demands, cost estimates, its ability to continue to raise additional financing and the state of the general economic environment in which the Company operates. There can be no assurance that these assumptions will prove to be accurate in all material respects, or that the Company will be able to successfully execute its operating plan. In the absence of additional appropriate financing, the Company may have to modify its operating plan or slow down the pace of development and commercialization of its proposed products. 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated.

These unaudited condensed interim consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company expects to finance its future operations primarily through cash flow from certain the stockholders of the Company and through debt or equity financings. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, certain stockholders of the Company indicated the intent and ability to provide additional equity financing.

Until November 1, 2023, Company sold devices with collection mechanism for biological samples based upon exhaled breath. Revenue comprises devices delivered to the Company’s customers.

In accordance with ASC 606 - Revenue from Contracts with Customers, the Company recognized revenue upon the transfer of goods to a customer at an amount that reflects the expected consideration to be received in exchange for those goods. The Company accounts for a customer contract when the rights of the parties, including the payment terms, are identified, the contract has commercial substance, collection of consideration is probable, and the contract has been signed and agreed to by both parties. Revenue is recognized when performance obligations are satisfied by transferring control or economic benefit of the goods to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for its goods.

The principles in ASC 606 are applied using the following five steps:

Cash includes cash on hand and balances with banks. Restricted cash includes proceeds from private placements and stockholder loans completed by the Company during year ended April 30, 2023 and quarter ended January 31, 2024.

The non-controlling interests represent the portion of the equity (net assets) in the subsidiary not directly or indirectly attributable to the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets, statements of loss, statements of comprehensive loss and statements of stockholders’ deficiency attributed to controlling and non-controlling interests.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant estimates and assumptions include: deferred income tax assets and related valuation allowance, accruals, stock options, principles of consolidation and reverse recapitalization and assumptions used in the going concern assessment. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

Accounts receivable consists of amounts due to the Company from research institutions. Accounts receivable is reported on the balance sheets net of an estimated allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts for estimated uncollectible receivables based on historical experience, assessment of specific risk, review of outstanding invoices, and various assumptions and estimates that are believed to be reasonable under the circumstances, and recognizes the provision as a component of selling, general and administrative expenses. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible.

Research and development and all patent maintenance and related filing costs are charged to operations as incurred as the Company is uncertain as to any future economic benefit.

The Company accounts for share-based payments in accordance with the provision of ASC 718, which requires that all share-based payments issued to acquire and compensate for goods or services received, including grants of employee shares, be recognized in the statement of loss based on their fair values, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to share-based awards is recognized over the requisite service period, which is generally the vesting period.

The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable. The Company issues compensatory shares for services including, but not limited to, executive, management, operations, corporate communication, finance and administrative consulting services.

The functional currency of the Company’s Swedish-based subsidiary is the Swedish Krona (“SEK”) and the US-based parent is the U.S. dollar (“USD”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net loss for the reporting period. In translating the financial statements of the Company’s Swedish subsidiary from their functional currency into the Company’s reporting currency of USD, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive loss in equity. The Company has not, to the date of These unaudited condensed interim consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

The Company’s financial instruments consist primarily of cash and restricted cash held in trust, accounts receivable, subscription receivable, other receivables, accounts payable and accrued liabilities, demand loans, loans from related parties, amounts due to related parties. The carrying amounts of these balances approximate their fair values due to the short-term maturities of these instruments. The carrying value of long term payable to a related party approximates its fair values due to current market rate on such debt.

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:

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 discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates. These financial instruments include cash and restricted cash held in trust, accounts receivable, subscription receivable, other receivables, accounts payable and accrued liabilities, demand loans, loans from related parties, amounts due to related parties and long term payable to a related party. The Company’s cash and restricted cash held in trust, which are carried at fair values, are classified as Level 1. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.

Income taxes are computed under the asset and liability method reflecting both current and deferred taxes, which reflect the tax impact of all events included in the consolidated financial statements. The balance sheet approach (i) reflects a current tax liability or asset recognized for estimated taxes payable or refundable on tax returns for the current and prior years, (ii) reflects a deferred tax liability or asset recognized for the estimated future tax effects attributable to temporary differences and carry forwards, (iii) measures current and deferred tax liabilities and assets using the enacted tax rate of which the effects of future changes in tax laws or rates are not anticipated, and (iv) reduces deferred tax assets, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company recognizes deferred tax assets only to the extent that management concludes these assets are more-likely-than-not to be realized. Significant judgement is required in assessing and estimating the more-likely-than-not tax consequences of the events included in the consolidated financial statements. Management considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (i) management determines whether it is more likely- than-not that the tax position will be sustained on the technical merits of the position and (ii) for those tax positions that meet the more likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

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 earnings (loss) per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average number of shares of Company common stock, par value $0.01 per share (“common shares”) outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. There were no potentially dilutive shares outstanding as at January 31, 2024, April 30, 2023 or January 31, 2023.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Until November 1, 2023, all revenues were earned in Sweden and significantly all of the assets of the Company were used for the Company’s medical device design and research and distribution activities that was carried out in Sweden. The Company has one reportable segment and operating segment. During the three months ended January 31, 2024, the Company began winding-up the business of Sensabues and entered into the Merger Agreement. For three and nine months ended January 31, 2024, the Company had one reportable segment and operating section.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. On November 19, 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies applying the credit losses (CECL), the revised effective for fiscal years beginning after December 15, 2022. The Company does not expect that this guidance will have a significant impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. There is no significant impact from adopting ASU 2019-12 on the Company’s financial condition, results of operations, and cash flows.

In April 2021, The FASB issued ASU 2021-04 to codify the final consensus reached by the Emerging Issues Task Force (EITF) on how an issuer should account for modifications made to equity-classified written call options (hereafter referred to as a warrant to purchase the issuer’s common stock). The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. The Company adopted this guidance for the fiscal year beginning April 1, 2022. There is no significant impact from adopting ASU 2021-04 on the Company’s financial condition, results of operations, and cash flows.

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

During the year ended April 30, 2021, SensaSure, via several private placements with proceeds of $793,000 for 12,200,000 common shares subscribed, issued 11,780,000 common shares. The proceeds received were reflected as an increase in common stock in amount of $117,800 and additional paid-in capital in amount of $647,900 respectively. The Company recognized a subscription receivable and shares to be issued in the amount of $27,300 at April 30, 2021. The number of shares to be issued was 420,000. During the year ended April 30, 2022, the Company received the subscription proceeds and issued 420,000 common shares accordingly (Note 8 (b)).

Prior to November 1, 2023 and at April 30, 2023, the Company’s then Swedish subsidiary, Sensabues, had balances in unsecured demand loans from several noncontrolling interests in Sensabues and a stockholder totaling $NIL and $28,550 (SEK 293,000), respectively. The loans had an interest rate of 20% per annum. For the nine months ended January 31, 2024 and 2023, interest expense was $2,719 and $4,109, respectively. The balances of loans owed to the those noncontrolling interests in Sensabues were deconsolidated from the interim condensed consolidated balance sheet pursuant to the winding up of Sensabues.

Prior to November 1, 2023 and at April 30, 2023, the Company’s then Swedish subsidiary, Sensabues, had balances in unsecured demand loans from a party who has a noncontrolling interests in Sensabues of $NIL and $44,846 (SEK 460,247), respectively. The loans had an interest rate of 2% per annum. For the nine months ended January 31, 2024 and 2023, interest expense was $427 and $679, respectively. The balances of loan owed to the noncontrolling interests in Sensabues was deconsolidated from the interim condensed consolidated balance sheet pursuant to the winding up of Sensabues.

At January 31, 2024, the Company had balances in demand loans in the amount of $100,172 from several stockholders and a third party (April 30, 2023 - $39,979). Those loans are unsecured, non-interest bearing and due on demand. (Note 2(b)).

The Company had the following balances and transaction with related parties except disclosed in other notes.:

At January 31, 2024 and April 30, 2023, salary payable to the former Chief Executive Officer of the Company who was also a director of Sensabues included in amounts due to related parties was $182,885 and $312,347, respectively. The balance owed to the director by Sensabues was deconsolidated from the interim condensed consolidated balance sheet pursuant to the winding up of Sensabues.

At January 31, 2024 and April 30, 2023, balance of loan from a former director of SensaSure was $Nil and $53,591 (SEK550,000), respectively. The loan is unsecured, bearing interest at 2% per annum and due on demand. The interest expense was $510 and $867 for nine months ended January 31, 2024 and 2023, respectively. The balance owed to the former director by Sensabues was deconsolidated from the interim condensed consolidated balance sheet pursuant to the winding up of Sensabues. (Note 2(b)).

At January 31, 2024 and April 30, 2023, balances of loan from a former director of SensaSure were $Nil and $29,232 (SEK300,000), respectively. The loan is unsecured, bearing interest at 2% per annum and due on demand. The interest expense was $278 and $473 for nine months ended January 31, 2024 and 2023, respectively. The balance owed to the former director by Sensabues was deconsolidated from the interim condensed consolidated balance sheet pursuant to the winding up of Sensabues.

The accounts payable balance related to professional services provided by a vendor that is controlled by a then-director of Sensabues.

As at January 31, 2024 and April 30, 2023, the interest accrual balance related to overdue invoices from the related party vendor was $138,483 and was included in accounts payable and accrued liabilities to a related party.

As at January 31, 2024, the total accounts payable and accrued liabilities to the related party was $271,296 (April 30, 2023 - $486,826). The balance owed to the related party by Sensabues was deconsolidated from the interim condensed consolidated balance sheet pursuant to the winding up of Sensabues.

For the nine months ended January 31, 2024, the total purchase from the related party representing the research and development and patent expenses was in amount of $10,145 (January 31, 2023 - $74,171).

On March 30, 2021, Sensabues, through a settlement agreement with the vendor, modified the payment term of accounts payable balance related to professional services provided in the amount of $333,744 (SEK2,798,280), and the parties agreed to settle the accounts payable balance in seven installments (Note 2 (c)) and the payable balance became current on April 30, 2023. Management has evaluated the terms of the agreement in accordance with the guidance provided by ASC 470 and concluded that there was no extinguishment accounting applicable to the modification. The payment modification did not include overdue invoices related interest accruals. At January 31, 2024, the accounts payable balance related to professional services provided by the related party vendor that was not included in the above settlement was $Nil (April 30, 2023 - $6,701).

At January 31, 2024, the current portion of the modified payable balance was $132,813 (April 30, 2023 - $240,012) and the long term portion was $nil (Aril 30, 2023 - $Nil).

At January 31, 2024, the Company was authorized to issue 250,000,000 (April 30, 2023 – 250,000,000) common shares.

At January 31, 2024, 56,349,183 (April 30, 2023 – 56,349,183) common shares were issued and outstanding. (Note 8 (b)).

During the year ended April 30, 2023, we issued 54,000 common shares for services provided by the then directors. The fair value of the share-based compensation was $3,780 and was determined by using the most recent private placement price at $0.07 per share. The fair value of the share-based compensation was included in the general and administrative expenses as well as a credit made in shares to be issued. As at April 30, 2023, service related vesting conditions were met for 750,000 common shares, but were not yet issued and therefore were included in shares to be issued. The fair value of the share-based compensation was in the amount of $11,975. The fair value of the share-based compensation was included in general and admirative expenses, as well as a credit made in shares to be issued.

At April 30, 2023, there were 2,800,000 unvested common shares from the conversion of previously issued shares of Class B preferred stock during the year ended April 30, 2022. At April 30, 2023, there were 750,000 vested and to be issued common shares from the conversion of previously issued shares of Class B preferred stock during year ended April 30, 2022. The dollar value associated with those shares in the amount of $35,761 was not included in common stock.

During the three months ended January 31, 2023, the Company issued 8,800,000 common shares to a then director of the Company, subject to a 24-month vesting term commencing on December 15, 2022. During the year ended April 30, 2023, 1,650,000 common shares vested and the fair value of the share-based compensation was $115,500 and was included in general and administrative expenses as well as a credit made in common stock in amount of 16,500 and additional paid-in capital in amount of 99,000, respectively. The fair value of the common shares issued was determined by using the most recent private placement price at $0.07 per share. During the nine months ended January 31, 2023, 550,000 common shares vested and the Company recorded $5,500 and $33,000] in common stock and additional paid-in capital, respectively. During the three months ended January 31, 2024, the board of directors of the Company approved the full vesting of the 8,800,000 common shares issued to a then-director of the Company, therefore, the remaining 4,950,000 common shares vested and the Company recorded $49,500 and $297,000 in common stock and additional paid-in capital, respectively.

During the three months ended January 31, 2024, the Company recognized $250,326 in share-based compensation and included in general and administrative expenses, as well as made a credit of $35,761 and $214,565 for those vested shares in common stock and additional paid-in capital, respectively.

At April 30, 2023, there were 3,080,000 unvested common shares that were issued to a consultant of the Company. The dollar value associated with those unvested shares in the amount of $30,800 was not included in common stock. During the three months ended January 31, 2024, the Company recognized $215,600 in share-based compensation and included in general and administrative expenses, as well as made a credit of $30,800 and $184,800 for those vested common shares and additional paid-in capital, respectively.

During the nine months ended January 31, 2024, the Company recognized $500,500 in share-based compensation and included in general and administrative expenses, as well as made a credit of $71,500 and $419,000 for those vested shares in common stock and additional paid-in capital, respectively.

At January 31, 2024 and April 30, 2023, there were Nil and 7,150,000, respectively, unvested common shares that were issued to the then director of the Company. The dollar value associated with those unvested shares in the amount of $Nil (April 30, 2023 - $71,500) was not included in common stock.

For the quarter ended January 31, 2024, the balance of noncontrolling interest was deconsolidated from the interim consolidated balance sheet pursuant to the winding up of Sensabues.

In compliance with the Swedish Annual Accounts Act, Sensabues financial statements recognize a development reserve. This reserve is considered restricted and is not distributable as dividends. Sensabues can transfer from the balance of development reserve to accumulated deficit those amounts to the extent of those qualified expenses that occurred in the prior year. For the year ended April 30, 2023, Sensabues transferred $59,804 from development reserve to accumulated deficits (2022 – $108,102). For the quarter ended January 31, 2024, the balance of development reserve was deconsolidated from the interim consolidated balance sheet pursuant to the winding up of Sensabues.

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As at January 31, 2024 and April 30, 2023 there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

The Company’s management has evaluated subsequent events up to March 25, 2024, the date the consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following material subsequent events that are needed to be disclosed:

On December 11, 2023, the Company entered into the Merger Agreement, providing for the Merger. At the closing, the Verde stockholders will be entitled to receive a number of shares of the Company’s capital stock having an aggregate value equal to $10,000,000. If the Merger is completed pursuant to the Merger Agreement, upon the effectiveness of the Merger, as consideration of the Merger: (i) each holder of Verde’s common stock, par value $0.001 per share (“Verde Common Stock”) will be entitled to receive for every 275 shares of Verde Common Stock, one common share; (ii) each holder of Verde’s series A convertible preferred stock, par value $0.001 per share (“Verde Series A Stock) will be entitled to receive for every 275 shares of Verde Series A Stock, one share of a newly designated class of Company preferred stock known as the Class A convertible preferred stock, par value $0.001 per share, of the Company; and (iii) each holder of Verde’s series C convertible preferred stock, par value $0.001 per share (“Verde Series C Stock”) will be entitled to receive for every 0.15 shares of Verde Series C Stock one share of a newly designated class of Company preferred stock known as the Class B preferred stock, par value $0.001 per share, of the Company, in each case based on the market price of the Company’s common stock of $0.75 per share, and the number of fully-diluted shares of Verde Common Stock outstanding, as of February 18, 2024. If the market price of the common shares or the number of fully-diluted shares of Verde Common Stock changes before the effective time, then the terms of the Merger will remain the same, but the per share Merger consideration payable will change in accordance with the provisions of the Merger Agreement. Subject to the satisfaction or waiver of closing conditions, the Merger is expected to close in the second calendar quarter of 2024.