An offering statement pursuant to Regulation A relating to these
securities has been filed with the Securities and Exchange
Commission. Information contained in this Preliminary Offering
Circular is subject to completion or amendment. These securities
may not be sold nor may offers to buy be accepted before the
offering statement filed with the Commission is qualified. This
Preliminary Offering Circular shall not constitute an offer to sell
or the solicitation of an offer to buy nor may there be any sales
of these securities in any state in which such offer, solicitation,
or sale would be unlawful before registration or qualification
under the laws of any such state.
PRELIMINARY OFFERING CIRCULAR
SUBJECT TO COMPLETION, DATED APRIL 2, 2019
DIGATRADE FINANCIAL CORP.
Up to 100,000,000 Shares
of Common Stock
US $1,000,000
Digatrade
Financial Corp., a British Columbia corporation (the
“Company,” “we,” “us,” and
“our”), is offering up to 100,000,000 shares of common
stock for $0.01 per share, for gross proceeds to the Company of up
to $1,000,000, before deduction of offering expenses, assuming all
shares are sold. There is no minimum aggregate offering amount, but
we will impose a minimum purchase requirement of $10,000 per
investor to participate in the offering, unless such minimum is
waived by the Company in its sole discretion, which may be done on
a case-by-case basis. We may sell significantly fewer shares of
common stock than the maximum amount offered hereby. At a closing,
the proceeds will be distributed to the Company and the associated
shares will be issued to investors. If there are no closings, the
investments for this offering will be promptly returned to
investors, without deduction and without interest.
All
shares will be offered on a “best efforts” basis. As
there is no minimum offering, upon the approval of any subscription
to this offering, the Company may immediately conduct a closing,
deposit said proceeds into the bank account of the Company, as
applicable, and use the proceeds of such closing in accordance with
the “Use of Proceeds” on page 15 and “Securities
Being Offered” on page 27.
Shares
offered by the Company will be sold by our directors and executive
officers on behalf of the Company. We may also elect to engage
licensed broker-dealers to act as sales agents in this offering. No
sales agents have yet been engaged to sell shares. All shares will
be offered on a “best-efforts” basis.
We
expect to commence the offering on the date on which the offering
statement of which this offering circular is a part is qualified by
the Securities and Exchange Commission (“SEC”) and will
terminate one year thereafter or once all offered securities are
sold, whichever occurs first. Notwithstanding the foregoing, the
Company may extend the offering by an additional 90 days or
terminate the offering at any time.
Our
common stock is not now listed on any U.S. national securities
exchange; however, our stock is quoted on the OTC Markets Group
Inc.’s OTC marketplace under the trading symbol
“DIGAF”. There is currently only a limited market for
our securities. There is no guarantee that our securities will ever
trade on any listed exchange.
This
offering is being made pursuant to Tier 1 of Regulation A following
the “Offering Circular” disclosure format.
(1)We
may offer shares through registered broker dealers, although at
this time, we have not determined if we will require these
services, and therefore have not selected such a selling
agent.
(2)We
estimate that our total expenses for this offering will be $50,000.
See “Plan of Distribution.”
Generally, no sale may be made to you in this offering if the
aggregate purchase price you pay is more than 10% of the greater of
your annual income or net worth. Different rules apply to
accredited investors and non-natural persons. Before making any
representation that your investment does not exceed applicable
thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of
Regulation A. For general information on investing, we encourage
you to refer to www.investor.gov.
This offering is highly speculative and these securities involve a
high degree of risk and should be considered only by persons who
can afford the loss of their entire investment. See “Risk
Factors” on page 5.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS
UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED
OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR
COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION
MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS
NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED
ARE EXEMPT FROM REGISTRATION.
1500
West Georgia Street, Suite 1300
Vancouver,
British Columbia, Canada, V6C 2Z6
+1(604)
200-0071
www.digatradefinancial.com
Offering
Circular Date: April 2, 2019
TABLE
OF CONTENTS
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SIGNATURES
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CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
Some of
the statements under “Summary Information,” “Risk
Factors,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,”
“Business” and elsewhere in this offering circular
constitute forward-looking statements. Forward-looking
statements relate to expectations, beliefs, projections, future
plans and strategies, anticipated events or trends and similar
matters that are not historical facts. In some cases, you can
identify forward-looking statements by terms such as
“anticipate,” “believe,”
“could,” “estimate,” “expect,”
“intend,” “may,” “plan,”
“potential,” “should,” “will”
and “would” or the negatives of these terms or other
comparable terminology. You should not place undue reliance on
forward looking statements. The cautionary statements set
forth in this offering circular, including in “Risk
Factors” and elsewhere,
identify important factors which you should consider in evaluating
our forward-looking statements.
Although
the forward-looking statements in this offering circular are based
on our beliefs, assumptions and expectations, taking into account
all information currently available to us, we cannot guarantee
future transactions, results, performance, achievements or
outcomes. No assurance can be made to any investor by anyone that
the expectations reflected in our forward-looking statements will
be attained, or that deviations from them will not be material and
adverse. We undertake no obligation, other than as may be required
by law, to re-issue this offering circular or otherwise make public
statements updating our forward-looking statements.
SUMMARY INFORMATION
This summary highlights some of the information in this offering
circular. It is not complete and may not contain all of the
information that you may want to consider. To understand this
offering fully, you should carefully read the entire offering
circular, including the section entitled “Risk
Factors,” before making a decision to invest in our
securities. Unless otherwise noted or unless the context otherwise
requires, the terms “we,” “us,”
“our,” the “Company,” refer to Digatrade
Financial Corp.
The Company
The
Company is a British Columbia corporation, incorporated on December
28, 2000.
The
Company was incorporated under the name Black Diamond Holdings
Corporation. On June 26, 2007, the Company changed its name from
Black Diamond Holdings Corporation to Black Diamond Brands
Corporation. On November 21, 2008 the Company changed its name to
Rainchief Energy Inc. and on February 19, 2015 to Bit-X Financial
Corporation. On October 27, 2015 the Company changed its name to
Digatrade Financial Corporation.
The
Company is listed as a fully reporting issuer on the FINRA OTC
bulletin board and trades under the symbol “DIGAF”. The
Company is focused on developing blockchain technology services and
building a profitable digital OTC trade desk for accredited traders
and institutions seeking buyside exposure to cryptocurrency. The
Company is exploring new opportunities within the sector including
Initial Coin Offerings “ICO’s”, Digital Corporate
Finance “DCF” and blockchain security protocol
services.
In
March 2015, the Company entered into an agreement with Mega Ideas
Holdings Limited, dba ANX (“ANXPRO and ANX
International”), a company incorporated and existing under
the laws of Hong Kong. ANX owns a proprietary trading platform and
provides operational support specializing in blockchain development
services and exchange and transaction services for
crypto-currencies e.g. Bitcoin and other digital assets. Effective
October 17, 2018 the Company closed the online retail trading
platform and shared liquidity order book with ANX International
owing to low transaction volumes. The Company will continue to
offer OTC trading for institutional customers and accredited
traders while continuing to seek new opportunities within the
blockchain and the financial technology sector.
On
February 28, 2019 the Company executed
its anticipated Definitive Agreement (“DA”) with
Securter Inc., a private Canadian Corporation that is developing a
proprietary, patent-pending credit card payment platform to
significantly increase the security of online credit card payment
processing. Securter technology reduces immense losses by financial
institutions and merchants that arise from fraudulent credit card
use and protects cardholder privacy by eliminating the distribution
of personal information to third parties. With the current
worldwide surge in online commerce expected to continue for years
to come, the problem of credit card security is large and growing.
The Definitive Agreement with Securter sets out that
Securter’s technology will be launched and commercialized as
a Digatrade subsidiary.
Organization Structure
As of
the date of this report the Company has three wholly-owned
subsidiaries, Digatrade Limited (a British Columbia corporation),
Digatrade Limited (a Nevada corporation) and Digatrade (UK) Limited
(a United Kingdom corporation).
Corporate Information
Our
principal executive offices are located at 1500 West Georgia
Street, Suite 1300, Vancouver, British Columbia, Canada, V6C 2Z6.
Our telephone is +1(604) 200-0071. The address of our website is
www.digatradefinancial.com. Information contained on or accessible
through our website is not a part of this offering circular and
should not be relied upon in determining whether to make an
investment decision.
The
Company is currently authorized to issue an unlimited number of
shares of common stock without par value and 1,100,000 Class
“B” Common Shares which are non-participating, voting
(voting right of 1,000 votes per share) without par value. As of
March 25, 2019, the Company had 230,667,223 shares of common stock
and 1,100,000 shares of Class “B” Common Shares issued
and outstanding.
The
Company’s securities are currently quoted on the OTC Markets
Group Inc.’s OTC marketplace under the symbol
“DIGAF.” The Company is a reporting issuer under Form
20-F (Foreign Private Issuer).
The Offering
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Issuer in this Offering:
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Digatrade
Financial Corp.
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Securities offered:
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Common
stock
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Common Stock to be outstanding before this Offering:
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230,667,223
shares
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Common Stock to be outstanding after this Offering:
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330,667,223
shares, assuming the maximum amount of shares are
sold.
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Price per share:
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$0.01
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Maximum Offering amount:
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$1,000,000,
assuming the maximum amount of shares are sold by the Company. The
minimum investment established for each investor is $10,000, unless
such minimum is waived by the Company in its sole discretion, which
may be done on a case-by-case basis. There is no minimum aggregate
offering amount, and we may sell significantly fewer shares than
the maximum amount offered hereby.
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Use of proceeds:
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We
estimate that the net proceeds to us from this offering, after
deducting fees and estimated offering expenses, will be
approximately $950,000, assuming the maximum amount of shares
offered by us are sold.
We
intend to use substantially all of such net proceeds from this
offering for general working capital purposes, as described in this
offering circular. Our management will have broad discretion over
how these proceeds are used. For additional information, see
“Use of Proceeds.”
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Dividend policy:
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Holders
of our common stock are only entitled to receive dividends when, as
and if declared by our board of directors out of funds legally
available for dividends. We do not intend to pay dividends for the
foreseeable future. Our ability to pay dividends to our
stockholders in the future will depend on regulatory restrictions,
liquidity and capital requirements, our earnings and financial
condition, the general economic climate, contractual restrictions,
our ability to service any equity or debt obligations senior to our
common stock and other factors deemed relevant by our board of
directors. For additional information, see “Dividend
Policy.”
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Risk factors:
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Investing
in our common stock involves risks. See “Risk Factors”
for a discussion of certain factors that you should carefully
consider before making an investment decision.
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RISK FACTORS
In
addition to the other information provided in this offering
circular, we are subject to a number of risks, including risks that
may prevent us from achieving our business objectives or that may
adversely affect our business, financial condition, results of
operations, cash flows and prospects. You should carefully
consider the risks discussed in this section in evaluating our
business and before purchasing any of our common
stock.
Risks Related to the Business
We have a history of operating losses and need additional capital
to implement our business plan.
For the nine months ended September 30, 2018, we recorded a
net loss from operations of $650,672, as compared with a net loss
from operations of $346,873 for the nine months
ended September 30, 2017. The financial statements have been
prepared using IFRS applicable to a going concern. However, as
disclosed in Note 1 to the interim condensed financial statements,
our ability to continue operations is uncertain.
We continue to incur operating losses and have a consolidated
deficit of $5,826,788 as at September 30, 2018.
Operations for the nine months ended September 30, 2018
have been funded by the issuance of convertible promissory notes
and the continued support of creditors.
We estimate that we will require at least $1,000,000 to continue
developing the OTC Trade Desk for institutions and accredited
traders and cover research & development costs with the
Securter technology application. Further due diligence on new
prospective business opportunities within the blockchain and
financial technology sector will be in process and as a result the
full implementation of our business plan will be delayed until the
necessary capital is raised.
We cannot predict when or if we will produce revenues.
We have
not generated any revenue to date from operations. In order for us
to continue with our plans and open our business, we must raise
capital. The timing of the completion of the milestones needed to
commence operations and generate revenues is contingent on the
success of this raise. There can be no assurance that we will
generate revenues or that revenues will be sufficient to maintain
our business.
Our entry into the OTC Trade Desk for institutions and accredited
traders may not be successful and there are risks attendant on
these activities.
The crypto-currency, blockchain and coin exchange platform business
is extremely volatile. There are many companies, large and small
entering the market with the capital to develop and create new
innovative applications resulting in a highly competitive and
fast-moving environment. Even with capital and technical expertise,
industry, political and compliance risks are significant.
Regulatory compliance and the overall ecosystem of
crypto-currencies is extremely complex and not yet fully defined by
governments and financial institutions worldwide. We may not be
able to finance our business plan and marketing plan, there is no
assurance that our entry into this business will be
successful.
Our entry into the development of a secure mobile application for
card not present “CNP” transaction business may not be
successful and there are risks attendant on these
activities.
The Financial Technology
“Fintech” business is extremely competitive. There are
many companies, large and small entering the market with the
capital to develop and create new innovative applications resulting
in a highly competitive and fast-moving environment. Even with
capital and technical expertise, industry, political and compliance
risks are significant. Regulatory compliance and the overall
ecosystem for secure online payments is extremely complex and not
yet fully defined by governments and financial institutions
worldwide. We may not be able to finance our business plan and
marketing plan, there is no assurance that our entry into this
business will be successful.
The loss of key personnel or the inability of replacements to
quickly and successfully perform in their new roles could adversely
affect our business.
We
depend on the leadership and experience of our key executive and
chairman, Brad Moynes. Mr. Moynes functions as our chairman and
executive officer, and as such, we are heavily dependent upon him
to conduct our operations. In 2018, the Company added two
additional directors which now brings the board to four directors.
We do not have key man insurance. If Mr. Moynes resigns or dies,
there could be a substantial negative impact upon our operations.
If that should occur, until we find other qualified candidates to
become officers and/or directors to conduct our operations, we may
have to suspend our operations or cease operating entirely. In that
event, it is possible you could lose your entire
investment.
Risks Related to this Offering and Our Stock
The market price of our shares may fluctuate
significantly.
The
market price and liquidity of the market for shares may be
significantly affected by numerous factors, some of which are
beyond our control and may not be directly related to our operating
performance. Some of the factors that could negatively affect the
market price of our shares include:
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our
actual or projected operating results, financial condition, cash
flows and liquidity, or changes in business strategy or
prospects;
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equity
issuances by us, or share resales by our stockholders, or the
perception that such issuances or resales may occur;
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loss of
a major funding source;
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actual
or anticipated accounting problems;
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changes
in market valuations of similar companies;
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adverse
market reaction to any indebtedness we incur in the
future;
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speculation in the
press or investment community;
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price
and volume fluctuations in the overall stock market from time to
time;
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general
market and economic conditions, and trends including inflationary
concerns, the current state of the credit and capital
markets;
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significant
volatility in the market price and trading volume of securities of
companies in our sector, which are not necessarily related to the
operating performance of these companies;
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changes
in law, regulatory policies or tax guidelines, or interpretations
thereof;
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operating
performance of companies comparable to us; and
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short-selling
pressure with respect to shares of our shares
generally.
As
noted above, market factors unrelated to our performance could also
negatively impact the market price of our shares. One of the
factors that investors may consider in deciding whether to buy or
sell our shares is our distribution rate as a percentage of our
share price relative to market interest rates. If market interest
rates increase, prospective investors may demand a higher
distribution rate or seek alternative investments paying higher
dividends or interest. As a result, interest rate fluctuations and
conditions in the capital markets can affect the market value of
our shares. For instance, if interest rates rise, it is likely that
the market price of our shares will decrease as market rates on
interest-bearing securities increase.
We have broad discretion in the use of the net proceeds from this
offering and may not use them effectively.
Our
management will have broad discretion in the application of the net
proceeds from this offering and could spend the proceeds in ways
that do not improve our results of operations or enhance the value
of our common stock. The failure by our management to apply these
funds effectively could result in financial losses that could have
a material adverse effect on our business, cause the price of our
common stock to decline and delay the development of our products
and services.
If we have to raise capital by selling securities in the future,
your rights and the value of your investment in the Company could
be reduced.
If we issue debt securities, the lenders would have a claim to our
assets that would be superior to the stockholder rights. Interest
on the debt would increase costs and negatively impact operating
results. If we issue more common stock or any preferred stock, your
percentage ownership will decrease and your stock may experience
additional dilution, and the holders of preferred stock (called
preference securities in Canada) may have rights, preferences and
privileges which are superior to (more favorable) the rights of
holders of the common stock. It is likely the Company will sell
securities in the future. The terms of such future transactions
presently are not determinable.
If the market for
our common stock is illiquid in the future, you could encounter
difficulty if you try to sell your stock.
Our stock trades on the OTC Marketplace but it is not actively
traded. If there is no active trading market, you may not be able
to resell your shares at any price, if at all. It is possible that
the trading market in the future will continue to be "thin" or
"illiquid," which could result in increased price volatility.
Prices may be influenced by investors' perceptions of us and
general economic conditions, as well as the market for energy
generally. Until our financial performance indicates substantial
success in executing our business plan, it is unlikely that there
will be coverage by stock market analysts will be extended. Without
such coverage, institutional investors are not likely to buy the
stock. Until such time, if ever, as such coverage by analysts and
wider market interest develops, the market may have a limited
capacity to absorb significant amounts of trading. As the stock is
a “penny stock,” there are additional constraints on
the development of an active trading market – see the next
risk factor.
The penny stock
rule operates to limit the range of customers to whom
broker-dealers may sell our stock in the market.
In general, "penny stock" (as defined in the SEC’s rule
3a51-1 under the Securities Exchange Act of 1934) includes
securities of companies which are not listed on the principal stock
exchanges, or the Nasdaq National Market or the Nasdaq Capital
Market, and which have a bid price in the market of less than
$5.00; and companies with net tangible assets of less than $2
million ($5 million if the issuer has been in continuous operation
for less than three years), or which has recorded revenues of less
than $6 million in the last three years.
As a "penny stock" our stock therefore is subject to the
SEC’s rule 15g-9, which imposes additional sales practice
requirements on broker-dealers which sell such securities to
persons other than established customers and "accredited investors"
(generally, individuals with net worth in excess of $1 million or
annual incomes exceeding $200,000, or $300,000 together with their
spouses, or individuals who are the officers or directors of the
issuer of the securities). For transactions covered by rule 15g-9,
a broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent to
the transaction prior to sale. This rule may adversely affect the
ability of broker-dealers to sell our stock, and therefore may
adversely affect our stockholders' ability to sell the stock in the
public market.
Your legal recourse as a United
States investor could be limited.
The
Company is incorporated under the laws of British Columbia. Most of
the assets now are located in Canada. Our directors and officers
and the audit firm are residents of Canada. As a result, if any of
our shareholders were to bring a lawsuit in the United States
against the officers, directors or experts in the United States, it
may be difficult to effect service of legal process on those people
who reside in Canada, based on civil liability under the Securities
Act of 1933 or the Securities Exchange Act of 1934. In addition, we
have been advised that a judgment of a United States court based
solely upon civil liability under these laws would probably be
enforceable in Canada, but only if the U.S. court in which the
judgment were obtained had a basis for jurisdiction in the matter.
We also have been advised that there is substantial doubt whether
an action could be brought successfully in Canada in the first
instance on the basis of liability predicated solely upon the
United States' securities laws.
Because the risk factors referred to above, as well as other risks
not mentioned above, could cause actual results or outcomes to
differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any
such forward-looking statements. Further, any forward-looking
statement speaks only as of the date on which it is made. We
undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such
statement is made or reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not
possible for us to predict which ones will arise. In addition, we
cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.
DILUTION
The Company, for business purposes, may from time to time issue
additional shares, which may result in dilution of existing
shareholders. Dilution is a reduction in the percentage of a stock
caused by the issuance of new stock. Dilution can also occur when
holders of stock options (such as company employees) or holders of
other optionable securities exercise their options. When the number
of shares outstanding increases, each existing stockholder will own
a smaller, or diluted, percentage of the Company, making each share
less valuable. Dilution may also reduce the value of existing
shares by reducing the stock’s earnings per share. There is
no guarantee that dilution of the Common Stock will not occur in
the future.
PLAN OF DISTRIBUTION
We are
offering up to 100,000,000 shares of our common stock for $0.01 per
share, for a total of up to $1,000,000 in gross offering proceeds,
assuming all shares of common stock are sold. The minimum
investment for any investor is $10,000, unless such minimum is
waived by the Company, which may be done in its sole discretion on
a case-by-case basis. There is no minimum offering amount, and we
may sell significantly fewer shares of common stock than those
offered hereby. In fact, there can be no assurances that the
Company will sell any or all of the offered shares. At a closing,
the proceeds will be distributed to the Company and the associated
shares will be issued to investors. All proceeds we receive from
the offering will be available to us for uses set forth in the
“Use of Proceeds” section of this offering circular. If
there are no closings, the investments for this offering will be
promptly returned to investors, without deduction and without
interest.
We
believe that the total expenses of this offering will be $50,000,
regardless of the number of shares of common stock that are
sold.
Our
common stock is not now listed on any U.S. national securities
exchange; however, our stock is quoted on the OTC Markets Group
Inc.’s OTC marketplace under the trading symbol
“DIGAF”. There is currently only a limited market for
our securities and there is no guarantee that a more substantial or
active trading market will develop in the future. There is also no
guarantee that our securities will ever trade on any listed
exchange. Accordingly, our shares should be considered highly
illiquid, which inhibits investors’ ability to resell their
shares.
Upon
this offering circular being qualified by the SEC, the Company may
offer and sell shares from time to time until all of the shares
registered are sold; however, this offering will terminate one year
from the initial qualification date of this offering circular,
unless extended or terminated by the Company. The Company may
terminate this offering at any time and may also extend the
offering term by 90 days.
Currently,
we plan to have our director and executive officers sell the shares
offered hereby on behalf of the Company on a
“best-efforts” basis. They will receive no discounts or
commissions. Our director and executive officers will deliver this
offering circular to those persons who they believe might have
interest in purchasing all or a part of this offering. The Company
may generally solicit investors; however, it must abide by the
“blue sky” regulations relating to investor
solicitation in the states where it will solicit
investors.
Our
directors and officers will not register as broker-dealers under
Section 15 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) in reliance upon Rule 3a4-1. Rule 3a4-1
sets forth those conditions under which a person associated with an
issuer may participate in the offering of the issuer’s
securities and not be deemed to be a broker-dealer. The conditions
are that:
●
the
person is not statutorily disqualified, as that term is defined in
Section 3(a)(39) of the Securities Act, at the time of his
participation;
●
the
person is not at the time of their participation an associated
person of a broker-dealer; and
●
the
person meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1
of the Exchange Act, in that he (i) primarily performs, or is
intended primarily to perform at the end of the offering,
substantial duties for or on behalf of the issuer otherwise than in
connection with transactions in securities; and (ii) is not a
broker or dealer, or an associated person of a broker or dealer,
within the preceding 12 months; and (iii) does not participate in
selling and offering of securities for any issuer more than once
every 12 months other than in reliance on paragraphs (a)(4)(i) or
(a)(4)(iii) of Rule 3a4-1 of the Exchange Act.
Our
officers and directors are not statutorily disqualified, are not
being compensated, and are not associated with a broker-dealer.
They are and will continue to hold their positions as officers or
directors following the completion of the offering and have not
been during the past 12 months and are currently not brokers or
dealers or associated with brokers or dealers. They have not nor
will they participate in the sale of securities of any issuer more
than once every 12 months.
As of
the date of this offering circular, we have not entered into any
arrangements with any selling agents for the sale of the
securities; however, we may engage one or more selling agents to
sell the securities in the future. If we elect to do so, we will
supplement this offering circular as appropriate.
All
subscription agreements and wire transfers received by the Company
for the purchase of shares are irrevocable until accepted or
rejected by the Company and should be delivered to the Company as
provided in the subscription agreement. A subscription agreement
executed by a subscriber is not binding on the Company until it is
accepted on our behalf by the Company’s Chief Executive
Officer or by specific resolution of our board of directors. Any
subscription not accepted within 30 days will be automatically
deemed rejected. Once accepted, the Company will arrange the
delivery of the shares electronically via DWAC to the purchaser
within five days upon receipt of the funds from the purchaser;
otherwise purchasers’ shares will be issued and held in
book-entry format at the Company’s Transfer Agent until
further instruction are provided by the purchaser.
Investment Limitations
Generally,
no sale may be made to you in this offering if the aggregate
purchase price you pay is more than 10% of the greater of your
annual income or net worth (please see below on how to calculate
your net worth). Different rules apply to accredited investors and
non-natural persons. Before making any representation that your
investment does not exceed applicable thresholds, we encourage you
to review Rule 251(d)(2)(i)(C) of Regulation A. For general
information on investing, we encourage you to refer to
www.investor.gov.
Because
this is a Tier 1, Regulation A Offering, most investors must comply
with the 10% limitation on investment in the offering. The only
investor in this offering exempt from this limitation is an
“accredited investor” as defined under Rule 501 of
Regulation D under the Securities Act (an “Accredited
Investor”). If you meet one of the following tests you should
qualify as an Accredited Investor:
●
You are
a natural person who has had individual income in excess of
$200,000 in each of the two most recent years, or joint income with
your spouse in excess of $300,000 in each of these years, and have
a reasonable expectation of reaching the same income level in the
current year;
●
You are
a natural person and your individual net worth, or joint net worth
with your spouse, exceeds $1,000,000 at the time you purchase
shares in this offering (please see below on how to calculate your
net worth);
●
You are
an executive officer or general partner of the issuer or a manager
or executive officer of the general partner of the
issuer;
●
You are
an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, or the Code, a corporation, a
Massachusetts or similar business trust or a partnership, not
formed for the specific purpose of acquiring the shares in this
offering, with total assets in excess of $5,000,000;
●
You are
a bank or a savings and loan association or other institution as
defined in the Securities Act, a broker or dealer registered
pursuant to Section 15 of the Exchange Act, an insurance company as
defined by the Securities Act, an investment company registered
under the Investment Company Act of 1940, or a business development
company as defined in that act, any Small Business Investment
Company licensed by the Small Business Investment Act of 1958 or a
private business development company as defined in the Investment
Advisers Act of 1940;
●
You are
an entity (including an Individual Retirement Account trust) in
which each equity owner is an accredited investor;
●
You are
a trust with total assets in excess of $5,000,000, your purchase of
shares in this offering is directed by a person who either alone or
with his purchaser representative(s) (as defined in Regulation D
promulgated under the Securities Act) has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment, and
you were not formed for the specific purpose of investing in the
shares in this offering; or
●
You are
a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
plan has assets in excess of $5,000,000.
In
various states, the securities may not be sold unless these
securities have been registered or qualified for sale in such state
or an exemption from registration or qualification is available and
is complied with. We have not yet applied for “blue
sky” registration in any state, and there can be no assurance
that we will be able to apply, or that our application will be
approved and our securities will be registered, in any state in the
U.S. We intend to sell the shares only in the states in which this
offering has been qualified or an exemption from the registration
requirements is available, and purchases of shares may be made only
in those states.
Should
any fundamental change occur regarding the status of this offering
or other matters concerning the Company, we will file an amendment
to this offering circular disclosing such matters.
OTC Markets Considerations
The OTC
Markets Group Inc. is separate and distinct from the New York Stock
Exchange and Nasdaq stock market or other national exchange.
Neither the New York Stock Exchange or Nasdaq has a business
relationship with issuers of securities quoted on the OTC Markets.
The SEC’s order handling rules, which apply to New York Stock
Exchange and Nasdaq-listed securities, do not apply to securities
quoted on the OTC Markets.
Although
other national stock markets have rigorous listing standards to
ensure the high quality of their issuers, and can delist issuers
for not meeting those standards; the OTC Markets Group Inc. has
limited listing standards. Rather, it is the market maker who
chooses to quote a security on the system, files the application,
and is obligated to comply with keeping information about the
issuer in its files.
Investors
may have greater difficulty in getting orders filled than if we
were on Nasdaq or other exchanges. Trading activity in general is
not conducted as efficiently and effectively on OTC Markets as with
exchange-listed securities. Also, because OTC Markets stocks are
usually not followed by analysts, there may be lower trading volume
than New York Stock Exchange and Nasdaq-listed
securities.
How to Subscribe
US
investors who participate in this offering will be required to
transmit their funds as instructed by the Company, and then used to
complete securities purchases, or returned if this offering fails
to close.
Non-US
investors who participate in this offering will be required to
transmit their funds as instructed by the Company, and then used to
complete securities purchases, or returned if this offering fails
to close.
After
we receive your complete, executed subscription agreement and the
funds required under the subscription agreement have been
transferred to our account, we have the right to review and accept
or reject your subscription in whole or in part, for any reason or
for no reason. We will return all monies from rejected
subscriptions immediately to you, without interest or
deduction.
Upon
our acceptance of a subscription agreement, we will countersign the
subscription agreement and issue the shares subscribed at closing.
Once you submit the subscription agreement and it is accepted, you
may not revoke or change your subscription or request your
subscription funds. All accepted subscription agreements are
irrevocable.
USE OF PROCEEDS
The Company seeks to raise gross proceeds of $1,000,000 from the
sale of Securities in this Offering. The Company intends to apply
these proceeds substantially as set forth herein, subject only to
reallocation by Company Management in the best interests of the
Company. All proceeds from this offering will become
immediately available to us and may be used as they are
accepted.
|
Percentage
of Offering Sold
|
100%
|
75%
|
50%
|
25%
|
|
Gross Offering
Proceeds
|
$1,000,000
|
$750,000
|
$500,000
|
$250,000
|
|
Use
of Proceeds:
|
|
|
|
|
|
General Working
Capital (1)
|
$880,000
|
$655,000
|
$430,000
|
$230,000
|
|
Legal
Fees
|
$15,000
|
$15,000
|
$15,000
|
$15,000
|
|
Accounting
Fees
|
$5,000
|
$5,000
|
$5,000
|
$5,000
|
|
Reserve/contingency
|
$100,000
|
$75,000
|
$50,000
|
$0
|
|
TOTAL
|
$1,000,000
|
$750,000
|
$500,000
|
$250,000
|
(1)As it relates to general working capital, use of proceeds will
be for research and development of the Securter patent pending
application that will enable fintech to be more secure with online
payments for Card not Present “CNP” transactions. The
Securter Agreement is attached to this Offering Statement as
Exhibit 6.4.
DESCRIPTION OF
BUSINESS
Overview
The
Company is a British Columbia corporation, incorporated on December
28, 2000.
The
Company was incorporated under the name Black Diamond Holdings
Corporation. On June 26, 2007, the Company changed its name from
Black Diamond Holdings Corporation to Black Diamond Brands
Corporation. On November 21, 2008 the Company changed its name to
Rainchief Energy Inc. and on February 19, 2015 to Bit-X Financial
Corporation. On October 27, 2015 the Company changed its name to
Digatrade Financial Corporation.
The
Company is listed as a fully reporting issuer on the FINRA OTC.PK
and trades under the symbol “DIGAF”. The Company is
focused on developing blockchain technology services and building a
profitable digital OTC trade desk for accredited traders and
institutions seeking buyside exposure to cryptocurrency. The
Company is exploring new opportunities within the sector including
Initial Coin Offerings “ICO’s”, Digital Corporate
Finance “DCF” and blockchain security protocol
services.
In
March 2015, the Company entered into an agreement with Mega Ideas
Holdings Limited, dba ANX (“ANXPRO and ANX
International”), a company incorporated and existing under
the laws of Hong Kong. ANX owns a proprietary trading platform and
provides operational support specializing in blockchain development
services and exchange and transaction services for
crypto-currencies e.g. Bitcoin and other digital assets. Effective
October 17, 2018 the Company closed the online retail trading
platform and shared liquidity order book with ANX International
owing to low transaction volumes. The Company will continue to
offer OTC trading for institutional customers and accredited
traders while continuing to seek new opportunities within the
blockchain and the financial technology sector.
On
February 28, 2019 the Company executed
its anticipated Definitive Agreement (“DA”) with
Securter Inc., a private Canadian Corporation that is developing a
proprietary, patent-pending credit card payment platform to
significantly increase the security of online credit card payment
processing. Securter technology reduces immense losses by financial
institutions and merchants that arise from fraudulent credit card
use and protects cardholder privacy by eliminating the distribution
of personal information to third parties. With the current
worldwide surge in online commerce expected to continue for years
to come, the problem of credit card security is large and growing.
The Definitive Agreement with Securter sets out that
Securter’s technology will be launched and commercialized as
a Digatrade subsidiary.
Organization Structure
As of
the date of this report the Company has three wholly-owned
subsidiaries, Digatrade Limited (a British Columbia corporation),
Digatrade Limited (a Nevada corporation) and Digatrade (UK) Limited
(a United Kingdom corporation).
Corporate Information
Our
principal executive offices are located at 1500 West Georgia
Street, Suite 1300, Vancouver, British Columbia, Canada, V6C 2Z6.
Our telephone is +1(604) 200-0071. The address of our website is
www.digatradefinancial.com. Information contained on or accessible
through our website is not a part of this offering circular and
should not be relied upon in determining whether to make an
investment decision.
The
Company is currently authorized to issue an unlimited number of
shares of common stock without par value and 1,100,000 Class
“B” Common Shares which are non-participating, voting
(voting right of 1,000 votes per share) without par value. As of
March 25, 2019, the Company had 230,667,223 shares of common stock
and 1,100,000 shares of Class “B” Common Shares issued
and outstanding.
The
Company’s securities are currently quoted on the OTC Markets
Group Inc.’s OTC.PK marketplace under the symbol
“DIGAF.” The Company is a reporting issuer under Form
20-F (Foreign Private Issuer).
Employees
The
Company currently has two officers and no employees. Employees will
be added as required.
Legal Proceedings
We are
not currently a party to any material legal proceedings. Although
we are not currently a party any material legal proceedings, from
time to time, we may be subject to various other legal proceedings
and claims that are routine and incidental to our business.
Although some of these proceedings may result in adverse decisions
or settlements, management believes that the final disposition of
such matters will not have a material adverse effect on our
business, financial position, results of operations or cash
flows.
DESCRIPTION OF PROPERTY
The
Company does not own any real estate. The Company’s address
is 1500 West Georgia Street, Suite 1300, Vancouver, British
Columbia, Canada, V6C 2Z6. The Company currently has no policy with
respect to investments or interests in real estate, real estate
mortgages or securities of, or interests in, persons primarily
engaged in real estate activities.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
The
Company is a British Columbia corporation, incorporated on December
28, 2000. The registered and corporate office is at 1500 West
Georgia Street, Suite 1300, Vancouver, British Columbia, Canada,
V6C 2Z6. The Company does not have an agent in the United
States.
The
Company was incorporated under the name Black Diamond Holdings
Corporation. On June 26, 2007, the Company changed its name from
Black Diamond Holdings Corporation to Black Diamond Brands
Corporation. On November 21, 2008 the Company changed its name to
Rainchief Energy Inc. and on February 19, 2015 to Bit-X Financial
Corporation. On October 27, 2015 the Company changed its name to
Digatrade Financial Corporation.
The
Company is listed as a fully reporting issuer on the FINRA OTC
bulletin board and trades under the symbol
“DIGAF”.
The
Company is focused on developing blockchain technology services and
building a profitable digital asset exchange platform that allows
customers to trade digital assets and crypto-currencies. The
Company is exploring new opportunities within the sector including
Initial Coin Offerings “ICO’s”, Digital Corporate
Finance “DCF” and blockchain consulting
services.
In
March 2015, the Company entered into an agreement with Mega Ideas
Holdings Limited, dba ANX (“ANXPRO and ANX
International”), a company incorporated and existing under
the laws of Hong Kong. ANX owns a proprietary trading platform and
provides operational support specializing in blockchain development
services and exchange and transaction services for
crypto-currencies e.g. Bitcoin and other digital assets. This
services agreement has been implemented and is aligned with the
Company’s business model to focus on licensing, developing
and branding the digital exchange trading platform along with
Blockchain development services and other new developments within
the sector.
Prior
to the change of name on February 19, 2015, the Company was an
energy exploration company focused on the identification and
evaluation for acquisition of energy assets.
For the years ended December 31, 2017 and 2016
(Audited)
Results of Operations
For the
years ended December 31, 2016, 2015, and 2014, the Company had net
losses of $674,520, $172,969 and $557,433,
respectively.
Accounting,
Audit and Legal expenses increased by $59,129 from $46,523 for the
year ended December 31, 2016 to $105,652 for the year ended
December 31, 2017. The increase is comprised of $786 in respect of
increased accounting and audit fees and $58,344 in respect of legal
expenses incurred in connection with the issuance of convertible
promissory notes during the year ended December 31,
2017.
Accounting,
Audit and Legal expenses increased by $5,329 from $36,086 for the
year ended December 31, 2015 to $41,414 for the year ended December
31, 2016. Legal fees incurred in connection with regular corporate
transactions amounted to $5,108 for the year ended December 31,
2016. The Company did not incur any legal expenses during the year
ended December 31, 2015.
Consulting
expense for the year ended December 31, 2017 increased by $61,696
to $147,845 as compared with $86,149 for the year ended December
31, 2016, as a result of increased corporate activity. Consulting
expense for the year ended December 31, 2017 increased by $10,414
to $86,149 as compared with $75,735 for the year ended December 31,
2015, also as a result of increased corporate
activity.
During
the year ended December 31, 2017 the Company incurred Filing and
Transfer Agents Expenses in the amount of $7,866 as compared with
$12,816 incurred during the year ended December 31, 2016, a
decrease of $4,950, as a result of reduced filing activity during
the period. Filing and Transfer Agents Fees for the year ended
December 31, 2016 increased by $1,096 from $11,720 to $12,816 for
the year ended December 31, 2015 as a result of increased corporate
activity during that year.
During
the year ended December 31, 2016 the company incurred $29,559 in
Interest and Bank Charges expense as compared with $906 and $4,672
for the years ended December 31, 2015 and 2014, respectively. Of
the amount incurred during the year ended December 31, 2016,
$27,612 was incurred in connection with interest on a Convertible
Promissory Note which was subsequently included in the debt
settlement agreement concluded on December 20, 2016.
The
Company did not incur any Investor Relations expenses during the
years ended December 31, 2016 and 2014. During the year end
December 31, 2015, the Company entered into three investor
relations contracts for a total cost of $94,072. Management fees
for the year ended December 31, 2017 amount to $105,000 as compared
with $60,000 for the year ended December 31, 2016.
Management
Fees for the year ended December 31, 2016 amounted to $60,000,
unchanged from the amounts incurred during the years ended December
31, 2015.
The
Company incurred Exchange Platform Development Costs in the amount
of $104,591 during the year ending December 31, 2016, as compared
with $111,734 incurred during the year ended December 31, 2016 and
$216,315 incurred during the year ended December 31, 2015. The
reduction in these costs resulted from the renegotiation of the
agreement with the platform provider during 2017 and costs related
to certain development projects in 2015 which were not continued in
2016 and 2017.
The
Company incurred $7,137 in Administrative expenses during the year
ended December 31, 2017. This amount is comprised of a bad debt
written off and minor travel expenses. The Company did not incur
Administrative expenses for the years ended December 31, 2016.
Administrative expenses for the year ended December 31, 2015
amounted to $6,892 as the Company utilized rented office
accommodation during that year and incurred $3,202 on Advertising,
Promotion and Website Development.
The
Company incurred a gain on foreign exchange of $40,723 for the year
ended December 31, 2017, as compared with a gain on foreign
exchange of $13,238 and a loss of $55,536 for the years ended
December 31, 2016 and 2015, respectively. The losses and gain
resulted from changes in the foreign currency exchange rates
between the Canadian and US Dollars.
During
the year ended December 31, 2016 the Company earned $119,600 in
Coin Development Fees in connection with the joint venture
agreement to develop a diamond-backed digital
currency.
During
the years ended December 31, 2016, the Company realized net gains
on the settlement of certain debts in the amounts of $41,406. The
Company did not realize net gains or incur net losses on settlement
of debts in the years ending December 31, 2017 and 2015,
respectively.
Financial position
As at
December 31, 2017 the Company had a working capital deficiency of
$782,207 as compared with a working capital deficiency of $350,388
as at December 31, 2015, a decrease of $431,819. The increase in
working capital deficiency during the year ended December 31, 2017
is due to increases in Liabilities to Customers of $286,990 and
current portion of Convertible Promissory Notes of $1,070,096,
offset by Increases of $379,955 in Cash at Bank, $281,445 in
Accounts Receivable, $6,672 in GST Receivable and $153,311 in
Prepaid Expenses.
Liquidity and Capital Resources
During
the year ended December 31, 2017 the Company raised $1,462,122 by
the issuance of Convertible Promissory Notes (year ended December
31, 2016 -$57,098) and re-paid a convertible Promissory Notes in
the amount of $130,498 (year ended December 31, 2016 -
$Nil).
The
Company raised $103,779 by the issuance of Common Shares during the
year ended December 31, 2017. The Company did not complete any
private placements during the year ended December 31,
2016.
Changes
in working capital accounts during the year ended December 31, 2017
provided $258,322 (year ended December 31, 2015 provided
$75,969).
During
the year ended December 31, 2017, the Company used cash in the
amount of $693,347 to fund the Company's continuing operations
(year ended December 31, 2016 – $196,218).
Significant Accounting Policies
The
Company’s critical accounting estimates are described in the
Company’s 2017 Consolidated Annual Financial
Statements.
For the three and nine months ending September 30, 2018
(unaudited)
Results of Operations
For the three and nine months ended September 30, 2018 the Company
had net losses of $85,572 and $650,672; as compared with net losses
of $246,472 and $346,873 for the three and nine months ended
September 30, 2017.
Accounting, Audit and Legal expenses for the three and nine months
ended September 30, 2018 amounted to $21,703 and $59,914,
respectively; as compared with $23,593 and $43,193 for the three
and nine months ended September 30, 2017. Legal expenses incurred
during the three and nine months ended September 30, 2018 amounted
to $3,904 and $29,562, respectively, as compared with $13,793
incurred during the three and nine months ended September 30, 2017.
The Legal Expenses were incurred in connection with the issuance of
Convertible Promissory Notes. Accounting and Audit expenses for the
three and nine months ended September 30, 2018 were essentially
unchanged as compared with the same periods in the previous
year.
Finders Fees incurred in connection with the issuance of certain
Convertible Promissory Notes amounted to $26,881 and $86,697 for
the three and nine months ended September 30, 2018. The Company did
not incur any Finders Fees during the corresponding periods in
2017.
Consulting Expense decreased by $21,256 from $63,094 for the nine
months ended September 2017 to $41,838 for the three months ended
September 30, 2018, but increased by $107,016 from $108,094 for the
nine months ended September 30, 2017 to $215,110 for the nine
months ended September 30, 2018 as compared with $45,000 incurred
during the nine months ended September 30, 2017. The increase
resulted from additional consulting services procured by the
Company during the three and nine months ended September 30,
2018.
Filing and Transfer Agents Fees for the three and nine months ended
September 30, 2018 amounted to $4,341 and $16,168 respectively; as
compared with $1,592 and $9,458 incurred during three and nine
months ended September 30, 2017. The increases of $2,749 and $6,710
for the three and nine months ended September 30, 2018,
respectively, as compared with the three and nine months ended
September 30, 2017, respectively, resulted from relative levels of
corporate filing activity during the periods under
review.
Management fees for the three and nine months ended September 30,
2018 amounted to $30,000 and $90,000, respectively, an increase of
$15,000 as compared with three and nine months ended September 30,
2017. The increase resulted from additional fees paid to a company
controlled by a Director and Officer of the Company.
The Company incurred Interest and Bank charges during the three and
nine months ending September 30, 2018 of $17,737 and $70,091
respectively. These amounts are comprised of interest charged on
Convertible Promissory Notes. The Company did not incur any
interest on Convertible Promissory Notes during the three and nine
months ending September 30, 2017.
The Company incurred Project Development Costs in the amount
$102,683 during the nine months ended September 30, 2018,
respectively, as compared with $56,708 incurred during the three
months ended September 30, 2017 and $60782 incurred during the nine
months ended September 30, 2017. The increase resulted from
additional expenditures relating to the development of a mobile
application.
The Company realized a gain on foreign exchange of $56,171 for the
three months ended September 30, 2018 but recorded a loss of $2,766
for the nine months ended September 30, 2018, as compared to losses
on foreign exchange of $15,528 and $37,326 for the three and nine
months ended September 30, 2017, respectively. The losses resulted
from changes in the foreign currency exchange rate between the
Canadian and US Dollars.
Financial position
The Company had a working capital deficiency of $151,759 as at
September 30, 2018, as compared with a working capital deficiency
of $782,107 as at December 31, 2017; a decrease of
$630,348.
The increase in working capital deficiency of $105,416 during the
nine months ended September 30, 2018 was due to decreases in Cash
at Bank of $13,718 Accounts Receivable of $153,377, Prepaid
Expenses of $58,069 and increases in Accounts payable of $55,165;
offset by increases in Current Portion of Convertible Promissory
Notes Payable of $713,901, GST Recoverable of $6,214 and
Liabilities to customers of $190,562
Liquidity and Capital Resources
Sources of Cash
During the nine months ended September 30, 2018, the Company raised
$443,597 through the issuance of Convertible Promissory
Notes.
Uses of Cash
The use of cash during the nine months ended September 30, 2018
were $425,600 to fund operations and changes in the Company's net
working capital and $31,715 to repay a portion of a Convertible
Promissory Note.
New Accounting Standards Not Yet Adopted
The
accounting standard, amendment, and interpretation listed below is
issued but not yet effective up to the date of issuance of the
Company’s consolidated financial statements. The Company
intends to adopt the following standard and interpretation, if
applicable, when it becomes effective. The Company has not yet
determined the impact of this standard on its consolidated
financial statements.
IFRS
16 – Leases
IFRS 16
provides a single lessee accounting model, requiring the
recognition of assets and liabilities for all leases, unless the
least term is 12 months or less or the underlying asset has a low
value. Lessor accounting remains largely unchanged from IAS 17 and
the distinction between operating and finance leases is retained.
The standard is effective for annual periods beginning on or after
January 1, 2019.
Off Balance Sheet Arrangements
The
Company has not entered into any material off-balance sheet
arrangements such as guarantee contracts, contingent interests in
assets transferred to unconsolidated entities, derivative financial
obligations, or with respect to any obligations under a variable
interest equity arrangement.
DIRECTORS, EXECUTIVE
OFFICERS AND SIGNIFICANT EMPLOYEES
Our
directors and executive officers are as follows:
|
Name
|
Position
|
Age
|
Term of
Office
|
|
Brad J.
Moynes
|
President,
Chief Executive Officer and Chairman of the Board
|
48
|
December
2000-Present
|
|
James
Romano
|
Director
|
62
|
October
24, 2018 - Present
|
|
Tyrone
Docherty
|
Director
|
58
|
July
10, 2016-Present
|
|
Timothy
Delaney
|
Director
|
65
|
November
20, 2018 - Present
|
Brad J. Moynes: Mr. Moynes has worked in the public
markets and business management since 2000 offering services to
private and public companies in sectors including Financial
Technology, Internet Commerce, Online Security, Payment Processing,
Software Development, Mining & Energy. Mr. Moynes has
held titles including CEO, President & Director.
Currently the President & CEO of Digatrade Financial Corp (a
company developing more secure fintech for online payments
including card not present "CNP" transactions). Areas of
expertise include corporate finance with funding mechanisms
successfully raising over $25.0m.
Tyrone Docherty: Current CEO of Deer Horn Capital
“DHC” and former President & CEO of Quinto Mining
Inc., where with limited resources in a difficult market he raised
more than $30 million and advanced a Quebec iron ore property to a
viable project. Sold Quinto to Consolidated Thompson Iron Mines in
June 2008 for a share value equal to $175M. Consolidated Thompson
eventually sold to Cliffs Resources for $4.9B. From 2012 to 2018,
Tyrone was Director and Chairman of Mason Graphite Inc. Mr.
Docherty has worked in the financial and minerals markets for over
30 years.
James Romano: James
Romano’s career spans over three decades of successful
management of small to medium sized businesses in Canadian and US
markets, providing corporate strategy, branding, and structuring,
and successfully raising of capital in venture markets. From
2006 to 2009, Mr. Romano served as Officer and Director of Exterra
Energy Inc., an oil and gas company based in Houston, Texas, where
he successfully led the Company to trade in the US public
markets. Exterra completed a leveraged buyout of the 11th
largest operator in the Barnett Shale. Previous to this, he
founded Horizon Industries Ltd., a junior exploration and
production oil and gas company. As President and Director, he
led Horizon through formation to production, listing on the TSX
Venture Exchange, securing capital for acquisitions, and
establishing operations in Canada and the US.
Timothy G. Delaney: Mr. Delaney graduated with a B. Comm
(1979) from the University of British Columbia. He has been active
in commercial real estate in both sales and development. He also
has extensive experience in corporate filings and due diligence of
public companies. From 2003 to 2014 he was the founder, principal,
and managing partner for the day to day operations of a retail
company with sales in excess of $6,000,000.
Family Relationships
There
are no family relationships among and between the issuer’s
directors, officers, persons nominated or chosen by the issuer to
become directors or officers, or beneficial owners of more than ten
percent of any class of the issuer’s equity
securities.
Legal Proceedings
No
officer, director, or persons nominated for such positions,
promoter, control person or significant employee has been involved
in the last five years in any of the following:
●
Any
bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that
time,
●
Any
conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses),
●
Being
subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities,
●
Being
found by a court of competent jurisdiction (in a civil action), the
Securities Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended,
or vacated,
●
Having
any government agency, administrative agency, or administrative
court impose an administrative finding, order, decree, or sanction
against them as a result of their involvement in any type of
business, securities, or banking activity,
●
Being
the subject of a pending administrative proceeding related to their
involvement in any type of business, securities, or banking
activity, or
●
Administrative
proceedings related to their involvement in any type of business,
securities, or banking activity.
COMPENSATION OF
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the compensation paid to the
executive officers of the Company in each of the years ended
December 31, 2017, 2016 and 2015. The table includes
compensation paid for service by such persons to subsidiaries. All
amounts are stated in US dollars.
Executive Compensation Plans and Employment Agreements
Management Agreements
No management agreements were entered into for the period
commencing January 1, 2017 to December 31, 2017.
Equity Compensation Plans; Outstanding Equity Awards
Effective December 31, 2010, our Board of Directors adopted the
2010 Stock Option Incentive Plan (“the Stock Option
Plan”). The purpose of the Stock Option Plan is to enhance
the long-term stockholder value of the Company by offering
opportunities to directors, officers, key employees and eligible
consultants of the Company to acquire and maintain stock ownership
in the Company, in order to give these persons the opportunity to
participate in the Company's growth and success, and to encourage
them to remain in the service of the Company. A maximum of 10% of
the issued and outstanding shares of common stock are available for
issuance under the Stock Option Plan. As of March 25, 2019,
10,000,000 stock options were outstanding with an exercise price of
US$0.006.
Director Compensation
During the most recently completed fiscal year, there are no
arrangements (standard or otherwise) under which directors of the
Company were compensated by the Company or its subsidiaries for
services rendered in their capacity as directors, nor were any
amounts paid to the directors for committee participation or
special assignments. There were no arrangements under
which the directors would receive compensation or benefits in the
event of the termination of that office.
SECURITY OWNERSHIP OF
MANAGEMENT AND CERTAIN SECURITYHOLDERS
The
following tables set forth the ownership, as of March 25, 2019, of
our shares of stock by each person known by us to be the beneficial
owner of more than 10% of our outstanding voting stock, our
executive officers and director as a group. To the best of our
knowledge, the persons named have sole voting and investment power
with respect to such shares, except as otherwise noted. There are
not any pending or anticipated arrangements that may cause a change
in control.
The
information presented below regarding beneficial ownership of our
voting securities has been presented in accordance with the rules
of the SEC and is not necessarily indicative of ownership for any
other purpose. Under these rules, a person is deemed to be a
“beneficial owner” of a security if that person has or
shares the power to vote or direct the voting of the security or
the power to dispose or direct the disposition of the security. A
person is deemed to own beneficially any security as to which such
person has the right to acquire sole or shared voting or investment
power within 60 days through the conversion or exercise of any
convertible security, warrant, option or other right. More than one
person may be deemed to be a beneficial owner of the same
securities.
Except
as otherwise indicated below and under applicable community
property laws, we believe that the beneficial owners of our common
stock listed below have sole voting and investment power with
respect to the shares shown.
|
Name
|
No. of Shares of
Common Stock
|
Percentage of
outstanding (1)
|
|
Brad J.
Moynes
|
22,504,000
|
9.76%
|
|
Tyrone
Docherty
|
250,000
|
0.001%
|
|
James
Romano
|
0
|
0%
|
|
Timothy
Delaney
|
0
|
0%
|
|
All Officers and
Directors as a Group (4 persons)
|
22,754,000
|
9.8%
|
|
Name
|
No. of Shares of
Class B Common Stock
|
Percentage of
outstanding(1)
|
|
Brad
Moynes
|
1,100,000
|
100%
|
(1)
Based on 230,667,223 shares of common stock and 1,100,000 shares of
Class B common stock as at March 25, 2019.
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS
Except
as described within the section entitled “Executive
Compensation of Directors and Officers” in this offering
circular, the Company had the following transactions
with “Related Persons,” as that term is
defined in item 404 of Regulation SK, which includes, but is not
limited to:
●
any of our
directors or officers;
●
any person who
beneficially owns, directly or indirectly, shares carrying more
than 10% of the voting rights attached to our outstanding shares of
common stock; or
●
any member of the
immediate family (including spouse, parents, children, siblings and
in- laws) of any of the above persons.
Management fees paid in advance to a Company Controlled by Director
and Officer
As at September 30, 2018, the Company had $96,902 (December 31,
2017 - $55,573) in prepaid management fees to a company controlled
by a Director and Officer of the Company.
Trade and Other Payables
As at December 31, 2017, the Company had $Nil (2016 - $36,177) in
trade and other payables owed to key management personnel. The
amounts owed to key management personnel arose from outstanding
management fees and are non-interest bearing, unsecured, and have
no specified terms of repayment.
Promissory Notes
During the year ended December 31, 2017, the Company repaid
Promissory Notes in the amount of $90,529, (including US$31,200) to
a company controlled by a Director (also an officer) of the Company
Included in Convertible Promissory Notes as at December 31, 2017,
was $Nil (2016 – $89,364 including US$31,200) owed to a
company controlled by a Director (also an officer) of the
Company.
During the year ended December 31, 2017, the Company settled a
Promissory Note owed to a company controlled by a former officer of
the Company in the amount $69,205 (US$50,000) by the issuance of
1,000,000 shares of Common Stock.
Included in Convertible Promissory Notes as at December 31, 2017,
was $Nil (2016 – $67,135 including
US$50,000) owed to a company controlled by a former officer of the
Company.
Compensation of Key Management Personnel
The Company incurred management fees for services provided by key
management personnel for the years ended December 31, 2017, 2016
and 2015, as described below.
Management
Fees
|
|
2017
|
2016
|
2015
|
|
|
$
|
$
|
$
|
|
Management
Fees
|
105,000
|
60,000
|
60,000
|
|
Share-Based
Payments
|
-
|
-
|
-
|
|
|
|
|
|
|
|
105,000
|
60,000
|
60,000
|
The Company incurred management fees for services provided by key
management personnel for the three and nine months ended September
30, 2018 and 2017 as described below.
|
|
Three Months
Ended
September
30,
|
Nine Months
Ended
September
30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
Management
Fees
|
$30,000
|
$15,000
|
$90,000
|
$45,000
|
During the year ended December 31, 2017, the Company incurred
consulting fees for services provided by a director of the Company.
The fees were settled by a cash payment of $6,296
(US$5,000).
SECURITIES BEING OFFERED
This
offering circular relates to the sale of up to 100,000,000 shares
of our common stock by the Company at a price of $0.01 per share,
for total offering proceeds to the Company of up to $1,000,000 if
all offered shares are sold. There is no minimum offering amount.
The minimum amount established for investors is $10,000, unless
such minimum is waived by the Company, in its sole discretion. All
funds raised by the Company from this offering will be immediately
available for the Company’s use.
The
Company is currently authorized to issue an unlimited number of
shares of common stock without par value and 1,100,000 Class
“B” Common Shares which are non-participating, voting
(voting right of 1,000 votes per share) without par value. As of
March 25, 2019, the Company had 230,667,223 shares of common stock
and 1,100,000 shares of Class “B” Common Shares issued
and outstanding.
Except as it relates to Class “B” Common Shares, all
holders of common stock have equal voting rights, equal rights to
dividends when and if declared, and equal rights to share in assets
upon liquidation of the corporation. The common shares
are not subject to any redemption or sinking fund
provisions. Directors serve from year to year, there
being no provision for a staggered board; cumulative voting for
directors is not allowed. Between annual general
meetings, the existing board can appoint one or more additional
directors to serve until the next annual general meeting, but the
number of additional directors shall not at any time exceed
one-third of the number of directors who held office at the
expiration of the last annual meeting. All issued and
outstanding shares are fully paid and non-assessable
securities.
In order to change the rights of the holders of common stock, the
passing of a special resolution by such shareholders is required,
being the affirmative vote of not less than 2/3 of the votes cast
in person or by proxy at a duly called meeting of
shareholders.
An annual meeting of shareholders must be called by the board of
directors not later than 15 months after the last annual
meeting. The board at any time may call a special
meeting of shareholders. Notice of any meeting must be
sent not less than 21 and not more than 50 days before the meeting,
to every shareholder entitled to vote at the
meeting. All shareholders entitled to vote are entitled
to be present at a shareholders meeting. A quorum is the
presence in person or by proxy of the holders of at least 5% of the
issued and outstanding shares of common stock.
Except under the Investment Canada Act, there are no limitations
specific to the rights of non-Canadians to hold or vote our shares
under the laws of Canada or our charter documents. The
Investment Canada Act ("ICA") requires a non-Canadian making an
investment which would result in the acquisition of control of a
Canadian business, the gross value of the assets of which exceed
certain threshold levels or the business activity of which is
related to Canada's cultural heritage or national identity, to
either notify, or file an application for review with, Investment
Canada, the federal agency created by the ICA. The
notification procedure involves a brief statement of information
about the investment on a prescribed form which is required to be
filed with Investment Canada by the investor at any time up to 30
days after implementation of the investment. It is
intended that investments requiring only notification will proceed
without intervention by government unless the investment is in a
specific type of business related to the scope of the
ICA. If an investment is reviewable under the ICA, an
application for review in the prescribed form normally is required
to be filed with Investment Canada before the investment is made
and it cannot be implemented until completion of review and
Investment Canada has determined that the investment is likely to
be of net benefit to Canada. If the agency is not so
satisfied, the investment cannot be implemented if not made, or if
made, it must be unwound.
Market Price, Dividends, and Related Stockholder
Matters
Our
securities are not traded on a national exchange, but are quoted on
the OTC Markets Group, Inc.’s OTC.PK marketplace. There is
only a limited market for our securities.
The
last sale price of the Company’s common stock on March 25,
2019 was $0.0104 per share.
The Company has approximately 109 beneficial shareholders of record
at March 25, 2019. The number of shareholders holding
securities beneficially through street name nominees, as reflected
in the record position of Cede & Co. and other intermediaries,
is approximately 86.48%
On
February 14, 2019, we entered into an agreement with Pikeminnow
Funding LLC, a Colorado limited liability company, which allows
Pikeminnow Funding, LLC to purchase up to $1.0 million of our
common stock, subject to the qualification of this offering.
As such, none of our securities have been sold under such
agreement to date.
Effective December 31, 2010, our Board of Directors adopted the
2010 Stock Option Incentive Plan (“the Stock Option
Plan”). The purpose of the Stock Option Plan is to enhance
the long-term stockholder value of the Company by offering
opportunities to directors, officers, key employees and eligible
consultants of the Company to acquire and maintain stock ownership
in the Company, in order to give these persons the opportunity to
participate in the Company's growth and success, and to encourage
them to remain in the service of the Company. A maximum of 10% of
the issued and outstanding shares of common stock are available for
issuance under the Stock Option Plan. As of March 25, 2019,
10,000,000 stock options were outstanding with an exercise price of
US$0.006.
The
Company has not paid any dividends on its common shares. The
Company has no present intention of paying dividends on its common
shares as it anticipates that all available funds will be invested
to finance the growth of its business.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES LIABILITIES
Our
charter documents contain provisions which allow the Company to
indemnify any person against liabilities and other expenses
incurred as the result of defending or administering any pending or
anticipated legal issue in connection with service to us if it is
determined that person acted in good faith and in a manner which he
reasonably believed was in the best interest of the Company.
Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to our directors, officers and
controlling persons, we have been advised that in the opinion of
the SEC, such indemnification is against public policy as expressed
in the Securities Act, and is, therefore,
unenforceable.
FINANCIAL
STATEMENTS
Annual Report for years ended December 31, 2017 and
2016
|
|
Page
|
|
|
|
|
Management’s
Responsibility for Financial Reporting
|
30
|
|
|
|
|
Independent
Auditors’ Report
|
31
|
|
|
|
|
Consolidated
Statements of Financial Position
|
32
|
|
|
|
|
Consolidated
Statements of Changes in Shareholders’
Deficiency
|
33
|
|
|
|
|
Consolidated
Statements of Comprehensive Loss
|
34
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
35
|
|
|
|
|
Notes
to the Consolidated Financial Statements
|
36
|
Unaudited Interim Consolidated Financial Statements as of September
30, 2018
|
Notice
of No Auditor Review of Interim Consolidated Financial
Statements
|
52
|
|
|
|
|
Unaudited
Interim Consolidated Balance Sheets
|
53
|
|
|
|
|
Unaudited
Interim Consolidated Statement of Equity
|
54
|
|
|
|
|
Unaudited
Interim Consolidated Statements of Operations and
Deficit
|
55
|
|
|
|
|
Unaudited
Interim Consolidated Statements of Cash Flows
|
56
|
|
|
|
|
Notes
to the Unaudited Interim Consolidated Financial
Statements
|
57
|
Management’s Responsibility for Financial
Reporting
These consolidated financial statements have been prepared by and
are the responsibility of the management of the Company. The
consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards, using
management’s best estimates and judgments based on currently
available information. When alternative accounting methods exist,
management has chosen those it considers most appropriate in the
circumstances.
The Company maintains an appropriate system of internal controls to
provide reasonable assurance that financial information is accurate
and reliable and that the Company’s assets are appropriately
accounted for and adequately safeguarded.
The Company’s independent auditors, WDM Chartered
Professional Accountants, were appointed by the shareholders to
conduct an audit in accordance with generally accepted auditing
standards in Canada and the Public Company Accounting Oversight
Board (United States) and their report follows.
“Bradley J. Moynes”
President,
CEO and Director
“Tyrone Docherty”
Director
DIGATRADE FINANCIAL CORP.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
Nature and Continuance of Operations (Note 1)
Subsequent Events (Note 17)
The accompanying notes are an integral part of these consolidated
financial statements.
Approved on behalf of the Board:
|
“Bradley J. Moynes”
|
|
“Tyrone Docherty”
|
|
President,
Chief Executive Officer and Director
|
|
Director
|
DIGATRADE FINANCIAL CORP.
Consolidated Statements of Changes in Shareholders’
Deficiency
For the Years Ended December 31, 2017, 2016, and 2015
(Expressed in Canadian Dollars)
|
|
Note
|
Number of Common
Shares
|
Number of Class
“B” Common Shares
|
Share
Capital
|
Share
Subscriptions
Received
|
Share Purchase
Warrant
Reserve
|
Deficit
|
Total
Shareholders’ Deficiency
|
|
|
$
|
$
|
$
|
$
|
$
|
|||
|
Balance,
December 31, 2014
|
|
1,622,150
|
-
|
3,241,848
|
-
|
18,600
|
(3,789,794)
|
(529,346)
|
|
|
|
|
|
|
|
|
|
|
|
Share Issued for
Cash
|
10(b)(ii),(iii)
|
5,000
|
-
|
32,000
|
25,998
|
-
|
-
|
57,998
|
|
Shares Issued for
Services
|
10(c)(i)
|
34,000
|
-
|
85,000
|
-
|
-
|
-
|
85,000
|
|
Fair Value of Share
Purchase Warrants Expired
|
|
-
|
-
|
-
|
-
|
(18,600)
|
18,600
|
-
|
|
Net Comprehensive
Loss
|
|
-
|
-
|
-
|
-
|
-
|
(557,433)
|
(557,433)
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2015
|
|
1,661,150
|
-
|
3,358,848
|
25,998
|
-
|
(4,328,627)
|
(943,781)
|
|
|
|
|
|
|
|
|
|
|
|
Shares Issued in
Settlement of Debts
|
10(b)(iv)
|
41,000,000
|
-
|
276,983
|
-
|
-
|
-
|
276,983
|
|
Shares Issued for
Services
|
10(c)(ii)
|
250,000
|
-
|
15,000
|
-
|
-
|
-
|
15,000
|
|
Shares Held in
Escrow and Returned to Treasury
|
10(e)
|
(1,500)
|
-
|
(5,374)
|
-
|
-
|
-
|
(5,374)
|
|
Shares
Subscriptions Received, Net of Issuance Costs
|
10(b)(v)
|
-
|
-
|
-
|
308,977
|
-
|
-
|
308,977
|
|
Net Comprehensive
Loss
|
|
-
|
-
|
-
|
-
|
-
|
(172,969)
|
(172,969)
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2016
|
|
42,909,650
|
-
|
3,645,457
|
334,975
|
-
|
(4,501,596)
|
(521,164)
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Issued
|
10(b)(v)
|
2,500,000
|
-
|
334,975
|
(334,975)
|
-
|
-
|
-
|
|
Shares Issued in
Settlement of Debts
|
10(b)(iii),(vi)
|
4,000,000
|
-
|
103,779
|
-
|
-
|
-
|
103,779
|
|
Shares Issued for
Cash
|
10(b)(vii)
|
-
|
100,000
|
100
|
-
|
-
|
-
|
100
|
|
Shares Issued for
Services
|
10(c)(iii)
|
250,000
|
-
|
21,896
|
-
|
-
|
-
|
21,896
|
|
Shares Held in
Trust
|
10(e)
|
1,500
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Net Comprehensive
Loss
|
|
-
|
-
|
-
|
-
|
-
|
(674,520)
|
(674,520)
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2017
|
|
49,661,150
|
100,000
|
4,106,207
|
-
|
-
|
(5,176,116)
|
(1,069,909)
|
Authorized Share Capital (Note 10(a))
Share Consolidation (Note 10(b)(i))
The accompanying notes are an integral part of these consolidated
financial statements.
DIGATRADE FINANCIAL CORP.
Consolidated Statements of Comprehensive Loss
For the Years Ended December 31, 2017, 2016, and 2015
(Expressed
in Canadian Dollars)
The accompanying notes are an integral part of these consolidated
financial statements.
DIGATRADE FINANCIAL CORP.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2017, 2016, and 2015
(Expressed in Canadian Dollars)
Supplemental Cash Flow Information (Note 12)
The accompanying notes are an integral part of these consolidated
financial statements.
DIGATRADE FINANCIAL CORP.
Notes
to the Consolidated Financial Statements
December 31, 2017 and 2016
(Expressed in Canadian Dollars)
NOTE 1 – NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated on December 28, 2000, under the
Company Act of the Province of British Columbia, Canada. On
February 19, 2015, the Company changed its name from Rainchief
Energy Inc. to Bit-X Financial Corporation. On October 27, 2015,
the Company changed its name from Bit-X Financial Corporation to
Digatrade Financial Corp. The Company is focused on increasing
scale, further development and branding a digital asset
(decentralized blockchain based crypto-currency) exchange
platform.
In March 2015, the Company entered into an agreement with Mega
Ideas Holdings Limited, dba ANX (“ANX”), a company
incorporated and existing under the laws of Hong Kong. ANX owns and
operates a technology platform and provides operational and
technology support specializing in blockchain applications and
crypto-currency exchange services. In addition, they provide
transaction and settlement services, debit card solutions along
with blockchain development services.
This services agreement is in line with the Company’s
business model restructuring which is to focus on licensing,
developing, and branding a digital exchange trading platform and
peer-to-peer electronic payment processing network.
The head office, principal address, and records office of the
Company are located at 1500 West Georgia Street, Suite 1300,
Vancouver, British Columbia, Canada, V6C 2Z6.
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards on the
basis that the Company is a going concern and will be able to meet
its obligations and continue its operations for its next fiscal
year. Several conditions as set out below cast uncertainties on the
Company’s ability to continue as a going
concern.
The Company’s ability to continue as a going concern is
dependent upon the financial support from its creditors,
shareholders, and related parties, its ability to obtain financing
for its development projects, and upon the attainment of future
profitable operations.
The Company has not yet achieved profitable operations and has
accumulated losses of $5,176,116 since
inception and working capital deficiency of $782,107 as at December 31, 2017; accordingly, the Company
will need to raise additional funds through future issuance of
securities or debt financing. Although the Company has raised funds
in the past, there can be no assurance the Company will be able to
raise sufficient funds in the future, in which case the Company may
be unable to meet its obligations as they come due in the normal
course of business. It is not possible to predict whether financing
efforts will be successful or if the Company will attain a
profitable level of operations.
The current cash resources are not adequate to pay the
Company’s accounts payable and to meet its minimum
commitments at the date of these consolidated financial statements,
including planned corporate and administrative expenses, and other
project implementation costs, accordingly, there is significant
doubt about the Company’s ability to continue as a going
concern. These consolidated financial statements do not give effect
to adjustments that would be necessary to the carrying amounts and
classifications of assets and liabilities should the Company be
unable to continue as a going concern.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
a)
Basis
of Presentation
These
consolidated financial statements have been prepared on a
historical cost basis except for financial instruments classified
as available-for-sale that have been measured at fair value. Cost
is the fair value of the consideration given in exchange for net
assets.
b)
Statement
of Compliance
These
consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting
Standards Board (“IASB”).
These
consolidated financial statements were approved and authorized for
issue by the Board of Directors on April 27, 2018.
c)
Basis
of Consolidation
These
consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries (collectively, the
“Company”). Intercompany balances and transactions are
eliminated in preparing the consolidated financial statements. The
following companies have been consolidated within these
consolidated financial statements:
|
Entity
|
Country of
Incorporation
|
Holding
|
Functional
Currency
|
|
|
|
|
|
|
Digatrade
Financial Corp.
|
Canada
|
Parent
Company
|
Canadian
Dollar
|
|
Digatrade
Limited
|
Canada
|
100%
|
Canadian
Dollar
|
|
Digatrade
(UK) Limited
|
United
Kingdom
|
100%
|
Pounds
Sterling
|
|
Digatrade
Limited
|
USA
|
100%
|
US
Dollar
|
The
Company’s former subsidiaries, Jaydoc Capital Corp. and
Rainchief Renewable-1 S.R.L., were de-registered during the year
ended December 31, 2015.
d)
Foreign
Currency
These
consolidated financial statements are presented in Canadian
dollars, which is also the functional currency of the parent
company. Each subsidiary determines its own functional currency
(Note 2(c)) and items included in the financial statements of each
subsidiary are measured using that functional
currency.
i)
Transactions
and Balances in Foreign Currencies
Foreign
currency transactions are translated into the functional currency
of the respective entity using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
re-measurement of monetary items at year-end exchange rates are
recognized in profit or loss.
Non-monetary
items measured at historical cost are translated using the exchange
rate at the date of the transaction and are not retranslated.
Non-monetary items measured at fair value are translated using the
exchange rate at the date when fair value was
determined.
ii)
Foreign
Operations
On
consolidation, the assets and liabilities of foreign operations are
translated into Canadian dollars at the exchange rate prevailing at
the reporting date and their revenues and expenses are translated
at exchange rates prevailing at the dates of the transactions. The
exchange differences arising on the translation are recognized in
other comprehensive income and accumulated in the currency
translation reserve in equity. On disposal of a foreign operation,
the component of other comprehensive income relating to that
particular foreign operation is recognized in earnings and
recognized as part of the gain or loss on disposal.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
e)
Financing
and Finder’s Fees
Financing
and finder’s fees relating to financial instruments with a
term of one year or less are expensed in the period incurred. For
financial instruments with a term of over one year, the fees are
netted against the financial instruments and amortized over the
term of the financial instruments.
f)
Share
Capital
The
Company records proceeds from share issuances, net of commissions
and issuance costs. Shares issued for other than cash
consideration are valued at the quoted price on the
Over-the-Counter Bulletin Board in the United States based on the
earliest of: (i) the date the shares are issued, and (ii) the date
the agreement to issue the shares is reached.
g)
Share-Based
Payments
The
fair value method of accounting is used for share-based payment
transactions. Under this method, the cost of stock options and
other share-based payments is recorded based on the estimated fair
value using the Black-Scholes option-pricing model at the grant
date and charged to profit over the vesting period. The amount
recognized as an expense is adjusted to reflect the number of
equity instruments expected to vest.
Upon
the exercise of stock options and other share-based payments,
consideration received on the exercise of these equity instruments
is recorded as share capital and the related share-based payment
reserve is transferred to share capital. The fair value of
unexercised equity instruments are transferred from reserve to
retained earnings upon expiry.
h)
Revenue
Recognition
Revenue
is comprised of consulting fees and commissions earned on trades
executed on the digital currency trading platform. Consulting fee
income is recognized as the consulting services are provided.
Commission is considered earned when a trade is completed by the
Company’s customers. As the platform is not yet fully live,
commissions and consulting fees earned have been accounted for as a
recovery of development costs incurred.
i)
Loss
per Share
Basic
loss per share is calculated by dividing net loss by the weighted
average number of common shares issued and outstanding during the
reporting period. Diluted loss per share is the same as basic loss
per share, as the issuance of shares on the exercise of stock
options and share purchase warrants is anti-dilutive. The loss per
share in prior periods has been adjusted to take into account the
consolidation of the Company’s common stock on June 8, 2016
(Note 10(b)(i)).
j)
Income
Taxes
Tax
expense recognized in profit or loss comprises the sum of deferred
tax and current tax not recognized in other comprehensive income or
directly in equity.
i)
Current
Income Tax
Current
income tax assets and liabilities comprise those claims from, or
obligations to, fiscal authorities relating to the current or prior
reporting periods that are unpaid at the reporting date. Current
tax is payable on taxable profit, which differs from profit or loss
in the consolidated financial statements. Calculation of current
tax is based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting
period.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
ii)
Deferred
Income Tax
Deferred
income taxes are calculated using the liability method on temporary
differences between the carrying amounts of assets and liabilities
and their tax bases. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to
apply to their respective period of realization, provided they are
enacted or substantively enacted by the end of the reporting
period. Deferred tax liabilities are always provided for in
full.
Deferred
tax assets are recognized to the extent that it is probable that
they will be able to be utilized against future taxable income.
Deferred tax assets and liabilities are offset only when the
Company has a right and intention to offset current tax assets and
liabilities from the same taxation authority.
Changes
in deferred tax assets or liabilities are recognized as a component
of tax income or expense in profit or loss, except where they
relate to items that are recognized in other comprehensive income
or directly in equity, in which case the related deferred tax is
also recognized in other comprehensive income or equity,
respectively.
k)
Financial
Instruments
Financial
assets and financial liabilities are recognized when the Company
becomes a party to the contractual provisions of the financial
instrument.
Financial
assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities classified
at fair value through profit or loss) are added to, or deducted
from, the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities classified at fair value through profit or
loss are recognized immediately in profit or loss.
Financial
assets and financial liabilities are measured subsequently as
described below. The Company does not have any derivative financial
instruments.
i)
Financial
Assets
For
the purpose of subsequent measurement, financial assets other than
those designated and effective as hedging instruments are
classified into the following categories upon initial
recognition:
●
Financial assets at
fair value through profit or loss;
●
Loans and
receivables;
●
Held-to-maturity
investments; and
●
Available-for-sale
financial assets.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
k)
Financial Instruments (Continued)
i)
Financial
Assets (Continued)
The
category determines subsequent measurement and whether any
resulting income and expense is recognized in profit or loss or in
other comprehensive income.
All
financial assets except for those at fair value through profit or
loss are subject to review for impairment at least at each
reporting date. Financial assets are impaired when there is any
objective evidence that a financial asset or a group of financial
assets is impaired. Different criteria to determine impairment are
applied for each category of financial assets, which are described
below.
●
Financial assets at fair
value through profit or loss – Financial assets at
fair value through profit or loss include financial assets that are
either classified as held for trading or that meet certain
conditions and are designated at fair value through profit or loss
upon initial recognition. All derivative financial instruments fall
into this category, except for those designated and effective as
hedging instruments. Assets in this category are measured at fair
value with gains or losses recognized in profit or loss. The
Company’s cash falls into this category of financial
instruments.
●
Loans and
receivables – Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition, these are
measured at amortized cost using the effective interest method less
any provision for impairment. Discounting is omitted where the
effect of discounting is immaterial. The Company’s accounts
receivable falls into this category of financial
instruments.
●
Held-to-maturity
investments – Held-to-maturity investments are
non-derivative financial assets with fixed or determinable payments
and fixed maturity, other than loans and receivables. Investments
are classified as held-to-maturity if the Company has the intention
and ability to hold them until maturity. The Company currently does
not hold financial assets in this category.
Held-to-maturity
investments are measured subsequently at amortized cost using the
effective interest method. If there is objective evidence that the
investment is impaired as determined by reference to external
credit ratings, then the financial asset is measured at the present
value of estimated future cash flows. Any changes to the carrying
amount of the investment, including impairment losses, are
recognized in profit or loss.
●
Available-for-sale
financial assets – Available-for-sale financial assets
are non-derivative financial assets that are either designated to
this category or do not qualify for inclusion in any of the other
categories of financial assets. The Company currently does not hold
financial assets in this category. Available-for-sale financial
assets are measured at fair value. Gains and losses are recognized
in other comprehensive income and reported within the
available-for-sale reserve within equity, except for impairment
losses and foreign exchange differences on monetary assets, which
are recognized in profit or loss. When the asset is disposed of or
is determined to be impaired, the cumulative gain or loss
recognized in other comprehensive income is reclassified from the
equity reserve to profit or loss, and presented as a
reclassification adjustment within other comprehensive
income.
For
financial assets measured at amortized cost, if, in a subsequent
period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the
impairment was recognized, then the previously recognized
impairment loss is reversed through profit or loss to the extent
that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortized cost
would have been had the impairment not been
recognized.
In
respect of available-for-sale financial assets, impairment losses
previously recognized in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an
impairment loss is recognized in other comprehensive income and
accumulated in the revaluation reserve.
Financial
assets are derecognized when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset
and all substantial risks and rewards are transferred.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
ii)
Financial Liabilities
For
the purpose of subsequent measurement, financial liabilities are
classified as either financial liabilities at fair value through
profit or loss, or other financial liabilities upon initial
recognition.
●
Financial liabilities at
fair value through profit or loss – Financial
liabilities at fair value through profit or loss include financial
liabilities that are either classified as held for trading or that
meet certain conditions and are designated at fair value through
profit or loss upon initial recognition. Liabilities in this
category are measured at fair value with gains or losses recognized
in profit or loss. The Company does not hold financial liabilities
in this category.
●
Other financial
liabilities – Other financial liabilities are
subsequently measured at amortized cost using the effective
interest method. Gains and losses are recognized in the income
statement when the liabilities are derecognized as well as through
the effective interest rate method amortization process. The
Company’s trade and other payables, liabilities to customers,
and promissory notes payable fall into this category of financial
instruments.
A
financial liability is derecognized when it is extinguished,
discharged, cancelled or expired.
NOTE 3 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND
ASSUMPTIONS
In the application of the Company’s accounting policies which
are described in Note 2, management is required to make judgments,
estimates, and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
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 judgments, estimates, and assumptions that have the
most significant effect on the amounts recognized in the
consolidated financial statements are described below.
Deferred Tax Assets
Deferred tax assets, including those arising from unutilized tax
losses, require management to assess the likelihood that the
Company will generate sufficient taxable earnings in future periods
in order to utilize recognized deferred tax assets. Assumptions
about the generation of future taxable profits depend on
management’s estimates of future cash flows. In addition,
future changes in tax laws could limit the ability of the Company
to obtain tax deductions in future periods. To the extent that
future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred
tax assets recorded at the reporting date could be
impacted.
NOTE 4 – ACCOUNTING STANDARDS ISSUED BUT NOT YET
EFFECTIVE
A number of new accounting standards, amendments to standards, and interpretations have been issued
but not yet effective up to the date of issuance of
the Company’s consolidated financial statements. The Company
intends to adopt the following standards, if
applicable, when they become effective.
a)
IFRS
9 – Financial Instruments
IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and
measurement of financial assets as defined in
IAS 39. The standard was initially
effective for annual period beginning on or
after January 1, 2013, but amendments to IFRS 9 Mandatory
Effective Date of IFRS 9 and Transition Disclosures, issued in
December 2011, moved the mandatory effective date to January 1,
2018. The Company has determined that there is no material impact
of this standard on its consolidated financial
statements.
b)
IFRS
15 – Revenue from Contracts with Customers
IFRS 15 clarifies the principles for recognizing revenue from contracts with customers. IFRS 15 will also result in enhanced disclosures
about revenue, provide guidance for transactions that were notpreviously addressed
comprehensively, and improve
guidance for multiple-element arrangements. The standard is effective for annual period beginning on or after January 1,
2018 and is to be applied retrospectively. The
Company has determined that there is no material impact of this
standard on its consolidated financial statements.
c)
IFRS
16 – Leases
IFRS
16 provides a single lessee accounting model, requiring the
recognition of assets and liabilities for all leases, unless the
least term is 12 months or less or the underlying asset has a low
value. Lessor accounting remains largely unchanged from IAS 17 and
the distinction between operating and finance leases is retained.
The standard is effective for annual period beginning on or after
January 1, 2019.
NOTE 5 – ACCOUNTS RECEIVABLE
As at December 31, 2017 and 2016, the Company had the following
amounts due from arm’s length parties:
|
|
2017
|
2016
|
|
|
$
|
$
|
|
Credit
Card Proceeds Receivable
|
-
|
5,545
|
|
Due
From Trading Platform, ANX (Note 8)
|
297,309
|
10,319
|
|
|
297,309
|
15,864
|
NOTE 6 – PREPAID EXPENSES
As at December 31, 2017 and 2016, the Company had the following
prepaid expenses:
|
|
2017
|
2016
|
|
|
$
|
$
|
|
Market Registration
Fees
|
7,685
|
6,001
|
|
Deposit
with ANX
|
70,029
|
-
|
|
Prepaid
Consulting Fees
|
26,025
|
-
|
|
Prepaid
Management Fees (Note 13(a)(i))
|
55,573
|
-
|
|
|
159,312
|
6,001
|
NOTE 7 – TRADE AND OTHER PAYABLES
As at December 31, 2017 and 2016, the Company had the following
amounts due to creditors:
|
|
2017
|
2016
|
|
|
$
|
$
|
|
Trade
Payables
|
119,013
|
99,830
|
|
Accrued
Liabilities
|
31,200
|
91,336
|
|
Related Party
Payable (Note 13(a)(ii))
|
-
|
36,177
|
|
Share Subscription
to be Refunded (Note 10(b)(iii))
|
-
|
26,854
|
|
|
150,213
|
254,197
|
NOTE 8 – LIABILITY TO CUSTOMERS
As at December 31, 2017, the Company had a liability to customers
trading on the Company’s exchange platform in the amount of
$297,309 (2016 – $10,319). This amount is offset by an equal
amount due to the Company from the trading platform, ANX. (Note
5)
NOTE 9 – CONVERTIBLE PROMISSORY NOTES
|
|
$
|
|
|
|
|
Balance,
December 31, 2015
|
639,824
|
|
|
|
|
Issuances (Net of
Transaction Costs)
|
52,725
|
|
Repayments
|
(13,841)
|
|
Conversions
|
(304,386)
|
|
Interest
Accrual
|
21,051
|
|
|
|
|
Balance,
December 31, 2016
|
395,373
|
|
|
|
|
Issuances (Net of
Transaction Costs)
|
1,391,759
|
|
Repayments
|
(130,498)
|
|
Conversions
|
(102,128)
|
|
Interest
Accrual
|
27,989
|
|
|
|
|
Balance,
December 31, 2017
|
1,582,495
|
a)
During
2016, the Company issued convertible promissory notes totaling
$49,806. In addition, the Company issued a convertible promissory
note in the amount of $2,919 (US$2,200) to a company controlled by
a director and officer of the Company. The notes mature on December
31, 2021.
The
notes are non-interest bearing and unsecured. All the notes become
payable immediately should the Company complete a financing in
excess of US$5,000,000 prior to the maturity date and shall bear
interest at 3% per annum compounded annually should the Company
default on the notes. These notes are convertible into common
shares of the Company in whole or in part at the option of the
holder upon terms to be determined by the Company either 10 days
prior to repayment of the notes or the maturity date, whichever
shall occur first.
b)
During
2016, the Company entered into assignment of creditors and
settlement of debt agreements in respect of certain convertible
promissory notes totaling $293,389 (including US$157,025). As part
of the settlement, the Company issued 16,000,000 post-consolidation
shares (Note 10(b)(iv)) to the promissory note holders and
recognized a gain on settlement of debts in the amount of $41,406
settled.
NOTE 9 – CONVERTIBLE PROMISSORY NOTES
(Continued)
c)
During
2017, the Company issued convertible promissory notes in the amount
of $304,239 (US$220,000). The notes are non-interest bearing,
unsecured, and mature on December 31, 2021.
The
notes may be converted into common shares of the Company in whole
or in part at the option of the holder upon terms to be determined
by the Company either 10 days prior to repayment of the note or the
maturity date, whichever shall occur first. The notes become
immediately payable should the Company complete financing in excess
of US$5,000,000 prior to the maturity date, and bear interest at 3%
per annum compounded annually should the Company default on the
note. Subsequent to year-end, all the promissory notes totalling
US$220,000 were converted into 2,500,000 common shares of the
Company (Note 17(c)).
d)
During
2017, the Company issued convertible promissory notes in the amount
of $1,053,647 (US$836,190). The notes are unsecured, bear interest
at between 10% and 12% per annum from the date of issuance, and
mature between 6 months and one year after the date of
issuance.
Any
amount of interest or principal that is not paid on the maturity
date bears interest at 22% to 24% per annum from the maturity date
to the date of payment. Any amount of principal and/or interest
that is unpaid may be converted, at the option of the holder, in
whole or in part into common share of the Company at a price equal
to 61% of the lowest closing bid price for the Company’s
stock as reported on the OTC during the fifteen trading days prior
to a Notice of Conversion. The Company may prepay the principal and
all accrued interest at any time between the date of issuance and
the maturity date, together with a prepayment premium of between
15% and 40% of the amount prepaid, determined by reference to the
date of repayment. Subsequent to year-end, promissory notes
totalling US$290,540 were converted into 4,267,873 common shares of
the Company (Note 17(c)).
e)
During
2017 the Company entered into a consulting agreement with an
unrelated party for the provision of advertising services. In
consideration for the services the Company issued a convertible
promissory note in the amount of $37,692 (US$30,000). The
convertible promissory note is unsecured, bears interest at 3% per
annum, and matures on January 10, 2018.
Upon
maturity, the note shall be converted into common shares of the
Company at a 20% discount to the lowest closing bid price for the
Company’s common stock offered during the twenty trading days
prior to conversion. The Company may redeem the note in whole or in
part at any time without penalty. Subsequent to year-end, this
promissory note was converted into 355,450 common shares of the
Company (Note 17(c)).
NOTE 10 – SHARE CAPITAL
a)
Authorized
Capital
Unlimited
number of common shares, participating, voting (voting right of 1
vote per share), with no par value.
100,000
Class “B” common shares, non-participating, voting
(voting right of 1,000 votes per share), with no par
value.
b)
Issued
and Outstanding Common Shares
i)
Effective
June 8, 2016, the common shares of the Company were consolidated at
the ratio of one new common share for every 50 old common shares.
The Company issued 12,306 shares to round up fractional
entitlements resulting from the consolidation. The number of common
shares and basic loss per share calculations disclosed in these
consolidated financial statements have been adjusted to reflect the
retroactive application of this share consolidation.
NOTE 10 – SHARE CAPITAL (Continued)
b)
Issued
and Outstanding Common Shares (Continued)
ii)
On
March 8, 2015, the Company completed a private placement of 250,000
shares (5,000 post-consolidation shares) at $0.13 per share ($6.50
per post-consolidation share), raising gross proceeds of
$32,000.
iii)
On
November 11, 2015, the Company completed a private placement of
400,000 shares (8,000 post-consolidation shares) shares at US$0.05
per share (US$2.50 per post-consolidation share), raising gross
proceeds of $25,998 (US$20,000). As shares were not issued as of
December 31, 2015 and 2016, the amount of $25,998 was reclassified
to accounts payable as at December 31, 2016. During 2017, the
Company paid the creditor $16,613 in cash and issued 1,000,000
common shares to settle the accounts payable of
$9,385.
iv)
On July
15, 2016, the Company entered into a debt settlement agreement with
a company controlled by a Director and Officer of the Company to
settle outstanding accounts payable of $25,000. The Company agreed
to issue 25,000,000 post-consolidation shares with a fair value
equal to the value of the underlying debt settled.
On
August 15, 2016, the Company entered into an assignment of
creditors and settlement of debt agreement with certain arm’s
length parties. The Company settled certain promissory notes
totalling $118,204 (US$91,475) by the issuance of 8,000,000
post-consolidation shares with a fair value equal to the value of
the underlying debt settled (Note 9(b)).
On
December 20, 2016, the Company entered into an assignment of
creditors and settlement of debt agreement with certain arm’s
length parties. The Company settled promissory notes totalling
$175,185 (including US$65,550) by the issuance of 8,000,000
post-consolidation shares with a fair value of $133,779. A gain of
$41,406 on the settlement of debts was recognized (Note
9(b)).
v)
On
December 12, 2016, the Company completed a private placement of
500,000 post-consolidation shares at US$0.50 per share, raising
gross proceeds of $334,975 (US$250,000). The shares were not issued
by December 31, 2016 and on September 20, 2017, the Company
re-priced the subscription share price to US$0.10 per share and
issued 2,500,000 common shares to the placees.
vi)
On June
12, 2017, the Company settled convertible promissory notes
totalling $32,700 by the issuance of 2,000,000 common shares with a
fair value equal to the value of the underlying debt
settled.
On
September 21, 2017, the Company settled a convertible promissory
note owed to a company controlled by a former Officer and Director
of the Company in the amount of $61,694 (US$50,000) by the issuance
of 1,000,000 common shares with a fair value equal to the value of
the underlying debt settled.
vii)
On
October 10, 2017, the Company passed a resolution authorizing the
creation of a new 100,000 Class “B” common shares with
the following characteristics: non-participating, no par value, and
with the voting right of 1,000 votes per share.
On
the same day, the Company issued 100,000 Class “B”
common shares at $0.001 per share for total proceeds of $100 to a
shareholder who is also a Director and Office of the
Company.
NOTE 10 – SHARE CAPITAL (Continued)
c)
Share-Based
Payments
i)
During
the year ended December 31, 2015, the Company issued 1,400,000
shares (28,000 post-consolidation shares) at a fair value of $0.05
per share ($2.50 per post-consolidation share) for investor
relations services. Share-based compensation of $70,000 was
recorded.
During
the year ended December 31, 2015, the Company also issued 300,000
shares (6,000 post-consolidation shares) at a fair value of $0.05
per share ($2.50 per post-consolidation share) for consulting
services rendered. Share-based compensation of $15,000 was
recorded. 150,000 of these shares (3,000 post-consolidation shares)
were issued to a related party (Note 13(b)(ii)).
ii)
During
the year ended December 31, 2016, the Company issued 250,000
post-consolidation shares at a fair value of $0.06 per share to a
related party for consulting services rendered. Share-based
compensation of $15,000 was recorded (Note 13(b)(ii)).
iii)
On July
10, 2017, the Company entered into a consulting agreement for the
provision of business strategy and compliance services. The Company
issued 250,000 common shares valued at $21,896.
d)
Share
Purchase Warrants
The
Company had no share purchase warrants outstanding for the years
ended December 31, 2017, 2016, and 2015.
e)
Escrow
Shares
On
September 19, 2014, the Company entered into an escrow agreement
with a creditor. The Company agreed to pay the creditor $2,500 upon
signing of the agreement and to issue 75,000 shares (1,500
post-consolidation shares) to be held in escrow. The Company was
obligated to pay the creditor a further $7,334 (US$6,687) forty
five days after the Company’s stock becomes DWAC-eligible. On
December 22, 2016, the Company paid $5,374 (US$4,000) and the
creditor agreed to release these shares from escrow.
As
of December 31, 2017, the 1,500 shares were held in trust by the
corporate lawyer and have not been returned to the Company’s
Treasury.
NOTE 11 – COMMITMENTS
a)
Crypto
Currency Deposit and Exchange Services
On
March 31, 2015, the Company entered into an agreement with Mega
Idea Holdings Limited, dba ANX (“ANX”), to provide
Crypto-currency deposit and exchange services. Pursuant to the
terms of the agreement, the Company is required to pay monthly
maintenance fees of US$10,000 for maintenance and support of the
exchange platform. The agreement with ANX is for a term of three
years.
On
April 7, 2017 (the “effective date”), the Company
entered into a revised agreement with ANX. Pursuant to the terms of
the agreement, the Company is required to pay monthly maintenance
fees of US$1,500 for the first six months commencing the first
month after the effective date, and US$5,000 thereafter. The
revised agreement with ANX is for a term of two years.
b)
Finder’s
Fee Agreement
The
Company has entered into various finder’s fee agreements
whereby the Company is required to pay cash finder’s fee of
10% of all monies raised through these parties. The terms of these
agreements are for periods of one year.
NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
2017
|
2016
|
2015
|
|
|
|
$
|
$
|
$
|
|
a)
Change
in Non-Cash Working Capital Accounts
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Receivable
|
(281,445)
|
35,155
|
(51,019)
|
|
|
GST
Recoverable
|
(6,672)
|
566
|
5,552
|
|
|
Prepaid
Expenses
|
(153,311)
|
(3,087)
|
(5,885)
|
|
|
Trade and Other
Payables
|
(103,884)
|
(76,175)
|
84,523
|
|
|
Liabilities to
Customers
|
286,990
|
(32,428)
|
42,747
|
|
|
|
(258,322)
|
(75,969)
|
75,918
|
|
|
|
|
|
|
|
|
b)
Significant
Non-Cash Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
Shares Issued in
Settlement of Debts
|
103,689
|
276,983
|
-
|
|
|
Shares Issued for
Services
|
21,986
|
15,000
|
85,000
|
|
|
Expenses Paid by An
Arm’s Length Party
|
-
|
8,569
|
-
|
|
|
|
125,675
|
300,552
|
85,000
|
|
|
|
|
|
|
|
|
c)
Other
Information
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Paid
|
16
|
28,974
|
49
|
|
|
Income Taxes
Paid
|
-
|
-
|
-
|
|
NOTE 13 – RELATED PARTIES TRANSACTIONS
Balances and transactions between the Company and its subsidiaries,
which are related parties of the Company, have been eliminated on
consolidation and are not disclosed. Details of transactions
between the Company and other related parties, in addition to those
transactions disclosed elsewhere in these consolidated financial
statements, are described below. All related party transactions
were in the ordinary course of business and were measured at their
exchange amounts.
a)
Related Party Balances
i)
Management
Fees Paid in Advance to a Company Controlled by Director and
Officer
As
at December 31, 2017, the Company had $55,573 (2016 – $Nil)
in prepaid management fees to a company controlled by a Director
and Officer of the Company.
ii)
Trade
and Other Payables
As
at December 31, 2017, the Company had $Nil (2016 – $36,177)
in trade and other payables owed to key management personnel. The
amounts owed to key management personnel arose from outstanding
management fees and are non-interest bearing, unsecured, and have
no specified terms of repayment.
iii)
Promissory
Notes
During
the year ended December 31, 2017, the Company repaid promissory
notes in the amount of $90,529, (including US$31,200) to a company
controlled by a Director (also an officer) of the Company. Included
in convertible promissory notes as at December 31, 2017, was $Nil
(2016 – $89,364 including US$31,200) owed to this
company.
During
the year ended December 31, 2017, the Company settled a promissory
note owed to a company controlled by a former officer of the
Company in the amount $69,205 (US$50,000) by the issuance of
1,000,000 common shares. Included in convertible promissory notes
as at December 31, 2017, was $Nil (2016 – $67,135 including
US$50,000) owed to this company.
NOTE 13 – RELATED PARTIES TRANSACTIONS
(Continued)
b)
Compensation of Key Management Personnel
i)
The
Company incurred management fees for services provided by key
management personnel for the years ended December 31, 2017, 2016
and 2015, as described below.
|
|
2017
|
2016
|
2015
|
|
|
$
|
$
|
$
|
|
Management
Fees
|
105,000
|
60,000
|
60,000
|
ii)
During
the year ended December 31, 2017, the Company incurred consulting
fees for services provided by a Director of the Company in the
amount of $11,296.
During
the year ended December 31, 2016, the Company incurred consulting
fees for services provided by a Director of the Company. The fees
were settled by the issuance of 250,000 post-consolidation shares
at $0.06 per share (Note 10(c)(ii)) and a cash payment of $6,699
(US$5,000).
During
the year ended December 31, 2015, the Company incurred consulting
fees for services provided by a company controlled by a former
officer of the Company. The fees were settled by the issuance of
150,000 shares (3,000 post-consolidation shares) at $0.05 per share
($2.50 per post-consolidation share) (Note 10(c)(i)).
NOTE 14 – INCOME TAX
a)
Deferred Tax Assets and Liabilities
The
Company’s unrecognized deductible temporary differences and
unused tax losses for which no deferred tax asset is recognized
consists of the following amounts:
|
|
2017
|
2016
|
|
|
$
|
$
|
|
Non-Capital
Losses
|
5,046,141
|
4,371,641
|
|
Capital
Losses
|
29,628
|
29,628
|
|
Property and
Equipment
|
100,490
|
100,490
|
|
|
5,176,259
|
4,501,759
|
As
at December 31, 2017, the Company has non-capital losses of
approximately $5,046,100 which may be applied to reduce Canadian
taxable income of future years. These non-capital losses expire as
follows:
|
|
$
|
|
2026
|
313,100
|
|
2027
|
515,300
|
|
2028
|
367,400
|
|
2029
|
1,157,900
|
|
2030
|
307,400
|
|
2031
|
301,400
|
|
2032 to
2037
|
2,083,600
|
|
|
5,046,100
|
b)
Income Tax Expense
The
income tax expense of the Company is reconciled to the net loss for
the year as reported in the consolidated statement of comprehensive
loss as follows:
NOTE 14 – INCOME TAX
(Continued)
|
|
2017
|
2016
|
2015
|
|
|
$
|
$
|
$
|
|
Recovery of Income
Tax Calculated at the Statutory Rate of 12.63% (2016 – 13%;
2015 – 13.5%)
|
(85,158)
|
(22,486)
|
(75,253)
|
|
Deferred Tax Assets
Not Recognized
|
84,315
|
(21,519)
|
68,065
|
|
Expiration of
Non-Capital Losses
|
-
|
-
|
7,188
|
|
Impact of Change in
Substantively Enacted Tax Rates on Opening Deferred Tax
Assets
|
843
|
44,005
|
-
|
|
Income Tax
Expense
|
-
|
-
|
-
|
NOTE 15 – FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES
The Company is exposed to various risks in relation to financial
instruments. The Company’s financial assets and liabilities
by category are summarized in Note 2(k). The Company’s risk
management is coordinated in close co-operation with the board of
directors and focuses on actively securing the Company’s
short to medium-term cash flows and raising finances for the
Company’s capital expenditure program. The Company does not
actively engage in the trading of financial assets for speculative
purposes.
The most significant financial risks to which the Company is
exposed are as follows:
a)
Liquidity
risk
Liquidity risk is the risk that the Company will
not be able to meet its financial obligations as they fall due. The
Company is dependent upon the availability of credit from its
suppliers and its ability to generate sufficient funds from equity
and debt financing to meet current and future obligations. The
Company has a working capital deficiency of $782,107 as at December 31, 2017. There can be no assurance
that such financing will be available on terms acceptable to the
Company.
b)
Interest
Rate Risk
Interest
rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market
interest rates. The Company is not exposed to significant interest
rate risk.
c)
Credit
Risk
Credit
risk is the risk of loss associated with a counter party’s
inability to fulfill its payment obligations. The Company is in the
development stage and has not yet commenced commercial production
or sales. Therefore, the Company is not exposed to significant
credit risk.
d)
Foreign
Exchange Risk
Foreign
exchange risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
foreign exchange rates. The Company is exposed to foreign exchange
risk to the extent it incurs currency exchange platform service and
development expenditures and operating costs in foreign currencies
including the U.S. Dollar. The Company does not hedge its exposure
to fluctuations in the related foreign exchange rates.
NOTE 15 – FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(Continued)
e)
Fair
Values
The
Company uses the following hierarchy for determining fair value
measurements:
Level
1: Quoted prices in active markets for identical assets or
liabilities.
Level
2: Other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly
or indirectly.
Level
3: Techniques which use inputs that have a significant effect on
the recorded fair value that are not based on observable market
data.
The
level within which the financial asset or liability is classified
is determined based on the lowest level of significant input to the
fair value measurement. The Company’s financial instruments
were measured at fair value use Level 1 valuation technique during
the years ended December 31, 2017 and 2016. The carrying values of
the Company’s financial assets and liabilities approximate
their fair values.
NOTE 16 – CAPITAL MANAGEMENT
The Company’s objective for managing its capital structure is
to safeguard the Company’s ability to continue as a going
concern and to ensure it has the financial capacity, liquidity and
flexibility to fund its ongoing operations and capital
expenditures.
The Company manages its share capital as capital, which as at
December 31, 2017, amounted to $4,106,207. At this time, the
Company’s access to the debt market is limited and it relies
on equity issuances and the support of shareholders to fund the
development of its trading platform. The Company monitors capital
to maintain a sufficient working capital position to fund
annualized administrative expenses and capital
investments.
As at December 31, 2017, the Company had working capital deficiency
of $782,107. The Company will issue shares and may from time
to time adjust its capital spending to maintain or adjust the
capital structure. There can be no assurance that the Company will
be able to obtain debt or equity capital in the case of operating
cash deficits.
The Company’s share capital is not subject to external
restrictions. The Company has not paid or declared any dividends
since the date of incorporation, nor are any contemplated in the
foreseeable future. There were no changes in the Company’s
approach to capital management during the year ended December 31,
2017.
NOTE 17 – SUBSEQUENT EVENTS
a)
Shares
Issued for Services
In
February 2018, the Company entered into two consulting agreements
for the provision of compliance and strategic advisory services and
issued 600,000 common shares pursuant to the
agreements.
b)
Issuance
of Convertible Promissory Notes
Subsequent
to year end, the Company issued two convertible promissory notes
for total proceeds of US$163,000. The notes are unsecured, bear
interest at 12% per annum from the date of issuance, and mature
between 6 months and one year after the date of
issuance.
Any
amount of interest or principal that is not paid on the maturity
date bears interest at 22% per annum from the maturity date to the
date of payment. Any amount of principal and or interest that is
unpaid may be converted, at the option of the holder, in whole or
in part into common share of the Company at a price equal to 61% of
the lowest closing bid price for the Company’s stock as
reported on the OTC during the fifteen trading days prior to a
Notice of Conversion. The Company may prepay the principal and all
accrued interest at any time between the date of issuance and the
maturity date, together with a prepayment premium of between 15%
and 40% of the amount prepaid, determined by reference to the date
of repayment.
c)
Conversion
of Promissory Notes
Subsequent
to year end, the Company issued a total of 7,123,323 common shares
on conversion of convertible promissory notes totalling US$540,540
(Note 9(c),(d),(e)).
Digatrade Financial Corp.
September 30, 2018
(Expressed in Canadian Dollars)
Unaudited Interim Consolidated Financial Statements
Notice of No Auditor Review of Interim Consolidated Financial
Statements
Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if
an auditor has not performed a review of the interim consolidated
financial statements they must be accompanied by a notice
indicating that the interim consolidated financial statements have
not been reviewed by an auditor.
The accompanying unaudited interim consolidated financial
statements of the Company for the three and nine months ended
September 30, 2018 have been prepared by, and are the
responsibility of, the Company’s management.
The Company’s independent auditor has not performed a review
of these interim consolidated financial statements in accordance
with standards established by the Canadian Institute of Chartered
Accountants for a review of interim consolidated financial
statements by an entity’s auditor.
“Bradley J. Moynes”
Bradley J. Moynes
President, Director & CEO
“Tyrone Docherty”
Tyrone Docherty
Director
DIGATRADE FINANCIAL CORP.
Interim Consolidated Balance Sheets
Unaudited – prepared by management
(Expressed in Canadian Dollars)
Nature and Continuance of Operations (Note 1)
Approved on Behalf of the Board:
|
“Bradley J. Moynes”
|
|
“Tyrone Docherty”
|
|
Bradley
J. Moynes
Chairman,
President, Director and CEO
|
|
Tyrone
Docherty
Director
|
The accompanying notes are an integral part of these interim
financial statements
DIGATRADE FINANCIAL CORP.
Interim Consolidated Statement of Changes in Shareholders’
Equity
Unaudited – prepared by management
(Expressed in Canadian Dollars)
The accompanying notes are an integral part of these interim
financial statements
DIGATRADE FINANCIAL CORP.
(Formerly “Bit-X Financial Corporation”)
Interim Consolidated Statements of Operations, Comprehensive Loss
and Deficit
Unaudited – prepared by management
(Expressed
in Canadian Dollars)
The accompanying notes are an integral part of these interim
financial statements
DIGATRADE FINANCIAL CORP.
Interim Consolidated Statements of Cash Flows
Unaudited – prepared by management
(Expressed in Canadian Dollars)
DIGATRADE FINANCIAL CORP.
Notes to the Interim Consolidated Financial
Statements
September 30, 2018
(Expressed in Canadian Dollars)
NOTE 1 – NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated on December 28, 2000, under the
Company Act of the Province of British Columbia, Canada. On
February 19, 2015, the Company changed its name from Rainchief
Energy Inc. to Bit-X Financial Corporation. On October 27, 2015,
the Company changed its name from Bit-X Financial Corporation to
Digatrade Financial Corp. The Company is focused on increasing
scale, further development and branding a digital asset
(decentralized blockchain based crypto-currency) exchange
platform.
In March 2015, the Company entered into an agreement with Mega
Ideas Holdings Limited, dba ANX (“ANX”), a company
incorporated and existing under the laws of Hong Kong. ANX owns and
operates a technology platform and provides operational and
technology support specializing in blockchain applications and
crypto-currency exchange services. Effective October 17, 2018 the
Company closed the online retail trading platform and shared
liquidity order book with ANX International (see Note
13).
The head office, principal address, and records office of the
Company are located at 1500 West Georgia Street, Suite 1300,
Vancouver, British Columbia, Canada, V6C 2Z6.
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards on the
basis that the Company is a going concern and will be able to meet
its obligations and continue its operations for its next fiscal
year. Several conditions as set out below cast uncertainties on the
Company’s ability to continue as a going
concern.
The Company’s ability to continue as a going concern is
dependent upon the financial support from its creditors,
shareholders, and related parties, its ability to obtain financing
for its development projects, and upon the attainment of future
profitable operations.
The Company has not yet achieved profitable operations and has
accumulated losses of $5,826,788 since inception and
working capital deficiency of $ 151,759 as at September 30, 2018;
accordingly, the Company will need to raise additional funds
through future issuance of securities or debt financing. Although
the Company has raised funds in the past, there can be no assurance
the Company will be able to raise sufficient funds in the future,
in which case the Company may be unable to meet its obligations as
they come due in the normal course of business. It is not possible
to predict whether financing efforts will be successful or if the
Company will attain a profitable level of operations.
The current cash resources are not adequate to pay the
Company’s accounts payable and to meet its minimum
commitments at the date of these consolidated financial statements,
including planned corporate and administrative expenses, and other
project implementation costs, accordingly, there is significant
doubt about the Company’s ability to continue as a going
concern. These consolidated financial statements do not give effect
to adjustments that would be necessary to the carrying amounts and
classifications of assets and liabilities should the Company be
unable to continue as a going concern.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
a)
Basis of Presentation
These
consolidated financial statements have been prepared on a
historical cost basis except for financial instruments classified
as available-for-sale that have been measured at fair value. Cost
is the fair value of the consideration given in exchange for net
assets.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
b)
Statement of Compliance
These
consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting
Standards Board (“IASB”).
These
consolidated financial statements were approved and authorized for
issue by the Board of Directors on August 20, 2018.
c)
Basis of Consolidation
These
consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries (collectively, the
“Company”). Intercompany balances and transactions are
eliminated in preparing the consolidated financial statements. The
following companies have been consolidated within these
consolidated financial statements:
|
Entity
|
Country of
Incorporation
|
Holding
|
Functional
Currency
|
|
|
|
|
|
|
Digatrade
Financial Corp.
|
Canada
|
Parent
Company
|
Canadian
Dollar
|
|
Digatrade
Limited
|
Canada
|
100%
|
Canadian
Dollar
|
|
Digatrade
(UK) Limited
|
United
Kingdom
|
100%
|
Pounds
Sterling
|
|
Digatrade
Limited
|
USA
|
100%
|
US
Dollar
|
The
Company’s former subsidiaries, Jaydoc Capital Corp. and
Rainchief Renewable-1 S.R.L., were de-registered during the year
ended December 31, 2015.
d)
Foreign Currency
These
consolidated financial statements are presented in Canadian
dollars, which is also the functional currency of the parent
company. Each subsidiary determines its own functional currency
(Note 2(c)) and items included in the financial statements of each
subsidiary are measured using that functional
currency.
i)
Transactions and Balances in Foreign Currencies
Foreign
currency transactions are translated into the functional currency
of the respective entity using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
re-measurement of monetary items at year-end exchange rates are
recognized in profit or loss.
Non-monetary
items measured at historical cost are translated using the exchange
rate at the date of the transaction and are not retranslated.
Non-monetary items measured at fair value are translated using the
exchange rate at the date when fair value was
determined.
ii)
Foreign Operations
On
consolidation, the assets and liabilities of foreign operations are
translated into Canadian dollars at the exchange rate prevailing at
the reporting date and their revenues and expenses are translated
at exchange rates prevailing at the dates of the transactions. The
exchange differences arising on the translation are recognized in
other comprehensive income and accumulated in the currency
translation reserve in equity. On disposal of a foreign operation,
the component of other comprehensive income relating to that
particular foreign operation is recognized in earnings and
recognized as part of the gain or loss on disposal.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
e)
Financing and Finder’s Fees
Financing
and finder’s fees relating to financial instruments with a
term of one year or less are expensed in the period incurred. For
financial instruments with a term of over one year, the fees are
netted against the financial instruments and amortized over the
term of the financial instruments.
f)
Share Capital
The
Company records proceeds from share issuances, net of commissions
and issuance costs. Shares issued for other than cash
consideration are valued at the quoted price on the
Over-the-Counter Bulletin Board in the United States based on the
earliest of: (i) the date the shares are issued, and (ii) the date
the agreement to issue the shares is reached.
g)
Share-Based Payments
The
fair value method of accounting is used for share-based payment
transactions. Under this method, the cost of stock options and
other share-based payments is recorded based on the estimated fair
value using the Black-Scholes option-pricing model at the grant
date and charged to profit over the vesting period. The amount
recognized as an expense is adjusted to reflect the number of
equity instruments expected to vest.
Upon
the exercise of stock options and other share-based payments,
consideration received on the exercise of these equity instruments
is recorded as share capital and the related share-based payment
reserve is transferred to share capital. The fair value of
unexercised equity instruments are transferred from reserve to
retained earnings upon expiry.
h)
Revenue Recognition
Revenue
is comprised of consulting fees and commissions earned on trades
executed on the digital currency trading platform. Consulting fee
income is recognized as the consulting services are provided.
Commission is considered earned when a trade is completed by the
Company’s customers. As the platform is not yet fully live,
commissions and consulting fees earned have been accounted for as a
recovery of development costs incurred.
i)
Loss per Share
Basic
loss per share is calculated by dividing net loss by the weighted
average number of common shares issued and outstanding during the
reporting period. Diluted loss per share is the same as basic loss
per share, as the issuance of shares on the exercise of stock
options and share purchase warrants is anti-dilutive. The loss per
share in prior periods has been adjusted to take into account the
consolidation of the Company’s common stock on June 8, 2016
(Note 10(b)(i)).
j)
Income Taxes
Tax
expense recognized in profit or loss comprises the sum of deferred
tax and current tax not recognized in other comprehensive income or
directly in equity.
i)
Current Income Tax
Current
income tax assets and liabilities comprise those claims from, or
obligations to, fiscal authorities relating to the current or prior
reporting periods that are unpaid at the reporting date. Current
tax is payable on taxable profit, which differs from profit or loss
in the consolidated financial statements. Calculation of current
tax is based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting
period.
ii)
Deferred Income Tax
Deferred
income taxes are calculated using the liability method on temporary
differences between the carrying amounts of assets and liabilities
and their tax bases. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to
apply to their respective period of realization, provided they are
enacted or substantively enacted by the end of the reporting
period. Deferred tax liabilities are always provided for in
full.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
(Continued)
ii)
Deferred Income Tax (Continued)
Deferred
tax assets are recognized to the extent that it is probable that
they will be able to be utilized against future taxable income.
Deferred tax assets and liabilities are offset only when the
Company has a right and intention to offset current tax assets and
liabilities from the same taxation authority.
Changes
in deferred tax assets or liabilities are recognized as a component
of tax income or expense in profit or loss, except where they
relate to items that are recognized in other comprehensive income
or directly in equity, in which case the related deferred tax is
also recognized in other comprehensive income or equity,
respectively.
k)
Financial Instruments
Financial
assets and financial liabilities are recognized when the Company
becomes a party to the contractual provisions of the financial
instrument.
Financial
assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities classified
at fair value through profit or loss) are added to, or deducted
from, the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities classified at fair value through profit or
loss are recognized immediately in profit or loss.
Financial
assets and financial liabilities are measured subsequently as
described below. The Company does not have any derivative financial
instruments.
i)
Financial Assets
For
the purpose of subsequent measurement, financial assets other than
those designated and effective as hedging instruments are
classified into the following categories upon initial
recognition:
●
Financial
assets at fair value through profit or loss;
●
Loans
and receivables;
●
Held-to-maturity
investments; and
●
Available-for-sale
financial assets.
The
category determines subsequent measurement and whether any
resulting income and expense is recognized in profit or loss or in
other comprehensive income.
All
financial assets except for those at fair value through profit or
loss are subject to review for impairment at least at each
reporting date. Financial assets are impaired when there is any
objective evidence that a financial asset or a group of financial
assets is impaired. Different criteria to determine impairment are
applied for each category of financial assets, which are described
below.
● Financial
assets at fair value through profit or loss – Financial assets at fair value
through profit or loss include financial assets that are either
classified as held for trading or that meet certain conditions and
are designated at fair value through profit or loss upon initial
recognition. All derivative financial instruments fall into this
category, except for those designated and effective as hedging
instruments. Assets in this category are measured at fair value
with gains or losses recognized in profit or loss. The
Company’s cash falls into this category of financial
instruments.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
(Continued)
i)
Financial Assets (Continued)
●
Loans and
receivables – Loans
and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
After initial recognition, these are measured at amortized cost
using the effective interest method less any provision for
impairment. Discounting is omitted where the effect of discounting
is immaterial. The Company’s accounts receivable falls into
this category of financial instruments.
●
Held-to-maturity
investments –
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturity, other than
loans and receivables. Investments are classified as
held-to-maturity if the Company has the intention and ability to
hold them until maturity. The Company currently does not hold
financial assets in this category.
Held-to-maturity
investments are measured subsequently at amortized cost using the
effective interest method. If there is objective evidence that the
investment is impaired as determined by reference to external
credit ratings, then the financial asset is measured at the present
value of estimated future cash flows. Any changes to the carrying
amount of the investment, including impairment losses, are
recognized in profit or loss.
●
Available-for-sale
financial assets –
Available-for-sale financial assets are non-derivative financial
assets that are either designated to this category or do not
qualify for inclusion in any of the other categories of financial
assets. The Company currently does not hold financial assets in
this category. Available-for-sale financial assets are measured at
fair value. Gains and losses are recognized in other comprehensive
income and reported within the available-for-sale reserve within
equity, except for impairment losses and foreign exchange
differences on monetary assets, which are recognized in profit or
loss. When the asset is disposed of or is determined to be
impaired, the cumulative gain or loss recognized in other
comprehensive income is reclassified from the equity reserve to
profit or loss, and presented as a reclassification adjustment
within other comprehensive income.
For
financial assets measured at amortized cost, if, in a subsequent
period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the
impairment was recognized, then the previously recognized
impairment loss is reversed through profit or loss to the extent
that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortized cost
would have been had the impairment not been
recognized.
In
respect of available-for-sale financial assets, impairment losses
previously recognized in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an
impairment loss is recognized in other comprehensive income and
accumulated in the revaluation reserve.
Financial
assets are derecognized when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset
and all substantial risks and rewards are transferred.
ii)
Financial Liabilities
For
the purpose of subsequent measurement, financial liabilities are
classified as either financial liabilities at fair value through
profit or loss, or other financial liabilities upon initial
recognition.
●
Financial
liabilities at fair value through profit or loss – Financial liabilities at fair value
through profit or loss include financial liabilities that are
either classified as held for trading or that meet certain
conditions and are designated at fair value through profit or loss
upon initial recognition. Liabilities in this category are measured
at fair value with gains or losses recognized in profit or loss.
The Company does not hold financial liabilities in this
category.
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
(Continued)
ii)
Financial Liabilities (Continued)
●
Other
financial liabilities – Other financial liabilities are
subsequently measured at amortized cost using the effective
interest method. Gains and losses are recognized in the income
statement when the liabilities are derecognized as well as through
the effective interest rate method amortization process. The
Company’s trade and other payables, liabilities to customers,
and promissory notes payable fall into this category of financial
instruments.
A
financial liability is derecognized when it is extinguished,
discharged, cancelled or expired.
NOTE 3 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND
ASSUMPTIONS
In the application of the Company’s accounting policies which
are described in Note 2, management is required to make judgments,
estimates, and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
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 judgments, estimates, and assumptions that have the
most significant effect on the amounts recognized in the
consolidated financial statements are described below.
Deferred Tax Assets
Deferred tax assets, including those arising from unutilized tax
losses, require management to assess the likelihood that the
Company will generate sufficient taxable earnings in future periods
in order to utilize recognized deferred tax assets. Assumptions
about the generation of future taxable profits depend on
management’s estimates of future cash flows. In addition,
future changes in tax laws could limit the ability of the Company
to obtain tax deductions in future periods. To the extent that
future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred
tax assets recorded at the reporting date could be
impacted.
NOTE 4 – ACCOUNTING STANDARDS ISSUED BUT NOT YET
EFFECTIVE
A number of new accounting standards, amendments to standards, and
interpretations have been issued but not yet effective up to the
date of issuance of the Company’s consolidated financial
statements. The Company intends to adopt the following standards,
if applicable, when they become effective.
a)
IFRS 9 – Financial Instruments
IFRS
9 as issued reflects the first phase of the IASBs work on the
replacement of IAS 39 and applies to classification and measurement
of financial assets as defined in IAS 39. The standard was
initially effective for annual period beginning on or after January
1, 2013, but amendments to IFRS 9 Mandatory Effective Date of IFRS
9 and Transition Disclosures, issued in December 2011, moved the
mandatory effective date to January 1, 2018. The Company has
determined that there is no material impact of this standard on its
consolidated financial statements.
b)
IFRS 15 – Revenue from Contracts with Customers
IFRS
15 clarifies the principles for recognizing revenue from contracts
with customers. IFRS 15 will also result in enhanced disclosures
about revenue, provide guidance for transactions that were not
previously addressed comprehensively, and improve guidance for
multiple-element arrangements. The standard is effective for annual
period beginning on or after January 1, 2018 and is to be applied
retrospectively. The Company has determined that there is no
material impact of this standard on its consolidated financial
statements.
c)
IFRS 16 – Leases
IFRS
16 provides a single lessee accounting model, requiring the
recognition of assets and liabilities for all leases, unless the
least term is 12 months or less or the underlying asset has a low
value. Lessor accounting remains largely unchanged from IAS 17 and
the distinction between operating and finance leases is retained.
The standard is effective for annual period beginning on or after
January 1, 2019.
NOTE 5 – ACCOUNTS RECEIVABLE
As at September 30, 2018 and December 31, 2017, the Company had the
following amounts due from third parties:
|
|
September
30,
2018
|
December
31,
2017
|
|
|
$
|
$
|
|
Due
From Trading Platform (Notes 7 and 13)
|
143,932
|
297,309
|
|
|
143,932
|
297,309
|
NOTE 6 – PREPAID EXPENSES
As at September 30, 2018 and December 31, 2017, the Company had the
following prepaid expenses:
|
|
September
30,
2018
|
December
31,
2017
|
|
|
$
|
$
|
|
Market Registration
Fees
|
4,341
|
7,685
|
|
Deposit
with ANX
|
-
|
70,029
|
|
Prepaid
Consulting Fees
|
-
|
26,025
|
|
Prepaid
Management Fees (Note 13(a)(i))
|
96,902
|
55,573
|
|
|
101,243
|
159,312
|
NOTE 7 – TRADE AND OTHER PAYABLES
As at September 30, 2018 and December 31, 2017, the Company had the
following amounts due to creditors:
|
|
September
30,
2018
|
December
31,
2017
|
|
|
$
|
$
|
|
Trade
Payables
|
197,111
|
119,013
|
|
Accrued
Liabilities
|
8,267
|
31,200
|
|
|
205,378
|
150,213
|
NOTE 8 - LIABILITY TO CUSTOMERS
As at September 30, 2018, the Company had a liability to customers
trading on the Company’s currency platform in the amount of
$106,747 (December 31, 2017 – $297,309). This amount is
offset by an equal amount due to the Company from the trading
platform. (Notes 5 and 13)
NOTE 9 – CONVERTIBLE PROMISSORY NOTES PAYABLE
|
|
$
|
|
Balance,
December 31, 2017
|
1,582,495
|
|
Issuances
|
508,417
|
|
Repayments
|
(31,762)
|
|
Conversions to
Common Shares
|
(1,480,046)
|
|
Unrealized Foreign
Exchange Adjustment
|
8,030
|
|
Balance,
September 30, 2018
|
587,134
|
During the period January 1, 2018 to September 30, 2018 certain
Convertible Promissory Notes totaling $1,542,900 including interest
and fees in the amount of $62,854 (US$1,206,445, including interest
and fees in the amount of $48,328) were converted to Common Stock,
either in whole or in part. The Company issued 46,528,091 shares of
Common Stock in connection with the conversions.
On February 15, 2018 the Company issued a Convertible Promissory
Note in the amount of $98,950 (US$78,000).
On March 5, 2018 the Company issued two Convertible Promissory
Notes totaling $101,184 (US$80,000)
On April 30, 2018 the Company issued a Convertible Promissory Note
in the amount of $107,508 (US$85,000)
On September 25, 2018 the Company issued a Convertible Promissory
Note in the amount of $135,954 (US$105,000)
The notes are unsecured, bear interest at 12% per annum from the
date of issuance and mature between 6 months and one year after the
date of issuance. Any amount of interest or principal that is not
paid on the maturity date bears interest at 22% to 24% per annum
from the maturity date to the date of payment. Any amount of
principal and/or interest that is unpaid may be converted, at the
option of the holder, in whole or in part into common share of the
Company at a price equal to 61% of the lowest closing bid price for
the Company’s stock as reported on the OTC during the fifteen
trading days prior to a Notice of Conversion. The Company may
prepay the principal and all accrued interest at any time between
the date of issuance and the maturity date, together with a
prepayment premium of between 15% and 40% of the amount prepaid,
determined by reference to the date of repayment.
On June 1, 2018 the Company issued a Convertible Promissory Note in
the amount of $64,820 (US$50,000) pursuant to a consulting
contact.
The note is unsecured and matures on December 2, 2018. The note may
be converted into common shares of the Company in whole or in part
at the option of the holder upon terms to be determined by the
Company either 10 days prior to repayment of the note or the
maturity date, whichever shall occur first. The note becomes
immediately payable should the Company complete financing in excess
of US$5,000,000 prior to the maturity date, and bears interest at
3% per annum compounded annually should the Company default on the
note. On September 30, 2018 the Company repaid $31,761 (US$24,500)
of this Note.
NOTE 10 – SHARE CAPITAL
a)
Authorized Capital
Unlimited
number of common shares, participating, voting (voting right of 1
vote per share), with no par value.
100,000
Class “B” common shares, non-participating, voting
(voting right of 1,000 votes per share), with no par
value.
b)
Issued and Outstanding Common Shares
i)
Effective
June 8, 2016, the common shares of the Company were consolidated at
the ratio of one new common share for every 50 old common shares.
The Company issued 12,306 shares to round up fractional
entitlements resulting from the consolidation. The number of common
shares and basic profit or loss per share calculations disclosed in
these financial statements have been adjusted to reflect the
retroactive application of this share consolidation.
ii)
On
October 10, 2017, the Company passed a resolution authorizing the
creation of a new 100,000 Class “B” common shares with
the following characteristics: non-participating, no par value, and
with the voting right of 1,000 votes per share. On the same day,
the Company issued 100,000 Class “B” common shares at
$0.001 per share for total proceeds of $100 to a shareholder who is
also a Director and Office of the Company.
iii)
During
the period January 1, 2018 to September 30, 2018 the Company
issued 46,528,091common shares in connection with the
Conversions of certain Convertible Promissory Notes (see Note
9)
c)
Share based Payments
On
February 1, 2018 the Company entered into two consulting agreements
for the provision of business strategy and compliance services. The
Company issued 600,000 common shares valued at $7,373.
d)
Share Purchase Warrants
As
at September 30, 2018 and December 31, 2017, the Company had no
share purchase warrants outstanding.
e)
Escrow Shares
On
September 19, 2014, the Company entered into an escrow agreement
with a creditor. The Company agreed to pay the creditor $2,500 upon
signing of the agreement and to issue 75,000 shares (1,500
post-consolidation shares) to be held in escrow. The Company was
obligated to pay the creditor a further $7,334 (US$6,687)
forty-five days after the Company’s stock becomes
DWAC-eligible. On December 22, 2016, the Company paid $5,374
(US$4,000) and the creditor agreed to release the shares from
escrow.
As
of September 30, 2018, the 1,500 shares were held in trust by the
corporate lawyer and have not been returned to the Company’s
Treasury.
NOTE 11
– COMMITMENTS
a)
Crypto Currency Deposit and Exchange Services
On
March 31, 2015, the Company entered into an agreement with Mega
Idea Holdings Limited, dba ANX (“ANX”), to provide
Crypto-currency deposit and exchange services. Pursuant to the
terms of the agreement, the Company is required to pay monthly
maintenance fees of US$10,000 for maintenance and support of the
exchange platform. The agreement with ANX is for a term of three
years.
On
April 7, 2017 (the “effective date”), the Company
entered into a revised agreement with ANX. Pursuant to the terms of
the agreement, the Company is required to pay monthly maintenance
fees of US$1,500 for the first six months commencing the first
month after the effective date, and US$5,000 thereafter. The
revised agreement with ANX is for a term of two years.
NOTE 11 – COMMITMENTS (Continued)
a)
Crypto Currency Deposit and Exchange Services (Continued)
On
June 1, 2018 the Company entered into a contract for consulting
services. The Company agreed pay the Consultant US$10,000 per month
and issued a Convertible Promissory Note to the Consultant in the
amount of $64,820 (US$50,000) (See Note 9)
b)
Finder’s Fee Agreement
The
Company has entered into various finder’s fee agreements
whereby the Company is required to pay cash finder’s fee of
10% of all monies raised through these parties. The terms of these
agreements are for periods of one year.
NOTE 12 – RELATED PARTIES TRANSACTIONS
Balances and transactions between the Company and its subsidiaries,
which are related parties of the Company, have been eliminated on
consolidation and are not disclosed. Details of transactions
between the Company and other related parties, in addition to those
transactions disclosed elsewhere in these consolidated financial
statements, are described below. All related party transactions
were in the ordinary course of business and were measured at their
exchange amounts.
a)
Related Party Balances
i)
Management Fees Paid in Advance to a Company Controlled by Director
and Officer
As
at September 30, 2018, the Company had $96,902 (December 31, 2017 -
$55,573) in prepaid management fees to a company controlled by a
Director and Officer of the Company.
b)
Compensation of Key Management Personnel
The
Company incurred management fees for services provided by key
management personnel for the three and nine months ended September
30, 2018 and 2017 as described below.
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
|
$
|
$
|
$
|
$
|
|
Management
Fees
|
30,000
|
15,000
|
90,000
|
45,000
|
NOTE 13 – SUBSEQUENT EVENTS
(i)
Convertible Promissory Notes Converted
During
the period October 1, 2018 to November 15, 2018 the Company issued
109,113,243 common shares in connection with the conversion of
certain Convertible Promissory Notes.
(ii)
Issuance of Convertible Promissory Notes
During
the period October 1, 2018 to November 15, 2018 the Company issued
two Convertible Promissory Notes totaling $139,565
(US$110,000).
The
notes are unsecured, bear interest at 12% per annum from the date
of issuance and mature between 6 months and one year after the date
of issuance. Any amount of interest or principal that is not paid
on the maturity date bears interest at 22% to 24% per annum from
the maturity date to the date of payment. Any amount of principal
and/or interest that is unpaid may be converted, at the option of
the holder, in whole or in part into common share of the Company at
a price equal to 61% of the lowest closing bid price for the
Company’s stock as reported on the OTC during the fifteen
trading days prior to a Notice of Conversion. The Company may
prepay the principal and all accrued interest at any time between
the date of issuance and the maturity date, together with a
prepayment premium of between 15% and 40% of the amount prepaid,
determined by reference to the date of repayment.
NOTE 13 – SUBSEQUENT EVENTS (Continued)
(iii)
Termination of ANX contact
On
October 25, 2018, the contract with Mega Idea Holdings Limited, dba
ANX was terminated by mutual agreement between the Company and ANX.
The Company agreed to pay ANX the sum of US$25,000 in full and
final settlement of all claims and obligations between the parties.
All trading platform accounts were closed and Company incurred no
obligations to the account holders as a consequence of the
termination of the contract. The Company will continue to offer OTC
trading for institutional customers and accredited
traders.
NOTE 14 – FINANCIAL INSTRUMENTS
The Company’s financial instruments are exposed to certain
financial risks:
a)
Fair Values
The
carrying values of cash, bank indebtedness, accounts receivable,
accounts payable and accrued liabilities, and amounts due to and
from related parties approximate their fair value as at the balance
sheet date.
b)
Liquidity Risk
Liquidity
risk refers to the risk that an entity will encounter difficulty
meeting obligations associated with financial liabilities. The
Company is dependent upon on the availability of credit from its
suppliers and its ability to generate sufficient funds from equity
and debt financing to meet current and future obligations. There
can be no assurance that such financing will be available on terms
acceptable to the Company.
c)
Credit Risks
Credit
risk is the risk of loss associated with a counter party’s
inability to fulfill its payment obligations. Management considers
that risks related to credit are not significant to the Company at
this time.
d)
Interest rate risk
Interest
rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market
interest rates. Management considers that risks related to interest
are not significant to the Company at this time. Amounts owed from
and to related parties are non-interest bearing.
e)
Foreign Exchange Risk
The
Company operates in Canada and the United States and some of its
material expenditures are payable in U.S. dollars. The Company is
therefore subject to currency exchange risk arising from the degree
of volatility of changes in exchange rates between the Canadian
dollar and the U.S. dollar. The Company does not use derivative
instruments to reduce its exposure to foreign currency
risk.
NOTE 15 – CAPITAL MANAGEMENT
The Company’s objective for managing its capital structure is
to safeguard the Company’s ability to continue as a going
concern and to ensure it has the financial capacity, liquidity and
flexibility to fund its on-going operations and capital
expenditures including investment in resource properties it has or
may acquire.
The Company manages its share capital as capital, which as at
September 30, 2018 totaled $ 5,668,686 (December 31, 2017 -
$4,106,207). At this time the Company’s access to the debt
market is limited and it relies on equity issuances and the support
of shareholders to fund its investments in capital assets and
resource properties. The Company monitors capital to maintain a
sufficient working capital position to fund annualized
administrative expenses and capital investments.
The Company’s share capital is not subject to external
restrictions. The Company has not paid or declared any dividends
since the date of incorporation, nor are any contemplated in the
foreseeable future. There were no changes in the Company’s
approach to capital management during three months ended September
30, 2018.
As at September 30, 2018 the Company had a working capital
deficiency of $158,102. The Company will issue shares and may
from time to time adjust its capital spending to maintain or adjust
the capital structure. There can be no assurance that the Company
will be able to obtain debt or equity capital in the case of
operating cash deficits.
The Company’s share capital is not subject to external
restrictions. The Company has not paid or declared any dividends
since the date of incorporation, nor are any contemplated in the
foreseeable future. There were no changes in the Company’s
approach to capital management during the period ended September
30, 2018.
EXHIBITS
The
following exhibits are filed with this offering
circular:
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
Articles
of Incorporation (Notice of Articles and Transition
Application)
|
|
|
|
By-laws
(Schedule “A”)
|
|
|
|
Management
Agreement of January 1, 2008 (Bradley James Moynes)
|
|
|
6.3*
|
|
Agreement
with Pikeminnow Funding LLC dated February 14, 2019
|
|
6.4*
|
|
Agreement
with Securter, Inc. dated February 26, 2019
|
|
6.5*
|
|
Item 6 Unregistered Securities
Issued or Sold Within One Year
|
|
11.1*
|
|
Consent
of Independent Auditors
|
|
12.1**
|
|
Opinion
of Procopio, Cory, Hargreaves & Savitch LLP
|
|
14.1**
|
|
Per
Form 1-A, a Canadian issuer must file a Form F-X.
|
* Filed
herewith
** To
be filed by amendment
(1)
Incorporated by reference to the Company’s Registration
Statement on Form 20-F filed with the Commission on July 21,
2006.
(2)
Incorporated by reference to the Company’s Annual Report on
Form 20-F filed with the Commission on August 13,
2008.
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form 1-A and has duly caused this
offering statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Vancouver, British Columbia, on April
2, 2019.
|
|
DIGATRADE FINANCIAL CORP.
|
|
|
|
|
|
By: /s/
Brad J. Moynes
|
|
|
Brad J.
Moynes
|
|
|
Chairman,
President and Chief Executive Officer
|
Pursuant to the requirements of the Securities Act, this offering
statement has been signed by the following persons in the
capacities and on the date indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Brad J. Moynes
|
|
Chairman,
President, Chief Executive Officer,
|
|
April 2,
2019
|
|
Brad J.
Moynes
|
|
Principal
Executive, Financial and Accounting
Officer
|
|
|
|
|
|
|
|
|
|
/s/ Tyrone Docherty
|
|
Director
|
|
April 2,
2019
|
|
Tyrone
Docherty
|
|
|
|
|
|
/s/ James Romano
|
|
Director
|
|
April
2, 2019
|
|
James Romano
|
|
|
|
|
|
/s/ Timothy Delaney
|
|
Director
|
|
April
2, 2019
|
|
Timothy
Delaney
|
|
|
|
|
70
