AVAX ONE TECHNOLOGY LTD.

Previous wording

During the year, the Company sold and delivered its first shipment of hydroxyl generating devices. The shipment consisted of 5 units for gross sales of $16,281.

Current wording

During the year, the Company sold and delivered its first shipment of hydroxyl generating devices. The shipment consisted of 5 units for gross sales of $40,845.

Previous wording

Operating expenses primarily consist of wages and salaries, professional fees, consulting, office and administration, investor and public relations, research and development, and share-based compensation. Operating expenses decreased in the year ended December 31, 2023 as compared to December 31, 2022 by $2,500,658 or 18% primarily due to the following:

Current wording

Operating expenses primarily consist of wages and salaries, professional fees, consulting, office and administration, investor and public relations, research and development, and share-based compensation. Operating expenses decreased in the year ended December 31, 2024 as compared to December 31, 2023 by $774,813 or 6.95% primarily due to the following:

Previous wording

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (“asset group”). An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value has been determined using a market approach.

Current wording

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (“asset group”). An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value has been determined using an income approach.

Previous wording

Fair value determinations of intangible assets require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of our intangible asset requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, discount rates, growth rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, change, or if management’s expectations or plans otherwise change, then our intangible might become impaired in the future.

Current wording

Fair value determinations of intangible assets require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating whether our long-lived assets are recoverable requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, discount rates, growth rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, change, or if management’s expectations or plans otherwise change, then our intangible might become impaired in the future.

Previous wording

Our intangible asset balance consists of our patented process to develop germinated whole grain wheat flour. We test our assets for impairment annually or more frequently if events or circumstances indicate it is more likely than not that the fair value of our intangible asset is less than its carrying amount. Such events and circumstances could include a sustained decrease in our market capitalization, increased competition or unexpected loss of market share, increased input costs beyond projections (for example due to regulatory or industry changes), disposals of significant components of our business, unexpected business disruptions, unexpected significant declines in operating results, or significant adverse changes in the markets in which we operate.

Current wording

Our intangible asset balance consists of our patented process to develop germinated whole grain wheat flour and hydroxyl generation systems, including the associated R&D, trademark, brand logo, web domain, customer list, device firmware and software, and product blue prints. We test our indefinite-lived intangible assets for impairment annually or more frequently if events or circumstances indicate it is more likely than not that the fair value of our indefinite-lived intangible asset is less than its carrying amount. Such events and circumstances could include a sustained decrease in our market capitalization, increased competition or unexpected loss of market share, increased input costs beyond projections (for example due to regulatory or industry changes), disposals of significant components of our business, unexpected business disruptions, unexpected significant declines in operating results, or significant adverse changes in the markets in which we operate.

Previous wording

While there was no single determinative event or factor, the consideration in totality of several factors that developed during the fourth quarter of 2023 led us to conclude that it was possible that the fair value of our intangible asset was below their carrying amounts. These factors included: (i) a sustained decrease in our share price in 2023, which reduced our market capitalization below the book value of net assets; (ii) lack of financing raised during 2023 due to the economic environment (iii) delays in the launch of the sale of our UN(THINK) flour;

Current wording

While there was no single determinative event or factor, the consideration in totality of several factors that developed during the third quarter of 2024 led us to conclude that it was possible that the fair value of our intangible asset was below their carrying amounts. These factors included: (i) a sustained decrease in our share price in 2024, which reduced our market capitalization below the book value of net assets; (ii) lack of financing raised during 2024 due to the economic environment (iii) delays in the launch of the sale of our UN(THINK) flour;

Previous wording

Accordingly, we performed an impairment test on our intangible asset as of December 31, 2023 based on the asset’s fair value based on net assets. As a result of our impairment test, we determined that the intangible asset was not impaired as of December 31, 2023. Subsequent to December 31, 2023, our market capitalization continued to decrease indicating that the intangible asset may be impaired in the foreseeable future.

Current wording

Accordingly, we performed an impairment test on our intangible assets as of September 30, 2024 based on the asset’s fair value based discounted future cash flows. As a result of our impairment test, we determined that an intangible asset was impaired as of September 30, 2024. We recorded impairment on the intangible asset.

Previous wording

The First, Second, Third, Fourth, and Fifth Tranche of Debenture Warrants, collectively (the “Debenture Warrants”) are categorized as a Level 3 financial instrument. The Company utilized the Monte Carlo option-pricing model to value the Debenture Warrants.

Current wording

The First, Second, Third, Fourth, Fifth, Sixth, and Seventh Tranche of Debenture Warrants, collectively (the “Debenture Warrants”) are categorized as a Level 3 financial instrument. The Company utilized the Monte Carlo option-pricing model to value the Debenture Warrants.

Previous wording

The Company’s primary need for liquidity is to fund working capital requirements, capital expenditures, and general corporate purposes. The Company’s ability to fund operations and make planned capital expenditures and debt service obligations depends on future operating performance and cash flows, which are subject to prevailing economic conditions, financial markets, business and other factors. We recorded a net loss of $11,733,210 for the year ended December 31, 2023 compared to $12,873,102 for the year ended December 31, 2022; and recorded an accumulated deficit of $44,507,304 as of December 31, 2023 ($32,774,094 – as of December 31, 2022). Net cash used in operating activities for the year ended December 31, 2023 was $6,505,072 compared to $12,079,359 for the year ended December 31, 2022.

Current wording

The Company’s primary need for liquidity is to fund working capital requirements, capital expenditures, and general corporate purposes. The Company’s ability to fund operations and make planned capital expenditures and debt service obligations depends on future operating performance and cash flows, which are subject to prevailing economic conditions, financial markets, business and other factors. We recorded a net loss of $16,274,815 for the year ended December 31, 2024 compared to $11,733,210 for the year ended December 31, 2023; and recorded an accumulated deficit of $60,782,119 as of December 31, 2024 ($44,507,304 – as of December 31, 2023). Net cash used in operating activities for the year ended December 31, 2024 was $5,271,278 compared to $6,505,072 for the year ended December 31, 2023.

Previous wording

We had $3,878,578 in cash as at December 31, 2023 as compared to $2,269,320 as at December 31, 2022.

Current wording

The Company had $489,868 in cash as at December 31, 2024 as compared to $3,878,578 as at December 31, 2023.

Previous wording

The net cash used by operating activities for the year ended December 31, 2023 was $6,505,072 compared to $12,079,359 for the year ended December 31, 2022. The change of $5,574,287 was primarily due to the following:

Current wording

The net cash used by operating activities for the year ended December 31, 2024 was $5,271,278 compared to $6,505,072 for the year ended December 31, 2023. The change of $1,233,794 was primarily due to the following:

Previous wording

During the year ended December 31, 2023, net cash used in investing activities was for the purchase of an equity investment in RCS for $225,000. The net cash used in investing activities for the year ended December 31, 2022 was related to the payment against acquisition of IP intangible asset of $500,000 and acquisition of equipment and leasehold improvements amounting to $104,986 due to increased staffing and office renovations, respectively. All other items aggregated to $35,028.

Current wording

During the year ended December 31, 2023, net cash used in investing activities was for the purchase of an equity investment in RCS for $225,000.

Previous wording

Net cash provided by financing activities for the year ended December 31, 2023, represents net proceeds from debentures of $9,615,385 as well as common shares issued for cash of $1,342,915. This was partially offset by repayments on convertible debentures of $2,143,091, financing costs of debentures of $387,917 and share issuance costs of $153,220. Net cash used in financing activities for the year ended December 31, 2022 represents net proceeds from debentures of $12,750,000. This was partially offset by financing costs of debentures of $1,634,894 and repayments of $2,805,000 as well as payment of $750,000 for the acquisition of an intangible asset.

Current wording

Net cash provided by financing activities for the year ended December 31, 2024 represents net proceeds from debentures of $2,250,000, as well as proceeds from common shares issued for cash of $2,775,616. This was offset by $1,331,467 paid for repayment of convertible debentures and $84,463 related to the financing costs of debentures held by the Company. Net cash provided by financing activities for the year ended December 31, 2023, represents net proceeds from debentures of $9,615,385 as well as common shares issued for cash of $1,342,915. This was partially offset by repayments on convertible debentures of $2,143,091, financing costs of debentures of $387,917 and share issuance costs of $153,220.