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RYAH Group Inc. Interim / Quarterly Report 2021

Dec 1, 2021

45693_rns_2021-11-30_39a4f7d4-3667-4e45-9fdf-73eb521785ed.pdf

Interim / Quarterly Report

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RYAH GROUP, INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2021

(Expressed in US Dollars)

(Unaudited)

NOTICE TO READER

The accompanying unaudited condensed consolidated interim financial statements of RYAH Group, Inc., (the “Company”) for the nine-month period ended September 30, 2021 have been prepared by and are the responsibility of the Company’s management. In accordance with National Instrument 51102 - Continuous Disclosure Obligations , the Company discloses that its independent auditor has not performed a review of these condensed consolidated interim financial statements.

1

INDEX TO THE FINANCIAL STATEMENTS

Condensed Consolidated Interim Statements of Financial Position 3
Condensed Consolidated Interim Statements of Comprehensive Loss 4
Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficiency 5
Condensed Consolidated Interim Statements of Cash Flows 6
Notes to the Condensed Consolidated Interim Financial Statements 7 to 15

2

RYAH Group, Inc. Condensed Consolidated Balance Sheets September 30, 2021 (Unaudited) and December 31, 2020 (Expressed in US Dollars)

Notes
September 30,
2021
December 31,
2020
ASSETS
CURRENT ASSETS
Cash
$ 559,654
Accounts receivable
14,146
Marketable securities
224
Loan from related parties
6,779
Prepaid expenses
3
60,798
Inventories
4
120,896
$ 153,285
-
148
7,034
144,834
762,497
NON-CURRENT ASSETS
Equipment
23,215
305,301
7,501
TOTAL ASSETS
$ 785,712
$ 312,802
LIABILITIES AND SHAREHOLDERS’ EQUITY
(DEFICENCY)
CURRENT LIABILITIES
Accounts payable and accrued liabilities
11
$ 793,082
Due to related party
9
96,945
Lease liability
7
37,318
Convertible notes
6
-
Loans from related parties
9
-
Loans payable
10
177,385
Shares to be issued
25,000
$ 836,885
213,516
10,220
38,276
188,377
18,916
25,000
1,129,730
NON-CURRENT LIABILITIES
Convertible notes
6
138,892
Loanspayable
-
1,331,190
83,349
644,067
TOTAL LIABILITIES
1,268,622
2,058,606
SHAREHOLDERS’ EQUITY (DEFICENCY)
Share capital
8
37,418,735
Reserves
10,103,021
Accumulated deficit
(47,595,928)
Accumulated other comprehensive loss
(408,738)
24,974,696
699,362
(27,419,862)
-
TOTAL SHAREHOLDER’S EQUITY
(DEFICENCY)
(482,910)
(1,745,804)
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY(DEFICENCY)
$ 785,712
$ 312,802

Nature and continuance of operation (Note 1)

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

3

RYAH Group, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Expressed in US Dollars)

Notes Three Months Ended
September 30, 2021
(Unaudited
Nine Months Ended
September 30, 2021
(Unaudited))
Three Months
Ended
September 30,
2020
(Unaudited)
Nine Months
Ended
September30,
2020
(Unaudited)
CONTINUING OPERATIONS
Revenues
Cost of sales
$ 13,250
$ 100,095
$ 20,350
$ 42,832
(5,571)
(31,229)
(11,889)
(24,279)
(24279Grossprofit 7,679
68,866
8,461
18,553
OPERATING EXPENSES
Accretion expense
6, 9
Consulting fees
9
Depreciation expense
General and administrative
Insurance expenses
Interest Expense
6,9,10
Licences and subscriptions
Marketing
Occupancy expenses
Payroll expenses
9
Professional fees
Research and development
9
Stock based compensation
8
Travel
5,321
39,980
13,045
78,770
696,424
1,146,197
21,028
66,700
11,132
27,460
7,636
22,625
9,944
124,337
7,489
13,034
108,404
122,806
3,934
15,455
6,095
15,258
6,595
49,057
1,617
9,507
2,378
7,977
239,565
529,453
4,310
13,996
8,290
8,290
220
1,840
57,363
156,089
55,392
146,335
101,034
368,485
85,541
189,124
74,833
328,818
18,359
108,989
60,352
474,081
285,000
285,000
671
6,009
-
3,313
Total operatingexpenses 1,381,045
3,356,770
510,927
1,002,215
Loss before other items
Other items
Change in fair value of marketable securities
Other income
Other expense
Income from government assistance
Listingexpenses
(1,373,366)
(3,287,904)
(502,466)
(983,662)
(4)
77
(130)
(158)
27,417
30,161
-
14,467
(836)-
(836)-
-
(1,390)
-
30,612
-
-
-
(16,948,176)
-
-
NET LOSS
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment
TOTAL COMPREHENSIVE (LOSS)
Basic and diluted loss per common share
(1,346,789)
(20,176,066)
(502,596)
(970,743)
(238,596)
(408,738)
-
-
$(1,535,385)
$(20,584,804)
$(502,596)
$(970,743)
$
(0.00)
$
(0.05)
$
(0.00)
$
(0.00)
Basic and diluted weighted average number of
common shares outstanding
495,356,321
421,640,828
313,047,475
310,250,923

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

4

RYAH Group, Inc. Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) For the nine months ended September 30, 2021 and 2020 (Restated) (Expressed in US Dollars)

Shares Outstanding
Class A
Class B
Share
Common1
Common1
Capital
Reserves
Equity
Accumulated
Component of
Other
Total
Convertible
Contributed
Option Reserves
Warrant
Comprehensive
Accumulated
Shareholders'
Notes
Capital
Reserves
Loss
Deficit
Equity (Deficiency)
January 1, 2020
-
2,993,316
$ 23,154,282

Issuance of common shares for conculting services
17,562
285,000
Issuance of additional common shares to existing shareholders
46,036
1,311
Conversion of loans from related parties to common shares
78,627
1,519,853
Issuance of convertible note / equity portion
-
-
Net loss
-
-
$
14,694
$
411,162
-
$
37,739
-
$ (24,928,394) $
(1,310,517)
-
-
-
-
-
-
285,000
-
-
-
-
-
(1,311)
-
-
(243,852)
-
-
-
-
1,276,001
25,113
-
-
-
-
-
25,113
-
-
-
-
-
(970,743)
(970,743)
39,807
$
167,310
-
$
37,739
-
$(25,900,448)
$
(695,146)
$
39,807
$
167,310
$
454,506
$
37,739
-
$ (27,419,862)
$
(1,745,804)
-
-
1,544,110
8,072,929
-
-
21,148,616
-
-
-
-
-
-
-
25,112
-
-
-
-
-
25,112
-
-
-
(264,391)
-
-
-
-
25,899
-
-
-
-
673,970.00
-
-
-
-
(408,738)
(20,176,066)
(20,584,804)
64,919
$
193,209
$
1,998,616
$
7,846,277
$
(408,738) $
(47,595,928)
$
(482,910)
June 30, 2020
-
3,135,541
$ 24,960,446
$
January 1, 2021
-
3,137,960
$ 24,974,696

Reverse Take Over
177,630,360
4,253
11,531,577
Conversion of Class B common to Class A common
86,099,200
(860,992)
-
Note conversion
-
-
-
Warrant exercises
3,600,000
-
264,391
Stock-based payments
3,821,878
-
648,071
Net and total comprehensive loss
-
-
-
September 30, 2021
271,151,438
2,281,221
$ 37,418,735
$

1 The numbers of shares outstanding before the RTO have been restated to reflect the effect of the exchange of shares using the exchange ratio inherent in the RTO.

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

5

RYAH Group, Inc. Condensed Consolidated Interim Statements of Cash Flows (Unaudited) For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

Nine Months Ended September September 30,
2021 2020
Cash flows used in operating activities
Net loss $ (20,176,066) $
(970,743)
Adjustments for:
Listing expenses 16,948,176 -
Accretion expenses 44,220 78,770
Expenses paid in shares 648,071
Depreciation 27,460 22,625
Gain on change in fair value of marketable securities (77) 158
Non-cash interest expense - 46,702
Income from government assistance (30,612) -
Changes in non-cash working capital items:
Prepayments and other assets (53,764) 4,575
Accounts receivable 16,944 -
Inventories 23,940 28,090
Due to related party - 97,363
Accrued liabilities and otherpayables (833,763) 164,303
Net cash used in operating activities (3,473,911) (243,127)
Cash flows from investing activities:
Repayment of lease liability - (21,929)
Purchase of equipment (43,174) -
Net cash used in investing activities (43,174) (21,929)
Cash flows from financing activities:
Proceeds from issuance of convertible notes - 100,000
Cash received for common shares not issued yet - 25,000
Proceeds from loans from related party - 72
Proceeds from loans from non-related parties 17,962 92,791
Preacquisition financing by Prime transferred to Potbotics 3,625,961 -
Proceeds from longterm loans - 35,500
Net cash from financing activities 3,643,923 253,363
eEffect of exchange rates on cash 15,140 -
Net increase / (decrease) in cash 406,369 (11,693)
Cash beginningofyear 153,285 35,792
Cash end of theyear $
559,654
$ 24,099

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

6

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

1 Nature and continuance of operations

On April 21, 2021, Potbotics Inc. (“Potbotics”) completed a reverse takeover of Prime Blockchain Inc. (“Prime”), a Canadian reporting issuer. As a result of the transaction, the resulting issuer changed its name to RYAH Group, Inc. and is listed on the CSE under the symbol RYAH, (the “Company” or “Ryah”).

(“Potbotics”) was incorporated on February 12, 2014, under the laws of Florida. The principal business of the Company is the use of artificial intelligence, data mining, and cloud technology to create products, services, and predictive data insights for the medical cannabis industry. The address of the registered records office of the Company is located at 205 East 42nd Street, 14th floor, New York, NY 10017.

These condensed consolidated interim financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. During the period ended September 30, 2021, the Company incurred losses of $20,176,066 (2020 – $970,743), has limited resources, no sources of operating cash flow and no assurances that sufficient funding will be available to continue operations for an extended period of time. The Company’s continuation as a going concern is dependent on its ability to generate future cash flows and/or obtain additional financing. These factors indicate the existence of a material uncertainty that may cast significant doubt as to the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with cash on hand, private or public placements of equity or debt securities, loans from directors and companies controlled by directors. There is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company.

These condensed consolidated interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. These condensed consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported revenues and expenses, and the statement of financial position classifications used, that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations, such adjustments could be material.

7

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

2 Statement of Compliance and Basis of Presentation

Merger

On September 9, 2020, Merger Sub, a wholly owned subsidiary of Prime and Potbotics entered into a merger agreement. Pursuant to the terms of the merger agreement and in accordance with the provisions of the Florida Business Corporations Act, on April 21, 2021, Merger Sub merged with and into Potbotics (the “Merger”). As a result of the Merger, the separate corporate existence of the Merger Sub ceased, and Potbotics continued as the surviving corporation and a wholly-owned subsidiary of Prime. Each shareholder of Potbotics received 0.035 Super Voting Share for each Potbotics Share held. As a result of the merger, former shareholders of Potboticsheld 2,920,019 Super Voting Shares of Prime, representing 100% of the issued and outstanding Super Voting Shares. The Super Voting Shares entitle the holder to 100 votes at the Company’s shareholder meetings per one Super Voting Share. In addition, the Super Voting Shares can be converted at the option of the holder into 100 subordinate voting shares of Prime (the “Super Voting Shares”). At the close of the merger, Prime had a total of 201,576,818 subordinate voting shares issued and outstanding. As a result of the Merger, former shareholders of Potbotics control 59.2% of the issued and outstanding voting shares.

The Merger resulted in a Reverse Take Over (“RTO”) of Prime by Potbotics because Potbotics shareholders control the majority of the voting rights, the board of directors, and senior management of the resulting issuer Ryah while Ryah maintained Prime’s listing status.

(a) Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Reporting Interpretation Committee (“IFRIC”) for all periods presented, but pursuant to IAS 34 Interim Financial Reporting, do not include all of the information and footnotes required by IFRS for complete financial statements.

The notes presented in these condensed consolidated interim financial statements include only significant events and transactions occurring since the Company’s last fiscal year end and they do not include all of the information required in the Company’s most recent annual financial statements. Except as noted below, these condensed consolidated interim financial statements follow the same accounting policies and methods of application as the Company’s annual financial statements and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2020, which were prepared in accordance with IFRS as issued by IASB.

These condensed consolidated interim financial statements were authorized and approved by the Board of Directors on November 30, 2021.

8

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

2 Statement of Compliance and Basis of Presentation (continued)

(b) Basis of presentation

These condensed interim consolidated financial statements include the accounts of the Ryah and its wholly owned subsidiaries Potbotics, Inc. and RYAH Medtech, Inc. All inter-company balances and transactions have been eliminated on consolidation.

These financial statements have been prepared on a going concern basis, under the historical cost convention, except for certain financial instruments which may be measured at fair value in subsequent periods and have been prepared using the accrual basis of accounting except for cash flow information.

(c) Foreign Currency Translation

These financial statements are presented in US dollars, except when otherwise indicated. The functional currency of each entity is measured using the currency of the primary economic environment in which the entity operates. The Company has determined that its Parent’s functional currency is the Canadian dollar. The net assets of Parent and the results of its operations have been translated into U.S. dollars using current exchange rates. The U.S. dollar results that arise from such translation are included in

(d) Weighted average shares outstanding

Weighted average shares outstanding include Class A subordinate voting shares and the Class B super voting shares as if converted to Class A at 100 Class A shares for each Class B shares. The weighted average shares outstanding for periods prior to the merger have been adjusted using the exchange ratio used to convert Potbotics shares into Class B common shares and as if the Class B common shares have been converted to Class A common shares. Potentially dilutive securities such as warrants, and options are excluded from the weighted average share outstanding calculation if the exercise of such securities would be antidilutive. For the nine months ended September 30, 2021 warrants and options for 152,695,150 and 22,229,834, respectively have been excluded from the calculation of weighted average shares outstanding as they would be antidilutive.

3 Prepaid expenses

Prepaid expenses consist of a security deposit of $47,915 for an office lease commencing on April 1, 2021 and advertising expenses of $12,883.

9

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

4 Inventories

At September 30, 2021 and December 31, 2020 the Company’s inventories were comprised of the following:

: September 30, 2021 December 31, 2020
Vaporizers $
38,533
$
55,550
Cartridge herb 43,932 30,007
Cartridge packaging 26,702 51,027
Fillingmachine 11,729 8,250
Total Inventories $
120,896
$
144,834

The Company’s inventories are finished goods and are measured at the lower of cost and net realizable value. During the nine months ended September 30, 2021, the Company recognized $23,938 (2020 - $24,729) of inventory as an expense in cost of sales.

5 Reverse Takeover (RTO)

On September 9, 2020, Prime, Ryah Acquisition Corp. a wholly-owned subsidiary of Prime formed for the purpose of completing the RTO (Merger Sub), and Potbotics entered into the Merger Agreement. Pursuant to the terms of the Merger Agreement, on April 21, 2021, Merger Sub merged with and into Potbotics (the Merger). As a result of the Merger, the separate corporate existence of Merger Sub ceased and Potbotics continued as the surviving corporation and a wholly owned subsidiary of Prime. Upon consummation of the merger Prime changed its name to Ryah Group, Inc.

As a result of the RTO, Potbotics operations were considered to be a continuance of the business and operations. Therefore, Potbotics is deemed to be the accounting acquirer for accounting and financial reporting purposes and therefore its assts, liabilities and operations are included in the condensed consolidated interim financial statements at their historical carrying value. The results of operations of the Company are those of Potbotics with the operations of Prime included from March 1, 2021 onwards.

At the time of the RTO, Prime did not constitute a business as defined under IFRS 3 Business Combinations; accordingly, the RTO is accounted for under IFRS 2 Share-based payment, where the difference between the fair value of the consideration to acquire the Company and the net asset value of the Company is recorded as listing expense in accompanying condensed consolidated interim statement of operations and comprehensive loss. As Potbotics is deemed to be the accounting acquirer, these condensed consolidated interim financial statements present the financial information of Potbotics up to March 1, 2020.

10

6 Convertible Notes

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

The fair value of the consideration issued for the net assets of the Company follows:

Consideration:
Value of Class A subordinate voting shares assumed
Value of warrants assumed
Value of options assumed
11,057,713
9,141,862
257,458
20,457,033
3,515,352
(6,495)
3,508,857
$16,948,176
Total consideration
Fair value of net assets acquired:
Current assets
Current liabilities
Net assets acquired
Consideration in excess of net assets acquired

During the year ended December 31, 2014, the Company issued a convertible note for proceeds of $20,000 that bears interest at 8% per annum with a maturity date on the earlier of January 8, 2020 and the date the Company completes a going public transaction and can be converted into common shares of the Company at $0.57 per share. As at September 30, 2021, the convertible note is past due.

On March 30, 2020, the Company issued a convertible note for proceeds of $100,000. The convertible note bears interest at 8% per annum and has a maturity date of March 30, 2022. On the maturity date the principal and interest on the convertible notes can be converted into common shares of the Company at the option of the holder or the Company at $0.4845 per share. In the event the Company enters into a reverse merger with a public shell company the principal and interest on the convertible notes will be automatically converted into common shares of the Company at $0.57 per share. The convertible notes are recorded at amortized cost using an effective interest rate of 25%, causing the carrying value to be lower than the principal value with the difference of $25,113 recorded as the equity component of the convertible note.

The balance of the convertible notes is as follows:

Nine months ended Nine months ended Year ended Year ended
September 30, 2021 December 31, 2020
Balance at beginning of year $ 83,349 $ -
Issuance of convertible notes - 100,000
Equity component of convertible notes - (25,113)
Accretion 55,543 8,462
Interest expense - -
Total $ 138,892 $ 83,349

11

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

7 Lease Liability

The lease liability consists of a one-year office lease that the company entered on April 1, 2021. The lease liability has been discounted using 2.7% as estimated incremental borrowing rate for this lease.

Lease liability at January 1, 2020 $ 4,642
Addition 29,177
Finance costs 461
Leasepayments (24,060)
Lease liability at December 31, 2020 $ 10,220
Addition 43,174
Finance costs 634
Leasepayments (16,710)
Lease liability at September 30, 2021 $ 37,318

12

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

8 Share Capital

Authorized share capital

Class A subordinate voting: unlimited, without par value 271,151,438 outstanding at September 30, 2021. Series B super voting: unlimited without par value, 2,281,221 outstanding at September 30, 2021

Options

On October 15, 2020, legacy Potbotics granted 2,982,808 options to the CEO of the Company with an exercise price of $0.0756. The options vest in equal tranches of 12.5% every 3 months with the first 12.5% vesting on January 15, 2021 up to October 15, 2022. Upon completion of the RTO, the options were converted into 10,439,800 options for Class A subordinate voting shares at an exercise price of $0.10 CDN per share. All other terms remain substantially the same. The options expire on October 15, 2030. The grant date fair value of the options was determined to be $1,598,824 using the Black Scholes option pricing model with the following assumptions: risk free interest rate of 0.57%, volatility of 80%, dividend rate of 0% and an expected life of ten years. During the three-month and nine-month periods ended September 30, 2021, the Company recorded share-based compensation of $188,029 and $1,277,541, respectively related to the vesting of these options and none in the corresponding prior year periods.

Stock-based compensation

During the nine months ended September 30, 2021 the Company issued 1,890,230, shares of class A subordinated as compensation for certain consultants which resulted in the Company recognizing stock-based compensation of $83,112. The Company also recognized an accrued expense of $79, 861 for 1,020,772 shares to be issued to the consultants.

13

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

9 Related Party Transactions

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Company's board of directors and its corporate officers.

The remuneration of directors and key management personnel made during the nine months ended September, 2021 and 2020, is as follows:

Nine months ended September 30, 2021 2020
Salaries to a director $ 100,000 $ 65,000
Salaries to a former director 48,000 23,000
Research and development fees paid to a former director 30,000 -
Consultingfeespaid to directors 104,200 13,333
Total $ 282,200 $ 101,333

As at September 30, 2021, the Company has recorded a liability of $81,527 due to a former director of the Company for salaries, and $36,668 due to current directors of the Company.

Loan from Related Parties

During the year ended December 31, 2019, the Company received loans from a company controlled by a director of the Company in the amounts of $954,490. The loans are initially measured at fair value using an estimated market discount rate of 25%. The loans are subsequently measured at amortized cost using the effective interest rate method.

During the year ended December 31, 2020, the Company converted principal of $750,000 and accrued interest into 2,238,597 common shares. The Company repaid an additional $157,500 loans from related parties. As of December 31, 2020, there is a principal balance of $202,440 and accrued interest of $5,523.

As of September 30, 2021, the Company repaid all of its outstanding principal and interest amount $228,940.

For the nine
months ended For the year ended
Period / Year ended September 30, 2021 December 31, 2020
Balance at beginning of year $ 188,377 $ 862,160
Loans converted into shares - (623,809)
Loans repaid (228,940) (157,500)
Interest expense 2,288 17,174
Accretion 38,275 90,352
Total $ - $ 188,377

On February 24, 2020, the Company issued a promissory note for proceeds of $17,984 (CAD $25,000). The note is unsecured, bearing interest of 6% per annum based on a 360-day year

10 Loans Payable

14

RYAH Group, Inc. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2021 and 2020 (Expressed in US Dollars)

and matures on August 23, 2021. During the year ended December 31, 2020, the Company recorded interest expense of $932.

On April 21, 2020, the Company received $35,500 from a promissory note entered with BNB Bank funded by the U.S. Small Business Administration. The loan matures two years from the date of first disbursement of the loan, with no payment required for the first six months, and bears interest at 1% per annum. The Company recorded the loan at fair value using an effective interest rate of 25%. At December 31, 2020, the carrying value of the loan was $31,612. On January 1, 2021, $34,500 of the promissory note was forgiven and the Company recorded $30,612 as income from government assistance.

11 Accounts Payable and Accrued Liabilities

September 30, 2021 December 31, 2020
Accounts payable $ 400,225 $ 739,273
Accrued liabilities 392,858 97,613
Total $ 793,083 $ 836,886

15