Company: TGNT
Filing Date: 2025-04-30
Form Type: S-1
Source: 0001477932-25-003124
Chunk: 86

Company: Totaligent, Inc.
Filing Date: 2025-04-30
Form: S-1
Chunk 86
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 or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Derivatives

As described in Note 7 to the Company’s consolidated financial statements, when the Company issues debt that contains a conversion feature, it first evaluates whether the conversion feature meets the requirements to be treated as a derivative. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, the Company estimates and records the fair value of the derivative liability using the Monte Carlo Simulation Model upon the date of issuance. The derivative liability is revalued at the end of each reporting period.

We identified the Company’s application of the accounting for convertible notes as a critical audit matter. The principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the Company’s judgments in determining the qualitative factors. Auditing these judgments and assumptions by the Company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.

The primary procedures we performed to address these critical audit matters included the following:

| - | We obtained debt and warrant related agreements and performed the following procedures:                                                                                                                                  |
| - | Reviewed agreements for all relevant terms.                                                                                                                                                                              |
| - | Tested management’s identification and treatment of agreement terms.                                                                                                                                                     |
| - | Recalculated management’s fair value of each conversion feature based on the terms in the agreements.                                                                                                                    |
| - | Assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of the amortization of the debt discount.         |
| - | Reviewed the work of the Company’s specialist to calculate the fair value of the derivative liability using the Monte Carlo method to determine whether the derivative liability recorded by the Company was reasonable. |

| F-3 |

| TOTALIGENT, INC.                                                                                                                                                    
 (Formerly Alltemp, Inc.)                                                                                                                                            
 AND SUBSIDIARY                                                                                                                                                      
 CONSOLIDATED BALANCE SHEETS                                                                                                                                         
 ASSETS                                                                                                                                                              
 Current assets                                                                                                                                                      |     | December 31, 2024 |            |   |     | December 31, 2023 |           |   |
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