Delic Holdings Corp. - Annual Report 2020

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DELIC HOLDINGS INC.

ANNUAL INFORMATION FORM

Financial Year Ended December 31, 2020

September 1, 2021

ADVISORIES ................................................................................................................................................ 3 GLOSSARY OF TERMS............................................................................................................................... 6 CORPORATE STRUCTURE ........................................................................................................................ 8 GENERAL DEVELOPMENT OF THE BUSINESS OF THE COMPANY...................................................... 8 BUSINESS OF THE COMPANY................................................................................................................. 13 REGULATORY FRAMEWORK .................................................................................................................. 28 RISK FACTORS.......................................................................................................................................... 30 DESCRIPTION OF CAPITAL STRUCTURE .............................................................................................. 42 MARKET FOR SECURITIES...................................................................................................................... 48 ESCROWED SECURITIES ........................................................................................................................ 49 DIVIDENDS................................................................................................................................................. 49 DIRECTORS AND OFFICERS ................................................................................................................... 49 AUDIT COMMITTEE................................................................................................................................... 52 LEGAL PROCEEDINGS AND REGULATORY ACTIONS ......................................................................... 53 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ................................. 54 AUDITOR, TRANSFER AGENT AND REGISTRAR .................................................................................. 54 MATERIAL CONTRACTS........................................................................................................................... 54 INTERESTS OF EXPERTS ........................................................................................................................ 54 ADDITIONAL INFORMATION .................................................................................................................... 54

ADVISORIES

In this Annual Information Form (" AIF "), unless otherwise specified or if the context otherwise requires, references to "we", "us", "our", "its", "the Company" or "Delic" mean Delic Holdings Inc.

The information in this AIF is stated as at December 31, 2020 unless otherwise indicated. For additional information and details, readers are referred to the Company's audited consolidated financial statements for the year ended December 31, 2020 and notes that follow, as well as the accompanying annual Management's Discussion and Analysis (" MD&A "), which are available on the Canadian Securities Administrator's SEDAR System at www.sedar.com.

All references to "$" or "dollars" are to Canadian dollars. References to US$ are to United States dollars. Certain totals, subtotals and percentages throughout this AIF may not reconcile due to rounding.

Cautionary Statement Regarding Forward-Looking Information and Statements

This AIF contains forward-looking information and statements (collectively, " forward-looking statements "). These forward-looking statements relate to the Company's current expectations, estimates and projections as to future events or the Company's future performance and are provided to allow readers a better understanding of the Company's business and prospects and may not be suitable for other purposes. All statements, other than statements of historical fact, may be considered forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in, or suggested by, such forward-looking statements. Forward-looking statements in this AIF or the documents incorporated by reference herein and therein include, but are not limited to, statements with respect to:

the performance of the Company's business, plans and operations;
the intention to grow the business, operations and product offerings of the Company;
the competitive conditions of the industry;
applicable laws, regulations and any amendments thereof;
the competitive and business strategies of the Company;
use of proceeds from the CBDV Offering;
the ability of KIC to operate the clinics; and
the general economic, financial market, regulatory and political conditions in which the Company operates.

Although we base the forward-looking statements contained in this AIF on assumptions that we believe are reasonable, we caution you that actual results and developments (including our results of operations, financial condition and liquidity, and the development of the industry in which we operate) may differ materially from those made in or suggested by the forward-looking statements contained in this AIF. In addition, even if results and developments are consistent with the forward-looking statements contained in this AIF, those results and developments may not be indicative of results or developments in subsequent periods. With respect to forward-looking statements contained in this AIF, the Company has made assumptions regarding, among other things:

the Company's ability to implement its growth strategies and business plan;
the Company's ability to maintain or build strong business relationships with its customers, suppliers and wholesalers;
the Company's ability to keep pace with changing consumer preferences;
ongoing ability to conduct business in the regulatory environments in which the Company operates and may operate in the future; and
the absence of material adverse changes in the Company's industry or the global economy.
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By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, the following risk factors described in greater detail under the heading " Risk Factors ":

impacts of COVID-19 on the Company's business;
brand development and effectiveness of marketing;
ketamine as a pharmaceutical;
technology risks;
technical operations infrastructure;
third party service providers;
information technology systems and data security breaches;
periodic changes to search engine algorithms;
use of personal information;
content quality;
competition and pricing;
inability to protect intellectual property;
intellectual property claims;
successful management and growth;
Delic being a holding company;
changing consumer and user preferences and retention;
product recalls;
product returns;
inability to implement growth strategy;
key officer and employees;
acquisitions and partnerships;
breach of confidentiality;
conflicts of interest;
emerging industry;
difficulty to forecast;
litigation;
management of growth;
additional financings;
entry into international markets;
third party business relationships;
natural disasters, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events;
global economic uncertainty;
changes in applicable regulation;
regulatory approvals and permits;
environmental, health and safety laws;
further issuance of securities and dilution;
value assigned to the Company;
potential for price volatility;
changes in law;
the ability to implement business strategies and pursue business opportunities;
the state of the capital markets;
the availability of funds and resources to pursue operations;
a novel business model;
dependence on key partners;
competition;
difficulty integrating newly acquired businesses;
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the time, outcome and cost of any inquiries, audits or litigation with insurance providers, or federal, state or local regulators;
low profit market segments;
fluctuations in exchange rates; general economic, market and business conditions; and
the other factors referred to under " Risk Factors ".

These factors should not be construed as exhaustive and should be read with the other cautionary statements in this AIF. If any of these risks or uncertainties materialize, or if any of the above opinions, estimates or assumptions underlying the forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements. The opinions, estimates or assumptions referred to above and described in greater detail in " Risk Factors " should be considered carefully by readers.

Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place substantial weight or undue reliance on forward-looking statements, which speak only as of the date made. The forward-looking statements contained in this AIF represents our expectations as of the date of this AIF (or as the date they are otherwise stated to be made) and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

The forward-looking statements contained herein are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements in this AIF or the MD&A or other disclosure incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required under applicable securities law in Canada.

Market, Independent Third Party and Industry Data

Unless otherwise indicated, the Company has obtained the market and industry data contained in this AIF from its internal research, management's estimates and third-party public information and other industry publications. While the Company believes such internal research, management's estimates and third-party public information is reliable, such internal research and management's estimates have not been verified by any independent sources and the Company has not verified any third party public information. While the Company is not aware of any misstatements regarding the market and industry data contained in this AIF, such data involves risks and uncertainties and are subject to change based on various factors, including those described under "Cautionary Statement Regarding Forward-Looking Information and Statements" and "Risk Factors".

Trademarks, Trade Names and Service Marks

This AIF contains certain trademarks which are protected under applicable intellectual property laws and are the Company's property. Solely for convenience, the Company's trademarks and trade names referred to in this AIF may appear without the ® or M symbol, but such references are not intended to indicate, in any way, that the Company will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names.

GLOSSARY OF TERMS

In this AIF, in addition to terms defined elsewhere herein, unless otherwise indicated or the context otherwise requires, the following terms shall have the indicated meanings. Words importing the singular include the plural and vice versa and words importing any gender include all genders. A reference to an agreement means the agreement as it may be amended, supplemented or restated from time to time.

" BC Subco " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" BCBCA " means the Business Corporations Act (British Columbia), as amended, including the regulations promulgated thereunder;

" Board " means the board of directors of the Company, as constituted from time to time, including, where applicable, any committee thereof;

" CBDV " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" CBDV Offering " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" CBDV Subscription Receipts " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" CBDV Transaction " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" CBDV Warrant " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" CDSA " Controlled Drugs and Substances Act;

" Company " means Delic Holdings Inc. and its wholly owned subsidiary, Delic Corp.;

"CRPS" means Complex Regional Pain Syndrome;

" CSE " means the Canadian Securities Exchange;

" DEA " means the Drug Enforcement Administration;

" Delic Corp. " means Delic Corp., a corporation formed under the laws of the State of Delaware;

" Delic Labs " means Delic Labs Inc., formerly Complex Biotech Discovery Ventures Ltd.

" Definitive Agreement " has the meaning in " Corporate Structure - Name, Address and Incorporation " herein;

" Eception " means Eception Ventures Ltd., a corporation incorporated under the BCBCA;

" FDA " means the United States Food and Drug Administration;

" Homestead " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" Homestead Transaction " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" KIC " has the meaning in " General Development of the Business of the Company - Overview of Business " herein;

" Multiple Voting Shares " means multiple voting shares in the capital of the Company;

" NI 51-102 " means National Instrument 51-102 - Continuous Disclosure Obligations ;

" NI 52-110 " means National Instrument 52-110 - Audit Committees ;

" PTSD " means Post-Traumatic Stress Disorder;

" Related Person " means an "Insider", which has the meaning set forth in the Securities Act being:

(a) a director or senior officer of the company that is an insider or subsidiary of the issuer;
(b) a director or senior officer of the issuer;
(c) a person that beneficially owns or controls, directly or indirectly, voting share carrying more than 10% of the voting rights attached to all outstanding voting shares of the issuer; or
(d) the issuer itself if it holds any of its own securities;

" Reverse Take-over " has the meaning in " Corporate Structure - Name, Address and Incorporation " herein;

" Section 56 Exemption " has the meaning in " Regulatory Framework - Section 56 Exemption " herein;

" SEDAR " means the System for Electronic Document Analysis and Retrieval;

" Securities Act " means the Securities Act (British Columbia) and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time;

" Subordinate Voting Shares " means subordinate voting shares in the capital of the Company; and

" US Subco " has the meaning in " General Development of the Business of the Company - Overview of Business " herein.

CORPORATE STRUCTURE

Name, Address and Incorporation

The Company was incorporated under the BCBCA on November 17, 2005 under the name "AMH Mining Corp". On February 13, 2007, the Company changed its name to "Molystar Resources Inc." The Company became a reporting issuer in the Provinces of British Columbia, Alberta and Ontario on July 15, 2008 following the filing of a final long form prospectus on July 14, 2008.

On October 20, 2020, the Company entered into a definitive agreement (the " Definitive Agreement ") with Delic Corp. and Eception pursuant to which the Company proposed to complete a business combination with Delic Corp. and Eception by way of reverse take-over (the " Reverse Take-over "), whereby the shareholders of the Company would become shareholders of the combined entity with the combined entity shares being listed on the CSE. The Reverse Take-over was completed on November 12, 2020 with the Company, as the combined entity, changing its name from "Molystar Resources Inc." to "Delic Holdings Inc." The Company is presently a reporting issuer in the Provinces of British Columbia, Alberta and Ontario.

The Company's registered office is located at Suite 2800, 666 Burrard Street, Vancouver, BC V6C 2Z7, Canada, and its head office is located at 885 West Georgia, Suite 1400, Vancouver, BC V6C 3E8.

Intercorporate Relationships

The following chart shows our subsidiaries, together with their respective jurisdictions of incorporation and share ownership as at the date hereof:

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Delic Corp. was formed on March 7, 2019 under the laws of the State of Delaware as a Delaware corporation under its current name. On November 12, 2020, Delic Corp. became a subsidiary of the Company pursuant to the Reverse Take-over.

Complex Biotech Discovery Ventures Ltd. was incorporated under the BCBCA on September 18, 2018. On May 26, 2021, CBDV became a subsidiary of the Company pursuant to the CBDV Transaction. On June 2, 2021, CBDV changed its name to Delic Labs Inc.

Ketamine Infusion Centers LLC was incorporated as a limited liability corporation in Arizona on September 29, 2017. On June 30, 2031, KIC became a subsidiary of the Company pursuant to the KIC Transaction.

GENERAL DEVELOPMENT OF THE BUSINESS OF THE COMPANY

Following the Reverse Take-over, the business of Delic Corp. became the business of the Company. Delic Corp. is a media, e-commerce and event company.

Overview of Business

The Company Prior to the Reverse Take-Over

The Company was incorporated under the BCBCA on November 17, 2005. Historically, the Company's principal business activities have been the exploration of mineral resource properties. All of the Company's properties were sold or abandoned during 2010.

In 2008 cease trade orders in British Columbia, Ontario and Alberta were issued against the Company as a result of its failure to file its financial statements for the year ended December 31, 2008 (BC Securities Commission – May 11, 2009; Ontario Securities Commission – May 25, 2009; and Alberta Securities Commission – August 11, 2009). The cease trade orders precluded the Company from raising funds and seeking out business opportunities. As of March 29, 2019 the cease trade orders were lifted allowing the Company to raise funds and seek business opportunities.

On April 12, 2019 the Company completed a private offering of common shares, selling an aggregate of 465,000,000 common shares (prior to consolidation of the Company's shares at a ratio of 45,000,000:1) at a price of $0.001 per share for gross proceeds of $465,000.

On January 10, 2020, the Company entered into an amalgamation agreement with Askott Entertainment Inc. (" Askott ") (the " Askott Amalgamation Agreement ") pursuant to which it was proposed that the Company would amalgamate with Askott. In connected with the proposed amalgamation, on January 24, 2020 and January 30, 2020, the Company completed a private offering of special warrants (the " Company Special Warrants ") at a price of $0.25 per Company Special Warrant to raise gross proceeds of $400,000 for the purposes of completing the Company Return of Capital (the " Company Special Warrant Financing "). The net proceeds of the Company Special Warrant Financing were used by the Company to fund a return of capital of approximately $476,507 by way of a reduction of capital to holders of common shares of the Company approved on December 31, 2019. On May 29, 2020, the Agreement with Askott terminated and concurrent with the termination, the Company completed a share consolidation at a ratio of 45,000,000:1 and the return of capital.

On August 14, 2020, the Company completed a forward stock split (the " Forward Split "), which resulted in each common share prior to the Forward Split becoming three common shares following the Forward Split.

Delic Corp. prior to the Reverse Take-Over

Delic Corp. was formed under the laws of the State of Delaware on March 7, 2019 to address the growing interest in psychedelic science. The company was formed as the first psychedelic umbrella media platform and is currently a trusted source for those interested in psychedelic science. Delic Corp. is a media, e- commerce and event company, and is not currently in the business of psychedelics or psychedelics research.

Since the formation of the business, Delic Corp. established "The Delic" in May 2019. The Delic is an e- commerce lifestyle brand. The Delic showcases and sells artwork and apparel related to the brand. The Delic expects to grow sales going forward through search engine optimization and other measures to bring online and brand awareness.

In May 2019, Delic Corp. raised US $850,000 in financing by way of a KISS (Keep It Simple Securities) convertible note with a US$4,000,000 valuation cap and a 15% discount (" Delic KISS "). The Delic KISS was repaid partially in cash and through the issuance of common shares of Delic Corp. on August 25, 2020.

On May 15, 2019, Delic Corp. acquired Reality Sandwich. Reality Sandwich is a free public education platform with over 10,000 pieces of content, serving up psychedelic guides, news and culture. According to Delic Corp. statistics, in 2019 there were between 500-800 daily users and over 20,000 monthly users

on the site. In 2020, the number of users has increased to between 800-1,200 per day and there over 26,000 users per month. Page views in the last 12 months have been over 900,000.

In May 2020, Delic Corp. had planned to launch "Meet Delic". Meet Delic is a biannual event that is a psychedelic wellness summit inspired to bring the worlds of wellness and psychedelic science together where thoughtful conversation about psychedelics can be had, at a state of the art venue in Los Angeles, California, bringing together thousands of attendees from all over the world. Due to the Covid-19 pandemic, both events in 2020, for the May and December dates, have been cancelled until 2021.

The Reverse Take-over

On November 12, 2020, the Company completed the Reverse Take-over. The Reverse Take-over was completed by way of, among other things: (i) several share exchanges between certain Canadian holders of common stock of Delic Corp. and the Company, pursuant to which such holders were issued Subordinate Voting Shares; (ii) a three-cornered amalgamation among the Company, Eception Ventures Ltd. (" Finco ") and 1237225 B.C. Ltd. (" BC Subco "), a wholly-owned subsidiary of the Company, pursuant to which Finco shareholders received Subordinate Voting Shares of the Company, holders of Finco special warrants received replacement Delic Corp. special warrants, and pursuant to which BC Subco amalgamated with Finco to form a new company, which was subsequently vertically amalgamated with the Company; (iii) Delic Corp. triggered the conversion of special warrants held by former holders of Eception special warrants into Subordinate Voting Share on a one-for-one basis; and (iv) Molystar Merger Sub, LLC (" US Subco "), a wholly-owned subsidiary of the Company, and Delic Corp. effected a merger under Delaware law whereby US Subco merged with and into Delic Corp. with Delic Corp. surviving and becoming a wholly-owned subsidiary of the Company, and the shareholders of Delic Corp., in exchange for each of their common stock of Delic Corp., received either one Subordinate Voting Share or one Multiple Voting Share of the Company, as applicable. Pursuant to steps (i) through (iv), the Company issued 170,783 Multiple Voting Shares and 14,487,700 Subordinate Voting Shares.

As part of the Reverse Take-over, the Company implemented a two-class voting structure on November 12, 2020, including re-designating the existing common shares as Subordinate Voting Shares, amending the special rights and restrictions of the Subordinate Voting Shares, creating a new class of Multiple Voting Shares. Each Subordinate Voting Share carries the right to one vote per share on all matters to be voted on by shareholders of the Company and each Multiple Voting Share carries the right to 100 votes per share on all matters to be voted on by shareholders of the Company (or one vote per Subordinate Voting Share into which each Multiple Voting Shares is convertible).

In connection with the closing of the Reverse Take-over, 17,377,500 subscription receipts issued pursuant to the Company's offering of subscription receipts for aggregate gross proceeds in the amount of $3,475,500 (the " Offering ") were automatically exchanged into Subordinate Voting Shares on a one-forone basis. The proceeds from the Offering were placed into escrow on completion of the Offering. The escrowed proceeds from the Offering were subsequently released from escrow upon closing of the Business Combination.

On November 18, 2020, the Company's Subordinate Voting Shares commenced trading on the CSE under the ticker symbol "DELC".

The Company Following the Reverse Take-Over

On November 24, 2020, the Company announced that it had formed an advisory board to aid the Company in its market diversification efforts to become the worldwide leader in operating and owning unique assets within the psychedelics sector. The Advisory Board is comprised of industry leaders including: Michael Lovitch, Barbara Branaman, Zak Garcia, David Rabin, Garyn Angel, David Belsky Louis Sagar, Shep Gordon, and Gerard Adams.

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On November 30, 2020, the Company announced that it had appointed Brett Fink as Lead Monetization Strategist.

On January 20, 2021, the Company's Subordinate Voting Shares commenced trading on the OTCQB Venture Market under the symbol OTC:DELCF.

Effective January 29, 2021, Matt Stang replaced Jackee Stang on the Board and as Chief Executive Officer. Jackee Stang transitioned to Chief Creative Officer.

The Company announced on February 1, 2021 that it had retained GRA Enterprises LLC to provide investor relations services to the Company for a term of 6 months, with GRA Enterprises LLC receiving a fee of US$25,000 and issued 150 Subordinate Voting Shares.

On February 4, 2021, the Company announced it had entered into a binding letter agreement (the " KIC LOI ") to acquire Ketamine Infusion Centres LLC (" KIC "), which operates two ketamine infusion treatment clinics, one in Phoenix, Arizona and the other in Bakersfield, California. Supported by clinical trials and peer reviewed studies, ketamine infusions has emerged as a promising treatment option for chronic diseases and pain disorders. Under the terms of the KIC LOI, Delic will acquire all of the membership interests of KIC through a reverse triangular merger between KIC and a wholly-owned subsidiary of Delic to be organized prior to execution by the parties of a definitive agreement (the " KIC Transaction "). Subject to customary adjustment terms, Delic has agreed, on closing of the KIC Transaction, to issue voting shares in the capital of Delic (" Consideration Shares ") to the members of KIC (the " Members "), having an aggregate value of USD$2,250,000 with the number of Consideration Shares to be issued determined based on a price per share equal to the ten trading day volume weighed average trading price (" VWAP ") of the Consideration Shares on the CSE immediately prior to closing of the Transaction. In addition, the Members will be eligible to receive additional Consideration Shares upon KIC's Bakersfield, California clinic posting three consecutive months of profitability and minimum revenue of USD$125,000, during the 12 months following the closing of the Transaction, such additional Consideration Shares to have an aggregate value of USD$800,000, based on a price per share equal to the 10 trading day VWAP of the Consideration Shares on the Exchange immediately prior to the date such milestone is achieved. The Members have agreed that any Consideration Shares issued will be subject to a contractual hold period, with 10% of the share consideration to be released on the date that is six months and one day following closing, and 15% released every six months thereafter over a period of 36 months. In addition, Members have agreed to enter into voting support agreements with Delic having a term of two years, pursuant to which the Members will vote as directed by the Board, subject to customary carve-outs.

On February 5, 2021, the Company announced that it had retained the services of IDR Marketing, Inc. to provide public relations strategies, brand awareness, financial and digital marketing services to the Company, aimed at maintaining and building the Company's profile through traditional press initiatives, advertising directives and social media strategies.

On February 17, 2021, the Company announced that it had retained the services of Wall Street Reporter, a multi-platform global marketing firm to increase investor awareness, aimed at maintaining and building the Company's profile through traditional press initiatives, online conferences and CEO Interviews. As compensation, Wall Street Reporter received a payment of US$125,000 and was granted 400,000 stock options exercisable to purchase up to 400,000 Subordinate Voting Shares in the capital of the Company with an exercise price of $0.65 per share for a period expiring February 16, 2022.

On February 24, 2021, the Company entered into a share purchase agreement with the shareholders of Complex Biotech Discovery Ventures Ltd. (" CBDV "). This agreement was subsequently amended on May 4, 2021 to extend the termination date.

On March 2, 2021, the Company announced appointment of Kyle Snook to the Board of Advisors of the Company.

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On March 4, 2021, the Company announced the acquisition of the brand and intellectual property of Homestead (" Homestead "), a legacy counterculture distributor of psychedelic media and creator of one of the first self-contained mushroom grow kits (" Homestead Transaction "). The Homestead Transaction will allow the Company to increase its product offering on its website Reality Sandwich. Through Homestead's extensive intellectual property and heritage brand, the Company anticipates to revive the at home EZ Grow experience targeted at the Reality Sandwich consumer. Including the EZ Grow product suite, the Company intends to increase e-commerce sales and activity by offering other high demand products to its online viewers and consumers. In consideration for the Homestead Transaction, the Company issued Subordinate Voting Shares having an aggregate value of US$50,000 and granted 108,887 stock options to David Tatelman, the founder of the Homestead brands, with an exercise price of $0.58, exercisable for a period of 3 years. David Tatelman continues to act as a consultant to the Company following the Homestead Transaction.

On March 11, 2021, the Company announced appointment of Zak Garcia as Chief Marketing Officer.

On March 16, 2021, the Company announced appointment of John Coleman as Vice President of Business Development.

On May 11, 2021, the Company announced that its acquisition target, KIC, proposes to acquire two additional licensed ketamine clinics in Arizona.

On May 26, 2021, the Company acquired all of the issued and outstanding shares in the capital of CBDV for a purchase price of $7,000,000 (satisfied by issuance of shares) plus certain amounts, if any, to be earned by Dr. Roggen, CEO of CBDV, pursuant to an earn-out agreement (the " CBDV Transaction "). CBDV is a federally authorized psilocybin and cannabis research laboratory focused on extraction, analytical testing, and chemical process development. Following closing, on June 2, 20221, CBDV changed its name to "Delic Labs Inc.".

Prior to closing of the CBDV Transaction, CBDV completed a non-brokered private placement (the " CBDV Offering ") of 11,441,189 subscription receipts of CBDV (the " CBDV Subscription Receipts ") at a price of $0.30 per CBDV Subscription Receipt for gross proceeds of approximately $3,432,356. The proceeds from the CBDV Offering were placed into escrow on completion of the CBDV Offering. Upon satisfaction of the escrow release conditions and immediately prior to closing of the Transaction: (i) each CBDV Subscription Receipt was converted into one common share of CBDV and one common share purchase warrant of CBDV (each, a " CBDV Warrant "), which, concurrent with the closing of the CBDV Transaction, were immediately exchanged for one Subordinate Voting Share of Delic and one Subordinate Voting Share purchase warrant of Delic having the same terms as the Warrants, respectively; and (ii) the gross proceeds of the CBDV Offering were released to CBDV. In connection with the CBDV Offering, CBDV paid aggregate finders' fees of $92,085.62 cash and issued finders an aggregate of 306,951 share purchase warrants of CBDV (which are now exercisable for Subordinate Voting Shares). In addition, Delic paid a corporate finance fee of $63,000 cash and issued 200,000 Subordinate Voting Share purchase warrants of Delic. The net proceeds from the CBDV Offering shall be used to increase Delic's cash position, to execute on Delic's business plan, for working capital and for general corporate expenses.

The CBDV Transaction is a significant acquisition for which disclosure is required under Part 8 of National Instrument 51-102 and the Company filed a business acquisition report on Form 51-102F4 in respect of the CBDV Transaction on July 9, 2021.

On June 3, 2021, the Company and a wholly-owned subsidiary of the Company entered into a definitive agreement with KIC and the Members to acquire KIC, having the same financial terms as the KIC LOI described above. In addition, each of Sonny Diaz, Rogelio Monzon, and Ganesh Acharya also entered into a milestone agreement (the " Milestone Agreement ") whereby they may each receive their pro rata proportion of an amount equal to USD$150,000 for each new clinic opened by KIC that is cash flow positive for three consecutive months after opening while achieving minimum revenues of USD$175,000 in those three consecutive months (each a " New Clinic Milestone ") subject to certain conditions of continued employment or engagement with KIC. Such additional consideration to satisfied by the Company's issuance

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of additional consideration shares at a price per share equal to the ten (10) trading day VWAP of the consideration shares on the Exchange on the trading day prior to the date the New Clinic Milestone is reached. The Company completed the KIC Transaction on June 30, 2021.

The KIC Transaction is a significant acquisition for which disclosure is required under Part 8 of National Instrument 51-102 and the Company will file a business acquisition report on Form 51-102F4 in respect of the KIC Transaction within the required timing.

On June 30, 2021, Delic Labs entered into a partnership agreement with Agilent, a global leader in life sciences, diagnostics, and applied chemical markets. Under the agreement, Agilent will refer its clients interested in cannabis and hemp analytics and new product development to Delic Labs and in turn, Delic Labs will recommend Agilent analytical equipment to its clients looking to purchase new systems. Both companies will participate in sales and marketing initiatives, referrals and instrument training.

On August 26, 2021, the Company announced the formation of a Medical Advisory Board that will advise the Company and its subsidiaries as they develop safety protocols and best practices pertaining to legal psychedelic wellness treatments.

BUSINESS OF THE COMPANY

Narrative Description of the Business

As at December 31, 2020, the business of the Company was the business of Delic Corp. As at the date hereof, the business of the Company now also includes the business of Delic Labs and KIC.

Delic Corp.

Founded in 2019, Delic Corp. was formed to address the growing interest in psychedelic science. The company was formed as the first psychedelic umbrella media platform and is currently a trusted media source for those interested in psychedelic science. Delic Corp. is an international media ecosystem and platform providing information about the psychedelics sector. Delic Corp. has developed an online media presence and has garnered interest in the topic of psychedelics from all over the world. Delic Corp. intends to capitalize on this interest by hosting a biannual summit in Los Angeles, California. Delic Corp. is headquartered in Chicago, Illinois.

Delic Corp. was formed to provide people with knowledge regarding the growing space of psychedelic wellness. Delic Corp. aims to inform and educate the public on the rapidly growing medical psychedelic market globally, where psychedelic therapies are used as possible treatments for PTSD, anxiety, depression and other mental health conditions.

According to a Data Bridge Market Research report published in January 2020, "the (US) psychedelic drugs market is expected to gain market growth in the forecast period of 2020-2027 with a CAGR of 16.3% and is expected to reach USD 6,859.95 million by 2027 from USD 2,077.90 million in 2019."[1] The report goes on to say that this growth is due to the "growing acceptance of psychedelic drugs for treating depression and increasing prevalence of depression and mental disorders are the factors for the market growth." With increased interest in the psychedelics industry, Delic Corp. anticipates growth in all segments of its platform.

Delic Corp.'s business has four distinct segments: The Delic (e-commerce website and blog), Reality Sandwich (online education platform), Meet Delic (bi-annual event) and Delic Radio (podcast), each of which is dedicated to public education and de-stigmatizing the psychedelic conversation for a mainstream audience. Collectively, these forums provide Delic Corp. with the opportunity to sell products relating to the psychedelics space, market various events in the psychedelic space, provide leading experts with a medium to publish articles, speak on podcasts, and, more broadly, build a culture of mainstream understanding and appreciation of psychedelics. See " Principle Products and Services " below.

1 "U.S. Psychedelic Drugs Market – Industry Trends and Forecast to 2027," Data Bridge Market Research, January 2020.

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Delic Corp.'s three online platforms, The Delic, Reality Sandwich and Delic Radio collectively reach over 100,000 people per month. The company's broad mission is to educate the public about new wellness options available to them and ultimately create space for a diverse demographic to feel empowered and live happier lives. As interest in the sector has grown in recent years, Delic Corp. has seen increases in viewers to the Reality Sandwich and The Delic websites and listeners of the Delic Radio podcast.

Over the next 12 months, Delic Corp. expects to generate revenue through the sale of online products, and ticket sales and sponsorship fees for Meet Delic.

Delic Corp.'s management team, with deep industry connections, affords it unique access to some of the best entrepreneurs and thought leaders in the space and an unmatched ability to curate content, allowing the company to offer mainstream information solutions to the emerging psychedelic industry players and general public.

Since incorporation, Delic Corp. has made expenditures related to all facets of its business, including advertising and marketing for its websites and e-commerce platform, Radio Delic and Meet Delic. Delic Corp. has invested in online advertising mechanisms including Google AdWords and social media postings, to drive traffic to its websites and foster interest in Meet Delic. Delic Corp. has also incurred website development and hosting costs, as well as paid compensation for certain content, consultants and products on its website and e-commerce platforms.

Delic Labs

Delic Labs was founded by award-winning chemist, Dr. Markus Roggen, and University of British Columbia Professor, Dr. Glenn Sammis, to support the psychedelic industry with high precision chemical analytics and metabolomic identification. Delic Labs is a licensed psilocybin and cannabis research laboratory, located in Vancouver, British Columbia, focused on extraction, analytical testing, and chemical process development and serves as the engine for the Delic platform, conducting research and developing innovative product lines and intellectual property, including psilocybin vaporization technology for future distribution across the company's physical footprint.

Delic Labs generates revenue through project-based work contracted by third party companies focused on chemical process development, analytical testing, and extraction optimization. Delic Labs is dedicated to bringing a rigorous scientific foundation to the cannabis and psilocybin industries through innovative research initiatives and consulting services. It offers a wide range of scientific services and expertise involving all aspects of chemistry.

KIC

KIC currently owns and operates two ketamine infusion treatment clinics, one in Phoenix, Arizona and the other in Bakersfield, California.

The Phoenix clinic was opened on September 29, 2017. This clinic is located at 3724 N. 3rd St., Suite #201 Phoenix, AZ and is approximately 2,400 square feet in size and has 7 treatment chairs for its patients. At this location, KIC has the following part-time staff: MD, psychiatrist, administrator, and anesthesiologist tech, and nurse practitioner (full-time). The location typically operates 5 days a week but has been operating at 3 days per week during COVID-19. To date, this location has treated the following number of cases: 2017 – 17; 2018 – 1068; 2019 – 1292; 2020 – 1050. The Phoenix clinic is owned by KIC.

The Bakersfield clinic was opened on October 15, 2018. This clinic is located at 6313 Schirra Ct Ste #1a Bakersfield, CA and is approximately 850 square feet in size. The location typically operates 5 days a week but has been operating at 3 days per week during COVID-19. To date, this location has treated the following number of cases: 2019 – 49; 2020 – 267. The Bakersfield clinic is owned by KIC2 LLC and KIC owns a 50% interest KIC2 LLC and Kern Psychiatric health and Wellness Center Inc. own the remaining 50%.

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Under KIC’s business model, treatments consist of six sessions administered by a full-time nurse practitioner over two weeks at $400 per session (PTSD and depression) followed by a booster session, either monthly or every other month thereafter at $350/session; or five sessions in a row at $750 per session (higher dosage for pain treatment such as CRPS) followed by monthly booster shot. Retention for ongoing treatment is approximately 75%. Each treatment is 90 minutes long. Normalized, a clinic can administer 120 treatments per month.

Both Medicare and insurance companies provide reimbursement for Ketamine treatments (Phoenix location: 1/3 paid in cash; 1/3 paid through Medicare; 1/3 paid through commercial insurance and Bakersfield location: 45% paid via Medicare; 45% paid via commercial insurance; 10% paid via cash).

Product Overview

Principle Products and Services

Delic Corp.

Media Platform

As stated above, Delic Corp.'s business is comprised of four distinct segments: The Delic, Reality Sandwich, Meet Delic, and Delic Radio, which when put together, form the basis of a leading media platform in the psychedelics sector. Through its various business segments, Delic Corp. provides educational and cultural information on the psychedelics space through various channels, including news, articles, commercial products, videos and podcasts as well as events and happenings in the sector, including films and art events. The educational topics explored by Delic Corp.'s various business segments include: arts, consciousness, sexuality and science, in the broader context of psychedelics. Via its podcast, Delic Radio, and other online platforms, Delic interviews leading experts in the field in psychedelics, including medical doctors and researchers who are able explain and educate visitors on the potential benefits of psychedelics.

Revenue generation from Delic Corp.'s four business segments has been minimal. The Delic generates revenue from merchandise sales of artwork, clothing and accessories posted on the website's online store. Reality Sandwich currently operates purely as an informative website that discusses the potential benefits of psychedelics as well as other current affairs related to the topic, and it does not currently generate revenue. Similarly, Delic Radio does not currently generate revenue. Delic Corp. believes that as the topic of psychedelics becomes more prevalent and interest in the topic increases, there will be opportunities to sell paid advertising and receive sponsorship on a go-forward basis on The Delic, Reality Sandwich and Delic Radio. In regards to Meet Delic, the bi-annual event, Delic Corp. anticipates that it will be able to generate revenue from ticket sales, with average ticket prices of US$200, as well as sponsorship of the event, with average sponsorship fees of US$2,000.

The Delic

The Delic (TheDelic.com) is one of the first psychedelic wellness brands and online platforms dedicated to public education and to destigmatizing the psychedelic conversation for a mainstream audience. The Delic website is a creative platform that creates and hosts public discourse about psychedelic culture. The Delic website has both an e-commerce component, blog component, and gallery which provides a unique artistic aspect to the larger Delic umbrella. The gallery available on The Delic website is a curated online gallery that enables the visitor to experience high-quality visual art in the form of photography. The unique photography displays on the website can be purchased, allowing the site visitor to own varying sizes of the photos displayed on the website in the form of physical wall art which is shipped to the purchaser upon sale. Additionally, the e-commerce component also makes available for purchase a variety of other non-art items, such as creams, oils, hats, bags, and various clothing items. As part of The Delic, there is a blog component, which has postings related to some of the products for sale on the site as well as recent news items related to psychedelics stories.

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Meet Delic

Meet Delic (MeetDelic.com) is Delic Corp.'s flagship event and is anticipated to be the first of its kind. Meet Delic is an event where attendees from all over the world will come together to attend the two day seminar that will offer over twenty hours of psychedelic education to be led by a visionary lineup of speakers. Meet Delic is an event that promotes topics such as: safety and harm reduction, Hollywood and psychedelics, mental health and psychedelics, the power of integration, human performance, psychedelics and medicine, as well as a variety of other topics in the sector. Delic plans to host the first inaugural Meet Delic event in November of 2021 in Los Angeles, California. Delic anticipates attracting sponsors for the Meet Delic events, as well as charging various ticket prices based on access to specific speakers and dates.

Reality Sandwich

Reality Sandwich (Realitysandwich.com) is a free public online education platform with over 10,000 pieces of content, including psychedelic guides, news, and culture. Additionally, Reality Sandwich has an interview series as well as a forum that allows the reader to explore a variety of topics including: arts, consciousness, sexuality and science. In 2019, Reality Sandwich had between 500-800 visitors per day and approximately 18,000-20,000 visitors per month. In 2020, traffic on Reality Sandwich increased to approximately 23,00026,000 visitors per month. Reality Sandwich has increased monthly average page views from 25,000 in 2019 to 220,000 monthly views (2.6 million annualized).

Delic Radio

The fourth segment of Delic Corp. is Delic Radio. This is a podcast that discusses topics relevant to the psychedelic space with experts including discussions relating to news, science, culture, medicine, current affairs, and policy. Interviews are conducted with medical doctors, scientists, celebrities, comedians as well as a variety of other experts and proponents of psychedelic medicine. Recent Delic Radio listenership statistics show listenership growing at over 3,000 downloads per month from the existing June 2020 download base of 60,000. In addition, Delic Radio has a 100,000 person email list.

Delic Labs

Psilocybin and Cannabis Research and Testing Services

The Company is also focused on research and developing innovative product lines and intellectual property, through Delic Labs.

Delic Labs is focused on developing intellectual property through research and development for both cannabis as well as psychedelics, namely, psilocybin mushrooms. For cannabis, Delic Labs is currently focusing on technologies related to: THC removal in hemp, CBN synthesis, and handheld analyzers. In December 2020, Delic Labs received a Section 56 Exemption from Health Canada for psilocybin, enabling them to focus on research and intellectual property development with psilocybin. The Section 56 Exemption will enable Delic Labs to begin the development of psilocybin synthesis, mushroom extraction and handheld analyzers. Delic Labs has applied for its Dealers Licence under the CDSA under Health Canada to bring those research projects to completion and the market.

Delic Labs generates revenue by offering the services summarized below. Contracts for these services are often in the form of purchase orders and are usually not long term in nature. However, to date, Delic has kept most of its clients and even expanded the collaboration with them.

Advanced Analytical Testing

As a licensed cannabis analytical laboratory, Delic Labs offers in-depth analysis and precise characterization of the chemical makeup of plant material and products. Delic Labs provides analytics that go beyond the basic compliance testing for product releases required by Health Canada. Delic Labs’ tests

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assist with eliminating impurities, adjusting concentrations, optimizing extraction and manufacturing processes, and determining the improvements needed to achieve the desired results for cannabis products. Through specialized testing, Delic Labs is able to offer personalized service, access to state-of-the-art instrumentation and university facilities and scientific expertise from an award-winning chemist and data science team.

Some of the services which Delic Labs offers, which make it unique include:

Vape and Smoke Analysis: This test captures gasses and aerosols formed during smoking and vaping. Coupled with an analysis on a Gas Chromatography Mass Spectroscopy (GCMS) instrument, the results identify and quantify compounds present within the formed aerosols. Delic Labs can support toxicological studies, improve the safety of cannabis products, and help tailor the smoking experiences for consumers.
Flavonoid Identification: This test uses high-resolution Liquid Chromatography (LC) and Mass Spectroscopy (MS) instruments to identify the flavonoids, phenolics, and flavanols in your sample.
Metabolomics: This test uses high-resolution Liquid Chromatography (LC) and Gas Chromatography (GC) instruments to reveal all the metabolites in your product. It can help determine sample purity and consistency of compounds beyond just THC and CBD. Possible avenues of exploration include taxonomy of chemovars, plant cultivation optimization, and assessment of cannabis-based sources of bioactivity in medicine.
NMR Spectroscopy: This test characterizes, quantifies, and assesses the purity of single compounds or mixtures in solutions or solid states. The results can identify unknowns in formulations and offer insights into possible future improvements of the product.
Calorimetry: This test measures the heat transfer during chemical reactions and can help determine the kinetics of a reaction. Calorimetry is an integral part of process scale-up and chemical engineering. Alternatively, in conjunction with other tests, a comparative study of the amphipathic interactions of your products with biological membranes can be determined.
Melting Point: This test determines the temperature at which a compound moves from the solid to the liquid state. Understanding this element of the product’s behavior can assist with product characterization, manufacturing, and packaging. Using the proper temperatures for packaging materials that get heated and change physical state, such as lip balms, is critical for maintaining the integrity and intended effects of the product.
IR Spectroscopy: This test is used for general identification of sample compounds by determining functional groups within each compound. It can be used to characterize different cannabis cultivars to help customers match the right material to the optimal conditions for production.
Solid Particle Sizing: This test measures the size and size distribution of particles in a sample. This is an important test used in quality control and product development. It can be used to establish the particle size in powders, like CBD isolate, where exact sizing is important for bioavailability. Particle sizing also supports research projects in extraction optimization and pre-roll manufacturing.
X-Ray Diffraction: These tests provide information about the crystal structure, chemical composition, and the physical properties of your product.
Nanoparticle Characterization:
Nanoparticle Sizing, PDI: Using dynamic light scattering (DLS), nanometer particle size and polydispersity (PDI) of an emulsion or nanoparticle is determined. For beverages that incorporate emulsions and also nanoparticle drug product development, these results can
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be used to understand the impact of mixing variables (eg. mixing speed, excipient ratios) on the size and quality of resulting particles.

Nanoparticle Shelf-Life: A nanoemulsion or nanoparticle that does not change over time is defined as stable or as having a long shelf-life. Minimal differences in size and quality are desired and indicative of a well-balanced nanoparticle formulation, and one that will be able to be stored without change for a period of time. Stability is tested over 1 month with 8 timepoints.
Nanoparticle Dissolution Profile: Dissolution is a bench test that quantifies the release of active ingredients from a particle in an environment mimicking physiological conditions (temperature, pH). The dissolution profile of a product can help predict how the active ingredients will reach the blood stream, or how different formulations impart unique active ingredient release profiles (eg. fast-acting vs long-lasting). Sample is tested over 8 timepoints.
Nanoparticle Encapsulation Efficiency: Encapsulation efficiency is used to understand how much active ingredient (cannabinoids) is found within each nanoparticle and how much is lost in the process of formulating. Process losses due to handling, container adhesion, surfactant make-up and excipient concentrations all have the potential to reduce the amount of cannabinoids in the particle.
Molecular Modeling: This process docks ligands into a protein model, resulting in protein-ligand complexes.
Rigid Docking (With Schrodinger Glide): Analysis of provided or publicly available crystal structure into defined binding pocket with top 5 poses (if applicable) reported, results provided in .pd format.
Induced-fit Docking (With Schrodinger Prime): Analysis of provided or publicly available crystal structure into defined binding pocket with top 5 poses (if applicable) reported, results provided in .pdb format.
Polarimeter: This test uses a Jasco P-2000 polarimeter to measure the angle of rotation caused by passing polarized light through an optically active substance. This is useful for verifying that your material has the right natural configuration or a high purity of the component you desire. In addition, it can be a great way to check the quality of your products and can be a useful tool for quality control.
Cannabinoid Stability: Nanoparticles have the potential to stabilize the compounds they encapsulate. This test helps determine if the nanoparticles maintain the potency of the original compounds over time which is important in the case of cannabinoids that change under light, pH and oxidation. Stability is tested over 1 month with 8 timepoints.
Viscosity: This test uses a GPC viscometer to test the viscosity of your samples. Knowing the viscosity of your products can be valuable in learning more about how to improve your products and their application. This can be beneficial to a wide array of products from creams to vape cartridge formulations.
Analysis Consulting: service solely includes discussions regarding the test data and results of tests Delic Labs offers.

Research and Consulting

Delic Labs Offers the following research and consulting services:

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Extraction Data Analytics: This is a subscription service platform driven by data science which helps improve operations by leveraging proprietary extraction algorithms developed through one of the largest and most diverse databases of cannabis extraction runs.
Extraction Process Improvements: With Delic Labs’ diverse knowledge of chemistry, statistics, and data analytics, Delic Labs optimizes customers’ cannabis extraction operations to increase yield, throughput and purity of oil. This includes recommendations for the right solvent system, optimal settings on your instruments, predictive maintenance and eliminating of extra steps, like winterization.
Product Innovation, R&D: Combining expertise in chemistry, process analytics, and cannabis, to help improve the design, formulation, purity, and packaging of client products.
Computational Modeling: For more complex and detailed chemistry questions, the DELIC Labs team of organic and computational chemists can help. Services offered include database mining, virtual screening, hit identification, and compound optimization
Scientific & Business Consulting: The DELIC Labs team have the ability to help their clients by delivering keynote speeches, guest lectures, and data-driven advice on their client’s operations

Cannabis Compound Database

The Cannabis Compound Database includes information about more than 750 compounds found in the cannabis plant. Through an extensive literature search of peer-reviewed and professional sources, the physical and chemical properties of these compounds are consolidated into this user-friendly database. The database is continuously growing as more research is conducted in our lab and around the world on the cannabis plant.

This database is designed for licensed producers, extraction facilities, analytical research and development labs, extraction equipment companies, formulation scientists, pharmaceutical companies, educators and academia, regulatory bodies and policymakers.

Delic Labs is able to access talent pool from the University of British Columbia, through its relationship with the school, amongst other universities. Namely, Delic Labs is able to access graduate PhD students in chemistry, computer science and business. Delic Labs often has student interns. The two founding members are well-accomplished PhD-level researchers. Dr. Roggen is an award-winning scientist and now President and Chief Science Officer of Delic Labs. Dr. Glenn Sammis is a professor in chemistry at the University of British Columbia and functions as scientific advisor to Delic Labs. Through the international status of its founding team and the award-winning work in its research area, Delic Labs has been able to attract strong candidates and team members to continue building its focus on cannabis and psilocybin research.

KIC

Ketamine Infusion Therapy

The Company, through the KIC clinics, offers the following types of treatments:

CRPS: CRPS is a chronic pain syndrome caused by dysfunction within either the central nervous system (brain and spinal cord) or peripheral nervous system (nerve signaling to the rest of the body). CRPS, which used to be called Reflex Sympathetic Dystrophy Syndrome, causes prolonged or excessive pain and changes in skin color, temperature, and or swelling. Patients may or may not have confirmed nerve injury, and the symptoms may vary in severity and duration, with severe cases causing long-term disability.
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Some of the symptoms from CRPS include constant pain, inflammation, and spasms. Many patients describe the constant pain as a burning, throbbing, stabbing, or crushing pain, with the affected area being hot or cold to the touch. Most patients also experience allodynia, extreme sensitivity to touch. With the inflammation, the skin may also appear spotted, easily bruised, bleeding in the skin, or have a red, dry look. The spasms may be confined to one area or be rolling over the limb, involving not only muscles but blood vessels. Some patients experience coldness, body fatigue, skin rashes, fevers, sores, tremors, and dystonia (involuntary muscle contractions).

Other symptoms of CRPS include insomnia and emotional disturbance. CRPS affects the limbic system located by the temporal and frontal lobes of the brain. This causes many problems not directly related to the initial nerve trauma cause of the CRPS, such as depression, insomnia, shortterm memory problems, agitation, irritability, and even poor judgement.

One of the reasons Ketamine is such an optimal treatment for CRPS is that it can reduce not only the pain symptoms, but also the depression frequently triggered by the syndrome. Typical treatments include taking pain medication like opioids and taking anti-depressants. Opioids can result in long-term addiction, and anti-depressants have many negative side effects such as blurred vision, constipation, weight gain, headaches, nausea, and lack of ability to achieve erection or orgasm, just to name a few. Ketamine infusion treatments have very mild and short-lasting side effects and are non-addictive when administered in a medical setting.

Patients can feel relief from the pain and depression caused by CRPS in just a few hours after their first Ketamine infusion treatment.

Depression: More than 16 million Americans suffer from major depression, and one-third of them get no relief from anti-depressants or traditional treatments. The answer for them could be Ketamine infusions. According to the National Institute of Mental Health, Ketamine works within hours, improves mood, and the mild side effects typically go away as soon as the infusion is over.

Anti-depressants are used to cure depression by altering brain chemicals like serotonin and dopamine. It is a balancing act to find what works with each patient and typically takes several weeks to months to find what works, if anti-depressants will work for them at all. Ketamine, on the other hand, blocks the NMDA receptors in the brain that are thought to cause depression. It also affects opioid receptors which affect pain as well as depression. In other words, antidepressants are trying to balance the chemicals, while Ketamine is changing the way the brain cells communicate. This explains why the impact of Ketamine is immediate and has longer lasting effects even after the drug is no longer in the body.

Ketamine is effective for Treatment Resistant Depression, suicidal thoughts, posttraumatic stress disorder, Bi Polar Depression, and multiple other mood disorders. Ketamine may have an immediate effect, which is why it is now being used for patients with suicidal ideations. The effects of an initial treatment usually last for 1-3 days, and repeat treatments are needed to sustain longer relief from Treatment Resistant Depression and other depressive symptoms.

Ketamine is given as an intravenous infusion. Usually, people receive about six doses over the first two weeks and then boosters every three to five weeks. Longer term results may begin after several months, sometimes a year or more.

Neuropathic Pain: Ketamine is used to treat a variety of chronic pain syndromes, especially those with a neuropathic component. Neuropathic pain is a shooting, burning pain that is usually caused by nerve damage or a malfunctioning nervous system. Antidepressant and anticonvulsive drugs are usually prescribed for the treatment of neuropathic pain and often do not provide a great deal of relief. Progressive symptoms from neuropathic pain also may lead to disabilities to comorbid mood disorders.
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Ketamine has been an effective treatment for pain since the early 1960’s and is widely used in hospitals and ambulatory surgery centers for the treatment of pain during surgical procedures. Ketamine has the unique ability to not only block NMDA receptors, but it alters the way brain cells communicate by creating new pathways. This process of synaptogenesis or synaptic plasticity is believed to result in in changes in the patient’s mood, anxiety, and their response to pain.

Ketamine can help with neuropathic pain caused by alcoholism, amputation (including phantom pain), chemotherapy, CRPS, diabetes, facial nerve problems, fibromyalgia, HIV infection or AIDS, Lyme’s disease, multiple myeloma, multiple sclerosis, nerve or spinal cord compression (herniated discs, arthritis), shingles, spine surgery and thyroid problems.

A single Ketamine infusion may provide immediate relief from neuropathic pain that generally last a few hours to several days depending on the severity of the condition.

PTSD: PTSD is experienced by over 8 million Americans who have undergone a frightening or traumatic event. PTSD causes a chemical imbalance in the brain that can trigger anxiety, depression, fear, high blood pressure, and emotional detachment. Typical treatments offered for PTSD including psychotherapy and medications (SSRI’s) that are usually incorporated together have shown low levels of success. Ketamine is a great solution, by quickly controlling symptoms allowing patients a better quality of life.

Severe emotions and trauma create changes within the brain. These changes usually occur in the ventromedial prefrontal cortex region of the brain that is responsible for the regulation of emotional response. Ketamine works by quickly increasing the activity of the neurotransmitter glutamate in the frontal cortex of the brain, while also allowing new synapses to form in the same area. The speediness of Ketamine in producing antidepressant effects in some cases can be almost immediate as most SSRI/Oral treatments can take four to six weeks. Studies have also shown that the impact of Ketamine infusion therapy for PTSD and other anxiety disorders can last for up to 14 weeks after the first series.

The slightly dissociative quality of Ketamine enables patients to explore the emotions attached to memory without experiencing severe reactions. With side effects being mild and short-term, Ketamine infusions are a great treatment for PTSD and other anxiety disorders.

Ketamine infusion treatment is helpful for the following anxiety disorders: PTSD, social anxiety disorder, general anxiety disorder, obsessive compulsive disorder and panic disorder.

Spravato Program: The FDA, has approved a new medication for the treatment of depression, Spravato (EsKetamine) which is an isomer of the drug Ketamine. Spravato was approved by the FDA to be covered by insurance for patients suffering from Treatment Resistant Depression (TRD), and recently added condition of Major Depression Disorder (MDD). Commonly new medications remain in a very controlled state and may be difficult to obtain for patients due to the regulations placed by the FDA.

Principal Markets

As a premier media platform focused on the psychedelics market, Delic Corp. provides news, articles, videos, podcasts, apparel, artwork and other forms of content via its various segments. Additionally, Delic Corp. also plans to have its own summit focused on psychedelics education and understanding, which will be held twice a year. Visitors to Delic Corp.'s websites are able to learn more about the potential benefits of psychedelics as well as become educated on the sector. Furthermore, visitors are able to purchase Delic Corp. apparel as well as curated artwork on the websites. Although Delic Corp. has online properties which can be accessed globally, Delic Corp.'s principal market is North America followed by Europe.

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Delic Corp. currently produces content for its websites in the form of tee-shirts and other apparel, radio content covering various topics related to psychedelics education, and news and articles on psychedelics. With the aid of sponsors, Delic Corp., through Meet Delic, plans to provide a biannual summit for which it charges various ticket prices. Ticket pricing is based on access to specific speakers and dates.

Due to COVID-19, Delic Corp. had to cancel its first Meet Delic summit. However, Delic Corp. expects to host this summit in November 2021. Delic Corp. believes that in addition to its internet properties, that the summits will not only bring significant exposure to the Company's brands and increase its profile within the psychedelics sector but also bring in high margin revenue to grow the business. As Delic Corp. increases revenue from both its Meet Delic and Internet properties via artwork and apparel sales, the Company believes that it will become a premier media platform addressing the psychedelics sector.

Delic Labs’s customers include: tobacco companies, biotech companies, licensed cannabis producers and instrument manufacturers. These customers seek out Delic Labs for its expertise and know-how in chemical research, cannabis knowledge, and data science. Delic Labs is based in Canada but has customers in Canada, the U.S, South America, Europe and Australia..

KIC provides Ketamine IV infusion treatments for CRPS, depression, neuropathic pain, and PTSD in Arizona and California, United Statement. Going forward, treatments might also include Spravato (nasal) as well as vitamins and supplements IV infusion.

Selected Financial Information

For the year ended December 31, 2020, the Company had a net loss of $2,037,526.

For the year ended December 31, 2020, Delic Labs has a service revenue of $586,887, compared to $471,730 for the year ended December 31, 2019. The CBDV Transaction closed on May 26, 2021 and this information does not form part the Company’s annual financial information.

Production and Sales

Delic Corp. produces most of its own content on its websites. However, the news and articles posted on The Delic and Reality Sandwich are often written and posted by well-respected journalists who write for other well-known publications. Many of these authors have their own following and are often based internationally.

Apparel sold on The Delic is produced by Delic Corp. and sold on its e-commerce platform. Artwork that is displayed on The Delic is curated third party artist pieces which are also sold through The Delic's e- commerce platform.

Delic Radio content is produced in-house and is distributed through various podcast platforms.

Besides the Meet Delic summit, which will take place as an in-person event, the remainder of the content and products, such as the apparel and artwork sold, are done so via the Company's e-commerce channels and websites.

Material Leases and Mortgages

Delic does not currently have any material leases or mortgages.

Specialized Skill and Knowledge

The operation and growth of Delic Corp.'s business requires knowledge about the psychedelics, media, and event industries. Delic Corp.'s founders and management team have significant experience in each of these industries. The team has spent most of their careers in managerial roles at well-established brands,

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consumer packaged goods companies as well as publications and have an understanding how to create new products and sell them online. Additionally, Delic Corp. is perpetually recruiting and looking for talented individuals to join the Delic Corp. team. Delic Corp. utilizes a variety of recruiting techniques, including online resources as well as recruiting professionals to assist with filing specialized roles.

In order to properly run a licensed laboratory, qualified personnel are required with knowledge on how to develop and validate testing methods, and how to conduct test and interpret results. Delic Lab’s team has expertise in chemistry (organic, process and analytical), natural product synthesis, data analytics and machine learning at graduate and doctorate levels. Furthermore, Delic Labs has close academic collaboration with the University of British Columbia, access to a robust pipeline of government grants for research, and access to additional state-of-the-art research instrumentation through its academic relationships.

The operation of KIC’s clinic requires qualified personnel with training, knowledge and experience relating to the administration of Ketamine treatment.

Materials

Delic Labs buys minimal amount of raw materials.

Intellectual Property

Delic Corp. has designed and built its own online and media platform. Delic Corp. relies on a combination of trademarks, trade secrets, copyright laws and contractual restrictions to protect the proprietary aspects of its products and services. These legal protections afford only limited protection. Delic Corp. may, in the future, pursue the patenting of certain technologies if and when deemed necessary.

Delic Corp. holds the following trademark registrations with the United States Patent and Trademark Office:

Trademark Registration No. "88/869,879", filed April 13, 2020, for DELIC
Trademark Registration No. "88/183,413", filed November 6, 2018, issue date April 29, 2020, for THE DELIC
Trademark Registration No. "88/478,990", filed June 18, 2019, for MEET DELIC
Trademark Registration No. "88/555,189", filed July 31, 2019, for REALITY SANDWICH

Delic Corp. may take steps to further strengthen the protection of its intellectual property moving forward although no assurances can be given that it will be successful in such endeavors. Delic Corp. will seek to limit disclosure of its intellectual property by requiring future employees, consultants, and partners with access to its proprietary platform and information to execute confidentiality agreements and noncompetition agreements and by restricting access to the company's proprietary information.

Due to rapid technological change, Delic Corp. believes that factors such as the expertise, technological and creative skills of its personnel as well as new services and enhancements to its existing services are more important to establish and maintain an industry and technology advantage than other available legal protections.

Delic Corp. has an IT Director who is responsible for the day-to-day functions of overseeing the overall technology aspects of the company. Delic Corp. also has an e-commerce coordinator who manages placement and positioning of products sold on The Delic, and who will manage products on Reality Sandwich in the future. In addition, Delic Corp. has a search engine optimization manager on staff to coordinate Delic Corp.'s online presence and placement of the four different segments via online searches. As Delic Corp.'s e-commerce offerings increase, Delic Corp. will look at hiring additional team members to increase placement and sales. Finally, to manage any additional intellectual property considerations, Delic Corp. has retained counsel in Canada and the United States to attend to its growing trademark holdings.

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Intangible Properties

Delic Labs has produced volumes of research that it offers through a subscription revenue model. This research has been conducted over three years by Dr. Roggen, Dr. Sammis and their team. Additionally, Delic Labs’ data science team has built a database of over 750 compounds found in the cannabis plant, as well as developed machine learning algorithms to optimize extraction processes for clients.

Furthermore, now that Delic Labs has received its Section 56 Exemption granted by Health Canada, Delic Labs believes that it will be able to develop licensable intellectual property around novel compounds related to both the cannabinoids and psilocybin.

Cycles/ Year-Round Business

Delic Corp. online psychedelics media platform is year-round and neither cyclical or seasonal. The Meet Delic summit will be held twice a year, in both May and December in Los Angeles, California.

Generally, KIC clinics experience a slowdown at the beginning of the calendar year with business beginning to pick-up towards the end of the first quarter. This slowdown is more the result of the collection of receivables from the insurance providers and the typical lag that exists at this time of the year. Typical collection timing on the insurance receivables is less than 45-60 days.

Employees

Delic Corp. operates with between 4-6 full-time contractors and 4-5 part-time contractors as well as a number of third party service providers.

Delic Labs operates with 6 full-time employees and 4 part-time employees as well as a constantly changing number of contractors. Contractors are recruited from university staff and join projects on a short-term basis. Additionally, Dr. Sammis and John Coleman act as advisors to Delic Labs.

KIC operates with 8 employees.

Economic Dependence and Changes to Contracts

Delic Corp.

Due to COVID-19, Delic Corp. had to cancel its May 2020 Meet Delic summit in Los Angeles, California. As a result, Delic Corp. had to refund certain sponsors and attendees who paid for refundable tickets to attend the events. Delic Corp. is not economically dependent on any contracts.

Delic Labs

In December 2020, Delic Labs received a Section 56 Exemption for psilocybin. This exemption allows Delic Labs to focus on research and intellectual property development with psilocybin without being subject to the restrictions set out in the CDSA. Delic Labs Section 56 Exemption is valid for one year, after which it may reapply for the exemption. If Delic Labs loses its Section 56 Exemption, it will be unable to perform research on psilocybin, which, could drastically affect its economic outlook.

Most of Delic Labs’ contracts are typically short-term and for less than one year. Additionally, clients can subscribe to many of Delic Labs services which are based on its compound database, nanoparticle, analysis consulting, and other previously research topics that are available for sale through its website. Most of the revenue streams from the online store are one off but there is also a subscription model that clients can partake in. Although most of Delic Labs’ contracts are typically for less than one year in term, several clients have come back for multiple contracts resulting in cumulative contracts that exceed a year.

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To date, of the 50+ contracts that Delic Labs has executed, it has only experienced one renegotiation or early termination of a contract or sub-contracts, which did not result in any loss to Delic Labs.

KIC

Before Ketamine can be purchased by a physician from a pharmacy, the doctor must have a DEA license. Requirements to open a Ketamine clinic mirror the standardized outpatient care requirements such as state medical board licenses, liability insurance, regulated storage of controlled substances on-premises, and compliance with OSHA standards. In terms of administering Ketamine to a patient, there are no current federal or state regulations. However, different healthcare organizations have published consensus guidelines such as the “Consensus Guidelines on the Use of Intravenous Ketamine Infusions for Chronic Pain” from the American Society of Regional Anesthesia and Pain Medicine, the American Academy of Pain Medicine, and the American Society of Anesthesiologists.[2] Unlike the administration procedures and regulatory requirements in Canada, American DEA certified physicians can administer Ketamine without a requirement to refer the patient for a psychiatric evaluation or prognosis. However, many medical associations have discussed making a psychiatric referral mandatory, if or when regulations regarding offlabel use of therapeutic Ketamine are provided.

Competitive Conditions and Positions

Delic Corp.

The market for psychedelics is fast growing, fragmented and dynamic. Increased capital, education and research is bringing more awareness to the sector. Most of the capital that is going into the sector is primarily being directed towards medicine, such as ketamine clinics, clinical studies, and big pharma research and development, as well as towards education. As a result, Delic Corp. finds itself uniquely positioned in the space. Delic Corp. is a pioneering and unique media platform addressing the psychedelic spaces and as a result Delic Corp. believes it has no true competitors.

Delic Corp. believes that its primary competitive advantage stems from the experience of its management many of who have held senior positions with well-established companies, have experience working in the media industry, and who have knowledge and significant relationships within the psychedelics sector. Delic Corp. believes that as a result the considerable experience of its management, it has better access to potential partners, curated articles, news, art and products for sale, and guests for its events, media platforms and podcasts.

While there are several companies that provide aspects of what Delic Corp. provides, there is no other media platform in the psychedelics sector providing visitors and readers with an educational platform, e- commerce platform, podcast, as well as access to cutting edge articles, leading experts, other media and events.

Delic Corp. believes that the following factors provide it with advantages over its competitors:

There are no true media platforms in the sector: Delic Corp., with its four distinct business segments, provides its visitors with access to with an educational platform, e-commerce platform, podcast, as well as access to cutting edge articles, leading experts, other media and events. Delic Corp. has no knowledge of another player in the space that offers a comprehensive media ecosystem for the psychedelics sector and that has a viewer, reader and listenership comparable to Delic Corp.
Relationships within the sector: Due to management's more than twenty years in the space, Delic Corp. has unrivalled access to some of the leading experts, respected thought leaders and entrepreneurs in the psychedelics space. Specifically, Delic Corp.'s Chief Executive Officer, Matt Stang, was previously an owner and operator of High Times, the magazine and cannabis brand. In

2 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6023575/

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addition, the proposed board of directors of the Company is comprised of several individuals who have started and operated both privately held and publicly traded companies in the cannabis sector. Delic Corp. sees a cross-section of the psychedelics and cannabis spaces, where the various experiences of these personnel will be able to positively expand Delic Corp.'s footprint in the sector.

Sector is nascent and fragmented: Most of the players in the psychedelics sector are focused on the medicinal aspects of the industry. Furthermore, related to news and media, there are no true media platforms in the sector that provides a similar ecosystem of knowledge and access to the psychedelics space like Delic Corp. does while having the same look and feel. For example, other organized events are not specific to the psychedelics industry. Similarly, other websites may provide information and news, but do not have the same look and feel as Reality Sandwich.

Delic Labs

In general, both cannabis testing laboratories and cannabis consultants can be considered Delic Labs’ competition. Although, testing laboratories cannot offer the high precision analytics or flexible protocols that Delic Labs can. This is due to the need for rigorous reproducibility and ISO certification at testing labs. And cannabis consultants lack the access to research laboratories, such as the one Delic Labs has established.

We identified a few companies that most closely resemble Delic Labs business proposition and detailed the differences in the table below. All of Delic Lab’s competitors lack the ability to do true metabolomics work, nor do have they developed algorithms that support extraction optimization and product development.

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KIC

Between 2015 and 2018, the number of Ketamine clinics in the U.S. ballooned from 60 to 300, each treating a breadth of diagnoses, from depression to anxiety to alcoholism. Key competitors of KIC include Numinus Wellness, Novamind Ventures, Ketamine One, Field Trip Health and Braxia Scientific.

As more medical practitioners and operators see how lucrative the Ketamine IV administration business can be, more entrepreneurs might enter this health services segment. However, KIC has its DEA licenses for both the state of California and Arizona. Ownership of medical practice in California is highly regulated. There are significant restrictions on who can own a medical practice here; that includes Ketamine infusion clinics because only licensed medical practitioners can prescribe and manage Ketamine and corresponding treatments.

California law requires that a medical practice be owned by a specific entity (a professional medical corporation) and that a majority of owners of the corporation be physicians with limits on ownership by non-

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physicians to other medical professionals. There are similar laws for medical partnerships. Accordingly, Ketamine clinics must generally be owned by licensed physicians, and cannot have owners who are not licensed medical professionals unless services of a management-services organization (MSO) is retained. However, services offered by MSOs are limited. The California Medical Board states that physicians cannot delegate the following to MSOs or non-physicians:

ownership is an indicator of control of a patient’s medical records, including determining the contents thereof, and should be retained by a California-licensed physician;
selection, hiring/firing (as it relates to clinical competency or proficiency) of physicians, allied health staff and medical assistants;
setting the parameters under which the physician will enter into contractual relationships with thirdparty payers;
decisions regarding coding and billing procedures for patient care services; and
approving of the selection of medical equipment and medical supplies for the medical practice.

The Medical Board also prohibits the following conduct:

non-physicians owning or operating a business that offers patient evaluation, diagnosis, care and/or treatment;
physician(s) operating a medical practice as a limited liability company, a limited liability partnership, or a general corporation;
management service organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician’s medical practice (nonphysician exercising controls over a physician’s medical practice, even where physicians own and operate the business); and
a physician acting as “medical director” when the physician does not own the practice (for example, a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion, that contracts with or hires a physician as its “medical director”).

In addition to the above restrictions, payments to MSOs are subject to regulation. Physicians are prohibited by California law for paying for referrals, but the following may be permitted: the payment or receipt of consideration for services other than the referral of patients which is based on a percentage of gross revenue or similar type of contractual arrangement shall not be unlawful if the consideration is commensurate with the value of the services furnished or with the fair rental value of any premises or equipment leased or provided by the recipient to the payer.

New Products

As part of being a research lab, Delic Labs continues to expand on its database of over 750 compounds found in the cannabis plant and has started developing the same with its psilocybin research. Eventually, Delic Labs intends on licensing its findings out to various interested parties. Most of Delic Labs’ revenue is generated by specialized proprietary research projects. Additionally, Delic Labs is continuously adding research services to its website as part of its highly-scalable revenue generating platform.

Other than potentially offering treatments for Spravato and vitamins through IV, additionally, KIC is looking to incorporate outpatient detox from alcoholism and opioid dependency through IV Ketamine. KIC does not anticipate releasing any additional new products or services in the near term.

Environmental Protection

The Company's business does not materially impact environmental conditions. The Company does not expect that there will be any financial or operational effects as a result of environmental protection requirements on its capital expenditures, profit or loss, or its competitive position in the current fiscal year or in future years.

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REGULATORY FRAMEWORK

The industry in which the Company operates is subject to regulation and control resulting from legislation enacted by the various levels of government. All applicable legislation is a matter of public record and the Company is unable to predict what additional legislation or amendments governments may enact in the future. Changes to government regulation could impact the Company's existing and planned operations or increase its operating expenses, which could have an adverse effect on the Company's financial condition, results of operations and cash flows.

Controlled Substances

With respect to Ketamine infusion therapy (which is the prime time attraction of Ketamine clinics), the medical research based promise is for treatment of chronic neuropathic pain, chronic pain (instead of opioids), and various medication-resistant mental health disorders, including depression, bi-polar disorder, and PTSD (among others). According to the American Psychiatric Nurses Association: Ketamine infusion therapy involves the administration of a single infusion or a series of infusions for the management of psychiatric disorders (e.g., major depressive disorder, PTSD post-traumatic stress disorder, acute suicidality). Ketamine is a noncompetitive N-methyl-D-aspartate (NMDA) receptor antagonist that has traditionally been used for the induction and maintenance of anesthesia.[3]

Since 1970, Ketamine has only been approved by the FDA for the induction and maintenance of anesthesia. However, it is also being used for off-label infusions for the management of psychiatric disorders and chronic pain management. The FDA doesn’t have any regulations on point for the control and oversight of Ketamine clinics when it comes to infusion therapy and the states don’t really either.[4]

In 1999, the DEA listed Ketamine as a Schedule III controlled substance (a depressant) pursuant to the Controlled Substances Act, which means it has a moderate to low abuse potential (lower than Schedules I and II), a currently accepted medical use, and a low to moderate potential for physical or psychological dependence. Ketamine makes its home on Schedule III alongside anabolic steroids and testosterone. According to the Feds, Ketamine is safer than cannabis (which is a Schedule I controlled substance).

According to the FDA, “once the FDA approves a drug, healthcare providers generally may prescribe the drug for an unapproved use when they judge that it is medically appropriate for their patient.”[5] Oftentimes, a healthcare provider may prescribe a drug off-label because there might not be an approved drug out there yet to treat the subject medical condition or because no other medication has worked yet for the patient.

Ketamine infusion therapy fits squarely into off-label use for those mental health conditions not effectively treated by what’s on the pharmaceutical market today (and there are definitely more treatment possibilities out there as medical research continues). And as long as the healthcare provider in charge judges the infusion therapy to be ethical and not violative of safety standards, they may prescribe it accordingly.

Ketamine is still a controlled substance even if it’s being used for off-label administration, so providers are still required to follow all federal and state laws around Schedule III registration, storage, inventory management, security, record keeping, and prescription protocols (which is not insignificant). Whomever on site is administering, manufacturing, storing, or distributing the drug, from the doctor to the nurse practitioner to the on-site pharmacist, must register with the DEA in accordance with Part 1301 of Title 21 of the Code of Federal Regulations on and after August 12, 1999. Failure to follow these very specific legal directives can lead to immediate criminal liability under federal law.

Multiple existing and state laws and regulations will apply to a Ketamine clinic. Specifically, clinics should analyze state (and federal) medical, drug and facility statutes and regulations to identify various regulatory

3 https://www.apna.org/m/pages.cfm?pageid=6603

4 https://harrisbricken.com/cannalawblog/the-ketamine-clinic-craze-legalities-and-possibilities/

5 https://www.fda.gov/patients/learn-about-expanded-access-and-other-treatment-options/understanding-unapproveduse-approved-drugs-label

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barriers to entry. Local laws will also likely come into play regarding the licensing and permitting of the clinic within certain zones of a city’s or county’s borders.

Considering that there is no FDA regulation on point for the control and oversight of Ketamine clinics, it is “dealer’s choice” on how the business is operated– including patient safety protocols. As a result, multiple medical community interest groups have established recommended business and patient protocols to ensure that these clinics are abiding by a variety of ethical and corporate standards for ultimate patient care. For example, the American Association of Nurse Anesthetists has developed a comprehensive Ketamine infusion therapy checklist.

Given that Ketamine infusion therapy is still an off-label use, the liabilities for Ketamine clinics is fairly farreaching. The consequences of medical malpractice may be greater because of the off-label use of the drug; dosing and frequency of treatments, marketing and promotions, medical claims and statements of efficacy, patient screening and determination of appropriateness of administration, and coordination with mental health care providers (to name just a few) are going to be areas of vulnerability as a result.

Spravato

The FDA has approved a new medication for the treatment of Depression, Spravato (EsKetamine), which is an isomer of the drug Ketamine. Spravato was approved by the FDA to be covered by insurance for patients suffering from Treatment Resistant Depression (TRD), and recently added condition of Major Depression Disorder (MDD). Commonly, new medications remain in a very controlled state and may be difficult to obtain for patients due to the regulations placed by the FDA.

The Spravato program is currently being guided by the Risk Evaluation and Mitigation Strategy (REMS). What this means is that you must meet specific criteria to become a candidate for this type of treatment including failing two previous antidepressants. In addition, the REMS program also stipulates how the medication may be given to patients and how your medical providers should be monitoring your progress.

Some of the regulations surrounding the medication require a lengthy process to be approved as well as a specific medication dosing regimen to be followed by the patient.

Patients be monitored by appropriate medical providers within the facility. This means that patients may not get the nasal form of Ketamine or have it delivered outside of any REMS registered medical facility and medications may not be taken home or removed from the facility.
Patients must follow medication protocol, which requires monitoring within the facility for a minimum of 2 hours of observation (as mandated by FDA and no exceptions may be made) and blood pressure must be recorded and monitored during the 2 hour observation.
Providers must complete a detailed monitoring record and submit all details of treatment to Janssen (Spravato Manufacturer).

The Spravato nasal medication is delivered in 3 phases to understand the outcomes of the medication for patients utilizing this drug.

Phase 1 (Induction): Weeks 1-4 patients are required to administer the medication within the approved medical facility and be monitored for a minimum of 2 hours twice a week.
Phase 2 (Maintenance): Weeks 5-8 patients come 1 time weekly and continued medical observation requirements remain.
Phase 3 (Ongoing Treatment): Patients follow up every 2 weeks for administration and required observation during the single treatment.

Section 56 Exemption

In Canada, certain psychoactive compounds, such as psilocybin, are considered controlled substances under the CDSA. In order to conduct any scientific research, including pre-clinical and clinical trials, using

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psychoactive compounds listed as controlled substances under the CDSA, an exemption under Section 56 of the CDSA (“ Section 56 Exemption ”) is required. The exemption is only granted if the requestor of the license can meet all the security requirements to be able to have the controlled substances on site. Security requirements can vary depending on the amount of the controlled substance that will be on site at any given time. Delic Labs has a Section 56 Exemption under the CDSA for psilocybin, which allows Delic Labs to work with psilocybin and develop analytical methods on psilocybin mushrooms for quality and safety testing. Delic Labs plans to apply for other Section 56 Exemptions to extend its work capabilities with other psychedelic controlled psychedelic substances. Presently, few exemptions for psilocybin and other psychedelic compounds have been issued in Canada, making it a valuable resource as demand for analytical tools to be able to identify and quantify these compounds is lacking in the industry.

RISK FACTORS

The following specific factors could materially adversely affect the Company and should be considered when deciding whether to make an investment in the Company. The risks and uncertainties described in this AIF and the information incorporated by reference herein are those we currently believe to be material, but they are not the only ones we face. If any of the following risks, or any other risks and uncertainties that we have not identified or that we currently consider not to be material, actually occur or become material risks, our business, prospects, financial condition, results of operations and cash flows, and consequently the price of the Subordinate Voting Shares could be materially and adversely affected. In all these cases, the trading price of our securities could decline, and prospective investors could lose all or part of their investment.

Investors should carefully consider the risk factors set out below and consider all other information contained herein and in the Company's other public filings before making an investment decision.

Risk Factors Relating to the Company

The risks and uncertainties described below are not exhaustive. Additional risks not presently known or currently deemed immaterial may also impair the Company's business operation. If any of the events described in the following business risks actually occur, overall business, operating results and the financial condition of the Company could be materially adversely affected.

Impacts of COVID-19 on The Company's Business

The impacts of the global emergence of the novel strain of coronavirus, identified as COVID-19, on the Company's business are currently unknown. The Company will monitor the situation and may take actions that alter its business operations as may be required by federal, state, provincial or local authorities or that the Company determines are in the best interests of its employees, users, customers, partners, suppliers, equity holders and stakeholders. Any such actions could impact or cause substantial interruption to the Company's business, which could have a material adverse effect on the Company's business and operations or financial results. In response to, or as a result of, the current COVID-19 pandemic, the Company may experience, among other things, temporary or long-term labor shortages; temporary or longterm adverse impacts on the Company's supply chain; the potential of increased network vulnerability and risk of data loss resulting from increased use of remote access and removal of data from the Company's online platforms; difficulty in complying with covenants under current or future debt agreements; required reallocation or adjustment of resources, which may impact the Company's business plans and product and service offerings. In addition, the direct or indirect impacts of COVID-19 may extend to disrupt the Company's suppliers, partners, customers, users, and other stakeholders, which in turn could materially adversely affect the Company's business, results of operations or financial condition. Any change or disruption in operations could impact and have a material adverse effect on the Company's operations and/or results from operations.

In addition, voluntary or mandated efforts to slow the spread of COVID-19 could impact the Company's operations. To date, a number of governments worldwide have enacted measures to combat the spread of the virus, including in the U.S. and Canada. These measures have included the implementation of travel

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restriction, self-isolation measures, physical distancing and in some instances, the suspension of nonessential business. If portions or all of the Company's, or its partners', operations are disrupted or suspended as a result of these or other measures, it could have a material adverse impact on the Company's profitability, results of operations and financial condition.

Further, there are potentially significant economic and social impacts of the COVID-19 pandemic, including a surge in unemployment which may lead to a deterioration in consumer balance sheets, reduction in the availability of consumer credit, and have an impact on consumer behavior, any of which may have a material adverse impact on the Company's profitability, results of operations and financial condition.

The Company will continue to monitor the situation and work with its stakeholders (including customers, users, employees, partners, and suppliers) in order to assess further possible implications to its business, supply chain, customers, users and, where practicable, take actions with a goal to mitigating adverse consequences and responsibly addressing this global pandemic.

Brand Development and Effectiveness of Marketing

The success of the Company's brand depends on the effectiveness of the Company's marketing efforts and on the Company's ability to provide reliable services. Management believes that maintaining and promoting the Company's brand is critical to expanding its customer and user base. The success of the Company's brand depends on the effectiveness of the Company's marketing efforts and on the Company's ability to provide reliable products and services.

The Company's brand marketing strategies may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses incurred in its attempts to build the Company's brand. There can be no assurance that advertising and promotional expenditures will result in revenues in the future or will generate awareness of the Company's products and services. If the Company fails to effectively market its brand, the Company may fail to attract new customers and users, retain existing customers and users or attract sufficient media coverage in order to realize a sufficient return on branding efforts. A failure in brand development and marketing may result in a negative impact on the Company's business and potential revenues.

Further, the Company may introduce new products and services that its customers and users do not like, which may negatively affect its brand and reputation. If the Company fails to successfully promote and maintain its brand or if it incurs excessive expenses in this effort, its business and financial results from operations could be materially adversely affected.

Technology Risk

the Company's products and services are dependent upon advanced technologies which are susceptible to rapid and substantial changes. There can be no assurance that the Company's services will not be seriously affected by, or become obsolete as a result of, such technological changes. Further, the Company's services are constantly under revision and development and there can be no assurance that the Company's efforts will result in viable commercial services as conceived by the Company. There is a risk that similar services, which may include features more appealing to users, may be developed and that other products and services competing with the Company's various online platforms may use technologies not yet incorporated in the Company's online platforms. The occurrence of any of these events could negatively impact interest any or all of the Company's online platforms and thus limit the potential revenues to be generated by the Company.

Technical Operations Infrastructure Risk

The Company's management anticipates significant growth in the number of users of its online platforms. The Company seeks to maintain sufficient excess capacity in its operations infrastructure to meet the needs of all of its users and to facilitate the development of its online platforms to account for a growing and diverse user base. In addition, the Company needs to properly manage its technological operations

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infrastructure in order to support changes in hardware and software parameters, and the evolution of its products and services. Despite the fact that the Company has taken a number of steps to allow its infrastructure to handle significant increases in demand, it may in the future experience website disruptions, outages and other performance problems. These problems may be caused by a variety of factors, including but not limited to: infrastructure changes; human or software errors; viruses; security attacks; fraud; spikes in usage; and denial of service issues. In some instances, the Company may not be able to identify the cause or causes of these performance problems within an acceptable period of time, which may harm the Company's reputation and operating results. Furthermore, although the Company has a number of disaster recovery measures in place, if it does not accurately predict its infrastructure and resource requirements, its existing users may experience service outages that may subject the Company to financial penalties, financial liabilities and user losses. If the Company's infrastructure fails to keep pace with an increased user base, users may experience delays which could adversely affect the Company's reputation and its revenue.

Third Party Service Providers

The Company relies on a number of third party service providers such as product suppliers, independent software developers, point-of-sale and compliance software providers and website hosting providers, as well as its own facilities including internal technology, to host and deliver its products and services. Loss of any of its suppliers or service providers could have a material adverse effect on the Company's business and operational results. Furthermore, any interruptions or delays in services from these third parties could impair the delivery of the Company's products and services, thereby harming the Company's business and reputation. The Company hosts its products and services on multiple third-party data facilities. While the Company operates through these facilities, the Company does not control the operation or service level requirements of these facilities. These service providers could be subject to cyber-attacks, break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. A natural disaster or an act of terrorism, a decision to close the services providers' facilities without adequate notice, capacity limitations at the facilities, and other unanticipated problems could result in lengthy interruptions in availability of the Company's products and services, which could adversely affect the Company's reputation and its revenue.

Furthermore, the Company depends on internet access through third-party bandwidth providers in order to operate its business. If the Company loses the services of these bandwidth providers for any reason, the Company could experience disruption in the delivery of its products and services. The Company may experience difficulty in replacing any bandwidth on commercially reasonable terms, or at all, due to the large amount of bandwidth required by the Company. The Company's operations also rely heavily on the availability of electrical power, which is supplied by third party providers, and any increase in the cost of electrical power could negatively impact the Company's operations and profitability. The Company's operations and profitability may be harmed if the Company or any of its third party service providers experience any major power outages.

Any errors, defects, disruptions or other performance problems with the Company's products or services caused either by third parties or by the Company, could harm the Company's reputation and may damage the Company's business. The Company's business would be harmed if customers or potential customers view the Company's products and services as unreliable.

Information Technology Systems and Data Security Breaches

The Company's operations depend, in part, on how well it and its third party service providers protect networks, equipment, information technology systems and software against damage from a number of threats, including, but not limited to, cable cuts, natural disasters, intentional damage and destruction, fire, power loss, hacking, phishing, computer viruses, vandalism and theft. The Company's operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, information technology systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company's reputation and results of operations.

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The Company or its third-party service providers collect, process, maintain and use sensitive personal information relating to its customers, users and employees, including customer financial data (e.g. credit card information) and their personally identifiable information, and the Company relies on third parties for the operation of its e-commerce platform and for its various social media tools and websites it uses as part of its marketing strategy. Any perceived, attempted or actual unauthorized disclosure of customer financial data (e.g. credit card information) or personally identifiable information regarding the Company's employees, customers or website visitors could harm its reputation and credibility, reduce its e-commerce sales, impair its ability to attract website visitors, reduce its ability to attract and retain customer and users and could result in litigation against the Company or the imposition of significant fines or penalties.

Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting new foreign, federal, provincial and state laws and legislative proposals addressing data privacy and security. As a result, the Company may become subject to more extensive requirements to protect the customer and user information that it processes, resulting in increased compliance costs.

The Company's on-line activities, including its e-commerce platform and other online platforms, also may be subject to denial of service or other forms of cyber-attacks. While the Company has taken measures to protect against those types of attacks, those measures may not adequately protect its on-line activities from such attacks. If a denial of service attack or other cyber event were to affect its online platforms or other information technology systems, its business could be disrupted, it may lose sales or valuable data, and its reputation may be adversely affected. The Company's risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Periodic Changes to Search Engine Algorithms

Periodic changes to search engine algorithms, which retrieve data from search indices and deliver ranked search results, produce changes in search engine results pages. Any changes to these algorithms and therefore search engine results pages could reduce visibility of, and traffic on, the Company's online platforms and negatively impact the Company's financial position and results of operations.

Use of Personal Information

The Company collects, processes, maintains and uses data, including sensitive information on individuals, available to the Company through its online activities and user interactions with its business. The Company's current and future marketing programs may depend on its ability to collect, maintain and use this information, and its ability to do so is subject to evolving international, U.S. and Canadian laws and enforcement trends. The Company strives to comply with all applicable laws and other legal obligations relating to privacy, data protection and customer protection, including those relating to the use of data for marketing purposes. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, conflict with other rules, conflict with the Company's practices or fail to be observed by its employees or business partners. If so, the Company may suffer damage to its reputation and be subject to proceedings or actions against it by governmental entities or others. Any such proceeding or action could hurt the Company's reputation, force it to spend significant amounts to defend its practices, distract its management or otherwise have an adverse effect on its business.

Certain of the Company's marketing practices rely upon e-mail, social media and other means of digital communication to communicate with consumers and users. The Company may face risk if its use of e-mail, social media or other means of digital communication is found to violate applicable laws. Any failure by the Company to comply with privacy-related laws and regulations could result in proceedings which could

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potentially harm its business. In addition, as data privacy and marketing laws change, the Company may incur additional costs to ensure it remains in compliance. If applicable data privacy and marketing laws become more restrictive at the international, federal, provincial or state levels, the Company's compliance costs may increase, its ability to effectively engage customers via personalized marketing may decrease, its investment in its online platforms may not be fully realized, its opportunities for growth may be curtailed by its compliance burden and its potential reputational harm or liability for security breaches may increase.

Content Quality Risk

If the information that the Company provides to its users and customers on through its various business segments and online platforms is inaccurate or unreliable, or perceived to be inaccurate or unreliable, the Company's brand and overall reputation within the psychedelics sector may be harmed. Any dissatisfaction by users or the media with the Company's services, products or methodologies could have an adverse effect on the Company's ability to retain existing users and customers and attract new users and customers. Any harm to the Company's brand or reputation due to actual or perceived irregularities or inaccuracies in the information produced or shared by the Company could harm the Company's overall business and adversely affect the Company's reputation and its revenue.

Competitive and Pricing Risk

The Company expects to experience additional competition in the future as other companies develop or offer an increasing number of online platforms and forums similar to those being offered by the Company. With the introduction of technological advances and new entrants into the psychedelics space at a rapid pace, competition may intensify in the future which could harm the Company's ability to develop a user base for its various online platforms and generate revenue. The Company's current and potential competitors may have significantly greater financial, technical, marketing and other resources; may be able to devote greater resources to the development, promotion, sale and support of their products and services; may have more extensive user bases and broader user relationships; and, may have longer operating histories and more brand recognition. In competing with such businesses, the Company may be unable to establish demand for its product and services which could negatively impact the Company's business and potential revenues.

Given the rapid changes affecting the global, national, and regional economies generally and the psychedelics industry, in particular, the Company may not be able to create and maintain a competitive advantage in the marketplace. The Company's success will depend on its ability to keep pace with any changes in such markets, especially in light of legal and regulatory changes. Its success will depend on the Company's ability to respond to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure by the Company to anticipate or respond adequately to such changes could have a material adverse effect on its financial condition, operating results, liquidity, cash flow and operational performance.

Inability to Protect Intellectual Property

The Company's success is dependent upon its intangible property and technology. The Company relies upon registered trademarks, unpatented proprietary know-how and continuing innovation to protect the intangible property, technology and information that is considered important to the development of the business. The Company relies on various methods to protect its proprietary rights, including confidentiality agreements with employees, consultants, service providers and management that contain terms and conditions prohibiting unauthorized use and disclosure of confidential information. However, despite efforts to protect intangible property rights, unauthorized parties may attempt to copy or replicate intangible property, technology or processes. There can be no assurances that the steps taken by the Company to protect its intangible property, technology and information will be adequate to prevent misappropriation or independent third-party development of the Company's intangible property, technology or processes. To the extent that any of the above would occur, revenue could be negatively affected, and in the future, the Company may have to litigate to enforce its intangible property rights, which could result in substantial costs and divert management's attention and other resources.

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The Company's ability to successfully implement its business plan depends in part on its ability to obtain, maintain and build brand recognition using its trademarks, service marks, trade dress, domain names and other intellectual property rights, including the Company's names and logos. If the Company's efforts to protect its intellectual property are unsuccessful or inadequate, or if any third party misappropriates or infringes on its intellectual property, the value of its brands may be harmed, which could have a material adverse effect on the Company's business and might prevent its brands from achieving or maintaining market acceptance.

The Company may be unable to obtain registrations for its intellectual property rights for various reasons, including refusal by regulatory authorities to register trademarks or other intellectual property protections, prior registrations of which it is not aware, or it may encounter claims from prior users of similar intellectual property in areas where it operates or intends to conduct operations. This could harm its image, brand or competitive position and cause the Company to incur significant penalties and costs.

Intellectual Property Claims

Companies in the retail space frequently own trademarks and trade secrets and often enter into litigation based on allegations of infringement or other violations of intangible property rights. The Company may be subject to intangible property rights claims in the future and its products may not be able to withstand any third-party claims or rights against their use. Any intangible property claims, with or without merit, could be time consuming, expensive to litigate or settle and could divert management resources and attention. An adverse determination also could prevent the Company from offering its products and services on go forward basis.

With respect to any intangible property rights claim, the Company may have to pay damages or stop using intangible property found to be in violation of a third party's rights. The Company may have to seek a license for the intangible property, which may not be available on reasonable terms and may significantly increase operating expenses. If the Company cannot license or obtain an alternative for the infringing aspects of its business, it may be forced to limit product and service offerings and may be unable to compete effectively. Any of these results could harm the Company's brand and prevent it from generating sufficient revenue or achieving profitability.

Successful Management and Growth

Management and growth of the Company's online and e-commerce platforms are essential to the Company's growth. The usability of and client experience provided by the Company's online and e- commerce platforms is critical to the success and growth of the Company's business. Any extended software disruption of the Company's online platforms or the failure on the part of the Company to provide attractive, effective, reliable, user-friendly online platforms that offer an assortment of content and merchandise with rapid delivery options and that continually meet the changing expectations of online users could place the Company at a competitive disadvantage, result in the loss of revenue or harm the Company's reputation with it users and could have a material adverse effect on business and results of operations.

The success of the Company's e-commerce business is also dependent on the Company's ability to successfully manage the costs, difficulties and competitive pressures associated with shipping, including inventory management and distribution, and compliance with governing statutes, laws, regulations and regulatory policies in the jurisdictions to which products are shipped, including laws governing the operating and marketing of e-commerce websites, as well as the collection, storage and use of information on individuals interacting with these websites. If the Company is unable to expand or update its e-commerce site commensurately with competitors, manage shipping and successfully respond to the risks inherent to e-commerce, the Company's financial position and results of operations may be negatively impacted.

Furthermore, if the Company is unable successfully capitalize on digital marketing channels to drive user and customer acquisition and retention, including search engine optimization, email marketing, improved

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product and service descriptions, data driven category naming, and the leveraging of social media, the Company's financial position and results of operations may be negatively impacted.

Changing Consumer and User Preferences and Retention

As a result of changing consumer preferences, many innovative products and services attain financial success for a limited period of time. Even if the Company's products and services find success, there can be no assurance that any of its products or services will continue to see extended financial success. The Company's success will be significantly dependent upon its ability to introduce new products and services. Even if it is successful in introducing new products and services, a failure to gain user and customer acceptance or to update products and services with compelling content could cause a decline in the popularity of its products and services that could reduce revenues and harm the Company's business, operating results and financial condition. Failure to introduce new features, products and services and to achieve and sustain market acceptance could result in the Company being unable to meet customer and user preferences and generate revenue which would have a material adverse effect on its profitability and financial results from operations.

The Company's success depends on its ability to attract and retain customers and users. There are many factors which could impact the Company's ability to attract and retain customers and users, including but not limited to the Company's ability to continually produce desirable and effective products and services, the successful implementation of the Company's customer and user acquisition plan and the continued growth in the aggregate number of people visiting the Company's online platforms and in person events. The Company's failure to acquire and retain customers and users could have a material adverse effect on the Company's business, operating results and financial position.

Product Recalls

Companies are sometimes subject to the recall or return of their products for a variety of reasons, including product defects or and inadequate or inaccurate labeling statements. If any of the products sold on the Company's e-commerce platform are recalled due to an alleged product defect or for any other reason, the Company could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. The Company may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Recall of products could lead to adverse publicity, decreased demand the products sold through the Company's e-commerce platform and could have significant reputational and brand damage. A recall for any reason could lead to decreased demand for the products sold on the Company's platform and could have a material adverse effect on the results of operations and financial condition of the Company. Additionally, product recalls may lead to increased scrutiny of the Company's operations by regulatory agencies, requiring further management attention and potential legal fees and other expenses.

Product Returns

Product returns are a customary part of any e-commerce business. Products may be returned for various reasons. Any increase in product returns could reduce the Company's results of operations.

Inability to Implement Growth Strategy

The Company's future success depends, in part, on its ability to implement its growth strategy, including (i) product and service innovations within existing categories and growth into adjacent categories; (ii) penetration into new markets and geographies; and (iii) in support of its profitability targets, improvements in the Company's operating income and gross profit. The Company's ability to implement this growth strategy depends, among other things, on its ability to:

develop new products and services that appeal to consumers and users;
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maintain and expand brand loyalty and brand recognition by effectively implementing its marketing strategy and advertising initiatives;
maintain and improve its competitive position with existing and newly acquired brands, if any, in the channels in which it competes;
identify and successfully enter and market its products and services in new geographic markets and market segments and categories; and
maintain and, to the extent necessary, improve the Company's high standards for quality, safety and integrity.

The Company may not be able to successfully implement its growth strategy and reach its revenue and profitability improvement targets.

Key Officers and Employees

The Company's success and future will depend, to a significant degree, on the continued efforts of its managers, officers and key employees, including certain sales and marketing personnel, the retention of which cannot be guaranteed. The loss of key personnel could materially adversely affect the Company's business. The loss of any such personnel could harm or delay the plans of the Company's business either while management time is directed to finding suitable replacements (who, in any event, may not be available), or, if not, covering such vacancy until suitable replacements can be found. In either case, this may have a material adverse effect on the future of the Company's business.

Competition for such personnel can be intense, and the Company cannot provide assurance that it will be able to attract or retain highly qualified technical, sales, marketing and management personnel in the future. From time to time, share-based compensation may comprise a significant component of the Company's compensation for key personnel, and if the price of the shares declines, it may be difficult to recruit and retain such individuals.

In addition, COVID-19 poses a risk to all of the Company's activities, including the potential that a member of management may become negatively impacted by the virus and the Company's ability to continue to rely on its key personnel throughout the pandemic. The Company will diligently monitor developments relating to COVID-19 and its impact on the Company's personnel, and make operational adjustments as necessary. Any of the foregoing risks or actions could disrupt the Company's operations and have a material adverse effect on the Company's results from operations and financial condition.

Risks Related to Acquisitions and Partnerships

The Company may acquire, partner or otherwise transact with other companies in the future and there are risks inherent in any such activities. Specifically, there could be unknown or undisclosed risks or liabilities of such companies for which the Company is not sufficiently indemnified. Any such unknown or undisclosed risks or liabilities could materially and adversely affect the Company's financial performance and results of operations. The Company could encounter additional transaction and integration related costs or experience an impact to its operations or results of operation as a result of the failure to realize all of the anticipated benefits from such acquisitions or partnerships, or an inability to successfully integrate an acquisition as anticipated. All of these factors could cause dilution to the Company's earnings per share or decrease or delay the anticipated accretive effect of the acquisition or partnership and cause a decrease in the market price of the Company's securities, or have a material adverse effect on the Company's operations or results from operations. The Company may not be able to successfully integrate and combine the operations, personnel and technology infrastructure of any such acquired company with its existing operations. As a result of integration efforts, the Company may experience interruptions in its business activities, deterioration in its employee and customer relationships, increased costs of integration and harm to its reputation, all of which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company may experience difficulties in combining corporate cultures, maintaining employee morale and retaining key employees. The integration of any such acquired companies may also impose substantial demands on management of the Company. There is no assurance

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that these acquisitions will be successfully integrated in a timely manner or without additional expenses incurred.

In respect of potential future acquisitions or partnerships, there can be no assurance that the Company will be able to identify acquisition or partnership opportunities that meet its strategic objectives, or to the extent such opportunities are identified, that it will be able to negotiate acceptable terms.

Breach of Confidentiality

While discussing potential business relationships or other transactions with third parties, the Company may disclose confidential information relating to the business, operations or affairs of the Company. Although confidentiality agreements are to be signed by third parties prior to the disclosure of any confidential information, a breach of such confidentiality agreement could put the Company at competitive risk and may cause significant damage to its business. The harm to the Company's business from a breach of confidentiality cannot presently be quantified but may be material and may not be compensable in damages. There can be no assurance that, in the event of a breach of confidentiality, the Company will be able to obtain equitable remedies, such as injunctive relief from a court of competent jurisdiction in a timely manner, if at all, in order to prevent or mitigate any damage to its business that such a breach of confidentiality may cause.

Other Conflicts of Interest

Certain of the officers and managers of the Company may also be directors, managers, officers, consultants or stakeholders of other companies or enterprises, some of which may be in similar sectors, and conflicts of interest may arise between their duties to the Company and their duties to or interests in such other companies or enterprises. Certain of such conflicts may be required to be disclosed in accordance with, and subject to, such procedures and remedies as applicable under applicable corporate and securities laws, however, such procedures and remedies may not fully protect the Company.

Emerging Industry

The industry in which the Company operates is in its infancy, and as a result, the Company has limited access to industry benchmarks in relation to the Company's business. Industry-specific data points such as operating ratios, research and development projects, debt structures, compliance and other financial and operational related data is limited and accordingly, management will be required to make decisions in the absence of such data points.

Difficulty to Forecast

The Company relies largely on its own market research to forecast industry trends and statistics as detailed forecasts are not generally available from other sources. A failure in the anticipated demand for the Company's products and services to materialize as a result of competition, technological change, change in the regulatory or legal landscape or other factors could have a material adverse effect the Company's business, financial condition and results of operations.

Litigation

The Company is, and may from time to time become, party to litigation in the ordinary course of business which could adversely affect its business. Should any litigation in which the Company is, or becomes, involved be determined against the Company, such a decision could adversely affect the Company's ability to continue operating and could use significant resources. Even if the Company is involved in litigation and wins, such litigation could redirect significant the Company resources. Litigation may also create a negative perception of the Company's brand.

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In addition, the Company could be liable for fraudulent or illegal activity of its employees, contractors and consultants resulting in significant financial losses to the Company.

Management of Growth

The Company may be subject to growth-related risks, including capacity constraints and pressure on its internal systems and controls. The ability of the Company to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of the Company to deal with this growth may have a material adverse effect on the Company's business, financial condition, results of operations and prospects.

Additional Financings

If the Company is not able to sustain profitability or if it requires additional capital to fund growth or other initiatives, it may seek additional equity or debt financing. There can be no assurances that the Company will be able to obtain additional financial resources on favorable commercial terms or at all. Failure to obtain such financial resources could affect the Company's plan for growth or result in the Company being unable to satisfy its obligations as they become due, either of which could have a material adverse effect on the business, results of operations and the financial condition of the Company.

Entry into International Markets

The Company's entry into international markets would require management attention and financial resources that would otherwise be spent on other parts of its business. The Company's international presence could expose it to risks and expenses inherent in operating or selling products in foreign jurisdictions, and developing and emerging markets in particular where the risks may be heightened.

These risks and expenses include:

adverse currency exchange rate fluctuations;
risks associated with complying with laws and regulations in the countries in which the Company sells products, if any, and the costs of adapting products for sale in foreign countries, including to changes to formats, labelling or packaging;
multiple, changing, and often inconsistent enforcement of laws, rules and regulations;
increases in taxes, tariffs, customs and duties, or costs associated with compliance with import and export licensing and other compliance requirements;
downward pricing pressure on the Company's products and services in international markets, due to competitive factors or otherwise;
laws and business practices favouring local companies;
political, social or economic unrest or instability;
greater risk on credit terms, longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
difficulties in enforcing or defending intellectual property rights; and
the effect of disruptions caused by severe weather, natural disasters, outbreak of disease or other events that make travel to a particular region less attractive or more difficult.

The Company's efforts to expand to international markets may not produce desired outcomes. Furthermore to the extend the Company makes efforts to offer products, services or events in international markets, if at all, its experience with offering products, services and events in its current markets may not be relevant or may not necessarily translate into favourable results in international markets. If and when the Company enters into new markets in the future, it may experience different competitive conditions, less familiarity with the Company's brands and/or different consumer tastes and discretionary spending patterns. Product, service and event offerings in international markets may take longer to ramp up and reach expected profit levels, or may never do so, thereby affecting the Company's overall growth and profitability. To build brand awareness in new markets, the Company may need to make greater investments in advertising and

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promotional activity than originally planned, which could negatively impact profitability in those markets. One or more of the factors listed above may harm the Company's business, results of operations or financial condition.

Risk Related to Third Party Business Relationships

The Company is party to business relationships, transactions and contracts with various third parties, pursuant to which such third parties have performance, supply, payment and other obligations to the Company. If any of these third parties were to become subject to business interruption, bankruptcy, receivership or similar proceedings, the Company's rights and benefits in relation to its business relationships, contracts and transactions with such third parties could be terminated, modified in a manner adverse to the Company, or otherwise impaired. The Company cannot make any assurances that it would be able to arrange for alternate or replacement business relationships, transactions or contracts on terms as favorable as existing business relationships, transactions or contracts if at all. Any inability on the Company's part to do so could have a material adverse effect on its business and results of operations.

Natural Disasters, Unusually Adverse Weather, Pandemic Outbreaks, Boycotts and Geo-Political Events

The occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events, such as civil unrest and acts of terrorism, or similar disruptions could materially adversely affect the Company's business, results of operations or financial condition. These events could result in the cancellation the Company's events, labour shortages, temporary or long-term disruption in the supply of products sold through the Company's e-commerce platform, disruption in the delivery of the Company's online platforms and information systems, any of which could have a material adverse effect on the Company's business, results of operations or financial results.

Global Economic Uncertainty

Demand for the Company's products and services are influenced by general economic and consumer trends beyond the Company's control. There can be no assurance that the Company's business and corresponding financial performance will not be adversely affected by general economic or consumer trends. In particular, global economic conditions remain constrained, and if such conditions continue, recur or worsen, this may have a material adverse effect on the Company's business, financial condition and results of operations.

Furthermore, such economic conditions have produced downward pressure on the availability of credit for financial institutions and corporations. If current levels of market disruption and volatility continue, the Company might experience reductions in business activity, increased funding costs and funding pressures, as applicable, a decrease in asset values, write-downs or impairment charges and lower profitability.

In addition, the outbreak of COVID-19 has resulted in governments worldwide enacting measures to combat the spread of the virus, including in Canada and the U.S. These measures, which include the implementation of travel restriction, self-isolation measures, physical distancing and in some instances, the suspension of non-essential business, have caused material disruption to businesses globally, resulting in an economic slowdown. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the response measures. It is impossible to forecast the duration and full scope of the economic impact of COVID-19 on the Company's business, operations and prospects, both in the short term and in the long term. Future crises may be precipitated by any number of causes, including natural disasters, public health crises, geopolitical instability, or sovereign defaults. These factors may impact the Company's operations and the ability of the Company to obtain equity or debt financing in the future and, if obtained, on terms favorable to the Company. Increased levels of volatility and market turmoil can adversely impact the Company's operations.

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Unfavourable Publicity or Consumer Perception

The success of the psychedelic therapy industry may be significantly influenced by the public's perception of psychedelic medicinal applications. Psychedelic therapy is a controversial topic, and there is no guarantee that future scientific research, publicity, regulations, medical opinion, and public opinion relating to psychedelic therapy will be favourable. The psychedelic therapy industry is an early-stage business that is constantly evolving, with no guarantee of viability. The market for psychedelic therapy is uncertain, and any adverse or negative publicity, scientific research, limiting regulations, medical opinion and public opinion relating to the consumption of psychedelic therapy may have a material adverse effect on the Company's operational results, consumer base and financial results.

The Company is a Holding Company

The Company is a holding company and virtually all of its assets consist of the equity it holds in Delic Corp., Delic Labs and KIC. As a result, investors are subject to the risks attributable to the Company’s subsidiaries and any and all future affiliates. The Company does not have any significant assets and conducts substantially all of its business through its subsidiaries, which generate all or substantially all of the Company’s revenues. The ability of the Company’s subsidiaries to distribute funds to the Company will depend on their operating results, tax considerations and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained by these subsidiaries and contractual restrictions contained in the instruments governing their debt, existing or if incurred. In the event of a bankruptcy, liquidation or reorganization of one or more of the Company’s subsidiaries or any other future subsidiary, holders of indebtedness and trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to the Company.

Risks Related to the Company's Regulatory Environment

Regulation

The Company is subject to general business regulations and laws as well as regulations and laws specifically governing the internet and e-commerce, psilocybin and ketamine. Existing and future laws and regulations may impede the Company's growth or strategy. These regulations and laws cover taxation, privacy, data protection, pricing, content, copyright, distribution, mobile communications, consumer protection, web services, the provision of online payment services, websites and the characteristics and quality or products and services as well as controlled substance laws. Unfavourable changes in regulations and laws could decrease demand for the Company's events, online offerings and merchandise, decrease the potential customer base, increase its cost of doing business, or otherwise have a material adverse effect on the Company's reputation, popularity, results of operations and financial condition.

Regulatory Approvals and Permits

The Company may be required to obtain and maintain certain permits, licenses and approvals in the jurisdictions where its services are offered, products are sold, or events are held. There can be no assurance that the Company will be able to obtain or maintain any necessary licenses, permits or approvals. Any material delay or inability to receive these items is likely to delay and/or inhibit the Company's ability to conduct its business, and would have an adverse effect on its business, financial condition and results of operations.

Environmental, Health and Safety Laws

The Company is subject to environmental, health and safety laws and regulations in each jurisdiction in which the Company operates. The Company's costs of complying with current and future environmental and health and safety laws, liabilities arising from past or future actions, or more vigorous enforcement of environmental and employee health and safety laws, may have a material adverse effect on the Company's business, financial condition and results of operations.

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Risks Related to the Company's Securities

Future Issuance of the Company's Securities

If the Company were to issue additional equity securities, the ownership interest of existing shareholders may be diluted and some or all of the Company's financial measures on a per share basis could be reduced. Moreover, as the Company's intention to issue additional equity securities becomes publicly known, the Company's share price may be materially adversely affected.

Limited Market for Subordinate Voting Shares

The Subordinate Voting Shares are listed on the CSE under the symbol "DELC". There can be no assurance that an active and liquid market for the Subordinate Voting Shares will be maintained and an investor may find it difficult to resell any securities of the Company.

Potential for Price Volatility

The market price of the Subordinate Voting Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company's control. This volatility may affect the ability of holders of the Subordinate Voting Shares to sell their securities at an advantageous price. Such volatility could be subject to significant fluctuations in response to numerous factors including:

actual or anticipated fluctuations in the Company's quarterly financial and operating results that vary from the expectations of management or of securities analysts and investors;
failure to meet the expectations of the investment community and changes in the investment community;
recommendations or estimates of future operating results;
announcements of strategic developments, acquisitions, dispositions, financings, product developments and other material events by the Company or competitors;
regulatory and legislative developments;
litigation;
general market conditions;
other domestic and international macroeconomic factors unrelated to the Company's performance;
additions or departures of key personnel;
sales or perceived sales of additional Subordinate Voting Shares or Multiple Voting Shares;
operating and share price performance of other companies that investors deem comparable to the Company or from a lack of market comparable companies; and
news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company's industry or target markets.

DESCRIPTION OF CAPITAL STRUCTURE

The following describes the material terms of the Company's share capital. The following description may not be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of our notice of articles and articles, as amended (the " Articles ").

The authorized capital of the Company consists of an unlimited number of Subordinate Voting Shares without par value and an unlimited number of multiple voting shares (" Multiple Voting Shares ") without par value. As at the date of this AIF there are 59,865,526 Subordinate Voting Shares issued and outstanding as fully paid and non-assessable shares and 259,913 Multiple Voting Shares issued and outstanding as fully paid and non-assessable shares. The Subordinate Voting Shares are "restricted securities" within the meaning of such term under applicable Canadian securities laws in that they do not carry equal voting rights with the Multiple Voting Shares. Each Subordinate Voting Share carries the right to one vote and each Multiple Voting Share carries the right to 100 votes. Assuming conversion of all Multiple Voting Shares into Subordinate Voting Shares, there are 85,856,826 Subordinate Voting Shares outstanding. In aggregate, all

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the voting rights associated with the Subordinate Voting Shares represented, as at September 1, 2021, approximately 70% of voting rights attached to all of the Company's issued and outstanding shares.

Take-Over Bid Protection

In the event that an offer is made to purchase Multiple Voting Shares, and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange, if any, on which the Multiple Voting Shares (or the Subordinate Voting Shares which may be obtained upon conversion of the Multiple Voting Shares) are then listed, to be made to all or substantially all the holders of Multiple Voting Shares in a province or territory of Canada to which the requirement applies, each Subordinate Voting Share shall become convertible at the option of the holder into Multiple Voting Shares at the inverse of the conversion ratio (as defined in the Articles) then in effect, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation or stock exchange rules for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Subordinate Voting Shares for the purpose of depositing the resulting Multiple Voting Shares under the offer, and for no other reason. In such event, the transfer agent for the Subordinated Voting Shares shall deposit under the offer the resulting Multiple Voting Shares, on behalf of the holder.

If Multiple Voting Shares resulting from the conversion and deposited pursuant to an offer for Multiple Voting Shares are withdrawn by the holder, or are not taken up by the offeror, or the offer is abandoned, withdrawn or terminated by the offeror or the offer otherwise expires without such Multiple Voting Shares being taken up and paid for, the Multiple Voting Shares resulting from the conversion will be re-converted into Subordinate Voting Shares at the then conversion ratio (as defined in the Articles) and a share certificate or other evidence representing the Subordinate Voting Shares will be sent to the holder by the transfer agent. In the event that the offeror takes up and pays for the Multiple Voting Shares resulting from conversion, the transfer agent shall deliver to the holders thereof the consideration paid for such shares by the offeror.

In addition, in the event that an offer is made to purchase Subordinate Voting Shares, and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange, if applicable, to be made to all or substantially all the holders of Subordinate Voting Shares in a province or territory of Canada to which the requirement applies, each Multiple Voting Share shall become convertible at the option of the holder into Subordinate Voting Shares at the conversion ratio (as defined in the Articles) then in effect, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. This conversion right may only be exercised in respect of Multiple Voting Shares for the purpose of depositing the resulting Subordinate Voting Shares under the offer, and for no other reason. In such event, the transfer agent for the Subordinate Voting Shares shall deposit under the offer the resulting Subordinate Voting Shares, on behalf of the holder.

If Subordinate Voting Shares, resulting from the conversion and deposited pursuant to the offer, are withdrawn by the holder or are not taken up by the offeror, or the offer is abandoned, withdrawn or terminated by the offeror or the offer otherwise expires without such Subordinate Voting Shares being taken up and paid for, the Subordinate Voting Shares resulting from the conversion will be reconverted into Multiple Voting Shares at the inverse of conversion ratio (as defined in the Articles) then in effect and a share certificate or other evidence representing the Multiple Voting Shares will be sent to the holder by the transfer agent. In the event that the offeror takes up and pays for the Subordinate Voting Shares resulting from conversion, the transfer agent shall deliver to the holders thereof the consideration paid for such shares by the offeror.

Subordinate Voting Shares

Right to Notice and Vote:

Holders of Subordinate Voting Shares will be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company will have the right to vote. At each such meeting,

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holders of Subordinate Voting Shares will be entitled to one vote in respect of each Subordinate Voting Share held.

Class Rights:

As long as any Subordinate Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Subordinate Voting Shares by separate special resolution, prejudice or interfere with any right attached to the Subordinate Voting Shares. Holders of Subordinate Voting Shares will not be entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Subordinate Voting Shares, or bonds, debentures or other securities of the Company.

Dividends:

Holders of Subordinate Voting Shares will be entitled to receive as and when declared by the directors of the Company, dividends in cash or property of the Company. No dividend will be declared or paid on the Subordinate Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Multiple Voting Shares.

Participation:

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Subordinate Voting Shares will, subject to the prior rights of the holders of any shares of the Company ranking in priority to the Subordinate Voting Shares, be entitled to participate rateably along with all other holders of Subordinate Voting Shares and Multiple Voting Shares (on an as-converted to Subordinate Voting Share basis).

Changes: No subdivision or consolidation of the Subordinate Voting Shares or Multiple Voting Shares shall occur unless, simultaneously, the Subordinate Voting Shares and Multiple Voting Shares are subdivided or consolidated in the same manner, so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.

Conversion:

In the event that an offer is made to purchase Multiple Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Multiple Voting Shares are then listed, to be made to all or substantially all the holders of Multiple Voting Shares in a given province or territory of Canada to which these requirements apply, each Subordinate Voting Share shall become convertible at the option of the holder into Multiple Voting Shares at the inverse of the Conversion Ratio then in effect at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Subordinate Voting Shares for the purpose of depositing the resulting Multiple Voting Shares pursuant to the offer, and for no other reason. In such event, the Company's transfer agent shall deposit the resulting Multiple Voting Shares on behalf of the holder. Should the Multiple Voting Shares issued upon conversion and tendered in response to the offer be withdrawn by shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Multiple Voting Shares resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Company or

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on the part of the holder, into Subordinate Voting Shares at the Conversion Ratio then in effect.

Redemption Right:

The Company will be entitled to redeem the Subordinate Voting Shares of an "Unsuitable Person" in certain circumstances. See "Redemption Right" below.

Multiple Voting Shares

Right to Vote:

Holders of Multiple Voting Shares will be entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company will have the right to vote. At each such meeting, holders of Multiple Voting Shares will be entitled to one vote in respect of each Subordinate Voting Share into which such Multiple Voting Share could then be converted (currently 100 votes per Multiple Voting Share held).

Class Rights:

As long as any Multiple Voting Shares remain outstanding, the Resulting Issuer will not, without the consent of the holders of the Multiple Voting Shares by separate special resolution, prejudice or interfere with any right attached to the Multiple Voting Shares. Holders of Multiple Voting Shares will not be entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of Subordinate Voting Shares, or bonds, debentures or other securities of the Company.

Dividends:

The holders of the Multiple Voting Shares are entitled to receive such dividends as may be declared and paid to holders of the Subordinate Voting Shares in any financial year as the Board of the Company may by resolution determine, on an as-converted to Subordinate Voting Share basis. No dividend will be declared or paid on the Multiple Voting Shares unless the Company simultaneously declares or pays, as applicable, equivalent dividends (on an as-converted to Subordinate Voting Share basis) on the Subordinate Voting Shares.

Participation: In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Multiple Voting Shares will, subject to the prior rights of the holders of any shares of the Resulting Issuer ranking in priority to the Multiple Voting Shares, be entitled to participate rateably along with all other holders of Multiple Voting Shares (on an asconverted to Subordinate Voting Share basis) and Subordinate Voting Shares.

Conversion:

The Multiple Voting Shares each have a restricted right to convert into 100 Subordinate Voting Shares (the " Conversion Ratio "), subject to adjustments for certain customary corporate changes. The ability to convert the Multiple Voting Shares is subject to a restriction that the aggregate number of Subordinate Voting Shares and Multiple Voting Shares held of record, directly or indirectly, by residents of the United

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States (as determined in accordance with Rules 3b-4 and 12g3-2(a)) under the Securities Exchange Act of 1934, as amended, may not exceed forty percent (40%) of the aggregate number of Subordinate Voting Shares and Multiple Voting Shares issued and outstanding after giving effect to such conversions and to a restriction on beneficial ownership of Subordinate Voting Shares exceeding certain levels. In addition, the Multiple Voting Shares will be automatically converted into Subordinate Voting Shares in certain circumstances, including upon the registration of the Subordinate Voting Shares under the United States Securities Act of 1933, as amended.

In the event that an offer is made to purchase Subordinate Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Subordinate Voting Shares are then listed, to be made to all or substantially all the holders of Subordinate Voting Shares in a given province or territory of Canada to which these requirements apply, each Multiple Voting Share shall become convertible at the option of the holder into Subordinate Voting Shares at the Conversion Ratio at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may be exercised in respect of Multiple Voting Shares for the purpose of depositing the resulting Multiple Voting Shares pursuant to the offer. Should the Subordinate Voting Shares issued upon conversion and tendered in response to the offer be withdrawn by shareholders or not taken up by the offeror, or should the offer be abandoned or withdrawn, the Subordinate Voting Shares resulting from the conversion shall be automatically reconverted, without further intervention on the part of the Company or on the part of the holder, into Multiple Voting Shares at the inverse of the Conversion Ratio then in effect.

Redemption Right

Subject to certain restrictions as set out below, no shareholder or group of shareholders acting in concert (the " Subject Shareholder ") shall acquire or dispose of five percent or more of the issued and outstanding Subordinate Voting Shares (assuming conversion of the Multiple Voting Shares into Subordinate Voting Shares) (a " Significant Interest "), directly or indirectly, in one or more transactions, without providing 15 days' advance written notice to the Company by mail sent to the Company's registered office to the attention of the Corporate Secretary. If the board reasonably believes that a Subject Shareholder may have failed to comply with this restriction, the Company may apply to the Supreme Court of British Columbia, or such other court of competent jurisdiction for an order directing that the Subject Shareholder disclose the number of shares held. These provisions do not apply to the ownership, acquisition or disposition of Subordinate Voting Shares as a result of: (i) any transfer of Subordinate Voting Shares occurring by operation of law; (ii) an acquisition or proposed acquisition by one or more underwriters or portfolio managers who hold Subordinate Voting Shares for the purposes of distribution to the public or for the benefit of a third party provided that such third party is in compliance with the above restrictions; or (iii) the conversion, exchange or exercise of securities of the Company (other than the Subordinate Voting Shares) duly issued or granted by the Company, into or for Subordinate Voting Shares, in accordance with their respective terms.

At the option of the Company, shares owned by an Unsuitable Person (as defined below) may be redeemed by the Company (the " Redemption ") for the Redemption Price (as defined below) out of funds lawfully available on the Redemption Date (as defined in the Articles). Shares redeemable will be redeemable at any time and from time to time pursuant to the terms hereof.

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In the case of a Redemption, the Company will send a written notice to the holder of the shares called for Redemption, which will set forth: (i) the Redemption Date, (ii) the number of Subordinate Voting Shares to be redeemed on the Redemption Date, (iii) the formula pursuant to which the Redemption Price will be determined and the manner of payment therefor, (iv) the place where such Subordinate Voting Shares (or certificate thereto, as applicable) will be surrendered for payment, duly endorsed in blank or accompanied by proper instruments of transfer, (v) a copy of the Valuation Opinion (as defined in the Articles) (if the Company is no longer listed on the Canadian Securities Exchange or another recognized securities exchange), and (vi) any other requirement of surrender of the Subordinate Voting Shares to be redeemed (the " Redemption Notice "). The Redemption Notice may be conditional such that the Company need not redeem the Subordinate Voting Shares owned by an Unsuitable Person on the Redemption Date if the board determines, in its sole discretion, that such Redemption is no longer advisable or necessary on or before the Redemption Date. The Company will send a written notice confirming the amount of the Redemption Price as soon as possible following the determination of such Redemption Price.

On and after the date the Redemption Notice is delivered, any Unsuitable Person owning Subordinate Voting Shares called for Redemption will cease to have any voting rights with respect to such Subordinate Voting Shares and on and after the Redemption Date specified therein, such holder will cease to have any rights whatsoever with respect to such Subordinate Voting Shares other than the right to receive the Redemption Price, without interest, on the Redemption Date; provided, however, that if any such Subordinate Voting Shares come to be owned solely by persons other than an Unsuitable Person (such as by transfer of such Subordinate Voting Shares to a liquidating trust, subject to the approval of any applicable Governmental Authority), such persons may exercise voting rights of such Subordinate Voting Shares and the board may determine, in its sole discretion, not to redeem such Subordinate Voting Shares. Following any Redemption in accordance with the terms of the above, the redeemed Subordinate Voting Shares will be cancelled.

For the purposes of the foregoing:

(i) " Business " means the conduct of any activities relating to the cultivation, manufacturing and dispensing of cannabis and cannabis-derived products in the United States, which include the owning and operating of cannabis licenses.
(ii) " Fair Market Value " will equal: (i) the volume weighted average trading price (VWAP) of the Subordinate Voting Shares for the five (5) Trading Day (as defined in the Articles) period immediately after the date of the Redemption Notice on the CSE or other national or regional securities exchange on which such shares are listed, or (ii) if no such quotations are available, the fair market value per share of the Subordinate Voting Shares to be redeemed as set forth in the Valuation Opinion (as defined in the Articles).
(iii) " Licenses " means all licenses, permits, approvals, orders, authorizations, registrations, findings of suitability, franchises, exemptions, waivers and entitlements issued by a governmental aauthority required for, or relating to, the conduct of the Business.
(iv) " Redemption Price " means the price per Subordinate Voting Share to be paid by the Company on the Redemption Date for the redemption of Shares and will be equal to the Fair Market Value of a Subordinate Voting Share, unless otherwise required by any Governmental Authority.
(v) " Unsuitable Person " means (i) any person (including a Subject Shareholder) with a Significant Interest who a Governmental Authority (as defined in the Articles) granting the Licenses has determined to be unsuitable to own Subordinate Voting Shares; or (ii) any person (including a Subject Shareholder) with a Significant Interest whose ownership of Subordinate Voting Shares may result in the loss, suspension or revocation (or similar action) with respect to any Licenses or in the Company being unable to obtain any new Licenses in the normal course, including, but not limited to, as a result of such person's failure to apply for a suitability review from or to otherwise fail to comply with the requirements of a Governmental Authority, as determined by the board, in
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its sole discretion, after consultation with legal counsel and if a license application has been filed, after consultation with the applicable Governmental Authority.

MARKET FOR SECURITIES

Trading Price and Volume of Subordinate Voting Shares

The Subordinate Voting Shares are listed and posted for trading on the CSE under the symbol "DELC". The following table sets forth the price range (monthly high and low prices at close) in Canadian dollars of the Subordinate Voting Shares and volume traded for the periods indicated (as reported by the CSE). The Subordinate Voting Shares were listed on the CSE on November 20, 2020.

2020 November(1) December 2021	High (C$) 0.40 0.49 0.78 0.80 0.70 0.50 0.40 0.34 0.31 0.31	Low(C$) 0.25 0.28 0.45 0.54 0.35 0.33 0.285 0.28 0.25 0.265	Volume
			812,526 2,274,314 4,136,292 5,464,596 3,831,512 3,261,568 2,378,622 2,737,726 1,772,120 1,362,635
January February March April May June July August

Notes:

(1) The Subordinate Voting Shares commenced trading on the CSE on November 20, 2020.

Prior Sales

The following table summarizes details of each class of securities that is outstanding but not listed or quoted on a marketplace issued by the Company during the year ended December 31, 2020.

Date of Issue	Type of Security	Number of Securities	Price per Security (C$)
April 30, 2020	Stock option(1)	100,000	0.083
November 17, 2020	Stock option(1)	3,450,000	0.25
November 24, 2020	Stock option(1)	150,000	0.25
December 18, 2020	Stock option(1)	425,000	0.35
January 22, 2021	Stock option(1)	120,000	0.75
February 8, 2021	Stock option(1)	400,000	0.65
February 11, 2021	Stock option(1)	50,000	0.58
March 3, 2021	Stock option(1)	50,000	0.63
March 4, 2021	Stock option(1)	108,887	0.58
March 10, 2021	Stock option(1)	250,000	0.55
May 26, 2021	Warrants(2)	11,441,189	0.40
May 26, 2021	Warrants(2)	506,951	0.30

Notes:

(1) Stock options exercisable to purchase Subordinate Voting Shares. Issued to directors, employees and consultants of the Company.

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(2) Warrants exercisable to purchase Subordinate Voting Shares. Issued in connection with the CBDV Offering.

ESCROWED SECURITIES

Escrowed Securities and Securities Subject to Contractual Restriction on Transfer

The following table summarizes the Company's securities that remain in escrow or subject to restrictions on transfer as of the date hereof:

Designation of Class	Number of securities held in escrow or that are subject to contractual restriction on transfer	Percentage of Class
Subordinate Voting Shares	6,121,275(1)	10.2%
Multiple Voting Shares	102,975(1)	39.6%

Note:

(1) Pursuant to an escrow agreement dated November 16, 2020, 8,161,700 Subordinate Voting Shares and 137,300 Multiple Voting Shares are subject to escrow restrictions and Olympia Trust Company acts as escrow agent. 10% of the escrow shares were released on the reverse acquisition date. The remaining escrow shares will be released at 15% every six months. The next release date is November 18, 2021.

DIVIDENDS

The Company has not declared or paid a dividend. Other than the requirements of the BCBCA, there are no restrictions on the Company that would prevent it from paying a dividend. However, as of the date of this AIF, the Board intends to retain any future earnings (when available) for reinvestment in the Company's business, and therefore, it has no current intention to declare or pay dividends on the Subordinate Voting Shares in the foreseeable future. Any future determination to pay dividends on the Subordinate Voting Shares will be at the sole discretion of the Board after considering a variety of factors and conditions existing from time to time including its earnings, financial condition and other relevant factors.

DIRECTORS AND OFFICERS

As at the date hereof, the Board is comprised of five individuals. The following table sets forth the names and municipalities of residence of the current directors and executive officers of the Company, their respective positions and offices with the Company and the date first appointed or elected as a director and/or officer and their principal occupation(s) within the past five years.

Name, Occupation and Security Holding

Position Held and Date Appointed Chief Executive Officer, Director Chief Financial Officer Director	Principal Occupation for Last Five Years Co-Founder and CEO of the Company. Formerly Chief Revenue Officer of High Times, an American monthly magazine and cannabis brand, from 2016-2019. President of Manning Lee Management Ltd., a CFO services company, since November 2017. Formerly Corporate Controller for Canadian operations at AP Capital Management from November 2016 to November 2017, and prior thereto Manager of Operations at Raymond James Ltd. from December 2014 to November 2016. Co-founder of ReTree in March 2016, a non- profit to enable e-commerce companies to add	Director/Officer Since
		January 29, 2021 November 12, 2020 November 12, 2020

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Name and Municipality of Residence Spokane, Washington, USA Sashko Despotovski (1)(2)(3) Stavanger, Norway Kraig Fox(2)(3) New York, New York, USA Paul Rosen(1)(3) Toronto, Ontario, Canada	Position Held and Date Appointed Director Director Director	Principal Occupation for Last Five Years reforestation as a product to their offerings. Founder of Element 8 Angels in January 2006, an angel group focussed on clean tech and sustainability. Founder and Manager of MGT Investments LLC since January 1996, an investment holding company. Formerly the CEO and CFO of Upgrade Labs, Inc. from 2018 to 2020. Managing Director at Hinna Park Capital since March 2017, an open end venture capital fund. Advisor, Canadian Market for Everyday Human Alliance since October 2019. Investment Director at NV Capital since May 2018. Formerly External Advisor for PwC from March 2016 to February 2018, and prior thereto, Director, M&A for PwC from November 2013 to October 2016. Consultant at U-Bet Advisory since December 2018. Chief Executive Officer and President of High Times Holding Corporation from April 2019 through December 2019. Prior thereto, Senior Managing Director of Entertainment and Media at Eldbridge Industries from January 2016 to December 2018. Prior thereto, Senior Managing Director of Entertainment and Media at Guggenheim Partners from July 2012 to January 2016. Chief Executive Officer of 1933 Industries Inc. Prior thereto, Chief Executive Officer and Chairman of Tidal Royalty from April 2018 to February 2019. President, Chief Executive Officer and Director of PharmaCan Capital Corporation from November 2013 to May 2016.	Director/Officer Since
			November 12, 2020 November 12, 2020 November 12, 2020

Notes: (1) Member of the Audit Committee. (2) Member of the Compensation Committee. (3) Member of the Investment Committee.

As at the date hereof, the directors and executive officers of the Company, as a group, beneficially own or control, directly or indirectly, (i) 1,470,000 of our issued and outstanding Subordinate Voting Shares, and (ii) approximately 1.7% of the voting power attached to all of the issued and outstanding shares of the Company.

The directors listed above will hold office until the next annual meeting of the Company or until their successors are elected or appointed.

Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of management, other than as disclosed herein, no director or executive officer as at the date hereof, is or was within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company), that (a) was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer, or (b) was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. For the purposes hereof, "order" means (a) a cease trade order, (b) an order similar to a cease trade

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order, or (c) an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days.

To the knowledge of management, other than as disclosed herein, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the company (a) is, as at the date hereof, or has been within the 10 years before the date hereof, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or (b) has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

Mr. Despotovski is a director of Sharc International Systems Inc. (" Sharc "), a company listed on the CSE. On October 11, 2019, Sharc announced that it had started the process of restructuring its UK operations through the divestiture of its UK subsidiaries and assets. Mr. Despotovski did not serve as a director or officer of Sharc's UK subsidiaries. Sharc remains listed on the CSE as of the date hereof.

Mr. Lee was appointed CFO of Good Life Networks Inc. (now named Aquarius AI Inc.) on August 30, 2019. On September 5, 2019, the British Columbia Securities Commission issued a cease trade order for the failure of Good Life to file its interim financial statements for the period ended June 30, 2019. Mr. Lee resigned as CFO of Good Life on September 11, 2019. Good Life filed the June 20, 2019 interims financial statements on November 19, 2019. The cease trade order was revoked by the British Columbia Securities Commission on November 20, 2019.

Mr. Lee was appointed CFO of Orchid Ventures, Inc. in March 2019. On October 29, 2020, the British Columbia Securities Commission issued a cease trade order for the failure of Orchid Ventures, Inc. to file its annual financial statements for the year ended June 30, 2020 due to the nature of business and the COVID-19 pandemic. Orchid Ventures, Inc. has been advised by its auditors, Dale Matheson Carr-Hilton Labonte CPAs, that they need more time to complete the audit. The cease trade order was revoked by the British Columbia Securities Commission on January 21, 2021.

Penalties or Sanctions

No director, executive officer or shareholder holding a sufficient number of securities of the Company to materially affect the control of the Company has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Conflicts of Interest

Certain of the directors and officers of the Company may be subject to various potential conflicts of interest as a result of the fact that certain of them are engaged in a range of business activities. In accordance with the applicable corporate and securities legislation, directors who have a material interest or any person who is a party to a material contract or a proposed material contract with the Company are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the matter. In addition, the directors are required to act honestly and in good faith with a view to the best interests of the Company. Certain of the directors and executive officers of the Company have either other employment or other business or time restrictions placed on them and accordingly, these directors and officers will only be able to devote part of their time to the affairs of the Company. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the applicable corporate law.

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AUDIT COMMITTEE

Audit Committee Charter

The full text of the Company's Audit Committee Charter is included as Schedule A to the AIF. The principal duties and responsibilities of the audit committee are to assist the Board in discharging the oversight of the nature and scope of the annual audit, management's reporting on internal accounting standards and practices, the review of financial information, accounting systems and procedures, and financial reporting and financial statements. The Board has charged the audit committee with the responsibility of recommending, for approval by the Board, the audited financial statements, interim financial statements and other mandatory disclosure releases containing financial information.

The audit committee has access to all books, records, facilities and personnel and may request any information about the Company as it may deem appropriate. It also has the authority to retain and compensate special legal, accounting, financial and other consultants or advisors to advise the Audit Committee. The audit committee is responsible for the pre-approval of all non-audit services to be provided by the Company's auditors.

Audit Committee Composition

The Company's audit committee consists of Messrs. Despotovski, Rosen and Stang, and is chaired by Mr. Despotovski. All members of the audit committee are independent, except for Mr. Stang who is an executive officer of the Company, and financially literate as those terms are used and defined in National Instrument 52-110 - Audit Committees (" NI 52-110 "). See " Directors and Officers ". All of the audit committee members have an understanding of the accounting principles used to prepare financial statements and varied experience as to the general application of such accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting. For additional details regarding the education and experience of each member of the audit committee, see " Directors and Officers ".

Relevant Education and Experience

Sashko Despotovski

Mr. Despotovski has been the Managing Director at Hinna Park Capital, an open end venture capital fund, since March 2017. Mr. Despotovski also acts as Advisor, Canadian Market for Everyday Human Alliance, an investment fund, since October 2019, as well as the Investment Director at NV Capital since May 2018. Formerly, Mr. Despotovski was an External Advisor for PwC from March 2016 to February 2018, and prior thereto, Director, M&A for PwC from November 2013 to October 2016.

Mr. Despotovski obtained an Associate of Science degree from the University of the Fraser Valley, a Bachelor of Science, Biology from the University of British Columbia and obtained an Honours Thesis, Genetics from the University of British Columbia.

Paul Rosen

Mr. Rosen is currently the Chief Executive Officer of 1933 Industries Inc., a vertically-integrated cannabis cultivation and manufacturing company. Prior thereto, Mr. Rosen was the Chief Executive Officer and Chairman of Tidal Royalty, an investment company, from April 2018 to February 2019. Mr. Rosen was the President, Chief Executive Officer and a Director of PharmaCan Capital Corporation, a merchant bank investing primarily in the Canadian medical marijuana industry, from November 2013 to May 2016.

Mr. Rosen obtained a Bachelor of Arts, Economics from the University of Western Ontario and an LLB from the University of Toronto.

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Matthew Stang

Mr. Stang is the co-founder and CEO of the Company. Formerly, he was Chief Revenue Officer of High Times, an American monthly magazine and cannabis brand, from 2016-2019. Matt Stang was with High Times for 17 years prior to its sale to a private equity fund, and during that time he helped legalize Cannabis in multiple states, launched the Cannabis Cup in America, and helped build the legal cannabis industry. For almost 20 years he has met and interacted with all corners within the cannabis community. His expertise in business includes marketing, branding, business development and product viability.

Audit Committee Oversight

At no time since the Company's incorporation was a recommendation of the audit committee to nominate or compensate an external auditor not adopted by the Board.

Reliance on Certain Exemptions

The Company has relied upon the exemption provided by section 6.1 of NI 52 110 which exempts venture issuers from the requirement to comply with the restrictions on the composition of its audit committee and the disclosure requirements of its audit committee in an annual information form as prescribed by NI 52 110.

Pre-Approval Policies and Procedures

The audit committee has not adopted specific policies and procedures for the engagement of non-audit services. The audit committee must pre-approve any non-audit services to the Company and the fees for those services.

External Auditor Service Fees

The aggregate fees billed by the Company's external auditors during the financial years ended December 31, 2020 and 2019 were as follows:

Financial Year Ending December 31, 2020 December 31, 2019	Audit Fees(1)(5) (US$) 20,000 10,000	Audit Related Fees(2) (US$) Nil Nil	Tax Fees(3) (US$) Nil 1,500	All Other Fees(4) (US$)
				Nil Nil

Notes:

(1) " Audit Fees" include fees necessary to perform the annual audit and quarterly reviews of the Company's financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.

(2) " Audit-Related Fees " for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported as audit fees. The services provided in this category include due diligence assistance, accounting consultations on proposed transactions, and consultation on International Financial Reporting Standards conversion.

(3) " Tax Fees " include fees for all tax services other than those included in "Audit Fees" and "Audit-Related Fees". This category includes fees for tax compliance, tax planning and tax advice.

(4) " All Other Fees " include all other non-audit services.
(5) Of the total Audit Fees, US$10,000 was payable to Baker Tilly WM LLP, the Company's former external auditor.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Company is not and has not been at any time within the most recently completed financial year, a party to any legal proceedings, nor is or was the Company's property the subject of any legal proceedings, known or contemplated, that involves a claim for damages exclusive of interest and costs that met or exceeded 10% of its current assets.

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Further, there have not been any (a) penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during the year ended December 31, 2020, (b) any other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision, or (c) settlement agreements entered into by the Company before a court relating to securities legislation or with a securities regulatory authority during the year ended December 31, 2020.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as otherwise disclosed herein, there were no material interests, direct or indirect, of any directors or executive officers of the Company, any shareholder who beneficially owns more than 10% of the voting rights attached to the shares or any known associate or affiliate of such persons in any transaction completed within the most recently completed financial year or during the current financial year, or any transaction proposed during the current financial year, that has materially affected or are reasonably expected to materially affect the Company.

AUDITOR, TRANSFER AGENT AND REGISTRAR

The Company's auditors are Manning Elliott LLP, located at 1030 W Georgia Street #1700, Vancouver, BC V6E 2Y3.

The transfer agent and registrar for our Subordinate Voting Shares and Multiple Voting Shares is Olympia Trust Company located at 1900, 925 West Georgia St, Vancouver, BC V6C 3L2.

MATERIAL CONTRACTS

The Company has not entered into any material contracts, other than contracts entered into in the ordinary course of business (not otherwise required to be disclosed) and documents entered into in connection with the Reverse Take-over, including the Definitive Agreement and the escrow agreement entered into in connection with the Reverse Take-over, the share purchase agreement and amending agreement entered into in connection with the CBDV Transaction and the agreement and plan of merger entered into in connection with the KIC Transaction (collectively, the " Material Agreements "), within the most recently completed financial year or since such time or before such time that are still in effect.

Copies of the Material Agreements are available on the Company's SEDAR profile at www.sedar.com.

INTERESTS OF EXPERTS

There is no person or company whose profession or business gives authority to a statement made by such person or company and who is named as having prepared or certified a statement, report or valuation described or included in a filing, or referred to in a filing, made under NI 51-102 by the Company during, or related to, the Company's most recently completed financial year other than Manning Elliott LLP, the Company's auditors.

Manning Elliott LLP, the Company's auditors for the year ended December 31, 2020, have confirmed that they are independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Institute of Chartered Professional Accountants of British Columbia.

ADDITIONAL INFORMATION

Additional information about Delic Holdings Inc. may be found on SEDAR at www.sedar.com. Additional financial information is provided in Delic Holdings Inc.'s audited financial statements for the period ended December 31, 2020 and the accompanying MD&A. Additional information, including directors' and officers' remuneration and indebtedness, principal holders of the Company's securities and securities authorized for

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issuance under equity compensation plans is contained in the Company's information circular for its most recent annual meeting of securityholders that involved the election of directors.

For copies of the financial statements of the Company and accompanying MD&A and additional copies of the AIF (in certain circumstances, reasonable fees may apply), please contact:

Chief Financial Officer Delic Holdings Inc. Telephone: 708-515-4925 Email: [email protected]

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SCHEDULE A

Audit Committee Charter

(see attached)

A-1

AUDIT COMMITTEE CHARTER

DELIC HOLDINGS INC.

1. Role and Objective

The Audit Committee (the " Committee ") is a committee of the board of directors (the " Board ") of Delic Holdings Inc. (the " Company ") to which the Board has delegated its responsibility for the oversight of the following:

nature and scope of the annual audit;
management's reporting on internal accounting standards and practices;
the review of financial information, accounting systems and procedures;
financial reporting and financial statements,

and has charged the Committee with the responsibility of recommending, for approval of the Board, the audited financial statements, interim financial statements and other mandatory disclosure releases containing financial information.

The primary objectives of the Committee, with respect to the Company and its subsidiaries, are as follows:

to assist the directors of the Company (the " Directors ") in meeting their responsibilities in respect of the preparation and disclosure of the financial statements of the Company and related matters;
to provide an open avenue of communication among the Company's auditors, financial and senior management and the Board;
to ensure the external auditors' independence and review and appraise their performance;
to increase the credibility and objectivity of financial reports; and
to strengthen the role of the outside Directors by facilitating in depth discussions between Directors on the Committee, management and external auditors.

2. Composition

The Committee will be comprised of at least three Directors or such greater number as the Board may determine from time to time and all members of the Committee shall be "independent" (as such term is used in National Instrument 52-110 – Audit Committees (" NI 52-110 ")) unless the Board determines that an exemption contained in NI 52-110 is available and determines to rely thereon. " Independent " generally means free from any business or other direct or indirect material relationship with the Company that could, in the view of the Board, reasonably interfere with the exercise of the member's independent judgment.

All of the members of the Committee must be "financially literate" (as defined in NI 52-110) unless the Board determines that an exemption under NI 52-110 from such requirement in respect of any particular member is available and determines to rely thereon in accordance with the provisions of NI 52-110. Being " financially literate " means members have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial

statements.

The Board shall from time to time designate one of the members of the Committee to be the chairperson of the Committee (the " Chair ").

3. Meetings and Administrative Matters

(a) The Committee shall meet at least four times per year and/or as deemed appropriate by the Committee Chair. As part of its job to foster open communication, the Committee will meet at least annually with management and the external auditors in separate sessions, and at such other times as the external auditor and/or the Committee consider appropriate. The Chief Financial Officer of the Company shall attend meetings of the Committee, unless otherwise excused from all or part of any such meeting by the Chair.
(b) Agendas, with input from management and approved by the Chair, shall be circulated to Committee members and relevant management personnel along with background information on a timely basis prior to the Committee meetings.
(c) A quorum for meetings of the Committee will be a majority of its members, and the rules for calling, holding, conducting and adjourning meetings of the Committee will be the same as those governing the Board unless otherwise determined by the Committee or the Board.
(d) The Chair will preside at all meetings of the Committee, unless the Chair is not present, in which case the members of the Committee that are present will designate from among such members the Chair for purposes of the meeting.
(e) At all meetings of the Committee, every resolution shall be decided by a majority of the votes cast. In case of an equality of votes, the Chair of the meeting shall be entitled to a second or casting vote.
(f) The minutes of the Committee meetings shall accurately record the decisions reached and shall be distributed to the Committee members with copies to the Board, the Chief Financial Officer or such other officer acting in that capacity, and the external auditor.
(g) The Committee may invite such officers, directors and employees of the Company and its subsidiaries, if any, as it sees fit from time to time to attend at meetings of the Committee and assist in the discussion and consideration of the matters being considered by the Committee.
(h) The Committee may retain persons having special expertise and/or obtain independent professional advice to assist in fulfilling its responsibilities at the expense of the Company as determined by the Committee without any further approval of the Board.
(i) Any members of the Committee may be removed or replaced at any time by the Board and will cease to be a member of the Committee as soon as such member ceases to be a Director. The Board may fill vacancies on the Committee by appointment from among its members. If and whenever a vacancy exists on the Committee, the remaining members may exercise all its powers so long as a quorum remains. Subject to the foregoing, following appointment as a member of the Committee each member will hold such office until the Committee is reconstituted.
(j) Any issues arising from these meetings that bear on the relationship between the Board and management should be communicated to the Chairman of the Board by the Committee Chair.

4. Mandate and Responsibilities

To fulfill its responsibilities and duties, the Committee shall:

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(a) undertake annually a review of this mandate and make recommendations to the Corporate Governance and Nominating Committee as to proposed changes;
(b) satisfy itself on behalf of the Board with respect to the Company's internal control systems, including, where applicable, relating to derivative instruments:
(i) identifying, monitoring and mitigating business risks; and
(ii) ensuring compliance with legal, ethical and regulatory requirements;
(c) review the Company's financial statements and reports and any related management's discussion and analysis (" MD&A "), any annual earnings, interim earnings and press releases before the Company publicly discloses this information and any reports or other financial information (including quarterly financial reports), which are submitted to any governmental body, or to the public, including any certification, report, opinion, or review rendered by the external auditors; the process should include but not be limited to:
(i) reviewing changes in accounting principles and policies, or in their application, which may have a material impact on the current or future years' financial statements;
(ii) reviewing significant accruals, reserves or other estimates such as the ceiling test calculation;
(iii) reviewing accounting treatment of unusual or non-recurring transactions;
(iv) ascertaining compliance with covenants under loan agreements;
(v) reviewing financial reporting relating to asset retirement obligations;
(vi) reviewing disclosure requirements for commitments and contingencies;
(vii) reviewing adjustments raised by the external auditors, whether or not included in the financial statements;
(viii) reviewing unresolved differences between management and the external auditors;
(ix) obtain explanations of significant variances with comparative reporting periods; and
(x) determine through inquiry if there are any related party transactions and ensure the nature and extent of such transactions are properly disclosed;
(d) review the financial reports and related information included in prospectuses, MD&A, information circular-proxy statements and annual information forms and all public disclosure containing audited or unaudited financial information (including, without limitation, annual and interim press releases and any other press releases disclosing earnings or financial results) before release and prior to Board approval. The Committee must be satisfied that adequate procedures are in place for the review of the Company's disclosure of all other financial information and will periodically assess the adequacy of those procedures;
(e) with respect to the appointment of external auditors by the Board:
(i) require the external auditors to report directly to the Committee;
(ii) review annually the performance of the external auditors who shall be ultimately accountable to the Board and the Committee as representatives of the shareholders
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of the Company;

(iii) obtain annually, a formal written statement of external auditors setting forth all relationships between the external auditors and the Company and confirming their independence from the Company;
(iv) review and discuss with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors;
(v) be directly responsible for overseeing the work of the external auditors engaged for the purpose of issuing an auditors' report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the external auditor regarding financial reporting;
(vi) review management's recommendation for the appointment of external auditors and recommend to the Board appointment of external auditors and the compensation of the external auditors;
(vii) review the terms of engagement of the external auditors, including the appropriateness and reasonableness of the auditors' fees;
(viii) when there is to be a change in auditors, review the issues related to the change and the information to be included in the required notice to securities regulators of such change;
(ix) take, or recommend that the full Board take, appropriate action to oversee the independence of the external auditors;
(x) at each meeting, consult with the external auditors, without the presence of management, about the quality of the Company's accounting principles, internal controls and the completeness and accuracy of the Company's financial reports;
(f) review and approve the Company's hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Company;
(g) review annually with the external auditors their plan for their audit and, upon completion of the audit, their reports upon the financial reports of the Company and its subsidiaries;
(h) review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Company's external auditors and consider the impact on the independence of the auditors; The pre-approval requirement is waived with respect to the provision of non-audit services if:
(i) the aggregate amount of all such non-audit services provided to the Company constitutes not more than five percent (5%) of the total amount of fees paid by the Company to its external auditors during the fiscal year in which the non-audit services are provided;
(ii) such services were not recognized by the Company at the time of the engagement to be non-audit services; and
(iii) such services are promptly brought to the attention of the Committee by the Company and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Committee;
5 -

provided the pre-approval of the non-audit services is presented to the Committee's first scheduled meeting following such approval, such authority may be delegated by the Committee to one or more independent members of the Committee;

(i) review any other matters that the Audit Committee feels are important to its mandate or that the Board chooses to delegate to it;
(j) with respect to the financial reporting process:
(i) in consultation with the external auditors, review with management the integrity of the Company's financial reporting process, both internal and external;
(ii) consider the external auditors' judgments about the quality and appropriateness of the Company's accounting principles as applied in its financial reporting;
(iii) consider and approve, if appropriate, changes to the Company's auditing and accounting principles and practices as suggested by the external auditors and management;
(iv) review significant judgments made by management in the preparation of the financial reports and the view of the external auditors as to appropriateness of such judgments;
(v) following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information;
(vi) review any significant disagreement among management and the external auditors regarding financial reporting;
(vii) review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented; and
(viii) review the certification process,
(k) review financial reporting relating to risk exposure and risk management policies and procedures of the Company (i.e., hedging, litigation and insurance),
(l) establish a procedure for:
(i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and
(ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

5. Authority

Following each meeting, in addition to a verbal report, the Committee will report to the Board by way of providing copies of the minutes of such Committee meeting at the next Board meeting after a meeting is held (these may still be in draft form).

Supporting schedules and information reviewed by the Committee shall be available for examination by any director.

The Committee shall have the authority to investigate any financial activity of the Company and to communicate directly with the internal and external auditors. All employees are to cooperate as requested by the Committee.

The Committee may retain, and set and pay the compensation for, persons having special expertise and/or obtain independent professional advice to assist in fulfilling its duties and responsibilities at the expense of the Company.

AI assistant

Delic Holdings Corp. — Annual Report 2020

46016_rns_2021-09-01_442c8785-5858-4542-abfe-0ea5fab5055d.PDF

DELIC HOLDINGS INC.

ANNUAL INFORMATION FORM

TABLE OF CONTENTS

ADVISORIES

Cautionary Statement Regarding Forward-Looking Information and Statements

Market, Independent Third Party and Industry Data

Trademarks, Trade Names and Service Marks

GLOSSARY OF TERMS

CORPORATE STRUCTURE

Name, Address and Incorporation

Intercorporate Relationships

GENERAL DEVELOPMENT OF THE BUSINESS OF THE COMPANY

Overview of Business

The Reverse Take-over

The Company Following the Reverse Take-Over

BUSINESS OF THE COMPANY

Narrative Description of the Business

Delic Corp.

Delic Labs

KIC

Product Overview

Delic Corp.

Media Platform

The Delic

Meet Delic

Reality Sandwich

Delic Radio

Delic Labs

Psilocybin and Cannabis Research and Testing Services

Advanced Analytical Testing

Research and Consulting

Cannabis Compound Database

KIC

Ketamine Infusion Therapy

Principal Markets

Selected Financial Information

Production and Sales

Material Leases and Mortgages

Specialized Skill and Knowledge

Materials

Intellectual Property

Intangible Properties

Cycles/ Year-Round Business

Employees

KIC operates with 8 employees.

Economic Dependence and Changes to Contracts

Delic Corp.

Delic Labs

KIC

Competitive Conditions and Positions

Delic Corp.

Delic Labs

KIC

New Products

Environmental Protection

REGULATORY FRAMEWORK

Controlled Substances

Spravato

Section 56 Exemption

RISK FACTORS

Investors should carefully consider the risk factors set out below and consider all other information contained herein and in the Company's other public filings before making an investment decision.

Risk Factors Relating to the Company

Impacts of COVID-19 on The Company's Business

Brand Development and Effectiveness of Marketing

Technology Risk

Technical Operations Infrastructure Risk

Third Party Service Providers

Information Technology Systems and Data Security Breaches

Periodic Changes to Search Engine Algorithms

Use of Personal Information

Content Quality Risk

Competitive and Pricing Risk

Inability to Protect Intellectual Property

Intellectual Property Claims

Successful Management and Growth

Changing Consumer and User Preferences and Retention

Product Recalls

Delic Holdings Corp. Annual Report 2020