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Entheon Biomedical Corp. — Proxy Solicitation & Information Statement 2025
Nov 25, 2025
47516_rns_2025-11-24_de48434b-509f-4c2e-82c9-2eac73214319.pdf
Proxy Solicitation & Information Statement
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ENTHEON BIOMEDICAL CORP.
ENTHEON
MANAGEMENT INFORMATION CIRCULAR
For the Annual General Meeting of Shareholders
To be held at 10:00 a.m. (PT) on Monday, December 15, 2025
MANAGEMENT INFORMATION CIRCULAR
GENERAL PROXY INFORMATION
THIS MANAGEMENT INFORMATION CIRCULAR (THE "CIRCULAR") IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF ENTHEON BIOMEDICAL CORP. (THE "COMPANY") OF PROXIES TO BE USED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY (THE "MEETING") TO BE HELD AS A PHYSICAL MEETING AT 15th FLOOR, 1111 WEST HASTINGS STREET, VANCOUVER, BC V6E 2J3 ON MONDAY, DECEMBER 15, 2025 AT 10:00 A.M. (PACIFIC TIME), AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF FOR THE PURPOSES SET OUT HEREIN AND IN THE NOTICE OF MEETING.
The Company's news releases and other prescribed documents are required to be filed on the electronic database maintained by the Canadian Securities Administrators (known as SEDAR+) located at www.sedarplus.ca. A copy of this Circular is also available under the Company's profile at www.sedarplus.ca.
In this Circular, "Shares" means the Subordinate Voting Shares and the Proportionate Voting Shares of the Company. "Registered Shareholders" means shareholders of the Company who hold Shares in their own names and whose names appear on the register of the Company as the registered holders of Shares. "Beneficial Shareholders" means shareholders of the Company who do not hold Shares in their own names. "Shareholders" means the Registered Shareholders and the Beneficial Shareholders. The "Board" or the "directors" means the board of directors of the Company. "Management" means the management of the Company.
Unless otherwise indicated herein, all references to dollars, “$” or “US$” are to U.S. dollars, and all references to “C$” are to Canadian dollars.
SOLICITATION OF PROXIES
The enclosed form of proxy (the "Proxy") is solicited by Management. Solicitations will be made by mail and possibly supplemented by telephone or other personal contact to be made without special compensation by regular officers and employees.
In accordance with securities regulatory policy, the Company has distributed copies of the Meeting materials, being the Notice of Meeting, this Circular and the Proxy, to the Nominees for distribution to non-registered holders.
Nominees are required to forward the Meeting materials to non-registered holders to seek their voting instructions in advance of the Meeting. Shares held by Nominees can only be voted in accordance with the instructions of the non-registered holder. The Nominees often have their own form of proxy, mailing procedures and provide their own return instructions. If you wish to vote by proxy, you should carefully follow the instructions from the Nominee to ensure your Shares are voted at the Meeting.
Appointment of Proxyholders
The persons named in the Proxy are representatives of the Company (the "Proxyholders"). A
Shareholder entitled to vote at the Meeting has the right to appoint a person (who need not be a Shareholder) to attend and act on the Shareholder’s behalf at the Meeting other than the persons named in the accompanying Proxy. To exercise this right, a Shareholder shall strike out the names of the persons named in the accompanying Proxy and insert the name of the Shareholder’s nominee in the blank space provided or complete another proper form of proxy.
Manner of Voting
The Shares represented by the Proxy will be voted for, or withheld from voting, in accordance with the instructions of the Shareholder on any ballot that may be called for and, if the Shareholder specifies a choice on the Proxy with respect to any matter to be acted upon, the Shares will be voted accordingly. In the absence of instructions to the contrary, the Proxyholders intend to vote the Shares represented by each Proxy, properly executed, in favour of each matter identified in the Proxy. The Proxy, when properly signed, confers discretionary authority on the Proxyholders with respect to amendments or variations to the matters identified in the notice of meeting (the “Notice”) and the Circular and with respect to other matters that may properly be brought before the Meeting. At the time of printing this Circular, Management is not aware that any such amendments, variations or other matters are to be presented for action at the Meeting. However, if any other matters which are not now known to Management should properly come before the Meeting, the proxies hereby solicited will be exercised on such matters in accordance with the best judgment of the Proxyholders.
Revocation of Proxy
A Shareholder who has given a Proxy may revoke it at any time before it is exercised. In addition to revocation in any other manner permitted by law, a Proxy may be revoked by instrument in writing executed by the Shareholder or by his or her attorney authorized in writing, or, if the Shareholder is a corporation, it must either be under its common seal or signed by a duly authorized officer and deposited with the Company's registrar and transfer agent, Endeavor Trust Corporation (“Endeavor”) by hand or mail at 702-777 Hornby Street, Vancouver, BC V6Z 1S4, by email to [email protected] or by fax to 604-559-8908 (within Canada and the U.S.) by 10:00 a.m. Pacific Time, on December 11, 2025, or in the case of any adjournment or postponement of the Meeting not less than 48 hours (Saturdays, Sundays and holidays excepted) before the time of the adjourned or postponed meeting. A revocation of a Proxy does not affect any matter on which a vote has been taken prior to the revocation.
Information for Registered Shareholders
The Registered Shareholders may choose to vote by Proxy whether or not they are able to attend the Meeting in person. Registered Shareholders who choose to submit a Proxy may do so by completing, signing, dating and depositing the Proxy by hand or mail at 702-777 Hornby Street, Vancouver, BC V6Z 1S4, by email to [email protected] or by fax to 604-559-8908 (within Canada and the U.S.) or by internet at www.eproxy.ca not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the Meeting or any adjournment or postponement thereof. If submitting the Proxy by internet, Registered shareholders must follow the instructions that appear on the screen and refer to the enclosed Proxy for the holder’s control number. The Proxy may be signed by the Shareholder or by his or her attorney in writing, or, if the Registered Shareholder is a corporation, it must either be under its common seal or signed by a duly authorized officer.
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To be effective, we must receive your completed Proxy form no later than 10:00 a.m. (Pacific Time) on December 11, 2025. If the Meeting is postponed or adjourned, we must receive your completed form of proxy by 10:00 a.m. (Pacific Time), two full business days before any adjourned or postponed Meeting. Late Proxies may be accepted or rejected by the Chair of the Meeting at his or her discretion and he or she is under no obligation to accept or reject a late Proxy. The Chair of the Meeting may waive or extend the Proxy cut-off without notice.
Information for Beneficial Shareholders
The information set forth in this section is of significant importance to the Beneficial Shareholders. Beneficial Shareholders should note that only Proxies deposited by Registered Shareholders can be recognized and acted upon at the Meeting. If Shares are listed in an account statement provided to a Shareholder by an intermediary, such as a brokerage firm, then, in almost all cases, those Shares will not be registered in the Shareholder's name on the records of the Company. Such Shares will more likely be registered under the name of the Shareholder's broker or an agent or nominee of that broker, and consequently the Shareholder will be a Beneficial Shareholder. In Canada, the vast majority of such Shares are registered under the name CDS & Co. (being the registration name for the Canadian Depositary for Securities Inc., which acts as nominee for many Canadian brokerage firms). The Shares held by brokers, or their agents or nominees can only be voted upon the instructions of the Beneficial Shareholders. Without specific instructions, brokers are prohibited from voting Shares for their clients. Therefore, Beneficial Shareholders should ensure that instructions respecting the voting of their Shares are communicated to the appropriate person. Please return your voting instructions as specified in the request for voting instructions.
Although Beneficial Shareholders may not be recognized directly at the Meeting for the purpose of voting Shares registered in the name of their broker, agent or nominee, a Beneficial Shareholder may attend the Meeting as a duly appointed Proxyholder for a Registered Shareholder and vote their Shares in that capacity. Beneficial Shareholders who wish to attend the Meeting and indirectly vote their Shares as proxyholder for a Registered Shareholder should contact their broker, agent, or nominee well in advance of the Meeting to determine the steps necessary to permit them to indirectly vote their Shares as a duly appointed Proxyholder.
There are two kinds of Beneficial Shareholders, those who object to their names being made known to the issuers of securities that they own ("OBOs" for 'Objecting Beneficial Owners') and those who do not object to the issuers of the securities they own knowing who they are ("NOBOs" for 'Non-Objecting Beneficial Owners').
Non-Objecting Beneficial Owners
Pursuant to National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer ("NI 54-101"), issuers can obtain a list of their NOBOs from intermediaries for distribution of proxy-related materials directly to NOBOs. This year, the Company will not rely on those provisions of NI 54-101 that permit it to directly deliver proxy-related materials to its NOBOs. As a result, NOBOs can expect to receive a scannable voting instruction form ("VIF") from Broadridge Investor Communications ("Broadridge"). These VIFs are to be completed and returned to Broadridge in the envelope provided or by facsimile. In addition, Broadridge provides internet voting as described on the VIF itself, which contains complete instructions. Broadridge will tabulate the results of the VIFs received from NOBOs and will
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provide appropriate instructions at the Meeting with respect to the Shares represented by the VIFs they receive.
Objecting Beneficial Owners
Beneficial Shareholders, who are OBOs, should follow the instructions of their intermediary carefully to ensure that their shares are voted at the Meeting.
Applicable regulatory rules require intermediaries to seek voting instructions from OBOs in advance of shareholder meetings. Every intermediary has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by OBOs in order to ensure that their Shares are voted at the Meeting. The purpose of the Proxy or VIF provided to an OBO by its broker, agent or nominee is limited to instructing the registered holder of the Shares on how to vote such Shares on behalf of the OBO.
The Proxy provided to OBOs by intermediaries will be similar to the Proxy provided to Registered Shareholders. However, its purpose is limited to instructing the intermediary on how to vote your Shares on your behalf. The majority of intermediaries now delegate responsibility for obtaining instructions from OBOs to Broadridge. Broadridge typically supplies VIFs, mails those forms to OBOs, and asks those OBOs to return the forms to Broadridge or follow specific telephonic or other voting procedures. Broadridge then tabulates the results of all instructions received by it and provides appropriate instructions respecting the voting of the Shares to be represented at the Meeting. An OBO receiving a VIF from Broadridge cannot use that form to vote Shares directly at the Meeting. Instead, the VIF must be returned to Broadridge, or the alternate voting procedures must be completed well in advance of the Meeting in order to ensure that such Shares are voted. The Company does not intend to pay Broadridge to forward these meeting materials to OBOs. As a result, OBOs will not receive the Meeting materials unless their Nominee assumes the costs of delivery.
Notice to Shareholders in the United States
The solicitation of proxies in this Circular involves securities of an issuer located in Canada and is being effected in accordance with the corporate laws of the Province of British Columbia, Canada and the securities laws of certain provinces of Canada. The proxy solicitation rules under the United States Securities Exchange Act of 1934, as amended, are not applicable to the Company or this solicitation, and this solicitation has been prepared in accordance with the disclosure requirements of the securities laws of the provinces of Canada. Shareholders should be aware that disclosure requirements under the securities laws of the applicable provinces of Canada differ from the disclosure requirements under United States securities laws.
The enforcement by shareholders of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Company is incorporated under the Canada Business Corporations Act, as amended (the "Act"), the majority of its directors and executive officers are residents of Canada and a substantial portion of the assets of such persons are located outside of the United States. Shareholders may not be able to sue a foreign company or its officers or directors in a foreign court for violations of United States federal securities laws. It may be difficult to compel a foreign company and its officers and directors to subject themselves to a judgement by a United States court.
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Quorum
The by-laws of the Company provide that the quorum for the transaction of business at the Meeting consists of two (2) shareholders who are present in person or represented by proxy.
In order to approve a motion proposed at the Meeting, a majority of greater than 50% of the votes cast will be required (an "Ordinary Resolution").
NOTICE AND ACCESS
The Company is not sending the Meeting materials to shareholders using "notice-and-access", as defined under NI 54-101.
REQUIRED SHAREHOLDER APPROVALS
Unless otherwise noted under "PARTICULARS OF MATTERS TO BE ACTED UPON", all resolutions which the Shareholders will be asked to pass must be approved by an Ordinary Resolution.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
Record Date
Only shareholders of record at the close of business on November 5, 2025 (the "Record Date"), who either personally attend the Meeting virtually or who complete and deliver the Proxy in the manner and subject to the provisions set out under the heading "Appointment and Revocation of Proxies" will be entitled to have his or her shares voted at the Meeting or any adjournment thereof.
Voting Shares
As at the Record Date, there were 13,858,934 common shares without par value ("Shares") issued and outstanding, each share carrying the right to one vote. At a general meeting of the Company, every shareholder shall have one vote and, on a poll, every shareholder shall have one vote for each share of which he or she is the holder.
Principal Shareholders
To the knowledge of the Company's directors and executive officers, as at the date hereof, no person or company owns, or controls or directs, directly or indirectly, Shares carrying 10% or more of the voting rights attached to all of the issued and outstanding Shares of the Company.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
Other than as disclosed below and elsewhere in this Circular, none of the directors or executive officers of the Company, no proposed nominee for election as a director of the Company, none of the persons who have been directors or executive officers of the Company since the commencement of the Company's last completed financial year and no associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.
PARTICULARS OF MATTERS TO BE ACTED UPON
I. FINANCIAL STATEMENTS
The audited financial statements of the Company (the "Financial Statements") for the year ended November 30, 2024, and the auditors' report thereon, will be tabled before the Shareholders at the Meeting. The audited financial statements have been approved by the audit committee and the Board of Directors. The Financial Statements can also be found under the Company's profile on SEDAR+ at www.sedarplus.ca. No vote by the Shareholders is required to be taken with respect to the Financial Statements.
II. ELECTION OF DIRECTORS
The directors of the Company are elected at each annual general meeting and hold office until the next annual general meeting or until their successors are appointed in accordance with the Articles and bylaws of the Company or the provisions of the CBCA.
Shareholder approval will be sought to fix the number of directors of the Company at three (3).
Pursuant to the Advance Notice Policy of the Company adopted by the directors on October 15, 2021, with immediate effect, any additional director nominations for the Meeting must be received by the Company on or before November 14, 2025, being a date not less than 30 and no more than 65 days prior to the date of the Meeting. As of the date hereof, there were no nominations received.
The following table sets forth the name of each person proposed to be nominated by Management of the Company for election as a director, his principal occupation, business or employment, his current position held with the Company, if any, the period of time for which he has been a director of the Company, and the number of Shares beneficially owned, directly or indirectly, or subject to control or direction, by such person as of the date hereof.
| Name and Municipality Of Residence | Director Since | Principal Occupation for the Past 5 Years | Number Of Shares Beneficially Owned or Controlled^{(4)} |
|---|---|---|---|
| Timothy Ko^{(1)(2)(3)} | |||
| CEO, President, and a Director | |||
| British Columbia, Canada | Nov 5, 2020 | • President & CEO of the Company since November 2020 | |
| • Founder and CEO of Entheon Holdings Corp. since incorporation | 230,000 | ||
| Christopher Sumeet Babu Gondi^{(1)(2)(3)} | |||
| Director | |||
| Illinois, USA | Nov 5, 2020 | • Research Associate Professor – Departments of Medicine, Surgery and Pathology at the University of Illinois College of Medicine Peoria | 50,000 |
| Harrison Newlands^{(1)(2)(3)} | |||
| Director | |||
| Ontario, Canada | Apr 3, 2025 | • Managing Partner of North King Capital | 123,500 |
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Notes:
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Disclosure Committee.
(4) The information as to shares beneficially owned has been furnished and confirmed by the directors individually.
Unless a Proxy specifies that the Shares it represents are to be withheld from voting for the candidates proposed above, the persons named in Proxy intend to vote for the candidates proposed above. Management of the Company does not contemplate that any of the nominees will be unable to serve as a director of the Company for the ensuing year. However, if that should occur for any reason prior to the Meeting or any adjournment thereof, the persons named in the Proxy have the right to vote for the election of the remaining nominees and may vote for the election of a substitute nominee at their discretion.
Corporate Cease Trade Orders, Bankruptcies or Penalties
No proposed director is to be elected under any arrangement or understanding between the proposed director and any other person or company, except the directors and executive officers of the Company acting solely in such capacity.
To the knowledge of the Company, no proposed director:
(a) is, as at the date of the Circular, or has been, within 10 years before the date of the Circular, a Director, chief executive officer ("CEO") or chief financial officer ("CFO") of any company (including the Company) that:
(i) was the subject, while the proposed director was acting in the capacity as director, CEO or CFO of such company, of a cease trade or similar order or 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; or
(ii) was subject to a cease trade or similar order or 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, that was issued after the proposed director ceased to be a director, CEO or CFO but which resulted from an event that occurred while the proposed director was acting in the capacity as Director, CEO or CFO of such company; or
(b) is, as at the date of this Circular, or has been within 10 years before the date of this Circular, 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
(c) has, within 10 years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any
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proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director; or
(d) has been subject to 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
(e) has been subject to any penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed Director.
III. RE-APPOINTMENT OF AUDITORS
The Shareholders will be asked to approve the re-appointment of Manning Elliott LLP, Chartered Professional Accountants as the auditors of the Company to hold office until the conclusion of the next annual general meeting of the Company and to authorize the Board to fix the remuneration of the auditors for the ensuing year.
Unless a Proxy specifies that the Shares it represents are to be withheld from voting for the re-appointment of Manning Elliott LLP, Chartered Professional Accountants as the auditors of the Company to hold office until the close of the next annual general meeting of the Company and authorizing the Board to fix the remuneration of the auditors of the Company for the ensuing year, the persons named in the Proxy intend to vote for such re-appointment and authorization.
STATEMENT OF EXECUTIVE COMPENSATION
The purpose of this section is to describe the compensation of certain Named Executive Officers of the Company in accordance with Form 51-102F6V – Statement of Executive Compensation – Venture Issuer published by the Canadian Securities Administrators. When used in this Circular, “Named Executive Officer” means: (i) each person who acted as the Chief Executive Officer or the Chief Financial Officer of the Company (or in similar capacities thereof) during the most recently completed financial year of the Company; and (ii) the other three most highly compensated executive officers of the Company whose compensation exceeded C$150,000 during the most recently completed financial year of the Company.
Director and Named Executive Officer Compensation, Excluding Compensation Securities
The following table sets forth a summary of all compensation paid, payable, awarded, granted, given, or otherwise provided, directly or indirectly, by the Company to each Named Executive Officer and director of the Company, for services provided and for services to be provided, directly or indirectly in any capacity, to the Company by such persons, for the two most recently completed financial years, excluding compensation securities:
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| Table of Compensation Excluding Compensation Securities | |||||||
|---|---|---|---|---|---|---|---|
| Name and Position | Year | Salary, consulting fee, retainer or commission ($) | Bonus ($) | Committee or meeting fees ($) | Value of perquisites ($) | Value of all other compensation ($) | Total Compensation ($) |
| Timothy Ko (1)President, Chief Executive Officer, Corporate Secretary & Director | 2024 | 60,000 | Nil | Nil | Nil | Nil | 60,000 |
| 2023 | 75,869 | Nil | Nil | Nil | Nil | 75,869 | |
| Soo-Whan Kim (2)Interim Chief Financial Officer | 2024 | 47,000 | Nil | Nil | Nil | Nil | 47,000 |
| 2023 | 36,500(3) | Nil | Nil | Nil | Nil | 36,500 | |
| Christopher Sumeet Babu Gondi (4)Director | 2024 | 12,000 | Nil | Nil | Nil | Nil | 12,000 |
| 2023 | 12,000 | Nil | Nil | Nil | Nil | 12,000 | |
| Andrew Hegle (5)Former Director & Former Chief Science Officer | 2024 | 12,000 | Nil | Nil | Nil | Nil | 12,000 |
| 2023 | 89,814 | Nil | Nil | Nil | Nil | 89,814 | |
| Brandon Schwabe (6)Former Chief Financial Officer | 2024 | N/A | N/A | N/A | N/A | N/A | N/A |
| 2023 | 35,630 | Nil | Nil | Nil | Nil | 35,630 | |
| Ruth Chun (7)Former Director | 2024 | N/A | N/A | N/A | N/A | N/A | N/A |
| 2023 | 10,000 | Nil | Nil | Nil | Nil | 10,000 |
Notes:
(1) Mr. Ko provides services to the Company pursuant to an agreement dated November 3, 2020, which was further replaced by an agreement dated January 23, 2023. For details, see "Employment, Consulting and Management Agreements or Arrangements".
(2) Mr. Kim was appointed Interim CFO on January 6, 2023.
(3) Mr. Kim provided services to the Company pursuant to an agreement dated January 6, 2023. For details, see "Employment, Consulting and Management Agreements or Arrangements".
(4) Mr. Gondi provided services to the Company pursuant to an agreement dated January 15, 2021. For details, see "Employment, Consulting and Management Agreements or Arrangements".
(5) Mr. Hegle ceased to be a director on April 3, 2025. Mr. Hegle ceased to be CSO on July 31, 2023. Mr. Hegle provided services to the Company pursuant to an agreement dated December 10, 2020, which was replaced by an agreement dated January 24, 2023 and again on July 18, 2023. For details, see "Employment, Consulting and Management Agreements or Arrangements".
(6) Mr. Schwabe ceased to be CFO on January 6, 2023. Mr. Schwabe provided services to the Company pursuant to an agreement dated November 3, 2020, as amended November 16, 2021. For details, see "Employment, Consulting and Management Agreements or Arrangements".
(7) Ms. Chun resigned as a director on February 28, 2023. Ms. Chun provided services to the Company pursuant to an agreement dated November 5, 2020. For details, see "Employment, Consulting and Management Agreements or Arrangements".
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Stock Options and Other Compensation Securities
For the most recently completed financial year ended November 30, 2024, there were no compensation securities granted or issued to Company directors and NEOs for services provided or to be provided, directly or indirectly, to the Company.
Exercise of Stock Options
There were no compensation securities exercised by any director and Named Executive Officer in the most recently completed financial year.
External Management Companies
The Company has not engaged the services of an external management company to provide executive management services to the Company, directly or indirectly.
Stock Options and Other Incentive Plans
The Company has a rolling stock option plan (the "SOP") and a rolling restricted share unit plan (the "RSU Plan") for the granting of stock options and restricted share units to the directors, officers, employees and consultants of the Company.
The purpose of granting such stock options and restricted share units is to assist the Company in compensating, attracting, retaining and motivating such persons and to closely align the personal interest of such persons to that of the Company's shareholders. The allocation of options under the SOP and restricted share units under the RSU Plan is determined by the Compensation Committee and then recommended to the Board for approval. In determining such allocations, the Compensation Committee considers such factors as previous grants to individuals, overall Company performance, peer company performance, share price performance, the business environment and labour market, the role and performance of the individual in question and, in the case of grants to non-executive directors, the amount of time directed to the Company's affairs and time expended for serving on the Company's Audit Committee, Compensation Committee and Disclosure Committee.
Employment, Consulting and Management Agreements
Other than as described below, the Company has not entered into any agreement or arrangement under which compensation was provided during the most recently completed financial year ended November 30, 2024, or is payable in respect of services provided to the Company or any of its subsidiaries that were: (a) performed by a director or NEO, or (b) performed by any other party but are services typically provided by a director or a NEO.
Timothy Ko – President, Chief Executive Officer, Corporate Secretary & Director
By an agreement dated November 3, 2020, Mr. Ko provided executive employee services to the Company and, in particular, his services as President and CEO, in consideration of $130,000 per annum payable in bi-weekly installments. The agreement was replaced by an employment agreement dated January 23, 2023, whereby Mr. Ko's salary was decreased to $60,000 per annum payable in bi-weekly installments. For actual amounts paid to Mr. Ko for the financial year ended November 30, 2024, see "Table of Compensation Excluding Compensation Securities".
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The agreement with Mr. Ko provides for termination:
(a) by Mr. Ko on providing 30 days written notice;
(b) by the Company without prior notice, if the termination is for just cause, as defined at common law; or
(c) by the Company without cause, on providing Mr. Ko with the greater of: (i) 30 days' notice or (ii) the minimum amount of notice required by the British Columbia Employment Standards Act, as amended or payment in lieu of such notice, and any other payments or entitlements required by the British Columbia Employment Standards Act, as amended.
The agreement with Mr. Ko does not provide for any change of control benefits. The agreement with Mr. Ko is in good standing.
Soo-Whan Kim – Interim Chief Financial Officer
By an agreement dated January 6, 2023, Mr. Kim provided consulting services to the Company and, in particular, his services as Interim CFO, in consideration of $2,500 per month. For actual amounts paid to Mr. Kim for the financial year ended November 30, 2024, see "Table of Compensation Excluding Compensation Securities".
The agreement with Mr. Kim provides for termination:
(a) by either party on providing 30 days' notice; or
(b) by the Company without prior notice, if the termination is for just cause on the grounds of material violation of the agreement and/or any act exposing the other party to liability for personal injury or damage to property.
The agreement with Mr. Kim does not provide for any change of control benefits. The agreement with Mr. Kim is in good standing.
Christopher Sumeet Babu Gondi – Director
By an agreement dated January 15, 2021, Mr. Gondi provides director services to the Company in consideration of $12,000 per annum payable quarterly. For actual amounts paid to Mr. Gondi for the financial year ended November 30, 2024, see "Table of Compensation Excluding Compensation Securities".
The agreement with Mr. Gondi provides for termination:
(a) automatically if Mr. Gondi is removed from office by a resolution of the shareholders;
(b) if Mr. Gondi becomes prohibited by law from acting as a director;
(c) if Mr. Gondi resigns in writing;
(d) if Mr. Gondi receives an order made against him;
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(e) if Mr. Gondi is unable to perform his duties to the reasonable satisfaction of the board of directors of the Company or by reason of mental incapacity;
(f) if Mr. Gondi is in breach of the Criminal Code (Canada);
(g) if Mr. Gondi is in breach of any terms set out in his agreement;
(h) if Mr. Gondi is incompetent, guilty of gross misconduct and/or any serious or persistent negligence or misconduct in respect of his obligations under his agreement; or
(i) if Mr. Gondi refuses after a written warning to carry out the duties reasonably and properly required of him under the terms of his appointment as set out in his agreement.
The agreement with Mr. Gondi does not provide for any change of control benefits. The agreement with Mr. Gondi is in good standing.
Andrew Hegle – Former Director & Former Chief Science Officer
By an agreement dated December 10, 2020, Mr. Hegle provided executive employee services to the Company and, in particular, his services as Chief Science Officer, in consideration of $120,000 per annum payable in bi-weekly installments. The agreement was replaced by an employment agreement dated January 23, 2023, for the same salary. Upon Mr. Hegle’s termination as CSO, the agreement was then further replaced by a director services agreement dated January 18, 2023, whereby Mr. Hegle was paid a fee of $12,000 per annum payable quarterly. For actual amounts paid to Mr. Hegle for the financial years ended November 30, 2023 and November 30, 2024, see “Table of Compensation Excluding Compensation Securities”.
The agreement with Mr. Hegle provided for termination under the same clauses as Mr. Gondi and did not provide for any change of control benefits.
The agreement with Mr. Hegle was terminated upon his resignation as a director on April 3, 2025.
Brandon Schwabe – Former Chief Financial Officer
By an agreement dated November 3, 2020, as amended November 16, 2021, Mr. Schwabe provided executive employee services to the Company and, in particular, his services as CFO, in consideration of $120,000 per annum payable in bi-weekly installments. For actual amounts paid to Mr. Schwabe for the financial years ended November 30, 2023 and November 30, 2024, see “Table of Compensation Excluding Compensation Securities”.
The agreement with Mr. Schwabe provided for termination:
(a) by Mr. Schwabe on providing 30 days written notice;
(b) by the Company without prior notice, if the termination is for just cause, as defined at common law; or
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(c) by the Company without cause, on providing Mr. Schwabe with 3 months' written notice plus 2 additional weeks' notice for each completed year of service up to a maximum of 8 months' notice, or payment in lieu of.
If within 6 months following a Change of Control of the Company, as defined in the agreement, the Company terminated Mr. Schwabe's employment without just cause pursuant to the agreement, the Company would have had to:
(a) pay the Employee in lieu of notice pursuant to section (C) above, either through continuing salary, or, in the Company's sole discretion, as a lump sum (the "Severance Payment"); and
(b) in addition to the Severance Payment, pay Mr. Schwabe 6 months' salary through continuing salary, or, in the Company's sole discretion, as a lump sum.
The agreement with Mr. Schwabe was terminated on January 6, 2023.
Ruth Chun – Former Director
By an agreement dated November 5, 2020, Ms. Chun provided director services to the Company in consideration of $16,000 per annum payable in quarterly installments and services on the Audit Committee and Compensation Committee in consideration of $5,000 per annum. For actual amounts paid to Ms. Chun for the financial years ended November 30, 2023 and November 30, 2024, see "Table of Compensation Excluding Compensation Securities".
The agreement with Ms. Chun provided for termination upon the same terms as the foregoing agreements with Mr. Gondi and Mr. Hegle and did not provide for any change of control benefits.
The agreement with Ms. Chun was terminated upon her resignation as a director on February 28, 2023.
Oversight and Description of Director and Named Executive Officer Compensation
Compensation Committee
The Compensation Committee of the Company has the responsibility of determining the compensation for the NEOs, directors and other senior management and recommending to the Board for approval. During the Company's financial year ended November 30, 2024, the Compensation Committee was comprised of Timothy Ko, Christopher Sumeet Babu Gondi, and Andrew Hegle. Mr. Gondi is considered independent in accordance with National Instrument 52-110 ("NI 52-110). Mr. Ko is considered non-independent due to his role as an executive officer of the Company. Mr. Hegle is considered non-independent due to his former role as an executive officer of the Company.
The Company's compensation objectives include the following:
- to assist the Company in attracting and retaining highly-qualified individuals;
- to create among directors, officers, consultants and employees a sense of ownership in the Company and to align their interests with those of the shareholders; and
- to ensure competitive compensation that is also financially affordable for the Company.
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The compensation program is designed to provide competitive levels of compensation. The Company recognizes the need to provide a total compensation package that will attract and retain qualified and experienced executives as well as align the compensation level of each executive to that executive's level of responsibility. In general, the Company's NEOs may receive compensation that is comprised of three components:
- Salary, wages or contractor payments;
- Stock option grants; and/or
- Bonuses.
The objective and reason for this system of compensation is to allow the Company to remain competitive compared to its peers in attracting experienced personnel. The base salary of an NEO is intended to attract and retain executives by providing a reasonable amount of non-contingent remuneration.
The base salary review of each NEO takes into consideration the current competitive market conditions, experience, proven or expected performance, and the particular skills of the NEO. The Compensation Committee relies on the general experience of its members in setting base salary amounts.
Stock option grants are designed to reward the NEOs and directors for success on a similar basis as the shareholders of the Company, although the level of reward provided by a particular stock option grant is dependent upon the volatile stock market.
Any bonuses paid to the NEOs are allocated on an individual basis related to the review by the Compensation Committee of the work planned during the year and the work achieved during the year. The bonuses are paid to reward work done above the base level of expectations set by the base salary, wages or contractor payments.
Pension Disclosure
The Company has no pension plans that provide for payments or benefits to any NEO at, following or in connection with retirement. The Company also does not have any deferred compensation plans relating to any NEO.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets out information on the Company's equity compensation plans under which common shares are authorized for issuance as of November 30, 2024.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, RSUs, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans |
|---|---|---|---|
| Equity compensation plans approved by securityholders | 140,000 | $6.28 | 450,892 (combined with all plans) |
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| Equity compensation plans not approved by securityholders | Nil | N/A | 450,892 (combined with all plans) |
|---|---|---|---|
| Total | 140,000 | 450,892 |
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No executive officer, director, employee, former executive officer, former director, former employee, proposed nominee for election as a director, or associate of any such person has been indebted to the Company or its subsidiaries at any time since the commencement of the Company's last completed financial year. No guarantee, support agreement, letter of credit or other similar arrangement or understanding has been provided by the Company or its subsidiaries at any time since the beginning of the most recently completed financial year with respect to any indebtedness of any such person.
MANAGEMENT CONTRACTS
During the Company's most recently completed financial year ended November 30, 2024, there were no management functions of the Company, which were to any substantial degree performed by a person other than a director or senior officer of the Company.
CORPORATE GOVERNANCE
National Policy 58-201 – Corporate Governance Guidelines ("NP 58-201") establishes corporate governance guidelines which apply to all public companies. The Company has reviewed its own corporate governance practices in light of these guidelines. In certain cases, the Company's practices comply with the guidelines. However, the Board considers that some of the guidelines are not suitable for the Company at its current stage of development. Therefore, certain guidelines under NP 58-201 have not been adopted. The Company will continue to review and implement the corporate governance guidelines set out in NP 58-201 as the business of the Company progresses.
The Board of Directors
Independence of the Board of Directors
The Company's Board consists of three (3) directors, two (2) of whom are independent based upon the tests for independence set forth in NI 52-110. Christopher Sumeet Babu Gondi and Harrison Newlands do not have any other material relationship to the Company that would interfere with their ability to act in the best interests of the Company and are considered to be independent directors. Timothy Ko, CEO & President, would not be considered an independent director as he has been an executive officer of the Company in the last three years.
Directorship with Other Reporting Issuers
Timothy Ko is presently a director for the following reporting issuers: Naughty Ventures Corp. and Metal Source Mining Inc. No other directors of the Company are presently directors with other reporting issuers.
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Orientation and Continuing Education
The Company does not provide a formal orientation and education program for new directors. However, any new directors will be given: (a) the opportunity to familiarize themselves with the Company, the current directors and members of management; (b) copies of recently publicly filed documents of the Company, the Company's internal financial information; (c) access to technical experts and consultants; and (d) a summary of significant corporate and securities legislation.
Board members are encouraged to communicate with management, auditors and technical consultants to keep themselves current with industry trends and developments, and with changes in legislation, and are encouraged to attend related industry seminars in relation to the Company's operations. Board members have full access to the Company's records.
Ethical Business Conduct
The Board encourages and promotes an overall culture of ethical business conduct by promoting compliance with applicable laws, rules and regulations, providing guidance to Management to help them recognize and deal with ethical issues, promoting a culture of open communication, honesty and accountability and ensuring awareness of disciplinary action for violations of ethical business conduct. While both the Management and the Board are committed to ensuring the ethical operation of the Company's business, the Company does not at present have a formal code of ethics.
Nomination of Directors
The Compensation Committee is responsible for identifying individuals qualified to become new Board members and recommending to the Board new director nominees for the next annual meeting of the shareholders.
New nominees must have a track record in general business management, special expertise in an area of strategic interest to the Company, the ability to devote the time required, show support for the Company's mission and strategic objectives, and a willingness to serve.
Compensation
The Compensation Committee is responsible for recommending to the Board for approval, the compensation paid to directors and executive officers and establishing and reviewing incentive plans for directors, officers and management. For further details, see "Oversight and Description of Director and NEO Compensation".
Committees of the Board of Directors
The Board currently has three standing committees, namely the Audit Committee, the Compensation Committee and the Disclosure Committee.
The Disclosure Committee is comprised of three directors: Christopher Sumeet Babu Gondi, Timothy Ko, and Harrison Newlands. The Disclosure Committee is responsible for carrying out the mandate set out in the Disclosure, Confidentiality and Insider Trading Policy (the "DCIT Policy"). The purpose of the DCIT Policy is to ensure that communications to the investing public about the Company are made in
accordance with all applicable legal and regulatory requirements, including National Instrument 51-201, "Disclosure Standards".
Assessments
The effectiveness of the Board as a whole, any committee of the Board and individual directors is assessed on an ongoing basis by the Board and senior management.
Liability Insurance
The Company has purchased, at its expense, directors' and officers' liability insurance for the protection of its directors and officers against liability incurred by them in their capacities as directors and officers of the Company and its subsidiaries.
Director Term Limits
The Company currently has not adopted a policy with respect to the term limits for directors. While term limits can help ensure the Board gains fresh perspective, imposing this restriction means the Board would lose the contributions of longer serving directors who have developed a deep knowledge and understanding of the Company over time. The Board does not believe that long tenure impairs a director's ability to act independently of Management.
Diversity and Inclusion
The Company's senior Management and members of the Board have varying backgrounds and expertise and were selected on the belief that the Company and its stakeholders would benefit from such a broad range of talent and cumulative experience. The Board considers merit as the essential requirement for board and executive appointments, and as such, it has not adopted any specific target number or percentage, or a range of target numbers or percentages, respecting the representation of women, Indigenous peoples, persons with disabilities, or members of visible minorities (collectively, "member of a designated group") on the Board or in senior Management roles.
The Company has not adopted a written diversity policy and seeks to attract and maintain diversity at the executive and Board levels informally through the recruitment efforts of Management in discussion with directors prior to proposing nominees to the Board as a whole for consideration. Although the level of representation of members of designated groups is one of the many factors taken into consideration in making Board and executive officer appointments, emphasis is placed on hiring or advancing the most qualified individuals. As of the date of this Circular, two (2) members of the Board or in senior Management roles are members of a designated group.
AUDIT COMMITTEE AND RELATIONSHIP WITH AUDITOR
Audit Committee Charter
Pursuant to the Canada Business Corporations Act and NI 52-110, the Company is required to have an audit committee. A copy of the Company's Audit Committee Charter is set out in Schedule "A" hereto.
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Composition of the Audit Committee
As at the date of this Circular, the following are the members of the Company's audit committee (the "Audit Committee"):
| Name | Independent | Financially Literate |
|---|---|---|
| Christopher Sumeet Babu Gondi (Chair) | Yes | Yes |
| Timothy Ko | No | Yes |
| Harrison Newlands | Yes | Yes |
Relevant Education and Experience
The Board has determined that the committee members have the appropriate level of financial understanding and industry specific knowledge to be able to perform the duties of the position. Furthermore, the Board has determined that each member of the Audit Committee is financially literate as defined in NI 52-110.
Christopher Sumeet Babu Gondi is an independent director and Chair of the Audit Committee where he has deepened his understanding of accounting principles and has gained experience preparing, auditing, analyzing and evaluating the Company's financial statements.
Timothy Ko is a non-independent director and an Audit Committee member. Mr. Ko has a broad background of leading private ventures in the service sector, investor relations, retail and technology. Most recently from 2017 to 2019 he served as a director of Hyperbridge Technology, a company focused on the development of decentralized technologies that facilitate crowdfunding. Previous to that, Mr. Ko served as President of Acom Building Maintenance.
Harrison Newlands is an independent director and an Audit Committee member. Mr. Newlands has a diverse understanding of start-ups and capital markets, having invested, advised, and helped co-found dozens of mid-cap companies spanning close to a decade of experience in the industry. He started his career working on Bay Street as a Research Associate at MacNicol and Associates, thereafter he jumped into the fast growing cannabis industry, and was one of the co-founders of Fire & Flower, one of Canada's first retail focused cannabis companies, where he led its early growth and served as Director of Business Development. Shortly thereafter, he helped take the first EV company public in Canada, Taiga Motors, where he served as a strategic advisor.
As a result of their education and experience, each member of the Audit Committee has familiarity with, an understanding of, or experience in:
(a) the accounting principles used by the Company to prepare its financial statements, and the ability to assess the general application of those principles in connection with estimates, accruals and reserves;
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(b) reviewing or evaluating 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 reasonable be expected to be raised by the Company's financial statements; and
(c) an understanding of internal controls and procedures for financial reporting.
Audit Committee Oversight
Since the commencement of the Company's most recently completed financial year, the Company's Board has not failed to adopt a recommendation of the Audit Committee to nominate or compensate an external auditor.
Reliance on Certain Exemptions
Since the effective date of NI 52-110, the Company has not relied on the exemptions contained in sections 2.4 or 8 of NI 52-110. Section 2.4 provides an exemption from the requirement that the audit committee must pre-approve all non-audit services to be provided by the auditor, where the total amount of fees related to the non-audit services are not expected to exceed 5% of the total fees payable to the auditor in the financial year in which the non-audit services were provided. Section 8 permits a company to apply to a securities regulatory authority for an exemption from the requirements of NI 52-110, in whole or in part.
If and when required, the Company is relying upon the exemption in section 6.1 of NI 52-110, which exempts "venture issuers" from the requirements of Part 3 (Composition of Audit Committee) and Part 5 (Reporting Obligations) of 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. Subject to the requirements of NI 52-110, the engagement of non-audit services is considered by the Company's Board, and where applicable, the Audit Committee, on a case-by-case basis.
External Auditor Services Fees
The following table sets out the aggregate fees billed by the Company's external auditors in each of the last two financial years.
| Category of Fees | Year Ended November 30, 2023 | Year Ended November 30, 2024 |
|---|---|---|
| Audit Fees^{(1)} | $38,962 | $21,758 |
| Audit-Related Fees^{(2)} | Nil | Nil |
| Tax Fees^{(3)} | $44,200 | Nil |
| All Other Fees^{(4)} | Nil | Nil |
| Total | $83,162 | $21,758 |
Notes:
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(1) "Audit Fees" include fees necessary to perform the annual audit and quarterly reviews of the Company's financial statements and includes the fees of the Company's auditor. Audit fees also 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" include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
(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. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.
(4) "All Other Fees" include all other non-audit service.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The Company's auditor is Manning Elliott LLP. Manning Elliott LLP was first appointed as auditor of the Company on November 5, 2020. The Company's transfer agent and registrar is Endeavor Trust Corporation.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
For the purposes of this Circular, "informed person" means:
(a) a director or executive officer of the Company;
(b) a director or executive officer of a person or company that is itself an informed person or subsidiary of the Company;
(c) any person or company who beneficially owns, directly or indirectly, voting securities of the Company or who exercises control or direction over voting securities of the Company, or a combination of both, carrying more than 10% of the voting rights attached to all outstanding voting securities of the Company, other than voting securities held by the person or company as underwriter in the course of a distribution; and
(d) the Company if it has purchased, redeemed or otherwise acquired any of its own securities, for so long as it holds any of its securities.
The Company was a party to the following material transactions with informed persons:
(a) certain of the directors and executive officers of the Company may be paid pursuant to written employment agreements or consulting agreements, or receive directors' fees or wages. See subheading "Employment, Consulting and Management Agreements or Arrangements" under the heading "Statement of Executive Compensation"; and
(b) directors and officers of the Company have been granted stock options under the Company's Stock Option Plan and Restricted Share Units under the Company's Restricted Share Unit Plan and
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will continue to be eligible to be granted stock options under the Stock Option Plan as well as Restricted Share Units under the Company's Restricted Share Unit Plan.
Other than as disclosed above and elsewhere in this Circular, no informed person, no proposed director of the Company and no associate or affiliate of any such informed person or proposed director, has any material interest, direct or indirect, in any material transaction since the commencement of the Company's last completed financial year or in any proposed transaction, which, in either case, has materially affected or will materially affect the Company or any of its subsidiaries.
ADDITIONAL INFORMATION
Additional information relating to the Company is filed on SEDAR+ and can be accessed on the internet at www.sedarplus.ca.
Financial information is provided in the Company's comparative financial statements and management discussion and analysis ("MD&A") for the financial year ended November 30, 2024. The Shareholders may request copies of such financial statements and MD&A by mailing a request to Entheon Biomedical Corp. at 999 West Broadway Street, Suite 720, Vancouver, BC V5Z 1K5.
DIRECTORS' APPROVAL
The contents and sending of this Circular have been approved by the directors of the Company.
DATED the 13th day of November, 2025.
(Signed) "Timothy Ko"
Timothy Ko
President, Chief Executive Officer and Corporate Secretary
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Schedule "A"
Audit Committee Charter
ENTHEON
Schedule “A”
ENTHEON BIOMEDICAL CORP.
(the "Company")
AUDIT COMMITTEE CHARTER
- Mandate and Purpose of the Committee
The Audit Committee (the "Committee") of the board of directors (the "Board") of the Company is a standing committee of the Board whose primary function is to assist the Board in fulfilling its oversight responsibilities relating to:
(a) the integrity of the Company's financial statements;
(b) the Company's compliance with legal and regulatory requirements, as they relate to the Company's financial statements;
(c) the qualifications, independence and performance of the Company's auditor;
(d) internal controls and disclosure controls;
(e) the performance of the Company's internal audit function;
(f) consideration and approval of certain related party transactions; and
(g) performing the additional duties set out in this Charter or otherwise delegated to the Committee by the Board.
- Authority
The Committee has the authority to:
(a) engage and compensate independent counsel and other advisors as it determines necessary or advisable to carry out its duties; and
(b) communicate directly with the Company's auditor.
The Committee has the authority to delegate to individual members or subcommittees of the Committee.
- Composition and Expertise
The Committee shall be composed of a minimum of three members, each of whom is a director of the Company. The majority of the Committee's members must not be officers or employees of the Company or an affiliate of the Company.
Committee members shall be appointed annually by the Board at the first meeting of the Board following each annual meeting of shareholders. Committee members hold office until the next annual meeting of shareholders or until they are removed by the Board or cease to be directors of the Company.
The Board shall appoint one member of the Committee to act as Chairman of the Committee. If the Chairman of the Committee is absent from any meeting, the Committee shall select one of the other members of the Committee to preside at that meeting.
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4. Meetings
Any member of the Committee or the auditor may call a meeting of the Committee. The Committee shall meet at least four times per year and as many additional times as the Committee deems necessary to carry out its duties. The Chairman shall develop and set the Committee's agenda, in consultation with other members of the Committee, the Board and senior management.
Notice of the time and place of every meeting shall be given in writing to each member of the Committee, at least 72 hours (excluding holidays) prior to the time fixed for such meeting. The Company's auditor shall be given notice of every meeting of the Committee and, at the expense of the Company, shall be entitled to attend and be heard thereat. If requested by a member of the Committee, the Company's auditor shall attend every meeting of the Committee held during the term of office of the Company's auditor.
A majority of the Committee who are not officers or employees of the Company or an affiliate of the Company shall constitute a quorum. No business may be transacted by the Committee except at a meeting of its members at which a quorum of the Committee is present in person or by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously. Business may also be transacted by the unanimous written consent resolutions of the members of the Committee, which when so approved shall be deemed to be resolutions passed at a duly called and constituted meeting of the Committee.
The Committee may invite such directors, officers and employees of the Company and advisors as it sees fit from time to time to attend meetings of the Committee.
The Committee shall meet without management present whenever the Committee deems it appropriate.
The Committee shall appoint a Secretary who need not be a director or officer of the Company. Minutes of the meetings of the Committee shall be recorded and maintained by the Secretary and shall be subsequently presented to the Committee for review and approval.
5. Committee and Charter Review
The Committee shall conduct an annual review and assessment of its performance, effectiveness and contribution, including a review of its compliance with this Charter. The Committee shall conduct such review and assessment in such manner as it deems appropriate and report the results thereof to the Board.
The Committee shall also review and assess the adequacy of this Charter on an annual basis, taking into account all legislative and regulatory requirements applicable to the Committee, as well as any guidelines recommended by regulators or the Canadian Securities Exchange and shall recommend changes to the Board thereon.
6. Reporting to the Board
The Committee shall report to the Board in a timely manner with respect to each of its meetings held. This report may take the form of circulating copies of the minutes of each meeting held.
7. Duties and Responsibilities
(a) Financial Reporting
The Committee is responsible for reviewing and recommending approval to the Board of the Company's annual and interim financial statements, any auditor's report thereon, MD&A and related news releases, before they are published.
The Committee is also responsible for:
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(i) being satisfied that adequate procedures are in place for the review of the Company's public disclosure of financial information extracted or derived from the Company's financial statements, other than the public disclosure referred to in the preceding paragraph, and for periodically assessing the adequacy of those procedures;
(ii) engaging the Company's auditor to perform a review of the interim financial statements and receiving from the Company's auditor a formal report on the auditor's review of such interim financial statements;
(iii) discussing with management and the Company's auditor the quality of applicable accounting principles and financial reporting standards, not just the acceptability of thereof;
(iv) discussing with management any significant variances between comparative reporting periods; and
(v) in the course of discussion with management and the Company's auditor, identifying problems or areas of concern and ensuring such matters are satisfactorily resolved.
(b) Auditor
The Committee is responsible for recommending to the Board:
(i) the auditor to be nominated for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Company; and
(ii) the compensation of the Company's auditor.
The Company's auditor reports directly to the Committee. The Committee is directly responsible for overseeing the work of the Company's auditor engaged for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the Company's auditor regarding financial reporting.
(c) Relationship with the Auditor
The Committee is responsible for reviewing the proposed audit plan and proposed audit fees. The Committee is also responsible for:
(i) establishing effective communication processes with management and the Company's auditor so that it can objectively monitor the quality and effectiveness of the auditor's relationship with management and the Committee;
(ii) receiving and reviewing regular feedback from the auditor on the progress against the approved audit plan, important findings, recommendations for improvements and the auditor's final report;
(iii) reviewing, at least annually, a report from the auditor on all relationships and engagements for non-audit services that may be reasonably thought to bear on the independence of the auditor; and
(iv) meeting in camera with the auditor whenever the Committee deems it appropriate.
(d) Accounting Policies
The Committee is responsible for:
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(i) reviewing the Company's accounting policy note to ensure completeness and acceptability with applicable accounting principles and financial reporting standards as part of the approval of the financial statements;
(ii) discussing and reviewing the impact of proposed changes in accounting standards or securities policies or regulations;
(iii) reviewing with management and the auditor any proposed changes in major accounting policies and key estimates and judgments that may be material to financial reporting;
(iv) discussing with management and the auditor the acceptability, degree of aggressiveness/conservatism and quality of underlying accounting policies and key estimates and judgments; and
(v) discussing with management and the auditor the clarity and completeness of the Company's financial disclosures.
(e) Risk and Uncertainty
The Committee is responsible for reviewing, as part of its approval of the financial statements:
(i) uncertainty notes and disclosures; and
(ii) MD&A disclosures.
The Committee, in consultation with management, will identify the principal business risks and decide on the Company's "appetite" for risk. The Committee is responsible for reviewing related risk management policies and recommending such policies for approval by the Board. The Committee is then responsible for communicating and assigning to the applicable Board committee such policies for implementation and ongoing monitoring.
The Committee is responsible for requesting the auditor's opinion of management's assessment of significant risks facing the Company and how effectively they are managed or controlled.
(f) Controls and Control Deviations
The Committee is responsible for reviewing:
(i) the plan and scope of the annual audit with respect to planned reliance and testing of controls; and
(ii) major points contained in the auditor's management letter resulting from control evaluation and testing.
The Committee is also responsible for receiving reports from management when significant control deviations occur.
(g) Compliance with Laws and Regulations
The Committee is responsible for reviewing regular reports from management and others (e.g. auditors) concerning the Company's compliance with financial related laws and regulations, such as:
(i) tax and financial reporting laws and regulations;
(ii) legal withholdings requirements;
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(iii) environmental protection laws; and
(iv) other matters for which directors face liability exposure.
(h) Related Party Transactions
All transactions between the Company and a related party (each a "related party transaction"), other than transactions entered into in the ordinary course of business, shall be presented to the Committee for consideration.
The term "related party" includes (i) all directors, officers, employees, consultants and their associates (as that term is defined in the Securities Act (British Columbia), as well as all entities with common directors, officers, employees and consultants (each "general related parties"), and (ii) all other individuals and entities having beneficial ownership of, or control or direction over, directly or indirectly securities of the Company carrying more than 10% of the voting rights attached to all of the Company's outstanding voting securities (each "10% shareholders").
Related party transactions involving general related parties which are not material to the Company require review and approval by the Committee. Related party transactions that are material to the Company or that involve 10% shareholders require approval by the Board, following review thereof by the Committee and the Committee providing its recommendation thereon to the Board.
- Non-Audit Services
All non-audit services to be provided to the Company or its subsidiary entities by the Company's auditor must be pre-approved by the Committee.
- Submission Systems and Treatment of Complaints
The Committee is responsible for establishing procedures for:
(a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and
(b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
The Committee is responsible for reviewing complaints and concerns that are brought to the attention of the Chairman of the Audit Committee and for ensuring that any such complaints and concerns are appropriately addressed. The Committee shall report quarterly to the Board on the status of any complaints or concerns received by the Committee.
- Procedure For Reporting Of Fraud Or Control Weaknesses
Each employee is expected to report situations in which he or she suspects fraud or is aware of any internal control weaknesses. An employee should treat suspected fraud seriously, and ensure that the situation is brought to the attention of the Committee. In addition, weaknesses in the internal control procedures of the Company that may result in errors or omissions in financial information, or that create a risk of potential fraud or loss of the Company's assets, should be brought to the attention of both management and the Committee.
To facilitate the reporting of suspected fraud, it is the policy of Company that the employee (the "whistleblower") has anonymous and direct access to the Chairman of the Audit Committee. Should a new Chairman be appointed prior to the updating of this document, the current Chairman will ensure that the whistleblower is able to reach the new Chairman in a timely manner. In the event that the Chairman of the Audit Committee cannot be reached, the whistleblower should contact the Chairman of the Board.
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In addition, it is the policy of the Company that employees concerned about reporting internal control weaknesses directly to management are able to report such weaknesses to the Committee anonymously. In this case, the employee should follow the same procedure detailed above for reporting suspected fraud.
11. Hiring Policies
The Committee is responsible for reviewing and approving the Company's hiring policies regarding partners, employees and former partners and employees of the present and former auditor of the Company.