EXMceuticals Inc. — Annual Report 2020

Dec 29, 2020

EXMCEUTICALS INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2020 AND 2019

(Expressed in Canadian Dollars)

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of EXMceuticals Inc.

Opinion

We have audited the consolidated financial statements of EXMceuticals Inc. (the "Company"), which comprise the consolidated statements of financial position as at June 30, 2020 and 2019, and the consolidated statements of comprehensive loss, cash flows and changes in shareholders' equity (deficiency) for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 to the financial statements which describes events or conditions that indicate a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Rakesh Patel*.*

DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, BC

December 23, 2020

EXMCEUTICALS INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars)

	Notes	June 30,2020	June 30,2019
ASSETS
Current
Cash		$264,752	$139,865
Prepaids and deposits		10,899	329,556
Receivables		82,078	129,639
Share subscriptions receivable	12	1,255	131,255
Total current assets		358,984	730,315
Non-current
Property and equipment	6	801,326	935,546
Intangible assets	7	-	9,000
Right of use asset	8	44,816	-
Due from related parties	13	46,520	111,749
Advances	9	-	671,760
Total assets		$1,251,646	$2,458,370
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued liabilities	10, 13	$2,856,004	$933,567
Due to related parties	13	713,990	722,922
Obligation to issue shares	11	130,595	-
Lease liability	8	15,634	-
Loans payable	11, 13	4,577,185	415,540
Total current liabilities		8,293,408	2,072,029
Long-term liabilities
Lease liability	8	33,073	-
Loan payable	11	276,951	-
Total long-term liabilities		310,024	-
Total liabilities		8,603,432	2,072,029
Shareholders' equity (deficiency)
Share capital	12	12,183,334	11,491,843
Commitment to issue shares	12	591,680	-
Equity reserves	12	928,604	107,965
Shares subscribed	12	94,500	6,500
Accumulated other comprehensive loss		(5,871)	(4,453)
Deficit		(20,676,417)	(11,075,366)
Shareholders' equity (deficiency) before non-controlling interest		(6,884,170)	526,489
Non-controlling interest	14	(467,616)	(140,148)
Total shareholders' equity (deficiency)		(7,351,786)	386,341
Total liabilities and shareholders' equity (deficiency)		$1,251,646	$2,458,370

Nature and continuance of operations (Note 1) Contingency (Note 18) Subsequent events (Note 20)

EXMCEUTICALS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Expressed in Canadian Dollars)

		Years Ended June 30,
	Notes	2020	2019
EXPENSES
Accounting and audit		$264,405	$78,937
Advertising and promotion		468,030	563,286
Consulting fees	13	3,382,230	1,571,892
Depreciation	6, 8	139,101	-
Foreign exchange loss		33,479	1,905
Insurance		82,386	48,565
Interest expense	8, 11	553,489	13,652
Legal		408,627	448,801
Management fees	13	64,420	158,982
Office and administration		52,994	145,173
Operating expenses		467,497	629,515
Project development costs	9	39,594	617,166
Rent		131,025	29,213
Share-based compensation	12	1,019,111	-
Transfer agent and filing fees		65,435	16,447
Travel		356,925	403,774
Wages and benefits		916,589	159,895
Net loss before other items		(8,445,337)	(4,887,203)
Other items
Gain on sale of subsidiary	5	151,048	-
Gain on settlement of related party debt	13	117,594	-
Gain on settlement of loan payable	11	108,000	-
Impairment of intangible asset	7	(9,000)	-
Impairment of property and equipment	6	(1,108,175)	-
Interest income		703	-
Listing fee	3	-	(4,875,508)
Write-down of advances	9	(671,760)	-
Write-down of prepaids and deposits		(4,000)	-
Write-down of receivables		(67,121)	-
Transaction cost	4	-	(66,835)
		(1,482,711)	(4,942,343)
Net loss for the year		(9,928,048)	(9,829,546)
Other comprehensive loss
Currency translation adjustment		(1,418)	(4,453)
Net comprehensive loss for the year		$ (9,929,466)	$ (9,833,999)
Net loss attributable to:
Non-controlling interest	14	$(675,350)	$(140,148)
Shareholders of the Company		(9,252,698)	(9,689,398)
		$ (9,928,048)	$ (9,829,546)
Loss per common share – basic and diluted		$(0.25)	$(0.43)
Weighted average number of
common shares outstanding – basic and diluted		39,577,973	22,800,613

EXMCEUTICALS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars)

	Years ended June 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year	$(9,928,048)	$	(9,829,546)
Items not involving cash:
Accretion of discount on loans payable	168,602		-
Accrued interest expense	384,887		12,189
Depreciation	139,101		-
Impairment of intangible asset	9,000		-
Impairment of property and equipment	1,108,175		-
Gain on settlement of loans payable	(108,000)		-
Gain on settlement of related party debt	(117,594)		-
Listing fee	-		4,875,508
Share-based compensation	1,019,111		-
Shares issued for services	731,060		-
Write-down of advances	671,760		-
Write-down of prepaids and deposits	4,000		-
	67,121		-
Write-down of receivables
Changes in non-cash working capital:
Receivables	47,561		(128,713)
Prepaids and deposits	314,657		(325,556)
Due to related parties	146,770		(111,749)
Accounts payable and accrued liabilities	1,984,435		325,067
Net cash used in operating activities	(3,357,402)		(5,182,800)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired on RTO	-		2,381
Acquisition of property and equipment	(1,097,293)		(812,976)
Advances	-		(671,760)
Net cash used in investing activities	(1,097,293)		(1,482,355)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares	5,000		3,588,476
Share issuance costs	(97,267)		(332,075)
Shares subscribed	88,000		6,500
Warrants exercised	80,700		42,499
Proceeds from loan payable	4,523,598		432,401
Proceeds from related party	-		595,956
Lease payments	(19,031)		-
Shares subscriptions received prior to RTO	-		2,328,251
Net cash provided by financing activities	4,581,000		6,662,008
Effect of currency translation adjustment	(1,418)		(4,453)
Change in cash	124,887		(7,600)
Cash, beginning of year	139,865		147,465
Cash, end of year	$264,752	$	139,865

Refer to Note 15 for supplemental cash flow disclosures.

EXMCEUTICALS INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) (Expressed in Canadian Dollars)

	ShCitalareap					Aclatedcumu
	Number	Amntou	CoitmtmmenIsstoueShares	SharesSubscribed	EquityReserves	OtherCorehsivmpeneLoss	ficitDe	Nollintron-congIntstere	Total
302018BalanJuce,ne,	1,000,000	$986,807	$	$-	$-	$-	$(1,385,968)	$	$(399,161)
Shired of lel pntares acqugaare	(1,000,000)		-	--	-	-	-	-	-
Equitf EXMCy o	3,630547,	2,424,145		--	368,628	-	-	-	2,792,773
Elimiionofthe bookluenatva
ofEXMC's eityqu	-	(2,424,145	)	5006,-	(368,628)	-	-	-	(2,78273)6,
Shs isd oTO(3)n RNotearesue	291,85876,	4,700,54	5	--	-	-	-	-	4,700,545
Prilacs (No12)vatenttee pem	5,617545,	6,047,98	2	--	-	-	-	-	6,047,982
Finders' sharissuedRTO (No3and12)teseson	148809,	12500,	0	--	-	-	-	-	125000,
Fair valuf find' ws (No12)anttee oersarr	-	(78915),		--	78915,	-	-	-	-
ir valuf special ws (11)FaNoanttee oarr	-		-	--	29050,	-	-	-	29050,
Shissts (No12)teareuancecos	-	5)(33207,		--	-	-	-	-	5)(33207,
Waised (No12)ntsterraexerc	71427,	4249,	9	--	-	-	-	-	42499,
andrehiveloLosscompensss	-		-	--	-	(4,453)	(9,689,398)	(140148),	(9,833,999)
BalanJu302019ce,ne,	39230,186,	11,491,843		6,50-	0107965,	(4,453)	(11,075,366)	(140148),	386,341
ised (WaNo12)ntsterraexerc	163570,	80699,		--	-	-	-	-	80699,
Shs isd fdebt (No12)tearesueor	75554,	101,99	8	--	-	-	-	-	101,998
Shs isd fvic(No12)tearesueorseres	1,200,000	731,06	0	--	-	-	-	-	731,060
Shned(12)Noturtotreteares reasury	(148809),	(125000),		--	-	-	-	-	(125000),
Shs isstsaresuanceco		(97266),		--	-	-	-	-	(97266),
Coitmisssha(No12)enttotemmueres	-		591,680-		-	-	-	-	591,680
Shbscribedforivalac(te 20)Note pentares suprem	-		-	88000-,	-	-	-	-	88000,
ir valuf special ws (11)FaNoanttee oarr	-		-	--	393,208	-	-	-	393,208
Sh-basedati(No12)tearecompenson	-		-	--	427,431	-	-	-	427,431
Reiveadjusadtiof IFRS16(No2)troacttmentteonopn o	-		-	--	-	-	(471)	-	(471)
Acisitionofrollinintst (No14)onttequnon-cgere	-		-	--	-	-	(347882),	347882,	-
andrehiveloLosscompensss	-		-	--	-	(1,418)	(252,8)9,69	(675,350)	(92466)9,9,
BalanJu302020ce,ne,	40520,501,	$12,18333,	$4591,68	0$94500,	$928,604	$(5,871)	$(20676,417),	$(467,616)	$(7,351,786)

1. NATURE AND CONTINUANCE OF OPERATIONS

EXMceuticals Inc. (the "Company" or "EXMC") was incorporated on October 9, 2008 under the laws of British Columbia. The Company's common shares were listed on the TSX Venture Exchange ("TSX-V") under the symbol "ORR". During the year ended June 30, 2019, the Company announced that effective at the close of business on November 6, 2018 its common shares were delisted from the TSX-V at the request of the Company. The Company submitted a listing application to list its shares on the Canadian Securities Exchange (the "CSE") and the Company's shares commenced trading on the CSE on January 31, 2019 under the trading symbol "EXM".

The Company's head office and principal address is located at 421 – 7th Avenue SW, 30th Floor, Calgary, AB, Canada.

These consolidated financial statements have been approved by the Board of Directors on December 23, 2020.

On June 5, 2018, the Company entered into a Share Exchange Agreement (the "Agreement") with EXM Holdings Inc. (formerly EXMceuticals Inc. and formerly "Afri-Can Cannabis Holdings Ltd.") ("EXM Holdings"), a private company incorporated under the Business Corporation Act (BC) and its wholly-owned subsidiary EXM Pharmaceutical and Therapeutical Farming Ltd. ("EXMP"), a company incorporated in Dominica. Pursuant to the Agreement, the Company consolidated its issued and outstanding common shares on a 1:7 basis and acquired all of the securities of EXM Holdings in consideration of 29,761,858 post-consolidated common shares of the Company. After the completion of the transaction, the Company changed its name to EXMceuticals Inc.

Upon completion of the transaction, the Company carried on the business of EXM Holdings which is to plan to operate a Pharmaceutical grade refining facility in Portugal to produce cannabinoid ingredients for the international market. The transaction resulted in the shareholders of EXM Holdings acquiring control of the Company. Therefore, the transaction was accounted for as a reverse take-over ("RTO"). The closing of the transaction was subject to the terms set forth in the Agreement, the completion of a proposed financing and certain conditions being satisfied by both parties and approval by the CSE, which was all completed on January 31, 2019. As EXM Holdings was deemed to be the acquirer for accounting purposes, its assets and liabilities are included in the consolidated financial statements at their historical carrying values.

On December 31, 2019, the Company formally dissolved EXM Holdings. On February 10, 2020, the Company sold its wholly owned subsidiary EXMP. Refer to Note 5.

These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.

As at June 30, 2020, the Company had no income generating assets and is not able to finance day-to-day activities through operations. During the year ended June 30, 2020, the Company incurred a net loss of $9,928,048 (2019 - $9,829,546) and as of this date had a working capital deficit of $7,934,424 (2019 - $1,341,714) and an accumulated deficit of $20,676,417 (2019 - $11,075,366). Management's view is that the success of the Company is dependent upon successfully being able to obtain licensing to produce cannabis-based ingredients for the international market on a commercial basis which will allow it to finance its capital requirements and achieving profitable operations. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with cash on hand, issuance of common shares in private placements and loans from related parties as required.

1. NATURE AND CONTINUANCE OF OPERATIONS (Continued)

The outbreak of the novel strain of coronavirus, specifically identified as "COVID-19", has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Government and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company.

As a result of COVID-19, the Company has noted, or is expecting, the following impacts on the Company's operations including an increase in the difficulty of raising funding, difficulties building out production facilities in Portugal, sourcing quality cannabis-based ingredients, and difficulties in attracting new customers due to inability to attend tradeshows and conferences.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

These consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

Basis of Preparation and Significant Accounting Policies

These consolidated financial statements have been prepared on a historical basis and have been prepared using the accrual basis of accounting, except cash flow information. These consolidated financial statements are presented in Canadian dollars unless otherwise noted.

Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The principal subsidiaries of the Company, their activities and their geographic locations as at June 30, 2020 were as follows:

	Country of	Ownership
Entity	Incorporation	Interest	Principal Activity
EXMceuticals Inc.	Canada	100%	Holding company
EMX Management Ltd.	England	100%	Dormant
EXMceuticals Holdings B.V.	Netherlands	100%	Holding company
Ceuticals Farming Limited	Malawi	100%	Dormant
EXMceuticals Portugal, LDA	Portugal	100%	Cannabis processing
EXMceuticals Portugal II, Unipessoal Lda.	Portugal	100%	Cannabis processing
Prime Ranchers Limited	Uganda	70%	Cannabis production

Inter-company balances and transactions, and any unrealized income and expenses arising from inter-company transactions, are eliminated in preparing the consolidated financial statements.

Significant Estimates and Assumptions

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, profit and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if it affects both current and future periods.

Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the fair value measurements for financial instruments, the useful life of property and equipment, the recoverability and measurement of deferred tax assets and provisions for contingent liabilities.

Significant Judgments

The preparation of financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments in applying the Company's consolidated financial statements include:

• The assessment of the Company's ability to continue as a going concern and whether there are events or conditions that may give rise to significant uncertainty;
• The classification/allocation of expenditures as assets or operating expenses;
• Fair value measurements for financial instruments; and
• The measurement and recoverability of deferred tax assets.

Cash

Cash includes cash on deposit at banking institutions and legal trust accounts.

Property and Equipment

Property and equipment is initially recorded at cost, net of accumulated amortization and any accumulated impairment losses. Amortization is provided using the following methods at rates intended to depreciate the costs of the assets over their estimated use lives.

Asset	Method	Rate
Equipment	Declining balance	20%
Furniture and fixtures	Declining balance	20%
Leasehold improvements	Straight-line	TBD

Intangible Assets

Intangible assets are recognized and measured at cost. Intangible assets with finite useful lives are amortized using the straight-line method over the useful life of the asset. The Company conducts an annual assessment of the residual balances, useful lives and amortization methods being used for intangible assets and any changes arising from the assessment are applied by the Company prospectively. The Company has determined that the intangible assets related to the license outlined in Note 7 have indefinite lives. Intangibles with infinite lives are tested for impairment.

Foreign Currency Translation

The functional currency of the Company is measured using the currency of the primary economic environment in which the Company operates. The consolidated financial statements are presented in Canadian dollars which is the Company's functional and presentation currency.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive income to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive income. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

The Company's subsidiaries EXMceuticals Portugal, LDA and EXMceuticals Portugal II, Unipessoal Lda.'s functional currency is the Euro and its subsidiary Prime Ranchers Limited's functional currency is the US Dollar. The parent and the remaining subsidiaries' functional currency is the Canadian Dollar.

Share-based payments

The Company grants stock options to buy common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes Option Pricing Model and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods and services rendered.

Loss per Share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company. Diluted loss per share is calculated by the treasury stock method. Under the treasury stock method, the diluted loss per share is determined by adjusting the loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all options and warrants outstanding that may add to the total number of common shares. As at June 30, 2020 and 2019, the Company's diluted loss per share was the same as the basic loss per share as the effect of the stock options and warrants were anti-dilutive.

Income Taxes

Current Income Tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from and paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Income Tax

Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes related to the same taxable entity and the same taxation authority.

Financial Instruments

The following is the Company's accounting policy for financial instruments under IFRS 9:

(i) Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss ("FVTPL"), at fair value through other comprehensive income (loss) ("FVTOCI") or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company's business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL.

Financial Instruments (continued)

For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

The following table shows the classification under IFRS 9:

Financial assets / liabilities	New classification IFRS 9
Cash	FVTPL
Receivables	Amortized cost
Deposits	Amortized cost
Accounts payable	Amortized cost
Due to/from related parties	Amortized cost
Loans payable	Amortized cost
Advances	Amortized cost

(ii) Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of comprehensive loss in the period in which they arise.

Debt investments at FVTOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in Other Comprehensive Income ("OCI"). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss

Equity investments at FVTOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

(iii) Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the credit risk of the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Instruments (continued)

(iv) Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and/or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

Gains and losses on derecognition are generally recognized in profit or loss.

Impairment of non-financial assets

The carrying amount of the Company's non-financial assets (which include intangible assets and property and equipment) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

The recoverable amount of assets is the greater of an asset's fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. Any reversal of impairment cannot increase in the carrying value of the asset to an amount higher than the carrying amount that would have been determined as had no impairment loss been recognized in previous years.

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

Segment reporting

A segment is a distinguishable component of the Company that is engaged either in providing related products (business segment) and that is subject to risks and returns that are different from those of other segments. Segment information is presented in respect of the Company's business segments. The Company's primary format for segment reporting is based on business segments. The business segments are determined based on the Company's management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly other investments and related revenue, loans and borrowings and related expenses, corporate assets (primarily the Company's headquarters) and head office expenses. Segment capital expenditure is the total cost incurred during the period to acquire property, and equipment and intangible assets, other than goodwill.

New accounting standards adopted during the period

IFRS 16 – Leases ("IFRS 16")

This new standard replaces IAS 17 "Leases" and the related interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting is not substantially changed. The standard is effective for annual periods beginning on or after January 1, 2019. The Company has applied IFRS 16 effective July 1, 2019 using the retrospective method. Under this method, financial information will not be restated and will continue to be reported under the accounting standards in effect for those periods. The Company recognized a lease obligation related to its lease commitment for the lease of its lab in Lisbon, Portugal (Note 8). It was measured at present value of the remaining lease payments, discounted using the Company's incremental borrowing rate as at July 1, 2019. The associated right of use asset was measured at the lease obligation amount and on recognition realized an adjustment to the opening balance of deficit of €317 (CND$471) of the Company's wholly owned subsidiary EXMceuticals Portugal, LDA ("Portugal"). The Company will apply the following practical expedients permitted under the new standard: leases of low value will continue to be expensed as incurred and the Company will not apply any grandfathering practical expedients.

Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company's consolidated financial statements.

3. REVERSE TAKEOVER TRANSACTION

Upon completion of the transaction in Note 1, the shareholders of EXM Holdings acquired control of EXMC. Therefore, the transaction has been accounted for as an acquisition of EXMC by EXM Holdings. The transaction has been accounted for as a reverse take-over ("RTO"). The "Company" is defined as the consolidated entity, being the Resulting Issuer. As EXMC does not meet the definition of a business as defined by International Financial Reporting Standards ("IFRS") 3, it has been accounted for as a share-based payment transaction in accordance with IFRS 2. Although the consolidated statement of financial position and the number of shares issued are those of EXMC as a legal entity, the assets, liabilities and dollar amounts allocated to share capital are those of EXM Holdings.

In accordance with the Agreement (Note 1), EXMC issued 29,761,858 common shares for all of the issued and outstanding shares of EXM Holdings. The transaction is recognized in substance as if EXM Holdings had proceeded to the issuance of the Company's shares outstanding before the transaction in exchange for the net assets acquired. The following table provides details of the fair value of the consideration given and the fair value of the assets and liabilities acquired:

Consideration
Fair value of 29,761,858 common shares issuedFair value of outstanding stock options and warrantsFair value of finders' shares issued	$3,050,0001,650,545125,000
Total consideration value:	$4,825,545

3. REVERSE TAKEOVER TRANSACTION (Continued)

Identifiable assets acquired and liabilities assumed
Cash	$2,381
Loan receivable	250,000
Advances to EXM Holdings	2,760,639
Accounts payable and accrued liabilities	(559,159)
Due to related parties	(1,803)
Loans payable	(173,770)
Shares subscribed	(2,328,251)
	$(49,963)
Listing fee:	$4,875,508

The fair value of the common shares acquired by the shareholders of EXM Holdings exceeds the fair value of the assets acquired and liabilities assumed of EXMC. Because the Company cannot specifically identify any goods or services that relate to this excess, IFRS 2 requires that the difference is recognized in the determination of net loss as a listing fee.

The Company assumed 9,523 stock options exercisable at a price of $1.05 per share expiring on February 26, 2019. The fair value of the options was $2,284, estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions: risk-free interest rate - 1.91%; estimated life – 0.66 years; expected volatility - 112%; expected dividend yield - 0.00%; and forfeiture rate - 0.00%.

The Company assumed 1,114,286 warrants exercisable at a price of $0.35 per share expiring on June 16, 2020. The fair value of the warrants was $610,301, estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions: risk-free interest rate - 1.76%; estimated life – 1.38 years; expected volatility - 85%; expected dividend yield - 0.00%; and forfeiture rate - 0.00%.

The Company assumed 1,630,881 warrants exercisable at a price of $0.595 per share expiring on January 24, 2023. The fair value of the warrants was $1,037,960, estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions: risk-free interest rate - 1.77%; estimated life – 3.98 years; expected volatility - 104%; expected dividend yield - 0.00%; and forfeiture rate - 0.00%.

At June 30, 2018, the Company had received $250,000 in advances from EXMC, which was due at the earlier of February 21, 2019 or the date of the RTO. Interest was payable on the outstanding principal at a rate of 5% per annum and the advances were secured against the Company's present and subsequent acquired personal property and its ownership interest in EXMP. The fair value of the finders' shares was determined using the share price of the concurring private placement.

Pursuant to the RTO, the Company also issued 148,809 common shares of the Company with a fair value of $125,000 as finders' shares.

4. ACQUISITION OF PRIME RANCHERS LIMITED

On November 20, 2018, the Company entered into a Joint Venture Agreement ("Agreement"), through its whollyowned subsidiary EXMceuticals Holdings B.V., to acquire 70% of Prime Ranchers Limited ("PRL"). The purpose of the joint venture is to legally grow and harvest cannabis plants for subsequent processing into products, as well as to import and/or process on cannabis raw ingredients from other supply sources for later resale and export of the products, as well as to carry out other related activities such as research and development, consultancy, etc. ("Project"). The Company has agreed to provide, in a timely and adequate manner and in the form of loans or of lease, all necessary funds required to implement the Project once the Licenses and Permits have been obtained, among others for the purpose of acquiring or leasing the related equipment, seeds, buildings as well as other material required to grow, harvest, extract, process and export the Products.

As per the Agreement, the Company shall be liable to pay PRL the sum of two hundred thousand American Dollars (USD$200,000) as follows: (i) USD$50,000 upon transfer of 70% of the shares of PRL to the Company, (ii) USD$50,000 when PRL will have been granted all licences and permits to enter into the test phase of the Project, including acceptance by the competent authorities of the buildings and processing plant, and (iii) USD$100,000 upon successful completion of the test phase and once PRL will have been granted all licences and permits for large scale operations in Uganda and full implementation of the Project. On July 18, 2018, pursuant to the agreement, the Company paid $66,835 (USD$50,000) to the shareholders of PRL in exchange for 70% of the issued and outstanding shares of PRL. This transaction was accounted for as an acquisition of an asset with the purchase price paid over the net assets acquired being recognized as a transaction cost:

Total consideration paid	$ 66,835
Transaction cost	$ 66,835
Net assets acquired	$-

5. SALE OF EXM PHARMACEUTICALS AND THERAPEUTICAL FARMING LTD.

On February 10, 2020, the Company sold its 100% interest in EXMP to a former director for nominal proceeds of $1.

Calculation of Gain on Sale of Subsidiary
Amount owing from EXMP on date of sale:	$655,208
Net liabilities of EXMP on date of sale:
Accounts payable	(18,020)
Due to related parties	(133,028)
Due to EXMC	(655,208)
	(806,256)
Gain on Sale of Subsidiary:	$(151,048)

5. SALE OF EXM PHARMACEUTICALS AND THERAPEUTICAL FARMING LTD. (Continued)

In addition to the sale of EXMP, the Company also sold the following dormant entities to the same former director for nominal proceeds of $1 each:

	Country of	Ownership
Entity	Incorporation	Interest	Principal Activity
EXM Ceuticals Financials B.V.	Sint Maarten	100%	Dormant
EXM Ceuticals Farming B.V.	Sint Maarten	100%	Dormant
EXMceuticals Holdings B.V.	Sint Maarten	100%	Holding company

All assets and liabilities relating to these entities were transferred to EXMC or one of its subsidiaries prior to the sale.

6. PROPERTY AND EQUIPMENT

		Furniture	Leasehold
	Equipment	and Fixtures	Improvements	Total
	$	$	$	$
Cost:
Balance, June 30, 2018	47,771	-	-	47,771
Reclassification of deposits	74,799	-	-	74,799
Additions	591,151	11,162	210,663	812,976
Balance, June 30, 2019	713,721	11,162	210,663	935,546
Additions	828,820	3,731	264,743	1,097,294
Impairment	(632,769)	-	(475,406)	(1,108,175)
Balance, June 30, 2020	909,772	14,893	-	924,665
Accumulated Depreciation:
Balance, June 30, 2019 and 2018	-	-	-	-
Additions	122,378	961	-	123,339
Balance, June 30, 2020	122,378	961	-	123,339
Net Book Value:
As at June 30, 2019	713,721	11,162	210,663	935,546
As at June 30, 2020	787,394	13,932	-	801,326

During the year ended June 30, 2020, the Company purchased certain property and equipment for a total of $1,097,294 (2019 - $812,976) and impaired certain property and equipment for a total of $1,108,175 (2019 - $nil) as the Company curtailed its operations in Africa.

7. INTANGIBLE ASSETS

On May 12, 2017, the Company entered into an asset purchase agreement to which the Company acquired a 100% interest in EXMP. EXMP holds 70% of the rights to a cannabis license issued by the Democratic Republic of Congo ("DRC") and 70% of the rights to a land concession with an option to acquire additional land, located in the DRC. Pursuant to the asset purchase agreement, the Company issued 125,571 common shares valued at $9,000. The acquisition of EXMP was accounted for as an asset acquisition. As at June 30, 2020, the Company determined to abandon its projects in the DRC and recognized an impairment of $9,000 on the license.

8. RIGHT OF USE ASSET AND LEASE LIABILITY

The Company has a lease for the office and research facility in Portugal which is reflected on the balance sheet as a right-of-use asset and a lease liability. The Company expects the lease will be renewed annually such that the Company will occupy the premises until at least April 30, 2023.

Right of Use Asset:

Balance – July 1, 2019, on adoption of IFRS 16	$60,578
Depreciation	(15,762)
Balance – June 30, 2020	$44,816

Lease liability:

Balance – June 30, 2019	$61,050
Lease payments	(19,031)
Interest expense	6,688
Balance – June 30, 2020	48,707
Less: Current portion	(15,634)
Long-term portion	$33,073

9. ADVANCES

a) During the year ended June 30, 2017, EXMP, a fully-owned subsidiary of the Company, entered into a first memorandum of understanding ("MOU 2017") for the purpose of jointly participating and collaborating into a project consisting in the cultivation for export of psychotropic and non-psychotropic medical cannabis in the Kuba Kingdom, Mweka Territory, DRC ("Project"), based on the principles set out in the MOU 2017 and under definitive terms and conditions to be recorded in a final agreement between EXMP and COMEXAF Industries s.a.r.l. ("COMEXAF") and under a Joint Venture company to be owned by EXMP and COMEXAF per the terms specified in the MOU 2017.

During the year ended June 30, 2018, EXMP entered into a second memorandum of understanding ("MOU 2018") to extend the MOU 2017 for an additional year.

During the year ended June 30, 2019, EXMP entered into an extension of the MOU 2018 to extend the MOU 2018 for an additional year and to replace EXMP as the counterpart in the MOU 2018 with EXM Holdings Inc., another subsidiary of the Company. During the year ended June 30, 2019, the Company advanced $617,166 towards the Project which was recorded as project development costs on the statement of loss.

b) During the year ended June 30, 2019, the Company entered into a non-binding term sheet to acquire 100% of the shares in MM (Operations) Limited, an agro-processing business in Malawi. Pursuant to the terms of the term sheet, the Company agreed to pay USD$5,000,000 in cash and USD$25,000,000 in the form of a convertible note. As at December 31, 2019, the Company had advanced $671,760 (USD$500,000) as partial payment of the cash portion of the proposed transaction. On July 15, 2019, the Company entered into an amendment to the term sheet relating to the acquisition of MM (Operations) Limited and the Company has agreed to revise the terms as follows: USD$6,500,000 in cash and USD$25,000,000 in a convertible note.

During the year ended June 30, 2020, the Company decided not to pursue the acquisition of MM (Operations) Limited and wrote-off the advance of $671,760.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	June 30,	June 30,
	2020	2019
Trade payables	$2,691,784 $	883,567
Accrued liabilities	164,220	50,000
	$2,856,004 $	933,567

11. LOANS PAYABLE

Balance, June 30, 2018	$-
Principal of loans	432,401
Discount on loans payable	(29,050)
Interest expense	8,000
Accretion of discount on loans payable	4,189
Balance, June 30, 2019	415,540
Settlement of loan payable	(108,000)
Principal of loans	4,523,598
Discount on loans payable	(393,208)
Interest expense	378,199
Accretion of discount on loans payable	168,602
Reallocation of accrued interest to obligation to issue shares (Note 11(h))	(130,595)
Balance, June 30, 2020	4,854,136
Less: current portion of loans payable	(4,577,185)
Long-term portion of loans payable	$276,951

• a) During the year ended June 30, 2019, the Company received a loan from a third party for $100,000. The loan bears an interest charge of 8% to be paid in cash on the payment date, in addition to the principal. During the year ended June 30, 2019, the Company accrued $8,000 of interest on this loan. On July 12, 2020 the Company entered into a debt settlement agreement with the lender and recognized the full balance owing of $108,000 as gain on settlement of loan payable.
• b) During the year ended June 30, 2020, the Company received loan proceeds from the Chairman of the Company (the "Lender") totalling $267,599 (2019 - $332,401) as partial proceeds from a loan agreement signed on June 7, 2019 for total proceeds of $600,000. The loan bears interest of 10% per annum and matured on December 6, 2019.

As additional consideration, the Company also agreed to issue special warrants (the "Special Warrants") to the Lender to acquire up to 88,889 common shares (the "Special Warrant Shares") equal in value to 20% of the principal amount at a conversion rate of $1.35 per Special Warrant Share. Conversion of the Special Warrants is subject to the Lender subscribing for securities of the Company at an aggregate subscription price of no less than the principal amount of the loan (the "Qualifying Financing"). Upon closing of a Qualifying Financing, the Special Warrants automatically convert into Special Warrant Shares. The Special Warrants are otherwise not convertible, and as the Lender did not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants expired.

As at June 30, 2020, the Company had issued 39,647 Special Warrants (2019 – 49,242) to the Lender. The fair value of the Special Warrants was based on a market rate of 20%. The Company recorded a discount of $9,236 (2019 - $29,050) which was accreted over the life of the loan. During the year ended June 30, 2020, the Company accrued $59,560 (2019 - $nil) in interest and accreted $34,097 (2019 - $4,189) of the discount which is included in interest expense. As at June 30, 2020, the loan is in default. On July 1, 2020, the parties renegotiated this loan. Refer to Note 20.

11. LOANS PAYABLE (Continued)

c) On July 5, 2020 the Company entered into a loan facility agreement (the "Loan Facility") with the Chairman of the Company with a maturity date of January 5, 2021 with the Lender, pursuant to which the Lender provided to the Company a loan for the principal amount of $1,400,000 which was received at June 30, 2020. The Loan Facility bears an interest rate of 12% per annum up to the maturity date, and 15% thereafter. The Company may elect to pay any outstanding principal amount and any interest accrued on the principal amount of the loan in cash or through the issuance of common shares of the Company.

As additional consideration for the loan, the Company agreed to issue Special Warrants to the Lender to acquire up to 207,407 common shares of the Company equal to 20% of the principal amount of the loan at a conversion rate of $1.35 per Special Warrant Share. Conversion of the Special Warrants to Special Warrant Shares is subject to the closing of one or more private placements in which the Lender will have subscribed for securities of the Company at an aggregate subscription price of no less than the principal amount of the loan. Upon closing of a Qualifying Financing, the Special Warrants automatically convert into Special Warrant Shares. The Special Warrants are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire.

As at June 30, 2020, the Company had issued 207,407 Special Warrants (2019 – nil) to the Lender. The fair value of the Special Warrants was based on a market rate of 20%. The Company recorded a discount of $125,731 which will be accreted over the term of the loan. During the year ended June 30, 2020, the Company accrued $135,781 (2019 - $nil) in interest and accreted $66,530 (2019- $nil) of the discount which is included in interest expense. As at June 30, 2020, the unaccreted portion of the discount was $59,201.

The Loan Facility also provides for the grant of performance-based warrants (the "Bonus Warrants"), entitling the Lender to acquire a percentage of the principal amount funded under the loan in common shares of the Company at a price of $1.35 per share. The percentage of Bonus Warrants the Lender will receive will be determined based on the Company's share price at the time the loan is fully repaid as follows:

• (i) equal to 10% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $1.35 and $2.00 per share;
• (ii) equal to 20% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $2.00 and $3.00 per share;
• (iii) equal to 30% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $3.00 and $4.00 per share;
• (iv) equal to 40% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $4.00 and $6.00 per share; and
• (v) equal to 50% of the principal amount of the Loan Facility if the fair market value of the Company's shares is above $6.00 per share.

As the value of these Bonus Warrants cannot be determined until the repayment date, no value has been recognized for the Bonus Warrants as at June 30, 2020.

On July 1, 2020, the parties renegotiated the accrued interest on this loan. Refer to Note 20.

d) On October 21, 2019, the Company entered into a loan facility agreement with the Chairman of the Company with a maturity date of December 31, 2020 with the Lender, pursuant to which the Lender provided to the Company a loan in the principal amount of $500,000 which was received at June 30, 2020. The loan bears an interest rate of 15% per annum up to the maturity date, and 20% thereafter. The loan is repayable in cash, and the accrued interest is convertible into common shares of the Company at the option of the Lender.

11. LOANS PAYABLE (Continued)

As additional consideration for the loan, the Company also agreed to issue Special Warrants to the Lender to acquire up to 74,074 common shares of the Company equal to 20% of the principal amount under the loan at a conversion rate of $1.35 per Special Warrant Share. Conversion of the Special Warrants is subject to the Lender participating in a Qualifying Financing, as described above, for an aggregate subscription price of no less than the principal amount of the loan. The Special Warrants are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire.

As at June 30, 2020, the Company had issued 74,074 Special Warrants (2019 – nil) to the Lender. The fair value of the Special Warrants was based on a market rate of 20%. The Company recorded a discount of $25,939 which will be accreted over the term of the loan. During the year ended June 30, 2020, the Company accrued $52,192 (2019 - $nil) in interest and accreted $11,938 (2019- $nil) of the discount which is included in interest expense. As at June 30, 2020, the unaccreted portion of the discount was $14,001.

The loan also provides for the grant of performance-based Bonus Warrants entitling the Lender to acquire a percentage of the principal amount funded under the loan in common shares of the Company at a price of $1.35 per share. The percentage of Bonus Warrants the Lender will receive will be determined based on the Company's share price at the time the loan is fully repaid as follows:

• (i) equal to 15% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $1.35 and $2.00 per share;
• (ii) equal to 25% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $2.00 and $3.00 per share;
• (iii) equal to 35% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $3.00 and $4.00 per share;
• (iv) equal to 45% of the principal amount of the Loan Facility if the fair market value of the Company's shares is between $4.00 and $6.00 per share; and
• (v) equal to 60% of the principal amount of the Loan Facility if the fair market value of the Company's shares is above $6.00 per share.

As the value of these Bonus Warrants cannot be determined until the repayment date, no value has been recognized for the Bonus Warrants as at June 30, 2020.

e) During the year ended June 30, 2020, the Company received loans from four third parties for a total of $820,000. The loans bear an interest rate of 12% per annum.

As additional consideration for the loans, the Company also agreed to issue Special Warrants to the Lenders to acquire up to 218,667 common shares of the Company equal to 20% of the principal amount under the loans at a conversion rate of $0.75 per Special Warrant Share. Conversion of the Special Warrants is subject to the Lenders participating in a Qualifying Financing, as described above, for an aggregate subscription price of no less than the principal amount of their respective loans. The Special Warrants are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire.

As at June 30, 2020, the Company had issued 218,667 Special Warrants (2019 – nil). The fair value of the Special Warrants was based on a market rate of 20%. The Company recorded a discount of $83,606 which will be accreted over the term of the loan. During the year ended June 30, 2020, the Company accrued $51,372 (2019 - $nil) in interest and accreted $22,166 (2019 - $nil) of the discount which is included in interest expense. As at June 30, 2020, the unaccreted portion of the discount was $61,440.

11. LOANS PAYABLE (Continued)

f) On January 24, 2020, the Company received a loan from a third party totalling $1,250,000. This loan bears interest of 12% per annum and matures on the earlier of June 20, 2021 and the closing of a Qualifying Financing.

As additional consideration for the loans, the Company also agreed to issue Special Warrants to the Lender to acquire up to 500,000 common shares of the Company equal to 20% of the principal amount under the loan at a conversion rate of $0.50 per Special Warrant Share. Conversion of the Special Warrants is subject to the Lender participating in a Qualifying Financing, as described above, for an aggregate subscription price of no less than the principal amount of their respective loan. The Special Warrants are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire.

As at June 30, 2020, the Company had issued 500,000 Special Warrants (2019 – nil). The fair value of the Special Warrants was based on a market rate of 20%. The Company recorded a discount of $119,398 which will be accreted over the term of the loan. During the year ended June 30, 2020, the Company accrued $64,932 in interest (2019 - $nil) and accreted $27,914 (2019 - $nil) of the discount (2019 - $nil) which has been included in interest expense. As at June 30, 2020, the unaccreted portion of the discount was $91,484 (June 30, 2019 - $nil).

g) During the year ended June 30, 2020, the Company received a loan from a third party totaling $286,000. The loan bears interest of 12% per annum and matures on the earlier of July 31, 2021 and the closing of a Qualifying Financing.

As additional consideration for the loans, the Company also agreed to issue Special Warrants to the Lender to acquire up to 114,400 common shares of the Company equal to 20% of the principal amount under the loan at a conversion rate of $0.50 per Special Warrant Share. Conversion of the Special Warrants is subject to the Lender participating in a Qualifying Financing, as described above, for an aggregate subscription price of no less than the principal amount of their respective loan. The Special Warrants are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire.

As at June 30, 2020, the Company had issued 114,400 Special Warrants (2019 – nil). The fair value of the Special Warrants was based on a market rate of 20%. The Company recorded a discount of $29,298 (June 30, 2019 - $nil) which will be accreted over the term of the loan. During the year ended June 30, 2020, the Company accrued $14,292 (2019 - $nil) in interest and accreted $5,957 (2019 - $nil) of the discount which has been included in interest expense. As at June 30, 2020, the unaccreted portion of the discount was $23,341 (June 30, 2019 - $nil).

• h) In relation to the loans disclosed in Notes 11(e) to (g), as the terms of the loans stipulate that the interest accrued on the loans be paid through the issuance of shares, the Company has recognized an amount of $130,595 as obligation to issue shares.
• i) In relation to the loans disclosed in Notes 11 (b) to (g), a total of $393,208 was recognized as a discount on loans payable and allocated to equity reserves during the year ended June 30, 2020 (2019 - $29,050).

12. SHARE CAPITAL

Authorized

100,000,000 common shares without par value.

Issued

During the year ended June 30, 2020 the Company:

12. SHARE CAPITAL (Continued)

• a) Issued 95,713 common shares of the Company at $0.595 per share for proceeds of $56,949 and 67,857 common shares of the Company at $0.35 per share for proceeds of $23,750 pursuant to the exercise of warrants.
• b) Issued 75,554 common shares of the Company at a price of $1.35 per share to its creditors for debt settlements in the aggregate amount of $101,998. The price per share was based on the trading price of the Company shares on the date of Board approval of the debt settlements and no gain or loss was realized in relation to the debt settlements.
• c) Issued 200,000 common shares of the Company at a price of $1.2803 per share for services in the aggregate amount of $256,060. The price was based on the fair value of the services provided.
• d) Issued 1,000,000 common shares of the Company with a fair value of $475,000 to an unrelated party for market related services.
• e) Returned 148,809 common shares to treasury which were originally subscribed for at a price of $0.84 per share for gross proceeds of $125,000.
• f) As at June 30, 2020, the Company had 16,176,193 shares held in escrow.

During the year ended June 30, 2019 the Company:

• a) The Company consolidated its shares on a 1:7 basis. All the references to shares issued have been retroactively restated to reflect the consolidation.
• b) Issued 29,761,858 common shares to the shareholders of EXM Holdings in exchange for 100% of the issued and outstanding shares of EXM Holdings. The Company also issued 148,809 common shares as a finders' fee in connection with the RTO at a fair value of $125,000 recorded as a listing fee. Refer to Note 3.
• c) Issued 3,011,220 common shares for gross proceeds of $2,529,445 (of which $5,000 was received during the year end June 30, 2020 and the shares relating to $125,000 were returned to treasury. See Note 12(e)) above. In connection with the financing, the Company paid an aggregate finders' fee of $62,471 and issued 69,416 finders' warrants (the "Finders' Warrants") at a fair value of $3,760. Each Finders' Warrant is exercisable into one common share in the capital of the Company at an exercise price of $1.26 per common share for a period of one year from the date of issuance.
• d) Issued 2,606,325 common shares for gross proceeds of $3,518,537 (of which $1,255 is receivable at June 30, 2020). In connection with the financing, the Company paid an aggregate finders' fee of $269,604 and issued 159,690 Finders' Warrants at a fair value of $75,155. Each Finders' Warrant is exercisable into one common share in the capital of the Company at an exercise price of $1.35 per common share for a period of 18 months from the date of issuance.
• e) Issued 71,427 common shares for gross proceeds of $42,499 from the exercise of warrants.
• f) As at June 30, 2019, $6,500 of share subscriptions were received.
• g) As at June 30, 2019, the Company had 24,264,289 shares held in escrow.

12. SHARE CAPITAL (Continued)

Restricted Share Units

On September 26, 2019, the Company's Board of Directors approved an equity compensation plan permitting the grant of stock options, Share Appreciation Rights, Deferred Share Units, Performance Share Units and Restricted Share Units ("RSUs") as a mechanism to attract, retain and motivate highly qualified directors, officers, employees and consultants to enable and encourage them to participate in the long-term growth of the Company and align their interests with those of the shareholders. As at June 30, 2020, the Company has 23,018 RSU's available to be issued (to a maximum of 3,923,018) under the Company's plan.

Summary of the Company's restricted share units:

	Number	Weighted averagegranted price
		$
June 30, 2018 and 2019	_	_
Granted	3,900,000	0.61
June 30, 2020	3,900,000	0.61

The Company uses the fair value method to recognize the obligation and compensation expense associated with the RSU's. The fair value of RSU's issued is determined on the grant date based on the market price of the common shares on the grant date multiplied by the number of RSUs granted. The fair value is expensed over the vesting term. Upon conversion of the RSU, the carrying amount is recorded as an increase in common share capital and a reduction in the share-based payment reserve. The RSU's granted during the year ended June 30, 2020 vest in annual installments over a three-year period. During the year ended June 30, 2020, the Company recognized $591,680 (2019 -$nil) for the fair value of RSU's vested which have been recognized in share-based compensation.

Stock Options

The Company has adopted a stock option plan whereby the Company may grant, to directors, officers, employees and consultants, options to purchase common shares of the Company provided that the number of options granted, including all options granted by the Company to date, does not exceed 10% of the Company's common shares issued and outstanding at the time of granting stock options. Options may be exercised no later than 90 days following cessation of the optionee's position with the Company or 30 days following cessation of an optionee conducting investor relations activities.

During the year ended June 30, 2020, the Company granted 10,966,931 (2019 – nil) stock options at a weighted average exercise price of $1.38 (2019 - $nil) per share and recorded share-based payments of $427,431 (2019 – $nil) under the graded vesting method.

	Number of	Weighted Average
	Options	Exercise Price
Balance, June 30, 2018	9,523	$ 1.05
Expired	(9,523)	1.05
Balance, June 30, 2019	-	-
Granted	10,966,931	1.38
Cancelled	(2,000,000)	2.63
Balance, June 30, 2020 - Outstanding	8,966,931	$ 1.11
Balance, June 30, 2020 - Exercisable	-	$-

12. SHARE CAPITAL (Continued)

The options outstanding as at June 30, 2020 vest as follows:

• 466,931 vest the earlier of i)18 months from grant or ii) the date the Company's share trade at or above $2.00 per share;
• 1,500,000 vest the earlier of i)18 months from grant, ii) the date the Company's share trade at or above $2.00 per share or iii) the Company receives a written offer from a third party to acquire at least 35% of the voting shares of the Company;
• 2,000,000 vest once certain licenses have been obtained;
• 5,000,000 vest the earlier of i) December 24, 2021, ii) the date the Company's share trade at or above $0.50 per share anytime after June 25, 2020 or iii) the Company receives a written offer from a third party to acquire at least 35% of the voting shares of the Company.

Number of Options	Exercise		Number of Options
Outstanding	Price	Expiry Date	Exercisable
1,500,000	$ 2.00	January 1, 2030	-
466,931	2.00	January 22, 2030	-
2,000,000	2.00	February 5, 2023	-
5,000,000	0.40	June 25, 2025	-
8,966,931			-

At June 30, 2020, the following incentive stock options were outstanding to directors, officers and consultants:

The weighted average remaining life of the options at June 30, 2020 is 5.45 years (2019 – nil years).

The following weighted average assumptions were used for the Black-Scholes Option Pricing Model valuation of stock options granted during the years ended June 30, 2020 and 2019:

	2020	2019
Risk-fee interest rate	1.02%	-
Expected life of options	6.4 years	-
Expected annualized volatility	119%	-
Expected dividend rate	-	-
Fair value per option	$0.27	-

Warrants

	Number ofWarrants	WeightedAverageExercise Price
Balance, June 30, 2018	2,745,167	$ 0.50
Granted	229,106	1.32
Exercised	(71,427)	0.595
Balance, June 30, 2019	2,902,846	0.56
Exercised	(163,570)	0.49
Expired	(1,115,845)	0.41
Balance, June 30, 2020	1,623,431	$ 0.67

The weighted average remaining contractual life of the outstanding warrants at June 30, 2020 was 2.34 years (2019 – 2.37 years).

12. SHARE CAPITAL (Continued)

Warrants (continued)

Number ofWarrants	ExercisePrice ($)	ExpiryDate
52,457*	1.35	September 15, 2020**
107,233*	1.35	October 17, 2020**
1,463,741	0.595	January 24, 2023
1,623,431

*finders' warrants

**expired subsequent to June 30, 2020

The following weighted average assumptions were used for the Black-Scholes Option Pricing Model valuation of finder's warrants granted during the years ended June 30, 2020 and 2019:

	Year endedJune 30, 2020	Year endedJune 30, 2019
Risk-fee interest rate	-	1.71%
Expected life of options	-	1.2 years
Expected annualized volatility	-	97.05%
Expected dividend rate	-	-

Special Warrants

Number ofWarrants	ExpiryDate
74,074	December 31, 2020
207,407	January 5, 2021
500,000	June 20, 2021
218,666	June 20, 2021
114,400	July 31, 2021
1,114,547

During the year ended June 30, 2020, the Company issued 1,154,194 (2019 – 49,242) Special Warrants in relation to the loans described in Note 11 (b) to (g) with a fair value of $393,208 (2019 - $29,050). Conversion of the Special Warrants is contingent on the Lenders participating in a Qualifying Financing for an aggregate subscription price of no less than the principal amount of their respective loans. The Special Warrants convert automatically into common shares of the Company on participation in a Qualifying Financing, as described above, and are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire. During the year ended June 30, 2020, 88,889 (2019 – nil) Special Warrants expired.

12. SHARE CAPITAL (Continued)

Equity Reserves

The equity reserve account records items recognized as stock-based compensation expense until such time that the stock options and warrants are exercised, at which time the corresponding amount will be transferred to share capital. Amounts recorded for forfeited or expired stock options are transferred to deficit in the year of forfeiture or expiry.

13. RELATED PARTY TRANSACTIONS

Related parties include the Board of Directors, officers, key management personnel, close family members and enterprises that are controlled by these individuals. Key management personnel are those having authority and responsibility for planning and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

As at June 30, 2020, the Company owed $713,990 (2019 – $722,922) to officers and directors of the Company recognized as due to related parties.

As at June 30, 2020, the Company owed $649,529 (2019 - $360,177) to related parties which has been included in accounts payable and accrued liabilities.

As at June 30, 2020, the Company advanced $46,520 (2019 – $111,749) to officers of the Company.

During the year ended June 30, 2020, the Company entered into a debt settlement agreement with a former officer of the Company resulting in the Company recognizing a gain on settlement of related party debt of $117,594 (2019 - $nil).

The amounts due to and from related parties are unsecured, non-interest bearing, and have no fixed terms of repayment.

On June 7, 2019, the Company entered into a loan agreement with a related party for $600,000 (Note 11(b)). The loan bears interest at 10% per annum, was due on December 7, 2019, and is in default as at June 30, 2020. As at June 30, 2020, principal and interesting outstanding on this loan total $659,560. On July 1, 2020, the Company and the Lender signed a new loan agreement (Note 20).

On July 5, 2019, the Company entered into a loan agreement with a related party for $1,400,000 (Note 11(c)). The loan bears interest at 12% per annum and is due on January 5, 2021. As at June 30, 2020, the principal and interesting outstanding on this loan total $1,535,781.

On October 21, 2019, the Company entered into a loan agreement with a related party for $500,000 (Note 11(d)). The loan bears interest at 15% per annum and is due on December 31, 2020. As at June 30, 2020, principal and interesting outstanding on this loan total $552,192.

During the year ended June 30, 2020, the Company granted 6,966,931 (2019 – nil) stock options with a fair value of $265,916 (2019 -$nil) and 3,500,000 (2019 - nil) RSUs with a fair value $546,265 (2019 - $nil) to related parties.

Key management personnel comprise the current and former President, Chief Executive Officer, Chief Financial Officer, and Directors and Officers of the Company. The remuneration of the key management personnel for the year ended June 30, 2020 consisted of consulting fees and management fees of $1,075,068 (2019 - $1,041,277).

14. NON-CONTROLLING INTEREST

The non-controlling interest represents the 30% interest in PRL held by other shareholders. During the year ended June 30, 2020, the Company acquired the 30% non-controlling interest in Portugal for a nominal value at which time the non-controlling interest up to the date of acquisition of $347,882 was reallocated to deficit.

14. NON-CONTROLLING INTEREST (Continued)

The following represents the summarized statement of financial position of Portugal:

At	June 30,	June30,
	2020	2019
Current Assets	$- $	265,353
Current Liabilities	-	(751,816)
Total Current Net Assets	-	(486,463)
Non-Current Assets	-	267,081
Non-Current Liabilities	-	-
Balance, end of period/year	$	- $ (219,382)

The following represents the summarized statement of comprehensive loss of Portugal:

For the years ended June 30	2020*	2019
Revenue	$- $	-
Net loss before income taxIncome tax expense	(923,397)-	(236,208)-
Net and comprehensive loss	$(923,397) $ (236,208)

* Net loss for Portugal up until January 31, 2020, date of acquisition of 30% non-controlling interest.

The following represents the summarized statement of financial position of PRL:

At	June 30,June30,
	20202019
Current AssetsCurrent LiabilitiesTotal Current Net Assets	$54,476 $112,849(1,766,696)(663,442)(1,712,220)(550,593)
Non-Current AssetsNon-Current Liabilities	117,045323,977--
Balance, end of year	$ (1,595,175) $ (226,616)

The following represents the summarized statement of comprehensive loss of PRL: For the years ended June 30 2020 2019 Revenue $ - $ - Net loss before income tax (1,327,769) (230,951) Income tax expense - - Net and comprehensive loss $ (1,327,769) $ (230,951)

15. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

Other than disclosed elsewhere in these consolidated financial statements, the significant non-cash transactions for the years ended June 30, 2020 and 2019 included:

15. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS (Continued)

• a) During the year ended June 30, 2020, the Company issued 1,154,195 special warrants with a fair value of $393,208 in relation to the loan payables and issued 75,554 common shares at a price of $1.35 per share to creditors for debt settlements in the aggregate amount of $101,998.
• b) During the year ended June 30, 2019, the Company issued 229,106 finders' warrants for a fair value of $78,915, issued 148,809 finders' shares with a fair value of $125,000 and 49,242 special warrants with a fair value of $29,050.

16. FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash held in bank accounts and legal trust accounts and receivables. Cash is deposited in bank accounts held with major banks in Canada and Portugal. As most of the Company's cash is held in trust there is a concentration of credit risk. As cash is held in legal trust and its receivable balance mainly consists of sale tax credits refundable from government bodies, the credit risk has been assessed as low.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company's access to financing is always uncertain. There can be no assurance of continued access to significant equity funding. The Company has also received funding from loans from related and third parties, there is no assurance that additional loans will be available as needed or on terms acceptable to the Company. Liquidity risk is assessed as high.

Foreign Exchange Risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency.

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to interest rate risk is minimal as rates on loans are at fixed terms.

16. FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT (Continued)

Capital Management

The Company's policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of share and working capital.

There was no change in the Company's approach to capital management during the year. The Company is not subject to any externally imposed capital requirements.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and Level 3 – Inputs that are not based on observable market data.

Cash is measured at Level 1 of the fair value hierarchy. The fair value of accounts payable, amounts due to/from related parties and loans payable approximates fair value due to the short-term nature of the financial instruments.

Fair Value

The fair value of the Company's financial assets and liabilities approximate the carrying amount.

17. SEGMENT REPORTING

Geographic information relating to the Company's activities are as follows:

					Sint
	Canada	Portugal	Uganda	Netherlands	Maarten	Total
	$	$	$	$	$	$
June 30, 2020:
Total assets	214,475	830,365	175,521	31,285	-	1,251,646
Total liabilities	7,696,339	361,675	545,418	-	-	8,603,432
Net loss	7,010,596	1,589,683	1,327,769	-	-	9,928,048
					Sint
	Canada	Portugal	Uganda	Dominica	Maarten	Total
	$	$	$	$	$	$
June 30, 2019:
Total assets	1,113,337	532,434	436,826	344,488	31,285	2,458,370
Total liabilities	1,604,978	267,797	48,206	151,048	-	2,072,029
Net loss	8,851,371	236,208	230,951	444,166	66,850	9,829,546

18. CONTINGENT LIABILITY

a) During the year ended June 30, 2019, the Company received a Notice of Claim from a former consultant for $35,236. Management is disputing this claim as they are contending the services have not been provided. The Company's legal counsel has stated that the likelihood of any outcome cannot be assessed and, therefore, no amount has been accrued as at June 30, 2019.

18. CONTINGENT LIABILITY (Continued)

b) During the year ended June 30, 2020, the Company was notified that it, a former subsidiary and a former member of management were named in a claim filed by another former member of management in the amount of $129,088. A trial has not yet been scheduled. The Company's legal counsel has stated the likelihood of the claim being upheld by the court is remote and, therefore, no amount has been accrued as at June 30, 2020.

19. INCOME TAX

The income tax provisions differ from the expected amounts calculated by applying Canadian combined federal and provincial corporate income tax rates to the Company's loss before income taxes. The components of these differences are as follows:

	June 30,2020	June 30,2019
Net loss	$(9,928,048)	$(9,829,546)
Statutory tax rate	27%	27%
Expected income tax recovery	(2,681,000)	(2,654,000)
Non-deductible items	2,865,000	1,286,000
Acquisition of tax assets on RTO	-	3,283,000
Increase in unrecognized deferred tax assets	(184,000)	(1,915,000)
	$-	$-

The Company's tax-effected deferred income tax assets and liabilities are estimated as follows:

	June 30,2020		June 30,2019
Non-capital losses carried forward	$2,262,000	$	2,104,000
Share issuance costs	87,000		92,000
Property and equipment	75,000		44,000
Exploration and evaluation assets	36,000		36,000
Unrecognized deferred tax assets	(2,460,000)		(2,276,000)
Net deferred income tax assets	$	- $	-

As at June 30, 2020, the Company had the following non-capital losses that may be applied against future income for Canadian income tax purposes.

Expiring	Amount
2029	$72,500
2030	18,500
2031	166,500
2032	159,500
2033	142,000
2034	117,500
2035	137,000
2036	268,000
2037	80,000
2038	279,000
2039	13,500
2040	4,996,000
	$6,450,000

20. SUBSQUENT EVENTS

a) On July 1, 2020, the Company and the Chairman of the Company signed a new loan agreement in the principal amount of $854,171, which includes the following amounts: (i) principal and interest due and owing under the June 7, 2019 loan agreement (Note 11(b)) in the amount of $664,500 as at July 1, 2020; (ii) accrued and unpaid expenses owing to the Lender in the amount of $25,671; and (iii) accrued and unpaid interest on the $1,400,000 July 5, 2019 loan agreement (Note 11(c)). This loan bears an interest rate of 10% per annum for a term of six months.

As additional consideration for the loan, the Company agreed to issue Special Warrants to the Lender to acquire up to 427,085 common shares of the Company equal to 20% of the principal amount of the loan at a conversion rate of $0.40 per Special Warrant Share. Conversion of the Special Warrants to Special Warrant Shares is subject to the closing of one or more private placements in which the Lender will have subscribed for securities of the Company at an aggregate subscription price of no less than the principal amount of the loan. Upon closing of a Qualifying Financing, the Special Warrants automatically convert into Special Warrant Shares. The Special Warrants are otherwise not convertible, and in the event the Lender does not participate in a Qualifying Financing on or prior to the maturity date, the Special Warrants will expire.

• b) On July 22, 2020, the Company completed a private placement of 5,180,000 units at a price of $0.20 per unit for total gross proceeds of $1,036,000. Each unit consists of one common share of the Company and one share purchase warrant. Each warrant entitles the holder to purchase one additional common share of the Company at an exercise price of $0.30 per share for a period of 18 months from closing of the private placement. The Company issued 71,400 units as finders' fees, with the units having the same terms as the private placement units.
• c) On July 22, 2020, the Company issued 220,859 common shares at a price of $0.326 for financial services of $72,000 provided to the Company. The price was based on the fair value of the services provided.
• d) On July 22, 2020, the Company issued 30,237 common shares for gross proceeds of $9,000.
• e) On July 22, 2020, the Company issued 71,400 common shares as finders' fees on a prior private placement.
• f) On July 24, 2020, the Company issued 23,025,855 common shares pursuant to certain loan agreements previously entered into between the Company and certain lenders to settle loans in the aggregate amount of $4,605,171.
• g) On August 6, 2020, the Company issued 207,407 Special Warrant Shares pursuant to the July 5, 2019 loan with the Chairman of the Company on entering into a Qualifying Financing prior to the maturity of the loan for a subscription price of no less than the principal balance of the loan. The Company also issued 6,818 shares for accrued interest at a price of $1.35 per share in connection with the loan. Refer to Note 11(c).
• h) On August 6, 2020, the Company issued 427,085 Special Warrant Shares pursuant to the July 1, 2020 amended loan with the Chairman of the Company on entering into a Qualifying Financing prior to the maturity of the loan for a subscription price of no less than the principal balance of the loan. The Company also issued 19,367 shares for accrued interest at $0.29 per share in connection with the loan. Refer to Note 20(a).
• i) On August 6, 2020, the Company issued 942,400 Special Warrant Shares pursuant to third-party Lenders entering into Qualifying Financing prior to the maturity of the loans for a subscription price of no less than the principal balance of the loans. The Company also issued 675,276 shares for accrued interest at $0.2175 per share, being the trading price on the date of issuance less the maximum discount allowed by the Canadian Securities Exchange, pursuant to loan agreements with third-party Lenders. Refer to Notes 11(e) to (g).
• j) On August 13, 2020, the Company issued 219,595 common shares at a price of $0.296 per share for financial services of $65,000 provided to the Company. The price was based on the fair value of the services provided.

20. SUBSQUENT EVENTS (Continued)

• k) On August 20, 2020, the Company issued 4,139,161 common shares for the settlement of $1,378,241 in debt along with cash payments of $79,559 for total amounts settled of $1,457,800 pursuant to debt settlement agreements with various creditors.
• l) On August 28, 2020, the Company cancelled 518,451 escrow shares.
• m) On November 5, 2020, EXMceuticals Holdings B.V., a wholly-owned subsidiary of the Company, entered into a Share Purchase Agreement with a non-related party to sell its 70% interest in PRL for proceeds of USD $150,000.