Innovotech Inc. — Interim / Quarterly Report 2021

May 26, 2021

Innovotech Inc.

Interim Financial Statements (Unaudited) For the three-month period ended March 31, 2021 and 2020

NOTICE OF NO AUDITOR REVIEW

Under National Instrument 51-102, part 4, subsection 4.3(3)(a); if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditor has not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by the entity’s auditors.

Innovotech Inc. Statements of Financial Position (Unaudited)

Assets Current assets Cash and cash equivalents Marketable securities Trade and other receivables Inventory Prepaid expenses Equipment Convertible debenture(note 4) Liabilities Current liabilities Accounts payable and accrued liabilities Deferred revenue Term loan Shareholders’ Deficiency Share capital(note 5) Warrants Contributed surplus Deficit	March 31, 2021 $ December 31, 2020 $
	558,032 530,144 - 20,000 156,546 143,514 40,066 38,880 20,760 20,187
	775,404 752,725 ______69,290 69,715 119,450 -
	964,144 822,440
	124,506 111,782 33,675 45,680
	158,181 157,462 20,000 20,000
	178,181 177,462
	7,695,237 7,576,487 159,543 159,543 1,531,576 1,531,576 (8,600,393) (8,622,628)
	785,963 644,978
	964,144 822,440

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

Approved by the Board of Directors

______ Director _________ Director (Signed) “Alan Savage” (Signed) “James Timourian”

Innovotech Inc. Statements of Changes in Shareholder’s Deficiency (Unaudited)

Balance – January 1, 2021 Net and comprehensive loss for the period Shares issued Balance – March 31, 2021 Balance – January 1, 2020 Net and comprehensive loss for the period Share based compensation Balance – March 31, 2020	Share capital $ Warrants $ Shares to be issued $ Contribute d surplus $ Deficit $ Total $
	7,576,487 159,543 - 1,531,576 (8,622,628) 644,978 - - - - 22,235 22,235 118,750 - - - - 118,750
	7,695,237 159,543 - 1,531,576 (8,600,393) 785,963
	7,344,818 - - 1,482,214 (8,728,945) 98,087 - - - - (115,298) (115,298) - - - - - -
	7,344,818 - - 1,482,214 (8,844,243) (17,208)

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

Innovotech Inc. Statements of Operations and Comprehensive Income (Loss) (Unaudited) For the three-months ended March 31, 2020 and 2019

Revenue(note 7) Contract research fees Product sales Other revenue Cost of sales Contract research Product sales Gross profit Operating expenses General and administrative Sales and marketing Research and development Grants Interest expense Interest income Net financing (income)/expense Net income/loss and comprehensive income/loss for the period Basic and diluted income/loss per common share	2021 $ 2020 $ 214,250 68,916 86,036 57,471 8,289 -
	126,387 59,651 36,719 21,023 21,498
	80,674 58,217 227,901 68,170
	200,050 177,209 2,835 - 4,862 8,666 - (3,407)
	207,747 182,468
	- 1,000 (2,081) -
	(2,081) 1,000
	22,235 (115,298)
	(0.00) (0.00)

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

Innovotech Inc. Statements of Cash Flows (Unaudited) For the three-months ended March 31, 2020 and 2019

Cash provided by (used in) Operating activities Net loss for the period Adjustments for: Amortization Loss on disposal of equipment Interest expense Interest income Net change in non-cash working capital items (note 6) Investing activities Purchase of equipment Financing activities Interest paid Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents – Beginning of period Cash and cash equivalents – End of period	2021 $ 2020 $ 22,235 (115,298) 3,980 3,542 - 93 - 1000 (699) -
	25,516 (110,663) 5,928 126,397
	31,444 15,734
	(3,556) (26,831)
	- (1,000)
	27,888 (12,097) 530,144 96,671
	558,032 85,574

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

Innovotech Inc. Notes to Financial Statements (Unaudited) March 31, 2020 and 2019

1 Nature of operations and use of the going concern assumption

Innovotech Inc. (the Company) is incorporated under the Business Corporation Act of Alberta. The primary activities of the Company are sales of its products, conducting contract research for outside customers and research and development to identify products for future commercialization. The Company’s product is an assay used in growing microbial biofilms for research purposes. The Company is publicly traded and listed on the TSX Venture Exchange, and its registered office is in Edmonton, Alberta.

These financial statements have been prepared using International Financial Reporting Standards applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations for the foreseeable future.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In mid-March 2020, federal, provincial, and local authorities in Canada, the United States, and other nations began to significantly restrict the ability of people to leave their homes and carry out normal day-to-day activities. These measures will have a significant, negative effect on the economy of all nations, for an uncertain period of time. The ability of the Company to carry on normal business activities and to otherwise meet its obligations to creditors and others is also uncertain.

2 Basis of preparation

The Company prepares its financial statements in accordance with Part I of the Handbook of the Canadian Institute of Chartered Accountants (CICA Handbook) which incorporates International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

These financial statements were approved by the Board of Directors for issue on May 25, 2021.

3 Significant accounting policies

There were no new or amended International Financial Reporting standards or interpretations that required adoption by the Company during the quarter.

4 Convertible debenture

On February 19, 2021 the Company acquired a $150,000 8% convertible loan agreement with CanBiocin Inc. (“CanBiocin”), by way of an assignment from Lonsdale Capital Corporation (“Lonsdale”). Innovotech purchased all of Lonsdale’s rights, title, and interest in and to the convertible loan, previously issued on April 13, 2020, with a $150,000 principal amount outstanding and payable by CanBiocin. The convertible loan bears interest at 8% per annum, payable quarterly until April 13th, 2022 after which date principal is paid monthly in installments of $3,125.00 together with interest calculated at 8% on the declining balance until the convertible loan is paid in full. At any time prior to April 15, 2025, the Company will have the option to convert the outstanding principal amount and interest outstanding under the convertible loan at a conversion price of $1.25 per share of Canbiocin. The Company issued 625,000 common shares at a deemed price of $0.24 per common share for a total deemed price of $150,000. The common shares traded at a closing price of $0.19 per share on February 19, 2021. The discount in the debenture will be recognized as income on a straight-line basis over the remaining term.

(1)

Innovotech Inc. Notes to Financial Statements (Unaudited) March 31, 2020 and 2019

5 Share capital

a) Authorized

Unlimited number of Class A common, voting shares

Issued and outstanding

Opening balance at January 1 Shares issued to acquire convertible debenture Shares issued on option exercise Shares issued in private placement Closing balance	2021 # $ 38,284,612 7,563,397 625,000 118,750 - - - -	2020
		# $ 36,239,612 7,344,818 - - 170,000 25,090 1,875,00 206,579
	38,909,612 7,695,237	38,284,612 7,576,487

The Company issued 625,000 shares on February 19, 2021 to acquire the convertible debenture from a shareholder.

6 Net change in non-cash working capital items

Marketable securities Trade and other receivable Inventory Prepaid expenses Accounts payable and accrued liabilities Deferred revenue	2021 $ 2020 $ 20,000 - (13,032) 56,879 (1,186) (8,408) (573) (1,372) 12,724 39,304 (12,005) 39,994
	5,928 126,397

(2)

Innovotech Inc. Notes to Financial Statements (Unaudited) March 31, 2020 and 2019

7 Geographic information

Geographic information about the Company’s revenue is based on the product shipment destination and, for contract research, on the location of the contracting organization.

Canada United States Rest of world	Three-month period ended March 31,
	2021 $ 2020 $ 25,040 12,056 233,140 86,374 50,394 27,957
	308,574 126,387

All of the Company’s equipment and intangible assets are located in Canada.

(3)