Medivolve Inc.

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CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

(in Canadian dollars)

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Independent Auditor’s Report

To the Shareholders of Medivolve Inc.

Opinion

We have audited the consolidated financial statements of Medivolve Inc. and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2022 and 2021, and the consolidated statements of operations and comprehensive (loss), consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

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 consolidated 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 consolidated financial statements in Canada. 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.

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Material uncertainty related to going concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss during the year ended December 31, 2022 and, as of that date, the Company had a cumulative deficit. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter	How our audit addressed the key audit
	matter
Revenue recognition
	In this regard, our audit procedures
Revenue is recognized only when it is probable	included:

Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the entity. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectible amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.

Understanding the policies and procedures applied to revenue recognition, as well as compliance therewith, including:
- Analyzing and discussing with management regarding the remittances and collectability processes;

The Company estimates the probability of the consideration transferring from the underlying payor. Key areas of estimation include the underlying insurance coverage of patients, the likelihood of successful application to the government program, the timing of acceptance under government program, the ability to bill claims in a timely manner and the ongoing status of the COVID-19 pandemic.

Reviewing the most relevant estimates made in connection with collectability;
- Performing operations cut-off procedures for a sample of revenue transactions at year-end in order to conclude on whether they were recognized at the moment the related goods or services actually took place;

We determined this matter to be a key audit issue due to the uncertainty surrounding program acceptance and probability of collection of revenue.

Confirming with independent third parties, including a reference laboratory, regarding the individual test occurrence and confirming with an independent third party regarding the

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The disclosures related to recognition of revenue by the Company as well as the information relating to insurance and government programs are provided in Note 19 to the accompanying consolidated financial statements.

Expected credit losses on testing receivables The Company recognized $9,734,703 in expected credit losses on testing receivables in its consolidated statement of financial position. The expected credit loss model is an unbiased and probability-weighted estimate of credit losses expected to occur in the future, which is based on the probability of default, loss given default, and expected cash shortfall relating to the underlying financial asset. The expected credit loss is determined by evaluating a range of possible outcomes incorporating the time value of money and reasonable and supportable information about past events, current conditions, and future economic forecasts.

The expected credit losses on testing receivables was a key audit matter because the allowance was complex and required the application of significant judgment because of the sophistication of the models, the forwardlooking nature of the key assumptions, and the inherent interrelationship of the critical variables.

Impairment of intangible assets with definite lives As of December 31, 2022 the Company has two intangible assets measured at cost less accumulated amortization and impairment losses.

Management is required to consider whether there are any indicators that intangible assets are impaired on an annual basis, If there are any indicators of impairment, an impairment assessment should be performed. The assessment of impairment and the assessment of impairment indicators requires a significant amount of management judgment.

We identified potential impairment of the technology platform intangible asset as a key audit matter because of the significant level of

likelihood of program acceptance and timing; and

Reviewing disclosures included in the notes to the accompanying consolidated financial statements.

In this regard, our audit procedures included:

Evaluating the process used by management to develop forwardlooking information and determine the expected credit loss scenario probability weights;
Confirming with an independent third party about the likelihood of program acceptance and timing; and
Assessing the estimate based on the results of different insurance payors and government programs from previous collections.

In this regard, our audit procedures included:

Discussing indicators of impairment with management;
Evaluating management’s assessment of indicators of impairment and any calculation or supporting documents on the recoverable amount of the intangible assets;
Assessing any calculation or supporting documents from management regarding the recoverable amount by employing an auditors’ expert to assist with valuation.

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management judgement required to be exercised in determining the assumptions adopted in the impairment assessments, which can be inherently uncertain and could be subject to management bias.

Management’s annual intangible asset impairment test is complex, given the status of current intangibles, the declining business and lack of documented business plan. This required a high degree of judgment and subjectivity in evaluating management’s estimates and assumptions. Significant assumptions included revenue assumptions, expected growth rates, cost assumptions, discount rates, which are affected by expectations about future market and economic conditions, including demand for products.

Using the Company’s historical sales data as well as available industry data. The audit team tested inputs in the valuation model;
Performing a sensitivity analysis to assess whether there is any material exposure to the financials statements if key estimates are changed;
Testing the existence of the intangible assets; and
Evaluating management’s disclosure in the notes to the consolidated financial statements of significant judgments in relation to this matter.

Litigations and claims

In the normal course of the Company’s business, potential exposures arise from administrative or court proceedings. As disclosed in Note 21 to the consolidated financial statements, the Company is involved in litigations with different authorities, business partners or other parties.

Whether a liability is recognized or disclosed as a contingent liability in the financial statements is inherently judgmental and dependent on a number of significant assumptions and assessments.

The amounts involved are potentially significant and determining the amount, if any, to be recognized or disclosed in the financial statements, is inherently subjective.

In this regard, our audit procedures included:

Inspecting minutes of the shareholders’ and board of directors’ meetings;
Obtaining and evaluating lawyers’ responses to our audit inquiry letters and discussing the nature and status of the litigations and potential legal exposures with the Company’s management and in-house legal counsel;
Critically assessing the Company’s assumptions and estimates in respect of litigations and claims, including the liabilities or provisions recognized or contingent liabilities disclosed in the consolidated financial statements. This involved assessing the probability of an unfavorable outcome of a given proceeding and the reliability of estimates of the related amount; and
Assessing whether the disclosures detailing significant legal proceedings adequately disclose the Company’s potential liabilities.

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Transactions with related parties

Company has incurred significant transactions with one related party as disclosed in Note 20 to the consolidated financial statements.

We considered the related party transactions to be significant to the audit since the incorrect accounting treatment of the rights and obligations of these transactions could influence the results of the Company.

Furthermore, for financial reporting purposes, IAS 24 related party disclosure, requires complete and appropriate disclosure of transactions with related parties.

In this regard, our audit procedures included:
Obtaining an understanding of the process for identifying related party transactions, performed a walkthrough and gained an understanding of the controls related to the fraud risk identified;
Verifying that the transactions are approved in accordance with internal procedures including involvement of key personnel at the appropriate level;
Evaluating the business rationale of the transactions;
Evaluating the rights and obligations per the terms and conditions of the agreements and assessed whether the transactions were recorded appropriately; and
Determining whether the directors and officers have disclosed relationships and transactions in accordance with IAS 24.

Valuation of the private investments

The Company has certain private investments acquired in prior years that are measured at fair value through profit and loss under IFRS 9.

When determining the fair values of financial assets and financial liabilities recorded on the statement of financial position, the Company uses a variety of valuation techniques. If there are active markets for these financial instruments, their fair values can be easily determined based on market prices. However, if there are no active markets available, the Company needs to rely on other valuation techniques, which require a high degree of judgment and subjectivity.

In this regard, our audit procedures included:

Obtaining investment continuity schedules and agreeing balances to accounting records;
Examining all material private investments and obtaining appropriate support for the reasonability of management’s valuations;
Reviewing discounted cash flow models, if available, to support the fair value of investments;

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In such cases, the inputs to the valuation models are derived from observable market data, where possible. But, where observable market data is not available, the valuation requires a high degree of judgment and subjectivity in evaluating management's estimates and assumptions. This means that determining the fair values of these private investments is a complex process that requires significant professional judgment.

As such, we considered the valuation of the private investments to be a key audit matter.

Reviewing any independent valuation reports obtained by management, if available;
Agreeing significant investment purchases during the year to supporting documentation. Confirming the existence of private investments;
Assessing for potential control over private investments to determine whether any additional disclosures are required pursuant to IFRS 10; and
Gaining an understanding of investments that may have unique clauses to determine if additional work is required to support valuation.

Other information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

Our opinion on the consolidated 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 consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated 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 consolidated financial statements

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

In preparing the consolidated 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 cease operations, or has no realistic alternative but to do so.

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

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated 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 risks 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 consolidated 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner of the audit resulting in this independent auditor’s report is Chris Milios.

McGovern Hurley LLP

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Chartered Professional Accountants Licensed Public Accountants

Toronto, Ontario March 30, 2023

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Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

Note As at	December 31, 2022 December 31, 2021
ASSETS Current assets Cash and cash equivalents Inventory	$ 4,271,549 $ 112,397 343,342 388,631 2,314 4,302 11,708,256 55,314,642 - 12,923 522,196 24,227
Public investments at fair value through profit and loss 5 Accounts receivable 4,19,20 Loans receivable 3 Prepaid expenses and advances
Total current assets	16,847,657 55,857,122
Investments in associates 6	- 488,326
Property and equipment 7 Right-of-use assets 12 Intangibles 9	398,272 595,031 135,737 - 1,436,753 2,354,938
TOTAL ASSETS	$ 18,818,419 $59,295,417
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current liabilities Accounts payable and accrued liabilities 10,19,20, 21	$ 12,414,204 33,198,613 $
Income taxes payable 22 Loans payable 11,19 Lease liabilities 12 Other liabilities 19,21 Liability component ofconvertiblenote 11	2,062,981 6,456,489 96,378 850,383 444,173 - 1,573,395 15,835 1,088,386 -
Total current liabilities	$ 17,679,517 40,521,320 $
Other liabilities 19,21 Liability component ofconvertiblenote 11	$ 812,640 - $ - 965,432
Total liabilities	$ 18,492,157 $ 41,486,752
Shareholders' Equity Share capital 13 Share-based payment reserve 14 Equity component of convertible note 11 Accumulated other comprehensive income Deficit	$ 67,286,990 67,281,741 $ 8,665,195 11,171,601 255,424 255,424 1,161,122 299,742 (77,042,469) (61,199,843)
Total shareholders' equity	326,262 $ 17,808,665 $
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 18,818,419 $59,295,417
Nature of operations and going concern 1 Commitments and contingencies 12,21 Subsequent event 25
Approved on behalf of the Directors:
"Beverley Richardson"	"Daniyal Baizak"
Director	Director

(The accompanying notes are an integral part of these consolidated financial statements)

Medivolve Inc.

Consolidated Statements of Operations and Comprehensive (Loss) (Expressed in Canadian dollars)

(Expressed in Canadian dollars)
		For the	year ended
		December 31,
	Notes	2022		2021
Revenue		$ 37,175,237	$	86,824,987
Cost of sales	15,20	(22,789,684)	$	(50,255,887)
Gross profit		$ 14,385,553	$	36,569,100
General and adminstrative	16,20	$ 23,163,830	$	12,102,490
Facility costs	12,20	3,546,389		7,478,818
Marketing and promotion		187,576		3,276,756
Foreign exchange loss (gain)		241,799		(17,435)
Financing costs		238,032		482,700
Interest expense (income)		(287)		(57,972)
Gain from early lease termination	12	-		(1,205,824)
Provision for legal judgment	21	-		3,050,264
Cost of termination of contract	9	-		1,285,915
Impairments	17	9,799,245		10,301,620
Total operating expenses		$ 37,176,584	$	36,697,332
(Loss) Income from operations		(22,791,031)		(128,232)
Unrealized (loss) gain on investment and loan receivable	5	(14,845)		2,581
Loss from investments in associates	6	(88,326)		(313,516)
Gain on debt settlement		16,520		285,129
(Loss) before income taxes for the year		$ (22,877,682)	$	(154,036)
Income tax recovery (expense)	22	4,512,348		(6,456,489)
Net (loss) for the year		$(18,365,334)	$	(6,610,524)
Other comprehensive (loss) income
Items that subsequently will be reclassified to operations:
Foreign currency translation gain		861,380		194,162
Net(loss)and comprehensive(loss)for theyear		$(17,503,954)	$	(6,416,362)
(Loss) per share
Basic and diluted		$ (0.68)	$	(0.34)
Weighted average number of shares outstanding
Basic and diluted		27,016,105		19,323,713

(The accompanying notes are an integral part of these consolidated financial statements)

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Medivolve Inc.

Consolidated Statements of Cash Flows (Expressed in Canadian dollars)

		For the year ended December 31,	For the year ended December 31,	For the year ended December 31,
	Notes	2022		2021
Cash (used in) provided by operations:				(Note 24)
Net (loss) for the year		$ (18,365,334)	$	(6,610,524)
Items not involving cash:
Share-based payments	14	17,550		3,476,822
Depreciation and amortization	7,9,12	1,545,810		4,823,476
Impairment of intangible assets	9	500,000		6,538,635
Impairment of investment in associate	6	400,000		-
Fair value loss on private investments	5,6	-		1,363,921
Loss from investment in associate	6	88,326		313,516
Impairment of loan receivable	3	-		596,174
Impairment of right of use asset	12	255,819		-
Impairment of property and equipment	7	139,132		-
Interest, financing and accretion expenses		153,375		(129,940)
Provision for legal judgment		-		3,050,264
Unrealized loss (gain) on investments and loan receivable		14,845		(2,581)
Unrealized foreign exchange		825,883		1,098,567
Expected credit losses	19	7,808,890		1,861,023
Accretion expense	11	206,954		63,856
Interest income		66		(57,080)
		(6,408,684)		16,386,129
Adjustments for change in working capital:
Inventory		45,289		(72,958)
Accounts receivable		35,797,496		(54,621,500)
Prepaid expenses and advances		(497,969)		306,455
Income taxes payable		(4,393,508)		6,456,489
Accountspayable,accrued liabilities and other liabilities		(18,498,208)		23,223,059
Net cashprovided by (used in) operating activities		$ 6,044,416	$	(8,322,326)
Investing activities
Purchase of investments		$ -	$	(418,358)
Purchase of property and equipment		-		(42,682)
Net cashpaid on acquisitions	8	-		(165,276)
Net cash(used in) investing activities		$ -	$	(626,316)
Financing activities
Proceeds from private placements	13	$ -	$	6,500,000
Share and warrants issue costs	13	-		(451,496)
Proceeds from options exercised	13	-		584,088
Proceeds from warrants exercised	13	4,000		175,000
Proceeds from loans	11	-		2,060,031
Convertible note	11	-		1,185,000
Lease payments	12	(1,089,160)		(1,842,993)
Loans and interest repaid	11	(800,104)		-
Net cash(used in) provided by financing activities		$(1,885,264)	$	8,209,630
Change in cash and cash equivalents		4,159,152		(739,012)
Cash and cash equivalents beginningofyear		112,397		851,409
Cash and cash equivalents, end ofyear		$ 4,271,549	$	112,397
Supplemental information:
Common shares issued for acquisitions	8,9	$ -	$	7,217,500
Common shares and warrants issued for debt and debt settlement	8,11,13	$ -	$	5,481,691
Right of use asset acquired	12	$ 1,373,943		-

(The accompanying notes are an integral part of these consolidated financial statements)

Medivolve Inc.

Consolidated Statements of Changes in Equity (Expressed in Canadian dollars)

Medivolve Inc. Consolidated Statements of Changes in Equity (Expressed in Canadian dollars)
Note Number of Shares Share Capital	Options Warrants Total Equity component on convertible note Deficit Accumulated Other Comprehensive Income Total Share-based Payments Reserve
Balance, December 31, 2020 9,986,007 $ 41,269,852	$ 2,445,183 $ 1,254,195 $ 3,699,378 $ - $ (55,088,812) $ 105,580 $ (10,014,002)
Units issued through private placement 13 13,238,095 17,500,000 Shares issued for acquisitions 8,9 2,300,000 7,217,500 Shares issued for debt arrangement 13 1,150,535 5,481,691 Warrants issued 14 - (4,993,449) Broker warrants issued 14 - (95,561) Compensation units issued 14 18,453 61,809 Share and warrant issued costs 14 - (443,584) Equity component on convertible note 11 - - Stock options granted and vested 14 - - Exercise of stock options 14 253,500 584,088 Value of stock options exercised 14 - 465,699 Exercise of warrants 14 69,333 175,000 Value of warrants exercised 14 - 58,695 Expiry of stock options 14 - - Net loss and comprehensive loss for theyear - -	- - - - - - 17,500,000
	- - - - - - 7,217,500
	- - - - - - 5,481,691
	- 4,993,449 4,993,449 - - - -
	- 95,561 95,561 - - - -
	- 7,391 7,391 - - - 69,200
	- (77,112) (77,112) - - - (520,696)
	- - - 255,424 - - 255,424
	3,476,822 - 3,476,822 - - - 3,476,822 - - - - - - 584,088 (465,699) - (465,699) - - - - - - - - - - 175,000 - (58,695) (58,695) - - - - (499,494) - (499,494) - 499,494 - - - - - -(6,610,525) 194,162(6,416,363)
Balance, December 31, 2021 27,015,924 $ 67,281,741	$ 4,956,812 $ 6,214,789 $ 11,171,601 $ 255,424 $(61,199,843) $ 299,742 $ 17,808,664
Balance, December 31, 2021 27,015,924 $ 67,281,741 Stock options granted 14 - - Exercise of warrants 13 3,333 4,000 Value of warrants exercised 13 - 1,249 Expiry of stock options 14 - - Expiry of warrants 14 - - Net loss and comprehensive loss for the year - -	$ 4,956,812 $ 6,214,789 $ 11,171,601 $ 255,424 $ (61,199,843) $ 299,742 $ 17,808,665
	17,550 - 17,550 - - - 17,550 - - - - - - 4,000 - (1,249) (1,249) - - - - (1,314,716) (1,314,716) - 1,314,716 - - - (1,207,990) (1,207,990) - 1,207,990 - - - - - - (18,365,334) 861,380 (17,503,954)
Balance, December 31, 2022 27,019,257 $ 67,286,990	$ 3,659,646 $ 5,005,550 $ 8,665,195 $ 255,424 $ (77,042,469) $ 1,161,122 $ 326,262

During the year ended December 31, 2022, the Company implemented a share consolidation where shareholders received one post-consolidation common share for every 15 pre-consolidation common shares held. All share, option and warrant information has been adjusted to reflect this consolidation.

(The accompanying notes are an integral part of these consolidated financial statements)

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

1. Nature of operations

Medivolve Inc. (“Medivolve” or the “Company”) operates under the Canada Business Corporations Act . The Company is publicly traded on the NEO Exchange (“NEO”).

These consolidated financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year.

The accompanying consolidated financial statements have been prepared on the going concern assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Due to continuing operating losses and a working capital deficiency, the Company's ability to continue as a going concern is dependent upon its ability to generate positive cash flows. The Company incurred a loss of $18,365,334 for the year ended December 31, 2022 (2021 – $6,610,524) has a working capital deficiency of $831,860 (2021 – surplus of $15,335,802) and had a cumulative deficit of $77,042,469 (December 31, 2021 - $61,199,843). These conditions indicate the existence of material uncertainties that cast significant doubt about the Company’s ability to continue as a going concern. Accordingly, readers are cautioned that these consolidated financial statements do not reflect adjustments that would be necessary if the "going concern" basis were not appropriate. Changes in future conditions could require material write downs of the carrying value of certain assets.

The Company is closely monitoring the development of the COVID-19 pandemic. The Company’s current primary revenue stream is derived from providing COVID-19 tests. A significant portion of the tests administered by the Company are provided to uninsured individuals, the cost of which is billed to government programs. If demand for COVID-19 testing decreases, or if government programs lose funding or are terminated, due to decreased spread of COVID-19, changes in the perceived risk posed by COVID-19, or for any other reason, it could have a material adverse impact on the Company’s operations, results of operations, and financial condition.

The global response to the COVID-19 outbreak has resulted in, among other things, border closures, severe travel restrictions and extreme fluctuations in financial and commodity markets. Additional measures may be implemented by one or more governments in jurisdictions where the Company operates. Labour shortages due to illness, Company or government-imposed isolation programs, or restrictions on the movement of personnel or possible supply chain disruptions could result in a reduction or cessation of all or a portion of the Company’s operations. The extent to which COVID-19 and any other pandemic or public health crisis impacts the Company’s business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be predicted with any meaningful precision, including new information which may emerge concerning the severity of COVID-19 and the actions required to contain COVID-19 or remedy its impact, among others.

The actual and threatened spread of COVID-19 globally could also have a material adverse effect on the regional economies in which the Company operates, could negatively impact stock markets, including any future trading price of the Company’s shares, could adversely impact the Company’s ability to raise capital, could cause continued interest rate volatility and movements that could make obtaining financing or renegotiating the terms of the Company’s existing financing more challenging or more expensive.

As a result of the continued and uncertain economic and business impact of the COVID-19 pandemic, the Company has reviewed the estimates, judgments and assumptions used in the preparation of its financial statements, including with respect to the determination of whether indicators of impairment exist for its tangible and intangible assets and the credit risk of its counterparties.

The Company has determined that no significant revisions to such estimates, judgments or assumptions were required as at December 31, 2022. However, any of these developments, and others, could have a material adverse effect on the Company’s business and results of operations. In addition, because of the severity and global nature of the COVID-19 pandemic, it is reasonably possible that the estimates in the financial statements could change in the near term and the effect of the change could be material. Potential impacts may include, but are not limited to, impairment of long-lived assets and a change in the estimated credit loss on accounts receivable.

The consolidated financial statements of the Company for the years ended December 31, 2022 and 2021 were reviewed, approved and authorized for issue by the Board of Directors on March 30, 2023. The head office and principal address of the Company is at 198 Davenport Avenue, Toronto, Ontario M5R 1J2.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

2. Significant accounting policies

Basis of preparation

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The policies as set out below were consistently applied to all of the periods presented unless otherwise noted.

These consolidated financial statements have been prepared using the historical cost convention except for certain financial instruments, which have been measured at fair value. All monetary references expressed in these notes are references to Canadian dollar amounts, unless indicated otherwise. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Basis of consolidation

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. To the extent that subsidiaries provide services that relate to the Company’s investment activities, they are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions.

These consolidated financial statements comprise the financial statements of the Company and its wholly owned subsidiaries Collection Sites LLC (“Collection Sites”), incorporated in the State of Nevada, which operates COVID19 testing centres, Noble Bioscience Corp , incorporated in Ontario, a company that had a distribution and sales agency agreement (that has now been terminated) related to a proprietary surface technology which can be used as a COVID-19 disinfectant, Optimum Care Pharmacy Inc. previously doing business as Marbella Pharmacy (“Marbella”) (see Note 8), incorporated in California, and Medivolve Pharmacy Inc. doing business as Marbella in California which operates a retail pharmacy business in California, United States. All material intercompany transactions and balances between the Company and its subsidiaries have been eliminated on consolidation. Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the consolidated financial statements.

Significant accounting judgments, estimates and assumptions

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

 Receivables Determining an allowance for expected credit losses ("ECLs") requires management to make assumptions about the historical patterns for the probability of default, the timing of collection and the amount of incurred credit losses, which are adjusted based on management’s judgment about whether economic conditions and credit terms are such that actual losses may be higher or lower than what the historical patterns suggest. See Note 19 for further details.

 Revenue Recognition The Company is required to make judgments with respect to the recognition of its revenue for certain underlying payors. Based on the terms of the arrangement, the Company determines whether it is probable that the

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

consideration to which it will be entitled in exchange for services that will be transferred to the Company. The Company estimates the probability of the consideration transferring. The assessment of this probability requires estimating the likelihood of the underlying payor making payment. Key areas of estimation include the chances and timing of acceptance under government programs, the ability to bill claims in a timely manner and the ongoing status of the COVID-19 pandemic. The Company recognized revenue for both insured and uninsured patients up to March 23, 2022 due to the existence of the federal uninsured program. This was because the Company believes is probable that it would be paid for its uninsured patients. Subsequent to this date the Company did not believe it was probable to collect consideration for uninsured patients outside the state of California and accordingly did not record revenue. The Company recorded revenue in the state of California for uninsured patients as the Company believes it is probable that the application will be approved and it is probable the consideration will be transferred. See Note 19 for additional information.

 Principal versus agent

The Company is required to make judgments with respect to its relationship with one of its contractors. Based on the terms of the arrangements, the Company determines whether it acts as the principal or an agent for the services provided to its customers. The key elements to determine if the Company acts as a principal or an agent are whether it has primarily responsible to fulfill the promise to deliver the services, whether it has inventory risk, and whether it has discretion in establishing the sales prices for the services. In the arrangement between the Company and Massachusetts Laboratories, Inc. (“Mass Labs”), management has concluded the Company is acting as a principal.

 Variable consideration

The Company determines whether instances where the amount of stated consideration in a contract is not paid in full gives rise to a price concession. If it is determined to be a price concession, the Company determines the transaction price based on the amount of consideration the Company expects to receive for rendering services. The Company estimates the probability and amount of consideration it expects to receive for rendering services using the expected amount method using a combination of historical data regarding amounts billed and amounts actually received, and any potential changes to future payments. The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 Leases

The determination of the Company’s lease liability and right-of-use asset depends on certain assumptions which includes the selection of the discount rate. The discount rate is set by referencing to the Company’s incremental borrowing rate. Significant assumptions are required to be made when determining which borrowing rates to apply in this determination. Changes in the assumptions used may have a significant effect on the Company’s consolidated financial statements.

 Intangibles

Indefinite life intangible assets are tested for impairment annually or more frequently if there is an indication of impairment. The carrying value of intangible assets with definite lives (technology platform and pharmacy license) is reviewed each reporting period to determine whether there is any indication of impairment. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired, and an impairment loss is recognized in profit or loss. The assessment of fair values requires the use of estimates and assumptions related to future operating performance, attributable revenues, EBITDA margin and discount rates, differences in these estimates and assumptions could have a significant impact on the consolidated financial statements.

 Valuation of property plant and equipment and intangible assets

Significant judgment is involved in the determination of useful life for the computation of depreciation of property and equipment and amortization of intangible assets. No assurance can be given that actual useful lives will not differ significantly from current assumptions.

 Fair value of investments not quoted in an active market or private company investments Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 5 and 19 for further details.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

 Share-based payments The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain inputs are estimates which involve considerable judgment and are, or could be, affected by factors that are out of the Company’s control. Refer to Note 14 for further details.

 Recognition of deferred taxes

Deferred tax assets are recognized in respect of tax losses and other temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits, together with future tax planning strategies. Refer to Note 22 for further details.

 Income, value added, withholding and other taxes The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax-related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax-related accruals and deferred income tax provisions in the period in which such determination is made.

 Business combinations

Applying the acquisition method to business combinations requires each identifiable asset and liability to be measured at its acquisition date fair value. The excess, if any, of the fair value of consideration over the fair value of the net identifiable assets acquired is recognized as goodwill. The determination of acquisition date fair values often requires management to make assumptions and estimates about future events. The assumptions with respect to fair value of intangible assets require a high degree of judgment and include estimates for future operating performance, discount rates, technology migration factors and terminal value rates.

 Convertible debt

The classification of the Company’s convertible debentures required Management to analyse the terms and conditions of debentures and use judgment to assess whether the debentures are a liability, equity, or a combination of the two. IAS 32 – Financial Instruments – Presentation (“IAS 32”), provides the criteria for Management to assess these complicated financial instruments to determine their appropriate classification(s). Factors considered are, but not limited to, whether the Company has a future obligation to settle the instrument in cash or exchange other assets or liabilities, the currency of settlement and if the settlement is already known to be equity, the amount will not vary based on the Company’s future share price.

 Significant influence

The Company classifies an investment as an associate based on management’s judgment that the Company has significant influence through board representation and percentage of voting rights attached to securities that the Company owns. Management determined that as of December 31, 2022,the Company has significant influence over its Sulliden Mining Capital Inc. (“Sulliden Mining”) and Amino Therapeutics Inc. (“Amino Therapeutics”) investments. See Note 6. The Company has determined that it holds significant influence over Amino Therapeutics due to its ownership of a 10% equity interest in Amino Therapeutics, and the existence of a common executive officer. The Company has determined that it holds significant influence over Sulliden Mining due to the existence of a common director.

Impairment exists when the carrying value of the investment in associate exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The determination of impairment requires significant judgement and can be triggered by significant adverse changes in the market, economic or legal environment in which the associate operates.

 Contingencies See Note 21.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

Functional and presentation currency

The functional currency for each subsidiary within the Company is the currency of the primary economic environment in which it operates. The Company’s consolidated financial statements are presented in Canadian dollars. The Canadian dollar is the functional currency of the Company and Noble Bioscience Corp. whereas the US dollar is the functional currency of its wholly owned subsidiaries, Collection Sites, Medivolve Pharmacy and Optimum Care Pharmacy.

 Foreign currency translation

Transactions denominated in foreign currencies (other than the functional currency) are recorded on initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at the end of each reporting period into the functional currency at the exchange rate at that date. Exchange differences, other than those capitalized to qualifying assets or recorded in equity in hedging transactions, are recognized in profit or loss. Non-monetary assets and liabilities measured at cost in a foreign currency are translated at the exchange rate at the date of the transaction. Nonmonetary assets and liabilities denominated in foreign currency and measured at fair value are translated into the functional currency using the exchange rate prevailing at the date when the fair value was determined.

The US dollar functional currency of Collection Sites, Medivolve Pharmacy and Optimum Care Pharmacy Inc is translated to the Canadian dollar presentation currency as follows: (1) all of the assets and liabilities are translated at the rate of exchange in effect on the date of the consolidated statement of financial position; (2) revenue and expenses are translated at the exchange rate approximating those in effect on the date of the transactions; and (3) exchange gains and losses arising from translation are included in accumulated other comprehensive income.

Financial instruments

Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company has become a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The Company’s financial instruments are described in Note 19.

Classification

The Company classifies its financial assets and financial liabilities in the following measurement categories (i) those to be measured subsequently at fair value through profit or loss (FVTPL); (ii) those to be measured subsequently at fair value through other comprehensive income (FVOCI); and (iii) those to be measured at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and losses are either recorded in the consolidated statements of earnings or other comprehensive income. The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified.

Amortized cost

This category includes financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the solely principal and interest ("SPPI") criterion. Financial assets classified in this category are measured at amortized cost using the effective interest method.

Fair value through profit or loss

This category includes derivative instruments as well as quoted equity instruments which the Company has not irrevocably elected, at initial recognition or transition, to classify at FVOCI. This category would also include debt instruments whose cash flow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. Financial assets in this category are recorded at fair value with changes recognized in the consolidated statements of earnings. Financial assets at fair value through other comprehensive income Equity instruments that are not heldfor-trading can be irrevocably designated to have their change in fair value recognized through other comprehensive income instead of through the consolidated statements of earnings. This election can be made on individual instruments and is not required to be made for the entire class of instruments. Attributable transaction costs are included in the carrying value of the instruments. Financial assets at fair value through other

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

comprehensive income are initially measured at fair value and changes therein are recognized in other comprehensive income.

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or a financial liability not measured at FVTPL, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss. Financial assets and financial liabilities with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes recognized through the consolidated statements of earnings or other comprehensive income (irrevocable election at the time of recognition). For financial liabilities measured subsequently at FVTPL, changes in fair value due to credit risk are recorded in other comprehensive income.

Impairment

The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition based on all information available, and reasonable and supportive forwardlooking information. With respect to valuation, the financial information of private companies in which the Company has investments may not always be available, or such information may be limited and/or unreliable. Use of the valuation approach described below may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these may not be realized or realizable. In addition to the events described below, which may affect a specific investment, the Company will take general market conditions into account when valuing the privately held investments in its portfolio. In the absence of occurrence of any of these events or any significant change in general market conditions indicates generally that the fair value of the investment has not materially changed. For accounts receivable, the Company applies the simplified approach as permitted by IFRS 9. The approach that the Company has taken for accounts receivable is a provisional matrix, whereby lifetime expected credit losses are recognized based on expected collection. Specific provisions may be used where there is information that a specific customer’s expected credit losses have increased.

Investments in associates

Investments in associates are those entities over which the Company has or is deemed to have significant influence, but not control over, the financial and operating policies, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments over which the Company has the ability to significantly influence are initially recorded at cost. When the initial recognition of the investment in the associate occurs as a result of a loss of control of a former subsidiary, the fair value of the retained interest in the former subsidiary on the date of the loss of control is deemed to be the cost on initial recognition. Investment income (loss) is calculated using the equity method. The Company’s share of the associate’s profit or loss is recognised in profit or loss and its share of movements in other comprehensive income (loss) is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the consolidated statements of income (loss).

Compound financial instruments

Compound financial instruments comprise convertible debentures that can be converted into common shares at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

transaction costs are allocated to the liability and equity components in proportion to their carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.

Intangible assets

Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over their useful economic life and assessed for impairment whenever there is an indication that the intangible asset could be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for on a prospective basis by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. Intangible assets are derecognized on disposal, or when no future economic benefits are expected from their use. Intangible assets with indefinite useful lives are tested for impairment annually, and whenever there is an indication that the intangible asset could be impaired, either individually or at the CGU level. Such intangibles are not amortized. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

Business combinations

Acquisitions have been accounted for using the acquisition method required by IFRS 3, Business Combinations. Goodwill arising from acquisitions is measured as the fair value of the consideration transferred less the net recognized amount of the estimated fair value of identifiable assets acquired and liabilities assumed (subject to certain exemptions to fair value measurement principles such as deferred tax assets or liabilities), all measured as of the acquisition date. Transaction costs that are incurred by the Company in connection with a business combination are expensed as incurred (except for costs directly related to the issuance of shares which are recognized in equity).

The Company uses its best estimates and assumptions to accurately value assets and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, and these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill. On conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in profit and loss.

Cash and cash equivalents

Cash is comprised of cash on hand and deposits that generally mature within 90 days from the date of acquisition. Deposits are held in Canadian chartered banks or in a financial institution controlled by a Canadian chartered bank and US banks.

Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition. Equity investments are excluded from cash equivalents unless they are, in substance, cash equivalents, for example in the case of preferred shares acquired within a short period of their maturity and with a specified redemption date.

As at December 31, 2022 the Company had cash equivalents of $3,052,220 (2021 – $1,268).

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation, and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Repairs and maintenance costs are charged to profit or loss during the period in which they are incurred.

Depreciation is calculated on a straight-line method to write off the cost of the asset to their residual values over their estimated useful lives. The depreciation rates or useful lives applicable to each category of property and equipment and are as follows:

Equipment 5 years Vehicles 5 years Mobile collection sites 8 years

Gains and losses on disposals of property and equipment are determined by comparing the proceeds with the carrying value of the asset and are included as part of other gains and losses in operations.

Leases

The Company implemented a single accounting model, requiring lessees to recognize assets and liabilities for all leases excluding exceptions listed in IFRS 16. The Company elected to apply exemptions for short-term leases and for leases for which the underlying asset is of low value. The Company has also elected to apply the practical expedient to not separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component. At the inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether there is a conveyance of the right to control the use of an identified asset for a specified time in exchange for consideration.

Based on the accounting policy applied, the Company recognizes a right-of-use asset and a lease liability at the commencement date of the contract for all leases conveying the right to control the use of an identified asset for a period of time. The commencement date is the date on which a lessor makes an underlying asset available for use by a lessee.

The right-of-use assets are initially measured at cost, which is comprised of:

(i) the amount of the initial measurement of the lease liability;

(ii) any lease payments made at or before the commencement date, less any lease incentives; and (iii) any initial direct costs incurred by the lessee.

After the commencement date, the right-of-use assets are measured at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any re-measurement of the lease liability. Depreciation is calculated using the straight-line method over the estimated useful life of the asset or over the term of the respective lease. If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset.

The lease liability is initially measured at the present value of the lease payments that are not paid at that date, which is comprised of:

(i) fixed payments, less any lease incentives receivable;

(ii) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

(iii) amounts expected to be payable by the lessee under residual value guarantees;

(iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

(v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate on the underlying asset. Generally, the Company uses its

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

incremental borrowing rate on the underlying asset as the discount rate. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease term determined by the Company is comprised of:

(i) non-cancellable period of lease contracts;

(ii) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and

(iii) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

Accounting by the lessor

There are no contracts in which the Company is the lessor.

Revenue recognition

The Company's main source of revenue consists of administering various COVID related tests and reporting the results of these tests to the customer. These tests are at fixed prices. Revenue is recognised once the result of the test has been provided to the customer and collection is reasonably assured. Payments received for which test results have not yet been delivered are reported as deferred revenue.

Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity investments at the grant date. Fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity reserve. For options that expire unexercised, the recorded value is transferred to deficit.

Loss per share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares for the period. In computing diluted earnings per share, an adjustment is made for the dilutive effect of the exercise of stock options and warrants. The number of additional shares is calculated by assuming that outstanding stock options and warrants are exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting periods. In periods where a net loss is reported, all outstanding options, warrants and convertible debentures are excluded from the calculation of diluted loss per share, as they are anti-dilutive.

Taxation

I. Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or 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 end of each reporting period.

II. Deferred income tax

Deferred income tax is provided using the liability method on temporary differences, at the end of each reporting period, between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in 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 at the end of each reporting period. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the profit or loss.

Deferred income tax assets and deferred income tax liabilities are offset if, and only if, a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to either settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Royalty interests

The Company holds royalty interests in certain research stage projects. Royalty interests are recorded at cost and capitalized as intangible assets with infinite lives. Royalty interests on research stage projects, where there are no cash inflows, are not amortized. The Company evaluates its royalty interests for impairment whenever events or changes in circumstances, which may include significant changes in publicly available information from operators of the assets, indicate that the related carrying value of the royalty interests may not be recoverable. The recoverability of royalty interests is evaluated based on future undiscounted net cash flows from each royalty interest. Impairments in the carrying value of each royalty are measured and recorded to the extent the carrying value of each royalty exceeds its recoverable amount, which is the higher of fair value less costs to sell or value in use, which is generally calculated using estimated discounted future cash flows.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed in profit (loss) to the extent that the carrying amount of the royalty interest at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. Estimates related to the royalty interests are subject to certain risks and uncertainties which may affect the recoverability of the Company’s investment in these royalty interests. Although the Company has made its best assessment of these factors based on current conditions, it is possible that changes could occur, which could adversely affect the net cash flows expected to be generated from these royalty interests.

Inventories

Inventories are comprised of antigen and antibody test kits and retail pharmacy products and all of them are treated as finished goods. Inventories are recorded at the lower of cost and net realizable value. Cost includes the purchase price and other costs, such as import duties, taxes and transportation costs. Inventory cost is determined on a first-in, first-out basis and any trade discounts and rebates are deducted from the purchase price.

Net realizable value represents the estimated selling price for inventories as part of the services in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale.

As of December 31, 2022, the book value of inventory is $343,342 (2021 — $388,631) which is entirely composed of finished inventory recorded at cost. During the year ended December 31, 2022, $2,799,899 of inventory was expensed in cost of sales (2021 — $7,059,678) and the provision for obsolete inventory totalled $Nil (2021 - $Nil).

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

New and future accounting pronouncements

During the year ended December 31, 2022, the Company adopted a number of amendments and improvements of existing standards. These new standards and changes did not have any material impact on the Company’s financial statements.

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2023. Many are not applicable or do not have a significant impact to the Company and have been excluded. Management is currently evaluating the impact of these pronouncements on the Company's consolidated financial statements.

IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on January 1, 2023.

IAS 1 – In February 2021, the IASB issued ‘Disclosure of Accounting Policies’ with amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial statements. The amendments are effective for year ends beginning on or after January 1, 2023.

IAS 8 – In February 2021, the IASB issued ‘Definition of Accounting Estimates’ to help entities distinguish between accounting policies and accounting estimates. The amendments are effective for year ends beginning on or after January 1, 2023.

IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined, however early adoption is permitted.

3. Loans receivable

		December	31,	2022	December	31, 2021
Blue SkyEnergyInc.	Unsecured	$		-	$	12,923
		$		-	$	12,923

On September 16, 2019, the Company entered into a loan agreement with Blue Sky Energy Inc. (“Blue Sky”) for a loan of $10,000. Interest is accrued and calculated at 12% per annum. The loan principal and accrued interest were due and payable on June 30, 2020, which was extended to June 30, 2021 and then further extended to June 30, 2022. Scott Moore, a former director of the Company, is a former director of Blue Sky. On April 1, 2022, the loan was converted in full to common shares of Blue Sky Energy Inc. (now EV Technology Group Ltd.) See Note 5.

On August 17, 2020 the Company entered into a loan agreement with Breeze Laboratory SAS Colombia (“Breeze”) and agreed to lend Breeze up to US$500,000 with interest accrued and calculated at 12% per annum. The loan principal and accrued interest are due and payable six months from the date when drawdown is made. Deborah Battiston, former CFO of the Company is the former CFO of Flora Growth Corp., which acquired Breeze on December 31, 2020. During the year ended December 31, 2021, the Company impaired its loan to Breeze due to concerns regarding collectability of the balance. See Note 17.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

4. Accounts receivable

		December 31, 2022		December 31, 2021
Testing receivables (Note 19,20)	$	20,394,998	$	55,763,906
Expected credit losses on testing receivables (Note 19)		(9,734,703)		(1,517,113)
Pharmacy receivables		121,116		185,537
Sales taxes receiveable		526,104		69,725
Related party receivables (Note 20)		125,000		135,706
Other receivables		983,343		676,881
Provision on other receivables		(707,601)		-
	$	11,708,256	$	55,314,642

5. Investments

Investments at fair value through profit and loss

Public investments

As at December 31, 2022, the Company’s two publicly traded investment had a total fair value of $2,314 (2021: one investment with fair value of $4,302).

December 31, 2022			Estimated
Public Issuer	Security description	Cost	Fair Value	% of FV
Last Mile Holdings Inc.*	172,071 common shares	$ 86,036	$ -	0.0%
EV TechnologyGroupLtd.	12,857 common shares	12,857	2,314	100.0%
Totalpublic investments		$98,893	$2,314	100.0%

==> picture [417 x 69] intentionally omitted <==

Private investments

As at December 31, 2022, the Company’s three privately held investments had a total fair value of $nil (2021 - nil).

December 31, 2022	December 31, 2022					Estimated
Private Issuer		Security description		Cost		Fair Value
Glenco Medical		30% of common shares	$	2,220,000	$	-
Latin-Canada Pharma Inc		40% of common shares		2,160,000		-
Marvel Diagostics		13% of common shares		418,360		-
Totalprivate investments			$	4,798,360	$	-

	December 31, 2021					Estimated
	Private Issuer	Security description		Cost	Fair Value
	Glenco Medical	30% of common shares	$	2,220,000	$	-
	Latin-Canada Pharma Inc	40% of common shares		2,160,000		-
	Marvel Diagostics	13% of common shares		418,360		-
	Totalprivate investments		$	4,798,360	$	-

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

On January 24, 2021, the Company completed a share purchase agreement to acquire up to 40% of Marvel Diagnostics, Inc. (“Marvel”), for an aggregate price of up to USD$1.0 million through a series of milestone-based payments. Marvel’s only asset was a pre-clinical trial stage project called BlowFISH. The BlowFISH technology offers the potential for a simple, inexpensive, non-invasive, massively deployable, rapid diagnostic or sentinel system for detecting respiratory illness and airborne viral threats. Medivolve will make an initial investment of USD$165,000 ($210,788) within 30 days (paid) to acquire approximately 6.6% of Marvel. Medivolve will make a second investment of USD$165,000 ($207,570) within 60 days to acquire an additional 6.6% of Marvel (paid). Following the two initial investments, Medivolve shall have the right to purchase an additional 26.8% of Marvel based on a series of milestones that include: (i) Successful clinical trial result for the BlowFISH collection device; (ii) Successful receipt of emergency use authorization for the collection device and; (iii) Receipt of emergency use authorization for rapid antigen BlowFISH detection. During the year ended December 31, 2021, the Company fully impaired the investment as the technology in Marvel was determined not to be commercially viable. The agreement with Marvel has since been terminated and the Company retains it 13.2% interest as at December 31, 2022. As at December 31, 2022 and 2021, the value of the Marvel investment was nil.

On June 22, 2020, the Company acquired 30% of the issued and outstanding shares of Glenco Medical Corp. (“Glenco Medical”) by issuing 800,000 of the Company’s common shares. Glenco Medical acts as the exclusive Canadian distributor of CareWear® wearable therapeutics class II low level light therapy device. The estimated fair value of the consideration paid to acquire the investment was $2,220,000 based on the fair market value of the common shares issued by the Company. Due to the COVID pandemic, the therapy business did not progress. Glenco Medical also developed protocols for the safe return of sports players, businesspeople, students, performers and shoppers to their respective professions. Although Glenco Medical did enter into agreements to provide COVID-19 protocols with a number of entities, including specifically in the media and film business, the management of Glenco was not able to establish a viable commercial business and therefore the Company decided to write down the asset. Should market conditions improve and the fair value of investments increase, the asset will be written up at that time. During the years ended December 31, 2022 and 2021, there were no operations in Glenco Medical.

On July 28, 2020, the Company acquired an indirect interest of 28% in Sanaty IPS S.A.S (“Sanaty”), through a definitive agreement made with Latin-Canada Pharma Inc. (Canada) and Latin-Canada Pharma Inc. (Bahamas) (“LCP Bahamas”) for 40% interest in LCP Bahamas which own 70% of Sanaty. Sanaty operates medical and diagnostic clinics in Colombia. The Company issued 800,000 of the Company’s common shares. The Company has assessed this investment and determined that it cannot assert significant influence over LCP or Sanaty. As a result this investment is recorded at fair value. In addition, the Company is required to issue 4,000,000 common shares upon Sanaty reaching certain sales thresholds. As a triggering event has not yet occurred, these amounts have not been reflected in these financial statements. Following the acquisition of Collection Sites LLC, the Company decided to focus its resources to develop and advance the COVID-19 testing business. As a result, the Company made the determination to no longer fund the Sanaty operations and the decision was made to write down the asset. At December 31, 2020, the Company wrote down the investment in Latin-Canada Pharma Inc. to nil as there has been no indication that the operation has been profitable. Should market conditions improve and the fair value of investments increase, the asset will be written up at that time.

During the years ended December 31, 2022 and 2021, the following losses on private investments were recorded:

Fair value loss on private investments Amino fair value loss Marvel fair value loss Latin Canada Pharma fair value loss	December 31, 2022 - $ - - - $	December 31, 2021 502,538 $ 418,360 120,000
		1,040,898 $

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

6. Investments in associates

December 31, 2022				Carrying
Investment in associates	Security description	Cost		Value
Sulliden Mining Capital Inc.	5,740,605 common shares	$ 300,067	$	-
Amino Therapeutics	10% of common shares	1,797,360		-
Total investments in associates		$ 2,097,427	$	-

December 31, 2021		Carrying
Investment in associates	Security description	Cost Value
Sulliden Mining Capital Inc.	5,740,605 common shares	$ 300,067 $ 88,326
Amino Therapeutics	10% of common shares	1,797,360 400,000
Total investments in associates		$ 2,097,427 $ 488,326

On January 31, 2020, the Company purchased 3,133,333 common shares and 2,607,272 flow-through shares of Sulliden. The Company recorded an equity loss of $313,516 for the year ended December 31, 2021 and a further loss of $88,326 for the year ended December 31, 2022. Sulliden Mining has a fiscal year end of July 31 and reporting periods of October 31, January 31, April 30 and July 31. The Company has determined that it holds significant influence over Sulliden Mining due to the existence of a common director. The Company holds approximately 5% interest in the common shares of Sulliden Mining.

On April 13, 2020, the Company acquired 40% of the issued and outstanding shares of Amino Therapeutics (“Amino) by issuing 1,000,000 of the Company’s common shares and agreed to make cash payments of USD$2.0 million (USD$180,000 ($250,380) paid). Amino is a company focused on developing biologic therapeutics for COVID-19. In March 2021, the Company disposed of 30% of this investment and as at December 31, 2021 and December 31, 2022 holds a 10% interest in Amino.

The Company has determined that it holds significant influence over Amino Therapeutics due to its ownership of a 10% equity interest in Amino Therapeutics, and the existence of a common executive officer.

On March 11, 2021, the Company entered into an amended agreement with Amino to reduce the ownership interest from 40% to 10% in consideration for forgiveness of the balance of outstanding debt of USD$1,566,870 ($1,994,939), which was discounted at 12%. During the year ended December 31, 2021, the Company impaired the investment by $264,890. Amino Therapeutics’ research initiatives required additional capital investments from the Company. During the year ended December 31, 2022, the Company further impaired the investment by $400,000 as there was no viable progress made on Amino’s research initiatives as there was no additional capital raised.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

7. Property and equipment

	Mobile
	Collection
	Sites	Equipment	Vehicle	Total
	$	$	$	$
Balance as at January 1, 2021	659,680	5,849	17,127	682,656
Additions	-	20,523	22,159	42,682
Foreign CurrencyTranslation	(25,780)	7	(289)	(26,062)
Balance as at December 31,2021	633,900	26,379	38,997	699,276

Balance as at January 1, 2022	633,900	26,379	38,997	699,276
Impairments	(139,132)	-	-	(139,132)
Foreign CurrencyTranslation	43,647	1,802	2,664	48,113
Balance as at December 31,2022	538,415	28,181	41,661	608,257
Accumulated depreciation
Balance as at January 1, 2021	(13,743)	(135)	-	(13,878)
Changes for the year	(78,205)	(4,184)	(7,335)	(89,724)
Foreign CurrencyTranslation	(496)	(50)	(97)	(643)
Balance as at December 31,2021	(92,444)	(4,369)	(7,432)	(104,245)
Balance as at January 1, 2022	(92,444)	(4,369)	(7,432)	(104,245)
Changes for the year	(81,353)	(5,415)	(8,005)	(94,773)
Foreign CurrencyTranslation	(9,611)	(521)	(835)	(10,967)
Balance as at December 31,2022	(183,408)	(10,305)	(16,272)	(209,985)
Net book value as at December 31, 2021	541,456	22,010	31,565	595,031
Net book value as at December 31, 2022	355,007	17,876	25,389	398,272

Management has reviewed the valuation of the property and equipment and identified indicators of impairment for its mobile collection sites and impaired the value of the sites no longer in use due to the closure of locations to its fair value less costs of disposal.

8. Business combinations

Optimum Care Pharmacy Inc. previously doing business as Marbella Pharmacy (“Marbella”)

On August 13, 2021, the Company acquired 100% of the outstanding common shares of Marbella, an arm’s length company that has a retail pharmacy in the state of California, in exchange for total consideration of $474,135, which the Company satisfied through the issue of 133,333 common shares of the Company and a cash payment of USD$275,000.

Consideration
133,333 common shares	$	130,000
Cash - USD$275,000	$	344,135
	$	474,135

The 133,333 common shares issued pursuant to the acquisition agreement were valued based on the closing share price of the Company on August 13, 2021, which was $0.975.

This acquisition was accounted for as a business combination under IFRS 3, with the Company as the acquirer, and Marbella as the acquiree. The business combination was recorded at 100% of the fair value of the net assets acquired. The purpose of the acquisition was to create future synergies in the Company’s digital health business.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

The allocation of the consideration to the fair value of the net assets acquired at the date of acquisition is as follows:

	Fair value
	recognized on
	acquisition
	$
Current assets	503,184
Intangible asset	190,925
Trade and other payables	(110,956)
Loanpayable	(109,017)
Purchase consideration transferred	474,135

Intangible asset represents the pharmacy license for the state of California that was acquired.

Subsequent to the acquisition, the loan payable of USD87,116 ($109,017) under the Paycheck Protection program (“PPP”) was forgiven.

The Company used the income approach for the valuation methodology for Marbella. Under the income approach, fair value is based on the present value of expected future cash flows attributable to the assets. Future cash flow is based on the net after tax cash flow expected to be derived from the assets over the remaining useful life, after providing for contributory assets, charges for other significant tangible and intangible assets that contribute to the generation of a cash flow stream. The cash flows are discounted to present value. The discount uses a rate of return, which reflects the relevant risk associated with the asset and the time value of money.

Based on the income approach, management recognised intangible assets – pharmacy license of $190,925 on the valuation date.

The valuation of Marbella as of August 13, 2021, is based on the following significant unobservable inputs and a 5% increase/decrease in those inputs will change the valuation as follows:

1. Year over year revenue growth (%) -	1. Year over year revenue growth (%) -	$13,000
2. Pharmacy license attrition rate	-	$28,000
3. EBITDA %	-	$18,000
4. Discount rate	-	$18,000

9. Intangibles

A continuity of the intangible assets for the years ended December 31, 2022 and 2021 are as follows:

										Balance at
		Balance at								December 31,
	December 31, 2021			Additions		Impairments		Amortization		2022
Technology platform	$	1,678,333	$	-	$	-	$	(380,000)	$	1,298,333
Pharmacy license (note 8)		176,605		-		-		(38,185)		138,420
Royaltyinterest		500,000		-		(500,000)		-		-
Total	$	2,354,938	$	-	$	(500,000)	$	(418,185)	$	1,436,753

										Balance at
		Balance at								December 31,
	December 31, 2020			Additions		Impairments		Amortization		2021
Supplier relationships	$	2,242,500	$	-	$	(1,891,500)	$	(351,000)	$	-
Intellectual property		-		5,187,500		(4,647,135)		(540,365)		-
Technology platform		-		1,900,000		-		(221,667)		1,678,333
Pharmacy license (note 8)		-		190,925		-		(14,319)		176,605
Royaltyinterest		500,000		-		-		-		500,000
Total	$	2,742,500	$	7,278,425	$	(6,538,635)	$	(1,127,351)	$	2,354,938

The estimated useful economic life of the Technology platform is 5 years.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

The estimated useful economic life of the Pharmacy license is 5 years.

During the year ended December 31, 2021, the Company fully impaired its supplier relationship asset as the supplier relationship was terminated during the year ended December 31, 2021.

Cost of termination of contract

During the year ended December 31, 2021, the Company terminated its laboratory testing contract with one of its suppliers and recorded an associated impairment of the supplier relationship. This relationship was terminated due to capacity limitations processing PCR tests, concerns regarding collection rates for outstanding receivables, the number of insurance carriers accepted and inability to transition to the Company’s planned change to the nocost pricing model. In order to terminate this agreement, the Company agreed to allow the supplier to retain the uncollected receivables and as such recorded a cost to terminate the contract of $1,285,915.

Noble Bioscience Corp.

On February 24, 2021 Medivolve entered into a definitive agreement and subsequently closed the transaction to acquire 100% of Noble Bioscience Corp. (“Noble Bioscience”). Noble Bioscience is an arm’s length company that has a distribution and sales agency agreement related to a proprietary surface technology which can be used as a COVID-19 disinfectant. Medivolve issued a total of 833,333 common shares to the shareholders of Noble Bioscience, in exchange for a 100% interest in Noble Bioscience. No finder fees were paid connection with the transaction. The transaction was accounted for as an asset acquisition as Noble did not have any other assets or liabilities and did not meet the definition of a business under the rules of IFRS 3.

The Company acquired all of the common shares of Noble Bioscience for a total consideration of $5,187,500 consisting of:

consisting of:
Consideration
833,333 common shares	$	5,187,500

The 833,333 common shares issued pursuant to the acquisition agreement were valued based on the closing share price of the Company on February 23, 2021, which was $6.225.

The allocation of the consideration to the fair value of the net assets acquired at the date of acquisition is as follows:

Intangible asset - Intellectual property $ 5,187,500

During the year ended December 31, 2021, the Company fully impaired its Intellectual property asset as the distribution and sales agency agreement was terminated.

Healthcare Application

On May 28, 2021, the Company signed an agreement to acquire an Electronic Health Record application (“EHR”) and all associated intellectual property and technology from Myosin Inc.(“Myosin”), an arm’s length company. The Company issued 1,333,333 common shares of the Company to the shareholders of Myosin, in exchange for a 100% interest in the EHR.

The 1,333,333 common shares issued pursuant to the acquisition agreement were valued based on the closing share price of the Company on May 28, 2021, which was $1.425.

Royalty interests

On April 2, 2020, the Company announced an investment commitment in the Sunnybrook Research Institute’s (“Sunnybrook”) COVID-19 research. The Company was to receive a 3.5% royalty on any revenues earned by Sunnybrook from the commercialization of its COVID-19 research. Under the agreement, the Company agreed

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

to provide $1,000,000 in funding to the program. The Company paid the first installment of $250,000 on April 2, 2020 and was to pay the remaining amounts in three equal installments of $250,000 within the next twelve months. On December 31, 2020, the Company entered into an amendment agreement with Sunnybrook whereby the royalty interest was reduced to 1.75% for total funding of $500,000. During the year ended December 31, 2021, the Company issued 21,739 shares of the Company in settlement of $150,000 of the amount owing and agreed to pay $100,000 in 10 monthly installments in full settlement of the remaining amount owing ($100,000 paid). During the year ended December 31, 2022, the Company recorded an impairment on the royalty asset as the royalty was related to the commercialization of IP from Sunnybrook Translational Research Group for Emerging and Respiratory Viruses. Given the decrease in COVID-19 testing volumes and perceived risk waning the Company noted indicators of impairment and compared the carrying value to the recoverable value resulting in an impairment charge of $500,000.

10. Accounts payable and accrued liabilities

		December 31, 2022		December 31,2021
Trade payables (Note 19, 20)	$	7,811,581	$	26,664,145
Accrued expenses		4,602,623		6,534,468
	$	12,414,204	$	33,198,613

During the year ended December 31, 2021, the Company issued 24,631 shares of the Company in settlement of $170,000 of accounts payable.

11. Loans payable and convertible note

		December	31, 2022	December 31,2021
Cambridge Capital Inc.	Secured	$	-	$ 543,068
Aberdeen International Inc.	Unsecured		55,746	266,880
Forbes and Manhattan(Note 20)	Unsecured		40,632	40,435
		$	96,378	$850,383

Cambridge Capital Inc. (“Cambridge”)

On April 21, 2020, the Company issued a promissory note in the amount of USD$7,700,000 ($10,271,030) to Cambridge, an arm’s length, third party lender. No interest is payable under the terms of the note. As additional consideration, the Company paid an origination fee of USD$1,300,000 ($1,734,070) and issued 400,000 of the Company’s common shares to the lender, with an estimated fair value of $2,790,000 ($6.975 per share) based on the closing price of the shares on the date of issuance. These amounts were shown as financing costs on the statement of operations. The origination fee forms part of the principal owing under the note, consequently USD$9,000,000 ($12,005,100) was due on maturity.

The note provides for security over all the assets of the Company and was due within 60 days from the date of issuance. On June 21, 2020, Cambridge granted the Company a 60-day extension on the note. The note was secured as part of the profit-sharing agreement with More Than Just Rice (“MTJR “)in order to finance the purchase of 1 million COVID-19 antibody testing kits from South Korean diagnostic testing company PCL Inc., to be distributed in the North and South American markets.

On October 21, 2020, the Company signed a 90-day loan agreement with the lender for a loan of $600,000 with 12% annual interest. On November 10, 2020, the Company also repaid $1,600,000 as partial payment against the USD$7.7 million promissory note. On April 13, 2021, the Company signed a 90-day loan agreement with the lender for a loan of $500,000 with 12% annual interest.

On February 9, 2021, the Company issued 569,715 common shares in settlement of USD$3,100,000 ($3,931,033) owed to Cambridge. On July 9, 2021, the Company issued 6,210,447 units in settlement of USD$4,680,766 ($5,869,681) and $651,288 owed to Cambridge. The fair value of the common shares issued was estimated based on the trading price of the common shares on the date of the transaction. On April 26, 2022, the Company repaid $191,000 of the loan outstanding and the remaining amount was repaid in the fourth quarter of 2022. At December 31, 2022, the loan has been fully repaid.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

Aberdeen International Inc. (“Aberdeen”)

On November 10, 2020, the Company borrowed $500,000 from Aberdeen with interest accrued and calculated at 12% per annum and a six-month repayment term. On April 8 and May 13, 2021, the Company borrowed another $500,000 and $200,000, respectively, from Aberdeen. On June 10, June 11, and June 24, 2021, the Company borrowed another USD$82,500, USD$220,000 and USD$230,000, respectively, from Aberdeen. On July 9, 2021, the Company issued 1,606,787 units in settlement of $939,452 and USD$536,195 ($672,389) owed to Aberdeen. The fair value of the common shares issued was estimated based on the trading price of the common shares on the date of the transaction. During the year ended December 31, 2022, the Company repaid $222,018 of the loan outstanding. As at December 31, 2022, loan principal and accrued interest totaling $55,746 remained outstanding.

Convertible note

On August 30, 2021, the Company closed a secured convertible note financing for aggregate gross proceeds to the Company of $1,200,000. The notes have a term of 24 months, an annual interest rate of 7% and are convertible into an aggregate of up to 1,142,857 units at a price per unit of $1.05. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at an exercise price of $1.20 for a period of five years from the date hereof. No finder fees or commissions were paid as part of the offering. The equity component of the convertible note was valued at $255,424 using the residual method.

The liability component of the convertible notes was valued using Company specific interest rates assuming no conversion features existed. The debt component is accreted to its fair value over the term to maturity as a noncash interest charge and the equity component is presented in equity component on convertible note. For the year ended December 31, 2022, accretion expense was $206,954 (2021 - $63,856). The carrying value of the convertible note as at December 31, 2022 was $1,088,386 (2021 - $965,432). The amount to be repaid on August 30, 2023 is $1,200,000.

Other loans

During the year ended December 31, 2021, the Company settled $1,730,466 owing to Sulliden Mining Capital through the issuance of 1,648,063 common shares and $789,685 owing to Greenway Investments International through the issuance of 114,443 common shares. The fair value of the common shares in both transactions was estimated based on the trading price of the common shares on the date of the transaction.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

12. Leases

The following table reconciles the Company’s lease obligations and right of use assets.

Right of use asset		Premise lease
Balance,January1,2021	$	10,941,321
Additions - lease commitments		442,496
Disposals		(11,047,687)
Foreign CurrencyTranslation		(336,130)
Balance, December 31, 2021	$	-
Additions - lease commitments		1,373,943
Impairment		(255,819)
ForeignCurrencyTranslation		92,638
Balance, December 31, 2022	$	1,210,762
Accumulated amortization
Balance,January1,2021	$	3,063,495
Amortization		3,606,258
Disposals		(6,497,938)
Foreign CurrencyTranslation		(171,815)
Balance, December 31, 2021	$	-
Amortization		1,032,852
Foreign CurrencyTranslation		42,173
Balance, December 31, 2022	$	1,075,025
Lease liabilities		Premise lease
Balance, January 1, 2021	$	6,775,229
Disposals		(3,739,138)
Interest expense		131,478
Lease payments		(3,146,236)
Gain on early termination of lease		(446,775)
Foreign exchange loss		425,442
Total lease liabilities at December 31, 2021	$	-
Balance, January 1, 2022	$	-
Lease additions		1,373,943
Interest expense		107,474
Lease payments		(1,089,160)
Foreign exchange loss		51,916
Total lease liabilities at December 31, 2022	$	444,173
Current portion of lease liabilities	$	444,173
Long-termportion of lease liabilities		-
Total lease liabilities at December 31, 2022	$	444,173

During the year ended December 31, 2021, the Company terminated a lease agreement in exchange for agreeing to make a payment of USD$50,000 ($62,875) resulting in a gain on early termination of lease of $18,563. Additionally, a separate lease agreement was amended in that the fixed lease payments were amended to a percentage of gross sales arrangement, resulting in a gain on modification of lease of $436,905 and a loss on disposal of the right of use asset of $1,329,915. Additionally, this lease agreement was amended again such that the percentage of gross sales arrangement was amended to a fixed monthly rate per location, resulting in a gain on modification of lease of $2,080,271. As consideration for the lease settlement, the Company paid USD$400,000 ($509,640) and issued

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

420,000 of common shares of the Company with an estimated fair value of $441,000. The fair value of the common shares issued was estimated based on the trading price of the common shares on the date of the transaction.

During the year ended December 31, 2022, the Company noted indicators of impairment due to the closure of locations during the year as well as additional closures subsequent to year end. The Company recorded impairment of $255,819 based on the impairment analysis.

The total expense related to short-term leases was $954,285 for the year ended December 31, 2022 (2021 - $1,030,487) and is recorded in facility costs in the consolidated statements of operations. There was no expense for variable lease expense for the year ended December 31, 2022 (2021 – $nil) The Company’s leases are primarily leases for land upon which it operates its mobile collection sites.

Included in facility costs is depreciation on right of use leases of $1,032,852 for the year ended December 31, 2022 (2021 - $3,606,258).

13. Share capital

Authorized: unlimited without par value

Common shares issued

	Number of Shares	Amount
Balance, December 31, 2020	9,986,007	$ 41,269,852
Units issued through private placements	13,238,095	17,500,000
Shares issued for acquisitions (Note 8 and 9)	2,300,000	7,217,500
Shares issued for debt arrangement (Note 10)	1,150,535	5,481,691
Fair value of warrants issued	-	(4,993,449)
Broker warrants issued	-	(95,561)
Compensation units issued	18,453	61,809
Cost of issue allocated to shares	-	(443,584)
Options exercised	253,500	584,088
Valuation of options exercised	-	465,699
Warrants exercised	69,333	175,000
Valuation of warrants exercised	-	58,695
Balance, December 31, 2021	27,015,924	$ 67,281,741
Warrants exercised	3,333	4,000
Valuation of warrants exercised	-	1,249
Balance, December 31, 2022	27,019,257	$ 67,286,990

On March 3, 2022, 3,333 share purchase warrants for total gross proceeds of $4,000 were exercised. The grant date fair value of the warrants exercised was $1,249, these amounts were reallocated to share capital from sharebased payments reserve.

On January 26, 2021, the Company closed a private placement of an aggregate of 1,333,333 units at a price per unit of $3.75 for aggregate gross proceeds to the Company of $5,000,000. Canaccord Genuity Corp. acted as the

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

sole lead underwriter and sole bookrunner. Each unit consisted of one common share of the Company and onehalf of one common share purchase warrant. Each whole warrant entitles the holder thereof to purchase one common share at an exercise price of $6.00 until January 26, 2023, subject to an acceleration right exercisable by the Company if, at any time following the date that is four months and one day from the closing date, the daily volume weighted average trading price of the Company's common shares on the NEO is greater than $12.00 for the preceding 10 consecutive trading days. As consideration for the services provided by Canaccord in connection with the offering, Canaccord received (i) a cash commission equal to 6.5% of the gross proceeds of the offering (other than from the issue and sale of the units to certain purchasers on a president's list, for which a 3.0% cash commission was paid); (ii) a corporate finance fee equal to 18,453 units (“compensation units”); and (iii) 77,333 compensation warrants. Each compensation warrant entitles the holder thereof to acquire one unit for $3.75 until January 26, 2023.

January 26, 2021 Private Placement Funds Breakdown

Private Placement Cash to Medivolve Total Proceeds	Gross Proceeds
	5,000,000 $ 5,000,000
	5,000,000 $

The issue date fair value of the warrants, compensation warrants and compensation units and were estimated at $534,000, $95,561 and $69,200, respectively using the Black Scholes option pricing model with the following weighted average assumptions: share price $3.30; expected dividend yield of 0%; expected volatility of 74.5% (based on a blended historical volatility of the Company and industry averages); risk-free interest rate of 0.17%, and an expected life of 2 years. The compensation units were allocated as follows: $61,809 to common shares and $7,391 to warrants. The Company paid total cash share issue costs of $401,008, of which $60,425 was allocated to the cost of issuing warrants.

On February 9, 2021, the Company issued a total of 594,353 common shares at a deemed issue price of $6.90 per share pursuant to a shares for debt settlement. A total of 24,638 common shares were issued in settlement of $345,342 owed to a consultant, which resulted in a gain on debt settlement of $175,342, and 569,715 common shares in settlement of USD$3,100,000 ($3,931,033) owed to Cambridge. The fair value of the common shares issued was estimated based on the current share price of the common shares on the date of the transaction.

On July 9, 2021, the Company issued an aggregate of 11,428,571 units at an issue price of $1.05 per unit, of which 1,904,762 units having an aggregate issue price of $2,000,000 were issued for cash, and 9,523,810 units having an aggregate issue price of $10,000,000 were issued in settlement of outstanding debts and accounts payable of the Company, as more particularly set out in the table below. Each unit consisted of one common share of the Company and one warrant exercisable to purchase one common share at an exercise price of $1.20 until July 9, 2026. No finder fees or commissions were paid as part of the offering.

The fair value of the common shares issued was estimated based on the current share price of the common shares on the date of the transaction. The issue date fair value of the warrants was estimated at $4,282,843 using the Black Scholes option pricing model with the following weighted average assumptions: share price $0.675; expected dividend yield of 0%; expected volatility of 84% (based on a blended historical volatility of the Company and industry averages); risk-free interest rate of 0.89%, and an expected life of 5 years. The Company paid total cash share issue costs of $21,800, of which $7,796 was allocated to the cost of issuing warrants.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

July 9 Private Placement Funds Breakdown

Private Placement Funds directed to: Cambridge Capital Inc. Sulliden Mining Capital Inc. Aberdeen International Inc. Accounts payable Cash to Medivolve Total Proceeds	Gross Proceeds
	12,000,000 $ 6,520,969 1,730,466 1,611,841 136,724
	10,000,000 2,000,000
	12,000,000 $

On November 9, 2021, the Company closed a non-brokered private placement of an aggregate of 476,190 units at an issue price $1.05 pursuant to a shares for debt settlement. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at an exercise price of $1.20 until November 9, 2026. No finder fees or commissions were paid as part of the offering.

November 9, 2021 Private Placement Funds Breakdown

Private Placement Funds directed to: Accounts payable Cash to Medivolve Total Proceeds	Gross Proceeds
	500,000 $ 500,000
	-
	500,000 $

The issue date fair value of the warrants was estimated at $176,606 using the Black Scholes option pricing model with the following weighted average assumptions: share price $0.675; expected dividend yield of 0%; expected volatility of 85% (based on a blended historical volatility of the Company and industry averages); risk-free interest rate of 1.37%, and an expected life of 5 years. The Company paid total cash share issue costs of $12,000, of which $4,343 was allocated to the cost of issuing warrants.

On November 22, 2021, the Company issued 420,000 common shares in settlement of $441,000 owed to a vendor. The common shares issued were valued at $1.05 (total value of $441,000), being the current share price on the date of issuance.

During the year ended December 31, 2021, 253,500 stock options for total gross proceeds of $584,088 and 69,333 share purchase warrants were exercised for total gross proceeds of $175,000. The grant date fair value of the stock options exercised was $465,700 and the grant date fair value of the warrants exercised was $58,695, these amounts were reallocated to share capital from share-based payments reserve.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

14. Share-based payments reserve

	Options	Warrants
	Number of options Weighted average exercise price Estimated grant date fair value of options	Number of warrants Weighted average exercise price Estimated Grant Date Fair Value of warrants Total
December 31, 2020	982,920 3.00 $ 2,445,183 $	1,070,000 3.75 $ 1,254,195 $ 3,699,378 $
Granted Expired Exercised Warrant issue costs	1,953,333 2.40 3,476,822 (144,920) 4.05 (499,494) (253,500) 2.25 (465,700) - - -	12,657,989 1.50 5,096,400 8,573,221 - - - (499,494) (69,333) 2.55 (58,694) (524,394) - - (77,111) (77,111)
December 31, 2021	2,537,833 2.55 $ 4,956,812 $	13,658,655 1.65 $ 6,214,789 $ 11,171,601 $
Granted Exercised Expired	20,000 1.20 17,550 - - - (420,000) 3.99 (1,314,716)	- - - 17,550 (3,333) 1.20 (1,249) (1,249) (1,034,000) 3.75 (1,207,991) (2,522,707)
December 31, 2022	2,137,833 2.28 $ 3,659,646 $	12,621,322 1.47 $ 5,005,549 $ 8,665,195 $

Stock options

The Company has a stock-option plan whereby the Company may grant to directors, officers, employees and consultants options to purchase shares of the Company. The plan provides for the issuance of stock options to acquire up to 10% of the Company's issued and outstanding capital. The plan is a rolling plan as the number of shares reserved for issuance pursuant to the grant of stock options will increase as the Company's issued and outstanding share capital increases. Options granted under the plan will be for a term not to exceed 5 years.

During the year ended December 31, 2022, the Company recorded expired unexercised stock options of $1,314,716 (2021 - $499,494) to deficit.

As at December 31, 2022, the Company had stock options outstanding as follows:

						Grant				Risk-
						date		Expected	Expected	free
Number	Number			Exercise	Fair value at	share	Expected	life	dividend	interest
outstanding	exercisable	Grant date	Expiry date	price ($)	grant date ($)	price ($)	volatility	(years)	yield	rate
-	-
37,500	37,500	11-Oct-2019	11-Oct-2024	1.875	53,887	1.875	104.4%	5	0	1.52%
1,000	1,000	30-Mar-2020	30-Mar-2025	2.40	1,857	2.325	114.3%	5	0	0.62%
113,333	113,333	02-Jul-2020	02-Jul-2025	2.025	190,400	2.025	122.1%	5	0	0.38%
100,000	100,000	25-Aug-2020	25-Aug-2025	2.85	241,800	2.85	127.8%	5	0	0.40%
126,000	126,000	03-Dec-2020	03-Dec-2025	2.40	233,982	2.40	107.6%	5	0	0.46%
33,333	33,333	29-Jan-2021	29-Jan-2026	7.95	204,300	7.950	107.0%	5	0	0.43%
170,000	170,000	01-Feb-2021	01-Feb-2026	8.40	1,101,345	8.400	107.0%	5	0	0.42%
83,333	83,333	29-Apr-2021	29-Apr-2026	2.325	132,125	2.250	93.2%	5	0	0.95%
1,453,333	1,453,333	21-Dec-2021	21-Dec-2026	1.425	1,482,400	1.425	94.4%	5	0	0.94%
20,000	20,000	02-Mar-2022	02-Mar-2027	1.200	17,550	1.200	96.7%	5	0	1.59%
2,137,833	2,137,833			2.28	3,659,646

The weighted average life of the outstanding options at December 31, 2022 was 3.63 years (2021 - 4.52).

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

Options issued by the Company are priced using the Black-Scholes option-pricing model. Where relevant, the expected life used in the model is adjusted based on managements’ best estimate for the effects of nontransferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioural considerations. Expected volatility is based on the historical share price volatility over the past 5 years. The expected life of the option is calculated based on the history of option exercises.

On March 2, 2022, the Company granted 20,000 stock options to an officer to purchase shares of the Company. The stock options vested immediately and have an estimated grant date fair value of $17,550 using the BlackScholes option pricing model with the following assumptions: current share price of $1.20; expected dividend yield of 0%; expected volatility of 96.7%; risk-free interest rate of 1.59%; and an expected average life of 5 years.

On January 29, 2021, the Company granted 33,333 stock options to a director to purchase shares of the Company. The stock options vest in four equal quarterly installments over a period of nine months, with the first installment vesting on the date of grant. The options have an estimated grant date fair value of $204,300 using the BlackScholes option pricing model with the following assumptions: current stock price of $7.59; expected dividend yield of 0%; expected volatility of 107%; risk-free interest rate of 0.43%; and an expected average life of 5 years.

On February 1, 2021, the Company granted 230,000 stock options to certain directors, officers and consultants of the Company. The stock options vested immediately and have an estimated grant date fair value of $1,490,055 using the Black-Scholes option pricing model with the following assumptions: current stock price of $8.40; expected dividend yield of 0%; expected volatility of 107%; risk-free interest rate of 0.42%; and an expected average life of 5 years.

On April 29, 2021, the Company granted 83,333 stock options to a director and an officer of the Company. The stock options vested immediately and have an estimated grant date fair value of $132,125 using the Black-Scholes option pricing model with the following assumptions: current stock price of $2.25; expected dividend yield of 0%; expected volatility of 93.2%; risk-free interest rate of 0.95%; and an expected average life of 5 years.

On December 21, 2021, the Company granted 1,606,667 stock options to a certain directors, officers and consultants of the Company. The stock options vested immediately and have an estimated grant date fair value of $1,638,799 using the Black-Scholes option pricing model with the following assumptions: current stock price of $1.425; expected dividend yield of 0%; expected volatility of 94.4%; risk-free interest rate of 0.94%; and an expected average life of 5 years.

Warrants

As at December 31, 2022, the Company had share purchase warrants outstanding as follows:

	Number					Grant date			Expected	Risk-free
	outstanding &			Exercise	Fair value at grant	share price	Expected	Expected	dividend	interest
	exercisable	Grant date	Expirydate	price($)	date($)	($)	volatility	life(years)	yield	rate
Warrants	666,667	26-Jan-2021	26-Jan-2023	6.00	534,000	3.300	75%	2	0	0.17%
Compensation units	9,227	26-Jan-2021	26-Jan-2023	6.00	7,391	3.300	75%	2	0	0.17%
Compensation warrants	77,333	26-Jan-2021	26-Jan-2023	3.75	95,561	3.300	75%	2	0	0.17%
Warrants	11,391,905	09-Jul-2021	09-Jul-2026	1.20	4,269,102	0.675	84%	5	0	0.89%
Warrants	476,190	09-Nov-2021	09-Nov-2026	1.20	176,606	0.675	85%	5	0	1.37%
Warrant issue costs					(77,111)
	12,621,322			1.47	5,005,549

Compensation warrants are exercisable into units at $3.75 per unit which consists of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder thereof to purchase one common share at an exercise price of $6.00 for a period of 24 months.

The weighted average life of the outstanding warrants at December 31, 2022 was 3.33 years (2021 – 4.05).

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

15. Cost of sales

	2022 2021 For the year ended December 31,
Laboratory fees (Note 20) Payroll Consumables (Note 20) Other (Note 20)	13,278,762 $ 30,882,790 $ 5,466,242 11,768,469 2,206,308 4,757,657 1,838,371 2,846,971
	22,789,684 50,255,887

16. General and administrative

	2022 2021 For the year ended December 31,
Consulting fees and payroll (Note 20) Legal and professional Other administrative Depreciation - property and equipment (Note 7) Depreciation - intangible (Note 9)	16,901,782 $ 7,079,418 $ 4,796,013 2,587,109 953,076 1,218,744 94,773 89,868 418,185 1,127,351
	23,163,830 12,102,490

17. Impairments

		For the year ended December 31,	For the year ended December 31,	For the year ended December 31,
Impairments		2022		2021
Expected credit losses (Note 19)	$	7,808,890	$	1,861,023
Uncollectible other receivable		695,405		-
Supplier relationship impairment (Note 9)		-		1,891,500
Impairment of private investments (Note 5)		-		1,040,898
Impairment of investments in associates (Note 6)		400,000		264,890
Impairment of right of use asset (Note 12)		255,819		-
Impairment of property and equipment (Note 7)		139,132		-
Breeze loan (Note 3)		-		596,174
Impairment of intangible asset (Note 9)		500,000		4,647,135
	$	9,799,245	$	10,301,620

18. Capital management

The Company considers its capital structure to consist of share capital, share purchase options, share purchase warrants and loans. The Company manages its capital structure and makes adjustments based on the funds available to support its capital management objectives:

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

a) to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;
b) to give shareholders sustained growth in value by increasing shareholders’ equity; while
c) taking a conservative approach towards financial leverage and management of financial risks

The management and board of directors of the Company review its capital management approach on an ongoing basis and believe it reflects a reasonable approach given the relative size of the Company’s assets. The Company is not subject to externally imposed capital requirements other than those of the NEO Exchange.

19. Financial instruments

Financial assets and financial liabilities at December 31, 2022 and 2021 are as follows:

	Assets & liabilities
	Assets & at fair value
	liabilities at through
	amortized cost profit and loss	Total
*December 31, 2022*
Cash and cash equivalents	$ 4,271,549 $ -$	4,271,549
Public investments	- 2,314	2,314
Accounts receivable	11,182,152 -	11,182,152
Accounts payable and accrued liabilities	(12,414,204) -	(12,414,204)
Income taxes payable	(2,062,981) -	(2,062,981)
Notes and loans payable	(1,184,764) -	(1,184,764)
Lease liabilities	(444,173) -	(444,173)
Other liabilities	(2,386,035) -	(2,386,035)
*December 31, 2021*
Cash and cash equivalents	$ 112,397 $ -$	112,397
Public investments	- 4,302	4,302
Accounts receivable	55,244,917 -	55,244,917
Loans receivable	12,923 -	12,923
Accounts payable and accrued liabilities	(33,198,613) -	(33,198,613)
Income taxes payable	(6,456,489) -	(6,456,489)
Loans payable	(965,432) -	(965,432)
Other liabilities	(15,835) -	(15,835)

A discussion of the Company’s use of financial instruments and their associated risks is provided below:

Credit risk

Substantially all of the Company’s accounts receivable relate to sales of testing services to patients, referred to as testing receivables. The Company contracts collection of testing receivables to a billing company. The Company evaluates the collectability of testing receivables based on the identity of the underlying payor. There are two primary groups of payors from which the Company seeks payment for testing services provided to patients: insurance companies and government programs.

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

A significant proportion of the Company’s accounts receivable depend on claims that are billable to a limited number of underlying payors, which are major insurance companies or government programs. Accordingly, the Company’s credit risk is concentrated with these insurance companies and government programs. If the credit risk associated with any one of these major insurance companies or government programs were to increase, it could result in a significant increase to the Company’s credit risk.

During May 2021, the Company increased the number of insurance carriers and government payors available for patients to rely on as part of an internal initiative referred to as the “Increased Patient Access Program”. As such, the Company’s accounts receivable balance significantly increased as these tests were billed to additional insurance companies and government payors.

The Company’s billing process changed during 2021 from a manual to an automated process due to increases in the volume of testing receivables, which necessitated the engagement of its current contracted billing company. This automated billing system takes all commercial efforts to verify that a patient does not have insurance coverage (and is therefore eligible to have testing services paid for under a government program) before billing to a government program. In some cases, this verification process may take months, resulting in situations where testing services are rendered to the patient months before the ultimate payment is collected from a government program. Our billing company submits claims as agent on our behalf, through Mass Labs, to government programs and the applicable insurance companies. Funds received by Mass Labs that are due to the Company are then remitted to the Company.

Medical billing in the United States is complex. There are many private insurance carriers, each of which may have unique and detailed billing requirements. Billing a government payor often requires compliance with a multistep process. As a result of these complexities, delays in collecting accounts receivable can occur during peak periods, and otherwise at times when processing a high volume of claims is required.

Evaluation methodology as of December 31, 2021

As part of enacted federal legislation—the Families First Coronavirus Response Act, the Paycheck Protection Program and Health Care Enhancement Act, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) — the U.S. Department of Health and Human Services (HHS), will provide claims reimbursement to health care providers generally at Medicare rates for testing uninsured individuals for COVID-19, for treating uninsured individuals with a COVID-19 primary diagnosis, and for COVID-19 vaccine administration to the uninsured known as HRSA. This program was relevant to Collection Sites’ historical business as a retail testing service due to the fact that many patients without health insurance chose to be tested for COVID in retail settings like those operated by Collection Sites.

The eligibility criteria for reimbursement funding from HRSA are:

• You have checked for health care coverage eligibility and confirmed that the patient is uninsured. You have verified that the patient does not have coverage through an individual, or employer-sponsored plan, a federal healthcare program, or the Federal Employees Health Benefits Program at the time services were rendered, and no other payer will reimburse you for COVID-19 vaccination, testing and/or care for that patient.

You will accept defined program reimbursement as payment in full.
You agree not to balance bill the patient.
You agree to program terms and conditions and may be subject to post-reimbursement audit review.

The Company primarily funded its accounts receivable from government programs through federal programs administered by HRSA up to March 23, 2022 when funding for this program was ceased.

As at December 31, 2021, the Company viewed its accounts receivable in two categories when assessing its expected credit losses, based on the underlying payor: government receivables and insurance receivables. If a patient has health insurance or coverage under a state health care coverage program, the Company would bill for testing services rendered to the patient to the applicable insurance carrier or state program. Otherwise, provided that the Company has determined that the patient is not eligible for health care coverage and is uninsured, the Company bills to a federal government program. If a testing receivable initially classified as an insurance receivable was denied due to no coverage, the Company would seek payment from a federal program

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

covering uninsured testing costs. During this period, there was no time restriction on filing a claim to the federal program. Accordingly, the number of days outstanding of a testing receivable had no significant impact on its collectability. The Company incurs expected credit losses through non-payments from insurance companies for insured individuals, as well as in instances when appropriate documentation is not submitted to insurance companies or applicable government programs or there are no government funds available to cover payment.

Based on historical information from patient remittances from the period starting when the Company changed its billing agent to Mass Labs, the Company expected that 75% of its Insurance receivables would be approved and paid, resulting in no expected credit losses. With respect to the remaining 25% of insurance receivables, upon denial, the Company expected to bill unpaid amounts to HRSA, and such amounts would be subject to an expected credit loss rate of 5% estimated in respect of government receivables. Accordingly, on average, the Company’s average expected credit loss rate with respect to insurance receivables is incur credit losses of 5% on 25% of its insurance receivables equating a 1% loss rate on the insurance receivable balance. The following table sets out expected credit losses as at December 31, 2021.

Gross Testing Receivables Loss Rate Expected Losses Net Testing Receivables	Total Federal Programs Insurance As at December 31, 2021
	55,763,906 $ 22,863,203 $ 32,900,703 $ 5% 1% 1,517,113 1,115,724 401,389
	54,246,793 $ 21,747,479 $ 32,499,314 $

*Loss rate is rounded to a single decimal place

Evaluation methodology as of December 31, 2022

HRSA ceased to accept new claims on March 23, 2022. The Company expects to be able to access funding under an alternative state-level government program in California for the reimbursement of testing services provided to uninsured patients in states.

The Company does not anticipate a major change in business with the discontinuation of HRSA. While a significant portion of the Company’s historical business was supported by funds from HRSA, there is a government program available in the state of California to subsidize healthcare services for individuals who are uninsured or undocumented. Due to this the Company now assesses its expected credit losses as insurance receivables and at individual state levels based on the availability of state-level government programs. If a balance previously classified as an insurance receivable is denied due to no coverage, the Company will seek payment from a state program covering uninsured receivables. Currently, California is the only state in which the Company has testing receivables that has implemented a government reimbursement program for uninsured patients. In states where no state-level government programs exist, the Company does not record receivables for uninsured patients as it does not meet revenue recognition standards as there is no viable method to collect these accounts. The Company evaluates the age of its insurance receivables when estimating collectability. The billing system utilizes an algorithm to attempt to collect from the correct underlying payor, which lessens the influence of aging when evaluating collectability.

States with Government Programs – California

The state of California, in which the Company conducts a significant portion of its business, has implemented reimbursement programs similar to those previously funded by HRSA with its COVID-19 Uninsured Group. These programs will accept claims retroactive to April 8, 2020, thus any accounts receivables in this jurisdiction are not expected to be collectible if they date back prior to this date. The Company submitted its application retroactive to June 2021. The Company will also incur credit losses when there is not valid information submitted such as missing names. Additionally, the program does not pay at the same rate for PCR testing as the prior federal program and as a result, the Company expects to incur credit losses on the reduced payments on outstanding balances previously billed to HRSA.

To qualify for the COVID-19 Uninsured Group, individuals must:

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

Have no health insurance, or
Have private health insurance that does not cover at no cost all diagnostic testing, testing- related services, and treatment services, including all medically necessary care for COVID-19, or
Not have Medicare, or
Are not eligible under any of the other Medi-Cal programs (with the exception of individuals who have not met their Medi-Cal Share of Cost obligation), and
Be a California resident.

The Company’s associated laboratory’s full application has been submitted for both the PAVE - Provider Application and Validation for Enrollment Application and for the Provider Enrollment Division (“PED”) Emergency Enrollment, which would result in the provider number. The application is currently in the process of being reviewed. Although timing of approval can be difficult to estimate as it is out of the Company’s control, the application is expected to be approved between April and June of 2023 to process from the date of issuance of these financial statements. Once approval has been obtained, the Company will be able to obtain temporary IDs for its patients and submit claims to the California state COVID-19 Uninsured program.

Medi-Cal issued a Deficiency Letter by DHCS on March 21, 2023, which outlined minor deficiencies in the application (“Deficiency Letter”). The deficiencies listed are of the kind that can be easily cured such as requesting a copy of business licenses.

On March 7, 2023, DHCS published the “Medi-Cal COVID-19 Public Health Emergency and Continuous Coverage Operational Unwinding Plan” on its official website, which outlines several facets of the COVID-19 Uninsured Group which are either being terminated or extended as the end of public health emergency approaches (the “Unwinding Plan”). One aspect of the COVID-19 Uninsured Group that is in its extension phase is the opportunity for medical providers to submit applications to be considered qualified Medi-Cal providers and in turn, to benefit from the reimbursements, on the condition that they satisfy ancillary requirements.

To benefit from these reimbursements, in addition to being enrolled as a Qualified Medical Provider, providers must have satisfied the following requirements in relation to the COVID Treatments they provided to patients, as beneficiaries of:

• They have checked their patients’ health care coverage eligibility and have confirmed that their patient is uninsured. They have verified that the patient did not have coverage through an individual, or employer-sponsored plan, a federal healthcare program, or the Federal Employees Health Benefits Program at the time services were rendered, and no other payer was to reimburse any COVID-19 vaccination, testing and/or care for that patient.

They acknowledge that they will accept defined program reimbursement as payment in full.
They acknowledge that they agree not to balance bill the patient for COVID Treatments rendered.
They acknowledge that they agree to all COVID-19 Uninsured Group terms and conditions and may be
subject to post-reimbursement audit review.

Due to the timing of approval from the program the Company will also potentially incur credit losses from not filing claims or receiving temporary IDs in time for the program to pay claims.

California State Program

The Company expects to incur credit losses of 49% on state covered testing receivable balances for tests completed in California after HRSA discontinuance based on historical remittance information from claims submitted under the federal program with similar testing criteria and the above mentioned risk factors, and the Company’s best estimate of the ability to submit claims on a timely basis.The Company expects to bill retroactive to June 2021, which would cover tests not paid by HRSA that are eligible under this program.

States with No Government Programs

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

No Government Program - Uninsured

The Company expects to incur credit losses of 100% on testing receivables that have no insurance coverage in jurisdictions with no state funded program for uninsured patients, or states which have no viable program from which to collect past testing receivables.

Insurance

These are cases where the Company believes there are underlying insurance coverage and due to potential time constraints may not have the ability to utilize state programs for patients that are in fact not insured.

The Company used historic collection rates and management's estimates relating the aging of the receivable in order to estimate its expected credit losses on its insurance receivables. The Company will incur credit losses when an insurance company denies a claim or if a patient puts incorrect insurance information into the EHR.

Insurance (Current, Aged 90+ Days, 90-180 Days, 270+ Days)

The Company utilizes a billing agent who bills/rebills insurance receivables at least once per quarter. Once an insurance testing receivable reaches this age (90 days) it is determined to have a higher expected loss rate. The billing agent utilizes an algorithm to help deal with rejections from insurance companies that will attempt to rebill with corrected information. As testing receivables age after this rebilling this increases the expected loss rate.

The expected loss rate on testing receivables with no state programs are: 20% on testing receivables that are current, 30% on testing receivables aged 90-180 days, 40% on testing receivables aged 180-270 days and 50% on testing receivables aged in excess of 270 days. These expected credit loss rates are based on management’s understanding of the billing algorithm and success in the past recovering aged insurance receivables in conjunction with historical remittance data. Additionally, the Company is exploring insurance discovery products for aged testing receivables.

Loss Rate Expected Losses Net	Total California State Program Uncovered State Programs Current Insurance 90-180 Days Insurance 180-270 Days Insurance 270+ Days Insurance
	$ 20,394,998 $ 9,693,353 $ 1,217,073 $ 861,981 $ 2,250,275 $ 2,657,502 $ 3,714,814 49% 100% 20% 30% 40% 50% 9,734,703 4,749,743 1,217,073 172,396 675,082 1,063,001 1,857,407
	$ 10,660,295 $ 4,943,610 $ - $ 689,585 $ 1,575,193 $ 1,594,501 $ 1,857,407

Continuity of Expected Credit Losses

Expected credit losses netted in accounts receivable as at December 31, 2022 are $9,734,703 (December 31, 2021 - $1,517,113). The expected credit loss recorded in the year ended December 31, 2022 is $7,808,890 (2021 - $1,861,023).

For theyear ended December 31, 2022	For theyear ended December 31, 2022
Opening Balance Additions Writeoffs Recoveries/Reversals Foreign Exchange Closing Balance	1,517,113 8,152,736 - 343,846 - 408,700
	9,734,703

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

For theyear ended December 31, 2021	For theyear ended December 31, 2021
Opening Balance Additions Writeoffs Recoveries/Reversals Foreign Exchange Closing Balance	191,709 1,861,023 383,239 - 114,664 - 37,716 -
	1,517,113

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company is unable to obtain payment of its accounts receivable, or if its access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated.

The Company has financed its cash requirements primarily through its gross profit from Collection Sites. The Company controls liquidity risk through management of working capital, cash flows and the availability and sourcing of financing.

As at December 31, 2022, the Company had net current liabilities of $831,860. The net current liabilities are currently primarily accounts receivable from Mass Labs billed on behalf of the Company. These are primarily made up of insurance companies and government programs. As the pivot in strategy to Increased Patient Access Program for the patients occurred in May 2021 the Company expected to have a cash loss from operations as there was an expected increase in accounts receivable. Additionally, there may be fluctuations in the Company’s liquidity resources as the primary payor is transitioned from HRSA to the state of California. There are uncertainties surrounding timing of payments from the payor that may put a further strain on the working capital of the Company. The Company’s primary source of liquidity is the collection of these receivable balances.

The following table shows the Company’s sources of liquidity by asset as at December 31, 2022 and December 31, 2021:

December 31, 2022		Total		Less than 1 year		1-3 years		More than 3 years	More than 3 years
Cash and cash equivalents	$	4,271,549	$	4,271,549	$		-	$	-
Inventory		343,342		343,342			-
Accounts receivable		11,708,256		11,708,256			-		-
Prepaid expenses		522,196		522,196			-		-
Public investments		2,314		2,314			-		-
Total current assets - December 31,2022	$	16,847,657	$	16,847,657	$		-	$	-

December 31, 2021		Total		Less than 1 year		1-3 years		More than 3 years
Cash and cash equivalents	$	112,397	$	112,397	$		-	$	-
Inventory		388,631		388,631
Note and loans receivable		12,923		12,923			-		-
Accounts receivable		55,314,642		55,314,642			-		-
Prepaid expenses		24,227		24,227			-		-
Public investments		4,302		4,302			-		-
Total current assets - December 31,2021	$	55,857,122	$	55,857,122	$		-	$	-

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

The Company is obligated to the following contractual maturities of undiscounted cash flows as at December 31, 2022:

2022:
Contractual Obligations	Total Less than 1 year 1- 3 years 4- 5 years After 5 years
Convertible note Lease obligations Accounts payable Income taxes payable Loans payable Other liabilities	1,200,000 $ 1,200,000 $ - $ - $ 457,110 457,110 - - - 12,414,204 12,414,204 - - - 2,062,981 2,062,981 96,378 96,378 - - - 2,386,035 1,573,395 812,640 - -
	18,616,708 $ 17,804,068 $ 812,640 $ - $ - $

Market risk

a) Currency risk

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company operates in Canada and the United States and the functional currency of the parent company is the Canadian dollar while the functional currency of it’s U.S. subsidiaries is the U.S. Dollar. Management believes the foreign exchange risk derived from currency conversions is negligible and therefore does not engage in hedging activities to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

As at December 31, 2022, the Company had the following financial assets and liabilities denominated in currencies other than the Canadian dollar:


December 31, 2022	U.S. dollars
Cash and cash equivalents	$ 3,006,714
Accounts receivable	8,163,875
Advances	16,950
Accounts payable and accrued liabilities	(4,529,804)
Lease liabiliites	(327,948)
Other liabilities	(1,750,000)
Income taxes payable	(1,523,170)
	$ 3,056,618

December 31, 2021	U.S. dollars
Cash and cash equivalents	$ 87,261
Accounts receivable	43,310,624
Advances	16,950
Loans Receivable	403,957
Accounts payable and accrued liabilities	(21,694,675)
Income taxes payable	(4,840,593)
	$ 17,283,524

Market risk

a) Currency risk
A 10% increase in the value of foreign currencies against the functional currencies in which the Company held financial instruments as of December 31, 2022 would result in an estimated increase in income of approximately $408,000 (2021 - $2,185,000).

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

b) Interest rate risk A 10% increase in interest rates based on the balance of cash at December 31, 2022, would result in an increase of $407,000 (2021 - $11,000) in annual interest income.
c) Price and concentration risk
The Company is exposed to market risk for unfavourable market conditions that could result in dispositions of inventory at unfavourable prices.

Fair value hierarchy

The three levels of the fair value hierarchy with respect to required disclosures about the inputs to fair value measurements 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.

The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy as at December 31, 2022 and 2021:

As at December 31, 2022
	Level 1			Level 2		Level 3			Total
Cash equivalents	$ 3,052,220		$	-	$		-	$	3,052,220
Public investments	2,314			-			-		2,314
Privateinvestments		-		-			-		-
Total	$ 3,054,534		$	-	$		-	$	3,054,534
As at December 31, 2021
	Level 1			Level 2		Level 3			Total
Public investments	$	-	$	4,302	$		-	$	4,302
Private investments		-		-			-		-
Total	$	-	$	4,302	$		-	$	4,302

Level 2 Hierarchy

At December 31, 2021, the 172,071 common shares of Last Mile Holdings Ltd. (formerly OjO Electric Corp.) were held in escrow, and therefore the full value of the investment had been recorded at Level 2 of the fair value hierarchy. This transferred to Level 1 in the year ended December 31, 2022.

Level 3 Hierarchy

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these investments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

As valuations of investments for which market quotations are not readily available are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Such changes may have a significant impact on the Company’s financial condition or operating results.

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2022 and 2021:

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

						Range of
				Significant		significant
			Valuation	unobservable		unobservable
Description		r vaue	technique	input(s)		input(s)
*December 31, 2022*
Glenco Medical	$	-	Recoverable amount		-	-
Latin-Canada Pharma Inc.		-	Recoverable amount		-	-
Marvel Diagnostics,Inc.		-	Recoverable amount		-	-
	$	-

*December 31, 2021*
Glenco Medical	$	-	Recoverable amount		-	-
Latin-Canada Pharma Inc.		-	Recoverable amount		-	-
Marvel Diagnostics,Inc.		-	Recoverable amount		-	-
	$	-

Marvel Diagnostics, Inc. (“Marvel”)

On January 24, 2021, the Company completed a share purchase agreement to acquire up to 40% of Marvel for an aggregate price of up to USD$1.0 million through a series of milestone-based payments. The Company fully impaired the investment as the technology in Marvel was determined not to be commercially viable.

Glenco Medical (“Glenco”)

The Company invested in Glenco in exchange for 800,000 shares of the Company in June 2020 with an estimated fair value of $2,220,000. On December 31, 2020 the Company had written down the investment in Glenco due to managements expectations of future activity. Should market conditions improve and the fair value of the investment increase, the asset will be written up at that time.

Latin-Canada Pharma Inc. (“LCP”)

The Company invested in LCP in exchange for 800,000 shares of the Company in July 2020 with an estimated fair value of $2,040,000. The Company fully impaired the investment in LCP due to managements expectation of future activity. Should market conditions improve and the fair value of the investments increase, the asset will be written up at that time.

20. Related party transactions and balances

Refer to Notes 4, 6, 10, 11, 13, 14, 15, 16 and 21

During the years ended December 31, 2022 and 2021 the Company entered into the following transactions in the ordinary course of business with related parties from an accounting perspective that are not subsidiaries of the Company.

	2022 2021 Years ended December 31,
Forbes & Manhattan, Inc. 2227929 Ontario Inc. Massachusetts Laboratories,Inc.	933,850 $ 300,000 $ 535,000 $ 360,000 $ 13,504,870 $ 26,783,556 $

Mr. Stan Bharti is the Executive Chairman of Forbes and Manhattan Inc. (“Forbes”). The Company is part of the Forbes Group of Companies and continues to receive the benefits of such membership, including access to

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

various professionals, and strategic advice from the Forbes Board of Advisors. An administration fee of $25,000 per month from May 2019 was charged by Forbes pursuant to a consulting agreement. As at December 31, 2022, receivables included $125,000 (December 31, 2021 - $125,000) owing from Forbes. These receivables and payables are unsecured, non-interest bearing and due on demand.

The Company shares office space with other corporations who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment, supplies, and certain other services are administered by 2227929 Ontario Inc., to whom the Company pays a monthly fee. For the year ended December 31, 2022, the Company was charged $360,000 for these services (2021: $360,000). As at December 31, 2022, payables included $203,400 (December 31, 2021: $536,342) owing to 2227929 Ontario Inc. These payables are unsecured, non-interest bearing and due on demand.

The CEO of the Company, David Preiner, is also the CEO of Xenomics, parent company to Amino Therapeutics in which the Company holds a 10% investment. The Company’s investment in Amino Therapeutics pre-dated the appointment of David Preiner as CEO of the Company. Xenomics is also a parent company to Mass Labs, which performs COVID-19 test processing services and medical billing services on behalf of the Company under the Mass Labs Agreement.

On December 7, 2020, the Company signed the Mass Labs Agreement. On April 30, 2021, the principal of Mass Labs, David Preiner, became the CEO of Medivolve Inc. Mass Labs has subcontracted its laboratory testing services contract to an independent third party. Pursuant to the Mass Labs Agreement, the parties have agreed that Mass Labs will bear certain expenses associated with inventory required to complete COVID-19 testing, that Mass Labs will be entitled to partial reimbursement of such expenses out of revenue actually received in respect of tests performed by the Company (e.g. from a government or insurance program), and that Mass Labs will be entitled to a variable fee for test processing that is calculated and paid as a percentage of the revenue remaining after the payment of such expenses. For the year ended December 31, 2022, the Company was charged $13,504,870 for these services (2021- $26,783,556), which were recorded as cost of sales on the consolidated statements of operations. As at December 31, 2022, $20,394,998 (2021 - $55,763,906 is owed from Mass Labs and included in Accounts receivable on the consolidated statement of financial position, which represents an amount remitted by Mass Labs from the billing company, however is ultimately payable from the underlying payor described in Note 19. As at December 31, 2022, $3,552,259(2021 - $19,289,637) is owed to Mass Labs and included in accounts payable and accrued liabilities on the consolidated statement of financial position.

At December 31, 2022, the Company had an amount receivable of $nil from Aberdeen International Inc. (2021 - $10,706). The receivable was unsecured, non-interest bearing and due on demand. Additionally, as at December - 31, 2022, the Company has a loan payable to Aberdeen of $55,746 (2021 $266,880). Stan Bharti, a former director and officer of the Company, is a director and officer of Aberdeen. Wen Ye is a common director of both the Company and Aberdeen.

Compensation of Key Management, Directors and Officers

The remuneration of directors and other members of key management personnel during the years ended December 31, 2022 and 2021 were as follows:

	2022 2021 Years ended December 31,
Short-term benefits Share-basedpayments	5,749,177 $ 661,970 $ 17,550 $ 1,608,765 $

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

During the year ended December 31, 2022, the Company granted a total of 1,333 stock options to key management, directors, and officers of the Company (2021: 1,150,000 options to management, directors and officers of the Company).

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

21. Commitments and contingencies

Management contracts

The Company is party to certain management contracts. These contracts contain clauses requiring additional payments of up to approximately $7,275,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Additional minimum management contract commitments related to termination under these contracts approximate $691,000, upon a termination. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements.

Lease obligation

The Company has a lease for its mobile testing centres. The term of the lease was three months and was to expire on January 31, 2022, prior to being extended for a further twelve months with an option to extend a further three months to April 30, 2023. The undiscounted commitment for the remaining lease term as at December 31, 2022 is approximately USD$243,000 ($329,000).

Legal Proceedings

The Company is from time to time named in various legal proceedings.

The Company was subject to a legal judgment related to the sale of COVID-19 testing equipment to a Russian entity in fiscal 2020. During the year ended December 31, 2021, the Company accrued an amount of $3,050,264 as an estimate of the legal judgment included in accounts payable and accrued liabilities. This provision is included as at December 31, 2022 in the amount of $3,393,518. The difference from year to year reflects the change in the value of the US$ compared to the CAD$.

On September 19, 2022, the Company negotiated a settlement of a potential lawsuit against the entity. The Company recorded other liabilities of USD $1,750,000 ($2,414,560) to reflect this settlement. This charge was included in Management and consulting fees within General and Administration as this related to former employees at Collection Sites.

During the year, the Company received a claim for an alleged breach of contract, negligence, breach of trust, conversion and unjust enrichment. The claim seeks damages of USD $7,150,000. The Company believes this is a frivolous lawsuit and has served a statement of defense and counterclaim and is actively defending the action. As such, no amounts are accrued.

The Company has not estimated or accrued any amounts related to any other proceedings as they are believed to be without merit.

22. Income taxes

a) Tax expense

The tax expense is applicable as follows:

	December 31, 2022	December 31, 2021
	$	$
Current income tax expense (recovery)	(4,512,348)	6,456,489
Deferred income tax expense(recovery)	-	-
	(4,512,348)	6,456,489

b) Provision for income taxes

The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% (2020: 26.5%) to the effective tax rate is as of:

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

	31-Dec-22	31-Dec-21
	$	$
(Loss)before income taxes	(22,756,329)	(154,038)
Expected income tax recovery based on statutory rate	(6,030,427)	(40,820)
Adjustment to expected income tax recovery:
Share based compensation	5,000	921,000
Flow-through renunciation
Impact of foreign tax rate	(51,862)	358,297
Expenses not deductible for tax purposes	18,485	1,647,358
Other	(1,013,696)	(41,792)
Prior year adjustment	(1,709,687)	1,558,441
Change in tax rates
Change in unrecorded deferred tax asset	4,269,749	2,054,005
Change in benefit of tax assets not recognized
Income tax expense	(4,512,438)	6,456,489

c) Deferred income taxes

The primary differences which give rise to the deferred income tax balances at December 31, 2021 and 2020 are as follows:

December	31, 2022	December	31, 2021
$		$

Deferred income tax assets
Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:
Non-capital loss carry-forwards	13,718,514		10,028,682
Share issue costs	615,054		908,294
Investments	661,266		1,282,867
Capital losses	2,591,169		1,338,348
Accrued liabilities	1,310,170		808,320
Other temporarydifferences	272,008		564,504
	19,168,181		14,931,015
Less: deferred tax assets not recognized	(19,006,103)		(14,736,354)
Less: set-off against deferred income tax liabilities	(162,078)		(194,661)
Net deferred income tax assets	-		-

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can use the benefits.

The Canadian tax losses expire from 2034 to 2042. The other temporary differences do not expire under current legislation.

Year of expiry	Amount ($)
2034	426,024
2035	983,517
2036	434,410
2038	623,186
2039	2,182,919
2040	20,487,266
2042	13,392,517
	38,529,839

Medivolve Inc. Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in Canadian dollars)

The Company also has approximately $12,519,166 of US net operating losses that may be carried forward indefinitely.

The Company has taxable temporary differences with its investment in subsidiaries of $nil (2021 - $19,915,000) for which a deferred income tax liability has not been recognized as the Company controls the timing of the reversal of the related temporary difference and it is not probable that the temporary difference will reverse in the foreseeable future.

23. Segment information

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. Operating companies may be aggregated into a reportable segment based on the nature of the products and services, production process, customer base, distribution model and regulatory environment at the operating companies, as well as key financial metrics such as gross margin and projected long-term revenue growth. During the year ended December 31, 2022 the Company operated one reportable segment, being the COVID Testing facilities across United States Of America. The following is a summary of the Company’s geographical information:

		Canada		United States		Total
For the year ended December 31, 2022
Revenue	$	-	$	37,175,237	$	37,175,237
Non- current assets (as at December 31, 2022)		-		1,970,763		1,970,763
For the year ended December 31, 2021
Revenue		8,910		86,816,077		86,824,987
Non- current assets (as at December 31, 2021)		2,666,659		771,636		3,438,296

24. Comparative information

Certain of the 2021 comparative amounts have been reclassified to present cashflows on a gross basis. Specifically, the “Expected Credit Losses” were separated as a non-cash expenditure rather than being netted within change in working capital. The change in presentation was made to provide clarity on the cash flows of the Company in accordance with IAS 7.

25. Subsequent event

Subsequent to December 31, 2022, the Company announced it had closed a secured convertible note (the “Note”) financing for aggregate gross proceeds to the Company of CAN $1.2 million (the “Offering”), which included a $200,000 original issue discount. Cumulative interest on the outstanding principal amount is payable by the Company at the annual rate of 8.0% per annum. The Note will mature on December 31, 2023 and will be convertible, at the option of the holder after four months and one day following issuance and subject to certain conditions, into units (the “Units”) at a price of $0.40 per Unit. All amounts outstanding under the Note are secured by a first ranking security interest over all of the Company’s present and after acquired personal property. Each Unit consists of one common share of the Company (a “Common Share”) and one common share purchase warrant (a “Warrant”). Each Warrant entitles the holder thereof to purchase one Common Share at an exercise price of $0.50 for a period of five years from the date of issuance. No finder fees or commissions were paid as part of the Offering.

Subsequent to December 31, 2022, 753,227 warrants expired unexercised.

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Medivolve Inc. — Audit Report / Information 2022

45925_rns_2023-04-03_b3f381e7-30dd-4e06-ab26-a51872007de9.pdf

CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor’s Report

Opinion

Basis for opinion

Material uncertainty related to going concern

Key audit matters

Litigations and claims

Transactions with related parties

Other information

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

McGovern Hurley LLP

Chartered Professional Accountants Licensed Public Accountants

Medivolve Inc.

Consolidated Statements of Financial Position

Medivolve Inc.

Medivolve Inc.

Medivolve Inc.

Consolidated Statements of Changes in Equity (Expressed in Canadian dollars)

1. Nature of operations

2. Significant accounting policies

Basis of preparation

Basis of consolidation

Significant accounting judgments, estimates and assumptions

 Principal versus agent

 Variable consideration

 Leases

 Intangibles

 Valuation of property plant and equipment and intangible assets

 Recognition of deferred taxes

 Business combinations

 Convertible debt

 Significant influence

Functional and presentation currency

 Foreign currency translation

Financial instruments

Classification

Amortized cost

Fair value through profit or loss

Measurement

Impairment

Investments in associates

Compound financial instruments

Intangible assets

Business combinations

Cash and cash equivalents

Property and equipment

Leases

Revenue recognition

Share-based payments

Loss per share

Taxation

I. Current income tax

II. Deferred income tax

Royalty interests

Inventories

New and future accounting pronouncements

3. Loans receivable

4. Accounts receivable

5. Investments

Investments at fair value through profit and loss

Public investments

Private investments

6. Investments in associates

7. Property and equipment

8. Business combinations

9. Intangibles

Cost of termination of contract

Noble Bioscience Corp.

Healthcare Application

Royalty interests

10. Accounts payable and accrued liabilities

11. Loans payable and convertible note

Cambridge Capital Inc. (“Cambridge”)

Aberdeen International Inc. (“Aberdeen”)

Convertible note

Other loans

Medivolve Inc. Audit Report / Information 2022