Psyched Wellness Ltd. — Audit Report / Information 2020

Feb 2, 2021

==> picture [300 x 128] intentionally omitted <==

Psyched Wellness Ltd.

(formerly Duncan Park Holdings Corporation)

Consolidated Financial Statements

For the Years ended November 30, 2020 and 2019

(Expressed in Canadian Dollars)

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation)

Report on the Audit of the Consolidated financial statements

Opinion

We have audited the consolidated financial statements of Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) (the Company), which comprise the consolidated statements of financial position as at November 30, 2020 and 2019, and the consolidated statements of operations and comprehensive loss, consolidated statements of cash flows and consolidated statements of changes in equity 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 financial position of the Company as at November 30, 2020 and 2019, and its financial performance and its cash flows for the years then ended, in accordance with International Financial Reporting Standards.

Basis for Opinion

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

Material Uncertainty Relating to Going Concern

We draw your attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a comprehensive loss of $2,072,758 during the year ended November 30, 2020. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Information Other than the Consolidated financial statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the annual management’s discussion and analysis, but does not include the consolidated financial statements and our auditor’s report thereon.

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.

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.

==> picture [612 x 11] intentionally omitted <==

==> picture [612 x 11] intentionally omitted <==

==> picture [612 x 11] intentionally omitted <==

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 International Financial Reporting Standards, 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 relating to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the 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 the 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 judgment and maintain professional scepticism 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 risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the 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.

==> picture [612 x 11] intentionally omitted <==

==> picture [612 x 11] intentionally omitted <==

==> picture [612 x 11] intentionally omitted <==

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

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

The engagement partner on the audit resulting in this independent auditor’s report is Pat Kenney.

Chartered Professional Accountants Licensed Public Accountants

Mississauga, Ontario February 1, 2021

==> picture [612 x 11] intentionally omitted <==

==> picture [612 x 11] intentionally omitted <==

==> picture [612 x 11] intentionally omitted <==

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

	As at November 30, 2020 As at November 30, 2019
	Notes $ $ Assets Current Assets Cash 2,059,776 1,471 Accounts receivable 5 150,244 3,308 Prepaid expenses 6 552,247 -
	Total Current Assets 2,762,267 4,779 Goodwill 4 448,611 -
	Total Assets 3,210,878 4,779
	Liabilities Accounts payable and accrued liabilities 9,16 34,847 369,736 Promissorynotespayable 11 - 49,638
	Total Liabilities 34,847 419,374
	Shareholders’ Equity Share capital 13 16,902,091 12,046,131 Contributed surplus 14 1,090,334 400,293 Reserve for warrants 15 117,383 - Accumulated deficit (14,933,777) (12,861,019)
	Total Shareholders’ Equity 3,176,031 (414,595)
	Total Liabilities and Shareholders’ Equity 3,210,878 4,779
	Nature of operations and going concern 1 Contingencies 20 Subsequent events 22

Approved on behalf of the Board of Directors:

“Jeffrey Stevens” “Christopher Hazelton” Jeffrey Stevens, Director Christopher Hazelton, Director

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

5

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Consolidated Statements of Loss and Comprehensive Loss For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

		2020 2019
	Notes Expenses Stock-based compensation 14,16 Advertising and promotion Management and consulting fees 16 Professional fees 16 Research costs Office and general Regulatory compliance Investor communications Interest on debt settlement 9 Interest on term loans 10 Interest on promissory notes 11 Interest on convertible debentures 12 Amortization of financingcosts 12	$ $ 690,041 - 420,926 - 339,455 36,533 288,054 124,564 272,740 - 66,237 6,948 41,921 22,929 7,641 7,481 7,783 - - 5,617 740 2,436 - 21,436 - 32,910
	Total Expenses	(2,135,538) (260,854)
	Other Gains (Losses) Annual minimum royalty Property taxes Write-down of exploration and evaluation assets 7 Write-down of land 8 Gain on debt settlement 16 Promissorynotes interest – relatedparty 16	(10,000) (10,000) (10,377) (4,265) - (50,000) - (25,000) 83,002 - 155 -
	Total Other Gains (Losses)	62,780 (89,265)
	Net Loss and Comprehensive Loss	(2,072,758) (350,119)
	Weighted Average Number of Outstanding Shares - Basic - Diluted	60,764,234 4,083,851 70,825,434 4,083,851
	Loss per Share - Basic 13 -Diluted 13	(0.034) (0.086) (0.029) (0.086)

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

6

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation)

Consolidated Statements of Changes in Shareholders’ Equity For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

		Number of		Contributed	Contributed	Reserve for	Accumulated
		Shares	ShareCapital	Surplus		Warrants	Deficit	Total
	Notes	#	$		$	$	$	$
Balance, November 30, 2018		3,151,912	11,332,138	400,293		-	(12,510,900)	(778,469)
Issuance of shares on debt settlement	10,13	1,462,178	438,653	-		-	-	438,653
Issuance of shares on conversion of debentures	12,13	917,800	275,340	-		-	-	275,340
Net loss for theyear		-	-	-		-	(350,119)	(350,119)
Balance, November 30, 2019		5,531,890	12,046,131	400,293		-	(12,861,019)	(414,595)
Issuance of shares on debt settlement	11,13	7,050,090	141,002	-		-	-	141,002
Issuance of shares on share exchange agreement	4,13	18,000,000	360,000	-		-	-	360,000
Issuance of shares from Seed Financing	13	33,500,000	670,000	-		-	-	670,000
Issuance of shares from Series A Financing	13	40,310,950	4,031,095	-		-	-	4,031,095
Share issuance costs	13,15	-	(364,400)	-		123,646	-	(240,754)
Stock-based compensation	14	-	-	690,041		-	-	690,041
Exercise of broker warrants	13,15	120,000	18,263			(6,263)	-	12,000
Net loss for theyear		-	-	-		-	(2,072,758)	(2,072,758)
Balance, November 30, 2020		104,512,930	16,902,091	1,090,334		117,383	(14,933,777)	3,176,031

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

7

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Consolidated Statements of Cash Flows

For the years ended November 30, 2020 and 2019

(Expressed in Canadian Dollars)

	2020 2019
	Notes $ $ Operating Activities Net loss for the year (2,072,758) (350,119) Adjustments for non-cash items: Stock-based compensation 14 690,041 - Gain on debt settlement 16 (83,002) - Interest on term loans 10 - 5,617 Interest on promissory notes 11 - 2,436 Interest on convertible debentures 12 - 21,436 Amortization of financing costs 12 - 32,910 Write-down of exploration and evaluation assets 7 - 50,000 Write-down of land 8 - 25,000
	(1,465,719) (212,720) Net change in non-cash working capital items: Accounts receivable 5 (127,068) 3,090 Prepaid expenses 6 (521,647) - Accountspayable and accrued liabilities 9 (195,915) 108,142
	Cash Flows (used in) Operating Activities (2,310,349) (101,488)
	Financing Activities Advances received on promissory notes 11 10,000 47,202 Proceeds from private placements 13 4,701,095 - Share issuance costs paid on private placements 13 (236,920) - Proceeds from exercise of broker warrants 13,15 12,000 - Loans made to Psyched Wellness Corp. 16 (117,521) -
	Cash Flows provided by Financing Activities 4,368,654 47,202
	Increase (decrease) in cash 2,058,305 (54,286) Cash,beginningofyear 1,471 55,757
	Cash, end of year 2,059,776 1,471
	Supplemental Information Settlement of debts with issuance of shares 13 141,002 -

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

8

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

1. Nature of Operations and Going Concern

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) (“Psyched Wellness” or the “Company”) is incorporated in the Province of Ontario, Canada. The Company previously operated in the mining industry and devoted its efforts to establish commercially viable mineral properties by exploring for gold and other precious metals in politically stable areas of the world. By completing the Share Exchange (defined hereafter), the Company changed its business focus to specialize on formulating, selling, and distributing mushroom-infused products and associated consumer packaged goods. The Company’s objective is to create premium mushroom products that have the potential to become a leading North American brand in the emerging functional food category.

The Company’s registered address is 77 King Street West, Suite 3000, Toronto, Ontario, M5K 1G8, Canada.

On May 5, 2020, the Company entered into a share exchange agreement (the “Share Exchange”) with Psyched Wellness Corp. (“Psyched Corp.”), a private entity incorporated under the Canadian Business Corporations Act, whereby the Company issued 18,000,000 common shares and acquired all of the outstanding common shares of Psyched Corp. in exchange for common shares of the Company on a one for one basis. Pursuant to the Share Exchange, Psyched Corp. became a wholly-owned subsidiary of the Company (see Note 4).

On July 13, 2020, the Company changed its name to Psyched Wellness Ltd., to reflect the change of business to focus in the growing psychedelic space. Effective October 22, 2020, the Company’s common shares commenced trading on the Canadian Securities Exchange (the “CSE”) under the ticker symbol “PYSC”. The Company’s shares are also listed in the United States (the “US”) on the OTCQB® Venture Market under the ticker symbol “PSYCF”, and in Germany on the Frankfurt Stock Exchange under the ticker symbol “5U9”.

The business of medicinal mushrooms health and wellness products involves a high degree of risk, and there is no assurance that any prospective project in the psychedelic industry will be successfully initiated or completed. Further, regulatory evolution and uncertainty may require the Company to alter its business plan and make further investments to react to regulatory changes.

These consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of operations. The application of the going concern basis is dependent upon the Company achieving profitable operations to generate sufficient cash flows to fund continuing operations, or, in the absence of adequate cash flows from operations, obtaining additional financing to support operations for the foreseeable future. It is not possible to predict whether financing efforts will continue to be successful in the future or if the Company will attain profitable levels of operations. The Company incurred a net and comprehensive loss of $2,072,758 during the year ended November 30, 2020 and as of that date, the Company’s accumulated deficit was $14,933,777. These conditions, including the unpredictability of the psychedelics business, and the potential impact of the COVID-19 pandemic represent material uncertainties which may cast doubt on the Company’s ability to continue as a going concern.

These consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, and do not reflect the adjustments to the carrying values of assets and liabilities and the reported revenues and expenses, and classifications of statements of financial position that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

2. Basis of Presentation

(a) Statement of Compliance

The Company’s consolidated financial statements, including comparatives, 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 accounting policies set out below were consistently applied to all periods presented unless otherwise noted.

These consolidated financial statements were reviewed, approved, and authorized for issuance by the Board of Directors (the “Board”) of the Company on February 1, 2021.

9

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(b) Basis of Measurement

These consolidated financial statements have been prepared in accordance with IFRS, on the historical cost basis except for financial instruments which are measured at fair value, as explained in the significant accounting policies set out in Note 3. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

(c) Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Psyched Corp. Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries 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 subsidiary after eliminating inter-entity balances and transactions.

(d) Functional Currency

These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiary, unless otherwise noted. The functional currency is the currency of the primary economic environment in which the Company operates.

(e) Significant Accounting Judgments and Estimates

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue, and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions. These estimates are reviewed periodically, and adjustments are made as appropriate in the period they become known. Items for which actual results may differ materially from these estimates are described as follows:

Going concern

At each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources and future obligations.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities on the consolidated statements of financial position that cannot be derived from active markets, are determined using a variety of techniques including the use of valuation models. 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. The judgments include, but are not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Business combination

In a business acquisition, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the acquisition date at their respective fair values. The date on which the acquirer obtains control of the acquiree is generally the date on which the acquirer legally transfers the consideration, acquires the assets and assumes the liabilities of the acquiree – the closing date. However, the acquirer might obtain control on a date that is either earlier or later than the closing date. Management exercises judgment in considering all pertinent facts and circumstances in identifying the acquisition date.

10

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(e) Significant Accounting Judgments and Estimates (continued)

Business combination (continued)

Classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgment. Whether an acquisition is classified as a business combination or asset acquisition can have a significant impact on the entries made on and after acquisition. In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to contingent consideration and intangible assets. Management also exercises judgement in estimating the probability and timing of when earn-outs are expected to be achieved which is used as the basis for estimating fair value. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied.

Goodwill

Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of goodwill has been impaired. In order to determine if the value of goodwill has been impaired, the groups of assets (each a “Cash-Generating Unit or a “CGU”) to which goodwill has been allocated must be valued using present value techniques. The Company assesses impairment by comparing the recoverable amount of a long-lived asset, CGU, or CGU group to its carrying value. The recoverable amount is defined as the higher of: (i) value in use; or (ii) fair value less cost to sell. The determination of the recoverable amount involves significant estimates and assumptions. When applying this valuation technique, the Company relies on a number of factors, including historical results, business plans, forecasts and market data. Changes in the conditions for these judgments and estimates can significantly affect the assessed value of goodwill.

Impairment

Long-lived assets, including exploration and evaluation (“E&E”) assets and land, are reviewed for indicators of impairment at each reporting period or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. Impairment is dependent upon estimates of recoverable amounts. These are determined through the exercise of judgments and are dependent upon estimates that take into account factors such as economic and market conditions, frequency of use, anticipated changes in laws, and technological improvements.

Warrants and options

Warrants and options are initially recognized at fair value, based on the application of the Black-Scholes pricing model (“Black-Scholes”). This pricing model requires management to make various assumptions and estimates which are susceptible to uncertainty, including the expected volatility of the share price, expected forfeitures, expected dividend yield, expected term of the warrants or options, and expected risk-free interest rate.

Income taxes

Income taxes and tax exposures recognized in the consolidated financial statements reflect management’s best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

In addition, when the Company incurs losses that cannot be associated with current or past profits, it assesses the probability of taxable profits being available in the future based on its budgeted forecasts. These forecasts are adjusted to take account of certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate the sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

11

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(e) Significant Accounting Judgments and Estimates (continued)

Measurement of non-cash consideration

Non-cash consideration can typically be defined as consideration which is received or receivable in a form other than cash. The fair value of such non-cash consideration (or promise of non-cash consideration) are measured at the date of the transaction, which would typically be the transaction date. In assessing fair value, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include: (i) the condition and location of the asset; and (ii) restrictions, if any, on the sale or use of the asset.

3. Summary of Significant Accounting Policies

(a) Cash

Cash on the consolidated statements of financial position comprises bank balances held in Canadian chartered banks, and funds held in trust with the Company’s legal counsel which is available on demand.

(b) Exploration and Evaluation Expenditures

Once the legal right to explore a property has been acquired, costs directly related to E&E expenditures are recognized and capitalized, in addition to the exploration costs. Direct expenditures include such costs as material used, surveying costs, drilling costs and payments made to contractors.

The Company assesses E&E assets for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. Some facts and circumstances which may be indicative of possible impairment include, but are not limited to: the expiration of the period for which the Company has the right to explore the property or the Company’s intention not to renew that right; substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned; exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area; sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the E&E asset is unlikely to be recovered in full from successful development or sale.

When a project is deemed to no longer have commercially viable prospects to the Company, E&E assets in respect of that project are deemed to be impaired. The recoverable amount of an E&E asset is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an E&E asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss by the amount by which the carrying amount of the E&E asset exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the E&E asset is increased to the lesser of the revised estimate of recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously.

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as “mines under construction”. E&E assets are also tested for impairment before the assets are transferred to development properties.

Investments in E&E properties are recorded at cost and are not written down except to the extent that it is determined that their value is impaired. Any impairment loss identified is recognized on the consolidated statements of loss and comprehensive loss.

(c) Land

Land is carried at cost, subject to estimates for impairment.

12

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies

(d) Financial Instruments

Financial assets and financial liabilities, including derivatives, are recognized on the consolidated statements of financial position when the Company becomes a party to the financial instrument or derivative contract.

Classification

The Company classifies its financial assets and financial liabilities in the following measurement categories: (a) those to be measured subsequently at fair value through profit or loss (“FVTPL”); (b) those to be measured subsequently at fair value through other comprehensive income (“FVTOCI”); and (c) 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 recorded in profit or loss.

The Company reclassifies financial assets when its business model for managing those assets changes. Financial liabilities are not reclassified.

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 FVTOCI. This category would also include debt instruments whose cash flow characteristics fail the solely principal and interest (“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 profit or loss.

Financial assets at fair value through other comprehensive income

Equity instruments that are not held-for-trading can be irrevocably designated to have their change in FVTOCI instead of through profit or loss. 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 FVTOCI are initially measured at fair value and changes therein are recognized in other comprehensive income (loss).

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 SPPI criterion. Financial asset classified in this category are measured at amortized cost using the effective interest method.

The Company’s classification of financial assets and financial liabilities under IFRS 9 – Financial Instruments (“IFRS 9”) are summarized below:

Cash Amortized cost Accounts payable and accrued liabilities Amortized cost Promissory notes payable Amortized cost

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or financial liability not 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.

13

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (continued)

• (d) Financial Instruments (continued)

Measurement (continued)

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 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 taken through profit and loss or other comprehensive income (loss) (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 (loss).

Expected credit loss impairment model

IFRS 9 introduced a single expected credit loss (“ECL”) impairment model, which is based on changes in credit quality since initial application. The adoption of the ECL impairment model had resulted in a provision of ECL recorded on the Company’s consolidated statements of loss and comprehensive loss.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the consolidated statements of loss and comprehensive loss.

Financial liabilities

The Company derecognizes financial liabilities only when its obligation under the financial liabilities are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized in the consolidated statements of loss and comprehensive loss.

Fair value hierarchy

The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

As at November 30, 2020, the Company did not have any financial instruments measured at fair value.

14

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (continued)

(e) Provisions

A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

As at November 30, 2020 and 2019, the Company had no material provisions.

(f) Income Taxes

Income tax expense comprises current and deferred income tax expense. Current and deferred taxes are recognized in net loss, except to the extent that it relates to items recognized directly in equity or in other comprehensive income (loss).

Current income taxes

Current income taxes are recognized and measured at the amount expected to be recovered from, or payable to, the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.

Deferred income taxes

Deferred income taxes are recorded for temporary differences at the date of the consolidated statements of financial position between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of a deferred income tax asset is reviewed at the end of the reporting period and is 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 the 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 to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset if, and only if, they relate to income taxes levied by the same taxation authority and the Company has the legal rights and intent to offset.

(g) Equity

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, stock options and warrants are classified as equity instruments.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.

15

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (continued)

(h) Loss Per Share

The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, in the weighted average number of common shares outstanding during the year, if dilutive. The “treasury stock method” is used for the assumed proceeds upon the exercise of the options and warrants that are used to purchase common shares at the average market price during the year.

(i) Share-Based Payments

The Company operates an employee stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received, or at the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The fair value of options is determined using Black–Scholes. The fair value of equity-settled sharebased transactions are recognized as an expense with a corresponding increase in share-based payments reserve.

The number of options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount ultimately recognized for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.

(j) Research and Development Costs

Expenditures during the research phase are expensed as incurred. Expenditures during the development phase are capitalized as internally generated intangible assets if the Company can demonstrate each of the following criteria:

• The technical feasibility of completing the intangible asset so that it will be available for use or sale;

• Its intention to complete the intangible assets and use or sell it;

• How the asset will generate future economic benefits;

• The availability of resources to complete the asset; and

• The ability to measure reliably the expenditure during development.

(k) Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

(l) Adoption of New Accounting Policies

The Company adopted the following standards, effective December 1, 2019. The changes were made in accordance with the applicable transitional provisions:

IFRS 16 – Leases (“IFRS 16”)

IFRS 16 was issued in January 2016 and replaces IAS 17 – Leases as well as some lease related interpretations. With certain exceptions for leases under twelve months in length or for assets of low value, IFRS 16 states that upon lease commencement a lessee recognizes a right-of-use (“ROU”) asset and a lease liability. The ROU asset is initially measured at the amount of the liability plus any initial direct costs. After lease commencement, the lessee shall measure the ROU asset at cost less accumulated amortization and accumulated impairment. A lessee shall either apply IFRS 16 with full retrospective effect or alternatively not restate comparative information but recognize the cumulative effect of initially applying IFRS 16 as an adjustment to opening equity at the date of initial application.

16

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (continued)

(l) Adoption of New Accounting Policies (continued)

IFRS 16 – Leases (“IFRS 16”) (continued)

IFRS 16 requires that lessors classify each lease as an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise, it is an operating lease.

The Company has reviewed its leasing arrangements outstanding as at December 1, 2019, in respect of the new lease standard, and had assessed that there was no material impact upon adoption of this new standard on its consolidated financial statements.

IFRIC 23 – Uncertainty Over Income Tax Treatments (“IFRIC 23”)

IFRIC 23 clarifies the accounting for uncertainties in income taxes. The IFRIC concluded that an entity shall consider whether it is probable that a taxation authority will accept an uncertain tax treatment. If an entity concludes it is probable that the taxation authority will accept an uncertain tax treatment, then the entity shall determine taxable profit (tax loss), tax bases, unused tax losses and credits or tax rates consistently with the tax treatment used or planned to be used in its income tax filings. If an entity concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the entity shall reflect the effect of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses and credits or tax rates. The Company had assessed that there was no material impact upon adoption of this new standard on its consolidated financial statements.

(m) Recent Accounting Pronouncements

At the date of authorization of these consolidated financial statements, the IASB and IFRIC have issued the following amendments which are effective for annual periods beginning on or after December 1, 2020:

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”)

IAS 1 and IAS 8 were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after December 1, 2020.

4. Business Combination

On May 5, 2020, the Company completed the Share Exchange pursuant to which the Company acquired 100% of the issued and outstanding shares of Psyched Corp. from holders of Psyched Corp. shares (the “Share Exchange Agreement”). Psyched Corp. is a private corporation incorporated pursuant to the Canadian Business Corporations Act on January 8, 2019 as “Sushego Ltd.”, which filed articles of amendment on March 25, 2020 to change its name to “Psyched Wellness Corp”. Upon closing of the Share Exchange, Psyched Corp. became a wholly-owned subsidiary of the Company. The Company determined that the Share Exchange was a business combination in accordance with the definition of IFRS 3 – Business Combination, and as such, has accounted for it in accordance with this standard, with the Company being the acquirer on the closing date.

The purchase price for the Share Exchange was $360,000 and was satisfied in full by the Company issuing to Psyched Corp. shareholders an aggregate of 18,000,000 common shares. The purchase price and other terms of the Share Exchange Agreement were negotiated at arm’s length with the Board of the Company and Psyched Corp. The Share Exchange has allowed the Company to capitalize and position itself to participate in the growing psychedelic space. Effective October 22, 2020, the Company’s common shares commenced trading on the CSE under the ticker symbol “PYSC”.

17

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

4. Business Combination (continued)

The following table summarizes the final purchase price allocation of the Share Exchange:

Purchase Price Consideration Paid
	$
Fair value of common shares issued	360,000
Fair value of settlement of pre-existing balance	117,676
Total consideration paid	477,676
Net Identifiable Asset Acquired
Accounts receivable	19,868
Prepaid expenses	30,600
Accounts payable and accrued liabilities	(21,403)
Total net identifiable assets acquired	29,065
Goodwill	448,611

Total consideration of $477,676 paid on the Share Exchange is comprised of the following components that were measured at the estimated fair value on the closing date:

• (i) The fair value of the 18,000,000 common shares, issued to holders of Psyched Corp. shares, was determined to be $360,000 based on the fair value of founders’ shares issued on April 23, 2020 (see Note 13).

• (ii) The effective settlement of a pre-existing liability related to the promissory note to the Company by Psyched Corp. of $117,676, including interest of $155 (see Note 16).

The estimated fair value of the net assets acquired do not include any intangible assets.

Goodwill of $448,611 recognized on the consolidated statements of financial position in connection with the Share Exchange is primarily attributable to the assembled skills and expertise of Psyched Corp.’s management and the synergies expected to arise after the Company’s acquisition of the business.

The net loss attributed to Psyched Corp. for the period of the Share Exchange to November 30, 2020 was $556,793. Transaction costs of approximately $56,827 were incurred in association with the Share Exchange.

Should the Share Exchange had been completed on December 1, 2019, the Company estimates it would have recorded an increase of $181,025 in net loss for the year ended November 30, 2020.

5. Accounts Receivable

The Company’s accounts receivable balance represents amounts due from government taxation authorities in respect of the Harmonized Sales Tax. The Company anticipates full recovery of these amounts and therefore no credit loss has been recorded against these receivables, which are due in less than one year.

6. Prepaid Expenses

Prepaid Expenses
	November 30,	November 30,
	2020	2019
	$	$
Prepaid insurance	48,549	-
Advances made to suppliers	503,698	-
	552,247	-

18

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

7. Exploration and Evaluation Assets

The Company continues to hold mining claims from a previously acquired 100% interest in two properties in the Red Lake mining district of Northwestern Ontario. The properties are commonly referred to as the “Dome Property”, with respect to 17 unpatented mining claims covering 40 mining units and approximately 504 hectares in the Dome, Byshe and Heyson Townships and, the “McManus Claims” with respect to 17 patented mining claims and 11 licenses of occupation covering approximately 324 hectares, which abut the Dome Property.

The Dome Property interests are subject to a 2% Net Smelter Royalty (“NSR”) obligation to the previous property owners, half of which may be purchased for $1,750,000. The McManus property interests are subject to 3% NSR to Camp McMan Red Lake Gold Mines Ltd., 1½% of which may be purchased for $500,000 per ½% interest. Minimum annual advance royalty payment of $10,000 per annum commenced in December 2014.

During the year ended November 30, 2019, the Company determined that the uncertainty over the E&E assets and the lack of planned or budgeted substantive expenditures were indicators of impairment. Accordingly, the Company tested the E&E assets for impairment and recorded an impairment loss of $50,000 based on a recoverable amount of $nil.

8. Land

Land comprised of six vacant lots subject to a registered plan of subdivision in the Town of Red Lake and a 94-acre block of undeveloped land south of the subdivision. The residual surface rights of the vacant lots were acquired as part of the earn-in agreement pursuant to which the Company acquired the McManus Patents. As the Company was no longer pursuing exploration in these lands, an impairment loss of $25,000 had been recorded during the year ended November 30, 2019, to write down the recoverable value to nil.

9. Accounts Payable and Accrued Liabilities

Accounts payables of the Company are principally comprised of amounts outstanding for trade purchases relating to regular business activities and amounts payable for financing activities.

	November 30,	November 30,
	2020	2019
	$	$
Accounts payable	5,740	87,271
Accrued liabilities	29,107	261,197
Others	-	21,268
	34,847	369,736

The Company’s standard term for trade payable is 30 to 60 days.

10. Term Loans

Commencing in 2014, the Company entered into a series of unsecured term loan agreements aggregating $250,000 and $116,000, respectively, with the late Ian McAvity, a former officer and director of the Company, and Eric P. Salsberg (“E. Salsberg”), also a former director. The loans bore interest at the rate of 5% per annum calculated annually and were due and payable on December 15, 2017.

On May 14, 2019, the Company settled $301,989 and $136,664 (the “Debt Settlement”) of outstanding principal term loan balances (including accrued interest) with the Estate of Ian McAvity (the “Estate”) and E. Salsberg, respectively, through the issuance of 1,462,178 common shares (“Debt Settlement Shares”). The Debt Settlement Shares were issued at a price of $0.30 per share. For purposes of calculating interest, accrued interest was calculated as of the fifth (5[th] ) business day prior to the issuance of the Debt Settlement Shares.

19

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

10. Term Loans (continued)

As a condition of the Debt Settlement, the Estate and E. Salsberg agreed to sell the Debt Settlement Shares to certain investors, including certain subscribers from the Private Placement from October 2018 (defined hereafter), at a price equal to 20% of the principal amount of the debt and accrued interest.

As a result of the foregoing, no term loans were outstanding as at November 30, 2019.

11. Promissory Notes Payable

On March 11, 2019, the Company issued a promissory note (the “First Promissory Note”) to an arm’s length party, in exchange for an advance of $30,000. The First Promissory Note is unsecured, bears interest at a rate of 10% per annum on the unpaid portion of the principal, calculated and compounded monthly. The First Promissory Note is due and payable on demand.

On October 23, 2019, the Company issued another promissory note (the “Second Promissory Note”) to another arm’s length party, in exchange for an advance of $17,202. The Second Promissory Note is unsecured, bears interest at a rate of 12% per annum on the unpaid portion of the principal, calculated and compounded monthly. The Second Promissory Note is due and payable on demand.

On January 16, 2020, the Company issued another promissory note (the “Third Promissory Note”) to another arm’s length party, in exchange for an advance of $10,000. The Third Promissory Note is unsecured, bears interest at a rate of 12% per annum on the unpaid portion of the principal, calculated and compounded monthly. The Third Promissory Note is due and payable on demand.

On April 23, 2020, the Company settled $60,378 of outstanding promissory notes (including accrued interest) with the above-mentioned arm’s length parties, as part of the issuance of Debt Settlement Shares (see Note 13 for details).

During the period from December 1, 2019 up to the Shares-for-Debt Issuances (defined hereafter) on April 23, 2020, $740 of interest expense was incurred in relation to the promissory notes. During the year ended November 30, 2019, interest expense of $2,436 was recorded on the promissory notes.

12. Convertible Debentures

On October 9, 2018, the Company completed a private placement of $250,000 (the “Private Placement”) of convertible debentures (the “Debentures”), which had a term of one year and accrued interest at a rate of 10% per annum. Pursuant to the Private Placement, the Debentures are convertible into units of the Company at the election of the holder. Each underlying unit was comprised of one pre-consolidation share (a “Debenture Share”) and one-half (1/2) of one preconsolidation share purchase warrant (a “Warrant”), subject to adjustment following completion of the Share Consolidation, as described in Note 13.

Following completion of the Share Consolidation, the Debentures were convertible based on a price of $0.40, adjusted to account for the consolidation ratio, and the Warrants would be exercisable at a price of $0.60 for every postconsolidation share. Following the Company’s delisting from the TSX Venture Exchange on May 9, 2019, the Debentures became effectively convertible into one Debenture Share (with no Warrants) at a price of $0.30 per share, adjusted to account for the Share Consolidation.

On October 9, 2019, immediately prior to its maturity, the Debentures were converted into 917,800 Debenture Shares of the Company, at the adjusted conversion price of $0.30.

During the year ended November 30, 2019, interest expense of $21,436 was recorded on the Debentures.

20

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

13. Share Capital

Authorized share capital

The Company is authorized to issue an unlimited number of common shares without par value.

Common shares issued and outstanding as at November 30, 2020 and 2019 are as follows:

	Number of
	common shares	Amount
	#	$
Balance, November 30, 2018	3,151,912	11,332,138
Shares issued on debt settlement	1,462,178	438,653
Shares issued on conversion of debentures	917,800	275,340
Balance, November 30, 2019	5,531,890	12,046,131
Shares issued on Share Exchange	18,000,000	360,000
Shares issued on debt settlement	7,050,090	141,002
Shares issued on private placement financings	73,810,950	4,701,095
Share issuance costs	-	(364,400)
Shares issued on exercise of broker warrants	120,000	18,263
Balance, November 30, 2020	104,512,930	16,902,091

Share capital transactions for the year ended November 30, 2020

On April 23, 2020, the Company closed a non-brokered private placement (“Seed Financing”) through the issuance of 33,500,000 common shares at a price of $0.02 per common share, for gross proceeds of $670,000.

On April 23, 2020, the Company also settled an aggregate amount of $141,002 of indebtedness owed to certain arm’s length and non-arms’ length creditors through the issuance of 7,050,090 common shares of the Company (“Shares-forDebt Issuances”) at a price of $0.02 per common share.

On May 5, 2020, the Company acquired all of the outstanding common shares of Psyched Corp. in pursuant of the Share Exchange on a one for one basis. On completion of the Share Exchange, holders of Psyched Corp. shares were issued an aggregate of 18,000,000 common shares of the Company.

On May 22, 2020, the Company completed the first tranche (“Tranche 1”) of a non-brokered private placement (“Series A Financing”) for gross proceeds of $1,637,000 through the issuance of 16,370,000 common shares at a price of $0.10 per common share. In connection with Tranche 1 of the Series A Financing, the Company paid finders’ fees of $63,200 and issued 632,000 broker warrants. Each broker warrant is exercisable into one common share of the Company at a price of $0.10 for a period of 24 months from closing of Tranche 1 of the Series A Financing.

On June 1, 2020, the Company completed the second tranche (“Tranche 2”) of the Series A Financing for gross proceeds of $2,231,500 through the issuance of 22,315,000 common shares at a price of $0.10 per common share. In connection with Tranche 2, the Company paid finders’ fees of $173,720 and issued 1,737,200 broker warrants. Each broker warrant is exercisable into one common share of the Company at a price of $0.10 for a period of 24 months from closing of Tranche 2 of the Series A Financing.

On July 31, 2020, the Company completed the third and final tranche (“Tranche 3”) of the Series A Financing for gross proceeds of $162,595 through the issuance of 1,625,950 common shares at a price of $0.10 per common share. No cash finders’ fees were paid, and no broker warrants were issued in connection with the closing of Tranche 3 of the Series A Financing.

On November 5, 2020, 120,000 common shares were issued as a result of the exercise of broker warrants for cash proceeds of $12,000.

21

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

13. Share Capital (continued)

Share capital transactions for the year ended November 30, 2019

On December 18, 2018, at the Company’s Annual General Meeting of Shareholders, shareholders of the Company approved a resolution empowering the Board to affect a share consolidation of up to one post-consolidation share for every 40 pre-consolidation shares (the “Share Consolidation”). Regulatory approval was received on January 29, 2019, and the Share Consolidation was effective February 1, 2019.

On May 14, 2019, the Company issued 1,462,178 Debt Settlement Shares to settle the outstanding term loans of $301,989 and $136,664 (including accrued interest) with the Estate and E. Salsberg, respectively (see Note 8). The Debt Settlement Shares were valued at $438,653 based on the fair value of the outstanding term loans.

On October 9, 2019, the Company issued 917,800 common shares on conversion of the Debentures at the adjusted conversion price of $0.30 (see Note 12).

Basic and diluted loss per share

Basic and diluted loss per share is calculated by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. For the year ended November 30, 2020, the basic and diluted loss per share was $0.034 and $0.029, respectively (2019 – $0.086 basic and diluted).

14. Contributed Surplus

The Company maintains a stock option plan (the “Option Plan”) whereby certain key employees, officers, directors and consultants may be granted stock options for common shares of the Company. The Option Plan provides that the aggregate number of securities reserved for issuance will be up to 10% of the number of the common shares issued and outstanding from time to time. The Option Plan is administered by the Board, which has full and final authority with respect to granting stock options thereunder. As at November 30, 2020, the Company had 389,293 common shares that are issuable under the Option Plan.

Under the Option Plan, the exercise price of stock options grants will be determined by the Board, will not be less than the greater of the closing market prices of the underlying securities on: (a) the trading day prior to the date of grant of the stock options; and (b) the date of grant of the stock options. All stock options granted under the Option Plan will expire not later than the date that is ten years from the date that such options are granted. Stock options terminate earlier as follows: (i) immediately in the event of dismissal with cause; (ii) 90 days from the date of termination other than for cause employment (or such other date as Board or a committee thereof may determine); (iii) one year from the date of death or disability. Vesting terms are also are determined at the discretion of the Board.

The following summarizes the options activity for the years ended November 30, 2020 and 2019:

	November	30, 2020	November	30,2019
		Weighted		Weighted
	Number of	average	Number of	average
	options	exerciseprice	options	exerciseprice
	#	$	#	$
Outstanding, beginning of year	-	-	-	-
Granted	7,312,000	0.10	-	-
Granted	1,500,000	0.15	-	-
Granted	500,000	0.145	-	-
Granted	750,000	0.185	-	-
**Outstanding, end of year **	10,062,000	0.12	-	-

22

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

14. Contributed Surplus (continued)

Options grants for the year ended November 30, 2020

On July 13, 2020, the Company granted 7,312,000 options to various officers, directors and consultants of the Company. The options are exercisable at a price of $0.10 per common share for a period of five years. The options vest three months from the date of grant, and were valued using Black-Scholes with the following assumptions: expected volatility of 100% based on the estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.36% and an expected life of five years. The grant date fair value attributable to these options was $540,219, of which $540,219 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2020.

On October 23, 2020, the Company granted 1,500,000 options to various consultants. The options are exercisable at a price of $0.15 per common share for a period of five years. The options vest three months from the date of grant, and were valued using Black-Scholes with the following assumptions: expected volatility of 100% based on the estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.38% and an expected life of five years. The grant date fair value attributable to these options was $159,749, of which $65,983 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2020.

On November 13, 2020, the Company granted 500,000 options to a director of the Company. The options are exercisable at a price of $0.145 per common share for a period of five years. The options vest three months from the date of grant, and were valued using Black-Scholes with the following assumptions: expected volatility of 100% based on the estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.46% and an expected life of five years. The grant date fair value attributable to these options was $47,122, of which $8,707 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2020.

On November 24, 2020, the Company granted 250,000 options to a director of the Company. The options are exercisable at a price of $0.185 per common share for a period of five years. The options vest three months from the date of grant, and were valued using Black-Scholes with the following assumptions: expected volatility of 100% based on the estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.45% and an expected life of five years. The grant date fair value attributable to these options was $36,379, of which $2,373 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2020.

On November 24, 2020, the Company granted 500,000 options to a consultant. The options are exercisable at a price of $0.185 per common share for a period of five years, and vested immediately on grant. These options were valued using Black-Scholes with the following assumptions: expected volatility of 100% based on the estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.45% and an expected life of five years. The grant date fair value attributable to these options was $72,759, of which $72,759 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2020.

Options grants for the year ended November 30, 2019

No options were granted during the year ended November 30, 2019.

23

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

14. Contributed Surplus (continued)

The following table summarizes information of stock options outstanding and exercisable as at November 30, 2020:

	Number of	Number of		Weighted average
	options	options		remaining
Date of expiry	outstanding	exercisable	Exerciseprice	contractual life
	#		$	Years
July 13, 2025	7,312,000	7,312,000	0.10	4.62
October 23, 2025	1,500,000	-	0.15	4.90
November 13, 2025	500,000	-	0.145	4.96
November 24,2025	750,000	500,000	0.185	4.99
	10,062,000	7,812,000	0.12	4.70

15. Reserve for Warrants

The following summarizes the warrant activity for the years ended November 30, 2020 and 2019:

	November	30, 2020	November	30,2019
		Weighted		Weighted
	Number of	average	Number of	average
	warrants	exerciseprice	warrants	exerciseprice
	#	$	#	$
Outstanding, beginning of year	-	-	-	-
Issued from Series A Financing	2,369,200	0.10	-	-
Exercised	(120,000)	0.10	-	-
Outstanding, end of year	2,249,200	0.10	-	-

Warrant issuances for the year ended November 30, 2020

On May 22, 2020, the Company issued 632,000 broker warrants as compensation to finders in connection with the closing of Tranche 1 of the Series A Financing, as disclosed in Note 13. Each broker warrant is exercisable at $0.10 to purchase one common share of the Company for a period of 24 months from closing of Tranche 1. The grant date fair value of the broker warrants issued was estimated to be $32,983 using Black-Scholes with the following assumptions: share price of $0.10, expected volatility of 100% based on estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.29% and an expected life of two years.

On June 1, 2020, the Company issued 1,737,200 broker warrants as compensation to finders in connection with the closing of Tranche 2 of the Series A Financing, as disclosed in Note 13. Each broker warrant is exercisable at $0.10 to purchase one common share of the Company for a period of 24 months from closing of Tranche 2. The grant date fair value of the broker warrants issued was estimated to be $90,663 using Black-Scholes with the following assumptions: share price of $0.10, expected volatility of 100% based on estimated volatility for the psychedelic industry, expected dividend yield of 0%, risk-free interest rate of 0.29% and an expected life of two years.

Warrant issuances for the year ended November 30, 2019

There were no warrant issuances during the year ended November 30, 2019.

24

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

15. Reserve for Warrants (continued)

The following table summarizes information of warrants outstanding as at November 30, 2020:

		Number of		Weighted average
		warrants		remaining
Date	of expiry	outstanding	Exerciseprice	contractual life
		#	$	Years
May	22, 2022	512,000	0.10	1.47
June	1,2022	1,737,200	0.10	1.50
		2,249,200	0.10	1.50

16. Key Management Compensation and Related Party Transactions

Key management personnel compensation

Key management includes the Company’s directors and officers with authority and responsibility for planning, directing and controlling the activities of an entity, directly or indirectly.

The remuneration of directors and other members of key management personnel during the years ended November 30, 2020 and 2019 were as follows:

	2020	2019
	$	$
Management and consulting fees	132,500	28,533
Professional fees	64,625	18,000
Stock-based compensation	470,464	-
	667,589	46,533

On March 25, 2020, Psyched Corp and S4 Management Group Inc. (“S4 Management”), an entity controlled by Jeffrey Stevens, the Chief Executive Officer (“CEO”) and also a director of the Company, entered into a consulting agreement, for a monthly renumeration of $8,000 in consideration of the CEO’s services to be provided to the Company. Effective October 1, 2020, the CEO’s renumeration had been adjusted to $12,000 per month. During the year ended November 30, 2020, S4 Management charged $64,000 (2019 – $nil) for consulting services provided to the Company, which are included in management and consulting fees. As at November 30, 2020, no balance was owed to S4 Management (November 30, 2019 – $nil).

On March 25, 2020, Psyched Corp and David Shisel, the Chief Operating Officer (“COO”) of the Company, entered into a consulting agreement, for a monthly renumeration of $8,000 in consideration of the COO’s services to be provided to the Company. Effective October 1, 2020, the COO’s renumeration had been adjusted to $10,000 per month. For the year ended November 30, 2020, the COO charged $60,000 (2019 – $nil) for consulting services provided to the Company, which are included in management and consulting fees. As at November 30, 2020, no balance was owed to the COO (November 30, 2019 – $nil).

During the year ended November 30, 2020, the Company paid a management bonus of $8,500 (2019 – $nil) to certain of its directors and officers for services rendered prior to the Share Exchange. Brian Presement, the former CEO, received a cash bonus of $2,500, while Keith Li, the Chief Financial Officer (“CFO”), Christopher Hazelton, director, and Jeremy Goldman, a former director of the Company, were also paid a cash bonus of $2,000 each. The bonus was included in management and consulting fees.

During the year ended November 30, 2020, Branson Corporate Services Ltd. (“Branson”), where the CFO is employed, charged fees of $64,625 (2019 – $18,000), for CFO services provided to the Company, as well as other accounting and administrative services, which are included in professional fees. As at November 30, 2020, no balance was owed to Branson (November 30, 2019 – $19,755; included in accounts payable and accrued liabilities).

25

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

16. Key Management Compensation and Related Party Transactions (continued)

Key management personnel compensation (continued)

During the year ended November 30, 2019, the Company was charged $20,028 (USD$15,000) and $8,505, respectively, by David Shaddrick (“D. Shaddrick”), a former President and CEO of the Company, and Harold Doran, a former CFO, for consulting and accounting services previously provided to the Company.

Stock-based compensation

On July 13, 2020, the Company granted 7,312,000 options, of which 6,250,000 options were granted to officers and directors. The options vest three months from the date of grant. During the year ended November 30, 2020, stock-based compensation of $461,757 (2019 – $nil) attributable to these 6,250,000 options was recorded in connection with the vesting of options.

On November 13, 2020, the Company granted 500,000 options to a director, which vest three months from the date of grant. During the year ended November 30, 2020, stock-based compensation of $8,707 (2019 – $nil) attributable to these options was recorded in connection with the vesting of options.

Other related party transactions

On March 5, 2020, the Company entered into a Debt Settlement with E. Salsberg, a former director, and D. Shaddrick, as debts of $216,190 previously owed to the parties were settled for payments of $79,173 and $58,835, respectively. As a result, the Company recorded a gain of $78,182 on the Debt Settlement. E. Salsberg was issued 1,000,000 common shares of the Company at a price of $0.02 per common share, as part of the Shares-for-Debt Issuances on April 23, 2020, to settle a remaining debt balance of $20,000.

On April 23, 2020, the Company entered into a Shares-for-Debt Issuance with Branson through the issuance of 1,779,750 common shares at a price of $0.02 per share, to settle outstanding obligations of $35,595.

On May 1, 2020, the Company advanced funds of $117,521 to Psyched Corp., in exchange of a promissory note. The promissory note is unsecured, due on demand and bears interest at a rate of 12% per annum. Upon closing of the Share Exchange, the balance was eliminated on consolidation. The Company recognized interest income of $155 on the promissory note from the period from issuance to May 5, 2020.

17. Income Taxes

The reported recovery of income taxes differs from amounts computed by applying the combined Canadian federal and provincial income tax rates to the reported loss before income taxes due to the following:

	November 30,	November 30,
	2020	2019
	$	$
Reported loss before income taxes	(2,072,757)	(350,119)
Combined statutory income tax rate	26.5%	26.5%
Expected income tax recovery at current rate	(549,281)	(92,781)
Non-deductible stock-based compensation	182,861	-
Share issue costs charged directly to equity	(63,800)	-
Adjustment to legacy mineral properties	232,781	-
Non-taxable gain on debt settlement	(21,996)	-
Other permanent differences	(718)	8,369
Change in tax benefits not recognized	220,153	84,413
	-	-

26

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation)

Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

17. Income Taxes (continued)

Deferred tax balances

Deferred income taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying values of assets and liabilities. The temporary differences and unused tax losses that give rise to deferred income tax assets are presented below:

rise to deferred income tax assets are presented below:
	November 30,	November 30,
	2020	2019
	$	$
Non-capital losses carried forward	1,219,057	815,096
Capital losses	720,732	720,732
Exploration and evaluation assets	-	232,781
Land	39,750	39,750
Financing costs	55,174	6,201
	2,034,713	1,814,560
Less: Deferred tax assets not recognized	(2,034,713)	(1,814,560)
Net deferred tax assets	-	-

As at November 30, 2020 and 2019, the Company had a 100% valuation allowance against its deferred income tax balances as it is not considered probable that sufficient future tax profit will allow the deferred tax assets to be realized.

Finance costs will be fully amortized in 2024 and other temporary differences may be carried forward indefinitely.

Non-capital losses carried forward

The Company’s non-capital losses will expire as follows:

	$
2026	39,310
2027	397,080
2028	188,981
2029	125,437
2030	282,441
2031	330,670
2032	265,417
2033	230,364
2034	171,849
2035	177,989
2036	160,160
2037	210,414
2038	244,616
2039	254,155
2040	1,521,332
	4,600,215

27

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

18. Capital Management

The Company’s objectives when managing capital is to safeguard its ability to continue as a going concern and to maintain optimal returns to shareholders and benefits for its stakeholders. While the Company does not yet have any commercial operations, management monitors its capital structure and makes adjustments according to market conditions to meet its objectives given the current outlook of the business and industry in general. The Board of the Company does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the management team to sustain the future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company’s capital management objectives, policies and processes have remained unchanged during the years ended November 30, 2020 and 2019.

The Company is not subject to any externally imposed capital requirements.

19. Financial Instrument Risks

The Company’s financial instruments consist primarily of cash, accounts payable and promissory notes payable. The Company is exposed to various risks as it relates to these financial instruments. There have not been any changes in the nature of these risks or the process of managing these risks from previous reporting periods.

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Cash is held with reputable Canadian chartered banks and in trust with the Company’s legal counsel, which is closely monitored by management. Management believes that the credit risk concentration with respect to financial instruments is minimal. The maximum exposure to credit risk at period-end is limited to the accounts receivable balance.

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’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company generates cash flow primarily from its financing activities. As at November 30, 2020, the Company had a cash balance of $2,059,776 (November 30, 2019 – $1,471) to settle current liabilities of $34,847 (November 30, 2019 – $419,374).

The following table summarizes the carrying amount and the contractual maturities of both the interest and principal portion of significant financial liabilities as at November 30, 2020:

	Carrying
	amount	Year 1	Year 2 to 3	Year 4 to 5
	$	$	$	$
Accountspayable and accrued liabilities	34,847	34,847	-	-

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet its liabilities as they come due. The Company has undertaken several proposed restructuring initiatives and other corporate measures to rationalize its capital and debt structure to better position the Company for future opportunities and meet its obligations as they come due. Until these initiatives and efforts are finalized, there is no assurance that one or any of these initiatives will be successful.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not hold any instruments subject to interest rate risk as at November 30, 2020.

28

Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation)

Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019

(Expressed in Canadian Dollars)

20. Contingencies

The Company’s psychedelics operations are subject to a variety of provincial, state and federal regulations in Canada and the US. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations in that specific state or local jurisdiction. While management of the Company believes that the Company is in compliance with applicable local and state regulations as at November 30, 2020, regulations on the psychedelics industry continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future.

21. Reclassification

Certain comparative figures have been reclassified to conform to the current year’s presentation on the consolidated financial statements. Net loss previously reported has not been affected by these reclassifications.

22. Subsequent Events

Subsequent to November 30, 2020, the Company granted 250,000 options to a consultant. The options are exercisable at a price of $0.225 per common share for a period of five years. The options vest three months from the date of grant.

Subsequent to November 30, 2020, the Company issued 1,055,360 common shares as a result of the exercise of broker warrants for cash proceeds of $105,536.

29