RAMM Pharma Corp.

==> picture [252 x 118] intentionally omitted <==

CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2019

(EXPRESSED IN CANADIAN DOLLARS)

Independent Auditor's Report

To the Shareholders of RAMM Pharma Corp.:

Opinion

We have audited the consolidated financial statements of RAMM Pharma Corp. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at October 31, 2019 and October 31, 2018, and the consolidated statements of loss and comprehensive loss, changes in equity and 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 October 31, 2019 and October 31, 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits 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 audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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 audits 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 audits 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 on this other information, 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 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 related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

==> picture [83 x 27] intentionally omitted <==

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 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 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.

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

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 Marufur Raza.

==> picture [89 x 25] intentionally omitted <==

==> picture [83 x 27] intentionally omitted <==

Chartered Professional Accountants Licensed Public Accountants

Toronto, Ontario February 28, 2020

RAMM PHARMA CORP.

CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2019

Financial Statements
Consolidated Statements of Financial Position	1
Consolidated Statements of Loss and Comprehensive Loss	2
Consolidated Statements of Changes in Shareholders’ Equity	3
Consolidated Statements of Cash Flows	4
Notes to the Consolidated Financial Statements	5-35

RAMM PHARMA CORP. Consolidated Statements of Financial Position (Expressed in Canadian Dollars)

Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax assets Total current assets Non-current assets Other receivables Property, plant and equipment Receivables from related parties Total non-current assets Total assets Equity and liabilities Liabilities Current liabilities Trade and other payables Loans and borrowings Lease liabilities Other financial liabilities Current tax liabilities Total current liabilities Non-current liabilities Lease liabilities Loans and borrowings Total non-current liabilities Total liabilities Equity Share capital Equity contribution Option reserve Warrants reserve Reserve of exchange differences on translation Accumulated deficit Total equity (deficit) Total equity and liabilities	Note 6 7 8 9 12 10 11 9.1 16 9.1 11 17.1 17.5 17.2 17.3	October 31, 2019 $ 35,370,072 2,183,749 1,605,252 19,783 39,178,856 57,904 2,429,201 1,019,572 3,506,677 42,685,533 2,107,618 2,090,694 80,206 154,443 5,014 4,437,975 116,476 - 116,476 4,554,451 41,788,119 3,062,332 37,405 1,208,006 (126,373) (7,838,407) 38,131,082 42,685,533	October 31, 2018
			$ 941,752 1,918,616 2,122,509 133,903
			5,116,780
			- 529,186 1,283,444
			1,812,630
			6,929,410
			1,901,938 3,881,193 - - 5,292
			5,788,423
			- 1,367,889
			1,367,889
			7,156,312
			1,227,401 - - - (436,348) (1,017,955)
			(226,902)
			6,929,410

See accompanying notes to the consolidated financial statements.

Commitment and contingencies – Note 19 Subsequent events – Note 23

Approved and authorized by the Board of Directors:

“Jack Burnett” “Eric Klein” Jack Burnett Eric Klein

RAMM PHARMA CORP.

Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars)

Expressed in Canadian Dollars)
Revenue Cost of sales Gross profit Selling and Administrative expenses Profit (Loss) from operating activities Listing expense Finance expense Exchange difference, net Net loss before tax Income tax expense Net loss for the year Exchange differences on translation Net comprehensive loss Net loss per share during the year Basic and diluted Weighted average number of shares outstanding Basic and diluted	Note 14 15 15 13 16 18 17.2 17.2	For the year ended
		October 31, 2019 $ 5,610,572 (4,827,386) 783,186 (2,704,803) (1,921,617) (3,605,766) (623,869) (663,697) (4,893,332) (6,814,949) (5,503) (6,820,452) 309,975 (6,510,477) (0.1353) 50,416,898	October 31, 2018
			$ 8,345,612 (6,120,768)
			2,224,844 (1,892,106)
			332,738
			- (416,059) (595,612)
			(1,011,671)
			(678,933)
			(5,649)
			(684,582)
			14,823
			(669,759)
			(0.0137) 50,000,000

See accompanying notes to the consolidated financial statements.

RAMM PHARMA CORP. Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars)

As at November 1, 2017 Comprehensive loss for the year Net loss for the year As at October 31, 2018 Equity contribution (Note 17.5) Adjustment to reflect shares issued to former shareholders of Medic Plast (Note 13 a) Shares issued to former shareholders of Medic Plast (Note 13 a) Shares issued for RAMM Pharma Holdings Corp amalgamation (Note 13 c) Shares issued for Yurelan acquisition (Note 13 b) Shares issued for reverse acquisition (Note 13 a) Share-based compensation Comprehensive loss for the year Net loss for the year As at October 31, 2019	Common Share Equity Option Warrant Reserve of exchange differences on translation Accumulated Shares Capital contribution Reserve Reserve Deficit Total
	# $ $ $ $ $ $ $ 17,000,000 1,227,401 - - - (451,171) (333,373) 442,857 - - - - - 14,823 - 14,823 - - - - - - - (684,582) (684,582)
	17,000,000 1,227,401 - - - (436,348) (1,017,955) (226,902)
	- - 3,062,332 - - - - 3,062,332 (17,000,000) - - - - - - - 50,000,000 - - - - - - - 38,020,854 32,652,351 - - 1,127,372 - - 33,779,723 7,820,000 1,318,075 - - - - 1,318,075 4,881,698 6,590,292 - - 80,634 - - 6,670,926 - - - 37,405 - - - 37,405 - - - - - 309,975 - 309,975 - - - - - - (6,820,452) (6,820,452)
	100,722,552 41,788,119 3,062,332 37,405 1,208,006 (126,373) (7,838,407) 38,131,082

See accompanying notes to the consolidated financial statements.

RAMM PHARMA CORP. Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

AMM PHARMA CORP. onsolidated Statements of Cash Flows Expressed in Canadian Dollars)
Net loss for the year Adjustments for Items not affecting cash: Unrealized effect of foreign currency Allowance for impairment of trade receivables Depreciation expense Income tax expense Loss from other financial liabilities Share-based compensation Listing expense Interest expense Other non-cash items Net changes in non-cash working capital balances: Decrease in inventories Decrease (increase) in trade and other receivables Decrease (increase) in current tax assets Increase in trade and other payables Decrease in current tax liabilities Total net changes in non-cash working capital balances Net cash flow from (used in) operating activities Cash flows from (used in) investing activities Purchase of property, plant and equipment Cash advances made to related parties Cash receipts from repayment of advances made to related parties Net cash flows (used in) investing activities Cash flows from (used in) financing activities Proceeds from borrowing Repayments of borrowing Proceeds from equity contribution Cash acquired from acquisitions Net proceeds from advances from related parties Lease payments Interest paid Net cash flows from (used in) financing activities Net increase in cash and cash equivalents before effect of exchange rate changes Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalent Cash and cash equivalent at beginning of the year Cash and cash equivalent at end of the year	Note 16 9 12 12 11 11 17.5 13 13 6 6	For the year ended
		October 31, 2019 $ (6,820,452) 95,243 143,597 34,597 5,503 170,155 37,405 3,605,766 453,714 31,728 (2,242,744) 517,257 (402,580) 114,120 205,680 (278) 434,199 (1,808,545) (387,909) (16,452) 131,784 (272,577) - (3,085,035) 3,062,332 32,560,894 4,332,284 (18,287) (432,255) 36,419,933 34,338,811 114,372 34,453,183 911,276 35,364,459	October 31, 2018
			$ (684,582) 130,591 54,037 10,232 5,649 - - - 416,059 -
			(68,014) 758,343 850,109 (139,552) 295,889 (4,003)
			1,760,786
			1,692,772
			(20,707) (347,656) 976,086
			607,723
			17,095 (1,334,038) - - - - (383,063)
			(1,700,006)
			600,489 (19,708)
			580,781
			330,495
			911,276

See accompanying notes to the consolidated financial statements.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS

RAMM Pharma Corp. (the “Company” or “RAMM”) was incorporated under the laws of Canada by articles of incorporation dated July 21, 1987, as amended August 12, 1987 as MTC Growth Fund-I Inc. (“MTC”) The registered office address of the Company is 82 Richmond St. E, Toronto, ON, M5C 1P1.

These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the “Group”) (See Note 3.1). The Group is primarily engaged in pharmaceutical and medical product business, including cannabinoid pharmacology and product formulation for cannabis-based pharmaceuticals and other cannabis-based products.

On October 28, 2019, MTC completed the acquisition of Medic Plast and Yurelan pursuant to the Medic Plast Share Exchange Agreement (the “Medic Plast SEA”) and the Yurelan Share Exchange Agreement (the “Yurelan SEA”), and the amalgamation of a wholly owned subsidiary of MTC (“Subco”) with RAMM Pharma Holdings Corp. pursuant to the Master Agreement (all together the “Going Public Transaction”) upon which MTC changed its name to RAMM Pharma Corp. and Medic Plast, Yurelan and RAMM Pharma Holdings Corp. became wholly-owned subsidiaries of the Company. The Going Public Transaction was accounted for as a reverse acquisition. See Note 13.

For further information with respect to the Transactions and the business of RAMM, please refer to the listing statement of the Company dated October 28, 2019 and posted under the Company’s issuer profile on SEDAR at www.sedar.com.

The Canadian Securities Exchange approved the listing, effective November 8, 2019, of the common shares of the Company under the ticker symbol “RAMM”.

These Consolidated Financial Statements were approved for issuance by the Company’s Board of Directors on February 28, 2020.

2. BASIS OF PRESENTATION

2.1. Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

2.2. Basis of measurement

These consolidated financial statements have been prepared on the going concern basis, under the historical cost convention except for certain financial instruments and options and warrants reserves, which are measured at fair value, as explained in the accounting policies set out in Note 3.15.

2.3. Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars, which is RAMM Pharma Corp.’s functional currency. References to $ are to Canadian dollars, unless otherwise stated.

As of October 31, 2019, and 2018, the functional currency was determined to be the Uruguayan Peso for the Group’s subsidiary, Medic Plast. As of October 31, 2019, the functional currency was determined to be the US Dollar for the Group’s subsidiary, Yurelan and the Canadian Dollar for the Group’s subsidiary RAMM Pharma Holdings Corp.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Effective November 1, 2018, the Company changed its presentation currency to Canadian dollars from US dollars. The financial statements as of October 31, 2018 and for the year then ended, have been translated into Canadian dollars in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”, as follows:

Assets and liabilities presented and previously reported in US dollars have been translated into Canadian dollars using period-end exchange rate of 0.7609;
Statements of loss and comprehensive loss have been translated using average exchange rates prevailing during the reporting period of 0.7771.
Shareholder’s equity balances have been translated using historical exchange rates in effect on the date that transactions occurred; and
Resulting exchange differences have been recorded within the Reserve of exchange differences on translation.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1. Basis of consolidation

a) Business Combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group (see b) below).The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment (see Note 3.7). Any gain on a bargain purchase is recognized in the consolidated statements of loss and comprehensive loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities (see Note 3.13).

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based measure of the replacement awards compared with the market-based measure of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.

b) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

The wholly owned subsidiaries of RAMM are as follows:

Name	Description
Medic Plast S.A.	Incorporated pursuant to Law 16.060 under the Business Companies Act (Uruguay) on October
	26, 1988, Medic Plast is a pharmaceutical and medical product business. Medic Plast developed
	medically registered and approved plant derived cannabinoid pharmaceutical products. Its
	registered office, pharmaceutical laboratory and main warehouse facility address is Belloni 3027,
	Montevideo, Uruguay, and its secondary warehouse facility address is Justo Alonso 3115,
	Montevideo, Uruguay. Medic Plast has an average team of 55 employees.
Yurelan S.A.	Incorporated pursuant to Law 16.060 under the Business Companies Act (Uruguay) on May 3,
	2018, Yurelan is a Uruguayan company established for the purpose of growing and cultivating
	hemp and cannabis for medicinal purposes at its proposed large-scale cultivation facility. Yurelan’s
	owns agricultural land and greenhouses.
RAMM Pharma Holdings	RAMM Pharma Holdings Corp. was formed on March 1, 2019 pursuant to the OBCA for the sole
Corp.	purpose of entering into the Master Agreement, to complete the Convertible Debenture Offering
	and the Subscription Receipts Financing as described in Note 13 c), and the Business Combination
	to form the Issuer and effect the listing of the Issuer Shares on the CSE.

c) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

3.2. Foreign currency

a) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognized in the consolidated statement of loss and comprehensive loss.

b) Foreign operations

The assets and liabilities of foreign operations are translated into Canadian dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into Canadian dollars at the average exchange rates during the period. Foreign currency differences are recognized in OCI and accumulated in the Reserve of exchange differences on translation.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Exchange rates used are as follows:

Uruguayan Pesos US Dollars	October 31 2019 2018 0.0351 0.0400 0.7599 0.7609	Average
		2019 2018 0.0382 0.0436 0.7526 0.7771

3.3. Revenue

On May 28, 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) and applies to annual financial statements for a period beginning on or after January 1, 2018, early adoption is permitted. On April 12, 2016, the IASB issued Clarifications to IFRS 15, which became effective at the same time as IFRS 15. The Group early adopted IFRS 15 for its annual financial statements as at October 31, 2017, with an adoption date on November 1, 2016.

The standard contains a single model that applies to contracts with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. The new standard applies to contracts with customers. It does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other IFRSs.

Revenue recognized by the Group represents the fair value of consideration receivable from customers for products provided by the Group, net of discounts and sales taxes. The Group generates revenue from the sales of products to its customers and recognizes revenue when performance obligations have been met. Typically, this happens when control passes upon receipt of the product by the customers at the customer’s location. Invoices are generated and revenue is recognized at that point in time. Invoices are usually payable within 60-90 days.

When considering whether the Group has satisfied its performance obligation in order to recognize revenue, it considers the indicators of the transfer of control, which include, but are not limited to, whether the Group has a present right to payment, the customer has legal title to the product, the Group has transferred physical possession of the product to the customer, and the customer has the significant risks and rewards of ownership of the product.

3.4. Cash and cash equivalents

The Group considers all investments with original maturities of three months or less, that are highly liquid and readily convertible into cash, to be cash equivalents. Cash and cash equivalents include bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management.

3.5. Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in, first-out principle. In the case of manufactured inventories, cost includes an appropriate share of production overheads based on normal operating capacity. The net realizable value of inventories is based on the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

3.6. Property, plant and equipment

Property, plant and equipment, are recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately.

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 Group and the cost of the item can be measured reliably. These costs may include the cost of replacing parts that are eligible for capitalization when the costs of replacing the parts are incurred. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Depreciation is calculated using the straight-line method beginning the next month after acquisition, to allocate their cost to their residual values over their estimated useful lives, as follows:

•	Land	Not depreciated
•	Buildings	50 years
•	Equipment	5 – 10 years
•	Vehicles	10 years
•	Furniture and fittings	10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the consolidated statements of loss and comprehensive loss.

3.7. Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use (“cash generating units” or “CGU”) that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

3.8. Related party transactions

A party is related to an entity if the party directly or indirectly controls, is controlled by or is under common control with the entity; or if it has an interest in the entity that gives it significant influence over the entity; or if it has joint control over the entity or is an associate or a joint venture of the entity. In addition, members and dependents of the key management personnel of the entity (Board of Directors and Executive Management Board) are also considered related parties.

3.9. Provisions

Provisions are recognized when (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. The Group bases its accruals on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligations.

3.10. Contingent liabilities and assets

Contingent liabilities will be recognized in the financial statements when it is determined that it is probable that an outflow of resources will take place to cover such liabilities. When the possibility of an outflow of resources to cover a contingent liability is remote, such disclosure is not required.

The items treated as contingent assets will be recognized in the financial statements in the period in which it is determined that it is virtually certain that an inflow of resources will occur. Contingent assets are not recognized in the financial statements, they are only disclosed in the notes to the financial statements when it is probable that an inflow of resources occurs.

3.11. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group's Chief Executive Officer. The Chief Executive Officer, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the person who makes strategic decisions as the chief operating decision maker. The Group’s operations are limited to a single reportable segment, being the production and sale of pharmaceutical, cosmetic, nutraceutical products, and the resale of medical supplies products.

3.12. Taxation

The income tax payable is based on taxable income for the year. Taxable income differs from “income before taxes” as reported in the consolidated statements of loss and comprehensive loss and because of items of income or expenses that are taxable or deductible in other years and items that are never taxable or deductible.

Current income tax represents the expected income taxes recoverable (or payable) on taxable income for the period using income tax rates enacted or substantively enacted at the end of the reporting period and considering any adjustments arising from prior years.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Deferred income taxes are accounted for using the liability method. Under this method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in earnings in the period that includes the substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable income will be sufficient to use the related tax benefits and may be subsequently reduced, if necessary, to the extent that it is probable that future taxable profits will be available. A deferred tax expense or benefit is recognized in other comprehensive earnings or otherwise directly in equity to the extent that it relates to items that are recognized in other comprehensive loss or directly in equity in the same or a different period.

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Group reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the outcome of these tax ‑ related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.

3.13. Equity

Common shares and warrants are classified as equity. Costs, such as commissions, professional fees and regulatory fees directly attributable to common shares issuances are deducted from the proceeds of the offering. Proceeds from unit offerings are allocated between shares and warrants. The fair value of warrants issued has been determined by using the Black Scholes model and the balance has been allocated to shares.

3.14. 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, respectively. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding stock options and share purchase warrants, in the weighted average number of common shares outstanding during the year, if dilutive.

3.15. Financial instruments

Implementation

In July 2014, the IASB issued the final version of IFRS 9 to replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 provides a revised model for recognition and measurement of financial instruments and a single, forward looking “expected loss” impairment model. IFRS 9 also includes a substantially reformed approach to hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.

As a result of the early adoption of IFRS 9, the Company has changed its accounting policy for financial instruments retrospectively, for financial instruments that were recognized at the date of application, which was November 1, 2017. The change did not impact materially the carry value of any financial instruments on this date.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Financial assets

Recognition and initial measurement

The Group recognizes financial assets when it becomes party to the contractual provisions of the instrument. Financial assets are measured initially at their fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through profit or loss are expensed in profit or loss when incurred.

Classification and subsequent measurement

On initial recognition, financial assets are classified as subsequently measured at amortized cost (“AC”), fair value through comprehensive loss (“FVOCI”) or fair value through profit or loss (“FVTPL”). The Group determines the classification of its financial assets, together with any embedded derivatives, based on the business model for managing the financial assets and their contractual cash flow characteristics.

Financial assets are classified as follows:

Amortized cost - Assets that are held for collection of contractual cash flows where those cash flows are solely payments of principal and interest are measured at amortized cost. Interest revenue is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss. Financial assets measured at amortized cost are comprised of trade receivables.
Fair value through comprehensive loss - Assets that are held for collection of contractual cash flows and for selling the financial assets, and for which the contractual cash flows are solely payments of principal and interest, are measured at fair value through comprehensive loss. Interest income calculated using the effective interest method and gains or losses arising from impairment and foreign exchange are recognized in profit or loss. All other changes in the carrying amount of the financial assets are recognized in comprehensive loss. Upon derecognition, the cumulative gain or loss previously recognized in comprehensive loss is reclassified to profit or loss. The Group does not hold any financial assets measured at fair value through comprehensive loss.
Mandatorily at fair value through profit or loss - Assets that do not meet the criteria to be measured at amortized cost, or fair value through comprehensive loss, are measured at fair value through profit or loss. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss. Financial assets mandatorily measured at fair value through profit or loss are comprised of cash and cash equivalents.
Designated at fair value through profit or loss – On initial recognition, the Group may irrevocably designate a financial asset to be measured at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch that would otherwise arise from measuring assets or liabilities, or recognizing the gains and losses on them, on different bases. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss. The Group does not hold any financial assets designated to be measured at fair value through profit or loss.

Contractual cash flow assessment

The cash flows of financial assets are assessed as to whether they are solely payments of principal and interest based on their contractual terms. For this purpose, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending risks and costs. In performing this assessment, the Group considers factors that would alter the timing and amount of cash flows such as prepayment and extension features, terms that might limit the Group’s claim to cash flows, and any features that modify consideration for the time value of money.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Impairment

The Group recognizes a loss allowance for the expected credit losses associated with its financial assets, other than financial assets measured at fair value through profit or loss. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions and forecasts of future economic conditions.

The Group applies the simplified approach for trade receivables. Using the simplified approach, the Group records a loss allowance equal to the expected credit losses resulting from all possible default events over the assets’ contractual lifetime.

For financial assets measured at amortized cost, loss allowances for expected credit losses are presented in the statement of financial position as a deduction from the gross carrying amount of the financial asset.

Financial assets are written off when the Group has no reasonable expectations of recovering all or any portion thereof.

Derecognition of financial assets

The Group derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire.

Financial liabilities

Recognition and initial measurement

The Group recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Group measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss.

Where an instrument contains both a liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability component measured initially at fair value and the equity component assigned the residual amount.

Classification and subsequent measurement

Subsequent to initial recognition, all financial liabilities are measured at amortized cost using the effective interest rate method. Interest, gains and losses relating to a financial liability are recognized in profit or loss.

Derecognition of financial liabilities

The Group derecognizes a financial liability only when its contractual obligations are discharged, cancelled or expire.

3.16. Share-based payments

(a) Share-based payment transactions

Employees (including directors and senior executives) of the Group receive a portion of their remuneration in the form of sharebased payment transactions, whereby employees render services as consideration for equity instruments (“equity settled transactions”). In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment.

The costs of equity-settled transactions with employees are measured by reference to the fair value at the date on which they are granted, using an appropriate valuation model.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

The costs of equity-settled transactions are recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the “vesting date”). For cash settled share-based compensation, the expense is determined based on the fair value of the liability at the end of the reporting period until the award is settled.

The cumulative expense is recognized for equity-settled transactions at each reporting date until the vesting date reflects the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and the corresponding amount is represented in options reserve. At the end of each reporting period, the Group re-assesses its estimates of the number of awards that are expected to vest and recognizes the impact of the revisions in the consolidated statements of loss and comprehensive loss.

No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity settled award are modified, the minimum expense recognized is the grant date fair value of the unmodified award, provided the original terms of the award are met. An additional expense is recognized for any modification which increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the Group or the counterparty, any remaining element of the fair value of the award is expensed immediately through the consolidated statements of loss and comprehensive loss.

The dilutive effect of outstanding options is reflected as additional dilution in the computation of earnings per share.

(b) Warrants

The Group measures the fair value of warrants issued using the Black-Scholes option pricing model. The fair value of each warrant is estimated based on their respective issuance dates considering volatility, expected life, the dividend rate, and the risk-free interest rate. The fair value of warrants issued to agents in conjunction with a financing is charged to share issue costs with an offsetting amount recorded to warrant reserve.

3.17. Leases

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4.

Policy applicable from November 1, 2018

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.

As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component based on its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

– fixed payments, including in-substance fixed payments, less any lease incentives receivable;

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

– amounts expected to be payable under a residual value guarantee; and

– the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-ofuse asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ in the statement of financial position.

4. CHANGES IN ACCOUNTING STANDARDS AND FUTURE ACCOUNTING STANDARDS

Early adoption of IFRS 16

The Group initially applied IFRS 16 Leases from November 1, 2018. The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in accumulated deficit at November 1, 2018. Accordingly, the comparative information presented for October 31, 2018 is not restated – i.e. it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below. Additionally, the disclosure requirements in IFRS 16 have not generally been applied to comparative information.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Leases classified as operating leases under IAS 17

Previously, the Group classified property leases as operating leases under IAS 17. On transition, for these leases, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at November 1, 2018.

The Group’s leases comprise only of land and building leases for office space purpose. Right-of-use assets were measured as an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. The Group has tested its right-of-use assets for impairment on the date of transition and has concluded that there is no indication that the right-of-use assets are impaired.

Impact on transition

On transition to IFRS 16, the Group recognized additional right-of-use assets for $70,635 and additional lease liabilities for $70,635.

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at November 1, 2018. The weighted-average rate applied is 6%.

Other IFRS

IAS 1–Presentation of Financial Statements (“IAS 1”) and IAS 8–Accounting Policies, Changes in Accounting Estimates and Errors (“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 based on those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier adoption is permitted.

5. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

The application of the Group’s accounting policies requires management to use estimates and judgments that can have significant effect on the revenues, expenses, assets and liabilities recognized and disclosures made in the consolidated financial statements.

Management’s best estimates concerning the future are based on the facts and circumstances available at the time estimates are made. Management uses historical experience, general economic conditions and assumptions regarding probable future outcomes as the basis for determining estimates. Estimates and their underlying assumptions are reviewed periodically, and the effects of any changes are recognized immediately. Actual results could differ from the estimates used.

The following area require management’s critical estimates and judgments:

a) Functional currency

Under IAS 21, "The Effect of Changes in Exchange Rates", an entity must define its functional currency as the currency of the primary economic environment in which the Company operates. In determining the functional currency of the Company and its subsidiary companies, management considered the currency that mainly influences sales and the cost of providing goods and services in each jurisdiction in which each of the companies operates. The Company also considered secondary indicators including the currency in which each funds from financing activities are denominated, the currency in which funds are retained and whether the activities of the subsidiaries are carried out as an extension of the Company or if they are carried out with a degree of autonomy.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

b) Acquisition method accounting

During the acquisition of the Yurelan and RAMM Pharma Holdings Corp., judgment was required to determine if the acquisition represented a business combination or an asset purchase. More specifically, management concluded that they did not represent a business, as the assets acquired were not an integrated set of activities with inputs, processes and outputs. Since it was concluded that the acquisitions represented the purchase of assets, there was no goodwill generated on the transactions. As the Company concluded that the acquisition were asset acquisitions, an allocation of the purchase price to the individual identifiable assets acquired, including intangible assets, and liabilities assumed based on their relative fair values at the date of purchase was required. The fair values of the net assets acquired were calculated using significant estimates and judgments. If estimates or judgments differed, this could result in a materially different allocation of net assets on the consolidated financial statements.

c) Share-based payment and fair value of warrants

Management assesses the fair value of options and warrants granted in accordance with the accounting policy stated in note 3.10. The fair value of stock options granted is measured using the Black-Scholes option valuation model, which was created for use in estimating the fair value of freely tradable and fully transferable options. The Group’s stock options have characteristics significantly different from those of traded options, and changes in the highly subjective input assumptions can materially affect the calculated values. The fair value of stock options granted using the model do not necessarily provide a reliable measure of the fair value of the Group’s stock options awards. The same model is used by the Group in order to arrive at a fair value for the issuance of the warrants.

d) Estimated useful lives and depreciation of property, plant and equipment

Management estimates the useful lives of property and equipment based on the period during which the assets are expected to be available for use. The amounts and timing of recorded expenses for depreciation of property and equipment for any period are affected by these estimated useful lives. The estimates are reviewed at least annually and are updated if expectations change as a result of physical wear and tear, technical or commercial obsolescence and legal or other limits to use. It is possible that changes in these factors may cause significant changes in the estimated useful lives of the Group’s property and equipment in the future.

e) Calculation of loss allowance

When measuring expected credit losses, the Group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, considering any cash flows from collateral. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.

f) Calculation of excess and obsolete inventory loss allowance

When measuring the excess and obsolete inventory loss allowance, the Group uses reasonable and supportable information, which is based on assumptions such as historical sales, current stock levels, inventory expiry dates, if applicable and forwardlooking market demand. Loss given is an estimate of the loss arising for inventory that the Group estimates would not be able to sell in the future in the ordinary course of business. Forward-looking market demand is a key input in measuring the inventory reserve. Excess and obsolete inventory allowance is expensed within to “Cost of sales” in the in the consolidated statements of loss and comprehensive loss.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

g) Income taxes

The Group computes an income tax provision in accordance with the applicable income tax laws. However, actual amounts of income tax expense only become final upon filing and acceptance of the tax return by the relevant authorities, which occurs subsequent to the issuance of the consolidated financial statements. Additionally, estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the ability to use the underlying future tax deductions before they expire against future taxable income. The assessment is based upon existing tax laws and estimates of future taxable income. To the extent estimates differ from the final tax return, earnings would be affected in a subsequent period.

The income tax provision is based on estimates of full-year earnings by jurisdiction. The average annual effective income tax rates are re-estimated at the end of each reporting period. To the extent that forecasts differ from actual results, adjustments are recorded in subsequent periods.

6. CASH AND CASH EQUIVALENTS

Cash in hand Cash at banks Cash and cash equivalents in the consolidated statement of financial position Bank overdrafts repayable on demand and used for cash management purposes (Note 11) Cash and cash equivalents in the consolidated statement of cash flows	As of October 31, 2019 October 31, 2018 2,124 1,571 35,367,948 940,181 35,370,072 941,752 (5,613) (30,476) 35,364,459 911,276	As of October 31, 2019 October 31, 2018 2,124 1,571 35,367,948 940,181 35,370,072 941,752 (5,613) (30,476) 35,364,459 911,276
		October 31, 2018
		1,571 940,181
		941,752
		(30,476)
		911,276

7. TRADE AND OTHER RECEIVABLES

Trade account receivables (i) (Note 20.2 a) Allowance reserve for impairment of trade receivables (Note 20.2 a) Advances to suppliers Other receivables (i) VAT credits Total trade and other receivables	As of	As of
	October 31, 2019 1,379,962 (155,734) 44,966 593,545 321,010 2,183,749	October 31, 2018
		1,415,393 (76,191) 72,021 214,153 293,240
		1,918,616

(i) The Group pledges trade receivables to a bank as collateral for the repayment of its loans and borrowings (see Note 11.3). As of October 31, 2019, trade receivables for an amount of $92,925 were pledged as collateral. As of October 31, 2018, there was $124,736 trade receivables pledged as collateral. These trade receivables have not been derecognized from the statement of financial position, because the Group retains substantially all of the risks and rewards – primarily credit risk. The arrangement with the bank is such that the customers remit cash directly to a Group’s restricted deposit account in the bank and then the bank releases the collected amounts in excess to the repayment conditions to the Group. While the cash temporarily remains in the Group’s deposit account it is classified as Other Receivables. As at October 31, 2019 and 2018, cash in restricted deposit accounts included in Other Receivables amounted to $240,761 and $43,313, respectively.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

8. INVENTORIES

Finished goods and resale inventories Raw materials In-transit inventories Reserve for excess and obsolete inventory Total inventories	As of	As of
	October 31, 2019 697,414 341,643 967,113 (400,918) 1,605,252	October 31, 2018
		943,731 452,240 874,698 (148,160)
		2,122,509

See note 15 for the amount of inventories expensed in “Cost of Sales”. The movement in the allowance reserve for excess and obsolete inventory during the years was as follows:

Opening balances Net remeasurement of loss allowance (Note 15) Effect of movements in exchange rates Allowance reserve for excess and obsolete inventory	For theyear ended	For theyear ended
	October 31, 2019 148,160 297,267 (44,509) 400,918	October 31, 2018
		- 158,169 (10,009)
		148,160

The remeasurement of the loss allowance has been charged to “Cost of Sales”. (Note 15) The remeasurement write-downs expired raw materials, expired resale inventories (sterilized medical devices and consumables) and comprises estimated excess resale inventories (medical devices and consumables) to current market demand.

9. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at November 1, 2017 Additions Effect of movements in exchange rates Balance at October 31, 2018 Recognition of right-of-use asset on initial application of IFRS 16 Additions Acquisition of Yurelan (Note 13) Acquisition of RAMM Pharma Holdings Corp (Note 13) Effect of movements in exchange rates Balance at October 31, 2019 Accumulated depreciation and impairment losses Balance at November 1, 2017 Depreciation Effect of movements in exchange rates Balance at October 31, 2018 Depreciation Effect of movements in exchange rates Balance at October 31, 2019 Carrying amounts At October 31, 2018 At October 31, 2019	Land and buildings including leases (i) Plant and equipment Vehicles Fixtures and fittings Total
	$ $ $ $ $ 786,344 1,726,003 155,523 220,754 2,888,624 5,078 14,776 - 853 20,707 (74,089) (163,274) (14,628) (20,818) (272,809)
	717,333 1,577,505 140,895 200,789 2,636,522
	70,635 - - - 70,635 236,398 118,617 15,131 17,763 387,909 1,378,203 6,325 19,381 - 1,403,909 147,494 - - 22,850 170,344 (105,331) (169,434) (15,391) (21,811) (311,967)
	2,444,732 1,533,013 160,016 219,591 4,357,352
	(213,246) (1,726,003) (155,523) (220,754) (2,315,526) (10,232) - - - (10,232) 20,692 162,339 14,628 20,763 218,422
	(202,786) (1,563,664) (140,895) (199,991) (2,107,336)
	(27,276) (5,699) (252) (1,370) (34,597) 21,378 157,938 14,208 20,258 213,782
	(208,684) (1,411,425) (126,939) (181,103) (1,928,151)

	514,547 13,841 - 798 529,186
	2,236,048 121,588 33,077 38,488 2,429,201

(i) The Group has pledged in guarantee of repayment of bank’s loans and borrowings, land and buildings for a carrying value of $0.6 million as of October 31, 2019 and 2018. See note 11.3.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

9.1. Lease as a lessee (IFRS 16)

The Group leases land and buildings (“Lease 1”), for office space purposes for which a rental contract was made in January 2016 for fixed term of 7 years, with an extension of 7 additional years and termination option held exercisable by the Group within a 60 days period before the initial term.

On October 28, 2019, upon the acquisition described in Note 13 c) the Group included the fair value of the right-of-use asset acquired for the land and buildings lease (“Lease 2”) for office space purposes started August 1, 2019 for a fixed period of 2 years with an extension for 3 additional years and termination option held exercisable only by the Group within a 60 days period before the 2 years term.

The Group has recorded these leases as right-of-use assets and lease liabilities in the consolidated statement of financial position as at October 31, 2019. At the commencement date of the lease, the lease liability was measured at the present value of the lease payments that were not paid at that date. The lease payments are discounted using an interest rate of 6%, which is the Company's weighted-average incremental borrowing rate.

*Right-of-use assets (land and buildings)* As at adoption November 1, 2018 Additions - acquisition of subsidiary (Note 13 c) Depreciation charge for the period Effect of movements in exchange rates As at October 31, 2019 *Lease liabilities* As at adoption November 1, 2018 Additions - acquisition of subsidiary (Note 13 c) Interest expense Lease payments Effect of movements in exchange rates Balance as at October 31, 2019	Lease 1 Lease 2 Total
	$ $ $ 70,635 - 70,635 - 147,494 147,494 (16,952) - (16,952) (6,520) - (6,520)
	47,163 147,494 194,657
	Lease 1 Lease 2 Total
	$ $ $ 70,635 - 70,635 - 147,924 147,924 (3,686) - (3,686) (18,287) - (18,287) 96 - 96
	48,758 147,924 196,682

The continuity of the lease liability is presented in Note 20.2 c).

10. TRADE AND OTHER PAYABLES

Trade accounts payable Salaries and employees benefit payable Other payables Total current trade and other payables	As of	As of
	October 31, 2019 1,318,016 371,515 418,087 2,107,618	October 31, 2018
		1,386,967 465,915 49,056
		1,901,938

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

11. LOANS AND BORROWINGS

11.1. Composition

As at October 31, 2019, loans and borrowings were comprised of loans and borrowings granted to the Group’s subsidiary, Medic Plast:

Plast:
Currency Annual Nominal Interest Rate % $	Maturity
	Less than 1 month 1 to 3 months 3 to 6 months 6 to 12 months More than 1year
US Dollars 5.75% to 6.75% (Fixed) 1,106,255 Uruguayan Pesos 15% to 15.5% (Fixed) 740,468 Uruguayan Pesos (*) 6.0% (Fixed) 222,512	1,008,260 41,529 42,241 14,225 - 740,468 - - - - 222,512 - - - -
2,069,235	1,971,240 41,529 42,241 14,225 -
Bank Overdrafts (note 6) 5,613 Accruedinterests 15,846
As of October 31, 2019 2,090,694

(*) Uruguayan pesos indexed to Uruguay’s Consumer’s Price Index.

Interests of $0.45 million were expensed during the year ended October 31, 2019.

During January and February 2020, all the outstanding bank debt was repaid (See Note 23).

As at October 31, 2018, were comprised of loans and borrowings granted to the Group’s subsidiary, Medic Plast:

Currency Annual Nominal Interest Rate % $	Maturity
	Less than 1 month 1 to 3 months 3 to 6 months 6 to 12 months More than 1year
US Dollars 5.0% to 7.3% (Fixed) 4,571,587 1,559,509 1,172,981 298,690 370,519 1,169,888 Uruguayan Pesos 15% (Fixed) 287,325 16,014 271,311 - - - Uruguayan Pesos (*) 6.0% (Fixed) 341,659 32,407 32,407 35,042 43,802 198,001
5,200,571 1,607,930 1,476,699 333,732 414,321 1,367,889
Bank Overdrafts (Note 6) 30,476 Accruedinterests 18,035 As of October 31, 2018 5,249,082

(*) Uruguayan pesos indexed to Uruguay’s Consumer’s Price Index.

Interests of $0.41 million were expensed during the year ended October 31, 2018.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

11.2. Loan and borrowings continuity

The Group’s subsidiary, Medic Plast, obtained and operated mainly with short term loans with maturity dates not exceeding 6 months for working capital purposes. On the maturity dates, most loans were renewed.

Following is the continuity of loan and borrowings for the years ended October 31, 2019 and 2018:

Currency Annual nominal interest rate %	Currency Annual nominal interest rate %	$
Opening Balance November 1, 2018 Renewal US dollars 5.00 5.75 6.00 6.60 6.75 5.75 6.60 Uruguayan Pesos 15.00 15.50 Repayment US dollars 5.00 5.75 6.00 6.60 6.75 Uruguayan Pesos 15.00 Uruguayan Pesos () 6.00 Effect of movements in exchange rates Balance as at October 31, 2019*	Opening Balance November 1, 2017 Proceeds Uruguayan Pesos 15.00 Renewal US dollars 5.00 6.00 6.30 6.32 5.50 5.75 6.40 6.75 6.85 7.25 7.32 Uruguayan Pesos 15.00 Repayment US dollars 5.00 6.00 6.05 6.17 6.30 6.00 6.32 6.50 Uruguayan Pesos () 6.00 Effect of movements in exchange rates Balance as at October 31, 2018*	6,415,409 17,095
		17,095 (354,747) (113,234) (911,124) (1,089,976) 257,380 97,367 19,423 276,801 17,885 616,437 965,175 218,613
		- (240,765) (29,065) (43,311) (102,946) (92,459) (412,466) (170,114) (159,253) (83,659)
		(1,334,038) 102,105
		5,200,571

(*) Uruguayan pesos indexed to Uruguay’s Consumer’s Price Index.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

11.3. Secured loans

The Group secured bank loans in U.S. dollars and Uruguayan Pesos for a carrying value of $1.0 million as of October 31, 2019 and $2.4 million as of October 31, 2018, secured over a property with a carrying value of $0.6 million as of October 31, 2019 and 2018 included in “Land and Buildings”.

The Group secured bank loans in U.S. dollars and Uruguayan Pesos for a carrying value of $0.6 million as of October 31, 2019 and October 31, 2018, secured over trade accounts receivables and cash deposits (See Note 7(i)).

12. RELATED PARTY TRANSACTIONS AND BALANCES

Related parties are defined as management, directors and principal shareholders of the Group and/or members of their immediate family and/or other companies and/or entities in which a principal shareholder, director or senior officer is a principal owner or senior executive.

Transactions with key management personnel

For the years ended October 31, 2019 and 2018, the Group granted $342,754 and $249,037, respectively, in remuneration to Officers, Senior Management and Directors, considered key management. At October 31, 2019 and 2018, due to key management amounted to $15,953 and $nil, respectively.

In addition, for the year ended October 31, 2019 and prior to the Going Public Transaction, consultancy fees payments for $341,168 were made to key management (current Officers of the Company), of the Group’s subsidiary, RAMM Pharma Holdings Corp., which are included within the net assets acquired as described in Note 13c).

The Group also issued options to current Officers during the period and the resulting share-based payment recognized is $37,366 (see Note 17.3 and Note 13c)). In relation to the acquisition of Medic Plast the Company issued 2,000,000 common shares as finder’s fee to a member of key management of the Company (see Note 13 a).

Other transactions

The Group’s subsidiary, Medic Plast, since incorporation provided on demand cash advances to one of its Director and Shareholder until December 2018. Advances granted were non-interest bearing with no specific terms of repayment. For the year ended October 31, 2019, the Group’s subsidiary, Medic Plast, received $130,128 in repayment of cash advances granted in previous years and granted $14,514 on demand cash advances. At October 31, 2019 and October 31, 2018, due from Director and Shareholder amounted to $921,509 and $1,283,444, respectively, and is included in “Receivables from related parties”.

In addition, the Group has a $98,063 receivable from a company in which an Officer has power of control and direction, for funds advanced prior to the Going Public Transaction and is included in “Receivables from related parties”. The advance granted is noninterest bearing with no specific terms of repayment.

The Group’s subsidiary, Medic Plast provided financial guarantees up to a maximum amount of US dollars $417,000 to financial institutions in favour of a company owned by a related party person. Guarantees secured debt for US dollars $113,316 and US dollars $124,031 as of October 31, 2019 and October 31, 2018, respectively. See Note 16 and 22.

See Note 17.5.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

13. GOING PUBLIC TRANSACTION

The Going Public Transaction was effected in accordance with the Medic Plast SEA, Yurelan SEA and the Master Agreement, the full texts of which are available under MTC’s issuer profile on SEDAR at www.sedar.com.

a) Reverse acquisition on October 28, 2019

Pursuant to the Medic Plast SEA, the Company acquired all of the Medic Plast shares (17,000,000 common shares) from the shareholders of Medic Plast in exchange for an aggregate of 50,000,000 common shares of the Company and the issuance of 2,000,000 common shares as a finder’s fee in connection the transaction.

For accounting purposes, the legal subsidiary, Medic Plast, has been treated as the acquirer and MTC, the legal parent, has been treated as the acquiree.

Consideration transferred 2,881,698 common shares at a fair value of $1.35 per share (i) 128,535 warrants at a fair value of $0.627 per warrant (i) Total consideration transferred Net assets acquired Cash and cash equivalents Other payables Total net assets acquired Excess attributed to cost of listing Listing cost Excess attributed to cost of listing 2,000,000 common shares at a fair value of $1.35 per share for finder's fees (See Note 12) Total listing cost	$
	3,890,292 80,634
	3,970,926
	3,404,541 (339,380)
	3,065,161
	905,765
	$
	905,765 2,700,000
	3,605,765

(i) 2,142,255 common shares issued in exchange for RAMM Pharma Holdings Corp. common shares issued in relation to a Subscription Receipts Financing (see below). RAMM Pharma Holdings Corp. issued 128,535 finder's warrants in connection with the Subscription Receipts offering that have been exchanged on a one to one basis for RAMM warrants (See Note 18.4).

739,442 common shares issued for former shareholders of MTC.

On May 14 and 22, 2019, the MTC completed a non-brokered private placement of subscription receipts (the “MTC Subscription Receipts”), resulting in the sale and issuance of an aggregate of 2,142,255 MTC Subscription Receipts at a price of $1.35 per Subscription Receipt for aggregate gross proceeds of $2,892,144 (the “MTC Subscription Receipt Financing”). Each Subscription Receipt entitled the holder to receive, without payment of additional consideration, one Common Share of the Company. The gross proceeds from the sale of the Subscription Receipts were held in escrow by an escrow agent and released upon the completion of the Going Public Transaction. Cash finder's fees of $173,522 were paid by the acquiree before the acquisition was effected. In addition, MTC issued 128,535 finder's warrants, with each finder warrant exercisable for one Common Share at a price of $1.35 per Common Share for a period of two years from the completion of the Going Public Transaction.

The fair value of the common shares issued as part of the reverse acquisition was based on the price at which the common shares of the Company were sold in the Company’s last financing.

For accounting purposes, these consolidated financial statements reflect a continuation of the financial position, operating results and cash flows of the Company’s legal subsidiary, Medic Plast.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

b) Acquisition of Yurelan on October 28, 2019

Pursuant to the Yurelan SEA, the Company acquired all the Yurelan shares from the shareholders of Yurelan in exchange for an aggregate of 7,820,000 common shares of the Company. The acquisition of 100% shares and voting interests in Yurelan and did not constitute a business combination and have been recorded as an asset acquisition and recorded at the fair value of the net assets. The shares issues have been recorded at nominal value. (See Note 5 b)).

Consideration transferred 7,820,000 common shares Settlement of pre-existing loans payable to MedicPlast Total consideration transferred Net assets acquired Other receivables Property, plant and equipment (i) Other payables Total net assets acquired	$
	1,318,075 63,565
	1,381,640
	33,144 1,403,908 (55,412)
	1,381,640

(i) For measuring the fair value of Land and Buildings included within Property, plant and equipment, the Group used the following valuation technique:
Market comparison technique and cost technique: The valuation model considers market prices for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

c) Acquisition of RAMM Pharma Holdings Corp. on October 28, 2019

Pursuant to the Master Agreement, RAMM Pharma Holdings Corp. and Subco amalgamated and continue as one corporation under the provisions of the OBCA. All RAMM Pharma Holdings Corp. shares were cancelled and the former shareholders thereof received Company’s common shares on a one to one basis. The amalgamation did not constitute a business combination (See Note 5 b)).

Consideration transferred 24,020,854 common shares (i) 14,000,000 common shares (ii) 1,441,251 warrants (i) 840,000 warrants (ii) Settlement of pre-existing loans receivable from MedicPlast Settlement of pre-existing loans receivable from RAMM Pharma Corp. Total consideration transferred Net assets acquired Cash and cash equivalents Other receivables Property, plant and equipment Other payables Lease liabilities Total net assets acquired	$
	20,629,136 12,023,215 546,464 580,908 (4,395,849) (158,794)
	29,225,080
	29,156,353 312,668 170,344 (266,361) (147,924)
	29,225,080

(i) Issued in exchange for RAMM Pharma Holdings Corp. common shares issued in relation to a Subscription Receipts Financing (see below). RAMM Pharma Holdings Corp. issued 1,441,251 finder's warrants in connection with the Subscription Receipts offering that have been exchanged on a one to one basis for RAMM warrants (See Note 17.4).

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

On May 14 and 22, 2019, the RAMM Pharma Holdings Corp. completed a non-brokered private placement of subscription receipts (the “Subscription Receipts”), resulting in the sale and issuance of an aggregate of 24,020,854 Subscription Receipts at a price of $1.35 per Subscription Receipt for aggregate gross proceeds of $32,428,153 (the “Subscription Receipt Financing”). Each Subscription Receipt entitled the holder to receive, without payment of additional consideration, one Common Share of the Company. The gross proceeds from the sale of the Subscription Receipts were held in escrow by an escrow agent and released upon the completion of the Going Public Transaction. Cash finder's fees of $1,945,689 were paid by the acquiree before the acquisition was effected. In addition, RAMM Pharma Holdings Corp. issued 1,441,251 finder's warrants, with each finder warrant exercisable for one Common Share at a price of $1.35 per Common Share for a period of two years from the completion of the Going Public Transaction.

(ii) Issued for the convertible debenture holders of RAMM Pharma Holdings Corp. upon full conversion of the debentures into RAMM Pharma Holdings Corp. common shares and exchanged on a one to one basis for RAMM’s common shares (see below). RAMM Pharma Holdings Corp. issued 840,000 finder warrants in connection with the offering of the debentures that have been exchanged on a one to one basis for RAMM warrants (See Note 17.4).

RAMM Pharma Holdings Corp. completed a non-brokered private placement of convertible debentures (the “Debentures”) for gross proceeds of $7,000,000 in two separate tranches on March 26 and March 28, 2019. Holders of Debentures converted the whole of the amount then outstanding to the number of Common Shares determined by the amount of principal sum being converted divided by $0.50 on the date of the Going Public Transaction was completed. RAMM Pharma Holdings Corp. also issued 840,000 finder warrants in connection with the offering of the Debentures, exercisable into Common Shares, each with an exercise price of $0.50 per Common Share that will be exercisable for a period of two years following the completion of the Going Public Transaction.

(iii) Including leases right-of-use assets for $147,494.

14. REVENUE

The Group generates revenue primarily from the sale of medical devices and consumables, sale of pharmaceutical products and sale of cosmetics. Other sources of revenue include immaterial amounts related medical devices sterilization services.

Medical devices and consumables Pharmaceutical formulations Cosmetics products Services Total Revenue	For theyear ended October 31, 2019 October 31, 2018 $ $ 3,145,312 6,261,827 2,148,566 1,753,094 277,844 292,041 38,850 38,650 5,610,572 8,345,612	For theyear ended October 31, 2019 October 31, 2018 $ $ 3,145,312 6,261,827 2,148,566 1,753,094 277,844 292,041 38,850 38,650 5,610,572 8,345,612
		October 31, 2018
		$ 6,261,827 1,753,094 292,041 38,650
		8,345,612

See Note 7 for the portion of sales that remain in trade account receivables.

Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

RAMM PHARMA CORP.

15. EXPENSES BY NATURE

Raw materials, consumables and cost of resale inventories (i) Salaries and employees’ benefits (ii) Professional fees Allowance for obsolete inventory (Note 8) (i) Other taxes Allowance for expected credit loss (Note 20.2 a) Repair and maintenance Utilities Advertising and promotion Insurance Bank charges Outbound freight Security Services Share-based payment Depreciation (Note 9) Office supplies Lease expense (2018: lease rent) Other expenses Total Cost of Sales and Selling and Administrative expenses	For the year ended	For the year ended
	October 31, 2019 3,776,431 2,063,998 321,770 297,267 185,360 143,597 111,474 96,685 81,129 70,139 43,235 42,956 37,237 37,405 34,597 26,830 3,686 158,393 7,532,189	October 31, 2018
		5,105,324 1,917,861 98,070 158,169 92,537 52,915 31,703 98,467 68,702 62,195 52,898 64,448 2,906 - 10,232 17,297 18,818 160,332
		8,012,874

(i) Included in “Cost of Sales”.

(ii) For the years ended October 31, 2019 and 2018, salaries and employees’ benefits for $753,688 and $857,275, respectively, are included within “Cost of sales”.

16. FINANCE EXPENSE

Interest expense Loss from other financial liabilities (i)	For the year ended	For the year ended
	October 31, 2019 (453,714) (170,155) (623,869)	October 31, 2018
		(416,059) -
		(416,059)

(i) The Group’s subsidiary, Medic Plast provided financial guarantees up to a maximum amount of US dollars $417,000 to financial institutions in favour of a Company owned by a related party person, securing debt for US dollars $113,316 and US dollars $124,031 as of October 31, 2019 and 2018, respectively. During the year ended October 31, 2019, the Group assessed that there was a significant increase in the risk the guaranteed Company defaulted on its payments and adjusted the carrying amount of the liability. As described in Note 23, during January and February 2020, the Group paid to financial institutions in relation to the financial guarantees US dollars $113,899 (approximately $150,000) to cancel the debtor outstanding secured debt.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

17. EQUITY

17.1. Share capital

The Company is authorized to issue unlimited number of common shares. As at October 31, 2019, the Company has issued 100,722,552 common shares.

17.2. Loss per share

The calculation of basic Loss per share has been based on the loss attributable to common shareholders and weighted-average number of common shares outstanding.

The calculation of diluted Loss Per Share has been based on the loss attributable to common shareholders and weighted-average number of common shares outstanding after adjustment for the effects of all dilutive potential common shares. At October 31, 2019, all 4,130,000 options (2018: nil) and all 2,409,786 warrants (2018: nil) were excluded from the diluted weighted-average number of common shares calculation because their effect would have been anti-dilutive.

Weighted-average number of common shares (basic and diluted)

Common shares of MedicPlast at November 1 Exchange ratio from RTO Deemed shares outstanding at November 1 Effect of shares issued during the year Weighted-average number of common shares at October 31	2019 17,000,000 50/17 50,000,000 416,898 50,416,898	2018
		17,000,000 50/17
		50,000,000 -
		50,000,000

17.3. Stock Options

In October 2019, the Company adopted a stock option plan under which it is authorized to grant options to officers, directors, employees or eligible contractors of the Group (all together “eligible grantees”) enabling them to acquire common shares of the Company. The maximum number of common shares reserved for issuance of stock options that may be granted under the plan is 10% of the issued and outstanding common shares (on a non-diluted basis) of the Company. The options granted can be exercised and vest as determined by the Board of Directors. The exercise price of each option may not be less than the market price of the common shares on the date of grant.

On October 28, 2019, 4,000,000 options to purchase Common Shares of RAMM Pharma Holdings Corp. issued on April 24, 2019 were replaced on a one to one basis to options to purchase RAMM Common Shares with the following terms:

3,000,000 options to purchase Common Shares at an exercise price of $0.16 per common share. The options shall vest in full on October 28, 2020 provide that the grantee remains a senior officer, director, employee, management company employee, or a person providing consulting services or investor relations activities to the Company on the relevant date.
1,000,000 options to purchase Common Shares at an exercise price of $0.16 per common share. The options shall vest as to one-third (⅓) of the number granted on October 28, 2020, as to one-third (⅓) of the number of options granted on October 28, 2021, and as to one-third (⅓) of the number of options granted on October 28, 2022, provided that the grantee remains an eligible grantee on the relevant date.

On October 28, 2019 the Company issued 130,000 options to purchase Common Shares to Officers and employees of the Group at an exercise price of $1.35 per common share. The options shall vest as to one-third (⅓) of the number granted on October 28, 2020, as to one-third (⅓) of the number of options granted on October 28, 2021, and as to one-third (⅓) of the number of

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

options granted on October 28, 2022, provided that the grantee remains an eligible grantee on the relevant date.

All options shall expire on the earlier of: (i) October 28, 2024 and (ii) 90 days after the grantee is no longer an eligible grantee, unless the grantee is terminated by the Company for cause, in which case all unexercised options shall be cancelled on the date of termination of the grantee.

The details of the options are set out bellow:

Options	Issued date	Issued	Weighted-average exercise price	Expiry date	Vested	Share-based payment
		#			#	$
Officers	10/28/2019	4,100,000	0.189	10/28/2024	-	37,366
Employees	10/28/2019	30,000	1.350	10/28/2024	-	139
		4,130,000	0.197		-	37,505
The fair value of the options was estimated		using the Black-Scholes option pricing		model with the	following estimated
assumptions:
Risk-free interest rate		1.66%
Dividend yield			0%
Volatility		87%
Expected life		5.0 years
Forfeiturerate			0%

17.4. Warrants

The warrants described in Note 13 are as follows:

Issue date	Warrants	Share price	Expiry Date	Weighted-average exercise price	Unit Fair value	Warrant Reserve
	#	$		$	$	$
10/28/2019	840,000	1.35	10/28/2022	0.500	0.692	580,908
10/28/2019	1,441,251	1.35	10/28/2021	1.350	0.379	546,464
10/28/2019	128,535	1.35	10/28/2021	1.350	0.627	80,634
	2,409,786			1.054		1,208,006

The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following estimated assumptions:

Risk-free interest rate	1.66-1.71%
Dividend yield	0%
Volatility	85%-86%
Expected life	2-3 years
Forfeiturerate	0%

17.5. Equity contribution

The Group received a $3,062,332 cash contribution from a current Shareholder of the Company prior to the completion of the Going Public Transaction. The contribution is included in “Equity contribution” in the consolidated statement of financial position.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

18. INCOME TAX

For the years ended October 31, 2019 and 2018, the reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% and 25%, respectively, to the effective tax rate is as follows:

Net loss before tax Expected income tax recovery Difference in foreign tax rates Change in foreign exchange rate Non-deductible expenses Adjustment over expenses that are not deductible Presumptive tax interests Change in tax benefits not recognized Other Income tax expense The Group’s income tax expense is allocated as follows: Current tax recovery expense Deferred tax (recovery) expense	For theyear ended	For theyear ended
	October 31, 2019 October 31, 2018 $ $ (6,814,949) (678,933) (1,805,961) (169,748) 42,306 - 95,524 - 1,005,688 319,280 - (250,594) 48,345 106,711 661,951 - (42,350) - 5,503 5,649 For the year ended	October 31, 2018
		$ (678,933)
		(169,748) - - 319,280 (250,594) 106,711 - -
		5,649
	October 31, 2019 $ 5,503 - 5,503	October 31, 2018
		$ 5,649 -
		5,649

Current income tax asset included in the consolidated statement of financial position is comprise of income tax advances and income tax recovery certificates.

Current income tax liability included in the consolidated statement of financial position is comprise of income tax advances payable.

Deferred taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

Canada Share issuance costs Non-capital losses carried forward Property, Plant and Equipment Uruguay Tax losses Property, Plant and Equipment Inventory Other financial liabilities Expected credit losses on accounts receivables Total deductible temporary differences	As of	As of
	October 31, 2019 $ 2,363,990 21,250 1,520 2,386,760 2,269,270 970,500 400,100 154,130 118,120 3,912,120 6,298,880	October 31, 2018
		$ - - -
		-
		108,004 1,174,430 - - -
		1,282,434
		1,282,434

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

19. COMMITMENTS AND CONTINGENCIES

From time to time, the Group may be involved in litigation relating to claims arising out of operations in the normal course of business. At October 31, 2019, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Group's operations. There are also no proceedings in which any of the Group's directors, officers or affiliates is an adverse party or has a material interest adverse to the Group's interest.

20. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

20.1. Fair Value

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. This is described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 inputs are quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 inputs are observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability that reflect the reporting entity’s own assumptions and are not based on observable market data.

The classification of financial instruments at their carrying and fair values is as follows:

Financial assets October 31, 2019 Cash and cash equivalents Trade and other receivables (i) Receivables from related parties Financial liabilities October 31, 2019 Trade and other payables Lease liabilities Loans and borrowings Other financial liabilities		Carrying values Fair values FVTOCI AC Total Total
	FVTPL
	$ 35,370,072 - -	$ $ $ $ - - 35,370,072 35,370,072 - 1,875,677 1,875,677 1,875,677 - 1,019,572 1,019,572 1,019,572
	35,370,072	- 2,895,249 38,265,321 38,265,321
		Carrying values Fair values FVTPL AC Total Total
		$ $ $ $ - 2,107,618 2,107,618 2,107,618 - 196,682 196,682 196,682 - 2,090,694 2,090,694 2,090,694 - 154,443 154,443 154,443
		- 4,549,437 4,549,437 4,549,437

(i) Does not includes VAT Credits and advances to suppliers.

RAMM PHARMA CORP.

Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

Financial assets October 31, 2018 Cash and cash equivalents Trade and other receivables (i) Receivables from related parties Financial liabilities October 31, 2018 Trade and other payables Loans and borrowings		Carrying values Fair values FVTOCI AC Total Total
	FVTPL
	$ 941,752 - -	$ $ $ $ - - 941,752 941,752 - 1,553,355 1,553,355 1,553,355 - 1,283,444 1,283,444 1,283,444
	941,752	- 2,836,799 3,778,551 3,778,551
		Carrying values Fair values FVTPL AC Total Total
		$ $ $ $ - 1,901,938 1,901,938 1,901,938 - 5,249,082 5,249,082 5,249,082
		- 7,151,020 7,151,020 7,151,020

(i) Does not includes VAT Credits and advances to suppliers.

The Group’s financial instruments as at October 31, 2019 and 2018 classified as “Level 1 - quoted prices in active markets” is cash and cash equivalents. The Group has determined that there have been no transfers between levels in the hierarchy by re-assessing categorization at the reporting dates.

20.2. Financial risk management

The Group is exposed to credit, liquidity and market risks. The Group’s management oversees the management of these risks. The Group’s financial risk activities are governed by policies and procedures and that financial risks are identified, measured and managed in accordance with Group’s policies and Group’s risk appetite.

(a) Credit Risk

Credit risk is the risk of a potential loss to the Company if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is moderately exposed to credit risk from its cash and cash equivalents and trade and other receivables. The risk exposure is limited to their carrying amounts reflected on the consolidated statements of financial position. The risk for cash and cash equivalents is mitigated by holding these instruments with highly rated financial institutions. Trade and other receivables primarily consist of trade accounts receivable with State-owned Hospitals, Private Hospitals, Pharmacies and other customers. The Company provides credit to customers in the normal course of business and the Management continually evaluates and monitors credit to customers to mitigate its credit risk.

The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large number of small balances.

Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on the following common credit risk characteristics – geographic region, age of customer relationship and type of product purchased.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

The following table provides information about the exposure to credit risk and ECLs for trade receivables from customers as at October 31, 2019 and 2018:

Current (not past due) 1-30 days past due 31-60 days past due 61-90 days past due More than 90 days past due	October 31, 2019 Weighted- average loss rate Gross Carrying amount Loss allowance $ $ 0.4% 650,579 2,612 2.3% 244,120 5,510 4.2% 102,304 4,340 10.6% 86,428 9,126 45.2% 296,531 134,146 11.3% 1,379,962 155,734	October 31, 2018
		Weighted- average loss rate Gross Carrying amount Loss allowance
		$ $ 0.4% 893,457 3,625 1.0% 149,821 1,498 2.0% 112,325 2,247 5.0% 52,155 2,608 31.9% 207,635 66,213
		5.4% 1,415,393 76,191

The increase in loss allowance is mainly attributable to the reassessment of the rate considered for trade receivables aged more than 90 days past due.

The movement in the allowance for impairment in respect of trade receivables during the years was as follows:

Opening balances Net remeasurement of loss allowance Effect of movements in exchange rates Allowance reserve for impairment of trade receivables	For the year ended	For the year ended
	October 31, 2019 (76,191) (143,597) 64,054 (155,734)	October 31, 2018
		(29,956) (54,037) 7,802
		(76,191)

(c) Liquidity Risk

Liquidity risk is the risk that the Group is unable to generate or obtain sufficient cash or its equivalents in a cost-effective manner to fund its obligations as they come due. The Group’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due.

The Group’s cash is currently invested in business accounts with high-credit quality financial institutions which are available on demand by the Group.

The following are the remaining contractual maturities of financial instruments at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments:

October 31, 2019 Financial assets Cash and cash equivalents Trade and other receivables (i) Receivables from related parties Financial liabilities Trade and other payables Lease liabilities Loans and borrowings Other financial liabilities	Under 1 year Between 1-2years Between 2-3 years Between 3-4years Over 5 years
	$ $ $ $ $ 35,370,072 - - - - 1,817,773 57,904 - - - - - - - 1,019,572
	37,187,845 57,904 - - 1,019,572
	2,107,618 - - - - 104,889 85,346 16,947 2,825 - 2,090,694 - - - - 154,443 - - - -
	4,457,644 85,346 16,947 2,825 -

(i) Does not includes VAT Credits and advances to suppliers.

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

(d) Foreign Currency Risk

The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily the Uruguayan Peso (UYU) and the US Dollar (USD).

Currently, the Group does not use derivative instruments to reduce its exposure to foreign currency risk.

A 10% change in the value of the USD, UYU or the Euro (EUR) would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular, interest rates remains constant and ignores any impact of forecast sales and purchases.

Effect in thousands of Canadian dollars October 31, 2019 EUR (10% movement) UYU (10% movement) USD (10% movement) October 31, 2018 EUR (10% movement) UYU (10% movement) USD (10% movement)	Profit or Loss Strengthening Weakening $ $ (18) 18 - - (92) 92 (18) 18 - - (379) 379	Equity
		Strengthening Weakening $ $ 16 (16) 104 (104) 216 (216) 17 (17) 169 (169) 457 (457)

(e) 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 is exposed to interest rate risk on its loans and borrowings but has determined that the risk is not significant. For the years ended October 31, 2019 and 2018 loans and borrowings were set with fixed interest rates.

21. RECONCILIATION OF MOVEMENTS OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES

Opening balance as at November 1, 2018 Changes from financing cash flows Repayments of borrowing Cash acquired from acquisitions Net proceeds from advances from related parties Lease payments Total changes from financing cash flows The effect of changes in foreign exchange rates Liability-related other changes Additions - acquisition of subsidiary (Note 13 c) Settlement of payables to RAMM Pharma Holdings Corp. on acquisition (Note 13 c) Settlement of receivables from Yurelan on acquisition (Note 13 b) Loss from other financial liabilities Interest expense Interest paid Total liability-related other changes Balance as at October 31, 2019	Loan and borrowings Lease liabilities Due to related parties Other financial liabilities Total
	$ $ $ $ $ 5,200,571 70,635 - - 5,271,206
	(3,085,035) - - - (3,085,035) - - - - - - - 4,332,284 - 4,332,284 - (18,287) - - (18,287)
	(3,085,035) (18,287) 4,332,284 - 1,228,962
	(46,301) 96 - (15,712) (61,917)
	- 147,924 - - 147,924 - - (4,395,849) - (4,395,849) - - 63,565 - 63,565 - - - 170,155 170,155 453,714 (3,686) - - 450,028 (432,255) - - - (432,255)
	21,459 144,238 (4,332,284) 170,155 (3,996,432)
	2,090,694 196,682 - 154,443 2,441,819

RAMM PHARMA CORP. Notes to the Consolidated Financial Statements for the years ended October 31, 2019 and 2018 (Expressed in Canadian Dollars)

22. GEOGRAPHIC INFORMATION

All the revenue for the years ended October 31, 2019 and 2018 has been obtained from customers located in Uruguay. All the non-current assets as of October 31, 2019 and 2018 belong to Company’s domiciled in Uruguay.

23. SUBSEQUENT EVENTS

On December 30, 2019, pursuant to the terms of a secured promissory, a shareholder of the Company agreed to repay to the Group existing debt in the total amount of US$1,789,000 (equivalent to approximately $2.4 million) secured over 4,674,069 Common Shares. The promissory note has a maturity date of December 30, 2021 and does not bear interest.

In January 2020, the Group repaid outstanding secured bank loans for an approximate amount of $1.0 million, secured over property included in “Land and Buildings” and paid $0.08 million in relation to other financial liabilities described in Note 16.

In February 2020, the Group repaid outstanding bank loans for an approximate amount of $1.0 million and paid $0.07 million in relation to other financial liabilities described in Note 16.

On February 24, 2020, the Company has entered into a definitive agreement to acquire Glediser S.A. operating as NettaLife™ (“NettaLife”) a developer of cannabis-based products for pets (the “Transaction”). The Company will acquire all of the issued and outstanding shares of NettaLife for total consideration of US Dollars $1,150,000, paid in cash. The Transaction is expected to close on or before March 31, 2020 and is subject to customary terms and conditions for a transaction of this nature. On closing, NettaLife will become a wholly owned subsidiary of RAMM.

*Right-of-use assets (land and buildings)* As at adoption November 1, 2018 Additions - acquisition of subsidiary (Note 13 c) Depreciation charge for the period Effect of movements in exchange rates As at October 31, 2019 *Lease liabilities* As at adoption November 1, 2018 Additions - acquisition of subsidiary (Note 13 c) Interest expense Lease payments Effect of movements in exchange rates Balance as at October 31, 2019	Lease 1 Lease 2 Total
	$ $ $ 70,635 - 70,635 - 147,494 147,494 (16,952) - (16,952) (6,520) - (6,520)
	47,163 147,494 194,657
	Lease 1 Lease 2 Total
	$ $ $ 70,635 - 70,635 - 147,924 147,924 (3,686) - (3,686) (18,287) - (18,287) 96 - 96
	48,758 147,924 196,682

AI assistant

RAMM Pharma Corp. — Annual Report 2019

47859_rns_2020-02-28_c88050cf-bc26-4ba0-8ecc-79ab611bfdd8.pdf

RAMM PHARMA CORP.

CONSOLIDATED FINANCIAL STATEMENTS

Opinion

Basis for Opinion

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

RAMM PHARMA CORP.

CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2019

RAMM PHARMA CORP. Consolidated Statements of Financial Position (Expressed in Canadian Dollars)

Commitment and contingencies – Note 19 Subsequent events – Note 23

RAMM PHARMA CORP.

RAMM PHARMA CORP. Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars)

RAMM PHARMA CORP. Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS

2. BASIS OF PRESENTATION

2.1. Statement of compliance

2.2. Basis of measurement

2.3. Functional and presentation currency

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1. Basis of consolidation

a) Business Combinations

b) Subsidiaries

c) Transactions eliminated on consolidation

3.2. Foreign currency

a) Foreign currency transactions

b) Foreign operations

3.3. Revenue

3.4. Cash and cash equivalents

3.5. Inventories

3.6. Property, plant and equipment

3.7. Impairment of non-financial assets

3.8. Related party transactions

3.9. Provisions

3.10. Contingent liabilities and assets

3.11. Segment reporting

3.12. Taxation

3.13. Equity

3.14. Loss per Share

3.15. Financial instruments

Implementation

Financial assets

Recognition and initial measurement

Classification and subsequent measurement

Contractual cash flow assessment

Impairment

Derecognition of financial assets

Financial liabilities

Recognition and initial measurement

Classification and subsequent measurement

Derecognition of financial liabilities

3.16. Share-based payments

(a) Share-based payment transactions

(b) Warrants

3.17. Leases

Policy applicable from November 1, 2018

As a lessee

4. CHANGES IN ACCOUNTING STANDARDS AND FUTURE ACCOUNTING STANDARDS

Early adoption of IFRS 16

Leases classified as operating leases under IAS 17

Impact on transition

Other IFRS

5. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

a) Functional currency

b) Acquisition method accounting

c) Share-based payment and fair value of warrants

d) Estimated useful lives and depreciation of property, plant and equipment

e) Calculation of loss allowance

f) Calculation of excess and obsolete inventory loss allowance

g) Income taxes

6. CASH AND CASH EQUIVALENTS

7. TRADE AND OTHER RECEIVABLES

8. INVENTORIES

9. PROPERTY, PLANT AND EQUIPMENT

9.1. Lease as a lessee (IFRS 16)

RAMM Pharma Corp. Annual Report 2019