Relevium Technologies Inc. — Annual Report 2020

Jan 20, 2021

RELEVIUM TECHNOLOGIES INC.

CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2020 AND 2019

EXPRESSED IN CANADIAN DOLLARS

CONTENTS

INDEPENDENT AUDITOR'S REPORT	2
FINANCIAL STATEMENTS
Consolidated Statements of Financial Position	5
Consolidated Statements of Operations and Comprehensive Loss	6
Consolidated Statements of Cash Flows	7
Consolidated Statements of Changes in Shareholders' Equity	8-9
Notes to the Consolidated Financial Statements	10-37

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Relevium Technologies Inc.

Opinion

We have audited the consolidated financial statements of Relevium Technologies Inc., (the "Company"), which comprise the consolidated statement of financial position as at June 30, 2020 and the consolidated statements of operations and comprehensive loss, changes in shareholders' equity and cash flows for the year 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 June 30, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended, in all material respects, in accordance with International Financial Reporting Standards.

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 2 in the consolidated financial statements, which indicates that the Company incurred a net loss of $6,931,628 during the year ended June 30, 2020 and, as of that date, the Company's current liabilities exceeded its current assets by $3,409,657. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Emphasis of Matter - Restated Comparative Information

We draw attention to Note 4 to the consolidated financial statements, which explains that certain comparative information for the year ended June 30, 2019 has been restated. Our opinion is not modified in respect of this matter.

The consolidated financial statements for the year ended June 30, 2019 excluding the adjustments that were applied to restate certain comparative information were audited by another auditor who expressed an unmodified opinion on those financial statements on October 28, 2019.

As part of our audit of the consolidated financial statements for the year ended June 30, 2020, we also audited the adjustments applied to restate certain comparative information presented. In our opinion, such adjustments are appropriate and have been properly applied.

Other than with respect to the adjustments that were applied to restate certain comparative information, we were not engaged to audit, review, or apply any procedures to the consolidated financial statements for the year ended June 30, 2019. Accordingly, we do not express an opinion or any other form of assurance on those consolidated financial statements taken as a whole.

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 and will not express any form of assurance conclusion thereon.

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

We obtained the Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is 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.

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 audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

The engagement partner on the audit resulting in this independent auditor's report is Mark Jakovcic.

Chartered Professional Accountants Licensed Public Accountants January 19, 2021 Toronto, Ontario

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian dollars)
As at,	June 30, 2020	June 30, 2019
		(Restated - see note 4)
	$	$
ASSETS
Current Assets
Cash and cash equivalents	194,919	875,000
Short-term investments (note 6)	5,000	5,000
Receivables (note 7)	380,546	162,958
Inventory	126,189	559,118
Advances to Lifeline Pharma (note 8)	-	72,398
Prepaid expenses	85,348	121,542
Total current assets	792,002	1,796,016
Non-current assets
Property and equipment (note 9)	9,847	14,506
Intangible assets (note 10)	3,324,802	4,474,869
Goodwill (note 10)	207,815	2,275,061
TOTAL ASSETS	4,334,466	8,560,452
LIABILITIES
Current liabilities
Bank advances	237,373	-
Accounts payable and accrued liabilities	1,390,688	571,109
Loans payable (notes 11 and 12)	303,520	458,045
Loan from Officer (note 18)	74,954	-
Current portion of long-term debt (note 13)	2,195,124	314,510
Total current liabilities	4,201,659	1,343,664
Non-current liabilities
Warrant liability (note 15)	77,285	195,000
Long-term debt (note 13)	-	1,973,480
TOTAL LIABILITIES	4,278,944	3,512,144
SHAREHOLDERS' EQUITY
Share capital (note 14)	14,067,808	13,373,632
Share purchase warrants (note 15)	3,172,766	1,521,276
Equity component of convertible debt (note 13)	99,738	99,738
Subscription receivable (note 14)	(210,000)	-
Obligation to issue shares and warrants	-	193,920
Contributed surplus	1,418,935	1,418,935
Accumulated Other Comprehensive	(42,392)	(39,488)
Deficit	(18,451,333)	(11,519,705)
TOTAL EQUITY	55,522	5,048,308
TOTAL LIABILITIES AND EQUITY	4,334,466	8,560,452

Going Concern (note 2), Commitments (note 22) and Subsequent events (note 24)

Approved on behalf of the Board:

/s/ Aurelio Useche	/s/ Andre Godin
Director	Director

(Expressed in Canadian dollars)
For the year ended,	June 30, 2020	June 30, 2019
		(Restated - see note 4)
	$	$
Sales	2,974,161	3,628,650
Cost of Sales	1,780,006	1,862,094
Gross Profit	1,194,155	1,766,556
Expenses
Accreted interest	221,644	125,075
Administration fees	160,373	469,486
Amortization of assets (note 9 and 10)	4,659	147,936
Amortization of deferred financing costs	-	58,207
Bad debt expense	152,747	-
Change in fair value of warrant liability (note 15)	(117,715)	85,500
Change in fair value of warrants (note 15)	26,000	32,250
Consulting fees	947,481	836,455
Gain on reduction of contingent consideration payable	-	(77,670)
General and administrative expenses (note 14)	898,011	1,141,653
Impairment of intangible assets (note 10)	1,154,267	-
Impairment of goodwill (note 10)	2,067,246	-
Interest on long-term debt (note 13)	345,036	275,231
Loss (gain) on foreign exchange	(34,145)	2,664
Other expenses (note 8)	344,798	-
Professional fees (note 14)	301,999	359,632
Selling and marketing	1,653,382	2,037,079
	8,125,783	5,493,498
Net loss	(6,931,628)	(3,726,942)
Other Comprehensive items
Items that may be subsequently classified to Income/Loss
Exchange differences on translation
of foreign operations	(2,904)	(23,594)
Comprehensive loss	(2,904)	(23,594)
Net Comprehensive loss	(6,934,532)	(3,750,536)
Loss per share - Basic and fully diluted	(0.046)	(0.033)
Weighted average number of
common shares outstanding	151,924,404	113,802,757

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars)

For the year ended,	June 30, 2020	June 30, 2019
		(Restated - see note 4)
	$	$
OPERATING ACTIVITIES
Net loss and comprehensive loss	(6,931,628)	(3,726,942)
Items not affecting cash:
Share-based payments (note 15)	26,000	32,250
Change in fair value of warrants (note 15)	(117,715)	85,500
Gain on reduction of contingent consideration payable	-	(77,670)
Non-cash consulting fees	-	39,600
Accreted interest	221,644	125,075
Bad debt expense	152,747	-
Impairment of intangible assets (note 10)	1,154,267	-
Impairment of goodwill (note 10)	2,067,246	-
Unrealized gain on foreign exchange	(2,904)	(17,781)
Other expenses (note 8)	344,797	-
Amortization of property and equipment (note 9)	4,659	4,553
Amortization of intangible assets (note 10)	-	143,383
Amortization of deferred financing costs	-	58,207
	(3,080,887)	(3,333,825)
Net changes in non-cash working capital items (note 17)	918,367	121,693
Cash outflow from operating activities	(2,162,520)	(3,212,132)
INVESTING ACTIVITIES
Acquisition of intangible assets (note 10)	(4,200)	(205,502)
Acquisition of property and equipment (note 9)	-	(2,113)
Advances to Lifeline Pharma (note 8)	(272,399)	(72,398)
Repayment of contingent consideration payable	-	(71,133)
Cash outflow from investing activities	(276,599)	(351,146)
FINANCING ACTIVITIES
Bank advances	237,373	-
Issuance of shares, net of issue costs (note 14)	399,421	1,176,000
Proceeds on loan payable (note 12)	-	747,663
Proceeds on loan from Officer	74,954	-
Issuance of share purchase warrants (note 15)	1,640,628	16,375
Obligation to issue shares and warrants	(193,920)	160,000
Proceeds on issue of convertible notes payable (note 11)	-	1,000,000
Issuance of shares on exercise of warrants (note 15)	69,617	-
Repayment of loans payable (note 12)	(154,525)	(654,320)
Repayment of long-term debt (note 13)	(314,510)	(82,490)
Cash inflow from financing activities	1,759,038	2,363,228
Net decrease in cash and cash equivalents	(680,081)	(1,200,050)
Cash and cash equivalents beginning of year	875,000	2,075,050
Cash and cash equivalents end of year	194,919	875,000

RELEVIUM TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in Canadian dollars)

For the year ended June 30, 2020

				Equity		Obligation
				component		to issue			Foreign
	Number of	Share		convertible	Subscription		shares and Contributed		currency
	Shares	capital	Warrants	debt	receivable	warrants	surplus		translation
	(note 14)	(note 14)	(note 15)	(note 13)	(note 14)	(note 14)	(note 16)	Deficit	reserve
	#	$	$	$	$	$	$	$	$	$
Balance - June 30, 2019	141,265,106	13,373,632	1,521,276	99,738	-	193,920	1,418,935	(11,519,705)	(39,488)	5,048,308
Net loss for the year	-	-	-	-	-	-	-	(6,931,628)	-	(6,931,628)
Other comprehensive loss	-	-	-	-	-	-	-	-	(2,904)	(2,904)
Private placement	58,331,694	639,544	1,605,303	-	-	(160,000)	-	-	-	2,084,847
Subscription receivable	-	-	-	-	(210,000)	-	-	-	-	(210,000)
Shares issuance costs	743,750	(69,364)	35,325	-	-	(33,920)	-	-	-	(67,959)
Shares issued for fees	784,829	39,241	-	-	-	-	-	-	-	39,241
Repricing of warrants	-	-	26,000	-	-	-	-	-	-	26,000
Exercised warrants	1 695,093	84,755	(15,138)	-	-	-	-	-	-	69,617
Balance - June 30, 2020	202,820,472	14,067,808	3,172,766	99,738	(210,000)	-	1,418,935	(18,451,333)	(42,392)	55,522

RELEVIUM TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in Canadian dollars)

For the year ended June 30, 2019 (Restated - see note 4)

				Equity	Obligation
				component	to issue			Foreign
	Number of	Share		convertible	shares and	Contributed		currency
	shares	capital	Warrants	debt	warrants	surplus		translation
	(note 14)	(note 14)	(note 15)	(note 13)	(note 14)	(note 16)	Deficit	reserve
	#	$	$	$	$	$	$	$	$
Balance - June 30, 2018	104,579,273 10,737,413		683,884	96,734	-	1,289,951	(7,685,285)	(15,894)	5,106,803
Net loss for the year	-	-	-	-	-	-	(3,726,942)	-	(3,726,942)
Other comprehensive loss	-	-	-	-	-	-	-	(23,594)	(23,594)
Issue of shares and
warrants on acquisition
of intangible assets	11,733,333	880,000	76,267	-	-	-	-	-	956,267
Private placements	15,350,000	828,900	399,100	-	-	-	-	-	1,228,000
Share issue costs	-	(85,920)	-	-	33,920	-	-	-	(52,000)
Obligation to issue
shares and warrants	-	-	-	-	160,000	-	-	-	160,000
Conversion of a portion									-
of convertible notes	9,000,000	1,211,811	-	(96,734)	-	96,734	-	-	1,211,811
Issue of convertible notes	-	-	-	99,738		-	-	-	99,738
Issue of warrants	-	(260,000)	260,000	-		-	-	-	-
Share-based payments	-	-	-	-	-	32,250	-	-	32,250
Shares issued to
consultants for services	440,000	39 600							39,600
Repricing of warrants	-	-	107,478	-	-	-	(107,478)	-	-
Exercised warrants and options	162,500	21 828	(5,453)	-		-	-	-	16,375
Balance - June 30, 2019	141,265,106 13,373,632		1,521,276	99,738	193,920	1,418,935	(11,519,705)	(39,488)	5,048,308

1. General information and nature of operations

Relevium Technologies Inc. (the "Company"), was incorporated under the Canada Business Corporations Act on July 19, 2012, is a publicly traded company currently trading under ticker symbol "RLV" on the TSX Venture Exchange and "6BX" on the Open Market Segment of the Frankfurt Stock Exchange.

The address of the Company's registered head office is 1000 Sherbrooke St. West, Suite 2700, Montreal, Quebec, Canada.

The principal business of the Company is the identification, evaluation, acquisition and operation of brands and businesses in the health and wellness markets, including medical cannabis.

2. Going concern and impact of COVID-19

The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") on the going concern basis, which presumes the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the ordinary course of business. The Company has a history of losses, has consumed significant amount of cash resources in the past and has continued to do so in the year ended June 30, 2020.

During the year ended June 30, 2020, the Company incurred a net loss of $6,931,628 (June 30, 2019 - $3,726,942) and had negative cash flow from operations of $2,162,520 (June 30, 2019 – $3,212,132). As at June 30, 2020, the Company had a negative working capital of $3,409,657 (June 30, 2019 - positive $452,352).

Historically, the Company has successfully raised financing through the issuance of debts and common shares. However, the Company expects that cash disbursements over the next 12 months will exceed cash resources and additional funds will be required to finance the operations of the Company. Therefore, as at June 30, 2020, there is a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern without obtaining additional financial resources.

To date, the Company has financed its cash requirements primarily by issuing shares, warrants and debt instruments. The Company's ability to continue as a going concern is subject to its ability to raise additional financing, generate cash flows from operations and continued support from existing creditors. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

The recent outbreak of a novel and highly contagious form of coronavirus ("COVID-19"), which the World Health Organization declared to be a pandemic on March 11, 2020, has resulted in numerous deaths, adversely impacted global commercial activity and contributed to significant volatility in certain equity and debt markets. It has created challenges for the entire market.

Recent state of emergency or shutdown declarations by several governments have impacted the Company's operations for the year ended June 30, 2020, resulting in a decrease in sales as well as earnings. Given the recent developments in the COVID-19 global pandemic, Management is closely monitoring the evolution of this pandemic, As the uncertainty regarding the full extent and duration of the pandemic continues, Management is focussing on a cash conservation plan aimed at ensuring maximum available liquidity and financial flexibility until crisis abates and market conditions stabilize.

3. Basis of preparation

The consolidated financial statements were authorized for issuance on January 19, 2021 by the Board of Directors of the Company. These consolidated financial statements are presented in Canadian dollars, which is the Company's functional currency.

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements

As at June 30, 2020 and 2019 Prepared in Canadian Dollars

Statement of compliance

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") and interpretations of the IFRS Interpretations Committee ("IFRIC").

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Ovid Acquisition Corp., Biocannabix Health Corporation, Relevium E-Health (incorporated in Canada) and BGX E-Health LLC (Incorporated in the USA). Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The subsidiaries are included in the consolidated financial statements from the date the Company gains control until it ceases to control. Intercompany balances and transactions, and unrealized gains and losses arising from intercompany transactions are eliminated in preparing the consolidated financial statements. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.

Basis of measurement

The consolidated financial statements have been prepared under the historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss which are measured at fair value. In addition, the consolidated financial statements have been prepared using the accrual basis of accounting.

Accounting judgements, estimates and assumptions

The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions about the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates and such differences could be significant.

The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical accounting estimates and judgements are those that have a significant risk of causing material adjustment and are often applied to matters or outcomes that are inherently uncertain and subject to change. Key areas of judgement and estimation, where management has made difficult, complex or subjective judgements, often as a result of matters that are inherently uncertain, include the date of acquisition of a business combination, the valuation of share-based payments, the valuation of the liability and equity components of the convertible notes, and the impairment of non-financial assets.

Significant judgement

The acquisition date is the date on which the Company obtains control over the business acquired. However, whether control has been obtained by a certain date requires judgment. In determining the date on which the Company obtains control over the acquired assets, consideration is given to, amongst others, the date at which the Company legally transfers the consideration, the power that the Company can exercise over the assets acquired, the exposure, or rights, to the variable returns and the ability to use its power over the significant activities acquired to affect the amount of the Company's returns.

In recognizing revenue, the Company determines it acts as a principal in executing transactions with third parties. Judgement is required to determine if the Company is acting as principal or an agent to determine if revenue should be recognized on a gross or net basis related to the consideration received.

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

Significant estimates

Share-based payments: The Company measures the cost of share-based payments by reference to the fair value of the equity instrument at the date on which they are granted. Estimating fair value for share-based payments requires management to determine the most appropriate valuation model for a grant, which is dependent on the terms and conditions of each grant. In valuing share-based payments, the Company uses the Black-Scholes option pricing model. Several assumptions are used in the underlying calculation of fair values of the Company's stock options using the Black-Scholes option pricing model, including the expected life of the option and stock price volatility. Details of assumptions used are included in Note 16, Share-based payments.

Valuation of convertible instrument: The Company determines the value of each component of its convertible instrument using the residual value method. Under the residual value method, the Company first determines the fair value of the liability component, and the residual amount is allocated to the equity component. Estimating the fair value of the liability component requires the use of assumptions, the most significant being the discount rate. The Company needs to determine the discount rate that reflects the interest rate that the Company would get for entering into a liability with similar terms but without any conversion feature. Details of the assumptions used are included in Note 13, Long-term debt.

Impairment of non-financial assets: Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data that would be considered by a market participant, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a discounted cash flow ("DCF") model. The cash flows are derived from the budget for the next three years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the performance of the assets of the cash-operating unit ("CGU") being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognized by the Company. The key assumptions used to determine the recoverable amount, including a sensitivity analysis, are disclosed and further explained in Note 10, Intangible assets.

Going concern: the assessment of the Company's ability to continue on as a going concern basis, to obtain sufficient funds to cover current operations expenses and meet its obligations for the coming period and obtain financing to pursue its activities involves significant judgment based on past experience and other factors, including the probability of future events that are considered reasonable in the light of circumstances. Refer to note 2 for more information.

4. Restatement note for June 30, 2019

The consolidated financial statements have been reclassified, where applicable to conform to the presentation used in the current year. The Company is restating its consolidated financial statements as at June 30, 2019. In the course of preparing the Company's consolidated financial statements for the year ended June 30, 2020, the following errors were identified:

The Company entered into contract with a customer for sale over a third-party platform, which is subject to variable consideration related to the promotions as defined by IFRS 15 – Revenue from contracts with customers. This error resulted in the overstatement of revenue and overstatement of expense.

These errors have been corrected by restating each of the affected consolidated financial statement line items in the comparative year. The effects of the restatement on June 30, 2019 consolidated financial statements are as follows:

	As previouslyreported	Adjustment	As restated
	$	$	$
Consolidated Statement of Loss and Comprehensive Loss
Revenue	4,053,617	(424,967)	3,628,650
Selling and marketing expenses	2,462,046	(424,967)	2,037,079

5. Summary of significant accounting policies

(1) Accounting standards adopted during the year ended June 30, 2020

IFRS 16 - Leases

IFRS 16 – Leases, replace IAS 17 – Leases, and related interpretations. The standard introduces a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. For lessees, IFRS 16 is a single on-balance sheet recognition and measurement model, eliminating the distinction between operating and finance leases and right-of-use assets and liabilities recognized in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets). Liabilities from leases are to be reduced over the term of the lease by amortizing lease payments to a reduction in liability and an interest expense recognized in finance costs. Rightof-use assets will be amortized over the term of the lease.

On July 1, 2019, the Company implemented IFRS 16 – Leases, using the modified retrospective approach with the cumulative effect of initial application recognized on April 1, 2019. Comparatives have not been restated. Leases are recognized as right-of-use assets and corresponding liability at the date of which the leased asset is available for use by the Company. The right-of-use asset is measured initially at cost, and subsequently at cost less any accumulated depreciation and impairment losses. The initial cost recognized includes the lease liability, any lease payments made, less any lease incentives, and any direct costs incurred by the lessee. Lease payments are allocated between the liability and finance cost. The finance cost is charged to the statement of income as depreciation over the lease period. Non-lease components including additional rent, utilities, and taxes are excluded from the calculation of the lease liability and are recognized as incurred over the life of the lease. The lease liability upon initial measurement includes the net present value of the following lease payments:

• Fixed payments, less any lease incentives receivable.
• Variable lease payments that are based on an index or rate.
• Expected payments by the lessee under residual value guarantees.
• The exercise price of a purchase option of the lessee is reasonably certain to exercise that option.
• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the Company's incremental borrowing rate. Payments for short-term leases or leases of low-value assets are recognized on a straight-line basis as an expense in the statement of earnings. Short-term leases are leases with a lease term of twelve months or less. Low-value assets compromise of small items of office equipment. In applying IFRS 16 – Leases for the first time, the Company has used the following practical expedients permitted by the standard:

• Leases with a remaining term less than 12 months or less from the date of application have been accounted for as short-term leases even though the initial term from the lease commencement have been more than twelve months.
• Leases with a low value have been excluded.

The adoption of IFRS 16 had no impact on the annual Consolidated Financial Statements

IFRIC 23 – Uncertainty over income tax treatments

In June 2017, the IASB Issued IFRIC 23, which clarifies the application of the recognition and measurement requirements in IAS 12 – Income Taxes, when there is uncertainty over income tax treatments. This interpretation is effective for annual reporting periods beginning on or after January 1, 2019, using a full retrospective approach. The Company has adopted IFRIC23 and determined that the application did not have a material impact on the Company's consolidated financial statements because its existing policies were in line with the standard.

(2) Foreign currency translation

The consolidated financial statements are presented in Canadian dollars, which is the currency of the primary economic environment in which the parent company operates (its functional currency). For each entity, the Company determines the functional currency and items included in the financial statements of each entity are measured using the functional currency.

In preparing the financial statements of the individual entities, transactions in currencies other than the Company's functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the financial position date. Non-monetary items measured at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are retranslated using the exchange rates at the dates of the initial transactions.

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each financial position presented are translated at the closing rate at the date of that financial position;
• income and expenses for each statement of operations and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates revealing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognized in other comprehensive income.

(3) Share-based payments

The Company uses the fair-value method of accounting for all equity-settled share-based payments. Stock-based payments to directors, employees and others providing similar services are measured at the fair value of the equity instruments at the grant date using the Black-Scholes option pricing model, which includes estimates of the number of awards that are expected to vest over the vesting period. Where granted share options vest in installments over the vesting period (defined as graded vesting), the Company treats each installment as a separate share option grant. Share-based compensation expense is recognized over the vesting period, or as specific vesting conditions are satisfied, and credited to equity under contributed surplus. When stock options are exercised, the proceeds, together with the amount recorded in contributed surplus, are recorded in share capital.

The Company granted stock options to Agents in connection with the issuance of shares ("Agents' Options") using the fair value method. Under this method, the fair value of broker options is first determined based on the value of the goods or services received. In situations where some or all of the goods or services received by the Company as consideration cannot be specifically identified, the fair value of Agents' Options is then determined using the Black-Scholes option pricing model as described above. The fair value of Agents' Options is recognized as a cost of the shares issued and recorded in share capital.

(4) Income taxes

Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted, or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

Deferred tax is recognized on temporary differences between the tax bases of assets and liabilities and the corresponding carrying amounts in the consolidated financial statements. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax assets and liabilities are measured, on a non-discounted basis, using the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the deferred tax asset or liability is settled. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(5) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and – for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

(6) Revenue recognition

An entity shall recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (i.e., an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Contracts with customers

The Company considers the terms and conditions of written contracts and its customary business practices in identifying its contracts under IFRS 15. In general, contract terms will be reflected in a written document that is signed by both parties. The Company will present separately in its financial statements any impairment losses recognized on any receivables arising from sales to customers.

The Company generates revenue primarily from online sales from portals such as www.amazon.com. These revenues are generally recognized at a point of time upon shipment of the goods sold in the reporting period. Per IFRS 15, an entity shall disaggregate revenue recognised from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company's revenue by sales type for the years ended June 30, 2020 and June 30, 2019 is as follows:

	June 30, 2020	June 30, 2019
Revenue – by type of sales	$	$
Consumer packaged goods – online sales	2,242,517	3,628,650
Consumer packaged goods – bulk sales	731,644	-
Total Revenue	2,974,161	3,628,650

The geographic breakdown of the Company's revenues for the years ended June 30, 2020 and June 30, 2019 is as follows:

	June 30, 2020	June 30, 2019
Revenue – by geography	$	$
United States	2,585,729	3,628,650
Canada	223,032	-
Other	165,400	-
Total Revenue	2,974,161	3,628,650

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

Performance obligations

Performance obligations are promises in a contract to transfer distinct products to a customer and is the unit of account under IFRS 15. A contract's transaction price is allocated to each distinct performance obligation, and revenue is recognized when the performance obligation is satisfied. A product is a distinct performance obligation if the customer can both benefit from the product either on its own or together with other resources that are readily available to the customer, and it is separately identifiable from other items within the context of the contract. Performance obligations are satisfied by transferring control of the product to the customer. The Company recognizes revenue when the products are delivered to its customers, in an amount that reflects the consideration of the Company expects to be entitled to in exchange for those products.

Determination of the transaction price

The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for providing products to customers, where the transaction price takes into account estimates of variable consideration.

(7) Inventory

Inventory represents finished goods and is determined on a first-in first-out basis and valued at the lower cost, which include all costs incurred in bringing each product to its present location and condition, and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The amount of inventories recognised as an expense during the year is $1,005,958 USD (June 30, 2019 - $869,570 USD), and the amount of write-down of inventories recognised as an expense in the year is $Nil (June 30, 2019 - $Nil).

(8) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of operations.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, and whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, either individually or at the CGU level. The assessment of indefinite life is reviewed annually, and whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. The Company's intangible assets consists of:

Trademarks – unamortized Brand – unamortized Licenses with definite useful lives – amortized on a straight-line basis over the license's terms Licenses with indefinite useful lives - unamortized Non-compete agreements - amortized on a straight-line basis over the expected useful life, which is 2 years.

(9) Goodwill

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.

Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cashgenerating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes.

(10) Property and equipment

Property and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses. The acquisition cost includes the purchase price or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the management. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. Depreciation is recognized under the straight-line method to write-down the cost to its estimated residual value, over the useful life of the assets. Assets are depreciated once they are available for use.

The depreciation of office equipment is calculated over five years.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

(11) Segmented information

For management purposes, the Company is organized into business units based on its products and services and has three reportable segments, as follows:

• Consumer Packaged Goods (CPG): this segment generates revenues from direct-to consumer sales of health and wellness products and
• Pediatric Biopharma: this segment is highly focused on the development of an integrated biopharma business focused on pediatric endomedecine.
• Corporate: this segment relates to the corporate administration of the Company.

No operating segments have been aggregated to form the above reportable operating segments.

The Executive Management Committee is the Chief Operating Decision Maker (CODM) and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.

(12) Loss per share

Basic loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing the applicable net loss by the sum of the weighted average

number of shares outstanding during the period and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the period. The treasury stock method is used to compute the dilutive effect of stock options, warrants and similar instruments.

The computation of diluted loss per share is equal to the basic loss per share due to the anti-dilutive effect of the stock options and warrants.

(13) Financial instruments

Financial assets

Financial assets are recognized and derecognized on the trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'at amortized cost' and 'fair value through other comprehensive income' (OCI). The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company's documented risk management or investment strategy, and information about the grouping is provided internally on that basis.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss.

Trade receivables are financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. These have fixed or determinable payments that are not quoted in an active market and are therefore classified as 'debt instruments. Debt instruments are initially recognized at fair value less transaction cost. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The Company has classified all of its financial assets as follows:

		Subsequent
Financial Asset	Classification	Measurement
Cash and cash equivalents	Amortized cost	Amortized cost
Short term investments	Amortized cost	Amortized cost
Receivables	Amortized cost	Amortized cost
Advances to Lifeline Pharma	Amortized cost	Amortized cost

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is any objective evidence of impairment of a financial asset or group of financial assets. For financial assets classified at amortized cost, the Company, at each reporting date, measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses given the credit risk on the financial instrument has not increased significantly since initial recognition. The Company recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it is becoming probable that the borrower will enter bankruptcy or reorganization.

The carrying amount of financial assets is reduced by any impairment loss directly for all financial assets with the exception of accounts receivable, where the carrying amount is reduced through the use of an allowance account. When an account receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in the Consolidated Statement of Loss and Comprehensive Loss.

Impairment provisions for receivables from related parties and loans to related parties are recognized based on a forwardlooking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, 12 month expected credit losses along with gross interest income are recognized. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognized. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognized.

Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

Financial liabilities and equity instruments issued by the Company

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if it has been acquired principally for the purpose of repurchasing it in the near term; or if on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit taking; or if it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; if the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or if it forms part of a contract containing one or more embedded derivatives.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the 'other gains and losses' line item in the statement of comprehensive income.

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis.

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition. The Company has classified all of its financial liabilities as follows:

		Subsequent
Financial Liability	Classification	Measurement
Accounts payable and accrued liabilities	Other financial liability	Amortized cost
Loan payable	Other financial liability	Amortized cost
Bridge loan payable	Other financial liability	Amortized cost
Warrant liability	FVTPL	Fair Value
Long-term debt	Other financial liability	Amortized cost
Bank advances	Other financial liability	Amortized cost

Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire.

(14) Convertible notes

Convertible notes are separated into liability and equity components based on the terms of the contract. On issuance of the convertible instrument, the fair value of the liability component is determined using a market rate for an equivalent nonconvertible instrument. This amount is classified as a financial liability measured at amortized cost (net of transaction costs) until it is extinguished on conversion or redemption.

The remainder of the proceeds is allocated to the conversion option that is recognized and included in equity. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent periods.

Transaction costs are apportioned between the liability and equity components of the convertible instrument, based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

(15) Fair value measurement

The Company measures certain financial instruments at fair value at each financial position date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming market participants act in their economic best interest.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

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

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

The determination of the fair value of intangible assets and goodwill were calculated using the level 3 hierarchy. The determination of the contingent payable and the convertible notes payable was calculated using level 2 fair value hierarchy.

(16) Standards issued but not yet effective

At June 30, 2020, a number of new standards, amendments to standards and interpretations have been issued but are not yet effective. Accordingly, they have not been applied in preparing these consolidated financial statements. The Company is currently assessing the impact that these standards will have on the consolidated financial statements. New standards issued but not yet effective are not expected to be relevant to the Company's consolidated financial statements and as such are not listed. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company's consolidated financial statements and are not listed.

6. Short-term investments held for trading

The short-term investment is a cashable guaranteed investment certificate with the Company's bank bearing interest at the rate of 0.5% maturing within one year and whose market value approximates cost.

7. Receivables

As at June 30, 2020 and June 30, 2019, the aging of the Company's accounts receivables was as follows:

	Balance Due	1-30 Days	31-60 Days	61-90 Days	Over 90 Days
	$	$	$	$	$
Trade and other receivables	67,153	28,741	22,496	15,916	-
Sales tax receivable	95,805	49,117	-	-	46,688
Allowance for doubtful accounts	-	-	-	-	-
Balance at June 30, 2019	162,958	77,858	22,496	15,916	46,688
Trade and other receivables	443,243	290,496	-	-	152,747
Sales tax receivable	90,050	90,050	-	-	-
Allowance for doubtful accounts	(152,747)	-	-	-	(152,747)
Balance at June 30, 2020	380,546	380,546	-	-	-

	June 30, 2020	June 30, 2019
	$	$
Allowance for doubtful accounts – opening balance	-	-
Net increase during the year	152,747	-
Allowance for doubtful accounts – closing balance	152,747	-

8. Advances to Lifeline Pharma

On June 12, 2019, the Company, through it's wholly owned subsidiary Biocannabix Health Corporation (''BCX''), entered into an letter of intent to acquire Lifeline Pharma S.A.S (''LPC'') a privately-owned start-up incorporated in Cali, Colombia currently seeking the licensing approval by the Government of Colombia to cultivate and produce medical grade cannabis extracts. The proposed terms of the transaction are as follows:

• A deposit of $250,000 USD payable by BCX in two tranches, 50% in July 2019 and 50% at grant of the first license of Cannabis to LPC by the Colombian government;
• A direct investment in cash of $650,000 USD by BCX over the next 7 months to January 2020 to fund LPC activities;
• Subject to an initial series A convertible debenture financing, BCX will invest an additional $1,150,000 USD to complete investments requirements;
• Subject to the successful completion of the licensing process in Colombia, BCX will issue $3,650,000 USD in common shares to the shareholders of LPC;
• Subject to the successful IPO, BCX will either pay $1,500,000 USD in cash or issue the equivalent number shares at the election of the shareholders of LPC;
• Subject to the successful IPO, BCX will also issue shares of the resulting company to a consultant 2.5% of the valuation of LPC pre-series A convertible debenture financing.

As at June 30, 2020, the company advanced $344,798 (June 30, 2019 - $72,398). Due to poor economic conditions, the Company had not finalized a definitive merger agreement with LPC and placed the transaction on hold. As at June 30, 2020, the Company is not a position to achieve the milestones required to move forward with the transaction, and therefore has expensed the entirety of the advances made to LPC in other expenses. As at June 30, 2020 the Company does not consider the remaining payments to be probable.

9. Property and equipment

Property and equipment were comprised of the following balances:

	$
Office equipment - at cost:
As at July 1, 2018	21,183
Additions	2,113
As at June 30, 2019	23,296
Additions	-
As at June 30, 2020	23,296
Depreciation and impairment:
As at July 1, 2018	4,237
Depreciation	4,553
As at June 30, 2019	8,790
Depreciation	4,659
As at June 30, 2020	13,449
Net carrying amount:
At June 30, 2019	14,506
At June 30, 2020	9,847

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements

As at June 30, 2020 and 2019

Prepared in Canadian Dollars

10. Intangible assets and Goodwill

Intangible assets were comprised of the following balances:

			AmortizableLicenses	Nonamortizable	NonCompete	Goodwill
	Brand	Trademarks	note (a)	Licenses	Agreements	note (b)	Total
	$	$	$	$	$	$	$
Cost
As at July 1, 2018	901,263	-	-	2,411,837	286,766	2,275,061	5,874,927
Additions	-	7,502	1,154,267	-	-	-	1,161,769
As at June 30, 2019	901,263	7,502	1,154,267	2,411,837	286,766	2,275,061	7,036,696
Additions	-	4,200	-	-	-	-	4,200
Balance, as at June 30, 2020	901,263	11,702	1,154,267	2,411,837	286,766	2,275,061	7,040,896
							-
Amortization and impairment
Balance as at July 1, 2018	-	-	-	-	143,383	-	143,383
Amortization	-	-	-	-	143,383	-	143,383
Balance as at June 30, 2019	-	-	-	-	286,766	-	286,766
Amortization	-	-	-	-	-	-	-
Impairment	-	-	1,154,267	-	-	2,067,246	3,221,513
Balance as at June 30, 2020	-	-	1,154,267	-	286,766	2 067 246	3,508,279
Net carrying amount:
At June 30, 2019	901,263	7,502	1,154,267	2,411,837	-	2,275,061	6,749,930
As at June 30, 2020	901,263	11,702	-	2,411,837	-	207,815	3,532,617

Note (a) – In January 2019, the Company entered into an agreement with CK Properties to acquire an exclusive licence to use the trademarks, including formulations, Standard Operating Procedures (SOPs) and sampling of patient data for pediatric applications for the Canadian market, with a 13% royalty on gross sales. This licensing agreement is for an initial three years period and is renewable for two consecutive three years term upon reaching certain targets. The acquisition of the license which belongs to the Pediatric Biopharma segment was structured as follows:

• Issuance of 11,733,333 shares valued at fair value for a total value of $880,000 and 5,866,666 warrants that are giving the holders the ability to purchase 5,866,666 shares at $0.15 for a period of one year valued at $76,267 according to the value determined by the black Scholes option pricing model;
• Cash payment of $198,000 (US$150,000).

As of June 30, 2020, the license was not available for use due to delays in getting access to the SOP, formulations, and scientific data. The Company believes that the license will not be ready for use prior to the expiry of the initial license term in January 2022. As at June 30, 2020, the Company does not expect to derive any economic benefits from the license. Therefore, the Company recorded an impairment of 100% of the value of the license ($1,154,267).

Note (b) – Goodwill allocation was to a single cash generating unit ("CGU"), BioGanix E-Health LLC ("BGX"). The recoverable amount of the goodwill was based on value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU. The carrying amount was determined to be more than the recoverable amount. Therefore, the Company recorded an impairment of $2,067,246 against the goodwill for a net value of $207,815 as at June 30, 2020.

Key assumptions used in the estimate of value in use for the year ended June 30, 2020 were as follows:

Pre-tax Discount Rate	23%
Terminal Growth Rate	2%
Budgeted revenue growth rate (average)	65%
EBITDA margin (average)	1%
Cash flow period	3 years

11. Bridge loan payable

On September 20, 2019, the Company entered into a bridge loan agreement with a related party (see note 18) for a total amount of $200,000. The loan bears interest at a rate of 10% per year and was redeemable in full on April 30, 2020. Given that repayment of this bridge loan was late, interest at an annual rate of 21% was charged on the late payment. The loan and interest were settled in full through an issuance of units as part of a private placement in May 2020 (note 14).

12. Loan payable

The loan is the balance of a US$350,000 product development and marketing facility issued on June 13, 2019. It bears interest at a rate of 15.22% per annum, repayable in 12 monthly payments of US$31,627, including interest. The loan is repaid automatically from ongoing sales and cash flows from the Company's Amazon account and is secured by the inventory in Amazon fulfillment centers and the Company's Amazon account administered by Amazon Services LLC. As at June 30, 2020 the balance is $103,520 (June 30, 2019 - $458,045). The Company can only use funds from this loan for Amazon marketing campaigns.

The previous balance of loan of US$350,000 product development and marketing facility issued on April 3, 2018 was repaid in full on October 4, 2018. It was bearing interest at a rate of 13.99% per annum, repayable in 9 monthly payments of US$41,191, including interest. On October 4, 2018, the Company contracted a new product development and marketing facility of US$219,000 that was bearing interest at a rate of 15.22% per annum, repayable in 12 monthly payments of US$25,902, including interest. This loan was repaid in full on June 10, 2019.

During the year, the Company entered into a letter of intent to roll its interest in its wholly-owned subsidiary BGX E-Health LLC into Newscope Capital Corporation ("Newscope"). Due to poor economic conditions, the transaction was cancelled. From the potential transaction, the Company received $200,000 in advanced funds from Newscope, which have been captured as a payable to Newscope as at June 30, 2020.

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

13. Long term debt

	June 30, 2020$	June 30, 2019$
Convertible notes payable bearing interest at the 12-month $US Libor rateplus 8% per year, payable monthly, in advance, maturing December 31,2019 (6), secured by a general assignment of all of the assets of theCompany. The note holders have a right to convert 85% of the outstandingcapital of $Nil (2) (3) as at strike price of $0.15 per share. The Company mayprepay any portion of the principal amount together with accrued interestthereon at any time after December 7, 2017 (1).	-	314,510
Convertible notes payable bearing interest at the 12-month $US Libor rateplus 8% (10% if in default) per year, payable monthly, in advance, maturingDecember 20, 2020, secured by a general assignment of all of the assets ofthe Company. The note holders have a right to convert 85% of theoutstanding capital of $1,176,471 at a strike price of $0.15 per share. TheCompany may prepay any portion of the principal amount together withaccrued interest thereon at any time (4). (see note 24)	1,097,562	986,740
Convertible notes payable bearing interest at the 12-month $US Libor rateplus 8% (10% if in default) per year, payable monthly, in advance, maturingDecember 20, 2020, secured by a general assignment of all of the assets ofthe Company. The note holders have a right to convert 85% of theoutstanding capital of $1,176,471 at a strike price of $0.15 per share. TheCompany may prepay any portion of the principal amount together withaccrued interest thereon at any time (5). (see note 24)	1,097,562	986,740
Total obligationsLess due within one period	2,195,124(2,195,124)	2,287,990(314,510)
	-	1,973,480

• (1) On initial recognition, the convertible notes of $2,250,000 were broken down into the following financial components: a financial liability of $2,088,777 and an equity instrument of $161,223.
• (2) On December 12, 2017, $900,000 of the convertible note were converted into 6,000,001 shares at $0.15 per shares and 2,999,999 warrants at an exercise price of $0.15 per warrant.
• (3) On December 20, 2018, $1,350,000 of the convertible note were converted into 9,000,000 shares at $0.15 per share and $82,490 of convertible notes were repaid.
• (4) On December 20, 2018, the bridge loan was converted into convertible notes in the aggregate principal amount of $1,176,471, which includes a discount of $176,471 and $1,000,000 of which would be convertible into shares of the Company at $0.15 per share. On initial recognition, the convertible notes of $1,000,000 were broken down into the following financial components: a financial liability of $950,131 and an equity instrument of $49,869. In addition, 4,500,000 cashless warrants exercisable at $0.15 per warrant were issued to the lenders. On June 26, 2019, the exercise price of these warrants was changed to $0.12. On February 1, 2020, the exercise price of these warrants was changed to $0.05 (note 15).
• (5) On December 20, 2018, the Company issued convertible notes in the aggregate principal amount of $1,176,471, which includes a discount of $176,471 and $1,000,000 of which would be convertible into shares of the Company at $0.15 per share. On initial recognition, the convertible notes of $1,000,000 were broken down into the following financial

components: a financial liability of $950,131 and an equity instrument of $49,869. In addition, 5,000,000 warrants exercisable at $0.15 per warrant were issued to the lenders. On June 26, 2019, the exercise price of these warrants was changed to $0.12. On February 1, 2020, the exercise price of these warrants was changed to $0.05 (note 15).

(6) On June 26, 2019, the maturity of the remaining notes issued on June 7, 2017 was extended from June 7, 2019 to December 31, 2019.

On December 18, 2020, the Company signed an agreement with the convertible note holders to extend the term of the repayment of the convertible notes to January 31, 2021, subject to the conditions below:

• All warrants issued to convertible note holders, which have a strike price of $0.05 and were scheduled to expire on December 20, 2020, shall have their expiration date amended to December 20, 2022;
• The company agreed to pay an extension fee of $24,000 to the convertible note holders, which can be paid either in cash or through the issuance of 800,000 common shares of the Company and,
• Interest and monitoring fees for January 2021 must be paid by December 28, 2020

Please refer to subsequent events Note 24 for more information.

Covenants

The Company has agreements in place with the convertible note holders, which require the Company to adhere to certain covenants. These agreements, which were amended, require the Company to:

• (1) Have a maximum senior debt-to-equity ratio of 1.25:1;
• (2) Generate revenues of at least $900,000 per quarter; and
• (3) Generate minimum EBITDA of $100,000 per fiscal year and positive EBITDA per quarter for the BGX E-Health subsidiary of the Company.

During and as at June 30, 2020, the Company was in default at times with respect to covenants (1), (2) and (3) above (2019 - Default at times with respect to covenants (2) and (3) above).

14. Share capital

Authorized - an unlimited number of common shares and an unlimited number of preferred shares without nominal or par values

Issued		June 30, 2020
	#	$	#	$
Common shares	202,820,472	14,067,808	141,265,106	13,373,632

Capital stock transactions are summarized as follows for the year ended June 30, 2020:

The Company issued a total of 61,555,366 shares pursuant to the following:

On July 9, 2019, the Company completed a private placement and issued an aggregate amount of 2,000,000 units of the Company at a price of $0.08 per unit, for gross proceeds of $160,000 to the Company. Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.12 until July 9, 2020. The Company had received these funds prior to the previous year-end of June 30, 2019 and recognized this as an obligation to issue shares in the prior fiscal year.

• On July 9, 2019, as part of the private placement, the Company issued 400,000 common shares and 400,000 share purchase warrants as finder's fees, entitling the holder thereof to purchase one common share at a price of $0.12 until July 9, 2020. An amount of $12,800 was also paid as issue cost.
• On September 6, 2019, the Company has completed a private placement and issued an aggregate amount of 3,437,500 units of the Company at a price of $0.065 per unit, for gross proceeds of $223,437 to the Company. Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.12 until September 6, 2020;
• On September 6, 2019, as part of the private placement, the Company issued 343,750 common shares as finders fees.
• On April 6, 2020, the Company issued 1,137,823 shares on exercise of warrants to settle $56,891 of interest expense due.
• On April 13, 2020, the Company issued 557,270 shares on exercise of warrants to settle $27,864 of interest expense due.
• On April 23, 2020, 784,829 shares were issued in exchange for professional and general and administrative fees of $39,241.
• On May 27, 2020, the Company has completed a private placement (first tranche) and issued an aggregate amount of 46,894,194 units of the Company at a price of $0.035 per unit, for gross proceeds of $1,641,297 to the Company. Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.05 until May 27, 2022. An amount of $25,584 was paid in cash and 730,980 broker warrants were issued as finder's fees. Each broker share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.05 until May 27, 2021.
• On June 19, 2020, the Company has completed a private placement (second tranche) and issued an aggregate amount of 6,000,000 units of the Company at a price of $0.035 per unit, for gross proceeds of $210,000 to the Company. Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.05 until May 27, 2022. As of June 30, 2020, the Company had not received the proceeds of $210,000 from the subscriber. As a result, the Company has recorded a subscription receivable of $210,000.

Capital stock transactions are summarized as follows for the year ended June 30, 2019:

The Company issued a total of 36,685,833 shares pursuant to the following:

• 162,500 shares were issued on the exercise of warrants in exchange for $16,375.
• On December 20, 2018, total convertible notes of $1,350,000 were converted into 9,000,000 shares. An amount of $1,211,811, representing the liability amount at the date of conversion, was reversed into share capital.
• On April 8, 2019, the Company issued 11,733,333 shares at fair value of $0.075 per share as a partial payment for an exclusive license (see note 10).
• On April 8, 2019, the Company issued 440,000 shares at a fair value of $0.09 per share as payment for services.
• On June 11, 2019, the Company has completed its closing of a private placement and has issued an aggregate amount of 15,350,000 units of the Company at a price of $0.08 per unit, for gross proceeds of $1,228,000 to the Company. Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.12 until June 11, 2020. The fair value of the warrants

was determined using the Black Scholes option pricing model. The proceeds attributable to the common shares and the warrants, before considering the share issue costs of $85,920, are respectively $828,900 and $399,100.

As consideration for its services in connection with the transactions, the agents received $52,000 in cash, 320,000 shares valued at $0.08 and 320,000 warrants entitling the holder to purchase one common share at a price of $0.12 until June 11, 2020. The estimated fair value of the warrants amounted to $8,320 and was calculated using the Black Scholes option pricing model.

As of June 30, 2019, the 320,000 shares and 320,000 warrants issuable to the agents were not yet issued. Therefore, an obligation to issue shares and warrants of $33,920 was accounted for in the Company's financial position.

15. Share purchase warrants

Share purchase warrants outstanding and exercisable as at June 30, 2020 are summarized as follows:

		Weighted average
	Warrants	exercise price
	#	$
Balance - June 30, 2018	24 829,832	0.147
Issued in connection of exclusive licenses	5,866,666	0.150
Private placement - June 2019	15,350,000	0.120
Issued in December 2018 to lenders	9,500,000	0.120
Exercised for cash	(160,000)	0.100
Exercised for cash	(2,500)	0.150
Warrants expired	(18,061,833)	0.150
Balance - June 30, 2019	37,322,165	0.127
Private placement - July 2019	2,000,000	0.120
Private placement - September 2019	3,437,500	0.120
Issued for agent's fees	400,000	0.120
Private placement - May 2020	46,894,194	0.050
Issued for agent's fees	730,980	0.050
Private placement - June 2020	6,000,000	0.050
Exercised for fees	(1,695,093)	0.050
Warrants expired	(1,722,500)	0.113
Warrants expired	(16,849,999)	0.120
Warrants expired	(9,249,666)	0.150
Balance - June 30, 2020	67,267,581	0.056

Share purchase warrants transactions are summarized as follows for the year ended June 30, 2020:

The Company issued a total of 59,462,674 share purchase warrants pursuant to the following:

• On July 9, 2019, the Company issued 2,400,000 share purchase warrants entitling the holder thereof to purchase one common share at a price of $0.12 until July 9, 2020. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 1.61%, expected volatility at 102.9%, dividend yield at Nil, expected life 1 year and grant date fair value $0.028.
• On September 6, 2019, the Company issued 3,437,500 share purchase warrants entitling the holder thereof to purchase one common share at a price of $0.12 until September 6, 2020. The fair value of the warrants was

determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 1.59%, expected volatility at 99.82%, dividend yield at Nil, expected life 1 year and grant date fair value $0.012.

• On May 27, 2020, the Company issued 46,894,194 share purchase warrants entitling the holder thereof to purchase one common share at a price of $0.05 until May 27, 2022. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 0.28%, expected volatility at 166.8%, dividend yield at Nil, expected life 2 years and grant date fair value $0.029.
• On May 27, 2020, the Company issued 730,980 broker share purchase warrants entitling the holder thereof to purchase one common share at a price of $0.05 until May 27, 2021. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 0.28%, expected volatility at 216.5%, dividend yield at Nil, expected life 1 year and grant date fair value $0.028.
• On June 19, 2020, the Company issued 6,000,000 share purchase warrants entitling the holder thereof to purchase one common share at a price of $0.05 until June 19, 2022. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 0.26%, expected volatility at 169%, dividend yield at Nil, expected life 2 years and grant date fair value $0.021.

Share purchase warrants transactions are summarized as follows for the year ended June 30, 2019:

• On December 20, 2018, the Company issued 4,500,000 warrants to lenders at an exercise price of $0.15 for two years. The holders of these warrants may elect, in lieu of exercising the warrants for cash, a cashless exercise option to receive common shares equal to the fair value of the warrants based on the number of warrants to be exercised multiplied by a five-day weighted average market price less the exercise price, with the difference divided by the weighted average market price. If a warrant holder exercises this option, there will be variability in the number of shares issued per warrant. Therefore, these warrants fail to meet the definition of equity and must instead be classified as a derivative liability and measured at fair value with changes in fair value recognized in the statement of operations at each period end. The derivative liability will ultimately be converted to the Company's equity (common shares) when the warrants are exercised or will be extinguished upon the expiry of the outstanding warrants and will not result in the outlay of any cash by the Company. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 1.46%, expected volatility at 98.66%, dividend yield at Nil, expected life 1.47 years and grant date fair value $0.037. On June 26, 2019, following an amendment to the convertible notes' agreement (note 13), the exercise price of these warrants was repriced at $0.12. On February 1, 2020, following an amendment to the convertible notes agreement (note 13), the exercise price of these warrants was repriced at $0.05. Therefore, the Company recognized a gain on change in fair value of warrant liability of $117,715.
• On December 20, 2018, the Company issued 5,000,000 warrants to lenders. Each warrant entitles the holder to purchase one common share of the Company at $0.15 for two years. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 1.91%, expected volatility at 135%, dividend yield at Nil, expected life 2 years and grant date fair value $0.052. On June 26, 2019, following an amendment to the convertible notes' agreement (note 12), the exercise price of these warrants was repriced at $0.12. On February 1, 2020, following an amendment to the convertible notes agreement (note 13), the exercise price of these warrants was repriced at $0.05. Therefore, the Company recognized change in fair value of warrants expense of $26,000.
• On April 8, 2019, the Company issued 5,866,666 warrants as partial payment to acquire an exclusive license (note 10). Each warrant entitles the holder to purchase one common share of the Company at $0.15 for one year. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 1.51%, expected volatility at 92.97%, dividend yield at Nil, expected life 1 year and grant date fair value $0.013.

On June 11, 2019, the Company has completed its closing of a private placement and has issued an aggregate amount of 15,350,000 units of the Company at a price of $0.08 per unit, for gross proceeds of $1,228,000 to the Company (see note 14). Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.12 until June 11, 2020. The fair value of the warrants was determined using the Black Scholes option pricing model with the following assumptions: risk free interest rate at 1.51%, expected volatility at 98.27%, dividend yield at Nil, expected life 1 year and grant date fair value $0.026.

Each share purchase warrant entitles the holder to purchase one common share of the Company. The share purchase warrants are summarized as follows:

	Number outstanding	Remaining contractual
Exercise price	and exercisable	life (months)	Expiry dates
$0.12	2,400,000	1 month	July 2020
$0.12	3,437,500	3 months	September 2020
$0.05	7,804,907	6 months	December 2020
$0.05	730,980	11 months	May 2021
$0.05	46,894,194	23 months	May 2022
$0.05	6,000,000	24 months	June 2022
	67 267 581

16. Share-based payments

On November 7, 2012, the Company established an incentive stock option plan (the "Stock Option Plan") which provides that the Board of Directors of the Company may from time to time, in its discretion, grant to directors, officers, employees and consultants of the Company, non-transferable options to purchase common shares.

On December 22, 2017, the Company amended the Stock Option Plan to increase the maximum number of common shares issuable to 6,983,684. These options vest over a period determined by the Board of Directors when granted and expire after a period of up to ten years, provided that the number of common shares reserved for issuance under the Stock Option Plan does not exceed ten percent of the outstanding common shares issued.

The Board of Directors determines the exercise price per common share and the number of common shares that may be allotted to each director, officer, employee and consultant of the Company and all other terms and conditions of the options granted under the Stock Option Plan.

In 2019, the fair value of the 250,000 options granted to consultants, which vested entirely on the date of grant, was estimated using the Black- Scholes option pricing model based on the following weighted average assumptions: risk free interest rate at 2.49%, expected volatility at 109.55%, dividend yield at Nil, expected life 10 years and grant date fair value $0.129.

During the year ended June 30, 2020, there were no options granted to directors and officers. The option activity, under the share option plan and information concerning outstanding and exercisable options is as follows:

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements

As at June 30, 2020 and 2019 Prepared in Canadian Dollars

	No. of OptionsVested	Weighted AverageExercise Price ($)
Balance - June 30, 2018	4,812,800	0.1793
Options granted	250,000	0.1500
Options expired	(1,107,800)	0.2033
Balance - June 30, 2019	3,955,000	0.1707
No transactions	-	-
Balance – June 30, 2020	3,955,000	0.1707

As at June 30, 2020 stock option issued and outstanding are as follows:

Options granted			Remaining contractual
and exercisable	Exercise Price ($)	Expiry dates	life (months)
180,000	0.10	December 2022	30 months
1,250,000	0.15	September 2025	63 months
2,275,000	0.19	December 2027	90 months
250,000	0.15	October 2028	100 months
3,955,000

17. Statement of cash flows

Changes in non-cash working capital items:

	June 30, 2020$	June 30, 2019$
ReceivablesInventory	(370,335)432,929	(20,724)(215,836)
Prepaid expenses	36,194	134,787
Accounts payable and accrued liabilities	819,579	223,466
	918,367	121,693

18. Related party transactions

The Company's related parties include the CEO, CFO, directors, corporate secretary and family members of these parties. Unless otherwise stated, none of the transactions incorporates special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. All balance of advances receivable and advances payable are measured at fair value and occurred in the normal course of business. Transactions with related parties for the year ended June 30, 2020 were as follows:

	Twelve-months ended June 30,
	2020	2019
	$	$
Management and directors' fees	374,398	52,764
Professional fees to corporate secretary	49,574	58,256
Loan with Investiness Inc.	230,000	-
Loan with Aurelio Useche	74,954	-
Share-based compensation	-	32,250

RELEVIUM TECHNOLOGIES INC. Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

Amounts payable to related parties included in the non-current liabilities and in the accounts payable and accrued liabilities were as follows:

		Amounts owed to
		Related Parties
	Period	$
Management and directors	June 30, 2020	176,466
	June 30, 2019	19,500
Corporate secretary	June 30, 2020	54,929
	June 30, 2019	15,064

19. Income taxes

1. The impact of differences between the Company's reported income tax expense on operating loss and the expense that would otherwise result from the application of statutory rates is as follows:

	June 30, 2020	June 30, 2019
	$	$
Loss before income taxes	(6,931,628)	(3,726,942)
Statutory tax rate	26.55%	26.55%
Income taxes recovery at statutory rates	(1,840,347)	(993,230)
Permanent differences	233,980	46,475
Effect of difference in tax rates on temporary differences	55,623	12,330
Tax benefit not realized	1,572,312	920,913
Other	(21,568)	13,512
	-	-

1. The significant components of deferred income tax assets are as follows:

	June 30, 2020	June 30, 2019
	$	$
Deferred income tax assets:
Net operating loss carry-forward	2,650,541	2,211,755
Share and debt issuance cost	87,050	58,910
Intangible assets and property and equipment	1,401,421	529,767
Prepaid expenses	91,371	-
Liability warranties	(23,642)	-
Convertible notes payable	51,708	-
	4,258,449	2,800,432
Unrecognized deferred income taxes	(4,258,449)	(2,800,432)
Net deferred income taxes	-	-

1. The Company has Canadian and Provincial income tax losses available which can be used to reduce future periods' taxable income. Future income tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements. These loss-carry-forwards will expire as follows:

RELEVIUM TECHNOLOGIES INC.

Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

	Federal	Quebec	US (CDN$)
	$	$	$
2033	170,000	170,000	-
2034	242,000	242,000	-
2035	215,000	215,000	-
2036	1 159,000	1,159,000	-
2037	927,000	927,000	-
2038	1,662,000	1,662,000	498,000
2039	2,633,000	2,625,000	-
2040	1,435,000	1,435,000	-
Indefinite	-	-	1,373,000
	8,443,000	8,435,000	1,871,000

20. Capital disclosure

The Company's objectives when managing capital are:

• to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders;
• to maintain sufficient cash resources to support its ongoing activities;
• to maintain a flexible capital structure which optimizes the cost of capital at an acceptable level of risk.

In the management of capital, the Company considers the items included in shareholders' equity in the definition of capital.

The Company manages its capital structure and makes adjustments to it in light of economic conditions and the risk characteristics of the underlying assets. The Company, upon the approval of the Board of Directors, will balance its overall capital structure through the issue of new shares, acquiring or disposing of assets, or by undertaking other activities as deemed appropriate under specific circumstances.

As previously reported, given the recent developments in the COVID-19 global pandemic, Management has put in place a response plan and is closely monitoring the evolution of this pandemic, including how it may affect the Company, the economy and the general population.

The Company is exposed to the covenant requirements associated with the convertible notes, as disclosed in note 13.

21. Financial instruments and risk management

The Company thoroughly examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, market risk and interest rate risk.

Fair value

Hierarchy of Fair Value Measurements

IFRS 13 requires disclosure of a three-level hierarchy for fair value measurements based upon transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1: Fair value is based on quoted market prices in active markets for identical assets or liabilities.

Level 2: Fair value is based on observable inputs other than Level 1 prices, such as quoted market prices for similar, but not identical, assets or liabilities in active markets, quoted market prices for identical assets or liabilities in markets that are not active, and other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Fair value is based on non-observable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Financial instruments classified within Level 3 of the fair value hierarchy are initially fair valued at their transaction price, which is considered the best estimate of fair value. After initial measurement, the fair value of Level 3 assets and liabilities is determined using valuation models, discounted cash flow methodologies, or similar techniques.

The carrying values of cash and cash equivalents, short-term investments, receivables, advances to Lifeline Pharma, bank advances, accounts payable and accrued liabilities, bridge loan payable and loan payable approximate their fair values due to the immediate or short-term maturity of these financial instruments.

The determination of the fair value of intangible assets and goodwill were calculated using level 3 fair value hierarchy. The determination of the contingent consideration payable and the convertible notes payable was calculated using level 2 fair value hierarchy.

Credit risk

The Company is exposed to credit risk through its cash and cash equivalents and trade and other receivables. Credit risk results from the possibility that a loss may occur from the failure of another party to perform according to the terms of a contract.

Cash and cash equivalents are maintained with a high-quality financial institution. As the Company's cash is held by a single Canadian bank, there is a concentration of credit risk. The carrying amount of cash and cash equivalents represents the Company's maximum credit exposure. Trade and other receivables are all current and are recouped within the credit term allowed from the sale.

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. Changes in market interest rates may have an effect on the cash flows associated with some financial assets and liabilities, known as cash flow risk, and on the fair value of other financial assets or liabilities, known as price risk. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates, which were $Nil at June 30, 2020 (June 30, 2019 – $2,168,480).

Interest rate sensitivity

The following table demonstrates the sensitivity to a possible change in interest rates on its debts. With all other variables held constant, the Company's loss before tax is affected through the impact on floating rate borrowings, as follows:

	Increase/decrease	Effect on lossbefore tax
	%	$
2020	1%	25,736
2019	1%	26,675

Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Carrying amounts in the Company's consolidated financial statements are based upon best estimates of amounts ultimately realizable after conversion to Canadian funds. As at June 30, 2020, assets and liabilities in foreign currencies are approximately as follows:

RELEVIUM TECHNOLOGIES INC.

Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

	June 30, 2020	June 30, 2019
(US Dollars)	$	$
Cash	15,144	65,732
Prepaid expenses	-	19,069
Accounts payable and accrued liabilities	314,438	42,744

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's ability to continue as a going concern is dependent on management's ability to raise required funding through future equity issuances. The Company manages its liquidity risk by continuously forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

Undiscounted cash flows, including capital and interest related to the Company's liabilities expire as follows:

		Maturing
	Carrying	in less than	in 1 to 3	June 30, 2020
	amount	12 months	years	Total
	$	$	$	$
Bank advances	237,373	237,373	-	237,373
Accounts payable and accrued liabilities	1,390,688	1,390,688	-	1,390,688
Bridge loan payable	200,000	200,000	-	200,000
Loan payable	178,474	178,474	-	178,474
Long-term debt	2,195,124	2,195,124	-	2,195,124
	4,201,659	4,201,659	-	4,201,659

22. Contingencies and commitments

Contingencies

In the ordinary course of business activities, the Company may be contingently liable for litigation and claims with customers, suppliers, location owners and former employees. Management has accrued for these contingent liabilities where an amount can be reasonable estimated:

• On April 8, 2019, the Company entered into an agreement with CK properties to acquire an exclusive licence to use the trademarks with a Royalty to be paid of 13% of Gross Sales. Per Note 10, this license was fully written off due to impairment, however the Company would be liable for royalty payments if the license were to be used in the future.
• On June 4, 2019, the Company signed a letter of intent with Weedsense Inc.("Weedsense") for the purchase of up to a 30% interest of Weedsense. A share purchase and sale agreement was later signed on October 16, 2019. Due to poor economic conditions, the Company no longer pursued the transaction and did not meet the obligations outlined in the share purchase agreement. On April 17, 2020, Weedsense claimed per a demand letter to the Company requesting payment in the amount of $809,326 and $500,000 in shares of the Company. The Company responded by preparing, but not filing, a judicial application originating a proceeding for declaratory judgement before the Superior Court seeking, inter alia, the cancellation of the share purchase agreement. Since these filings, no further action has been taken by either party. Due to the claim being in early stages and lack of any progress, management cannot reasonably determine the probable outcome and no reliable estimate of any contingent payments can be made relating to this claim.

Commitments

There are no commitments as at June 30, 2020.

23. Segmented information

The Company operates in three reportable segments, being Consumer Packaged Goods, Pediatric Biopharma and Corporate. The general information within these segments are as follows:

	June 30, 2020
	ConsumerPackagedGoods$	PediatricBiopharma$	Corporate$	Eliminations$	Total$
Revenue	2,974,161	-	-	-	2,974,161
Cost of sales	1,780,006	-	-	-	1,780,006
Interest on long-term debt	85,299	-	259,737	-	345,036
Accreted interest	-	-	221,644	-	221,644
Amortization of property and equipment	-	-	4,659	-	4,659
Stock-based compensation	-	-	-	-	-
Change in fair value of warrants	-	-	26,000	-	26,000
Impairment	3,221,513	-	-	-	3,221,513
Bad debt expense	152,747	-	-	-	152,747
Remaining expenses	1,958,331	521,307	1,674,546	-	4,154,184
Net segment loss	(4,223,735)	(521,307)	(2,186,586)	-	(6,931,628)
Segment assets	437,323	20,156	7,768,245	(3,891,258)	4,334,466
Additions to property and equipment	-	-	-	-	-
Additions to intangible assets	-	-	4,200	-	4,200
Segment liabilities	2,640,060	854,999	3,434,581	(2,650,696)	4,278,944

RELEVIUM TECHNOLOGIES INC.

Notes to consolidated financial statements As at June 30, 2020 and 2019 Prepared in Canadian Dollars

	June 30, 2019
	ConsumerPackagedGoods$	PediatricBiopharma$	Corporate$	Eliminations$	Total$
Revenue	3,628,650	-	-	-	3,628,650
Cost of sales	1,862,094	-	-	-	1,862,094
Interest on long-term debt	61,406	-	213,825	-	275,231
Accreted interest	51,857	-	73,218	-	125,075
Amortization of intangible assets	143,383	-	-	-	143,383
Amortization of deferred financing costsGain on write-down of contingentconsideration payable	58,207(77,670)	--	--	--	58,207(77,670)
Amortization of property and equipment	-	-	4,553	-	4,553
Stock-based compensation	-	-	32,250	-	32,250
Remaining expenses	1,884,519	309,425	2,221,247	517,278	4,932,469
Net segment loss	(355,146)	(309.425)	(2,545,093)	(517,278)	(3,726,942)
Segment assets	1,222,726	92,554	10,678,153	(3,432,981)	8,560,452
Additions to property and equipment	-	-	2,113	-	2,113
Additions to intangible assets	7,502	1,154,267	-	-	1,161,769
Segment liabilities	1,906,016	406,089	2,878,035	(1,677,996)	3,512,144

24. Subsequent events

• On July 9, 2020, the Company has completed a private placement (third tranche) that was originally announced on May 25, 2020. The Company issued 2,649,916 units of the Company at a price of $0.035 per unit, for gross proceeds of $92,747 to the Company. Each unit consists of one common share of the Company and one share purchase warrant entitling the holder thereof to purchase one common share at a price of $0.05 for the next 2 years. No finder's fees were paid.
• On September 18, 2020, the convertible note holders elected to complete cashless exercise of 4,500,000 warrants, with the Warrant price to be deducted from the Common Shares issuable upon such exercise. The number of Common Shares received upon such cashless exercise was equal to 1,500,000 based on the closing price of $0.075 and $0.05 warrant price.
• On December 18, 2020, the Company signed an agreement with the convertible note holders (see note 13) to extend the term of the repayment of the convertible notes. On December 20, 2020, the Company was due to repay convertible notes in the amount of $2,352,941. As per the agreement among the Company and all convertible note holders, the maturity date of these convertible notes has been extended to January 31, 2021, subject to the conditions below:
  • All warrants issued to convertible note holders, which have a strike price of $0.05 and were scheduled to expire on December 20, 2020, shall have their expiration date amended to December 20, 2022;
  • The Company agreed to pay an extension fee of $24,000 to the convertible note holders, which can be paid either in cash or through the issuance of 800,000 common shares of the Company; and
  • Interest and monitoring fees for January 2021 must be paid by December 28, 2020.

The Company opted to pay the above extension fee in shares. In addition, the Company may at its option extend the maturity date of the convertible notes up to three times for an additional 30 days each by paying an additional extension fee equal to 2% of the principal balance of the convertible notes for each extension.