Relevium Technologies Inc. — Interim / Quarterly Report 2020

Jul 16, 2020

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS NINE- MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

UNAUDITED - PREPARED BY MANAGEMENT EXPRESSED IN CANADIAN DOLLARS

CONTENTS

Condensed consolidated interim Consolidated Financial Statements

Notice to reader	2
Unaudited Condensed Consolidated InterimStatements of Financial Position	3
Unaudited CondensedConsolidated Interim Statements of Operations
and Comprehensive Loss	4
Unaudited Condensed Consolidated Interim Statements of Cash Flows	5
Unaudited Condensed Consolidated Interim Statements of Changes in Equity	6
Notes to the Unaudited Condensed Consolidated Interim Financial Statements	7-19

NOTICE TO READER

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

The accompanying unaudited interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these interim consolidated financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian dollars)
As at,	March 31, 2020	June 30, 2019(audited)
	$	$
ASSETS
Current Assets
Cash and cash equivalents	13,268	875,000
Short-term investments (note 7)	5,000	5,000
Receivables (note 8)	802,011	162,958
Inventory	269,817	559,118
Advances to Lifeline Pharma (note 9)	344,798	72,398
Prepaid expenses	138,784	121,542
Total current assets	1,573,678	1,796,016
Non-current assets
Property and equipment (note 10)	11,012	14,506
Intangible assets (note 11)	4,479,069	4,474,869
Goodwill (note 11)	2,275,061	2,275,061
TOTAL ASSETS	8,338,820	8,560,452
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	1,310,356	571,109
Bridge loan payable (note 12)	200,000	-
Loan payable (note 13)	247,655	458,045
Current portion of long-term debt (note 14)	2,539,060	314,510
Total current liabilities	4,297,071	1,343,664
Non-current liabilities
Warrant liability (note 16)	42,000	195,000
Long-term debt (note 14)	-	1,973,480
TOTAL LIABILITIES	4,339,071	3,512,144
SHAREHOLDERS' EQUITY
Share capital (note 15)	13,656,700	13,373,632
Share purchase warrants (note 16)	1,624,891	1,521,276
Equity component of convertible debt	99,738	99,738
Obligation to issue shares and warrants	-	193,920
Contributed surplus	1,418,935	1,418,935
Accumulated Other Comprehensive	25,122	(39,488)
Deficit	(12,825,637)	(11,519,705)
TOTAL EQUITY	3,999,749	5,048,308
TOTAL LIABILITIES AND EQUITY	8,338,820	8,560,452

Going Concern (note 2), Commitments (note 22) and Subsequent Events (note 23)

Approved on behalf of the Board:

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

(Expressed in Canadian dollars)
For the periods ended March 31,	Three-month periods			Nine-month periods
	2020	2019	2020	2019
	$	$	$	$
Sales	529,735	1,038,467	2,671,675	3,030,019
Cost of Sales	107,113	476,729	1,058,921	1,374,973
Gross Profit	422,622	561,738	1,612,754	1,655,046
Expenses
Administration fees	44,366	132,357	176,716	359,134
Consulting fees	2,812	267,775	475,743	614,002
General and administrative expenses	124,479	342,997	605,467	799,695
Selling and marketing	165,260	694,785	1,395,489	1,770,383
Professional fees	80,019	106,283	204,293	244,082
Amortization of assets	1,164	37,012	3,494	110,930
Share-based payments	-	-	-	32,250
Loss on foreign exchange	(935)	(594)	893	(1,170)
Write-down of contingent payable	-	-	-	(77,670)
Change on fair value of warrants	-	(181,500)	(153,000)	52,500
Amortization of deferred financing costs	-	-	-	58,207
Interest on long-term debt	20,301	71,276	158,521	204,323
Accreted interest	(3,330)	36,608	51,070	88,465
	434,136	1,506,999	2,918,686	4,255,131
		(945,261)		(2,600,085)
Net Loss	(11,514)		(1,305,932)
Other Comprehensive Items
Exchange differences on translation
of foreign operations	(186,357)	(9,777)	64,610	(13,501)
Net Comprehensive Loss	(197,871)	(955,038)	(1,241,322)	(2,613,586)
Loss per share - Basic and fully diluted	(0.0013)	(0.0084)	(0.0085)	(0,0238)
Weighted average number of
common shares outstanding	147,446,356	113,581,773	146,455,288	110,000,687

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars)

For the nine-month periods ended,	March 31, 2020$	March 31, 2019$
OPERATING ACTIVITIES
Net loss and comprehensive loss	(1,305,932)	(2,600,085)
Items not affecting cash:
Share-based payments	-	32,250
Change in fair value of warrants	(153,000)	52,500
Gain on reduction of contingent consid pay	-	(77,670)
Unrealized (gain) loss on foreign exchange	64,610	(18,046)
Accreted interest	51,070	88,465
Amortization of Property and equipment	3,494	3,389
Amortization of intangible assets	-	107,541
Amortization of deferred financing costs	-	58,207
	(1,339,758)	(2,353,449)
Net changes in non-cash working capital items (note 18)	372,253	100,325
	(967,505)	(2,253,124)
INVESTING ACTIVITIES
Repayment of contingent consideration payable	-	(71,133)
Advances to Lifeline Pharma	(272,400)	-
Acquisition of intangible assets	(4,200)	(7,502)
Acquisition of property and equipment	-	(2,113)
	(276,600)	(80,748)
FINANCING ACTIVITIES
Issue of shares on exercise of options and warrants	-	375
Issuance of bridge loan	200,000	-
Issuance of shares, net of shares issue costs	386,683	-
Obligation to issue shares and warrants	(193,920)	-
Proceeds on issue of convertible notes payable	-	1,000,000
Repayment of long term debt	-	(82,490)
Issue of long term debt	200,000	-
Issue of loan payable	-	289,618
Repayment of loan payable	(210,390)	(423,866)
Advance from parent company	-	-
	382,373	783,637
Net increase (decrease) in cash and cash equivalents	(861,732)	(1,550,235)
Cash and cash equivalents beginning of period	875,000	2,075,050
Cash and cash equivalents end of period	13,268	524,815

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in Canadian dollars)

				Equity	Obligation			Foreign
	Number ofshares	Sharecapital	Warrants	componentconvertible	to issueshares and	Contributedsurplus	Deficit	currencytranslation
	#	$	$	Debt$	warrants$	$	$	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 period	-	-	-	-		-	(1,305,932)	-	(1,305,932)
Other comprehensive loss	-	-	-	-		-	-	64,610	64,610
Private placement	2,000,000	104,000	56,000		(160,000)				-
Shares issue costs	400,000	18,880	2,240	-	(33,920)	-	-	-	(12,800)
Private placement	3,437,500	182,188	41,250	-	-	-	-	-	223,438
Shares issue costs	343,750	(22,000)	4,125	-	-	-	-	-	(17,875)
Balance -March 31, 2020	147,446,356	13,656,700	1,624,891	99,738	-	1,418,935	(12,825,637)	25,122	3,999,749

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 period	-	-	-	-		-	(2,600,085)	-	(2,600,085)
Other comprehensive loss	-	-	-	-		-	-	(13,501)	(13,501)
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
Exercised warrants and options	2,500	459	(84)	-		-	-	-	375
Balance -March 31, 2019	113,581,773	11,689,683	943,800	99,738	-	1,418,935	(10,285,370)	(29,395)	3,837,391

1. General information and nature of operations

Relevium Technologies Inc. (the "Company") was incorporated under the Canada Business Corporations Act on July 19, 2012 and 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 disclosure 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 period ended March 31, 2020.

During the nine-month period ended March 31, 2020, the Company incurred a net loss of $1,305,932 (March 31, 2019 - $2,600,085) and had negative cash flow from operations of $967,505 (March 31, 2019 - $2,253,124). As at March 31, 2020, the Company had a negative working capital of $2,723,393 (June 30, 2019 - $452,352 positive).

The Company 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. As such the use of the going concern assumption may not be appropriate. Therefore, as at March 31, 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 and to generate cash flows from its operations. These condensed consolidated interim 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 quarter ended March 31, 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.

As of March 31, 2020, management considers the COVID-19 has no impact on the Company's ability to continue as a going concern and did not cause significant major adverse changes to assets or liabilities of the Company.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

3. Basis of preparation

These condensed consolidated interim financial statements were authorized for issuance on July 15, 2020 by the Board of Directors of the Company.

Statement of Compliance: these unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements should be read in conjunction with the Company's most recently issued Annual Report which includes information necessary or useful to understanding the Company's business and financial statement presentation. In particular, the Company's significant accounting policies were presented in Note 4 of the consolidated financial statements for the years ended June 30, 2019 and 2018 and have been consistently applied in the preparation of these consolidated interim financial statements. These consolidated interim financial statements have been prepared on a historical cost basis except for certain financial assets which are recorded at fair value. In addition, these consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Functional and presentation currency: these consolidated interim financial statements are presented in Canadian dollars, which is the Company's functional currency.

Basis of Consolidation: the consolidated interim financial statements include the accounts of the Company and its wholly owned subsidiaries, Ovid Acquisition Corp., Biocannabix Health Corporation, Relevium E-Health Inc., BGX E-Health LLC and BIOGX HM Corp. 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 interim 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.

4. Summary of significant accounting policies

See annual consolidated financial statements for the years ended June 30, 2019 and 2018 for a list of accounting policies used by the Company.

5. Summary of accounting estimates and judgements

The preparation of the financial statements in conformity with IFRS requires management to make estimates and judgements that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management's experience and other factors, including on historical experience and expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions. The estimates and judgments that, in management's opinion, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are disclosed in the annual audited consolidated financial statements.

See annual consolidated financial statements for the years ended June 30, 2019 and 2018 for a list of accounting estimates and judgements considered significant by management.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

6. Future accounting policies

At March 31, 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 interim financial statements. The Company is currently assessing the impact that these standards will have on the consolidated financial statements.

Management anticipates that all of the pronouncements will be adopted in the Company's accounting policies for the first period beginning after the effective date of each pronouncement. 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.

Information on new standards, amendments and interpretations that are expected to be relevant to the Company's interim condensed consolidated financial statements is provided in the Company's audited consolidated financial statements for the year ended June 30, 2019. Certain amendments and interpretations have been issued but had no material impact of the Company's interim condensed consolidated financial statements.

7. 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.

8. Receivables

Receivables are comprised of the following:
	March 31, 2020	June 30, 2019
	$	$
Trade and other receivables	773,246	67,153
Sales tax receivable	28,765	95,805
	802,011	162,958

9. Advances to Lifeline Pharma

On June 12, 2019, the Company, through its wholly-owned subsidiary Biocannabix Health Corporation (''BCX''), entered into an binding letter of intent with 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 of March 31, 2020, the Company advanced $344,798 (June 30, 2019 - $72,398) to LPC according to the letter of intent for funding the activities.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

10. 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 March 31, 2020	23,296
Depreciation and impairment:
As at July 1, 2018	4,237
Depreciation	4,553
As at June 30, 2019	8,790
Depreciation	3,494
As at March 31, 2020	12,284
Net carrying amount:
At June 30, 2019	14,506
At March 31, 2020	11,012

11. Intangible assets

Intangible assets were comprised of the following balances:

			AmortizableLicenses	Nonamortizable	Noncompete
	Brand	Trademarks	note (a)	Licenses	agreements	Patents	Goodwill	Total
	$	$	$	$	$	$	$	$
Cost
As at July 1, 2018	901,263	-	-	2,411,837	286,766	1,236,041	2,275,061	7,110,968
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	1,236,041	2,275,061	8,272,737
Additions	-	4,200	-	-	-	-	-	4,200
As at March 31, 2020	901,263	11,702	1,154,267	2,411,837	286,766	1,236,041	2,275,061	8,276,937
								-
Amortization and impairment
As at July 1, 2018	-	-	-	-	143,383	1,236,041	-	1,379,424
Amortization	-	-	-	-	143,383	-	-	143,383
As at June 30, 2019	-	-	-	-	286,766	1,236,041	-	1,522,807
Amortization	-	-	-	-	-	-	-	-
As at March 31, 2020	-	-	-	-	286,766	1,236,041	-	1,522,807
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 March 31, 2020	901,263	11,702	1,154,267	2,411,837	-	-	2,275,061	6,754,130

RELEVIUM TECHNOLOGIES INC. Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

Note (a) - On April 8, 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 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 March 31, 2020, the license was not available for use due to delays in getting access to the SOP, formulations and scientific data, therefore it was not amortized during the period. The Company performed its annual impairment test of goodwill and indefinite-life intangible assets as of June 30, 2019. All the assets are related to BGX E-Health CGU.

The Company conducted its annual impairment test as at June 30, 2019, in accordance with its policy described in note 4 of the annual audited consolidated financial statements. The Company's recoverable amount was determined using a fair value less costs to sell by using the average of the capitalized adjusted EBITDA approach and the price to earnings method. Based on a 7.4X multiple and a sales growth of 33%, whereby the Company referenced comparable companies in determining adjusted EBITDA multiples. Comparable companies were determined based by reference to size and operation in similar industries. As a result of this analysis, the recoverable amount exceeded it carrying value and no impairment was recorded. The calculation of the fair value less cost to sell approach is most sensitive to the adjusted EBITDA multiple and sales growth rate. A reduction of the adjusted EBITDA multiple below 7.0x or a reduction of the sales growth rate by 2 percentage points would result in an impairment.

12. Bridge loan payable

On September 20, 2019, the Company entered into a bridge loan agreement for a total amount of $200,000. The loan bears interest at a rate of 10% per year and is redeemable in full on May 31, 2020.

13. 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.

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.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

14. Long term debt

	March 31, 2020$	June 30, 2019$
Convertible notes payable bearing interest at the 12-month $US Libor rate plus
8% per year, payable monthly, in advance, maturing December 31, 2019 (6),
secured by a general assignment of all of the assets of the Company. The note
holders have a right to convert 85% of the outstanding capital of $Nil (2) (3) as
at strike price of $0.15 per share. The Company may prepay any portion of the
principal amount together with accrued interest thereon at any time after
December 7, 2017 (1).	314,510	314,510
Convertible notes payable bearing interest at the 12-month $US Libor rate plus
8% (10% if in default) per year, payable monthly, in advance, maturing
December 20, 2020, secured by a general assignment of all of the assets of the
Company. The note holders have a right to convert 85% of the outstanding
capital of $1,176,471 at a strike price of $0.15 per share. The Company mayprepay any portion of the principal amount together with accrued interest
thereon at any time (4).	1,012,275	986,740
Convertible notes payable bearing interest at the 12-month $US Libor rate plus
8% (10% if in default) per year, payable monthly,in advance, maturing
December 20, 2020, secured by a general assignment of all of the assets of the
Company. The note holders have a right to convert 85% of the outstanding
capital of $1,176,471 at a strike price of $0.15 per share. The Company may
prepay any portion of the principal amount together with accrued interest
thereon at any time (5).	1,012,275	986,740
Advances bearing no interest rate	200,000	-
Total obligations	2,539,060	2,287,990
Less due within one period	(2,539,060)	(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 share 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.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

• (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.
• (6) On June 26, 2019, the maturity of the remaining notes issued on June 7, 2017 was extended from June 7, 2019 to an undetermined date.

15. Share capital

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

Issued –
	March 31, 2020		June 30, 2019
	#	$	#	$
Common shares	147,446,356	13,656,700	141,265,106	13,373,632

Capital stock transactions are summarized as follows for the period ended March 31, 2020:

The Company issued a total of 6,181,250 shares pursuant to the following:

• On July 9, 2019, the Company has 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;
• 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 $223,437.50 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 and 343,750 share purchase warrants as finder's fees, entitling the holder thereof to purchase one common share at a price of $0.12 until September 6, 2020. An amount of $17,875 was also paid as issue cost.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

16. Share purchase warrants

Share purchase warrants outstanding and exercisable as at March 31, 2020 are summarized as follows**:**

	Weighted average
	Warrants	exercise price
	#	$
Balance - June 30, 2018	24,829,832	0.1474
Issued in connection of exclusive licenses	5,866,666	0.1500
Private placement - June 2019	15,350,000	0.1200
Issued in December 2018 to lenders	9,500,000	0.1200
Exercised for cash	(160,000)	0.1000
Exercised for cash	(2,500)	0.1500
Warrants expired	(18,061,833)	0.1500
Balance - June 30, 2019	37,322,165	0.1271
Private placement - July 2019	2,000,000	0.1200
Private placement - September 2019	3,437,500	0.1200
Issued for agent's fees	743,750	0.1200
Warrants expired	(1,722,500)	0.1125
Warrants expired	(3,383,000)	0.1500
Warrants expired	(1,499,999)	0.1200
Balance – March 31, 2020	36,897,916	0.1248

Share purchase warrants transactions are summarized as follows for the period ended March 31, 2020:

The Company issued a total of 6,181,250 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 1.51%, expected volatility at 98.27%, dividend yield at Nil, expected life 1 year and grant date fair value $0.026;
• On September 6, 2019, the Company issued 3,781,250 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 1.51%, 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	Weighted averageremaining contractual
Exercise price	and exercisable	life (months)	Expiry dates
$0.15	5.866,666	1 month	April 2020
$0.12	15,350,000	3 months	June 2020
$0.12	2,400,000	4 months	July 2020
$0.12	3,781,250	6 months	September 2020
$0.12	9,500,000	9 months	December 2020
	36 897 916

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

17. 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.

During the period ended March 31, 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:

	No. of Options	Weighted Average
	Vested	Exercise 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 - March 31, 2020	3,955,000	0.1707

As at March 31, 2020 stock option issued and outstanding are as follows:

Options granted	Weighted Average		Weighted averageremaining contractual
and exercisable	Exercise Price ($)	Expiry dates	life (months)
180,000	0.10	December 2022	33 months
1,250,000	0.15	September 2025	66 months
2,275,000	0.15	December 2027	93 months
250,000	0.15	October 2028	103 months
3,955,000

18. Statement of cash flows

Changes in non-cash working capital items:
	March 31, 2020	March 31, 2019
	$	$
Receivables	(639,053)	35,343
Inventory	289,301	(169,450)
Prepaid expenses	(17,242)	8,928
Accounts payable and accrued liabilities	739,247	225,504
	372,253	100,325

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

19. Related party transactions

The Company's related parties include the CEO, CFO, directors and corporate secretary. 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 nine-month period ended March 31, 2020 were as follows:

Nine-months ended March 31(unaudited)	2020$	2019$
Management and directors' fees	213,697	275,340
Professional fees to corporate secretary	46,205	49,256

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

		Amounts owed toRelated Parties
	Period	$
Management and directors	March 31, 2020	133,823
	June 30, 2019	19,500
Corporate secretary	March 31, 2020	58,572
	June 30, 2019	15,064

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.

The Company is not exposed to any other externally imposed capital requirements.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

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, 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 cash and cash equivalents was calculated using level 1 fair value hierarchy.

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 a couple of days 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.

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

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/	Effect on loss
	decrease	before tax
	%	$
2020	1%	25,391
2019	1%	22,800

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 March 31, 2020, assets and liabilities in foreign currencies are approximately as follows:

	March 31, 2020	June 30, 2019
(US Dollars)	$	$
Cash	47,495	63,310
Prepaid expenses	-	19,069
Accounts payable and accrued liabilities	314,415	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.

22. Commitments

Under the new license agreement, the Company is subject to minimum royalty payable commitments that detailed over the term of the contract as follows:

	$USD
Year one	400,000 to 800,000
Year two	5,000,000 to 8,000,000
Year three	18,000,000 to 25,000,000

Notes to condensed consolidated interim financial statements Nine-month periods ended March 31, 2020 and 2019 UNAUDITED - PREPARED BY MANAGEMENT IN CANADIAN DOLLARS

23. Subsequent events

On May 27, 2020, the Company closed a private placement of 46,894,194 units ("Units") of the Company at a price of $0.035 per Unit (the "Offering"), resulting in gross proceeds to the Company of $1,642,296.76. Each Unit consists of one common share and one common share purchase warrant ("Warrant"). Each Warrant entitles its holder to acquire one common share of the Company at a strike price of $0.05 for a period of two years from the date of issuance. The Warrants are subject to an acceleration feature of the volume-weighted average price of the common shares trades at or above $0.075 on the TSX Venture Exchange for a period of seven consecutive days starting four months and a day from closing.

The Company paid finders' fees of $25,584.30 and issued 730,980 broker warrants ("Broker Warrants"). Each Broker Warrant entitles the holder to acquire one common share of the Company at a strike price of $0.05 for a period of one year from the date of issuance.

The net proceeds of the Offering will be used to fund business development, as well as working capital purposes.

All securities issued pursuant to the Offering are subject to a statutory four-month hold period.

On June 19, 2020, the Company closed a private placement of 6,000,000 Units, for gross proceeds of $210,000. The Units issued in this private placement have the same terms and conditions as described above.