Sirona Biochem Corp. — Interim / Quarterly Report 2021

Jun 29, 2021

SIRONA BIOCHEM CORP.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited – Prepared by Management)

(Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED APRIL 30, 2021

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

The accompanying unaudited condensed 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 condensed interim consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of condensed interim consolidated financial statements by an entity’s auditor.

1

SIRONA BIOCHEM CORP. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian dollars)

As at			April 30,2021	October 31,2020	October 31,2020
		ASSETS
Current Assets
Cash and cash equivalents		$	583,072	$	1,535,873
Trade	and other receivables (Note 6)		197,171		138,217
Tax receivables (Note 7)			514,560		357,752
Prepaid expenses and deposits(Note 8)			89,846		68,122
		$	1,384,649	$	2,099,964
Equipment, net of accumulated depreciation			32,221	$	37,275
		$	1,416,870	$	2,137,239
		LIABILITIES
Current Liabilities
Trade	and other payables (Note 9)	$	564,318	$	726,342
Current portion of long-term debt (Note 11)			281,289		264,194
Currentportion of lease obligation(Note 12)			37,911		39,260
			883,518		1,029,796
Long-term debt (Note 11)			654,812		850,432
Lease obligation (Note 12)			64,744		87,993
Employee benefits(Note 14)			123,732		121,623
			1,726,806		2,089,844
		SHAREHOLDERS' EQUITY (DEFICIENCY)
Share capital (Note 15)			29,937,789		29,079,178
Contributed surplus (Note 15)			6,769,754		6,563,182
Foreign translation reserve			(11,854)		(101,536)
Accumulated deficit			(37,005,625)		(35,493,429)
			(309,936)		47,395
		$	1,416,870	$	2,137,239

APPROVED ON BEHALF OF THE BOARD:

"Howard Verrico" Director " Alex Marazzi" Director Howard Verrico Alex Marazzi

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

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SIRONA BIOCHEM CORP. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in Canadian dollars)

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Three Months Ended Three Months Ended Six Months Ended Six Months Ended
April 30, 2021 April 30, 2020 April 30, 2021 April 30, 2020
Revenue (Note 13) $ 190,923 $ 527 $ 209,082 $ 527
Expenses
Research expenses (net) 325,242 263,293 725,139 570,313
Consulting fees 29,595 47,813 71,335 136,636
Depreciations 2,490 - 5,053 -
Office and administration 59,288 61,562 130,244 135,823
Accounting and audit fees (Note 16) 41,760 64,340 78,720 126,392
Wages, salaries and benefits (Note 16) 35,814 34,653 69,308 68,015
Management fees (Note 16) 40,320 40,320 80,640 80,640
Travel and entertainment - 745 95 18,385
Rental expenses 8,949 7,712 17,948 16,835
Investor relations 31,923 41,865 63,666 58,630
Legal fees 781 28,455 1,236 40,430
Filing fees and transfer agent fees 27,903 45,183 29,476 47,228
Exchange (gain)/loss 58,965 6,508 66,393 5,428
Share-based payments (Note 16) 367,242 - 387,142 1,815,542
(839,349) (641,922) (1,517,313) (3,119,770)
Other income/(expenses)
Other income 3,875 3,393 3,875 7,692
Finance expense (Notes 10, 11 and 12) (1,629) 16,880 (1,145) 588,477
2,246 20,273 2,730 596,169
Loss for the period before income taxes (837,103) (621,649) (1,514,583) (2,523,601)
Income taxes recovery (expense) 506 9,468 2,387 3,885
Net loss for the period (836,597) (612,181) (1,512,196) (2,519,716)
Other comprehensive income (loss) for the period
Foreign currency translation 89,661 (38,522) 89,682 (29,947)
Comprehensive loss for the period $ (746,937) $ (650,703) $ (1,422,514) $ (2,549,663)
Loss per share - basic and diluted $ (0.00) $ (0.00) $ (0.01) $ (0.01)
Weighted avaerage number of common shares outstanding - basic and diluted 226,260,444 226,260,444 226,441,593 225,743,074
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The accompanying notes are an integral part of these consolidated financial statements.

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SIRONA BIOCHEM CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)

(Expressed in Canadian dollars, except share number)

	(Expressed in Canadian dollars, except share number)
	Contributed Equity portion of Foreign translation Accumulated Total equity Number Amount surplus convertible debenture reserve deficit (deficiency) Issued common shares
BALANCE, OCTOBER 31, 2019	224,030,004 28,523,089 $ 5,037,510 $ 22,335 $ (33,692) $ (31,359,705) $ 2,189,537 $
Loss for the period Convertible debentures, net of issuance costs (Note 10) Issuance of stock options (Notes 15 and 16) Exercise of options (Note 15) Exercise of warrants (Note 15) Foreign currency translation	- - - - - (2,519,716) (2,519,716) 1,785,716 257,789 - (7,789) - - 250,000 - - 1,815,542 - - - 1,815,542 370,000 266,895 (100,395) - - - 166,500 123,600 25,123 (5,347) - - - 19,776 - - - - (29,947) - (29,947)
BALANCE, April 30, 2020	226,309,320 29,072,896 $ 6,747,310 $ 14,546 $ (63,639) $ (33,879,421) $ 1,891,692 $
BALANCE, OCTOBER31, 2020	226,309,320 29,079,178 $ 6,563,182 $ - $ (101,536) $ (35,493,429) $ 47,395 $
Loss for the period Issuance of stock for consulting fees Issuance of stock options (Notes 15 and 16) Exercise of options (Note 15) Exercise of warrants (Note 15) Foreigncurrency translation	- - - - - (1,512,196) (1,512,196) 129,000 28,380 - - - - 28,380 - - 387,142 - - - 387,142 689,286 277,251 (75,750) - - - 201,501 2,766,360 552,980 (104,820) - - - 448,160 - - - - 89,682 - 89,682
BALANCE, April 30, 2021	229,893,966 29,937,789 $ 6,769,754 $ - $ (11,854) $ (37,005,625) $ (309,936) $

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

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SIRONA BIOCHEM CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS PERIOD ENDED APRIL 30,

(Expressed in Canadian Dollars)

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2021 2020
Operating activities
Net loss for the period $ (1,512,196) $ (2,519,716)
Items not requiring use of cash:
Consulting fees 38,625 41,770
-
Depreciations 5,053
Income taxes expense (recovery) (2,389) (3,888)
Interest accretion - 2,456
Share-based payments 387,142 1,815,542
Changes in operating assets and liabilities:
Trade and other receivables and tax receivables (194,737) (164,386)
Prepaid expenses and deposits (62,204) 32,117
Trade and other payables (142,052) (96,028)
Employee benefits 8,127 10,070
Cash used in operating activities (1,474,631) (882,063)
Financing activities
Option and warrants exercised 678,040 85,026
(Repayment)/borrowings (149,196) (70,947)
Cash provided by financing activities 528,844 14,079
Increase in cash and cash equivalents (945,787) (867,984)
Effect of exchange rate fluctuations (7,014) 13,732
Cash and cash equivalents, beginning of period 1,535,873 3,734,647
Cash and cash equivalents, end of period $ 583,072 $ 2,880,395
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The accompanying notes are an integral part of these consolidated financial statements.

5

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

1. NATURE OF OPERATIONS

The Company was incorporated on October 19, 2006 under the Business Corporations Act of British Columbia. The Company is a development stage public company listed for trading on the TSX Venture Exchange (the “Exchange”) under the symbol SBM. The Company is a cosmetic ingredient and drug discovery company with a proprietary technology platform developed at its laboratory facility in France with a specialization in the stabilization of carbohydrate molecules. The principle activities of the Company are dedicated to the development of safer, more effective cosmetic and pharmaceutical active ingredients which are licensed to partners in exchange for upfront, milestone and royalty payments.

The head office, principal address and registered and records office of the Company are located at WeWork – 595 Burrard Street, Vancouver, BC, V7X 1L4.

2. BASIS OF PRESENTATION AND GOING CONCERN

Statement of compliance

The unaudited condensed interim consolidated financial statements (the “Interim Financial Statements”) include the accounts of the Company and its wholly owned subsidiary, TFChem S.A.R.L. Any reference to “the Company” throughout these Interim Financial Statements refers to the Company and its subsidiary. All inter-entity transactions have been eliminated. The results of the operations of the subsidiary acquired during the year are included from the date of acquisition.

The Interim Financial Statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”), using the accounting policies the Company adopted in its consolidated financial statements as at and for the financial year ended October 31, 2020.

Going concern

These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. To date, the Company has not achieved a scalable commercialization of its products. As of April 30, 2021, the Company has an accumulated deficit of $37,005,625 (2020 - $35,493,429). For the period ended April 30, 2021, the Company incurred a net loss of $1,512,196 (2020 – $2,519,716) and used net cash in operating activities of $1,462,687 (2020 – $882,063).

The Company’s ability to continue as a going concern is dependent upon its ability to generate product sales, negotiate collaboration or license agreements with upfront payments, raise additional funding via debt and equity financing, and ultimately attain and maintain profitable operations. While the Company is striving to act on these initiatives, there is no assurance that these and other strategies will be successful or sufficient to permit the Company to continue as a going concern.

These circumstances comprise a material uncertainty which may cast significant doubt as to the Company’s ability to continue as a going concern. These consolidated financial statements do not reflect adjustments to the carrying values of the Company’s assets and liabilities, revenue and expenses, and the statement of financial position classifications used, that would be necessary if the going concern assumption were not appropriate. Such adjustments could be material.

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SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Basis of measurement

These unaudited condensed interim consolidated financial statements have been prepared on a historical costs basis except for certain financial instruments which are measured at their fair value as explained in the accounting policies set out below. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Functional and presentation currency

These unaudited condensed interim consolidated financial statements are presented in Canadian dollars, which is the Company’s functional and reporting currency. The functional currency of its wholly owned subsidiary, TFChem S.A.R.L. (“TFC”), is the Euro.

Use of estimates

The preparation of these unaudited condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments and estimates and form assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for the periods reported. The estimates and associated assumptions are based on historical experience and various other factors that are considered to be relevant. Actual results could differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis, and may change if new information becomes available. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. See Note 4.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial statements.

Principles of consolidation

These unaudited condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, TFC, a biopharmaceutical company based in Rouen, France.

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

All significant inter-company balances and transactions between the Company and its wholly-owned subsidiary have been eliminated in preparing the consolidated financial statements.

Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Company and its subsidiary at the exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in other than the functional currency are translated at the exchange rates in effect at the financial position date. The resulting exchange gains and losses are recognized in profit or loss. Nonmonetary assets and liabilities denominated in other than the functional currency that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value is determined. Non-monetary items that are measured in terms of historical cost in other than the functional currency are translated using the exchange rate at the date of transaction.

Foreign operations

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SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

For consolidation purposes, the assets and liabilities of foreign operations are translated to the presentation currency using the exchange rate prevailing at the financial position date. The income and expenses of foreign operations are translated to the presentation currency using the average rates of exchange during the year. All resulting exchange differences are recorded as other comprehensive loss and accumulated in a separate component of shareholders’ equity, described as foreign translation reserve.

Financial instruments

Classification

On initial recognition, the Company determines the financial instruments classification as per the following categories:

• instruments measured at amortized cost;

• instruments measured at fair value through other comprehensive income (FVOCI) or through net income (FVTPL).

The financial instruments' classification under IFRS 9 is based on the business model in which a financial asset is managed and on its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial instrument in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Equity investments held for trading are classified as FVTPL. For all other equity investments that are not held for trading, the Company, on initial recognition, may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income (OCI). This election is made on an investment-by-investment basis.

Financial liabilities are measured at amortized cost unless they must be measured at FVTPL (such as derivatives) or if the Company elects to measure them at FVTPL.

Measurement

Financial instruments at amortized cost

Financial instruments at amortized cost are initially measured at fair value, and subsequently at amortized cost, using the effective interest method, less any impairment loss. Interest income, foreign exchange gains and losses and impairment are recognized in the consolidated statements of loss and comprehensive loss.

Financial instruments at fair value

Financial instruments are initially and subsequently measured at fair value and transaction costs are accounted for in the consolidated statements of loss and comprehensive loss. When the Company elects to measure a financial liability at FVTPL, gains or losses related to the Company's own credit risk are accounted for in the consolidated statements of loss and comprehensive loss.

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SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020 (Expressed in Canadian dollars)

Impairment

The Company recognizes loss allowances for expected credit losses (“ECL”) on:

• financial assets measured at amortized cost;

• debt investments measured at FVOCI; and

• contract assets (as defined in IFRS 15).

The Company measures loss allowances on amounts receivable at an amount equal to lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when:

• the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realizing security (if any is held); or

• the financial asset is more than 90 days past due.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Presentation of allowance for ECL in the consolidated statements of financial position

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

11

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Derecognition

Financial assets

The Company derecognizes a financial asset when, and only when, the contractual rights to the cash flows from the financial asset have expired or when contractual rights to the cash flows have been transferred.

Financial liabilities

The Company derecognizes a financial liability when, and only when, it is extinguished, meaning when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of the extinguished financial liability and the consideration paid or payable, including non-cash assets transferred or liabilities assumed, is recognized in the consolidated statement of loss and comprehensive loss.

Cash and cash equivalents

Cash and cash equivalents consist of cash and highly liquid instruments that are readily convertible to cash with a maturity of three months or less when initially purchased. There were no cash equivalents as at April 30, 2021 and 2020.

Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are classified in current assets, except for the portion expected to be realized or paid beyond 12 months of the consolidated statements of financial position date, if any, which are classified as non-current. Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. Trade receivables are held with the objective of collecting contractual cash flows and classified as subsequently at amortized cost using the effective interest method.

Equipment

Items of equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of replacing a part of an item of equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of day-to-day servicing of equipment (i.e. repairs and maintenance) are recognized under Expenses in the statements of loss and comprehensive loss as incurred.

Depreciation is calculated based on the cost of the asset, less its estimated residual value. Depreciation is recognized in the statements of loss and comprehensive loss on a straight-line basis over the estimated useful lives of each asset. The estimated useful lives for the Company’s equipment is as follows:

• Industrial equipment 4 to 7 years

An item of equipment is derecognized when it is either disposed of or when it is determined that no further economic benefit is expected from the item’s future use or disposal. Gains and losses on disposal of an item of equipment is determined by comparing the proceeds from disposal, less associated costs of disposal, with the carrying amount of equipment, and is recognized in Other income/(expenses) in the statements of loss and comprehensive loss.

12

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Leases

At inception of a contract, the Company must assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset over a period of time in exchange for consideration. The Company must assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all of the economic benefits from the use of the asset during the term of the contract and if it has the right to direct the use of the asset. As a lessee, the Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease.

Right-of-use asset

The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made and any initial direct costs incurred at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received. The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain re-measurements of the lease liability.

Lease liability

A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted by the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method. Lease payments included in the measurement of the lease liability comprise: fixed payments; variable lease payments that depend on an index or a rate; amounts expected to be payable under any residual value guarantee; the exercise price under any purchase option that the Company would be reasonably certain to exercise; lease payments in any optional renewal period if the Company is reasonably certain to exercise an extension option; and penalties for any early termination of a lease unless the Company is reasonably certain not to terminate early. The Company has elected to not include non-lease components related to premises leases in the determination of the lease liability.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of twelve months or less and leases of low-value assets. The lease payments associated with these leases are charged directly to income on a straight-line basis over the lease term.

Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is defined as the estimated price that would be received on the sale of the asset in an orderly transaction between market participants at the measure date. For the purposes of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other groups of assets.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses

13

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

recognized in respect of the cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in profit or loss.

Provisions

Provisions for legal or constructive obligations are recognized when the Company has a present legal or constructive obligation that has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

Share capital

The Company’s ordinary common shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares, warrants and stock options, net of any tax effects, are recognized as a deduction from equity.

Revenue recognition

The Company from time to time enters into licensing and collaboration agreements. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from licensing arrangements.

The Company will only recognize revenue if a contract meets the following parameters: when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Once it is determined that a contract exists, the Company will evaluate the performance obligations within the agreement. Performance obligations will be analysed to determine whether they are distinct or whether they must be accounted for as a single unit of multiple related distinct goods and services. The Company will then perform an analysis to determine the total transaction price that it expects to receive from satisfying the performance obligations in the agreement.

If the contract also provides for development and regulatory milestone payments, royalties and salesbased milestone payments, these amounts are contingent on the occurrence of a future event and therefore give rise to variable consideration. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. Estimated amounts are included in the transaction price when it becomes highly probable that the amount will not be subject to significant reversal when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available. Based on this information and related analysis, any quarterly adjustments to revenue are recognized as necessary in the period they become known.

14

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

The upfront license fee is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the Company from the other party failing to adequately complete some or all of its obligations under the contract.

Sales-based royalty revenue and sales-based milestone payments will be recognized when the later of the following events occurs: the subsequent sale occurs or the performance obligation to which some or all of the sales-based royalty or sales-based milestone payment has been allocated has been satisfied. The calculated transaction price will then be allocated to the separate performance obligations based upon the relative standalone selling price of the performance obligations. If a standalone selling price cannot be determined a residual approach may be used to estimate the standalone selling price when the selling price for a good or service is highly variable or uncertain.

Contract asset

The Company’s right to consideration in exchange for goods or services that have been transferred to a customer when that right is conditioned on something other than the passage of time (for example, the Company’s future performance).

Contract liability

The Company’s obligation to transfer goods or services to a customer for which consideration has been received (or the amount is due) from the customer.

Research and development

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. No development expenditures have been deferred to date.

Research and development costs includes fees paid to contract research organizations and other vendors who conduct certain research and development activities on behalf of the Company. The amount of expenses recognized in a period related to research arrangements with third parties is based on estimates of work performed using an accrual basis of accounting. These estimates are based on services provided, contractual terms and experience with similar contracts. The Company monitors these factors and adjusted the estimates accordingly.

Employee benefits

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Long term employee benefits

A provision is recognized for benefits accruing to employees when it is probable that settlement will be required and it is capable of being measured reliably. Provisions recognized in respect of employee benefits which are not due to be settled within one year are measured at the present value of the estimated future cash outflows to be made by the Company in respect of services provided by employees up to the reporting date. As of April 30, 2021, and 2019, the employee benefit provision represents the retirement allowance payable accrued by TFC.

15

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Share-based payment transactions

The Company awards shares of the Company’s stock or stock options to directors, officers, employees and/or third-party goods/service providers and uses the fair-value based method of accounting for sharebased compensations for all awards granted. The resulting compensation expense, based on the fair value of the awards granted is charged to profit or loss over the period that the employees unconditionally become entitled to the award or when goods/services are rendered, with a corresponding increase to contributed surplus. Any consideration received on exercise of stock options or purchase of shares, together with the amount initially recorded in contributed surplus, is credited to share capital.

The Board of Directors grants stock options with vesting periods determined at the sole discretion of the Board and at prices reflecting the share price on the date the options were granted. An individual is classified as an employee when the individual is an employee for legal or tax purposes (“direct employee”) or provides services similar to those performed by a direct employee, including directors of the Company.

The fair value of employee stock options granted is measured using the Black-Scholes option pricing model as of the grant date, taking into account the terms and conditions upon which the options are granted. The cumulative expense recognized at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of options that will ultimately vest. The compensation expense for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

Where the terms of a stock option are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional expense is recognized for any modification which increases the total fair value of the stock-based compensation arrangement, or is otherwise beneficial to the employee as measured at the date of modification over the remaining vesting period.

Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received.

Government assistance and research & development tax credits

Government assistance and research and development tax credits are recorded as either a reduction of the cost of the applicable assets or credited against the related expense incurred in profit or loss, as determined by the terms and conditions of the agreements under which the assistance is provided to the Company or the nature of the expenditures which give rise to the credits.

Government assistance is recorded at fair value when there is reasonable assurance that the grants will be received, and the Company will comply with all attached conditions. Research and development tax credits are accrued when qualifying expenditures are made and there is reasonable assurance that the credits will be realized.

The benefit of loans from government at a below-market interest rate are measured and recognized as the difference between the amount expected to be received less, when material, a discount to reduce the loan to fair value. The benefit amount is presented with the carrying value of the loans as long-term debt in the consolidated financial statements of financial position. The benefit amount will be amortized over the repayment period of the loans and the accretion of the loans will be amortized using the effective interest method.

16

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Income taxes

The Company follows the asset and liability method of accounting for income tax. Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination, nor is it recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Related party transactions

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

Other comprehensive income (loss)

Other comprehensive income (loss) is the change in the Company's net assets that results from transactions, events and circumstances from sources other than the Company's shareholders and includes items that would not normally be included in net income (loss) such as unrealized gains or losses on available-for-sale investments and translation gains or losses on translation of foreign operations to the presentation currency of the Company.

Segment reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment.

Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing the profit (loss) for the year attributable to ordinary common shareholders of the Company by the weighted average number of common shares outstanding during the year, adjusted for treasury shares. Diluted earnings (loss) per share is calculated using the treasury stock method.

Under the treasury stock method, the dilution is computed based upon the number of common shares issued should “in the money” options or warrants, if any, be exercised. When the effects of outstandingly stock-based compensation arrangements would be anti-dilutive, diluted loss per share is not calculated.

17

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020 (Expressed in Canadian dollars)

As at April 30, 2021 and 2020, stock options and warrants were not included in the computation of loss per share as they are out of the money and such inclusion would be anti-dilutive.

4. CRITICAL JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical accounting judgments

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in these consolidated financial statements are as follows:

Evaluation of the Company’s ability to continue as a going concern

Management has applied judgements in the assessment of the Company's ability to continue as a going concern when preparing these consolidated financial statements. Management prepares the consolidated financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The assessment of the Company’s ability to execute its strategy and finance the operations through achieving positive cash flow from operations or by obtaining additional funding through debt or equity financing involves judgments. Management monitors future cash requirements to assess the Company’s ability to realize assets and discharge its liabilities in the normal course of operations.

Determination of functional currency of the Company

The functional currency for each of the Company and its subsidiary is the currency of the primary economic environment in which each entity operates. The determination of each entity’s functional currency requires analysing facts that are considered primary factors, and if the result is not conclusive, the secondary factors. The analysis requires management to apply significant judgment since primary and secondary factors may be mixed. In determining its functional currency, management analysed both the primary and secondary factors, including the currency of each entity’s operating cash flow, and sources of financing.

Capitalization of development costs

Management applies judgement in evaluating whether or not development costs incurred by the Company in the internal development of intangible assets meet the criteria for capitalizing. Management determined that as at April 30, 2021, it was not able to demonstrate with sufficient certainty that it is probable the economic benefits will flow to the Company. Accordingly, all internal development costs incurred to date have been expensed.

Key sources of estimation uncertainty

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of the financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Impairment of trade and other receivables

The assessment of the ultimate collectability of amounts receivable and the determination of the expected credit losses requires significant estimates and assumptions. See Note 3.

18

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

- Long term employee benefits

The present value of long-term employee benefits is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that have terms to maturity approximating the terms of the related employee benefits. Determination of the benefit costs requires assumptions such as the discount rate to measure the employee benefits provision, the projected age of employees upon retirement, the probability of survival, the probability of employee turnover, and the amount of the employees’ last month salary prior to retirement. Actual results may differ from results which are estimated based on assumptions.

Revenue recognition and deferred revenue

The assessment of the timing of revenue recognition and the determination of deferred revenue requires significant estimates and assumptions. See Note 3.

Research and development expenses

The amount of research and development expenses recognized related to research arrangements with third parties is based on estimates of work performed using the accrual basis of accounting. These estimates are based on the services provided, contractual terms and experience with similar contracts.

COVID-19

On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The outbreak and efforts to contain the virus may have a significant impact on the Company’s business. A prolonged economic slowdown could result in purchase order delays or the inability to collect receivables and it is possible that in the future there will be negative impacts on the Company’s operations that could have a material adverse effect on its financial results. Although the Company has adjusted some of its operating procedures in response to COVID-19, operations have not experienced any significant negative impact to date. The extent to which the pandemic impacts future operations and financial results, and the duration of any such impact, depends on future developments, which are highly uncertain and unknown at this time.

5. NEW AND FUTURE ACCOUNTING STANDARDS AND INTERPRETATIONS

Future accounting standards and interpretations

New IFRS pronouncements that have been issued but are not yet effective at the date of these financial statements are listed below. The Company plans to apply the new standards or interpretations in the annual period for which they are first required.

Business combinations

Narrow-scope amendments to IFRS 3 were issued in October 2018 and apply to annual reporting periods beginning on or after January 1, 2020. The amendments clarify the definition of a business, provide guidance in determining whether an acquisition is a business combination or a combination of a group of assets, emphasize that the output of a business is to provide goods and services to customers and provide a supplementary guidance.

Presentation of financial statements

An amendment to IAS 1 was issued in January 2020 and applies to annual reporting periods beginning on or after January 1, 2023. The amendment clarifies the criterion for classifying a liability as non-current relating to the right to defer settlement of a liability for at least 12 months after the reporting period.

19

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

6. TRADE AND OTHER RECEIVABLES

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April 30, 2021 October 31, 2020
Trade receivables $ 167,575 $ 107,151
Other receivables 29,596 31,066
$ 197,171 $ 138,217
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As of April 30, 2021, there was no allowance for doubtful accounts provision. In determining the recoverability of a trade or other receivable, the Company performs a risk analysis considering the type and age of the outstanding receivable, as well as the Company’s exposure to credit and currency risks. See Note 17.

7. TAX RECEIVABLES

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April 30, 2021 October 31, 2020
R&D tax credit $ 502,616 $ 348,899
GST/HST receivables 11,944 8,853
$ 514,560 $ 357,752
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Tax receivables are mainly related to the R&D tax credit and value added taxes (“VAT”). The Company expects full recovery of the R&D tax credit, VAT and other tax receivables and GST/HST receivables based on the past receipt history and consequently has not recorded any allowance against these receivables.

8. PREPAID EXPENSES AND DEPOSITS

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April 30, 2021 October 31, 2020
Prepaid expenses and deposits $ 89,106 $ 67,345
Other 740 777
$ 89,846 $ 68,122
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9. TRADE AND OTHER PAYABLES

		April	30, 2021	October	31, 2020
Trade payables	$		389,043	$	620,500
Other payables			175,275		105,842
	$		564,318	$	726,342

10. CONVERTIBLE DEBENTURES

On November 30, 2018, the Company issued 3,478,571 convertible notes (“Notes D”) with a principal amount of $487,000 in exchange for an equivalent amount of Notes B. Each Note is convertible at the option of the holder into one common share of the Company at a conversion price of $0.14 per share during the 12-month term of the Notes D. The Notes D will mature in 12 months from the date of issuance

20

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

and bear interest at the rate of 12% per annum, payable quarterly, until the Notes D are converted or repaid. The Company is entitled to repay the principal amount of the Notes D, together with accrued and unpaid interest, at any time commencing four months after the date of issuance.

The Company initially recorded $471,826 related to the fair value of the debt component of the Notes D using a market interest rate for comparable companies of 16.3% for an equivalent, non-convertible, loan at the date of issue. The residual amount of $11,076, net of taxes ($4,098) was assigned to the equity conversion component and included in shareholders’ equity. The Company amortizes the debt component of the Notes D using an effective interest rate of 15.39% over the term of the Notes D. For the year ended April 30, 2021, $9,902 (2019: $52,178) in finance expense was recorded in the consolidated statement of loss and comprehensive loss. During the year ended April 30, 2021, $250,000 (2019: $237,000) of Notes D were converted into the Company’s common shares and a total of 1,785,716 (2019: 1,692,857) common shares were issued upon conversion. The equity component of the Notes D of $7,790 (2019: $7,384) with the fully accreted debt component was reclassified into share capital of the Company upon the conversion. On August 31, 2018, the Company issued 3,168,571 convertible notes (“Notes C”) for total gross proceeds of $443,600. Each Note is convertible at the option of the holder into one common share of the Company at a conversion price of $0.14 per share during the 12-month term of the Notes C. The Notes C will mature in 12 months from the date of issuance and bear interest at the rate of 12% per annum, payable quarterly, until the Notes C are converted or repaid. The Company is entitled to repay the principal amount of the Notes C, together with accrued and unpaid interest, at any time commencing four months after the date of issuance.

11. LONG-TERM DEBT

During the year ended October 31, 2015, TFC entered into two loan agreements with BPifrance Financement (“BPI”) for a total amount of $1,262,604 (€840,000). The loans were provided to TFC as a regional innovation fund to assist with TFC’s research project and the loans are non-interest bearing with fixed repayment terms, commencing April 1, 2018. The Company estimated that 14.9% was the reasonable interest rate a comparable biotechnology company in France would likely have paid in obtaining loans. During the year ended October 31, 2015, the Company received the first draw of the loan totalling $757,562 (€504,000). During the year ended October 31, 2017, the Company received the second draw of the loan totalling $505,042 (€336,000). Repayment terms of BPI loan are as follows:

• 23.42% of profit, excluding taxes, of sales or concessions of patent licenses or know-how collected during the year related to the research project, financed by the BPI loan;

• 23.42% of profit, excluding taxes, generated by the marketing and the sale to a third party or the Company’s own use; and

• Minimum repayments per year were postponed and commenced in December 2019.

As at April 30, 2021, long-term debt was as follows:

		April 30, 2021		October 31, 2020
Total long-term debt	$	936,101	$	1,114,626
Current portion		(281,289)		(264,194)
Long-term portion	$	654,812	$	850,432

Minimum payments under the long-term debt at April 30, 2021, are as follows:

21

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020 (Expressed in Canadian dollars)

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2021 $ 281,289 € 200,000
2022 355,152 240,000
2023 299,660 202,500
$ 936,101 € 642,500
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As a result of COVID-19, BPI has granted the Company a six-month extension on the repayment terms.

12. LEASE LIABILITY

In June 2016, TFC entered into a lease agreement with NATIXIS Lease to lease a scientific instrument. The lease agreement bears interest of 2.7% annually, and expires in seven years on May 6, 2023, with monthly lease payments of $3,518 (€2,265) or an annual lease payment of $42,216 (€27,180). Management has assessed that the lease is a finance lease. The lease is guaranteed by BPI. Minimum payments under the finance lease at April 30, 2021, are as follows:

2021	$ 21,108
2022	42,216
2023	42,216
2024	7,036
	112,576
Less: amount representing interest	(9,921)
Principal	102,655
Current portion	37,911
Long-term portion	$ 64,744

As a result of COVID-19, NATIXIS granted the Company a six-month payment deferral period from April 2020 to September 2020.

13. LICENSING AGREEMENTS

Agreement with Wanbang Biopharmaceuticals (“Wanbang”)

On January 23, 2014, and as amended on April 13, 2016, the Company (as licensor) entered into a licensing and co-development agreement (the “LCDA”) with Wanbang (as licensee).

Subject to the terms of the LCDA, the Company granted to Wanbang an exclusive (for the People’s Republic of China, excluding the Hong Kong and Macau S.A.R.), non-sublicensable and non-transferable license (the “License”) during the term of the LCDA and for the purpose of applying for regulatory approvals, conducting clinical research, developing, registering, launching, manufacturing, having manufactured, marketing, importing, offering for sale, distributing and selling the Company’s SGLT2 inhibitor (the “Product”) as well as any other indication that may have clinical effect derived from the Product.

The Company and Wanbang are co-developing a process for the manufacturing and upscale of an active ingredient in connection with the Product and optimizing the related chemical supply chain pursuant the specified development plan, with each party bearing their own costs and expenses incurred during the codevelopment activities. In addition, the Company and Wanbang are conducting pre-clinical and clinical

22

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

trials in accordance with the Chinese Food and Drug Administration (the “CFDA”), with the results of the trials being jointly owned. Wanbang has the right to develop and commercialize other indications that may have a clinical effect and combination products with, any proceeds arising from agreements with third parties being shared equally between Wanbang and the Company.

In consideration for the grant of the License, Wanbang will pay the Company the following Milestone Payments:

• i. US$200,000 ($203,440) upon signing of the LCDA (paid in fiscal 2014 and recognized as revenue);

• ii. US$300,000 ($391,500) upon signing of the LCDA (paid in fiscal 2016 and recognized as revenue);

• iii. US$500,000 ($623,381) upon successful filing of an Investigational New Drug application and all supplements under the CFDA (the “Second-Line Tests”) (paid in fiscal 2018 and recognized as revenue);

• iv. US$500,000 ($648,527) upon receipt of Clinical Trial Approval (the “CTA”) by CFDA for a Phase 1 Study in the Territory (paid in fiscal 2018 and recognized as revenue);

• v. US$1,500,000 upon receipt of CTA by CFDA for a Phase III Study;

• vi. US$2,500,000 upon successful completion of a first Phase III Study; and

• vii. US$4,000,000 upon a New Drug Application and all supplements approval by CFDA.

During the royalty period (as defined), Wanbang will pay the Company royalties at a rate equal to 5% of all License Net Sales (as defined).

The LCDA will continue unless terminated by either party. If Wanbang decides to discontinue the development of the Product, and if at any time subsequent the Company wishes to take over and use the Data (as defined), then the Company will pay the specified fee for the full transfer of the Data to the Company as full and final compensation of Wanbang’s expenses and efforts contributed in the process of developing and creating the Data.

Manufacturing and Supply Agreement with Rodan & Fields, LLC (“R&F”)

On September 13, 2019, the Company entered into a manufacturing and supply agreement, pursuant to which the Company shall manufacture, test, label, package, store and supply R&F a minimum of 10 kilograms per year of skin lightening compound TFC-1067 for use in the United States, Canada, Australia and Japan for beginning in 2020. In consideration for these services, R&F will make license fee and milestone payments to the Company.

This agreement runs for a five-year term, with R&F having the option to extend the term for an additional three years and is cancellable upon R&F providing the Company 30 days’ written notice. On termination of the agreement, R&F will reimburse the Company for any materials unique to R&F and which remain in the Company’s possession.

During the period ended April 30, 2021, the Company received the milestone revenue of $63,325.

14. EMPLOYEE BENEFITS

As at April 30, 2021 and October 31, 2020, the employee benefits amount represents the retirement allowance provision accrued by TFC. The obligation of TFC is limited to legal obligations applicable in

23

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

France. For each employee, a calculation is made based on future benefits they have earned during their service in the current and prior years. The benefit is discounted to determine its present value. The calculation is made annually using the projected benefit method using the following assumptions:

• Discount rate: (2021: 0.45%);

• Increase in salaries: (2021: 0.01%);

• Turnover: ranging from (2021: 2% to 7%) for under 60 years old and (2021: 0%) over 60 years old; and

• Payroll tax rate: (2021: 40%).

The assumptions used are in accordance with French legislation and practice.

15. SHARE CAPITAL

Share capital

• a) Authorized: Unlimited common shares without par value.

• b) Issued: As of April 30, 2021, 229,893,966 (2020: 226,309,320) common shares were issued and outstanding.

During the period ended April 30, 2021, 689,286 (2020: 370,000) shares were issued for the exercise of options and 2,766,360 (2020: 123,600) shares were issued for the exercise of warrants. Total cash proceeds of $201,500 (2020: $65,250) has been received for options exercised and $448,160 (2020: $19,777) for warrants exercised. The $75,750 (2020: $92,130) value of options and $104,820 (2020: $5,347) value of warrants exercised originally recorded to contributed surplus at issuance was reclassified to share capital upon exercise.

During the period ended April 30, 2021, nil (2020: 1,785,716) shares were issued for the convertible debentures. See note 10.

On July 10, 2019, the Company completed a private placement for total gross proceeds of $1,500,000. The private placement consists of 3,750,000 units at $0.40 per unit. Each unit consists of one common share of the Company and one transferable share purchase warrant. Each warrant is exercisable into an additional common share of the Company for a period of three years at a price of $0.60 per warrant. The Company estimated the fair value of the warrants at $659,612 and recorded the amount in contributed surplus. The Company issued 205,960 broker’s warrants fair valued at $64,662 and paid cash of $10,284 to the finder in connection with the private placement.

On February 27, 2019, the Company completed a private placement for total gross proceeds of $1,783,500. The private placement consists of 17,835,000 units at $0.10 per unit. Each unit consists of one common share of the Company and one transferable share purchase warrant. Each warrant is exercisable into an additional common share of the Company for a period of three years at a price of $0.16 per warrant. The Company estimated the fair value of the warrants at $688,747 and recorded the amount in Contributed surplus. The Company issued 621,630 broker’s warrants fair valued at $39,090 and paid cash of $62,136 to the finder in connection with the private placement.

24

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

During the year ended October 31, 2019, the Company repaid the $200,000 short-term loan and issued 400,000 common shares to pay accrued interest of $36,000.

c) Shareholders rights plan:

Effective March 12, 2020 (the “Effective Date”), and approved by the shareholders on May 22, 2020, the Company adopted a shareholder rights plan (the “Rights Plan”) to prevent, to the extent possible, a creeping take-over of the Company and to ensure that any offer to acquire shares of the Company is made to all shareholders and cannot be completed unless shareholders holding at least 50% of the outstanding shares (other than the offeror and related parties) are tendered in acceptance of the offer, to ensure, to the extent possible, the fair treatment of all shareholders in connection with any take-over bid for the securities of the Company and to ensure that the Board of Directors is provided with sufficient time to evaluate unsolicited take-over bids and to explore and develop alternatives to maximize shareholder value. On March 12, 2020, the Company entered into a shareholder rights plan agreement (the “SRPA”) with Computershare Investor Services Inc. (the “Rights Agent”). Pursuant to the SRPA:

• The Company will issue one Right in respect of each common share outstanding on March 12, 2020 (the “Record Time”) and will issue one Right in respect of each common share issued after the Record Time and prior to the earlier of the Separation Time (see below) and the Expiration Time (see below); and

• Certificates representing shares which are issued after the Record Time, but prior to the earlier of the Separation Time and the Expiration Time will evidence one Right for each share represented thereby until the earlier of the Separation Time or the Expiration Time,

with each Right entitling the holder to purchase a share of the Company upon the terms and subject to the conditions in the SRPA.

Subject to specified adjustments, each Right entitles the holder, from and after the Separation Time and prior to the Expiration Time, to purchase one common share for the Exercise Price (as defined) as at the Business Day (as defined) immediately preceding the day of exercise of the Right. Notwithstanding any other provision of the SRPA, any rights held by the Company or its subsidiary are void. Until the Separation Time: (i) the Rights are not exercisable and cannot be exercised; (ii) each Right is evidenced by the certificate for the associated voting share registered in the name of the holder; and (iii) each Right is transferrable only together with, and will be transferred by a transfer of, the associated share. From and after the Separation Time and prior to the Expiration Time the rights are exercisable and the registration and transfer of Rights is separate from and independent of voting shares.

The SRPA will expire on the earlier of the Termination Time and the time at which the annual meeting of shareholders of the Company held in 2023 terminates (the “Expiration Time”).

Separation Time means the close of business on the 10[th] Trading Day (as defined) after the earlier of (all terms are as defined):

• The Share Acquisition Date;

• The date of commencement of or the first public announcement of the intent of any person to commence a Take-over bid (other than a Permitted Bid or a Competing Permitted Bid); and

• The date on which a Permitted Bid or Competing Permitted Bid cease to qualify as such.

25

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Warrants

A summary of warrant activities for the periods ended April 30, 2021 and October 31, 2020 is as follows:

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Weighted average
remaining
Number of Weighted average contractual life
Warrants exercise price (year)
Balance at October 31, 2018 13,497,504 $ 0.23 1.97
Warrants exercised (7,277,594) 0.22 -
Warrants expired (1,823,750) 0.30 -
Warrants granted exercisable on or before February 27, 2022 17,835,000 0.16 2.58
Broker warrants granted exercisable on or before February 27, 2022 621,360 0.16 2.58
Warrants granted exercisable on or before July 16, 2022 3,750,000 0.60 2.96
Broker warrants granted exercisable on or before July 16, 2022 205,960 0.60 2.96
Balance at October 31, 2019 26,808,480 $ 0.23 2.55
Warrants exercised 123,600 0.16 -
Balance at October 31, 2020 26,684,880 $ 0.24 1.30
Warrants exercised (2,766,360) $ 0.16 -
Balance at April 30, 2021 23,918,520 $ 0.24 1.05
----- End of picture text -----

At April 30, 2021, the warrants outstanding and exercisable were as follows:

				Number of
				Warrants as at
	ExpiryDate	Exercise	Price	April 30, 2021
October 16, 2021		$	0.18	5,953,600
February 27, 2022		$	0.16	13,602,000
February 27, 2022		$	0.16	406,960
July 16, 2022		$	0.60	3,750,000
July16,2022		$	0.60	205,960
				23,918,520

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

	2020	2019
Risk-free interest rate	-	1.54% to 1.78%
Dividend yield	-	0%
Volatility	-	87% to 99.39%
Expected life	-	3 years
Shareprice ofgrant date	-	$0.125 to$0.48

Stock options

The Company’s stock option plan is administered by the board of directors in accordance with Exchange requirements summarized below:

26

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

• i. maximum available for grant is up to 10% of the Company’s issued shares outstanding at any one time;

• ii. grant price and exercise price may not be less than the discounted market price of the shares at the time of grant, as permitted by Exchange policy;

• iii. non-transferable, vesting schedule subject to Board discretion when granted and exercisable up to 10 years from grant date;

• iv. eligibility includes employees, directors, officers and consultants of the Company subject to a 5% limitation on options granted annually to any one individual director or officer and 2% to any one consultant; and

• v. exercisable up to 90 days following cessation of the optionee’s position with the Company. If the cessation of office, directorship or consulting arrangement was due to death, the option may be exercised within a maximum period of one year after death, subject to expiry date of such option.

Expected life of stock options

When the Company grants 10-year options, management estimates that the period of time from the date of grant to the date of exercise is five years. Pursuant to IFRS 2 Share-based Payment , the effects of an expected early exercise can be accounted for by using an estimate of the option’s expected life as an input into the option pricing model. Accordingly, for 10-year options, an expected life of five years is used as an input when estimating fair value.

A summary of stock option activities for the years ended April 30, 2021 and October 31, 2020 is as follows:

At April 30, 2021, the stock options outstanding and exercisable were as follows:

Expiry Date	Exercise Price Number of Options as at October 31, 2020 Granted During the Year Exercised During the Year Expired/ Cancelled During the Year Number of Options as at April 30, 2021 Number of Options Exercisable as at April 30, 2021
January 21, 2021	$0.45 1,000,000 - - (1,000,000) - -
June 21, 2021	$0.20 100,000 - (100,000) - - -
June 30, 2021 September 8, 2021	$0.30 300,000 - (300,000) - - - $0.22 100,000 - - - 100,000 100,000
January 22, 2022	$0.38 - 150,000 (75,000) - 75,000 75,000
March 1, 2022 March 19, 2022 January 21, 2023 June 7, 2024 January 21, 2025 June 26, 2025 February 1, 2025 September 21, 2026	$0.12 100,000 - - - 100,000 100,000 $0.42 114,286 (114,286) - - $0.45 500,000 - - - 500,000 500,000 $0.52 300,000 - - - 300,000 300,000 $0.45 700,000 - - - 700,000 700,000 $0.16 3,300,000 - - - 3,300,000 3,300,000 $0.38 200,000 200,000 200,000 $0.20 300,000 - - - 300,000 300,000
November 20, 2027	$0.15 1,250,000 - (100,000) - 1,150,000 1,150,000
February 26, 2029 January 21, 2030 April 1, 2031	$0.12 500,000 - - - 500,000 500,000 $0.45 4,230,000 - - - 4,230,000 4,230,000 $0.45 - 750,000 750,000 750,000
	12,680,000 1,214,286 (689,286) (1,000,000) 12,205,000 12,205,000

At October 31, 2020, the stock options outstanding and exercisable were as follows:

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SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

==> picture [507 x 211] intentionally omitted <==

----- Start of picture text -----

Expired/ Number of
Number of Granted Exercised Cancelled Number of Options
Exercise Options as at During the During the During the Options as at Exercisable as at
Expiry Date Price October 31, 2019 Year Year Year October 31, 2020 October 31, 2020
June 1, 2020 $0.50 300,000 - - (300,000) - -
November 3, 2021 $0.15 70,000 - - (70,000) - -
January 21, 2021 (1) $0.45 - 1,000,000 - - 1,000,000 250,000
June 21, 2021 $0.20 100,000 - - - 100,000 100,000
June 30, 2021 $0.30 - 300,000 - - 300,000 300,000
September 8, 2021 $0.22 - 100,000 - - 100,000 100,000
March 1, 2022 $0.12 100,000 - - - 100,000 100,000
January 21, 2023 $0.45 - 225,000 (225,000) - - -
June 7, 2024 $0.52 300,000 - - - 300,000 300,000
June 26, 2025 $0.16 3,300,000 - - - 3,300,000 3,300,000
September 21, 2026 $0.20 300,000 - - - 300,000 300,000
November 20, 2027 $0.15 1,250,000 - - - 1,250,000 1,250,000
February 26, 2029 $0.12 500,000 - - - 500,000 500,000
January 21, 2030 $0.45 - 5,575,000 (145,000) - 5,430,000 5,430,000
6,220,000 7,200,000 (370,000) (370,000) 12,680,000 11,930,000
Weighted average exercise price $ 0.19 $ 0.44 $ 0.45 $ 0.43 $ 0.32 $ 0.19
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(1) These options expired unexercised subsequent to year end.

The weighted average contractual life remaining of all stock options as at April 30, 2021 is 5.66 years (2020: 6.45 years). During the year ended April 30, 2021, 1,214,286 stock options were granted with a weighted average exercise price of $0.43 (2020: 7,200,000 and $0.44).

The fair value of the options granted was estimated using the Black-Scholes option pricing model with the following weighted average estimated assumptions:

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2021 2020
Risk-free interest rate 0.17% to 0.42% 0.24% to 1.65%
Dividend yield 0% 0%
Volatility 92.84% to 164.50% 81.88% to 159.49%
Expected life 1-5 years 1-3 years
Share price of grant date $0.38 to $0.41 $0.19 to $0.31
----- End of picture text -----

For the year ended April 30, 2021, share-based compensation in the amount of $387,142 (2020 - $1,815,542) was recognized in the Company’s consolidated statements of loss and comprehensive loss.

16. RELATED PARTY TRANSACTIONS

Related party transactions impacting the consolidated financial statements primarily relate to transactions with key management personnel. Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers.

During the years ended April 30, 2021 and 2020, the Company incurred the following expenses to officers or directors of the Company or companies with common directors:

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SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

		2021		2020
Management fees (a)	$	80,640	$	80,640
Accounting fees (b)		73,920		73,920
Salaries (c)		58,072		57,120
Share-based payments (d)		339,840		1,307,536
Total	$	557,272	$	1,519,216

• (a) For the period ended April 30, 2021, $80,640 (2020: $80,604) in management fees were paid/incurred to a company controlled by Howard Verrico, for acting as CEO, secretary and director. See below.

• (b) For the period ended April 30, 2021, $73,920 (2020: $73,920) in accounting fees were paid/incurred to Christopher Hopton for acting as CFO. See below.

• (c) For the period ended April 30, 2021, $58,072 (2020: $57,120) in salary were paid to the VP, Operations.

• (d) For the period ended April 30, 2021, 950,000 (2020: 4,325,000) stock options were granted to management and directors and $339,840 (2020: $1,307,536) of share-based payments expense was recorded.

During the year ended April 30, 2021, an aggregate of $17,948 (2020: $16,835) in rental payments were made paid/incurred to the Company’s CEO, CFO and VP Operations.

These related party transactions are in the normal course of operations and have been valued in these consolidated financial statements at the exchange amount which is the amount of consideration established and agreed to by the related parties.

On June 1, 2013, and as subsequently amended, the Company entered into indefinite consulting agreements for management services with Howard Verrico and Christopher Hopton, whereby Howard currently receives $13,440 (plus GST) per month and Christopher currently receives $12,320 per month (plus GST) until the agreements are terminated by either party. Effective June 1, 2019, compensation was increased from $12,000 and $11,000 per month, respectively, on the recommendation of the Compensation Committee.

Pursuant to the agreements, Howard and Christopher are eligible to receive discretionary cash bonuses, change of control payments and buyout bonuses. In the event that Howard or Christopher resign or their agreements are terminated with 12 months after a change of control (as defined), they will receive two times the compensation received immediately preceding such termination. In addition to the change of control payments, if the change of control results in a buyout of the Company transaction (as defined), on closing of the buyout transaction Howard will receive a cash bonus equal to 1.4% (plus GST) of the transaction value and Christopher will 1% (plus GST).

17. FINANCIAL INSTRUMENTS, RISK MANAGEMENT AND CAPITAL MANAGEMENT

The Company’s activities expose it to a variety of financial risks. The Company’s overall business strategies, tolerance of risk and general risk management philosophy are determined by the directors in accordance with prevailing economic and operating conditions.

The Company has the following financial instruments as of April 30, 2021 and October 31, 2020:

29

SIRONA BIOCHEM CORP.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Trade and other payables Long-term debt Lease obligation	April 30, 2021 October 31, 2020 Categories $ $
	Amortized cost 583,072 1,535,873 Amortized cost 197,171 138,217 Amortized cost 564,318 726,342 Amortized cost 936,101 1,114,626 Amortized cost 102,655 127,253

Fair value of financial instruments

The Company classifies its fair value measurements in accordance with the three level fair value hierarchies as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

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

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

The fair value of cash and cash equivalents, trade and other receivables, share subscription receivable and trade and other payables approximate their carrying values due to the short-term nature of these instruments. The fair value of employee benefits is determined at each statement of financial position date. The fair value of convertible debentures, lease obligation, short-term loan and long-term debt are determined by discounting future payments of loan principals and interests under the loans at prevailing market interest rates at each reporting date. The difference between the fair value and carrying amount is minimal.

During the year, there were no transfers between Level 1, Level 2 and Level 3 classified assets and liabilities.

Financial risk management objectives and policies

The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Credit risk is the risk that one party to a financial instrument will fail to discharge its contractual obligations and cause the other party to incur a financial loss and arises principally from the Company’s cash and cash equivalents and trade and other receivables. This risk is managed by placing cash and cash equivalents with major financial institutions which have a high credit quality as determined by the rating agencies. To mitigate credit risk with respect to trade receivables, the Company subjects all major customers to its credit evaluation process. See Note 6.

30

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

• (i) Since the Company’s functional currency is the Canadian dollar, it has a foreign exchange risk regarding its Euro obligations since it has a subsidiary in France. A significant change in the currency exchange rates between the Euro relative to the Canadian dollar could have an effect on the Company’s results of operations, financial position and cash flows. The Company has not entered into any derivative financial instruments to manage exposures to currency fluctuations. A 1% fluctuation in the Canadian dollar against the Euro would have a before-tax effect of approximately an $11,000 increase or decrease in accumulated other comprehensive income, based on amounts held at year end.

At April 30, 2021, the Company’s monetary assets and liabilities denominated in the Euro and were approximately as follows:

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Monetary assets € 114,588
Monetary liabilities 1,023,312
Net monetary liabilities € 908,724
Gain/loss on a 1% increase/decrease on the revaluation of monetary
assets and liabilities denominated in the Euro € 9,087
$ 13,447
----- End of picture text -----

• (ii) The Company’s exposure to interest rate risk relates to its ability to earn short term interest on cash balances at variable rates. The Company is exposed to interest rate risk on its cash and cash equivalents. The Company has no floating interest rate loans. Management does not believe that the impact of interest rate fluctuation will be significant.

• (iii) Liquidity risk arises through the excess of financial obligations due over available financial assets at any point in time. The Company’s objective in managing liquidity risk is to maintain sufficient, readily available capital in order to meet its liquidity requirements. Funding risk is the risk that market conditions will impact the Company’s ability to raise capital through equity markets under acceptable terms and conditions. Given the cash and cash equivalents balance of $583,072 at April 30, 2021 and under current market conditions, both liquidity and funding risk have been assessed as relatively low.

The following table summarizes the significant remaining contracted payments of the Company’s financial liabilities and capital expenditures as at April 30, 2021:

Total	Due by period
	< 1year 1 - 2years 2 -3 years 3- 4years >5 years
$ Trade and other payables 564,318 Long-term debt 936,101 Lease obligation 102,655	$ $ $ $ $ 564,318 - - - - 281,289 355,152 299,660 - - 21,108 42,216 42,216 7,036 -
1,603,074	866,715 397,368 341,876 7,036 -

Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and to maintain a flexible capital structure which will allow it to pursue technology

31

SIRONA BIOCHEM CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Period Ended April 30, 2021 and 2020

(Expressed in Canadian dollars)

research. Therefore, the Company monitors the level of risk incurred in its technology research relative to its capital structure which is comprised of working capital and shareholders’ equity (deficiency).

The Company manages its capital in a manner consistent with the risk characteristics of the assets it holds. All sources of financing are analysed by management and approved by the board of directors.

The Company is meeting these objectives primarily through its on-going cash management procedures, which include monthly comparison of actual results against budget and periodic forecasting of cash flow requirements.

18. GEOGRAPHIC SEGMENTS

The Company is located and operated in Canada and France.

The Company’s net loss by geographic location for the periods ended April 30, 2021 and 2020 is as follows:

Net loss		Period ended		Period ended
		April 30, 2021		April 30, 2020
Canada	$	717,026	$	2,483,324
France		795,170		36,392
Total	$	1,512,196	$	2,519,716

The Company’s total assets by geographic location as at April 30, 2021 and 2020 is as follows:

Total assets		April 30, 2021		October 31, 2020
Canada	$	703,581	$	1,572,775
France		713,289		564,464
Total	$	1,416,870	$	2,137,239

19. SUBSEQUENT EVENT

Subsequent to period ended April 30, 2021, the Company issued 180,000 common shares pursuant to the exercise warrants for proceeds of $32,400.

32