Avricore Health Inc 6-K, filed Jun 20, 2024
Avricore Health Inc. (AVCRF)
About this 6-K
Avricore Health Inc filed this 6-K on June 20, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2024.
Commission File Number: 000-51848
Avricore Health Inc.
(Exact name of registrant as specified in its charter)
1120-789 West Pender St, Vancouver, BC, V6C 1H2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): NO
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): NO
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Exhibits
The following exhibits are included in this form 6-K:
| Exhibit No. | Description | Date Released | ||
| 1 | Interim Financial Statements/report for the period ended March 31-2024 | 2024-05-30 | ||
| 2 | MD&A interim filing for the period ended March 31-2024 | 2024-05-30 | ||
| 3 | Certification of interim filings CEO for the period ended March 31-2024 | 2024-05-30 | ||
| 4 | Certification of interim filings CFO for the period ended March 31-2024 | 2024-05-30 | ||
| 5 | Form of Proxy | 2024-05-30 | ||
| 6 | Management information circular | 2024-05-30 | ||
| 7 | Notice of meeting | 2024-05-30 | ||
| 8 | Financial Statements request form | 2024-05-30 | ||
| 9 | Voting instruction form | 2024-05-30 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AVRICORE HEALTH INC. | ||
| Date: June 20, 2024 | By | “Kiki Smith” |
| Kiki Smith | ||
| Chief Financial Officer | ||
| SEC1815(04-09) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number |
Exhibit 1
Avricore Health Inc.
Condensed Interim Consolidated Financial Statements
(Unaudited)
For the three months ended March 31, 2024 and 2023
(Expressed in Canadian Dollars)
Notice to Reader
Management has prepared the unaudited condensed interim consolidated financial statements for Avricore Health Inc. (the “Company”) in accordance with National Instrument 51-102 released by the Canadian Securities Administration. The Company discloses that its auditors have not reviewed the unaudited condensed interim consolidated financial statements for the period ended March 31, 2024 and 2023.
Avricore Health Inc.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| Note | Unaudited March 31, 2024 | Audited December 31, 2023 | ||||||||
| $ | $ | |||||||||
| ASSETS | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | 584,041 | 276,571 | ||||||||
| Term deposit | 10,000 | 10,000 | ||||||||
| Accounts receivable | 4 | 393,863 | 427,689 | |||||||
| Prepaid expenses and deposits | 5 | 61,876 | 38,625 | |||||||
| Inventory | 9,045 | 20,676 | ||||||||
| 1,058,825 | 773,561 | |||||||||
| Equipment | 6 | 1,687,536 | 1,717,995 | |||||||
| Intangible assets | 7 | 51,697 | 46,649 | |||||||
| Total Assets | 2,798,058 | 2,538,205 | ||||||||
| LIABILITIES | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable and accrued liabilities | 8 | 577,470 | 489,218 | |||||||
| Loans payable | 9 | - | 40,000 | |||||||
| 577,470 | 529,218 | |||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||
| Share capital | 10 | 27,214,564 | 27,186,114 | |||||||
| Reserves | 10 | 6,573,047 | 6,558,433 | |||||||
| Deficit | (31,567,023 | ) | (31,735,560 | ) | ||||||
| 2,220,588 | 2,008,987 | |||||||||
| Total Liabilities and Shareholders’ Equity | 2,798,058 | 2,538,205 | ||||||||
Nature of operations and going concern (Note 1)
Significant events (Note 18)
Approved and authorized for issuance on behalf of the Board of Directors on May 30, 2024.
| “Hector Bremner” | “David Hall” | |
| Hector Bremner, Director | David Hall, Chairman |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 1 |
Avricore Health Inc.
Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss)
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
| Note | 2024 | 2023 | ||||||||
| $ | $ | |||||||||
| Revenue | 14 & 18 | 1,124,307 | 629,241 | |||||||
| Cost of sales | (639,516 | ) | (418,560 | ) | ||||||
| Gross profit | 484,791 | 210,681 | ||||||||
| Expenses | ||||||||||
| Advertising and promotion | 41 | 2,208 | ||||||||
| Amortization | 729 | 312 | ||||||||
| Consulting | 12 | 54,000 | 74,117 | |||||||
| General and administrative | 11 | 138,091 | 82,450 | |||||||
| Management Fees | 12 | 54,000 | 54,000 | |||||||
| Shareholder communications | 19,886 | 41,918 | ||||||||
| Professional fees | 12 | 32,100 | 60,960 | |||||||
| Share-based compensation | 10 & 12 | 27,464 | 88,001 | |||||||
| (326,311 | ) | (403,966 | ) | |||||||
| Profit / (loss) before other income (expense) | 158,480 | (193,285 | ) | |||||||
| Other income (expense) | ||||||||||
| Gain on settlement of debt | 9 | 10,000 | - | |||||||
| Foreign exchange gain (loss) | 48 | (495 | ) | |||||||
| Interest income | 9 | 2,268 | ||||||||
| Net profit / (loss) and comprehensive income / (loss) for the period | 168,537 | (191,512 | ) | |||||||
| Basic and Diluted Earning / (Loss) Per Share | 0.00 | (0.00 | ) | |||||||
| Weighted Average Number of Common Shares Outstanding | 99,740,049 | 99,294,664 | ||||||||
Segmented information (Note 14)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 2 |
Avricore Health Inc.
Condensed Interim Consolidated Statements of Changes in Shareholder’s Equity
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
| Number
of Shares | Share
Capital | Warrant
Reserve | Option
Reserve | Deficit | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||
| Balance, December 31, 2022 | 99,244,664 | 27,064,727 | 901,229 | 5,032,479 | (31,034,345 | ) | 1,964,090 | |||||||||||||||||
| Exercise of options | 250,000 | 76,164 | - | (48,664 | ) | - | 27,500 | |||||||||||||||||
| Share-based compensation | - | - | - | 88,001 | - | 88,001 | ||||||||||||||||||
| Net loss for the period | - | - | - | - | (191,512 | ) | (191,512 | ) | ||||||||||||||||
| Balance, March 31, 2023 | 99,494,664 | 27,140,891 | 901,229 | 5,071,816 | (31,225,857 | ) | 1,888,079 | |||||||||||||||||
| Balance, December 31, 2023 | 99,644,664 | 27,186,114 | 901,229 | 5,657,204 | (31,735,560 | ) | 2,008,987 | |||||||||||||||||
| Exercise of options | 225,000 | 28,450 | - | (12,850 | ) | - | 15,600 | |||||||||||||||||
| Share-based compensation | - | - | - | 27,464 | - | 27,464 | ||||||||||||||||||
| Net income for the period | - | - | - | - | 168,537 | 168,537 | ||||||||||||||||||
| Balance, March 31, 2024 | 99,869,664 | 27,214,564 | 901,229 | 5,671,818 | (31,567,023 | ) | 2,220,588 | |||||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 3 |
Avricore Health Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Operating Activities | ||||||||
| Net profit (loss) | 168,537 | (191,512 | ) | |||||
| Adjustment for non-cash items: | ||||||||
| Amortization | 109,599 | 78,252 | ||||||
| Share-based payments | 27,464 | 88,001 | ||||||
| Gain on settlement of debt | (10,000 | ) | - | |||||
| Change in working capital items: | ||||||||
| Accounts receivable | 33,826 | 464,002 | ||||||
| Inventory | 11,631 | - | ||||||
| Prepaid expenses and deposits | (23,251 | ) | (149,589 | ) | ||||
| Deferred revenue | - | (252,000 | ) | |||||
| Accounts payable and accrued liabilities | 88,252 | 55,593 | ||||||
| Net cash provided by (used in) operating activities | 406,058 | 92,747 | ||||||
| Investing Activities | ||||||||
| Intangible assets | (7,570 | ) | (4,532 | ) | ||||
| Purchase of equipment | (76,618 | ) | (223,485 | ) | ||||
| Net cash used in investing activities | (84,188 | ) | (228,017 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from exercise of stock options | 15,600 | 27,500 | ||||||
| Loan repaid | (30,000 | ) | - | |||||
| Net cash (used in) provide by financing activities | (14,400 | ) | 27,500 | |||||
| Increase / (Decrease) in cash and cash equivalents | 307,470 | (107,770 | ) | |||||
| Cash and cash equivalents, beginning of period | 276,571 | 620,527 | ||||||
| Cash and cash equivalents, end of period | 584,041 | 512,757 | ||||||
Supplemental cash flow information (Note 15)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 4 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Avricore Health Inc. (the “Company”) was incorporated under the Company Act of British Columbia on May 30, 2000. The Company’s common shares trade on the TSX Venture Exchange (the “Exchange”) under the symbol “AVCR” and are quoted on the OTCIQ Market as “NUVPF”. The Company’s registered office is at 700 – 1199 West Hastings Street, Vancouver, British Columbia, V6E 3T5.
The Company is involved in the business of health data and point-of-care technologies (“POCT”).
The condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has historically experienced operating losses and negative operating cash flows. As at March 31, 2024, the Company has an accumulated deficit of $31,567,023 and working capital of $481,335 which is insufficient to finance the Company’s operations over the next twelve months. These conditions indicate the existence of material uncertainty that may cast substantial doubt on the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon its ability to generate revenue from its operations and/or raise additional financing to cover ongoing cash requirements. The condensed interim consolidated financial statements do not reflect any adjustments, which could be material, to the carrying values of assets and liabilities, which may be required should the Company be unable to continue as a going concern.
2. BASIS OF PRESENTATION
a) Statement of Compliance
The condensed interim consolidated financial statements for the period ended March 31, 2024 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), IAS 34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2023. The accounting policies followed in these interim financial statements are consistent with those applied in the Company’s most recent annual financial statements for the year ended December 31, 2023.
b) Basis of preparation
The condensed interim consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The significant accounting policies are presented in Note 3 of the annual consolidated financial statements for the year ended December 31, 2023 and have been consistently applied in each of the periods presented. The condensed interim consolidated financial statements are presented in Canadian dollars, which is also the Company’s and its subsidiary’s functional currency, unless other indicated.
| 5 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
2. BASIS OF PRESENTATION (continued)
b) Basis of preparation (continued)
The preparation of condensed interim consolidated financial statements in accordance with IFRS requires the Company’s management to make estimates, judgments and assumptions that affect amounts reported in the condensed interim consolidated financial statements and accompanying notes. The areas involving a higher degree of judgment and complexity, or areas where assumptions and estimates are significant to the condensed interim consolidated financial statements are disclosed below. Actual results might differ from these estimates. The Company’s management reviews these estimates and underlying judgments on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the year in which the estimates are revised.
c) Basis of consolidation
Condensed interim consolidated financial statements include the assets, liabilities and results of operations of all entities controlled by the Company. Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated in preparing the Company’s the condensed interim consolidated financial statements. Where control of an entity is obtained during a financial year, its results are included in the condensed interim consolidated statements of operations and comprehensive loss from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for that part of the year during which control exists.
These condensed interim consolidated financial statements include the accounts of the Company and its controlled wholly owned Canadian subsidiary HealthTab™ Inc.
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES
Significant accounting estimates and judgments
Share-based payments
The Company grants share-based awards to certain directors, officers, employees, consultants and other eligible persons. For equity-settled awards, the fair value is charged to the statement of operations and comprehensive loss and credited to the reserves over the vesting period using the graded vesting method, after adjusting for the estimated number of awards that are expected to vest.
The fair value of equity-settled awards is determined at the date of the grant using the Black-Scholes option pricing model. For equity-settled awards to non-employees, the fair value is measured at each vesting date. The estimate of warrant and option valuation also requires determining the most appropriate inputs to the valuation model, including the volatility, expected life of warrants and options, risk free interest rate and dividend yield. Management must also make significant judgments or assessments as to how financial assets and liabilities are categorized.
Estimation of useful lives of equipment and software
Amortization of equipment and software is dependent upon estimates of their useful lives. The actual lives of the assets are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation, product lifecycles, and maintenance are taken into account.
| 6 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
Significant accounting estimates and judgments (continued)
Judgements
Significant judgments used in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:
Revenue recognition
Revenue is recognized when the revenue recognition criteria expressed in the accounting policy stated above have been met. Judgment may be required when allocating revenue or discounts on sales amongst the various elements in a sale involving multiple deliverables.
Deferred income taxes
Tax interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change. The determination of income tax expense and deferred tax involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred tax assets and liabilities, and interpretations of laws in the countries in which the Company operates. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these estimates may materially affect the final amount of deferred taxes or the timing of tax payments. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full.
Going concern
Management has applied judgements in the assessment of the Company’s ability to continue as a going concern when preparing these financial statements. 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 factors considered by management are disclosed in Note 1.
4. ACCOUNTS RECEIVABLE
The Company’s accounts receivable consists of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Trade receivables | 375,363 | 420,998 | ||||||
| GST receivable | 18,500 | 6,691 | ||||||
| 393,863 | 427,689 | |||||||
5. PREPAID EXPENSES AND DEPOSITS
The balance consists of prepaid expenses to vendors of $43,377 (December 31, 2023 - $16,889), prepaid business insurance of $6,499 (December 31, 2023 - $9,736) and security deposits of $12,000 (December 31, 2023 - $12,000).
| 7 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
6. EQUIPMENT
| Equipment | ||||
| $ | ||||
| Cost | ||||
| Balance, December 31, 2022 | 1,298,703 | |||
| Additions | 1,021,572 | |||
| Balance, December 31, 2023 | 2,320,275 | |||
| Additions | 76,618 | |||
| Balance, March 31, 2024 | 2,396,893 | |||
| Accumulated Amortization | ||||
| Balance, December 31, 2022 | 190,712 | |||
| Amortization | 411,568 | |||
| Balance, December 31, 2023 | 602,280 | |||
| Amortization | 107,077 | |||
| Balance, March 31, 2024 | 709,357 | |||
| Carrying value | ||||
| As at December 31, 2023 | 1,717,995 | |||
| As at March 31, 2024 | 1,687,536 | |||
Equipment is comprised primarily of assets leased to earn revenues.
7. INTANGIBLE ASSETS
| Software | HealthTab™ | Corozon | Emerald | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Cost | ||||||||||||||||||||
| Balance, December 31, 2022 | 40,177 | 1 | 1 | 1 | 40,180 | |||||||||||||||
| Additions | 25,288 | - | - | - | 25,288 | |||||||||||||||
| Balance, December 31, 2023 | 65,465 | 1 | 1 | 1 | 65,468 | |||||||||||||||
| Additions | 7,570 | - | - | - | 7,570 | |||||||||||||||
| Balance, March 31, 2024 | 73,035 | 1 | 1 | 1 | 73,038 | |||||||||||||||
| Accumulated Amortization | ||||||||||||||||||||
| Balance, December 31, 2022 | 10,319 | - | - | - | 10,319 | |||||||||||||||
| Amortization | 8,500 | - | - | - | 8,500 | |||||||||||||||
| Balance, December 31, 2023 | 18,819 | - | - | - | 18,819 | |||||||||||||||
| Amortization | 2,522 | - | - | - | 2,522 | |||||||||||||||
| Balance, March 31, 2024 | 21,341 | - | - | - | 21,341 | |||||||||||||||
| Carrying value | ||||||||||||||||||||
| As at December 31, 2023 | 46,646 | 1 | 1 | 1 | 46,649 | |||||||||||||||
| As at March 31, 2024 | 51,694 | 1 | 1 | 1 | 51,697 | |||||||||||||||
| 8 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company’s accounts payable and accrued liabilities consist of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Trade accounts payable | 498,641 | 428,677 | ||||||
| GST payable | 78,829 | 60,541 | ||||||
| 577,470 | 489,218 | |||||||
9. LOANS PAYABLE
During the year ended December 31, 2020, the Company received a Canada Emergency Business Account loan of $40,000 to be repaid on or before December 31, 2024. The loan was interest-free until January 18, 2024. In January 2024, the Company repaid the loan principal of $30,000 and received loan forgiveness of $10,000, recorded as gain on settlement of debt.
10. SHARE CAPITAL
Authorized share capital
Authorized: Unlimited number of common shares without par value.
Issued share capital
During the three months period ended March 31, 2024:
The Company issued 225,000 common shares upon exercise of stock options for gross proceeds of $15,600.
During the year ended December 31, 2023:
The Company issued 400,000 common shares upon exercise of stock options for gross proceeds of $42,500.
Stock options
The Company has adopted a fixed up to 20% incentive share purchase option plan under the rules of the Exchange pursuant to which it is authorized to grant options to acquire up to 19,925,000 common shares of the Company to executive officers, directors, employees and consultants. The options can be granted for a maximum term of ten years and generally vest either immediately or in specified increments of up to 25% in any three-month period.
| 9 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
10. SHARE CAPITAL (continued)
Stock options (continued)
The changes in stock options including those granted to directors, officers, employees and consultants are summarized as follows:
| Period ended March 31, 2024 | Year ended December 31, 2023 | |||||||||||||||
| Number
of Options | Weighted Average Exercise Price | Number
of Options | Weighted Average Exercise Price | |||||||||||||
| Beginning Balance | 10,350,000 | $ | 0.17 | 8,635,000 | $ | 0.14 | ||||||||||
| Options granted | - | - | 2,365,000 | $ | 0.26 | |||||||||||
| Expired/Cancelled | - | - | (250,000 | ) | $ | 0.17 | ||||||||||
| Exercised | (225,000 | ) | $ | 0.06 | (400,000 | ) | $ | 0.11 | ||||||||
| Ending Balance | 10,125,000 | $ | 0.15 | 10,350,000 | $ | 0.17 | ||||||||||
| Exercisable | 9,498,750 | $ | 0.17 | 9,132,250 | $ | 0.17 | ||||||||||
The following table summarizes information about stock options outstanding and exercisable as at March 31, 2024:
| Exercise Price | Expiry date | Options | ||||||||||
| Outstanding | Exercisable | |||||||||||
| $ | 0.06 | April 1, 2024 | 55,000 | 55,000 | ||||||||
| $ | 0.05 | October 15, 2024 | 1,470,000 | 1,470,000 | ||||||||
| $ | 0.08 | November 18, 2025 | 500,000 | 500,000 | ||||||||
| $ | 0.08 | December 8, 2025 | 710,000 | 710,000 | ||||||||
| $ | 0.19 | January 28, 2026 | 150,000 | 150,000 | ||||||||
| $ | 0.25 | March 22, 2026 | 1,800,000 | 1,800,000 | ||||||||
| $ | 0.15 | August 10, 2027 | 2,675,000 | 2,675,000 | ||||||||
| $ | 0.15 | August 12, 2027 | 100,000 | 100,000 | ||||||||
| $ | 0.16 | October 12, 2027 | 300,000 | 300,000 | ||||||||
| $ | 0.28 | May 15, 2028 | 1,825,000 | 1,368,750 | ||||||||
| $ | 0.20 | June 21, 2028 | 400,000 | 300,000 | ||||||||
| $ | 0.20 | September 15, 2028 | 140,000 | 70,000 | ||||||||
| 10,125,000 | 9,498,750 | |||||||||||
The weighted average remaining life of the stock options outstanding at March 31, 2024 is 2.66 years (December 31, 2023: 2.84 years).
Share-based compensation
Share-based compensation of $27,464 was recognized during the three months ended March 31, 2024 (2023 - $88,001), respectively, for stock options granted and/or vested during the period. Options issued to directors and officers of the Company vested immediately, while those issued to consultants vest over one year, however, the Board may change such provisions at its discretion or as required on a grant-by-grant basis.
| 10 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
10. SHARE CAPITAL (continued)
Share-based compensation (continued)
Share-based payments for options granted and repriced was measured using the Black-Scholes option pricing model with the following assumptions:
| 2024 | 2023 | |||||||
| Expected life | - | 3.30 years | ||||||
| Volatility | - | 134% - 174 | % | |||||
| Dividend yield | - | 0 | % | |||||
| Risk-free interest rate | - | 3.28% - 4.20 | % | |||||
Option pricing models require the use of highly subjective estimates and assumptions, including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates.
Warrants
There were no warrants outstanding at March 31, 2024 and December 31, 2023.
Fair value of the finder’s warrants granted is measured using the Black-Scholes pricing model. Black-Scholes pricing models require the use of highly subjective estimates and assumptions, including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates.
11. GENERAL AND ADMINISTRATIVE EXPENSES
| Three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Bank service charges | 6,256 | 1,109 | ||||||
| Filing and registration fees | 8,322 | 9,728 | ||||||
| Insurance | 26,703 | 20,293 | ||||||
| Office maintenance | 9,804 | 13,108 | ||||||
| Payroll | 18,925 | 16,324 | ||||||
| Regulatory fees | 233 | - | ||||||
| Rent | 4,500 | 4,500 | ||||||
| Travel | 60,098 | 17,388 | ||||||
| Warranty expense | 3,250 | - | ||||||
| 138,091 | 82,450 | |||||||
12. RELATED PARTY TRANSACTIONS
For the period ended March 31, 2024 and 2023, the Company recorded the following transactions with related parties:
| a) | $1,500 in office rent (2023 – $1,500) to a company controlled by the Chief Technology Officer of the Company. |
| b) | $3,000 in office rent (2023 – $3,000) to a company controlled by the Chief Financial Officer of the Company. |
| c) | $85,417 worth of purchases (2023 - $72,071) to a company controlled by Chief Technology Officer of the Company. |
| 11 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
12. RELATED PARTY TRANSACTIONS (continued)
Related party transactions not otherwise described in the condensed consolidated interim financial statements are shown below. The remuneration of the Company’s directors and other members of key management, who have the authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, consist of the following:
| Three months ended March 31, | ||||||||
| Type of transaction | 2024 | 2023 | ||||||
| $ | $ | |||||||
| Consulting fees | 54,000 | 54,000 | ||||||
| Management fees | 54,000 | 54,000 | ||||||
| Professional fees | 32,100 | 32,100 | ||||||
| Share-based compensation | 20,715 | 71,646 | ||||||
| 160,815 | 211,746 | |||||||
There were no amounts due to related parties as at March 31, 2024 and December 31, 2023
13. CAPITAL DISCLOSURES
The Company includes Common shares, Options reserve and Warrants reserve in the definition of capital net of share issue costs. The Company’s objective when managing capital is to maintain sufficient cash resources to support its day-to-day operations. The availability of capital is solely through the issuance of the Company’s common shares. The Company intends to issue additional equity at such time when funds are needed and the market conditions become favorable to the Company. There are no assurances that funds will be made available to the Company when required. The Company makes every effort to safeguard its capital and minimize its dilution to its shareholders.
The Company is not subject to any externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the period ended March 31, 2024.
14. SEGMENTED INFORMATION
At March 31, 2024 and December 31, 2023, the Company has only one segment, being the HealthTab™ - Point of Care Business in Canada.
Revenue from the major customer was $1,109,193 during the three months period ended March 31, 2024 (2023 - $629,241). The major customer purchases goods and services from the Company’s only segment HealthTab™ - Point of Care Business. The loss of this major customer could significantly impact the Company’s revenue and financial position.
15. SUPPLEMENTAL CASH FLOW INFORMATION
There were no non-cash transactions during the period ended March 31, 2024 and 2023.
| 12 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
16. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Company’s financial instruments include cash and cash equivalents, term deposit, accounts receivable, accounts payable and loans payable. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.
This note presents information about the Company’s exposure to each of the above risks and the Company’s objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included throughout the condensed interim consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has implemented and monitors compliance with risk management policies.
a) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are held through a large Canadian financial institution. The Company does not have financial assets that are invested in asset-backed commercial paper.
The Company performs ongoing credit evaluations of its accounts receivable but does not require collateral. The Company establishes an allowance for expected credit losses based on the credit risk applicable to particular customers and historical data.
Approximately 97% of trade receivables are due from one customer at March 31, 2024 (December 31, 2023 – 99% from one customer).
a) Liquidity risk
Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company’s reputation. Liquidity risk has been assessed as moderate.
The Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. Please refer to note 13 to these condensed consolidated interim financial statements regarding the Company’s strategy to raise the funds through equity.
Contractual undiscounted cash flow requirements for financial liabilities as at March 31, 2024 are as follows:
| Carrying value | Contractual Cash flows | Within 1 year | 1 - 5 Years | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Trade accounts payable | 577,470 | 577,470 | 577,470 | - | ||||||||||||
| 577,470 | 577,470 | 577,470 | - | |||||||||||||
| 13 |
Avricore Health Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
16. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
b) Market risk
Market risk for the Company consists of currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposure within acceptable limits, while maximizing returns.
Currency risk
Foreign currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As all of the Company’s purchases and sales are denominated in Canadian dollars, and it has no significant cash balances denominated in foreign currencies, the Company is not exposed to foreign currency risk at this time.
Interest rate risk
Interest rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates. In respect of financial assets, the Company’s policy is to invest cash at fixed interest rates and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. The Company is not exposed to significant interest rate risk.
c) Fair values of financial instruments
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities and amounts resulting from direct arm’s length transactions.
Cash and cash equivalents are valued using quoted market prices or from amounts resulting from direct arm’s length transactions. As a result, these financial assets have been included in Level 1 of the fair value hierarchy.
The fair values of financial assets and financial liabilities are determined as follows:
Cash and cash equivalents are measured at fair value on a recurring basis using a level 1 measurement. The carrying amounts of accounts receivable, accounts payable, and loans payable are of approximate fair value due to their short-term maturity or current market rates for similar instruments.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full contractual term. Derivatives are included in Level 2 of the fair value hierarchy as they are valued using price models. These models require a variety of inputs, including, but not limited to, contractual terms, market prices, forward price curves, yield curves and credit spreads.
Level 3: Inputs for the asset or liability are not based on observable market data.
17. REVENUE
Revenues earned are comprised of lease and service of $563,487 (2023 –$311,001) and sale of products of $560,820 (2023 –$318,240). For the periods ended March 31, 2024 and 2023, the Company had one major customer from whom revenues are earned. Please refer to note 14 to this financial statement for the details regarding revenue from the major customer.
18. SUBSEQUENT EVENTS
| ● | 55,000 stock options with an exercise price of $0.06 expired unexercised on April 1, 2024 |
| 14 |
Exhibit 2
Avricore Health Inc.
Management’s Discussion & Analysis
For the three months ended
March 31, 2024
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
This Management Discussion and Analysis (“MD&A”) of Avricore Health Inc. (“AVRICORE”, the “Company”, “we”, “us” or “our”) for the period ended March 31, 2024 is prepared as of May 30, 2024. This MD&A should be read in conjunction with the unaudited condensed interim financial statements for the period ended March 31, 2024 and the audited consolidated financial statements for the years ended December 31, 2023 and the related notes thereto.
Our consolidated financial statements are prepared in accordance International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This MD&A contains “forward-looking statements” and the non-GAAP performance measures that are subject to risk factors set out in a cautionary note contained herein.
All amounts are expressed in Canadian dollars unless otherwise indicated.
Additional information about Avricore Health Inc. can be found on the SEDAR website (www.sedarplus.ca) and on the Company’s website (www.avricorehealth.com).
FORWARD LOOKING STATEMENTS
This MD&A contains or incorporates forward-looking statements within the meaning of Canadian securities legislation (collectively, “forward-looking statements. These forward-looking statements relate to, among other things, revenue, earnings, changes in cost and expenses, capital expenditures and other objectives, strategic plans and business development goals, and may also include other statements that are predictive in nature or that depend upon or refer to future events or conditions, and can generally be identified by words such as “may”, “will”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These statements are not historical facts but instead represent only Avricore’s expectations, estimates and projections regarding future events.
Although the Company believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Undue reliance should not be placed on such statements. Certain material assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Known and unknown factors could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Important assumptions, influencing factors, risks and uncertainties are referred to in the body of this MD&A, in the press release announcing the Company’s financial results, and in Avricore’s condensed interim financial statements and the notes thereto. These documents are available at www.sedarplus.ca.
The forward-looking statements contained in this MD&A are made as at the date of this MD&A and, accordingly, are subject to change after such date. Except as required by law, Avricore does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this MD&A, whether as a result of new information, future events or otherwise.
| 2 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
OVERVIEW
Avricore Health is focused on acquiring and developing early-stage technologies aimed at advancing pharmacy practice and patient care. Through our flagship offering HealthTab™ (a wholly owned subsidiary), we provide a turnkey point-of-care testing platform, creating value for stakeholders and better outcomes for patients.
The HealthTab™ platform effectively transforms pharmacies into community point-of-care diagnostic centers. HealthTab™ enables pharmacists to take on a greater role in primary health services and direct patient care. By capitalizing on the rapidly growing point-of-care testing market HealthTab™ ultimately improves the quality of life for patients living with chronic illness.
POST COVID-19 ENVIRONMENT
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. Four years later the pandemic’s aftershocks continue to impact the environment in which the Company operates.
One benefit is the increased focus on real world evaluations and rapid point-of-care testing (POCT) which has brought increased attention to HealthTab™. While continuing HealthTab’s™ primary focus on general health screening it has also been adapted to support virological testing.
In 2024, it is estimated over 6 million Canadians do not have a access to a family doctor, and only 29% of those who can are able to access them in a timely manner. This challenge is expected to get worse, as 29% of family doctors are planning on retiring or changing careers in the next 12 – 36 months.
Pharmacy is playing a critical role in filling the gaps that have been created and reducing expenses, as they can offer timely services in an efficient manner utilizing healthcare team members with lower billable rates. This is attractive in the current economy with stretched public health budgets.
HEALTHTAB™ – KEY DEVELOPMENTS
Key developments have included:
| ● | In the period ended March 31, 2024 revenue increased by 79% year over year to $1,124,307 and gross profit increased by 130% to $484,791. |
| ● | In the three months ended March 31, 2024 the Company recorded net profit of $168,537 and a net increase in cash of $307,470. |
| ● | Avricore has partnered with Ascensia Diabetes Care to integrate their blood glucose monitoring systems, CONTOUR®NEXT GEN and CONTOUR®NEXT ONE, with Avricore’s HealthTab™ platform. The collaboration aims to improve diabetes management for patients and pharmacists in Canada by linking daily blood glucose testing data to the patient’s HealthTab™ account. This integration will provide a more comprehensive health data tool for combating diabetes. The technical work is expected to be completed by Q3 of this year, with ongoing efforts to encourage patient engagement. Ascensia Diabetes Care is a global company focused on supporting people with diabetes and is a subsidiary of PHC Holdings Corporation. |
| ● | In September 2023, the Company announced its first testing location within Rexall’s Pharmacy Walk-In Clinic in Sherwood Park, Alberta. That location, a first for Rexall as well, offers both the Afinion 2™ blood-chemistry analyzer as well as the ID Now™ molecular platform by Abbott Rapid Diagnostics, giving patients quick access to their test results, and allowing for immediate consultation with their pharmacist. |
| 3 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
| ● | Subsequent to the initial launch, the Company was pleased to announce further expansion of HealthTab™ with Rexall Pharmacy Group ULC (“Rexall”). The Companies have been working closely to develop the best patient approaches and internal workflows to ensure the most successful deployment of this powerful point-of-care testing platform. |
| ● | The next steps with Rexall will be to deploy a minimum of another 20 locations spread out between stores in Alberta and Ontario. After each deployment, the teams will collaborate to assess deployment workflow, refine processes and identify further deployment opportunities based on patient and pharmacist feedback. |
| ● | Avricore’s HealthTab™ platform has been selected by a collaborative effort involving Barts Heart Centre and HEART UK to assess the feasibility of community pharmacists in the UK providing cholesterol testing alongside blood pressure checks for cardiovascular risk evaluation. The study aims to build on the success of over 930,000 blood pressure checks conducted in 6,000 pharmacies as part of an NHS initiative. With NHS England allocating £645 million (approx. $1.1 billion CDN$) to increase access to primary care, HealthTab™ will support pharmacists in delivering vital support for chronic diseases. |
| ● | Signing a reseller agreement between HealthTab™ Inc. and Abbott Rapid Diagnostics Limited UK & Ireland. This agreement provides a foundation for HealthTab™ to purchase and distribute the Afinion™ 2 and associated tests for diabetes and heart disease screening in community pharmacies in the United Kingdom. |
| ● | The Company has significantly expanded the number of Shoppers Drug Mart pharmacies offering its HealthTab™ point-of-care testing platform under a renewed Master Service Agreement (MSA) to 777 locations nation-wide. In addition to Shoppers Drug Mart pharmacies, this new MSA and corresponding Statement of Work (SOW) provides for affiliated locations under the Loblaws family of brands, to utilize HealthTab™ upon request. |
| ● | 775 HealthTab™ systems were operating in Shoppers Drug Mart® and Loblaw family stores including pharmacist walk-in clinics as of March 31, 2024; 479 in Ontario and 91 in British Columbia, 20 in Nova Scotia, 160 in Alberta, 3 in Prince Edward Island, 1 in Saskatchewan and 21 in New Brunswick. The Company was honoured to have HealthTab™ placed in the first pharmacist-led primary healthcare clinic located in Lethbridge, Alberta. Not only was this the first clinic, it was also the first system placed in a Real Canadian Superstore®, as well as its first Alberta location. |
| ● | Subsequent to March 31, 2024 an additional 2 systems have been deployed for a total of 777 participating Shoppers Drug Mart® pharmacies and Loblaw family stores offering screening tests to patients via HealthTab™ systems as of the date of this report. |
| ● | In 226 of these locations, the Company has deployed Abbott’s ID Now™, either in combination with the Afinion 2™ or standalone, to offer confirmed molecular testing for virus detection in community pharmacies. Last year’s “tripledemic” (Flu, RSV and Covid) strained the Canadian healthcare system beyond its breaking point. This year scientists are concerned about a heavily mutated Covid variant. Pharmacy will play a key a role in these battles and confirmed tests results means faster responses, better treatment and less spread of these infectious diseases. |
| ● | While flu season strains pharmacies’ capacity for chronic disease screening and management, having the ID Now™ means HealthTab™ can support pharmacies with confirmed molecular testing for virus detection during these critical months of the year and diversify the Company’s revenues. |
| 4 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
| ● | The innovative practice of pharmacist-led primary healthcare clinics is expected to expand, as provinces struggle to meet the health care needs of their residents and recruit more family physicians. The program’s primary focus is to screen patients at-risk for diabetes and cardiovascular disease. In-store signage and print material will let customers know they are able to request HealthTab™ tests, and existing patients will be made aware through direct outreach from their Shoppers Drug Mart® or Real Canadian Superstore® pharmacist based on their health profile. On March 28th, 2023, the Government of Canada tabled its budget for the year ahead, including a 10-year funding agreement with the Nation’s provinces to increase healthcare funding. This new funding approach is novel for the fact that each province will have specific agreements, opposed to the more traditional generalized formula. This approach is expected to bring substantial innovations related to healthcare data and new healthcare service delivery models, as the provinces agreed to make changes to rules and practices which have limited data-flow optimization and healthcare access. |
| ● | The Canadian Medical Association expressed support for many of the initiatives on March 30th, 2023, in relation to the healthcare agreement and encouraged government to institute recommendations from the Addressing Canada’s Health Workforce Crisis report from the Standing Committee on Health. One of the key items they pointed to was “…optimizing scopes of practice for health professionals…”. |
| ● | Most provinces have already begun expanding the scope of practice of their pharmacists, with 7 provinces allowing these healthcare professionals to prescribe for minor ailments and 8 provinces either allowing or will soon allow them to order and interpret lab results. HealthTab™ is uniquely situated to support the expanding scope of pharmacy practice. |
| ● | As of July 1st, 2022, the Government of Ontario brought into effect an expanded scope of practice for community pharmacists in the province, joining Alberta in this growing and increasingly popular approach. This includes limited prescribing for minor ailments, as well as the ability to perform certain point-of-care tests to assist patients with managing chronic disease. Approved tests include glucose, HbA1c and lipids, all of which HealthTab™ currently offers with the Abbott Afinion 2™. Also announced as part of this plan in Ontario, is a second stage of scope modifications, which began on January 1, 2023. This stage allows for limited prescribing for minor ailments and certain prescription renewals, further enhancing the value of community pharmacy in direct patient care. |
| ● | These changes, and increasing demand, means Canadian pharmacy business is rapidly evolving before our eyes, from being product focused to care service focused. At $51.4 billion, the industry already represents a significant impact on healthcare, and the anticipated increase in funding and new service offerings, including point-of-care testing, will mean this practice will play an even more impactful role going forward. |
| ● | During the pilot with Shoppers Drug Mart®, over 15,000 HealthTab™ tests were completed for more than 6,900 patients. The data collected confirmed that the patients tested had a high prevalence of previously undiagnosed diabetes, pre-diabetes and heart disease and significant near-term risk for major health events. Almost 60 per cent of patients needed an intervention to better manage their chronic disease. On average, 31 percent received a new chronic medication, 28 percent required a change in their current medication, and 235 patients were newly identified as diabetic. Patients also reported in post surveys that they valued receiving this information from their pharmacists, and those pharmacists indicated that HealthTab™ enabled an increase in the value of services they were able to provide to their patients. |
| ● | Developed a unique quality assurance program with a third-part reference laboratory to offer HealthTab™ pharmacies industry leading validation for point-of-care instruments and test consumables. |
| ● | Expanding capabilities, signing of a non-exclusive, pilot supplier distribution agreement in Canada between HealthTab™ Inc., and Abbott, with respect to the handheld blood chemistry analyzer, i-STAT Alinity. The agreement allows HealthTab™ to now also distribute Abbott’s novel point-of-care i-STAT Alinity and its associated tests for creatinine in Canadian pharmacies to better support patients with important information about their renal function. |
| 5 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
| ● | Expanding capabilities, amendment to the Distribution Agreement adds Abbott’s popular ID NOW™ molecular testing device which will add onsite testing and reporting capabilities for SARS-CoV-2 as well as Respiratory Syncytial Virus (RSV), Influenza A & B and Streptococcus – a powerful combination for detecting infections before they spread. |
| ● | Developing new pilot programs with national pharmacy chains, |
| ● | Continuing to negotiate new and novel POC diagnostic device integrations to strategically expand the HealthTab™ testing menu. |
| ● | Refining HealthTab™’s de-centralized clinical trials capabilities to make actionable and to monetize de-identified data associated with high-value Real-World Evaluation (RWE). |
| ● | Moving forward with negotiations across several target demographics, domestically and internationally, with pharmacies, life-science companies, host-locations, and Clinical Research Organizations (CRO). |
HealthTab™ is a cloud-based network technology that enables the world’s first harmonized, real-time response system where consumers receive a finger-stick blood test at their local pharmacy via a web-enabled clinical grade blood chemistry analyzer. These results are available in 12 minutes. Consumers’ biomarkers, which include key results related to heart, liver and kidney function, are received via secure login which they can then use to better understand their health performance and share with their healthcare team for evidence-based decision making. This one-of-a-kind real-time reporting system opens the door to improved preventative healthcare in public and private health systems.
De-identified data collected, with consumer consent across the HealthTab™ network of analyzers, can be shared with life-science companies and other research entities including the clinical research industry. The traditional clinical trial approach can be limited in the scope of time, demographical outreach, and other inherent exclusionary attributes. HealthTab™ presents a revolutionary model for utilizing the system’s unique ability to offer real-time evaluations of treated populations and real-world evaluation clinical trials.
Between January and February 2020, the Deloitte Center for Health Solutions surveyed multiple leaders from 17 pharmaceutical companies on their organizations’ RWE capabilities. Survey questions revolved around current and future applications for RWE, areas of investment, strategic partnerships, and use of Real World Data (RWD) and RWE in R&D.
| ● | Ninety-four percent of survey respondents believe using RWE in R&D will become important or very important to their organizations by 2022. |
| ● | Almost all companies expect to increase investments in talent, technology, and external partnerships to strengthen their RWE capabilities. |
| ● | Reduced clinical trial costs and trial failure rates using RWE in R&D |
| ● | Entered strategic partnerships to access new sources of RWD (in fact, all have taken this step) |
The Company believes it is very well positioned as a strategic partner and lead in this exciting growth sector. In addition, HealthTab™ is ideally situated to provide Real Time Real World Data (RTRWD). This is an important distinction from RWD because HealthTab™’s anonymized data can be transmitted in real time versus the lag that is accompanied with RWD that is gathered from clinical reporting systems, insurance claims and adverse event reporting systems.
| 6 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
Currently, HealthTab™ is available in certain Shoppers Drug Marts in several Canadian provinces. The Company has secured commitments with other pharmacies in Canada to place additional HealthTab™ systems and is in negotiations with corporate chains. Furthermore, the Company expanded a partnership agreement with the Ontario Pharmacists Association (OPA) to endorse HealthTab™ to pharmacies conducting COVID-19 testing and government for real-time reporting of test results. The OPA is the largest pharmacists’ association in Canada with over 10,000 members and over 4,600 community pharmacy locations.
HealthTab™ is being embraced as it is the most credible way to deploy point-of-care testing in the pharmacy and community setting where it offers the reliability, accuracy and flexibility the sector needs. Avricore has enjoyed a robust response from a variety of key industry players including, CROs, labs, pharmacies and researchers and has been engaging in a variety of technical discussions which are anticipated to lead to business.
As conversations progress, the Company will be making announcements in due course.
Fully Integrated Patient Health Records
The Company has been in technical discussions on the integration of HealthTab™ into the electronic medical records and pharmacy management systems with a Canadian market leader in the provision of these systems.
HealthTab™’s API integration capabilities make it ideal to achieve an industry first, where a consumer’s test results can be directly linked to an electronic medical record as well as a patient’s personal health record, for real-time responses and smooth integration across the multiple platforms a health provider will use.
Community Pharmacy Sector
In an era of rapid change in health care delivery, community pharmacy practice models and community pharmacy business models are both experiencing significant evolution in focus and daunting challenges to be met. We strongly believe that Avricore is a game-changing catalyst for community pharmacy to meet their practice and business challenges and increasingly focus on patient-centred cognitive services with attendant point-of-care testing in the future. Avricore is focused on expanding and further deploying its HealthTab™ and to best meet the current community pharmacy sector’s needs.
Selected Financial Information and Additional Disclosure
The following financial data for the three years is derived from the Annual Audited Consolidated Financial Statements and should be read in conjunction with the Consolidated Financial Statements.
| 2023 | 2022 | 2021 | ||||||||||
| Total revenue | $ | 3,485,147 | $ | 1,768,374 | $ | 122,808 | ||||||
| Loss from operations | $ | 701,215 | $ | 818,228 | $ | 1,708,132 | ||||||
| Loss per share – basic and diluted | $ | 0.01 | $ | 0.01 | $ | 0.02 | ||||||
| Total assets | $ | 2,538,205 | $ | 2,568,983 | $ | 2,281,393 | ||||||
| Total current liabilities (1) | $ | 529,218 | $ | 604,893 | $ | 84,477 | ||||||
| Total non-current financial liabilities | Nil | Nil | Nil | |||||||||
| (1) | 2022 Current liabilities include deferred revenue of $252,000 for which the Company completed delivery in Q1 2023. |
| 7 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
QUARTERLY FINANCIAL INFORMATION
The following table highlights selected unaudited consolidated financial data for each of the eight most recent quarters. These results are not necessarily indicative of results for any future period and you should not rely on these results to predict future performance.
| Quarter Ended | Mar 2024 | Dec 2023 | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Jun 2022 | ||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Revenue | 1,124,307 | 1,354,403 | 953,454 | 548,049 | 629,241 | 997,235 | 572,228 | 176,175 | ||||||||||||||||||||||||
| Gross profit (loss) | 484,791 | 501,466 | 261,778 | 229,471 | 210,681 | 168,845 | 215,961 | 56,874 | ||||||||||||||||||||||||
| Share-based compensation | 27,464 | 142,765 | 304,328 | 168,518 | 88,001 | 243,000 | 58,354 | 9,069 | ||||||||||||||||||||||||
| Comprehensive income (loss) | 168,537 | 59,584 | (285,062 | ) | (284,225 | ) | (191,512 | ) | (244,789 | ) | (180,398 | ) | (207,363 | ) | ||||||||||||||||||
| Net profit (loss)/share | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | |||||||||||||||||
| Total Assets | 2,798,058 | 2,538,205 | 2,453,136 | 2,143,810 | 2,296,565 | 2,568,983 | 2,128,017 | 1,985,085 | ||||||||||||||||||||||||
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2024 and 2023
Three months ended March 31 | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | 1,124,307 | $ | 629,241 | ||||
| % Change - year over year | 79 | % | ||||||
| Gross profit | $ | 484,791 | $ | 210,681 | ||||
| % Change - year over year | 130 | % | ||||||
The Company incurred a comprehensive income of $168,537 for the three months ended March 31, 2024 (2023 - loss $191,512).
Significant changes are as follows:
| ● | Revenue increased to $1,124,307 (2023 - $629,241) a 79% increase due to an increase in HealthTab™ systems deployed and tests sold. Gross profit amounted to $484,791 (2023 – $210,681) a 130% increase. Gross margin for the period was 43% (2023- 33%) outperforming the Company’s target margin of 30%. |
| ● | Share-based compensation of $27,464 (2023 - $88,001) was recognized for stock options granted, vested, and repriced during the period. |
| 8 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
| ● | Consulting fees decreased to $54,000 (2023 - $74,117) due to fewer consultants engaged compared to the previous year. |
| ● | General and administrative expenses increased to $138,091 (2023 - $82,450) mainly due to increase in operations as compared with the previous year. |
| ● | Management fees remained unchanged at $54,000 (2023 - $54,000). |
| ● | Professional fees decreased to $32,100 (2023 – 60,960) due to the timing of invoicing of audit fees. |
LIQUIDITY AND CAPITAL RESOURCES
The Company’s operations have been financed through the issuance of common shares. Management anticipates that additional financings or capital requirements to fund the current commercial operations and working capital will be required to grow the business to a sustainable level.
Cash flows
| Sources and Uses of Cash: | Period ended March 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Cash provided by (used in) operating activities | 406,058 | (92,747 | ) | |||||
| Cash used in investing activities | (84,188 | ) | (228,017 | ) | ||||
| Cash provided by (used in) financing activities | (14,400 | ) | 27,500 | |||||
| Cash and Cash Equivalents, closing balance | 584,041 | 512,757 | ||||||
There is an overall cash inflow of $307,470 for the three months ended March 31, 2024 compared to the cash outflow of $107,770 in the comparable period in 2023.
Funding Requirements
Management devotes financial resources to the Company’s operations, sales and commercialization efforts, regulatory approvals and business development. The Company will require cash to support working capital.
The future funding requirements will depend on many factors including:
| ● | the extent to which we will be commercially successful in launching HealthTab™, |
| ● | the size, cost and effectiveness of our sales and marketing programs, distribution and marketing arrangements, |
| ● | the ability of the Company to raise capital through the issuance of its securities. |
As at March 31, 2024, the Company had a working capital of $481,355 (December 31, 2023 – $244,343) and $393,863 (December 31, 2023 - $427,689) in accounts receivable. We believe that our cash on hand, the expected future cash inflows from revenues, net proceeds from the options exercised, if any, may be sufficient to finance our working capital within the next twelve months. If our existing cash resources together with the cash we generate from the sales of our products are insufficient to fund our working capital, operational needs, we may need to sell additional equity or debt securities or seek additional financing through other arrangements.
| 9 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
RELATED PARTY TRANSACTIONS
For the three months period ended March 31, 2024 and 2023, the Company recorded the following transactions with related parties:
| a) | $1,500 in office rent (2023 – $1,500) to a company controlled by the Chief Technology Officer of the Company. |
| b) | $3,000 in office rent (2023 – $3,000) to a company controlled by the Chief Financial Officer of the Company. |
| c) | $85,417 worth of purchases (2023 - $72,071) to a company controlled by Chief Technology Officer of the Company. |
Related party transactions not otherwise described in the consolidated financial statements are shown below. The remuneration of the Company’s directors and other members of key management, who have the authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, consist of the following:
| Type of transaction | Three months ended March 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Consulting fees, Director & CTO | 54,000 | 54,000 | ||||||
| Management fees, CEO | 54,000 | 54,000 | ||||||
| Professional fees, CFO | 32,100 | 32,100 | ||||||
| Share-based compensation | 20,715 | 71,646 | ||||||
| 160,815 | 211,746 | |||||||
There were no amounts due to related parties as at March 31, 2024 (December 31, 2023 - $Nil).
DISCLOSURE OF OUTSTANDING SHARE DATA
The following table summarizes the Company’s outstanding share capital as at report date:
| Common Shares | 99,869,664 | |||
| Stock Options | 10,070,000 | |||
| Warrants | - |
SUBSEQUENT EVENTS
| ● | 55,000 stock options expired unexercised on April 1, 2024 |
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Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
COMMITMENTS AND AGREEMENTS
Loans payable
During the year ended December 31, 2020, the Company received a Canada Emergency Business Account loan of $40,000 to be repaid on or before December 31, 2024. The loan was interest-free until January 18, 2024. In January 2024, the Company repaid the loan principal of $30,000 and received loan forgiveness of $10,000, recorded as gain on settlement of debt.
FINANCIAL INSTRUMENTS AND RISKS
Operational Risk Factors
Limited Operating History
There is no assurance that Avricore will earn profits in the future, or that profitability will be sustained. Operating in the pharmaceutical and biotechnology industry requires substantial financial resources, and there is no assurance that future revenues will be sufficient to generate the funds required to continue AVRICORE business development and marketing activities. In case AVRICORE does not have sufficient capital to fund its operations, the management may be required to restructure the operations.
Going concern
The assessment of the Company’s ability to execute its strategy by funding future working capital requirements involves judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has always experienced operating losses and negative operating cash flows. Operations have been funded by the issuance of share capital. These conditions may cast substantial doubt on the Company’s ability to continue as a going concern.
Development of Technological Capabilities
The market for Avricore’s products is characterized by changing technology and continuing process development. The future success of Company’s business will depend in large part upon our ability to maintain and enhance the Company’s technological capabilities, develop and market products and services which meet changing customer needs and successfully anticipate or respond to technological changes on a cost effective and timely basis. Although we believe that Company’s operations provide the products and services currently required by our customers, there can be no assurance that the Company’s process development efforts will be successful or that the emergence of new technologies, industry standards or customer requirements will not render Avricore’s products or services uncompetitive. If Avricore needs new technologies and equipment to remain competitive, the development, acquisition and implementation of those technologies and equipment may require us to make significant capital investments.
Dependence on Key Personnel
We are dependent to a large extent upon the continued services of our senior management team and other key employees such as sales and technical personnel. There is intense competition for skilled employees and our failure to recruit, train and retain such employees could have an adverse effect on our business, financial condition or operating results.
| 11 | Page |
Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
Financial Instruments and Risk Management
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and loans payable. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has implemented and monitors compliance with risk management policies.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are held through a large Canadian financial institution. The cash equivalent is composed of a guaranteed investment certificate and is issued by a Canadian bank with high investment-grade ratings. The Company does not have financial assets that are invested in asset-backed commercial paper.
The Company performs ongoing credit evaluations of its accounts receivable but does not require collateral. The Company establishes an allowance for doubtful accounts based on the credit risk applicable to particular customers and historical data. Approximately 97% of trade receivables are due from one customer at March 31, 2024 (December 31, 2023 – 99% from one customer).
Liquidity risk
Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company’s reputation.
The Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. The Company anticipates it will have adequate liquidity to fund its financial liabilities through future equity contributions, however, there can be no guarantees that sufficient funds will be raised. As at March 31, 2024, the Company’s liabilities $577,470 (December 31, 2023 - $529,218) were comprised of accounts payable $577,470 (December 31, 2023 – 489,218), and loans payable $Nil (December 31, 2023 – $40,000).
Currency risk
Foreign currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As all of the Company’s purchases and sales are denominated in Canadian dollars, and it has no significant cash balances denominated in foreign currencies, the Company is not exposed to foreign currency risk at this time.
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Avricore Health Inc.
Management’s Discussion and Analysis
March 31, 2024
Interest rate risk
Interest rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates. In respect of financial assets, the Company’s policy is to invest cash at floating interest rates and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. The Company is not exposed to significant interest rate risk.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements, which would require disclosure.
CONTACT
| Officers and Directors | Contact | |
|
Hector Bremner, CEO, Director
Rodger Seccombe, CTO, Director
Kiki Smith, CFO
David Hall, Chairman
Alan Arnstein, Director
Christine Hrudka, Director
Dr. Robert Sindelar, Director
Thomas Teahen, Director |
Avricore Health Inc.
Suite 1120 - 789 West Pender St. Vancouver, BC V6C 1H2
Tel: 604 773-8943 |
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Exhibit 3
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Hector D. Bremner, CEO of Avricore Health Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Avricore Health Inc. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: May 30, 2024
| “Hector Bremner” | |
| Hector D. Bremner, CEO |
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Exhibit 4
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Kiki Smith, CFO of Avricore Health Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Avricore Health Inc. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: May 30, 2024
| “Kiki Smith” | |
| Kiki Smith, CFO |
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Exhibit 5
Exhibit 6
AVRICORE HEALTH INC.
NOTICE OF ANNUAL GENERAL AND
SPECIAL MEETING HELD
THURSDAY, JUNE 20, 2024
AND
MANAGEMENT INFORMATION CIRCULAR
May 16, 2024
Avricore Health Inc.
Suite
1120 – 789 West Pender Street
Vancouver, British Columbia V6C 1H2
NOTICE
OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 20, 2024.
NOTICE IS HEREBY GIVEN that the annual general and special meeting (the “Meeting”) of Avricore Health Inc. (the “Company” or “AVRICORE”) will be held at Suite 1120 – 789 West Pender Street, Vancouver, British Columbia, V6C 1H2 on Thursday, June 20, 2024 at 10:00 a.m. (Vancouver time) for the following purposes:
| 1. | to receive the audited financial statements of the Company for the financial year ended December 31, 2023, together with the auditor’s report thereon; |
| 2. | to fix the number of directors at seven (7); |
| 3. | to elect directors of the Company for the ensuing year; |
| 4. | to appoint Manning Elliot LLP, Chartered Professional Accountants, as the Company’s auditors for the ensuing year, and to authorize the directors to fix the remuneration to be paid to the auditors for the ensuing year; |
| 5. | to re-approve, ratify and confirm by ordinary resolution the Company’s fixed 20% Stock Option Plan for the ensuing year, as set forth in the Information Circular accompanying this Notice; |
| 6. | to transact such other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof. |
Specific details of the matters proposed to be put before the Meeting are set forth in the Information Circular. The Corporation is offering its shareholders the option to listen and participate (but not vote) at the Meeting in real time by Zoom Meeting at the following coordinates:
Join Zoom Meeting
https://us02web.zoom.us/j/84830389027?pwd=QnFtUHByWU5kRGN6ZmdjTnBDSkhFUT09
Meeting ID: 848 3038 9027
Passcode: 871631
Shareholders of the Company of record at the close of business on May 16, 2024, will be entitled to receive notice of and vote at the Meeting. Shareholders of the Company who are unable to attend the Meeting are requested to complete, sign, date and return the enclosed form of proxy indicating your voting instructions. A proxy will not be valid unless it is deposited at the office of Computershare Investor Services Inc., Attention: Proxy Department, 510 Burrard Street, Vancouver, British Columbia, V6C 3A8, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed for the Meeting or any adjournment(s) or postponement(s) thereof. Alternatively, a proxy may be voted over the internet at www.investorvote.com, by facsimile within North America toll-free at 1-866-249-7775, or outside North America at 1-416-263-9524, or by telephone within North America toll-free at 1-866-732-8683, or outside North America at 1-312-588-4290. If you are not a registered shareholder of the Company, please refer to the accompanying Information Circular for information on how to vote your shares.
DATED
at Vancouver, British Columbia, this 16th day of May 2024.
BY ORDER OF THE BOARD OF DIRECTORS:
| “David Hall” | |
| David Hall, Chairman of the Board of Directors |
Registered shareholders of the Company unable to attend the Meeting are requested to date, sign and return their form of proxy in the enclosed envelope or to vote by telephone or facsimile or using the internet in accordance with the instructions on the form of proxy. If you are a non-registered shareholder of the Company and receive these materials through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided to you by your broker or by the other intermediary. Failure to do so may result in your shares not being eligible to be voted by proxy at the Meeting.
MANAGEMENT INFORMATION CIRCULAR
UNLESS OTHERWISE NOTED, INFORMATION IS PROVIDED AS AT MAY 16, 2024 FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS OF THE COMPANY TO BE HELD ON JUNE 20, 2024.
This management information circular (the “Information Circular”) is being mailed by management of Avricore Health Inc. (the “Company” or “AVRICORE”) to shareholders of the Company of record at the close of business on May 16, 2024 (the “Record Date”), which is the date that has been fixed by the directors of the Company as the record date to determine the shareholders of the Company who are entitled to receive notice of and to attend the Meeting (as defined herein). The Company is mailing this Information Circular in connection with the solicitation of proxies by and on behalf of the Company for use at its annual general and special meeting (the “Meeting”) of shareholders of the Company that is to be held on Thursday, June 20, 2024 at 10:00 a.m. (Vancouver time) at Suite 1120-789 West Pender Street, Vancouver, British Columbia, V6C 1H2.
The Corporation is offering its shareholders the option to listen and participate (but not vote) at the Meeting in real time by Zoom Meeting at the following coordinates:
Join Zoom Meeting
https://us02web.zoom.us/j/84830389027?pwd=QnFtUHByWU5kRGN6ZmdjTnBDSkhFUT09
Meeting ID: 848 3038 9027
Passcode: 871631
The solicitation of proxies will be primarily by mail. Certain officers, directors and employees of the Company may also solicit proxies by telephone, in person or by electronic communications, as well as by newspaper or media advertising. In addition, AVRICORE may request brokers and nominees who hold stock in their respective names to furnish this Information Circular and related proxy materials to their customers, and AVRICORE will reimburse such brokers and nominees for their related out-of-pocket expenses. The cost of solicitation will be borne by the Company.
PART 1 – VOTING MATTERS
WHO CAN VOTE?
If you are a registered shareholder of the Company as at the close of business on the Record Date, you are entitled to notice of and to attend the Meeting and cast a vote for each share registered in your name on all resolutions put before the Meeting. If the shares are registered in the name of a corporation, a duly authorized officer of the corporation, may attend on its behalf, but documentation indicating such officer’s authority should be presented at the Meeting. If you are a registered shareholder of the Company but do not wish to, or cannot, attend the Meeting in person, you can appoint someone who will attend the Meeting and act as your proxyholder to vote in accordance with your instructions (see “Voting By Proxy” below). If your shares are registered in the name of a “nominee” (usually a bank, trust company, securities dealer, financial institution or other intermediary) you should refer to the section entitled “Non-Registered Shareholders” set out below.
It is important that your shares be represented at the Meeting regardless of the number of shares you hold, if you will not be attending the Meeting in person, we invite you to complete, date, sign and return your form of proxy as soon as possible so that your shares will be represented.
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VOTING BY PROXY
If you do not attend the Meeting, you can still make your vote count by appointing someone who will be there to act as your proxyholder. You can either tell your proxyholder how you want to vote or you can let your proxyholder decide for you. You can do this by completing a form of proxy.
In order to be valid, you must return the completed form of proxy to the Company’s transfer agent Computershare Investor Services Inc., Attention: Proxy Department, 510 Burrard Street, Vancouver, British Columbia, V6C 3A8, not later than 48 hours, excluding Saturdays, Sundays and holidays, prior to the time fixed for the Meeting or any adjournment(s) or postponement(s) thereof. Alternative, a proxy may be voted over the internet at www.investorvote.com, by facsimile within North America toll free at 1-866-249-7775, or outside North America at 1-416-263-9524, or by telephone within North America toll-free at 1-866-7328683, or outside North America at 1-312-588-4290.
What Is A Proxy?
A form of proxy is a document that authorizes someone to attend the Meeting and cast your votes for you. We have enclosed a form of proxy with this Information Circular. You can use it to appoint a proxyholder.
Appointing A Proxyholder
You can choose any person to be your proxyholder. It is not necessary for the person whom you choose as your proxyholder to be a shareholder of the Company. To make such an appointment, simply fill in the person’s name in the blank space provided in the enclosed form of proxy. To vote your shares, your proxyholder must attend the Meeting. If you do not fill a name in the blank space in the enclosed form of proxy, the persons named in the form of proxy are appointed to act as your proxyholder (the “Management Proxyholders”). Those persons are directors, officers or other authorized representatives of the Company.
Instructing Your Proxy
You may indicate on your form of proxy how you wish your proxyholder to vote your shares. To do this, simply mark the appropriate boxes on the form of proxy. If you do this, your proxyholder must vote your shares in accordance with the instructions you have given.
If you do not give any instructions as to how to vote on a particular issue to be decided at the Meeting, your proxyholder can vote your shares as your proxyholder thinks fit. If you have appointed the persons designated in the form of proxy as your proxyholder, they will, unless you give contrary instructions, vote your shares IN FAVOUR of each of the items of business set out in the Notice of Meeting.
For more information about these matters, see “Part 3 - The Business of the Meeting”. The enclosed form of proxy gives the persons named on it the authority to use their discretion in voting on amendments or variations to matters identified in the Notice of Meeting. As of the date of this Information Circular, the Company’s management is not aware of any other matter to be presented for action at the Meeting. If, however, other matters do properly come before the Meeting, the persons named in the enclosed form of proxy will vote on them in accordance with their best judgment, pursuant to the discretionary authority conferred by the form of proxy with respect to such matters.
Changing Your Mind
If you want to revoke your proxy after you have delivered it, you can do so at any time before it is used. You may do this by (a) attending the Meeting and voting in person; (b) signing a proxy bearing a later date; (c) signing a written statement which clearly indicates that you want to revoke your proxy and delivering the signed written statement to the Company’s registered office at Suite 1120 – 789 West Pender Street, Vancouver, British Columbia V6C 1H2; or (d) in any other manner permitted by applicable law.
Your proxy will only be revoked if a revocation is received by 4:00 p.m. (Vancouver time) on the last business day before the day of the Meeting, or any adjournment(s) or postponement(s) thereof, or delivered to the person presiding at the Meeting before it (or any adjournment or postponement) commences. If you revoke your proxy and do not replace it with another that is deposited with the Company before the deadline, you can still vote your shares but to do so you must attend the Meeting in person. Only registered shareholders of the Company may revoke a proxy. If your shares are not registered in your own name and you wish to change your vote, you must arrange for your nominee to revoke your proxy on your behalf (see below under “Non-Registered Shareholders”).
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NON-REGISTERED SHAREHOLDERS
Only registered holders of shares or the persons they appoint as their proxyholders are permitted to vote at the Meeting. In many cases, however, shares beneficially owned by a holder (a “Non-Registered Holder”) are registered either:
| (a) | in the name of an intermediary (an “Intermediary”) that the Non-Registered Holder deals within respect of the shares. Intermediaries include banks, trust companies, securities dealers or brokers, and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans; or |
| (b) | in the name of a clearing agency (such as The Canadian Depository for Securities Limited), of which the Intermediary is a participant. |
Non-Registered Holders who have not objected to their Intermediary disclosing certain ownership information about themselves to the Company are referred to as “NOBOs”. Those Non-Registered Holders who have objected to their Intermediary disclosing ownership information about themselves to the Company are referred to as “OBOs”.
Pursuant to National Instrument 54-101 – Communications with Beneficial Owners of Securities of a Reporting Issuer, the Company has distributed copies of proxy-related materials in connection with this Meeting (including this Information Circular) indirectly or directly to the NOBOs and to the Intermediaries for onward distribution to Non-Registered Holders.
Intermediaries that receive the proxy-related materials are required to forward the proxy-related materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Intermediaries often use service companies to forward the proxy-related materials to Non-Registered Holders.
The Company will not be paying for Intermediaries to deliver to OBOs (who have not otherwise waived their right to receive proxy-related materials) copies of the proxy-related materials and related documents. Accordingly, an OBO will not receive copies of the proxy-related materials and related documents unless the OBO’s Intermediary assumes the costs of delivery.
Generally, Non-Registered Holders who have not waived the right to receive proxy-related materials (including OBOs who have made the necessary arrangements with their Intermediary for the payment of delivery and receipt of such proxy-related materials) will be sent a voting instruction form which must be completed, signed and returned by the Non-Registered Holder in accordance with the Intermediary’s directions on the voting instruction form. In some cases, such Non-Registered Holders will instead be given a proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature) which is restricted as to the number of shares beneficially owned by the Non-Registered Holder but which is otherwise not completed. This form of proxy does not need to be signed by the Non-Registered Holder, but to be used at the Meeting, needs to be properly completed and deposited with Computershare Investor Services Inc. as described under “Voting By Proxy” above.
The purpose of these procedures is to permit Non-Registered Holders to direct the voting of the shares that they beneficially own. Should a Non-Registered Holder wish to attend and vote at the Meeting in person (or have another person attend and vote on behalf of the Non-Registered Holder), the Non-Registered Holder should insert the Non-Registered Holder’s (or such other person’s) name in the blank space provided or, in the case of a voting instruction form, follow the corresponding instructions on the form.
Non-Registered Holders should carefully follow the instructions of their Intermediaries and their service companies, including instructions regarding when and where the voting instruction form or proxy form is to be delivered.
PART 2 – VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The authorized capital of the Company consists of an unlimited number of common shares without par value (“Common Shares”). At the close of business on the Record Date, 99,869,664 Common Shares were issued and outstanding. Each shareholder of the Company is entitled to one vote for each Common Share registered in the shareholder’s name at the close of business on the Record Date.
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To the knowledge of the directors and executive officers of Avricore Health Inc., as at the date of this Circular, the following persons beneficially own, directly or indirectly, or exercise control or direction over, 10% or more of the issued and outstanding shares of each class of the Company:
| Member | Number of Common Shares | Percentage of Issued Common Share Capital (of 99,869,664) | ||||||
| CDS & CO. (1) | 96,900,762 | 97 | % | |||||
|
(1) | The beneficial owners of common shares held by depositories and brokerage firms are not known to the directors or executive officers of the Company. |
As at May 16, 2024, the total number of common shares owned or controlled by management and directors of the Company and their associates or affiliates was 9,077,229 common shares, representing 9.09% of the total issued and outstanding common shares.
PART 3 - THE BUSINESS OF THE MEETING
FINANCIAL STATEMENTS
The audited financial statements of the Company for the financial year ended December 31, 2023 will be presented to shareholders of the Company at the Meeting. They have been mailed to the shareholders of the Company who have requested to receive a copy. The Company’s audited financial statements and management’s discussion and analysis for the financial year ended December 31, 2023 may also be accessed through the internet on the System for Electronic Document Analysis and Retrieval (SEDAR+) at www.sedarplus.ca, or copies may be obtained without charge upon request to the Company at Suite 1120 – 789 West Pender Street, Vancouver, BC V6C 1H2. You may also access the Company’s audited Financial Statements and Management’s Discussion and Analysis for the financial year ended December 31, 2023 through the Company’s website at www.avricorehealth.com.
ELECTION OF DIRECTORS
The board of directors of the Company (the “Board”) is recommending seven persons (the “Nominees”) for election at the Meeting. Each of the seven persons whose name appears below is proposed by the Board to be nominated for election as a director of AVRICORE to serve until the next annual general meeting of shareholders of the Company or until the director sooner ceases to hold office. Each of the Nominees has agreed to stand for election, and the Company’s management is not aware of any intention of any of them not to do so. If, however, one or more of the Nominees should become unable or unwilling to stand for election, proxies held by the persons designated as proxyholders on the form of proxy will vote (in the absence of specifications or instructions in the form of proxy that the shares represented by the proxy are to be withheld from voting on the election of directors) for the election of the remaining nominees.
The Company’s articles include an advance notice requirement for nominations by shareholders of the Company in certain circumstances. The advance notice requirement fixes a deadline by which holders of record of Common Shares must submit director nominations to the Secretary of the Company prior to any annual meeting of shareholders of the Company (or any special meeting of shareholders of the Company if one of the purposes for which the special meeting is called is the election of directors) and sets forth the specific information that a nominating shareholder must include in the written notice to the Secretary of the Company for a nomination to be valid, subject to the requirements of the Business Corporations Act, [SBC 2002] Chapter 57.
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The following table (and notes thereto) states the name and province and country of residence of each Nominee, all offices of AVRICORE now held by the Nominee, the period of time for which the Nominee has been a director of AVRICORE and the number of Common Shares or convertible securities beneficially owned by the Nominee, directly or indirectly, or over which the Nominee exercises control or direction, as at the date hereof:
The Board recommends that you vote FOR all Nominees standing for election.
| Name, province and country of residence | Current position(s) with Avricore | Director since | Number of Common Shares beneficially owned or controlled , directly or indirectly (1) | Number of convertible securities | ||||||
David Hall (2) British Columbia, Canada | Director and Chairman of the Board | January 20, 2016 | 1,367,618 | 835,000 options | ||||||
Alan Arnstein (2) Alberta, Canada | Director | April 20, 2017 | 25,000 | 400,000 options | ||||||
Robert Sindelar (2) Vancouver, British Columbia Canada | Director | March 27, 2018 | 795,000 | 400,000 options | ||||||
Rodger Seccombe
Vancouver, British Columbia Canada | CTO, and Director | December 8, 2020 | 4,461,111 | 1,975000 options | ||||||
Hector Bremner Vancouver, British Columbia Canada | CEO, and Director | April 2, 2020 | 1,490,000 | 1,975,000 options | ||||||
Thomas W. Teahen Toronto, Ontario Canada | Director | June 21, 2023 | Nil | 200,000 options | ||||||
Christine Hrudka Saskatoon, Sask. Canada | Director | June 21, 2023 | 22,500 | 200,000 options | ||||||
Notes:
| (1) | Common Shares beneficially owned, controlled or directed, directly or indirectly, is based upon information furnished to Avricore Health Inc. by the individual directors. |
|
(2) |
Member of the Audit Committee |
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Set out below are the profiles of the Nominees for election at the Meeting:
David Hall, Chairman and Director. Mr. Hall is currently Chairman of RepliCel Life Sciences (“RepliCel”), a public company listed on the TSXV, Co-founder of MoodMD, past Chairman of Providence Healthcare Research Institute and a consultant to the life sciences industry. Mr. Hall served as Chief Executive Officer and President of RepliCel from 2012-2015. Prior to RepliCel, Mr. Hall consulted to the British Columbia government, companies in the pharmaceutical, biotech and e-Health industries and Non-Governmental-Organizations. Mr. Hall was a business founder, Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary of Angiotech Pharmaceuticals Inc., a company that was listed on the Toronto Stock Exchange and the NASDAQ. Mr. Hall is a past Chair and board member of Life Sciences BC and is the author of Life Sciences BC’s position papers for the BC Premier’s Competition Council Report and Conversation on Health. Mr. Hall was also a member of the BC Task Force on PharmaCare and the board of directors of Advantage BC. Mr. Hall holds an Honours degree in Economics and an Honours degree in Finance from the University of Manitoba.
Alan Arnstein, Director. Mr. Arnstein previously worked for Katz Group Canada where he oversaw the growth of the Medicine Shoppe from 28 stores to 175 stores before its successful sale to McKesson Canada. Mr. Arnstein was also actively involved in expanding the Rexall pharmacy brand across Canada, which included responsibility for acquiring and consolidating independent pharmacies under the Rexall banner. Mr. Arnstein is also actively involved in various real estate projects, including the leasing of the Ice District next to Rogers Place in downtown Edmonton, an estimated $5.5 billion project.
Robert Sindelar, Director. Dr. Sindelar is Dean Emeritus and Professor Emeritus in the Faculty of Pharmaceutical Sciences at the University of British Columbia (“UBC”). Dr. Sindelar is also an elected fellow of the Canadian Academy of Health Sciences, and an elected fellow of the International Pharmaceutical Federation (FIP). Currently, he serves as the Chair of the FIP “Global Pharmacy Observatory Data & Intelligence Presidential Commission working with FIP stakeholders including WHO. He served as Vice President of Innovation, Research & Academic Affairs at Providence Health Care (PHC), President of the PHC Research Institute (with 300+ medical researchers) and Associate Dean Research in the UBC Faculty of Medicine (2013-2016). He is a founder of the Centre for Drug Research and Development (formerly CDRD, now called adMare BioInnovations), a national not-for-profit drug development and commercialization centre. Also, he has served as President of the Global Drug Commercialization Centre (GDCC)-China, and Vice President, GDCC-Worldwide (2017-2019), a translational medicine endeavor that facilitates the innovative development of healthcare initiatives.
Rodger Seccombe, Chief Technology Officer and Director. Mr. Seccombe brings over 20 years’ experience in software and technology, as well as clean energy, having developed and sold companies he has launched. This includes a leading cloud-based informatics system currently used by laboratories and instrument manufacturers. After recognizing the need for accurate point-of-care testing, Mr. Seccombe, along with his brother, developed and pioneered HealthTab™, which was acquired by Avricore Health in 2017.
Hector Bremner, Chief Executive Officer and Director. Mr. Bremner previously owned and operated a boutique marketing and communication firm, TOUCH Marketing, in Vancouver from 2007 – 2013. He Joined the BC Government as Executive Assistant to the Minister of International Trade and served as Executive Assistant to the Minister of Natural Gas Development and Deputy Premier, responsible for Housing and to the Minister of Small Business. In 2015 he joined Vancouver’s Pace Group Communications as VP, Public Affairs.
Thomas W. Teahen, Director.
Mr. Teahen served as president and CEO of the Ontario Workplace Safety and Insurance Board 2015-2021. He also served as chief of staff to the Ontario Minister of Labour, Minister of Education and to the Office of the Premier of Ontario during the period 2005 - 2015. Prior to that Mr. Teahen practiced law in the areas of labour and employment law, civil litigation and administrative law. Mr. Teahen currently serves as a management and public affairs consultant and the Senior Vice President Advanced Fuels for Greenfield Global Inc.
Christine Hrudka, Director. Ms. Hrudka is a Canadian pharmacist, entrepreneur, leader, public speaker, and advocate for women in business. She owned Shoppers Drug Mart franchises in Saskatchewan and now owns independent pharmacies in Saskatoon. Christine served as Chair of the Canadian Pharmacy Association and has led the advancement of many critical topics provincially, nationally, and internationally. She is a board member of Pharmacy Association of Saskatchewan and of the Canadian Pharmacy Association. She currently sits as a board director of Rapid Dose Therapeutics (DOSE) and chairs Governance and Compensation. She also served as Director of Pharmapod, Director and committee member of Governance and Compensation, Smart Employee Benefits, Board chair of Aither Ingredient Corporation and Member-at-Large, University of Saskatchewan Senate. She has volunteered for many community boards such as SREDA, YWCA, United Way, and WESK. Christine holds a B.Sc. in Pharmacy (BSP) and a designation from the Institute of Corporate Directors, Designation (ICD.D).
| 8 |
The Company’s management recommends that shareholders vote in favour of the election of management’s Nominees as directors of the Company for the ensuing year. Unless you give instructions otherwise, the Management Proxyholders intend to vote your proxy FOR the Nominees named in this Information Circular.
APPOINTMENT OF THE AUDITOR
At the Meeting, shareholders of the Company will be asked to vote for the re-appointment of Manning Elliott LLP, Chartered Professional Accountants, of Vancouver, British Columbia, as the Company’s auditors for the ensuing year, and to authorize the directors to fix the auditors’ remuneration. See “Part 5 – Audit Committee” below for a discussion of the past remuneration paid to the auditor. Manning Elliott LLP was first appointed as auditors of the Company on March 6, 2020.
The Company’s management recommends that shareholders vote in favour of the re-appointment of Manning Elliot LLP as the Company’s auditors for the ensuing year and grant the Board the authority to determine the remuneration to be paid to the auditors. Unless you give instructions otherwise, the Management Proxyholders intend to vote your proxy FOR the re-appointment of Manning Elliott LLP to act as the Company’s auditors until the close of its next annual general meeting and to authorize the Board to fix the remuneration to be paid to the auditors.
ANNUAL
APPROVAL OF STOCK OPTION PLAN
Background
The Company’s current plan, a “fixed up to 20%” stock option plan (the “Plan”), was most recently approved by the shareholders of the Company at the meeting of shareholders on June 21, 2023 and subsequently accepted for filing by the TSXV on July 13, 2023. Under the Company’s current Plan, the number of shares that are issuable pursuant to the Plan is fixed up to a maximum of 20% of the issued shares of the Company. A copy of the Plan will be available for review at the Meeting.
Re-Approval of Stock Option Plan:
At the Company’s Annual General held on June 21, 2023, the Company adopted a “fixed up to 20%” stock option plan (the “Plan”), which provided for the issuance of up to 19,925,000 common shares. The Plan was approved by the Shareholders and subsequently by the TSXV on July 13, 2023.
The Company wishes to re-approve the Plan with an increase to 19,970,000 in the maximum number of options authorized to be issued under the Plan.
The purpose of the Plan is to attract and motivate directors, senior officers, employees, consultants and others providing services to the Company and its subsidiaries, and thereby advance the Company’s interests, by affording such persons with an opportunity to acquire an equity interest in the Company through the issuance of stock options.
The TSXV’s Policy 4.4 and the terms of the Plan authorize the Board of Directors to grant stock options to optionees on the following terms:
| 1. | an optionee must be a director, officer, employee, management company employee or consultant of the Company or of its subsidiary, or must be an eligible charitable organization, at the time the option is granted or issued in order to be eligible for the grant or issuance of the option. |
| 2. | The aggregate number of shares that may be issued pursuant to options granted under the Plan, unless otherwise approved by shareholders, may not exceed that number which is equal to 20% of the issued and outstanding shares of the Company at the time of the grant. |
| 3. | The number of shares subject to each option will be determined by the Board of Directors, provided that the aggregate number of shares reserved for issuance pursuant to options granted to: |
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| (a) | insiders may not exceed 10% of the issued shares of the Company in any 12 month period (unless disinterested shareholder approval has been obtained); | |
| (b) | insiders may not exceed 10% of the issued shares of the Company at any point in time; | |
| (c) | any one individual within a 12 month period may not exceed 5% of the number of issued and outstanding shares of the Company (unless the Company is a Tier 1 Issuer and disinterested shareholder approval has been obtained); | |
| (d) | any one consultant during any 12 month period may not exceed 2% of the issued shares of the Company; | |
| (e) | all persons employed to provide investor relations activities (as a group) may not exceed 2% of the issued shares of the Company during any 12 month period; |
in each case calculated as at the date of grant of the option, including all other shares under option to such person at that time.
| 4. | The exercise price of an option may not be set at less than the minimum price permitted by the TSXV. The Company must obtain disinterested shareholder approval of any decrease in the exercise price of, or extension of the term of, any stock options granted to individuals who are insiders at the time of the proposed amendment. |
| 5. | Options may be exercisable for a period of up to ten years from the date of grant. |
| 6. | The options are non-assignable and non-transferable. The options can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the Plan or within a period of not more than 90 days after ceasing to be an eligible optionee (except in the case of any optionee whose primary function with the Company involves the performance of investor relations activities, in which case, the options can only be exercised for 30 days after the optionee ceases activities on behalf of the Company) or, if the optionee dies, within one year from the date of the optionee’s death. |
| 7. | Options granted to consultants engaged to perform investor relations activities must be subject to a vesting requirement, whereby such options will vest over a period of not less than 12 months, with a maximum of 25% vesting in any 3 month period. |
| 8. | The Board of Directors will have the right to accelerate the date on which any option, other than an option granted in respect of consultants engaged to perform investor relations activities, becomes exercisable. |
The Company’s Plan terminates upon the termination of all outstanding plan awards unless previously terminated by the Board of Directors. Upon such Plan termination, all outstanding plan awards shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such plan awards.
A copy of the Plan may be inspected at the office of the Company, Suite 1120 – 789 West Pender Street, Vancouver, BC, V6C 1H2 during normal business hours at any time up to the Meeting and at the Meeting. In addition, a copy of the Plan will be mailed, free of charge, to any holder of common shares who requests a copy, in writing, from the Company at the address above.
Notice of options granted under the Plan must be given to the TSXV on a monthly basis. Any amendments to the Plan must also be approved by the TSXV and, if necessary, by the shareholders of the Company prior to becoming effective.
| 10 |
Accordingly, Shareholders will be asked to pass an ordinary resolution, in substantially the following form, to re-approve for the ensuing year, the Company’s Plan:
“BE IT RESOLVED, as an ordinary resolution, that:
| A) | the Company’s “fixed up to 20%” stock option plan, providing for the issuance of a maximum of 19,970,000 stock options as described in the Company’s Information Circular dated May 16, 2024 and the grant of options thereunder in accordance therewith, be and is hereby re-approved, ratified and confirmed; and |
| B) | The Company’s “fixed up to 20%” stock option plan shall terminate upon the termination of all stock options outstanding under the plan unless earlier terminated by the Board of Directors. Upon such termination, all outstanding plan awards shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such plan awards.” |
PART 4 – EXECUTIVE COMPENSATION
STATEMENT OF EXECUTIVE COMPENSATION
Pursuant to applicable securities legislation and in accordance with Form 51-102F6V – Statement of Executive Compensation – Venture Issuers, AVRICORE is providing a summary of all annual and long-term compensation for services in all capacities to AVRICORE and its subsidiaries in respect of any individual who served as: (a) the Company’s chief executive officer (the “CEO”), including an individual performing functions similar to a chief executive officer, during any part of the financial year ended December 31, 2023; (b) the Company’s chief financial officer (the “CFO”), including an individual performing functions similar to a chief financial officer, during any part of the financial year ended December 31, 2023; (c) AVRICORE’s three other most highly compensated executive officers, if any, whose individual total compensation for the financial year ended December 31, 2023 exceeded $150,000; and (d) any individual who would have satisfied these criteria but for the fact that the individual was not serving as an executive officer of AVRICORE or its subsidiaries, nor acting in a similar capacity, at the end of the financial year ended December 31, 2023 (the “Named Executive Officers” or “NEOs”).
During the financial year ended December 31, 2023, the following individuals were the NEOs of AVRICORE:
| ● | Hector Bremner, CEO (appointment effective April 2, 2020) | |
| ● | Kiki Smith, CFO (appointment effective August 6, 2019) |
| ● | Rodger Seccombe, CTO (appointment effective April 16, 2021) |
DIRECTOR AND NAMED EXECUTIVE OFFICER COMPENSATION
Oversight and Description of Director and Named Executive Officer Compensation
NEO Compensation
The principal objective of the Company’s compensation policy is to attract and retain key executive officers that are considered critical to the growth and success of AVRICORE. The Company’s compensation committee (the “Compensation Committee”), in consultation with AVRICORE’s executive officers, periodically reviews and makes recommendations to the Board in respect of compensation paid to AVRICORE’s directors and executive officers, including salary, incentive and other compensation levels. Presently, the Company relies on discussions of the Board and the Compensation Committee without any formal objectives, criteria and analysis in determining compensation, which generally consists of base salary and grants of stock option awards under the Stock Option Plan. The Company does not assess its compensation through benchmarks or peer groups at this time.
| 11 |
Elements of Compensation
Under the Company’s compensation structure, compensation for executive officers may consist of:
Base Salary. Base salary is currently the foundation of AVRICORE’s compensation policy and is intended to compensate competitively based on the past experience of the executive, while taking into consideration AVRICORE’s current level of development. The desire is for base salary to be high enough to secure exceptional executives that can further the annual and long-term objectives of the Company, while at the same time not being excessive with a view to AVRICORE’s available cash resources. The Compensation Committee reviews salary levels periodically and may recommend adjustments to the Board, if warranted, as a result of competitive positioning, the stage of development of the Company or an increase in responsibilities assumed by an executive.
Stock Options. The Board may also grant stock options under the Stock Option Plan as part of an executive’s compensation package. The primary objective of making stock option grants is to encourage executive officers to acquire an ownership interest in the Company over a period of time, thus better aligning the interests of executive officers with the interests of shareholders of the Company, and thereby discouraging excessive risk taking. Additionally, awards may be granted to help enhance the overall competitiveness of an executive’s compensation package, where necessary, while helping maintain AVRICORE’s available cash resources.
The Company considers various factors when determining the number of awards to be granted to specific individuals, including the level of responsibility and base salary level associated with the position held by such individual. The Compensation Committee periodically submits to the Board for approval its recommendations in respect of the number of stock options to be granted to specific individuals. When determining possible future stock option grants, the Board considers past grants. The Company uses the Black-Scholes model to determine the fair value of stock options on the date of grant.
Bonus. From time to time, the Board may grant bonus awards to members of the Company’s management, in the form of cash or Common Shares, in light of the Company’s accomplishments of certain milestones or achievements and the member’s level of involvement in accomplishing such milestones or achievements.
Director Compensation
The Company has implemented a directors’ compensation policy, pursuant to which directors are compensated by AVRICORE for their services in their capacity as directors, for committee participation and involvement in special assignments and for services as consultants or experts. The directors are also reimbursed for reasonable expenses incurred in connection with their services as directors and are eligible for the grant of stock options under the Stock Option Plan.
DIRECTOR AND NAMED EXECUTIVE OFFICER COMPENSATION, EXCLUDING COMPENSATION SECURITIES
The following table (and notes thereto) sets forth all compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by AVRICORE or its subsidiaries to each NEO and director of the Company, in any capacity, including, for greater certainty, all plan and non-plan compensation, direct and indirect pay, remuneration, economic or financial award, reward, benefit, gift or perquisite paid, payable, awarded, granted, given or otherwise provided to a NEO or a director of the Company for services provided and for services to be provided, directly or indirectly, to AVRICORE or its subsidiaries for the Company’s most recently completed financial year.
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| Name and position | Year | Salary, consulting fee, retainer or commission ($) | Bonus ($) | Committee or meeting fees ($) | Value of perquisites ($) | Value of all other compensation ($) | Total compensation ($) | |||||||||||||||||||
David Hall | 2023 | Nil | Nil | Nil | Nil | 81,425 | 81,425 | |||||||||||||||||||
| Chairman | 2022 | Nil | Nil | Nil | Nil | 59,928 | 59,928 | |||||||||||||||||||
| and Director | 2021 | Nil | Nil | Nil | Nil | 16,876 | 16,876 | |||||||||||||||||||
Hector Bremner | 2023 | 216,000 | Nil | Nil | Nil | 105,442 | 321,442 | |||||||||||||||||||
| CEO and | 2022 | 168,000 | Nil | Nil | Nil | 93,222 | 261,222 | |||||||||||||||||||
| Director | 2021 | 150,000 | 35,000 | Nil | Nil | 73,130 | 258,130 | |||||||||||||||||||
Alan Arnstein | 2023 | Nil | Nil | Nil | Nil | 53,783 |
| 53,783 | ||||||||||||||||||
| Director | 2022 | Nil | Nil | Nil | Nil | 16,647 | 16,647 | |||||||||||||||||||
| 2021 | Nil | Nil | Nil | Nil | 16,876 | 16,876 | ||||||||||||||||||||
David Farnfield(1) | 2023 | Nil | Nil | Nil | Nil | 53,783 | 53,783 | |||||||||||||||||||
| Director | 2022 | Nil | Nil | Nil | Nil | 16,647 | 16,647 | |||||||||||||||||||
| 2021 | Nil | Nil | Nil | Nil | 16,876 | 16,876 | ||||||||||||||||||||
Dr. Robert Sindelar | 2023 | Nil | Nil | Nil | Nil | 53,783 | 53,783 | |||||||||||||||||||
| Director | 2022 | Nil | Nil | Nil | Nil | 16,647 | 16,647 | |||||||||||||||||||
| 2021 | Nil | Nil | Nil | Nil | 16,876 | 16,876 | ||||||||||||||||||||
Kiki Smith | 2023 | 128,400 | Nil | Nil | Nil | 39,546 | 167,946 | |||||||||||||||||||
| CFO | 2022 | 124,200 | Nil | Nil | Nil | 19,976 | 144,176 | |||||||||||||||||||
| 2021 | 120,000 | 30,000 | Nil | Nil | 50,629 | 200,629 | ||||||||||||||||||||
Rodger Seccombe | 2023 | 216,000 | Nil | Nil | Nil | 105,442 | 321,442 | |||||||||||||||||||
| Director & | 2022 | 168,000 | Nil | Nil | Nil | 93,222 | 261,222 | |||||||||||||||||||
| CTO | 2021 | 120,000 | Nil | Nil | Nil | 73,130 | 193,130 | |||||||||||||||||||
Christine Hrudka | 2023 | Nil | Nil | Nil | Nil | 26,703 | 26,703 | |||||||||||||||||||
| Director | 2022 | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
| 2021 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Thomas Teahen | 2023 | Nil | Nil | Nil | Nil | 26,703 | 26,703 | |||||||||||||||||||
| Director | 2022 | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
| 2021 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Notes:
| (1) | Mr. Farnfield ceased to be a director of the Company on June 21, 2023. |
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OUTSTANDING OPTION-BASED AWARDS AND SHARE-BASED AWARDS
The following table sets out the outstanding option-based awards and share-based awards held by each NEO and director of the Company by AVRICORE or any of its subsidiaries as at December 31, 2023:
| Option-based Awards | Share-based Awards | |||||||||||||||
| Name | Number of securities underlying unexercised options (#) | Option exercise price ($) | Option expiration date | Value of unexercised in-the-money options ($)(1) | Number of shares or units of share that have not vested (#) | Market or payout value of share-based awards that have not vested ($) | ||||||||||
| David Hall Chairman and Director | 60,000 75,000 450,000 250,000 | $0.05 $0.25 $0.15 $0.28 | October 15, 2024 March 22, 2026 August 10, 2027 May 15, 2028 | $0.12 N/A $0.02 N/A | N/A N/A N/A N/A | N/A N/A N/A N/A | ||||||||||
| Hector Bremner CEO and Director | 150,000 325,000 500,000 700,000 300,000 | $0.05 $0.25 $0.08 $0.15 $0.28 | October 15, 2024 March 22, 2026 December 8, 2025 August 10, 2027 May 15, 2028 | $0.12 N/A $0.09 $0.02 N/A | N/A N/A N/A N/A N/A | N/A N/A N/A N/A N/A | ||||||||||
| Alan Arnstein Director | 10,000 75,000 200,000 200,000 | $0.05 $0.25 $0.15 $0.28 | October 15, 2024 March 22, 2026 August 10, 2027 May 15, 2028 | $0.12 N/A $0.02 N/A | N/A N/A N/A N/A | N/A N/A N/A N/A | ||||||||||
| David Farnfield(2) Director | 300,000 75,000 200,000 200,000 | $0.05 $0.25 $0.15 $0.28 | October 15, 2024 March 22, 2026 August 10, 2027 May 15, 2028 | $0.12 N/A $0.02 N/A | N/A N/A N/A N/A | N/A N/A N/A N/A | ||||||||||
| Dr. Robert Sindelar Director | 90,000 75,000 200,000 200,000 | $0.05 $0.25 $0.15 $0.28 | October 15, 2024 March 22, 2026 August 10, 2027 May 15, 2028 | $0.12 N/A $0.02 N/A | N/A N/A N/A N/A | N/A N/A N/A N/A | ||||||||||
| Kiki Smith CFO | 225,000 210,000 150,000 135,300 | $0.25 0.08 $0.15 $0.28 | March 22, 2026 December 8, 2025 August 10, 2027 May 15, 2028 | N/A $0.09 $0.02 N/A | N/A N/A N/A N/A | N/A N/A N/A N/A | ||||||||||
| Rodger Seccombe CTO & Director | 650,000 325,000 700,000 300,000 | $0.05 $0.25 $0.15 $0.28 | October 15, 2024 March 22, 2026 August 10, 2027 May 15, 2028 | $0.12 N/A $0.02 N/A | N/A N/A N/A N/A | N/A N/A N/A N/A | ||||||||||
| Christine Hrudka Director | 200,000 | $0.20 | June 21, 2028 | N/A | N/A | N/A | ||||||||||
| Thomas Teahen Director | 200,000 | $0.20 | June 21, 2028 | N/A | N/A | N/A | ||||||||||
(1) This value was determined by calculating the difference between the market price of the underlying common shares and the exercise price of the options on December 31, 2023. The closing market price of the Company’s common shares on December 31, 2023 was $0.17.
(2) Mr. Farnfield ceased to be a director of the Company on June 21, 2023.
VALUE VESTED OR EARNED DURING THE YEAR
The following table sets out the value vested or earned in incentive plan awards by each NEO and director of the Company by AVRICORE or any of its subsidiaries as at December 31, 2023:
| Name | Option-based awards – Value vested during the year ($) | Share-based awards – Value vested during the year ($) | Non-equity incentive plan compensation – Value earned during the year ($) | |||||
| David Hall | 81,425 | N/A | N/A | |||||
| Hector Bremner | 105,442 | N/A | N/A | |||||
| David Farnfield(1) | 53,783 | N/A | N/A | |||||
| Dr. Robert Sindelar | 53,783 | N/A | N/A | |||||
| Alan Arnstein | 53,783 | N/A | N/A | |||||
| Rodger Seccombe | 105,442 | N/A | N/A | |||||
| Kiki Smith | 39,546 | N/A | N/A | |||||
| Christine Hrudka | 26,703 | N/A | N/A | |||||
| Thomas Teahen | 26,703 | N/A | N/A | |||||
(1) Mr. Farnfield ceased to be a director of the Company on June 21, 2023.
| 14 |
EXERCISE OF COMPENSATION SECURITIES BY DIRECTORS AND NEOS
The following table sets out all compensation securities exercised by each NEO and director of the Company for the financial year ended December 31, 2022.
| Name and position | Type of compensation security | Number of compensation securities, exercised | Date of exercise | Issue, price ($) | Proceeds ($) | Closing price of security or underlying security at December 31, 2022 ($) | Expiry date | |||||||||||||||||
| David Hall | Options | 600,000 | December 8, 2022 | $ | 0.10 | $ | 60,000 | $ | 0.36 | December 8, 2022 | ||||||||||||||
| Alan Arnstein | Options | 25,000 | December 8, 2022 | $ | 0.10 | $ | 2,500 | $ | 0.36 | December 8, 2022 | ||||||||||||||
The following table sets out all compensation securities exercised by each NEO and director of the Company for the financial year ended December 31, 2023.
| Name and position | Type of compensation security | Number of compensation securities, exercised | Date of exercise | Issue, price ($) | Proceeds ($) | Closing price of security or underlying security at December 31, 2023 ($) | Expiry date | |||||||||||||||||
| Robert Sindelar | Options | 200,000 | March 13, 2023 | $ | 0.10 | $ | 20,000 | $ | 0.17 | March 27, 2023 | ||||||||||||||
| Rodger Seccombe | Options | 150,000 | April 10, 2023 | $ | 0.10 | $ | 15,000 | $ | 0.17 | April 11, 2023 | ||||||||||||||
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STOCK OPTION PLANS AND OTHER INCENTIVE PLANS
Stock options are granted pursuant to the Company’s Stock Option Plan (the “Plan”) to provide an incentive to the directors, officers, employees and consultants of the Company to achieve the longer-term objectives of the Company; to give suitable recognition to the ability and industry of such persons who contribute materially to the success of the Company; and to attract and retain persons of experience and ability, by providing them with the opportunity to acquire an increased proprietary interest in the Company. Previous grants of incentive stock options are taken into account when considering new grants.
Implementation of a new incentive stock option plan and amendments to the existing stock option plan are the responsibility of the Company’s Board of Directors.
EMPLOYMENT, CONSULTING AND MANAGEMENT AGREEMENTS
The Company does not presently have any written agreements for employment, consulting or management services except as noted below under “External Management Companies”.
EXTERNAL MANAGEMENT COMPANIES
Pursuant to a Consulting Agreement dated August 5, 2019, the Company has engaged KSI CPA Inc. to provide CFO, corporate secretary, controller and bookkeeping services for a monthly fee of $10,000 per month. This fee was increased to $10,700 in August 2022.
PENSION DISCLOSURE
The Company does not provide pension benefits to the NEOs or directors of the Company.
PART 5 - AUDIT COMMITTEE
AUDIT COMMITTEE CHARTER
The text of the Company’s Audit Committee Charter is attached as Schedule “A” to this Information Circular.
COMPOSITION OF AUDIT COMMITTEE
Ms. Hrudka and Messrs. Hall and Arnstein are members of the Company’s Audit Committee. At present, all of the Audit Committee members are considered “independent” as that term is defined in applicable securities legislation. All of the Audit Committee members are considered by the Board to be financially literate within the meaning set forth in National Instrument 52-110 – Audit Committees (“NI 52-110”). In addition, Ms. Hrudka and Mr. Hall have knowledge of the role of an audit committee of reporting companies from their years of experience as directors of public companies other than the Company. See Part 6 – Corporate Governance – Directorships in Other Public Companies.
RELEVANT EDUCATION AND EXPERIENCE
The education and experience of each member of the Audit Committee which is relevant to the performance of his responsibilities as an Audit Committee member, including education or experience that would provide the member with an understanding of accounting principles used by the Company to prepare its financial statements, the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and provisions, experience preparing, auditing, analyzing or evaluating financial statements and an understanding of internal controls and procedures for financial reporting is set forth below.
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Christine Hrudka
Ms. Hrudka is a Canadian pharmacist, entrepreneur, leader, public speaker, and advocate for women in business. She owned Shoppers Drug Mart franchises in Saskatchewan and now owns independent pharmacies in Saskatoon. Christine served as Chair of the Canadian Pharmacy Association and has led the advancement of many critical topics provincially, nationally, and internationally. She is a board member of Pharmacy Association of Saskatchewan and of the Canadian Pharmacy Association. She currently sits as a board director of Rapid Dose Therapeutics (DOSE) and chairs Governance and Compensation. She also served as Director of Pharmapod, Director and committee member of Governance and Compensation, Smart Employee Benefits, Board chair of Aither Ingredient Corporation and Member-at-Large, University of Saskatchewan Senate. She has volunteered for many community boards such as SREDA, YWCA, United Way, and WESK. Christine holds a B.Sc. in Pharmacy (BSP) and a designation from the Institute of Corporate Directors, Designation (ICD.D).
David Hall
Mr. Hall is currently Chairman of RepliCel Life Sciences (“RepliCel”), a public company listed on the TSXV, Co-founder of MoodMD, past Chairman of Providence Healthcare Research Institute and a consultant to the life sciences industry. Mr. Hall served as Chief Executive Officer and President of RepliCel from 2012-2015. Prior to RepliCel, Mr. Hall consulted to the British Columbia government, companies in the pharmaceutical, biotech and e-Health industries and Non-Governmental-Organizations. Mr. Hall was a business founder, Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary of Angiotech Pharmaceuticals Inc., a company that was listed on the Toronto Stock Exchange and the NASDAQ. Mr. Hall is a past Chair and board member of Life Sciences BC and is the author of Life Sciences BC’s position papers for the BC Premier’s Competition Council Report and Conversation on Health. Mr. Hall was also a member of the BC Task Force on PharmaCare and the board of directors of Advantage BC. Mr. Hall holds an Honours degree in Economics and an Honours degree in Finance from the University of Manitoba.
Alan Arnstein
Mr. Arnstein previously worked for Katz Group Canada where he oversaw the growth of the Medicine Shoppe from 28 stores to 175 stores before its successful sale to McKesson Canada. Mr. Arnstein was also actively involved in expanding the Rexall pharmacy brand across Canada, which included responsibility for acquiring and consolidating independent pharmacies under the Rexall banner. Mr. Arnstein is also actively involved in various real estate projects, including the leasing of the Ice District next to Rogers Place in downtown Edmonton, an estimated $5.5 billion project.
AUDIT COMMITTEE OVERSIGHT
At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.
RELIANCE ON CERTAIN EXEMPTIONS
At no time since the commencement of the Company’s most recently completed financial year ended December 31, 2023 has the Company relied on the exemption in Section 2.4 of NI 52-110 - Audit Committees, or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110.
As the Company is a “Venture Issuer” pursuant to relevant securities legislation, the Company is relying on the exemption in Section 6.1 of NI 52-110 from the requirement of Parts 5 (Reporting Obligations) of NI 52-110.
PRE-APPROVAL POLICIES AND PROCEDURES FOR NON-AUDIT SERVICES
The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services as described in the Company’s Audit Committee Charter attached as Schedule “A” to this Information Circular.
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EXTERNAL AUDITOR SERVICE FEES
The fees paid by the Company to its auditors in each of the last two financial years, by category, are as follows:
| Auditor | Financial Year Ending | Audit Fees(1) | Audit Related Fees(2) | Tax Fees(3) | All Other Fees(4) | |||||||||||||
| Manning Elliott LLP(6) | 2023 | $ | 88,500 | Nil | Nil | $ | 4,500 | |||||||||||
| Manning Elliott LLP(6) | 2022 | $ | 65,000 | Nil | $ | 7,500 | $ | 4,500 | ||||||||||
Notes:
| (1) | “Audit Fees” include fees necessary to perform the annual audit and quarterly reviews of the Company’s consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits. |
| (2) | “Audit-Related Fees” include fees for services that are traditionally performed by the auditors. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation. |
| (3) | “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities. |
| (4) | “All Other Fees” include all other non-audit services. |
PART 6 - CORPORATE GOVERNANCE
COMPOSITION OF THE BOARD OF DIRECTORS
The Company’s Board facilitates its exercise of independent supervision over the Company’s management by ensuring that the Board is composed of at least one director that is independent of management. The Board, at present, is composed of seven directors, five of whom are not executive officers of the Company and are considered to be “independent”, as that term is defined in applicable securities legislation. In determining whether a director is independent, the Board chiefly considers whether the director has a relationship which could or could be perceived to interfere with the director’s ability to objectively assess the performance of the Company’s management. Messrs. Hall, Arnstein, Sindelar, Teahen, and Ms. Hrudka are considered to be “independent” as that term is defined in applicable securities legislation. Mr. Bremner is not considered independent by virtue of his office as Chief Executive Officer of the Company. Mr. Seccombe is not considered independent by virtue of his office as Chief Technology Officer of the Company.
The Board is responsible for approving long-term strategic plans and annual operating plans and budgets recommended by the Company’s management. Board consideration and approval is also required for material contracts and business transactions, and all debt and equity financing transactions.
The Board delegates to the Company’s management the responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying on the Company’s business in the ordinary course, managing the Company’s cash flow, evaluating new business opportunities, recruiting staff and complying with applicable regulatory requirements. The Board also looks to the Company’s management to furnish recommendations respecting corporate objectives, long-term strategic plans and annual operating plans.
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DIRECTORSHIPS IN OTHER PUBLIC COMPANIES
Certain of the Nominees are also directors of other reporting issuers (or equivalent) in a jurisdiction or a foreign jurisdiction as follows:
| Name of Director | Other reporting issuer (or equivalent in a foreign jurisdiction) | |
| David Hall | RepliCel Life Sciences Inc. | |
| Hector Bremner | N/A | |
| Alan Arnstein | N/A | |
| Robert Sindelar | N/A | |
| Rodger Seccombe | N/A | |
| Thomas Teahen | N/A | |
| Christine Hrudka | Smart Employee Benefits Inc. |
ORIENTATION AND CONTINUING EDUCATION
Given the relatively small composition of the Board since incorporation, the Company has not yet developed an official orientation or training program for new directors. As required, new directors will have the opportunity to become familiar with the Company and its business by meeting with the other directors and with officers and employees. Orientation activities will be tailored to the particular needs and experience of each director and the overall needs of the board.
ETHICAL BUSINESS CONDUCT
The Board monitors the ethical conduct of the Company and its management and ensures that it complies with applicable legal and regulatory requirements, such as those of relevant securities commissions and stock exchanges. The Board has found that the fiduciary duties placed on individual directors by our governing corporate legislation and the common law, as well as the restrictions placed by applicable corporate legislation on the individual director’s participation in decisions of the Board in which the director has an interest, have been sufficient to ensure that the Board operates independently of the Company’s management and in the best interests of the Company.
NOMINATION OF DIRECTORS
The Company has implemented a Governance, Nominating and Compensation Committee, which is responsible for considering the Board’s size and the number of directors to recommend to the shareholders of the Company for election at annual meetings of shareholders, taking into account the number of directors required to carry out the Board’s duties effectively, and to maintain a majority of independent directors and a diversity of view and experience. The Committee is also responsible for identifying new candidates to join the Board.
COMPENSATION OF DIRECTORS AND CHIEF EXECUTIVE OFFICER
The Governance, Nominating and Compensation Committee have the responsibility for determining compensation for the directors and senior management of the Company.
To determine compensation payable, the Governance, Nominating and Compensation Committee review compensation paid to directors and CEOs of companies of similar size and stage of development in the same industry and determines an appropriate compensation reflecting the need to provide incentive and compensation for the time and effort expended by the directors and senior management of the Company while taking into account the financial and other resources of the Company. In setting the compensation, the Governance, Nominating and Compensation Committee annually review the performance of the CEO in light of the Company’s objectives and considers other factors that may have impacted the success of the Company in achieving its objectives. For further discussion on executive officer compensation please see “Part 4 – Executive Compensation – Oversight and Description of Director and Named Executive Officer Compensation”.
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The Company’s directors are not currently paid a fee for their services as directors (see “Part 4 – Executive Compensation – Compensation of Directors”).
COMMITTEES OF THE BOARD OF DIRECTORS
The Company currently has the Audit Committee, which is comprised of Messrs. Hall, Arnstein and Ms. Hrudka, and the Governance, Nominating and Compensation Committee, which is comprised of Messrs. Hall, Sindelar and Teahen.
ASSESSMENTS
The Board has not, as yet established procedures to formally review the contributions of individual directors. At this point, the directors believe that the Board’s current size facilitates informal discussion and evaluation of members’ contributions within that framework.
PART 7 - OTHER INFORMATION
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
As of December 31, 2023, the Company’s Stock Option Plan was the only equity compensation plan under which securities were authorized for issuance. The following table (and note thereto) sets out securities authorized for issuance under the Stock Option Plan.
| Plan category | Number of securities(1) to be issued upon exercise of outstanding options (a) | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
As at December 31, 2023: Equity compensation plans approved by securityholders | 10,350,000 | $ | 0.17 | 9,575,000 | ||||||||
Notes:
| (1) | Underlying securities are Common Shares in the capital of the Company. |
Please see “Part 4 – Executive Compensation – Stock Option Plans and Other Incentive Plans” for details on the Stock Option Plan.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
Since the beginning of the most recently completed financial year ended December 31, 2023, and as at the date of this Information Circular, no director, executive officer or employee or former director, executive officer or employee of the Company, nor any nominee for election as a director of the Company, nor any associate of any such person, was indebted to the Company; nor was any indebtedness to another entity the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
None of the directors or executive officers of the Company, no proposed nominee for election as a director of the Company, none of the persons who have been directors or executive officers of the Company since the commencement of the Company’s last completed financial year, none of the other insiders of the Company and no associate or affiliate of any of the foregoing persons has any substantial interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting other than the election of the directors.
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INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
An informed person is one who, generally speaking, is a director or executive officer or a 10% shareholder of the Company. To the knowledge of the Company’s management, no informed person or nominee for election as a director of the Company or any associate or affiliate of any informed person or proposed director has any interest in any transaction which has materially affected or would materially affect the Company or its subsidiary during the financial year ended December 31, 2023, or has any interest in any material transactions in the current year other than as set out herein.
MANAGEMENT CONTRACTS
The Company has no management agreements or arrangements under which the management functions of the Company are performed other than by the Company’s directors and executive officers.
PENALTIES AND SANCTIONS
As at the date of this Information Circular no proposed nominee for election as a director of the Company (nor any of his or her personal holding companies) has been subject to:
| (a) | any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or |
| (b) | any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable shareholder in deciding whether to vote for a proposed director. |
CORPORATE CEASE TRADE ORDERS AND BANKRUPTCIES
As at the date of this Information Circular no proposed nominee for election as a director of the Company is, or has been, within 10 years before the date of this Information Circular:
| 1. | a director, chief executive officer or chief financial officer of any company (including the Company and any personal holding company of the proposed director) that, while that person was acting in that capacity: |
| (a) | was subject to a cease trade order (including any management cease trade order which applied to directors or executive officers of a company, whether or not the person is named in the order) or an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days (an “Order”); or |
| (b) | was subject to an Order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; or |
| 2. | a director or executive officer of any company (including the Company and any personal holding company of the proposed director) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. |
PERSONAL BANKRUPTCY
No proposed nominee for election as a director of the Company has, within the ten years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
OTHER MATTERS
The Company’s management is not aware of any other matters to come before the Meeting other than as set forth in the Notice of Meeting that accompanies this Information Circular. If any other matter properly comes before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares represented thereby in accordance with their best judgment on such matter.
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ADDITIONAL INFORMATION
No person has been authorized to give any information or to make any representation other than as contained in this Information Circular in connection with the solicitation of proxies. If given or made, such information or representations must not be relied upon as having been authorized by AVRICORE. The delivery of this Information Circular shall not create, under any circumstances, any implication that there has been no change in the information set forth herein since the date of this Information Circular. This Information Circular does not constitute the solicitation of a proxy by anyone in any jurisdiction in which such solicitation is not authorized, or in which the person making such solicitation is not qualified to do so, or to anyone to whom it is unlawful to make such an offer of solicitation.
Financial information about the Company is included in the Company’s financial statements and management’s discussion and analysis for the financial year ended December 31, 2023, which have been electronically filed with regulators and are available through the Internet on SEDAR at www.sedarplus.ca. Copies may be obtained without charge upon request to the Company at Suite 1120 – 789 West Pender Street, Vancouver, British Columbia V6C 1H2; or by telephone at (778) 968-1176. You may also access the Company’s public disclosure documents through the Internet on SEDAR at www.sedarplus.ca.
BOARD APPROVAL
The Board has approved the contents and the delivery of this Information Circular to the shareholders of the Company.
DATED at Vancouver, British Columbia, this 16th day of May 2024.
BY
ORDER OF THE BOARD OF DIRECTORS OF
AVRICORE HEALTH INC.
| “David Hall” | |
| David Hall | |
| Chairman of the Board of Directors |
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SCHEDULE “A”
AUDIT COMMITTEE CHARTER
The Audit Committee (the “Committee”) is a committee of the Board of Directors (the “Board”) of Avricore Health Inc., (the “Company”), designed to assist the Board in monitoring (1) the integrity of the financial statements of the Company, (2) the adequacy of the Company’s internal controls, (3) the independence and performance of the Company’s external auditor, and (4) conflict of interest transactions.
I. ROLES AND RESPONSIBILITIES
A. Maintenance of Charter. The Committee shall review and reassess the adequacy of this formal written Charter on at least an annual basis.
B. Financial Reporting. The Committee shall review and make recommendations to the Board regarding the adequacy of the Company’s financial statements and compliance of such statements with financial standards. In particular, and without limiting such responsibilities, the Committee shall:
With respect to the Annual Audited Financial Statements:
| ● | Review and discuss with management and with the Company’s external auditor the Company’s audited financial statements, management discussion and analysis (“MD&A”) and news releases regarding annual financial results before the Company publicly discloses this information. |
| ● | Review an analysis prepared by management and the external auditor of significant financial reporting issues and judgments made in connection with the preparation of the Company’s audited financial statements. |
| ● | Discuss with the external auditor the matters required to be discussed by National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currencies (as may be modified or supplemented) relating to the conduct of the audit. |
| ● | Based on the foregoing, indicate to the Board whether the Committee recommends that the audited financial statements be included in the Company’s Annual Report. |
With respect to Interim Unaudited Financial Statements:
| ● | Review and discuss with management the Company’s interim unaudited financial statements, MD&A and news releases regarding interim financial results before the Company publicly discloses this information. The review may be conducted through a designated representative member of the Committee. |
| ● | Approve interim unaudited financial statements and interim MD&A on behalf of the Board. Generally |
| ● | Be satisfied that adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements, and annually assess the adequacy of those procedures. |
C. Internal Controls. The Committee shall evaluate and report to the Board regarding the adequacy of the Company’s financial controls. In particular, the Committee shall:
| ● | Ensure that the external auditor is aware that the Committee is to be informed of all control problems identified. |
| ● | Review with the Company’s counsel legal matters that may have a material impact on the financial statements. |
| ● | Review the effectiveness of systems for monitoring compliance with laws, regulations and instruments relating to financial reporting. |
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| ● | Receive periodic updates from management, legal counsel, and the external auditor concerning financial compliance. | |
| ● | Establish procedures for: |
| (i) | the receipt, retention and treatment of complaints received by the Company from officers, employees and others regarding accounting, internal accounting controls, or auditing matters and questionable practices relating thereto; and |
| (ii) | the confidential, anonymous submission by officers or employees of the Company or others or concerns regarding questionable accounting or auditing matters. |
D. Relationship with External Auditor. The Committee shall:
| ● | Interview, evaluate, and make recommendations to the Board with respect to the nomination and retention of, or replacement of, the external auditor. |
| ● | Ensure receipt from external auditor of a formal written statement delineating all relationships between the external auditor and the Company. |
| ● | Ensure that the external auditor is in good standing with the Canadian Public Accountability Board (“CPAB”) and enquire if there are any sanctions imposed by the CPAB on the external auditor. |
| ● | Ensure that the external auditor meets the rotation requirements for partners and staff on the Company’s audits. |
| ● | Actively engage in a dialogue with the external auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the external auditor. |
| ● | Take, or recommend that the Board take, appropriate action to oversee the independence of the external auditor. |
| ● | Review and approve the compensation to be paid to the external auditor. |
| ● | Oversee the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company. |
| ● | Review and resolve disagreements between management and the external auditor regarding financial reporting. |
| ● | Pre-approve all non-audit services to be provided to the Company or any subsidiary by the external auditor in accordance with subsection 2.3(4) and sections 2.4 and 2.6 of Multilateral Instrument 51-110 Audit Committees. |
| ● | Review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Company |
Notwithstanding the foregoing, the external auditor shall be ultimately accountable to the Board and the Committee, as representatives of shareholders. The Board, upon recommendation from the Committee, shall have ultimate authority and responsibility to select, evaluate, and, where appropriate, replace the external auditor (or to nominate the external auditor to be proposed for shareholder approval in any information circular).
E. Conflict of Interest Transactions. The Committee shall:
| ● | Review potential conflict of interest situations, including transactions between the Company and its officers, directors and significant shareholders not in their capacities as such. |
| ● | Make recommendations to the Board regarding the disposition of conflict of interest transactions in accordance with applicable law. |
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II. MEMBERSHIP REQUIREMENTS
| ● | The Committee shall consist of at least three (3) directors chosen by the Board, the majority of whom are neither officers nor employees of the Company or any of its affiliates. |
| ● | The members of the Committee will be appointed annually by and will serve at the discretion of the Board. |
| ● | At least one (1) member of the Committee shall be able to read and understand a set of financial statements, including the Company’s balance sheet, income statement, and cash flow statement, or will become able to do so within a reasonable period of time after his or her appointment to the Committee. |
| ● | At least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or comparable experience or background (such as a position as a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities), which results in financial sophistication, recognized financial or accounting expertise. |
III. STRUCTURE AND POWERS
| ● | The Committee shall appoint one of its members to act as a Chairperson, either generally or with respect to each meeting. |
| ● | The Committee Chairperson shall review and approve an agenda in advance of each meeting. |
| ● | The Committee shall meet as circumstances dictate. |
| ● | The Committee shall have the authority to engage independent legal counsel and other advisors as it determines necessary to carry out its duties, and to set and pay the compensation for any advisors employed by the Committee. |
| ● | The Committee shall have the authority to communicate directly with the internal and external auditors. |
| ● | The Committee may request any officer or employee of the Company or the Company’s outside counsel or external auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. |
| ● | The Committee shall possess the power to conduct any investigation appropriate to fulfilling its responsibilities. |
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the external auditor. Nor is it the duty of the Committee to conduct investigations or to assure compliance with laws and regulations and the Company’s Corporate Governance Policies and Practices.
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IV. MEETINGS
| ● | The quorum for a meeting of the Committee is a majority of the members of the Committee who are not officers or employees of the Company or of an affiliate of the Company. |
| ● | The members of the Committee must elect a chair from among their number and may determine their own procedures. |
| ● | The Committee may establish its own schedule that it will provide to the Board in advance. |
| ● | The external auditor is entitled to receive reasonable notice of every meeting of the Committee and to attend and be heard thereat. |
| ● | A member of the Committee or the external auditor may call a meeting of the Committee. |
| ● | The Committee may hold meetings by telephone conference call where each member can hear the other members or pass matters that would otherwise be approved at a meeting by all members signing consent resolutions in lieu of holding a meeting. |
| ● | The Committee will meet with the President and with the Chief Financial Officer of the Company at least annually to review the financial affairs of the Company. |
| ● | The Committee will meet with the external auditor of the Company at least once each year, at such time(s) as it deems appropriate, to review the external auditor’s examination and report. |
| ● | The chair of the Committee must convene a meeting of the Committee at the request of the external auditor, to consider any matter that the auditor believes should be brought to the attention of the Board or the shareholders. |
| ● | The Committee will record its recommendations to the Board in written form which will be incorporated as a part of the minutes of the Board’s meeting at which those recommendations are presented. |
| ● | The Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board. |
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Exhibit 7
Exhibit 8
Exhibit 9
