Avricore Health Inc 6-K, filed Oct 14, 2022
Avricore Health Inc. (AVCRF)
About this 6-K
Avricore Health Inc filed this 6-K on October 14, 2022.
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 April, 2022.
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 | Financial Statements For the year ended December 31, 2021 | April 22, 2022 | ||
| 2 | CEO Certification | April 22, 2022 | ||
| 3 | CFO Certification | April 22, 2022 | ||
| 4 | MD&A for the year ended December 31, 2021 | April 22, 2022 | ||
| 5 | Form 13-501F1 | April 22, 2022 |
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: | October 13, 2022 | By | /s/ 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.
Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Avricore Health Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Avricore Health Inc. and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2021 and 2020, and the consolidated statements of operations and comprehensive loss, changes in equity (deficiency) and cash flows for the years ended December 31, 2021 and 2020, and the related notes, including a summary of significant accounting policies and other explanatory information (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years ended December 31, 2021 and 2020 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Emphasis of Matter
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has negative operating cash flows and has accumulated losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to fraud or error. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a reasonable basis for our audit opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
We have served as the Company’s auditor since 2019.
/s/ Manning Elliott LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, Canada
April 22, 2022
Avricore Health Inc.
Consolidated Statements of Financial Position
As at December 31, 2021 and 2020
(Expressed in Canadian Dollars)
| Note | 2021 | 2020 | ||||||||||
| $ | $ | |||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | 2,012,995 | 302,715 | ||||||||||
| Accounts receivable | 5 | 91,548 | 11,928 | |||||||||
| Prepaid expenses and deposits | 6 | 54,467 | 125,444 | |||||||||
| 2,159,010 | 440,087 | |||||||||||
| Equipment | 8 | 90,875 | - | |||||||||
| Intangible assets | 9 | 31,508 | 3 | |||||||||
| Total Assets | 2,281,393 | 440,090 | ||||||||||
| LIABILITIES | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 10 | 44,477 | 152,569 | |||||||||
| Loans payable | 12 | 40,000 | 1,001,562 | |||||||||
| 84,477 | 1,154,131 | |||||||||||
| SHAREHOLDERS’ EQUITY (DEFICIENCY) | ||||||||||||
| Share capital | 13 | 26,618,315 | 22,286,852 | |||||||||
| Shares subscribed | - | 10,000 | ||||||||||
| Reserves | 13 | 5,794,718 | 5,497,092 | |||||||||
| Deficit | (30,216,117 | ) | (28,507,985 | ) | ||||||||
| 2,196,916 | (714,041 | ) | ||||||||||
| Total Liabilities and Shareholders’ Equity (Deficiency) | 2,281,393 | 440,090 | ||||||||||
Nature of operations and going concern (Note 1)
Subsequent events (Note 22)
Approved and authorized on behalf of the Board of Directors on April 22, 2022.
| “Hector Bremner” | “David Hall” | |
| Hector Bremner, Director | David Hall, Chairman |
The accompanying notes are an integral part of these consolidated financial statements
| 2 |
Avricore Health Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
| Note | 2021 | 2020 | ||||||||||
| $ | $ | |||||||||||
| Revenue | 122,808 | 33,030 | ||||||||||
| Cost of sales | 92,287 | 15,550 | ||||||||||
| Gross profit | 30,521 | 17,480 | ||||||||||
| Expenses | ||||||||||||
| Amortization | 8 & 9 | 17,984 | - | |||||||||
| Consulting | 16 | 355,350 | 174,321 | |||||||||
| General and administrative | 15 | 183,000 | 120,577 | |||||||||
| Management Fees | 16 | 205,000 | 270,000 | |||||||||
| Marketing and communications | 14 | 329,342 | 31,251 | |||||||||
| Professional fees | 16 | 189,796 | 159,593 | |||||||||
| Share-based compensation | 13 & 16 | 495,791 | 130,219 | |||||||||
| (1,776,263 | ) | (885,961 | ) | |||||||||
| Other income (expense) | ||||||||||||
| Finance costs | 12 | (38,438 | ) | (158,952 | ) | |||||||
| Gain on settlement and write-off of liabilities | 75,467 | 33,899 | ||||||||||
| Write-down on inventories | 7 | - | (180,432 | ) | ||||||||
| Interest income | 581 | - | ||||||||||
| Net loss and comprehensive loss for the year | (1,708,132 | ) | (1,173,966 | ) | ||||||||
| Basic and Diluted Loss Per Share | (0.02 | ) | (0.02 | ) | ||||||||
| Weighted Average Number of Common Shares Outstanding | 92,610,766 | 60,449,165 | ||||||||||
Segmented information (Note 18)
The accompanying notes are an integral part of these consolidated financial statements
| 3 |
Avricore Health Inc.
Consolidated Statements of Changes in Equity (Deficiency)
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
Number of Shares | Share Capital | Shares to be Issued | Shares Subscribed | Warrant Reserve | Option Reserve |
Deficit |
Total | |||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Balance, December 31, 2019 | 52,472,619 | 21,400,106 | 100,000 | 10,000 | 904,698 | 4,453,764 | (27,334,019 | ) | (465,451 | ) | ||||||||||||||||||||||
| Shares issued for cash | 6,260,000 | 626,000 | - | - | - | - | - | 626,000 | ||||||||||||||||||||||||
| Exercise of options | 105,000 | 6,672 | - | - | - | (1,422 | ) | - | 5,250 | |||||||||||||||||||||||
| Shares issued for services | 3,480,000 | 52,200 | - | - | - | - | - | 52,200 | ||||||||||||||||||||||||
| Acquisition of HealthTab™ Inc. | 2,000,000 | 100,000 | (100,000 | ) | - | - | - | - | - | |||||||||||||||||||||||
| Shares issued for debt | 5,477,965 | 136,949 | - | (10,000 | ) | - | - | - | 126,949 | |||||||||||||||||||||||
| Share issue cost | - | (35,075 | ) | - | - | 9,833 | - | - | (25,242 | ) | ||||||||||||||||||||||
| Share subscriptions received | - | - | - | 10,000 | - | - | - | 10,000 | ||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | 130,219 | - | 130,219 | ||||||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | - | (1,173,966 | ) | (1,173,966 | ) | ||||||||||||||||||||||
| Balance, December 31, 2020 | 69,795,584 | 22,286,852 | - | 10,000 | 914,531 | 4,582,561 | (28,507,985 | ) | (714,041 | ) | ||||||||||||||||||||||
| Shares issued for cash | 15,740,000 | 2,414,000 | - | (10,000 | ) | - | - | - | 2,404,000 | |||||||||||||||||||||||
| Exercise of warrants | 10,058,660 | 1,805,132 | - | - | (151,395 | ) | - | - | 1,653,737 | |||||||||||||||||||||||
| Exercise of stock options | 1,666,020 | 312,052 | - | - | - | (186,395 | ) | - | 125,657 | |||||||||||||||||||||||
| Share issued for services | 275,000 | 38,500 | - | - | - | - | - | 38,500 | ||||||||||||||||||||||||
| Share issuance costs | - | (238,221 | ) | - | - | 139,625 | - | - | (98,596 | ) | ||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | 495,791 | - | 495,791 | ||||||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | - | (1,708,132 | ) | (1,708,132 | ) | ||||||||||||||||||||||
| Balance, December 31, 2021 | 97,535,264 | 26,618,315 | - | - | 902,761 | 4,891,957 | (30,216,117 | ) | 2,196,916 | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 4 |
Avricore Health Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Operating Activities | ||||||||
| Net loss | (1,708,132 | ) | (1,173,966 | ) | ||||
| Adjustment for non-cash items: | ||||||||
| Amortization | 17,984 | - | ||||||
| Finance cost | 38,438 | 144,488 | ||||||
| Gain on settlement of liabilities | - | (33,899 | ) | |||||
| Write-down of inventories | - | 180,432 | ||||||
| Share-based payments | 495,791 | 130,219 | ||||||
| Change in working capital items: | ||||||||
| Accounts receivable | (79,620 | ) | 3,546 | |||||
| Prepaid expenses and deposits | 70,977 | 45,259 | ||||||
| Inventories | - | (180,432 | ) | |||||
| Accounts payable and accrued liabilities | (69,592 | ) | (339,043 | ) | ||||
| Net cash used in operating activities | (1,234,154 | ) | (1,223,396 | ) | ||||
| Investing Activities | ||||||||
| Intangible assets | (35,006 | ) | - | |||||
| Purchase of equipment | (105,358 | ) | - | |||||
| Net cash used in investing activities | (140,364 | ) | - | |||||
| Financing Activities | ||||||||
| Proceeds from issuance of shares | 2,404,000 | 626,000 | ||||||
| Proceeds from exercise of warrants | 1,653,737 | - | ||||||
| Proceeds from exercise of stock options | 125,657 | 5,250 | ||||||
| Share issuance costs | (98,596 | ) | (25,242 | ) | ||||
| Share subscription received | - | 10,000 | ||||||
| Loan repaid | (1,000,000 | ) | - | |||||
| Loan proceeds | - | 940,000 | ||||||
| Finance cost | - | (30,000 | ) | |||||
| Lease payments | - | (13,696 | ) | |||||
| Net cash provided by financing activities | 3,084,798 | 1,512,312 | ||||||
| Increase in Cash and Cash Equivalents | 1,710,280 | 288,916 | ||||||
| Cash and Cash Equivalents, Beginning of Year | 302,715 | 13,799 | ||||||
| Cash and Cash Equivalents, End of Year | 2,012,995 | 302,715 | ||||||
| Cash and Cash Equivalents Consist of: | ||||||||
| Cash | 1,702,995 | 292,715 | ||||||
| Guaranteed investment certificates | 310,000 | 10,000 | ||||||
| Cash and Cash Equivalents | 2,012,995 | 302,715 | ||||||
Supplemental cash flow information (Note 19)
The accompanying notes are an integral part of these consolidated financial statements
| 5 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(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 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.
The continuation of the Company as a going concern is dependent upon its ability to generate revenue from its operations, or raise additional financing to cover ongoing cash requirements. The 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.
| December 31, 2021 | December 31, 2020 | |||||||
| $ | $ | |||||||
| Deficit | (30,216,117 | ) | (28,507,985 | ) | ||||
In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a global pandemic. Since then, several measures have been implemented in Canada and the rest of the world in response to the increased impact from COVID-19. The Company continues to operate the business forward at this time. While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on the Company’s operations, including the duration and impact on the Company’s future plans, cannot be reasonably estimated at this time.
2. BASIS OF PRESENTATION
a) Statement of Compliance
The consolidated financial statements for the year ended December 31, 2021 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
b) Basis of preparation
The 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 and have been consistently applied in each of the periods presented. The consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional currency, unless other indicated.
| 6 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
2. BASIS OF PRESENTATION (continued)
b) Basis of preparation (continued)
The preparation of consolidated financial statements in accordance with IFRS requires the Company’s management to make estimates, judgments and assumptions that affect amounts reported in the 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 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
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 consolidated financial statements. Where control of an entity is obtained during a financial year, its results are included in the 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 consolidated financial statements include the accounts of the Company and its controlled wholly owned subsidiaries, Vanc Marine Pharmaceuticals Inc. and HealthTab™ Inc.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Revenue recognition
The Company’s revenues are generated from operating leases of the POC system and sale of testing panels. Revenue comprises the fair value of the consideration received or receivable and it is shown net of tax and discounts.
The Company recognizes revenue to depict the transfer of goods and services to clients in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services by applying the following steps:
| ● | Identify the contract with a client; |
| ● | Identify the performance obligations in the contract; |
| ● | Determine the transaction price; |
| ● | Allocate the transaction price to the performance obligations; and |
| ● | Recognize revenue when, or as, the Company satisfies a performance obligation. |
Revenue may be earned over time as the performance obligations are satisfied or at a point in time which is when the entity has earned a right to payment, the customer has possession of the asset and the related significant risks and rewards of ownership, and the customer has accepted the asset.
The Company’s arrangements with clients can include multiple performance obligations. When contracts involve various performance obligations, the Company evaluates whether each performance obligation is distinct and should be accounted for as a separate unit of accounting under IFRS 15, Revenue from Contracts with Customers.
| 7 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
a) Revenue recognition (continued)
The Company determines the standalone selling price by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include discounting practices, the size and volume of our transactions, our marketing strategy, historical sales and contract prices. The determination of standalone selling prices is made through consultation with and approval by management, taking into consideration our go-to-market strategy. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes in relative standalone selling prices.
The Company generally receives payment from its clients after invoicing within the normal 28-day commercial terms. If a client is specifically identified as a credit risk, recognition of revenue is stopped except to the extent of fees that have already been collected.
b) Leases
A contract is, or contains, a lease if the contract conveys a lessee the right to control the use of lessor’s identified asset for a period of time in exchange for consideration.
The Company as a lessee
A lease liability is recognized at the commencement of the lease term at the present value of the lease payments that are not paid at that date. At the commencement date, a corresponding right-of-use asset is recognized at the amount of the lease liability, adjusted for lease incentives received, retirement costs and initial direct costs. Depreciation is recognized on the right-of-use asset over the lease term. Interest expense is recognized on the lease liabilities using the effective interest rate method and payments are applied against the lease liability.
Key areas where management has made judgments, estimates, and assumptions related to the application of IFRS 16 include:
| - | The incremental borrowing rates are based on judgments including economic environment, term, currency, and the underlying risk inherent to the asset. The carrying balance of the right-of-use assets, lease liabilities, and the resulting interest expense and depreciation expense, may differ due to changes in the market conditions and lease term. | |
| - | Lease terms are based on assumptions regarding extension terms that allow for operational flexibility and future market conditions. |
The Company as a lessor
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. All other leases are classified as finance leases.
Leases of the Company’s POC systems to customers are classified are operating leases. Lease payments from operating leases are recognized as income on a straight-line basis. All costs, including depreciation, incurred in earning the operating lease income are recognized as an expense. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as an expense over the lease term on the same basis as the lease income. The depreciation for depreciable underlying assets subject to operating leases is in accordance with depreciation policy for the Company’s equipment.
| 8 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c) Foreign currency
These consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the Company and its subsidiaries.
Foreign currency transactions are translated into the functional currency of the respective entity, using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates are recognized in profit or loss.
Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction and are not retranslated. Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.
d) Cash equivalents
Cash equivalents include short-term guaranteed investment certificates readily convertible into a known amount of cash, which is subject to insignificant change in value.
e) Intangible assets
All intangible assets acquired separately by the Company are recorded at cost on the date of acquisition. Intangible assets that have indefinite lives are measured at cost less accumulated impairment losses. Intangible assets that have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets comprise of intellectual property, trademarks and web domains and distribution rights, which are amortized on a straight-line basis over 3 years. Amortization rates are reviewed annually to ensure they are aligned with estimates of remaining economic useful lives of the associated intangible assets.
f) Equipment
Equipment is stated at historical cost less accumulated amortization and accumulated impairment losses. Amortization is calculated on a declining balance method over their estimated useful lives. The Company’s
computer systems are amortized at 55% and POC systems at 8%.
g) Share-based payments
The Company operates an incentive share purchase option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share- based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes option pricing model, which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
| 9 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
h) Share capital
Proceeds from the exercise of stock options and warrants are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company. Any previously recorded share-based payment included in the reserves account is transferred to share capital on exercise of options. Share capital issued for non-monetary consideration is valued at the closing market price at the date of issuance. The proceeds from issuance of units are allocated between common shares and warrants based on the residual method. Under this method, the proceeds are allocated first to share capital based on the fair value of the common shares at the time the units are priced and any residual value is allocated to the warrants reserve. Consideration received for the exercise of warrants is recorded in share capital, and any related amount recorded in warrants reserve is transferred to share capital.
i) Loss per share
Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity. In a loss year, potentially dilutive common shares are excluded from the loss per share calculation as the effect would be anti-dilutive. Basic and diluted loss per share are the same for the periods presented.
j) Income taxes
Income tax expense, consisting of current and deferred tax expense, is recognized in the statements of operations. Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at period-end, adjusted for amendments to tax payable with regard to previous years.
Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
| 10 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
k) Financial Instruments
Classification
The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL.
The Company has classified its cash and cash equivalents as FVTPL and accounts receivable, accounts payable and loans payable as amortized cost.
Measurement
Financial assets and liabilities at amortized cost
Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.
Financial assets and liabilities at FVTPL
Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the profit or loss in the period in which they arise.
Financial assets at FVTOCI
Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income (loss) as they arise.
Impairment of financial assets at amortized cost
An ‘expected credit loss’ impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period. In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
| 11 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
k) Financial Instruments (continued)
Derecognition
Financial assets
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss.
The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value:
| Level 1 – | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 – | inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and |
| Level 3 – | inputs for the asset or liability that are not based on observable market data (unobservable inputs) |
l) Impairment of equipment and intangible assets
At the end of each reporting period, if there are indicators of impairment, the Company reviews the carrying amounts of its equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. Individual assets are grouped together as a cash generating unit for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are independent from other group assets.
If any such indication of impairment exists, the Company makes an estimate of its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use. Where the carrying amount of a cash generating unit exceeds its recoverable amount, the cash generating unit is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are adjusted for the risks specific to the cash generating unit and are discounted to their present value with a discount rate that reflects the current market indicators. The recoverable amount of intangible assets with an indefinite useful life, intangible assets not available for use, or goodwill acquired in a business combination are measured annually whether or not there are any indications that impairment exists.
Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash generating unit in prior years. A reversal of an impairment loss is recognized as income immediately.
| 12 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
m) Significant accounting estimates and judgments
Estimates
Significant estimates used in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:
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. Changes in these assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company’s options and warrants issued. Management must also make significant judgments or assessments as to how financial assets and liabilities are categorized.
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 for Revenue Recognition 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
The Company’s management has made an assessment of the Company’s ability to continue as a going concern and is satisfied that the Company has the resources to continue in business for the foreseeable future. The factors considered by management are disclosed in Note 1.
| 13 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n) Accounting standards issued but not yet effective
There are no accounting pronouncements with future effective dates that are applicable or are expected to have a material impact on the Company’s consolidated financial statements.
4. ACQUISITION OF HEALTHTAB™ INC.
On December 28, 2017, the Company completed the acquisition of all the common shares of HealthTab™ Inc. (“HealthTab™”). HealthTab™’s primary asset is intellectual property and certain trademarks and web domains related to the design of the HealthTab™ system, being a lab-accurate, point of care testing platform. Under the share purchase agreement, the consideration paid by the Company is as follows:
| ● | Cash payment of $100,000 upon signing of the share purchase agreement (paid); |
| ● | Cash payment of $100,000 in six equal monthly instalments after the closing date (paid); |
| ● | Issue 880,000 common shares no later than 125 days after the closing date (issued); |
| ● | Issue 880,000 common shares no later than 245 days after the closing date (issued); |
| ● | Issue 906,667 common shares no later than 365 days after the closing date (issued); |
| ● | Issue common shares equal to the higher of $100,000 or 5% of net sales related to HealthTab™ for the year ended December 2018 by January 31, 2019 (issued); and |
| ● | Issue common shares equal to the higher of $100,000 or 5% of net sales related to HealthTab™ for the year ended December 2019 by January 31, 2020 (issued) |
This acquisition was accounted for as an acquisition of assets and liabilities as HealthTab™ did not meet the definition of a business under IFRS 3, Business Combinations.
5. ACCOUNTS RECEIVABLE
The Company’s accounts receivable consists of the following:
| December 31, 2021 | December 31, 2020 | |||||||
| $ | $ | |||||||
| Trade receivables | 83,847 | 9,800 | ||||||
| GST receivable | 7,701 | 2,128 | ||||||
| 91,548 | 11,928 | |||||||
6. PREPAID EXPENSES AND DEPOSITS
The balance consists of prepaid expenses to vendors of $35,949 (2020 - $49,433), prepaid business insurance of $6,518 (2020 - $16,513) and security deposits of $12,000 (2020 - $12,000).
7. INVENTORIES
During the year ended December 31, 2020, the Company recorded an inventory write-down of $180,432 related to hand sanitizers purchased during the year.
| 14 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
8. EQUIPMENT
| Equipment | ||||
| $ | ||||
| Cost | ||||
| Balance, December 31, 2019 and 2020 | - | |||
| Additions | 105,358 | |||
| Balance, December 31, 2021 | 105,358 | |||
| Accumulated Amortization | ||||
| Balance, December 31, 2019 and 2020 | - | |||
| Amortization | 14,483 | |||
| Balance, December 31, 2021 | 14,483 | |||
| Carrying value | ||||
| As at December 31, 2020 | - | |||
| As at December 31, 2021 | 90,875 | |||
9. INTANGIBLE ASSETS
| Software | HealthTab™ | Corozon | Emerald | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Cost | ||||||||||||||||||||
| Balance, December 31, 2019 and 2020 | - | 1 | 1 | 1 | 3 | |||||||||||||||
| Additions | 35,006 | - | - | - | 35,006 | |||||||||||||||
| Balance, December 31, 2021 | 35,006 | 1 | 1 | 1 | 35,009 | |||||||||||||||
| Accumulated Amortization | ||||||||||||||||||||
| Balance, December 31, 2019 and 2020 | - | - | - | - | - | |||||||||||||||
| Amortization | 3,501 | - | - | - | 3,501 | |||||||||||||||
| Balance, December 31, 2021 | 3,501 | - | - | - | 3,501 | |||||||||||||||
| Carrying value | ||||||||||||||||||||
| As at December 31, 2020 | - | 1 | 1 | 1 | 3 | |||||||||||||||
| As at December 31, 2021 | 31,505 | 1 | 1 | 1 | 31,508 | |||||||||||||||
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company’s accounts payable and accrued costs consist of the following:
| December 31, 2021 | December 31, 2020 | |||||||
| $ | $ | |||||||
| Trade accounts payable | 44,477 | 126,569 | ||||||
| Accrued liabilities | - | 26,000 | ||||||
| 44,477 | 152,569 | |||||||
| 15 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
11. LEASE LIABILITIES
| $ | ||||
| Balance, December 31, 2019 | 21,390 | |||
| Finance cost | 726 | |||
| Lease payments | (22,116 | ) | ||
| Balance, December 31, 2020 and 2021 | - | |||
During the year ended December 31, 2020, the Company terminated its lease agreement for its office premise. Pursuant to the cancelation, the Company forfeited its deposit of $8,420 and paid the outstanding rent for the months of January to March, 2020.
12. LOANS PAYABLE
During the year ended December 31, 2020, the Company entered into a loan agreement with a third party for a secured loan in the amount of $1,000,000 (the “Loan”). The Loan was for a term of one year from the date of receipt of the funds, bore interest at a rate of 10% per annum and was secured with all of the present and after-acquired property of the Company. The loan was subject to an interest reserve of $100,000 held back from the loan advance. The Company paid a loan application fee in the amount of $30,000 and issued 3,480,000 bonus shares with a fair value of $52,500, which was recorded against the carrying value of the Loan. During the year ended December 31, 2021, the Company recorded $21,096 (2020 - $78,904) as interest expense and recorded $17,342 (2020 - $64,158) as accretion expense on the loan which was been included in finance cost in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2021, the Company repaid the outstanding loan balance of $1,000,000 at the end of the term.
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, 2025. The loan is interest-free until December 31, 2022. Thereafter, the outstanding loan balance will bear interest at the rate of 5% per annum.
13. SHARE CAPITAL
Authorized share capital
Authorized: Unlimited number of common shares without par value.
Issued share capital
During the year ended December 31, 2021:
The Company issued 10,058,660 common shares upon exercise of warrants for gross proceeds of $1,653,737.
The Company issued 1,666,020 common shares upon exercise of stock options for gross proceeds of $125,657.
The Company issued 275,000 common shares valued at $38,500 to a consultant in exchange for services received.
| 16 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
13. SHARE CAPITAL (continued)
Issued share capital (continued)
On February 12, 2021, the Company completed a non-brokered private placement and issued 7,000,000 units at a price of $0.22 per unit for gross proceeds of $1,540,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.30 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company’s directors and officers participated in the private placement. The Company paid finder’s fee totaling $56,320 and issued 256,000 finder’s warrants valued at $39,206.
On January 28, 2021, the Company closed the final tranche of a non-brokered private placement and issued 8,740,000 units at a price of $0.10 per unit for gross proceeds of $874,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.15 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company’s directors and officers participated in the private placement. The Company paid finder’s fee totaling $27,800 and issued 278,000 finder’s warrants valued at $100,419.
During the year ended December 31, 2020:
The Company closed a tranche of a non-brokered private placement and issued 6,260,000 units at a price of $0.10 per unit for gross proceeds of $626,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.15 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company paid finder’s fee totaling $22,500 and issued 225,000 finder’s warrants valued at $9,833. The Company’s directors and officers participated in the private placement.
The Company issued 5,477,965 common shares in exchange for services received and to settle accounts payables of $136,949. An aggregate of 1,900,000 shares were issued in settlement of $47,500 in amounts owing to certain directors and officers of the Company. The common shares issued to the related parties are subject to a four month plus one day hold period.
The Company issued 105,000 common shares pursuant to the exercise of stock options for gross proceeds of $5,250. $1,422 was reclassified from reserves to share capital on exercise of the options.
The Company issued 2,000,000 common shares valued at $100,000 related to the acquisition of HealthTab™ (see Note 4).
The Company issued 3,480,000 common shares valued at $52,200 as bonus shares pursuant to a loan agreement (see Note 12).
Stock options
The Company has adopted an incentive share purchase option plan under the rules of the Exchange pursuant to which it is authorized to grant options to executive officers, directors, employees and consultants, enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. 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.
| 17 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
13. SHARE CAPITAL (continued)
Stock options (continued)
The changes in stock options including those granted to directors, officers, employees and consultants are summarized as follows:
| Year ended December 31, 2021 | Year ended December 31, 2020 | |||||||||||||||
| Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | |||||||||||||
| Beginning Balance | 6,706,072 | $ | 0.08 | 5,241,072 | $ | 0.13 | ||||||||||
| Options granted | 2,840,000 | $ | 0.22 | 1,730,000 | $ | 0.08 | ||||||||||
| Expired/Cancelled | - | - | (160,000 | ) | $ | 0.07 | ||||||||||
| Exercised | (1,666,020 | ) | $ | 0.08 | (105,000 | ) | $ | 0.05 | ||||||||
| Ending Balance | 7,880,052 | $ | 0.13 | 6,706,072 | $ | 0.08 | ||||||||||
| Exercisable | 7,692,552 | $ | 0.13 | 6,706,072 | $ | 0.08 | ||||||||||
The following table summarizes information about stock options outstanding and exercisable as at December 31, 2021:
| Exercise Price | Expiry date | Options | ||||||||||
| Outstanding | Exercisable | |||||||||||
| $ | 0.15 | June 21, 2022 | 140,000 | 140,000 | ||||||||
| $ | 0.17 | July 2, 2022 | 500,000 | 500,000 | ||||||||
| $ | 0.10 | (1) | July 20, 2022 | 150,000 | 150,000 | |||||||
| $ | 0.10 | (1) | September 27, 2022 | 150,000 | 150,000 | |||||||
| $ | 0.10 | (1) | November 20, 2022 | 150,000 | 150,000 | |||||||
| $ | 0.10 | (2) | December 8, 2022 | 675,052 | 675,052 | |||||||
| $ | 0.10 | (3) | March 27, 2023 | 200,000 | 200,000 | |||||||
| $ | 0.17 | March 31, 2023 | 250,000 | 62,500 | ||||||||
| $ | 0.10 | (4) | April 11, 2023 | 150,000 | 150,000 | |||||||
| $ | 0.075 | January 24, 2024 | 280,000 | 280,000 | ||||||||
| $ | 0.08 | February 28, 2024 | 140,000 | 140,000 | ||||||||
| $ | 0.06 | April 1, 2024 | 175,000 | 175,000 | ||||||||
| $ | 0.05 | October 1, 2024 | 1,480,000 | 1,480,000 | ||||||||
| $ | 0.08 | November 18, 2025 | 780,000 | 780,000 | ||||||||
| $ | 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 | ||||||||
| 7,880,052 | 7,692,552 | |||||||||||
(1) Options repriced from $0.15 to $0.10 during the year ended December 31, 2020
(2) Options repriced from $0.28 to $0.10 during the year ended December 31, 2020
(3) Options repriced from $0.24 to $0.10 during the year ended December 31, 2020
(4) Options repriced from $0.21 to $0.10 during the year ended December 31, 2020
The weighted average remaining life of the stock options outstanding at December 31, 2021 is 2.73 years.
| 18 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
13. SHARE CAPITAL (continued)
Share-based compensation
Share-based compensation of $495,791 was recognized during the year ended December 31, 2021 (2020 - $130,219) for stock options granted, vested, and repriced during the year. 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.
Share-based payments for options granted and repriced was measured using the Black-Scholes option pricing model with the following assumptions:
| 2021 | 2020 | |||||||
| Expected life | 1 – 5 years | 2 – 5 years | ||||||
| Volatility | 134% - 211 | % | 141% - 180 | % | ||||
| Dividend yield | 0 | % | 0 | % | ||||
| Risk-free interest rate | 0.32% - 0.99 | % | 0.23% - 0.47 | % | ||||
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
The Company has issued warrants entitling the holders to acquire common shares of the Company. The summary of changes in warrants is presented below.
| Year ended December 31, 2021 | Year ended December 31, 2020 | |||||||||||||||
| Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | |||||||||||||
| Beginning Balance | 18,743,226 | $ | 0.16 | 20,704,664 | $ | 0.24 | ||||||||||
| Warrants issued | 16,274,000 | $ | 0.22 | 6,485,000 | $ | 0.15 | ||||||||||
| Warrants exercised | (10,058,660 | ) | $ | 0.16 | - | - | ||||||||||
| Warrants expired | (6,177,500 | ) | $ | 0.15 | (8,446,438 | ) | $ | 0.33 | ||||||||
| Outstanding | 18,781,066 | $ | 0.21 | 18,743,226 | $ | 0.16 | ||||||||||
The following table summarizes information about warrants outstanding and exercisable as at December 31, 2021:
| Exercise Price | Expiry date | Warrants Outstanding | ||||||
| $ | 0.20 | June 26, 2022 | 993,666 | |||||
| $ | 0.20 | August 3, 2022 | 742,667 | |||||
| $ | 0.20 | November 27, 2022 | 770,733 | |||||
| $ | 0.15 | January 28, 2022 | 9,018,000 | |||||
| $ | 0.30 | February 12, 2022 | 7,256,000 | |||||
| 18,781,066 | ||||||||
The weighted average remaining life of the warrants outstanding at December 31, 2021 is 0.17 years.
| 19 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
13. SHARE CAPITAL (continued)
Warrants (continued)
Fair value of the finder’s warrants granted was measured using the Black-Scholes pricing model with the following assumptions:
| 2021 | 2020 | |||||||
| Expected life | 1 year | 1 year | ||||||
| Volatility | 195% - 200 | % | 190 | % | ||||
| Dividend yield | 0 | % | 0 | % | ||||
| Risk-free interest rate | 0.15% - 0.17 | % | 0.26 | % | ||||
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.
14. MARKETING AND COMMUNICATIONS EXPENSES
| Year ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Marketing | - | 2,279 | ||||||
| Shareholder communications | 329,342 | 28,972 | ||||||
| 329,342 | 31,251 | |||||||
15. GENERAL AND ADMINISTRATIVE EXPENSES
| Year ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Bad debt | - | 2,977 | ||||||
| Bank service charges | 6,806 | 5,910 | ||||||
| Filing and registration fees | 59,635 | 37,715 | ||||||
| Foreign exchange | 153 | 6,350 | ||||||
| Insurance | 44,784 | 38,283 | ||||||
| Investor relations | 5,312 | 1,265 | ||||||
| Office maintenance | 30,738 | 17,550 | ||||||
| Regulatory | 8,380 | - | ||||||
| Rent | 12,810 | 5,268 | ||||||
| Travel | 14,382 | 5,259 | ||||||
| 183,000 | 120,577 | |||||||
| 20 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
16. RELATED PARTY TRANSACTIONS
For the years ended December 31, 2021 and 2020, the Company recorded the following transactions with related parties:
| a) | $150,000 in management fees (2020 - $150,000) to the Chief Executive Officer of the Company along with a bonus award of $35,000 (2020 - $nil). |
| b) | $20,000 in management fees to the former President and Chief Executive Officer of the Company (2020 - $120,000). |
| c) | $120,000 in professional fees (2020 - $120,000) to a company controlled by the Chief Financial Officer of the Company along with a bonus award of $30,000 (2020 - $nil). |
| d) | $127,500 in consulting fees (2020 - $120,000) to the Chief Technology Officer of the Company along with a bonus award $35,000 (2020 - $nil). |
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:
| Year ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Consulting fees | 162,500 | 120,000 | ||||||
| Management fees | 205,000 | 270,000 | ||||||
| Professional fees | 150,000 | 120,000 | ||||||
| Share-based compensation | 264,393 | 58,159 | ||||||
| 781,893 | 568,159 | |||||||
There were no amounts due to related parties as at December 31, 2021 and 2020.
17. CAPITAL DISCLOSURES
The Company includes shareholders’ equity in the definition of capital. 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 will not issue additional equity until 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 year ended December 31, 2021.
18. SEGMENTED INFORMATION
At December 31, 2021 and 2020, the Company has only one segment, being the HealthTab™ - Point of Care Business in Canada.
| 21 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
19. SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended December 31, 2021, the Company:
- Issued common shares against subscriptions of $10,000 received in prior year.
- Issued 275,000 common shares valued at $38,500 for services received.
During the year ended December 31, 2020, the Company:
- Issued in total 2,000,000 common shares valued at $100,000 related to the acquisition of HealthTab™ (see Notes 4 and 13).
- Issued in total 3,480,000 common shares valued at $52,200 as bonus shares under a loan agreement (see Notes 12).
- Issued 5,477,965 common shares at a price of $0.025 per share to settle an outstanding debt of $136,949.
20. INCOME TAXES
The following table reconciles the expected income tax expense (recovery) at the Canadian statutory income tax rates to the amounts recognized in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021 and 2020:
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Loss for the year | (1,708,132 | ) | (1,173,966 | ) | ||||
| Expected income tax recovery (27%) | (461,000 | ) | (317,000 | ) | ||||
| Change in statutory, foreign tax, foreign exchange rates and other | (24,000 | ) | (3,000 | ) | ||||
| Permanent differences and other | 134,000 | 35,000 | ||||||
| Share issue cost | (5,000 | ) | (5,000 | ) | ||||
| Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses | - | 1,000 | ||||||
| Change in unrecognized deductible temporary differences | 356,000 | 289,000 | ||||||
| Total income tax expense (recovery) | - | - | ||||||
The significant components of the Company’s deferred tax assets and liabilities are as follows:
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Share issue costs | 29,000 | 8,000 | ||||||
| Property and equipment | 164,000 | 164,000 | ||||||
| Intangible asset | 157,000 | 157,000 | ||||||
| Non-capital losses | 5,636,000 | 5,301,000 | ||||||
| Total | 5,986,000 | 5,630,000 | ||||||
| Unrecognized deferred tax assets | (5,986,000 | ) | (5,630,000 | ) | ||||
| Deferred income tax asset (liability) | - | - | ||||||
The Company has approximately $20,876,000 in non-capital losses for Canadian tax purposes which begin expiring in 2026.
| 22 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
21. FINANCIAL INSTRUMENTS AND FINANCIAL 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.
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 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 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 76% of trade receivables are due from one customer at December 31, 2021 (2020 – 45% from one customer).
b) 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. Due to the ongoing COVID-19 pandemic, liquidity risk has been assessed as high.
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 December 31, 2021, the Company’s liabilities were comprised of accounts payable and accrued liabilities, and loans payable of $84,477 (2020 - $1,154,131).
c) 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.
| 23 |
Avricore Health Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
21. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
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 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. The Company’s loans payable bear fixed interest rate.
d) Fair value of financials instruments
The fair values of financial assets and financial liabilities are determined as follows:
Cash and cash equivalents are measured at fair value. For accounts receivable, accounts payable, and loans payable carrying amounts approximate fair value due to their short-term maturity;
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.
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. The Company’s lease liabilities are at this level.
Level 3: Inputs for the asset or liability are not based on observable market data. Currently, the Company has no financial instruments at this level.
22. SUBSEQUENT EVENTS
| a) | The Company issued 160,000 common shares upon exercise of warrants for gross proceeds of $24,000 |
| b) | 8,858,000 warrants with exercise price of $0.15 expired unexercised. |
| c) | 7,256,000 warrants with exercise price of $0.30 expired unexercised. |
| d) | 1,280,000 stock options held by former consultants of the Company were cancelled. |
| 24 |
Exhibit 2
Form 52-109FV1
Certification of Annual Filings
Venture Issuer Basic Certificate
I, Hector Bremner, CEO of Avricore Health Inc., certify the following:
| 1. | Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Avricore Health Inc. for the financial year ended December 31, 2021. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual 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, for the period covered by the annual filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual 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 annual filings. |
Dated: April 22, 2022
| “Hector Bremner” | |
| Hector 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 3
Form 52-109FV1
Certification of Annual Filings
Venture Issuer Basic Certificate
I, Kiki Smith, CFO of Avricore Health Inc., certify the following:
| 1. | Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Avricore Health Inc. for the financial year ended December 31, 2021. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual 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, for the period covered by the annual filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual 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 annual filings. |
| Dated: April 22, 2022 | |
| “KikiSmith” | |
| 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 4
Avricore Health Inc.
Management’s
Discussion & Analysis
For the year ended December 31, 2021
Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
This Management Discussion and Analysis (“MD&A”) of Avricore Health Inc. (“AVRICORE”, the “Company”, “we”, “us” or “our”) for the year ended December 31, 2021 is prepared as of April 22, 2022. This MD&A should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 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.sedar.com) 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 for the year ended December 31, 2021, and in Avricore’s annual financial statements and the notes thereto. These documents are available at www.sedar.com.
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.
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
OVERVIEW
Avricore Health is focused on acquiring and developing early-stage technologies aimed at moving pharmacy forward. 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 turns pharmacies into community diagnostic centres. It enables pharmacists to take on a greater role in primary health services, capitalizes on the rapidly growing point-of-care testing market, and ultimately improves the quality of life for patients living with chronic illness.
COVID-19 RESPONSE
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. One year later the pandemic continues to severely impact the environment in which the Company operates.
One benefit is the increased focus on real world evaluations and rapid testing which has brought increased attention to HealthTab™. While continuing HealthTab’s™ primary focus on general health screening it has also been adapted to support COVID-19 testing.
The extent to which the COVID-19 outbreak impacts the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the spread of the virus and government actions. Management continues to monitor the situation and adjust corporate planning as appropriate.
HEALTHTAB™ – KEY DEVELOPMENTS
Key developments have included:
| ● | 20 (increased from an initial 11) participating Shoppers Drug Mart® pharmacies, 15 in Ontario and 5 in British Columbia, have now received their HealthTab™ systems and are offering screening tests to patients. 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® pharmacist based on their health profile. Additionally, the first ever third-party HealthTab™ advertising campaign will actively market the program publicly in the participating region. | |
| ● | 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 distribute Abbott’s 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. | |
| ● | The first Shoppers Drug Mart® pharmacy selected to receive the system to begin beta-testing HealthTab™’s systems, reported that more than 90 patients were tested and over 600 results were reported over the initial trial period between July 5 – July 18 at this single location. |
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
| ● | Signing master agreement to pilot Healthtab™ platform for diabetes management in select Shoppers Drug Mart® pharmacies. | |
| ● | Amendment to the Distribution Agreement adds the 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, Influenza A & B and Strep – a powerful combination for detecting infections before they spread. | |
| ● | Partnered with Ellerca Health Inc. to offer joint diabetes screening and management support. | |
| ● | Signing of a Distribution Agreement with Abbott Rapid Diagnostics, to integrate new devices into Avricore’s HealthTab™ to expand its real-time data reporting system capabilities. | |
| ● | Expanding partnership with Ontario Pharmacists Association (OPA) to promote HealthTab™ to pharmacies conducting COVID-19 testing and government for real-time reporting of test results. | |
| ● | Developing new pilot programs with national pharmacy chains, | |
| ● | Advancing discussions with lab service providers, | |
| ● | Continuing to negotiate new POC service integrations to expand the HealthTab™ testing menu. | |
| ● | Refining HealthTab™’s de-centralized clinical trials capabilities 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 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 blood chemistry analyzer. These results are available in 12 minutes. Consumers’ bio-markers, 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) |
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
The Company believes 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 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.
Currently, HealthTab™ is available in certain Shoppers Drug Marts in the Greater Toronto Area, the Greater Vancouver Area, and Victoria. 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 the country, with over 10,000 members and over 4,600 community pharmacy locations.
The Company has partnered with established laboratory service providers in offering its point-of-care testing as part of their overall menu. 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 these 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 their patient 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.
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
SIGNIFICANT EVENTS AND TRANSACTIONS
Significant events and transactions during the year ended December 31, 2021 and to the date of this MD&A include the following:
| ● | The Company repaid the $1,000,000 secured loan from a third party at the end of the term. |
| ● | The Company issued 10,218,660 common shares upon exercise of warrants for gross proceeds of $1,677,737. |
| ● | The Company issued 1,666,020 common shares upon exercise of stock options for gross proceeds of $125,657. |
| ● | On February 12, 2021, the Company completed a non-brokered private placement and issued 7,000,000 units at a price of $0.22 per unit for gross proceeds of $1,540,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.30 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company paid finder’s fee totaling $56,320 and issued 256,000 finder’s warrants. The Company’s directors and officers participated in the private placement. |
| ● | On January 28, 2021 the Company closed the final tranche of a non-brokered private placement and issued 8,740,000 units at a price of $0.10 per unit for gross proceeds of $874,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.15 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company paid finder’s fee totaling $27,800 and issued 278,000 finder’s warrants. The Company’s directors and officers participated in the private placement. |
| ● | On March 22, 2021, the Company granted 1,800,000 stock options to the directors, officers and consultants of the Company at an exercise price of $0.25 per common share. The stock options are exercisable for a period of 5 years. 200,000 consultant options vest 50% after six months with the balance vesting quarterly thereafter. The remaining options vest on the date of grant. |
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
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.
| 2021 | 2020 | 2019 | ||||||||||
| Total revenue from continuing operations | $ | 122,808 | $ | 33,030 | $ | 33,000 | ||||||
| Loss from operations of continuing operations | $ | 1,708,132 | $ | 1,173,966 | $ | 1,916,252 | ||||||
| Loss from operations of discontinued operations | $ | - | $ | - | $ | 189,356 | ||||||
Loss per share – basic and diluted Continuing operations | $ | 0.02 | $ | 0.02 | $ | 0.04 | ||||||
| Discontinued operations | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
| Total assets | $ | 2,281,393 | $ | 440,090 | $ | 208,399 | ||||||
| Total current liabilities | $ | 84,477 | $ | 1,154,131 | $ | 673,850 | ||||||
| Total non-current financial liabilities | Nil | Nil | Nil | |||||||||
QUARTERLY FINANCIAL INFORMATION
The following table highlights selected unaudited consolidated financial data for each of the eight most recent quarters that, in management’s opinion, have been prepared on a basis consistent with the audited consolidated financial statements for the year ended December 31, 2021. 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 | Dec 2021 | Sep 2021 | Jun 2021 | Mar 2021 | Dec 2020 | Sep 2020 | Jun 2020 | Mar 2020 | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Revenue from continuing operations | 35,190 | 75,104 | 4,939 | 7,575 | 8,082 | 8,082 | 8,482 | 8,384 | ||||||||||||||||||||||||
| Gross profit (loss) from continuing operations | 9,317 | 20,555 | (998 | ) | 1,647 | 2,220 | 4,757 | 4,911 | 5,592 | |||||||||||||||||||||||
| Share-based
compensation | 9,169 | 74,722 | 24,965 | 386,935 | 120,191 | 10,028 | - | - | ||||||||||||||||||||||||
| Comprehensive Loss | 208,895 | 439,311 | 344,620 | 715,306 | 538,499 | 206,789 | 198,117 | 230,561 | ||||||||||||||||||||||||
| Loss/Share - continuing and discontinued operations | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.01 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||||||||||
| Total Assets | 2,281,393 | 2,517,569 | 2,541,099 | 2,740,053 | 440,090 | 355,808 | 532,086 | 607,061 | ||||||||||||||||||||||||
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2021
The Company incurred comprehensive loss of $1,708,132 for the year ended December 31, 2021 (2020 - $1,173,966).
Significant changes are as follows:
| ● | Revenue increased to $122,808 (2020 - $33,030) due to an increase in HealthTab™ systems deployed and tests sold. Gross profit increased to $30,521 (2020 - $17,480). |
| ● | Share-based compensation of $495,791 (2020 - $130,219) was recognized for stock options granted, vested, and repriced during the period. |
| ● | Consulting fees of $355,350 (2020 - $174,321) increased due to increase in consultant engagements for business development and the bonus awarded to the CTO. |
| ● | Professional fees of $189,796 (2020 - $159,593) increased mainly due to the bonus awarded to the CFO. |
| ● | Marketing and communications expenses increased to $329,342 (2020 - $31,251) mainly due to implementation of shareholder communication and awareness programs. |
| ● | Finance cost of $38,438 (2020 - $158,952) includes interest and accretion expense on loans. The decrease is due to repayment of loans. |
| ● | General and administrative expenses increased to $183,000 (2020 - $120,577) mainly to due to increases in insurance expense, office maintenance, and filing fees. |
FOURTH QUARTER
The Company incurred comprehensive loss of $208,895 for the three months ended December 31, 2021 (2020 - $538,499).
Significant changes are as follows:
| ● | Revenue increased to $35,190 (2020 - $8,082) due to an increase in HealthTab™ systems deployed and tests sold. Gross profit increased to $9,317 (2020 - $2,220). |
| ● | Share-based compensation of $9,169 (2020 - $120,191) was recognized for stock options granted, vested, and repriced during the period. |
| ● | Consulting fees of $68,075 (2020 - $36,998) increased due to increase in consultant engagements for business development. |
| ● | Management fees of $37,500 (2020 - $67,500) decreased due to resignation of the former President. |
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
| ● | Marketing and communications expenses increased to $75,425 (2020 - $1,650) mainly due to implementation of shareholder communication and awareness programs. |
| ● | Finance cost of $nil (2020 - $45,788) includes interest and accretion expense on loans. The decrease is due to repayment of loans. |
| ● | General and administrative expenses increased to $49,980 (2020 - $38,014) mainly to due to increases in rent expense, office maintenance, and regulatory expense. |
| ● | Write-down of inventories of $nil (2020 - $180,432) relates to the hand sanitizers purchased during 2020. |
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: | Year ended December 31, | |||||||
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Cash used in operating activities | (1,234,154 | ) | (1,223,396 | ) | ||||
| Cash used in investing activities | (140,364 | ) | - | |||||
| Cash provided by financing activities | 3,084,798 | 1,512,312 | ||||||
| Cash and Cash Equivalents, closing balance | 2,012,995 | 302,715 | ||||||
There is an overall cash inflow of $1,710,280 for the year ended December 31, 2021 compared to $288,916 in comparable period in 2020.
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. |
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
As at December 31, 2021, the Company had a working capital of $2,074,533 (2020 – deficit of $714,044). We believe that our cash on hand, the expected future cash inflows from revenues, net proceeds from the warrants 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.
RELATED PARTY TRANSACTIONS
For the year ended December 31, 2021 and 2020, the Company recorded the following transactions with related parties:
| a) | $150,000 in management fees (2020 - $150,000) to the Chief Executive Officer of the Company along with a bonus award of $35,000 (2020 - $nil). |
| b) | $20,000 in management fees to the former President and Chief Executive Officer of the Company (2020 - $120,000). |
| c) | $120,000 in professional fees (2020 - $120,000) to a company controlled by the Chief Financial Officer of the Company along with a bonus award of $30,000 (2020 - $nil). |
| d) | $127,500 in consulting fees (2020 - $120,000) to the Chief Technology Officer of the Company along with a bonus award $35,000 (2020 - $nil). |
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:
| Year ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| $ | $ | |||||||
| Consulting fees | 162,500 | 120,000 | ||||||
| Management fees | 205,000 | 270,000 | ||||||
| Professional fees | 150,000 | 120,000 | ||||||
| Share-based compensation | 264,393 | 58,159 | ||||||
| 781,893 | 568,159 | |||||||
There were no amounts due to related parties as at December 31, 2021 and December 31, 2020.
SUBSEQUENT EVENTS
| a) | The Company issued 160,000 common shares upon exercise of warrants for gross proceeds of $24,000 |
| b) | 8,858,000 warrants with exercise price of $0.15 expired unexercised. |
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
| c) | 7,256,000 warrants with exercise price of $0.30 expired unexercised. |
| d) | 1,280,000 stock options held by former consultants of the Company were cancelled. |
DISCLOSURE OF OUTSTANDING SHARE DATA
The following table summarizes the Company’s outstanding share capital as at report date:
| Common Shares | 97,695,264 | |||
| Stock Options | 6,600,052 | |||
| Stock Warrants | 2,507,066 |
COMMITMENTS AND AGREEMENTS
Loans payable
During the year ended December 31, 2020, the Company entered into a loan agreement with a third party for a secured loan in the amount of $1,000,000. The Loan was for a term of one year from the date of receipt of the funds, bore interest at a rate of 10% per annum and was secured with all of the present and after-acquired property of the Company. The loan was subject to an interest reserve of $100,000 held back from the loan advance. The Company paid a loan application fee in the amount of $30,000 and issued 3,480,000 bonus shares with a fair value of $52,500, which was recorded against the carrying value of the loan. During the year ended December 31, 2021, the Company recorded $21,096 (2020 - $78,904) as interest expense and recorded $17,342 (2020 - $64,158) as accretion expense on the loan which was been included in finance cost in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2021, the Company repaid the outstanding loan balance of $1,000,000 at the end of the term.
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, 2025. The loan is interest-free until December 31, 2022. Thereafter, the outstanding loan balance will bear interest at the rate of 5% per annum.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Our consolidated financial statements are prepared in accordance with IFRS. These accounting principles require the Company’s management to make estimates, judgments and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes to the consolidated financial statements. 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. Actual results may differ from these estimates under different assumptions or conditions. Significant areas requiring management estimates include accounting for amounts recorded in connection recoverability of inventories, reporting of revenue recognition, bad debt and doubtful accounts, income taxes, accounting for stock-based compensation expense, and commitments and contingencies.
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
The significant accounting policies that we believe are the most critical in fully understanding and evaluating our reported financial results include revenue recognition, stock-based compensation and fair value measurements of financial instruments. These and other significant accounting policies are described more fully in Note 2 and 3 of our annual consolidated financial statements for the year ended December 31, 2020.
Inventory valuation
The Company estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by regulatory changes or other market-driven changes that may reduce future selling prices. In determining net realizable value, the Company considers such factors as turnover, historical experience, expiry dates and shelf life of the products. A change to these assumptions could impact the Company’s inventory valuation and gross margin. The Company attempts to sell products with short shelf life with significant rebates. Any unsold products with short shelf life and expired products are written-off.
Revenue recognition
The Company recognizes revenue to depict the transfer of promised goods and services to clients in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services by applying the following steps:
| ● | Identify the contract with a client; |
| ● | Identify the performance obligations in the contract; |
| ● | Determine the transaction price; |
| ● | Allocate the transaction price to the performance obligations; and |
| ● | Recognize revenue when, or as, the Company satisfies a performance obligation. |
Revenue may be earned over time as the performance obligations are satisfied or at a point in time which is when the entity has earned a right to payment, the customer has possession of the asset and the related significant risks and rewards of ownership, and the customer has accepted the asset.
The Company’s arrangements with clients can include multiple performance obligations. When contracts involve various performance obligations, the Company evaluates whether each performance obligation is distinct and should be accounted for as a separate unit of accounting under IFRS 15, Revenue from Contracts with Customers. Judgment may be required when allocating revenue or discounts on sales amongst the various elements in a sale involving multiple deliverables.
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. Changes in these assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company’s options and warrants issued. Management must also make significant judgments or assessments as to how financial assets and liabilities are categorized.
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
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 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.
Financial Instruments and Risk Management
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and asset acquisition liability. 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.
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
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 76% of trade receivables are due from one customer at December 31, 2021 (2020 — 45% from one customer).
As at December 31, 2021 and 2020, the allowance for doubtful accounts receivable was $nil.
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. As at December 31, 2021, the Company’s financial liabilities were comprised of accounts payable and accrued liabilities, deferred revenue, and loans payable of $84,477 (2020 - $1,154,131).
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 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.
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Avricore Health Inc.
Management’s Discussion and Analysis
as of April 22, 2022
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements, which would require disclosure.
CONTACT
Officers
and Directors Kiki
Smith, CFO Rodger
Seccombe, CTO, Director Dr. Robert Sindelar, Director |
Contact Avricore Health Inc.
Suite 1120, 789 West Pender St. Vancouver, BC V6C 1H2
Tel: 604 773-8943 |
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Exhibit 5
FORM 13-501F1
CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS —
PARTICIPATION FEE
MANAGEMENT CERTIFICATION
I, KIKI SMITH , an officer of the reporting issuer noted below have examined this Form 13-501F1 (the Form) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate.
KIKI SMITH, CFO |
April 22, 2022 | |
| Name: | Date: | |
| Title: |
| Reporting Issuer Name: | AVRICORE HEALTH INC. | |
| End date of previous financial year: | December 31, 2021 | |
| Type of Reporting Issuer: | [ x ] Class 1 reportingissuer | [ ] Class 3B reporting issuer |
| Highest Trading Marketplace: | TSX:V |
| Market value of listed or quoted equity securities: Equity Symbol | AVCR | |||||
| 1st Specified Trading Period (dd/mm/yy) | 01/01/21 to 31/03/21 | |||||
| Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace | $ | 0.2350 | ||||
| (i) | ||||||
| Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period | 93,976,744 | |||||
| (ii) | ||||||
| Market value of class or series | (i) x (ii) | $ | 22,084,534.84 | |||
| (A) | ||||||
| 2nd Specified Trading Period (dd/mm/yy) | 01/04/21 to 30/06/21 | |||||
| Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace | $ | 0.1700 | ||||
| (iii) | ||||||
| Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period | 94,812,764 | |||||
| (iv) | ||||||
| Market value of class or series | (iii) x (iv) | $ | 16,118,169.88 | |||
| (B) | ||||||
| 3rd Specified Trading Period (dd/mm/yy) | 01/07/21 to 30/09/21 | |||||
| Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace | $ | 0.1500 | ||||
| (v) | ||||||
| Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period | 97,016,264 | |||||
| (vi) | ||||||
| Market value of class or series | (v) x (vi) | $ | 14,552,439.6 | |||
| (C) | ||||||
| 4th Specified Trading Period (dd/mm/yy) | to 31/12/21 | |||||
| Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace | $ | 0.1600 | ||||
| (vii) | ||||||
| Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period | 97,535,264 | |||||
| (viii) | ||||||
| Market value of class or series | (vii) x (viii) | $ | 15,605,642.24 | |||
| (D) | ||||||
| 5th Specified Trading Period (dd/mm/yy) | _________ to _____ | |||||
| Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace | $ | |||||
| Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period | (ix) | |||||
| Market value of class or series | (ix) x (x) | $ | ||||
| (E) | ||||||
| Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above)) | $ | 17,090,196.64 | ||||
| (I) |
(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year)
| Fair value of outstanding debt securities: | ||||||
| (Provide details of how value was dete_nined) | $ | |||||
| (2) | ||||||
| Capitalization for the previous financial year | (1) + (2) | $ | 17,090,196.64 | |||
| Participation Fee | $ | 500.0000 | ||||
| Late Fee, if applicable | $ | |||||
| Total Fee Payable | $ | 500.0000 | ||||
| (Participation Fee plus Late Fee) |