Form 6-K Avricore Health Inc. For: Nov 30

June 23, 2021 4:55 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15b-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of: November 2020

 

Commission File Number:  000-51848

 

 

Avricore Health Inc.

(Exact name of registrant as specified in its charter)

 

N/A

(Translation of Registrant’s name into English)

 

3500 – 1055 Dunsmuir Street PO Box 49114 Vancouver BC V7X1H7

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.      Form 20-F x Form 40-F o

 

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):    Yes o No x

 

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   Yes o No x

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form 6-K is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:    Yes o No x

 

 

Exhibits

 

The following exhibits are included in this Form 6-K:

 

Exhibit No.

Description

Date

99.1

News Release, Avricore Health Closes $626,000 First Tranche of Financing

November 13, 2020

99.2

Material Change Report

November 13, 2020

99.3

News Release, Avricore Health’s HealthtabTM Endorsed by Ontario Pharmacists Association for Real-Time Coved-19 Data Reporting in Community Pharmacies

November 23, 2020

99.4

News Release, Correction – Avricore Health Closes $626,000 First Tranche of Financing

November 24, 2020

99.5

Interim financial statements for the three and nine months ended September 30, 2020

November 30, 2020

99.6

Management’s Discussion and Analysis, September 30, 2020

November 30, 2020

99.7

CEO Certification

November 30, 2020

99.8

CFO Certification

November 30, 2020


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.

 

 

Dated:  June 23, 2021

AVRICORE HEALTH INC.

 

 

 

By: /s/ Kiki Smith

 

Kiki Smith

 

Chief Financial Officer


2

Exhibit 99.1

Picture 1 

 

AVRICORE HEALTH CLOSES $626,000 FIRST TRANCHE OF FINANCING

 

Vancouver, British Columbia – November 13, 2020 – AVRICORE HEALTH INC. (TSXV: AVCR) (the “Company” or “Avricore”) announces it has closed the first tranche of its non-brokered private placement for gross proceeds of $626,000. The Company will issue 6,360,000 units at $0.10 per unit and will pay finders fees totaling $22,500 and issue 225,000 finders warrants. Insiders participated in the aggregate amount of $55,000 for 550,000 units. Placement proceeds will be used for general working capital purposes.  

“Despite a very challenging year, our company continues to march down the field in a positive way and we are really pleased to not only be able to raise capital, but also raise it at a premium,” said Avricore Health CEO, Hector Bremner. “While the decision horizon for some investors is further out than this first group, we are confident in the enthusiasm and momentum we have to close out the balance.”

Each Unit consists of one common share and one transferrable share purchase warrant. Each warrant will entitle the holder thereof to purchase one additional common share for a period of 12 months from the closing date of the offering at a price of $0.15 per common share provided that if the closing price of the common shares of the Company on any stock exchange or quotation system on which the common shares are then listed or quoted is equal to or greater than $0.20 for a period of fifteen (15) consecutive trading days, the Company will have the right to accelerate the expiry of the warrants to a date that is not less than ten (10) business days from the date notice is given. The Company may pay finders fees of up to 5% cash and 5% finders warrants on a portion of the placement.

Closing of the Private Placement is subject to final acceptance by the TSX Venture Exchange. All securities issued in connection with the Private Placement will be subject to a four-month hold period from the closing date under applicable Canadian securities laws.

The Private Placement securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or under any state securities laws, and may not be offered or sold, directly or indirectly, or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements. This news release does not constitute an offer to sell or a solicitation to buy such securities in the United States.

Contact:

 

Hector Bremner, CEO 604-773-8943

info@avricorehealth.com 

www.avricorehealth.com 

 

About Avricore Health Inc.

Avricore Health Inc. is committed to becoming a health innovator and applying technologies at the forefront of science to core health issues at the community pharmacy level. The Company's goal is to empower consumers, patients and pharmacists with innovative technology, products, services and information to monitor and optimize health. www.avricorehealth.com

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


Page 1 of 1

Exhibit 99.2

FORM 51-102F3

 

SECURITIES ACT

 

MATERIAL CHANGE REPORT

 

 

Item 1Name and address of Company 

 

Avricore Health Inc.

2300-1177 West Hastings Street

Vancouver BC  V6E 2K3

 

Item 2Date of Material Change 

 

November 13, 2020

 

Item 3Press Release 

 

News Release, dated November 13, 2020, disseminated via Globenewswire under section 7.1 of National Instrument 51-102

 

Item 4Summary of Material Change 

 

See attached copy of the November 13, 2020 news release.

 

Item 5Full Description of Material Change 

 

See attached copy of the November 13, 2020 news release.

 

Item 6Reliance on subsection 7.1(2) or (3) of National Instrument 51-102: 

 

Not applicable.

 

Item 7 Omitted Information

 

Not applicable.

 

Item 8Senior Officers 

 

Hector Bremner, CEO of the Issuer, is knowledgeable about the material change and this report.  His business telephone number is (604) 773-8943

 

Item 9Date of Report  

 

November 13, 2020

 

“Hector Bremner” 

___________________ 

Hector D. Bremner, CEO 

Director 


 

AVRICORE HEALTH CLOSES $626,000 FIRST TRANCHE OF FINANCING

 

Vancouver, British Columbia – November 13, 2020 – AVRICORE HEALTH INC. (TSXV: AVCR) (the “Company” or “Avricore”) announces it has closed the first tranche of its non-brokered private placement for gross proceeds of $626,000. The Company will issue 6,260,000 units at $0.10 per unit and will pay finders fees totaling $22,500 and issue 225,000 finders warrants. Insiders participated in the aggregate amount of $55,000 for 550,000 units. Placement proceeds will be used for general working capital purposes.  

“Despite a very challenging year, our company continues to march down the field in a positive way and we are really pleased to not only be able to raise capital, but also raise it at a premium,” said Avricore Health CEO, Hector Bremner. “While the decision horizon for some investors is further out than this first group, we are confident in the enthusiasm and momentum we have to close out the balance.”

Each Unit consists of one common share and one transferrable share purchase warrant. Each warrant will entitle the holder thereof to purchase one additional common share for a period of 12 months from the closing date of the offering at a price of $0.15 per common share provided that if the closing price of the common shares of the Company on any stock exchange or quotation system on which the common shares are then listed or quoted is equal to or greater than $0.20 for a period of fifteen (15) consecutive trading days, the Company will have the right to accelerate the expiry of the warrants to a date that is not less than ten (10) business days from the date notice is given. The Company may pay finders fees of up to 5% cash and 5% finders warrants on a portion of the placement.

Closing of the Private Placement is subject to final acceptance by the TSX Venture Exchange. All securities issued in connection with the Private Placement will be subject to a four-month hold period from the closing date under applicable Canadian securities laws.

The Private Placement securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or under any state securities laws, and may not be offered or sold, directly or indirectly, or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements. This news release does not constitute an offer to sell or a solicitation to buy such securities in the United States.

 

Contact:

 

Hector Bremner, CEO 604-773-8943

info@avricorehealth.com 

www.avricorehealth.com 

 

About Avricore Health Inc.

Avricore Health Inc. is committed to becoming a health innovator and applying technologies at the forefront of science to core health issues at the community pharmacy level. The Company's goal is to empower consumers, patients and pharmacists with innovative technology, products, services and information to monitor and optimize health. www.avricorehealth.com

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

Exhibit 99.3

Picture 1 

AVRICORE HEALTH’S HEALTHTABÔ ENDORSED BY ONTARIO PHARMACISTS ASSOCIATION FOR REAL-TIME COVID-19 DATA REPORTING IN COMMUNITY PHARMACIES

Avricore Health and the OPA expand their partnership to promote HealthTab™ to pharmacies conducting COVID-19 testing and government for real-time reporting of test results for better community safety.

 

VANCOUVER, BC – (GLOBE NEWSWIRE)  November 23, 2020 Avricore Health Inc. (TSXV: AVCR) and the Ontario Pharmacists Association (OPA) are pleased to announce the expansion of their partnership agreement to endorse and promote the Company’s HealthTabÔ as a real-time data reporting platform for COVID-19 tests in Ontario pharmacies, as well as government agencies. Avricore and the OPA originally announced their agreement on November 18, 2019.

 

Under this agreement the Company agrees to share revenues generated with the OPA for HealthTabÔ contracts secured through OPA efforts.

 

“With community pharmacists anticipated to conduct more COVID-19 rapid tests, they are telling us they need to inform patients quickly, reduce workload and ensure that data is getting to reporting agencies seamlessly.” Said Avricore Health’s CEO, Hector Bremner. “HealthTabÔ automates these functions and ensures higher productivity and lower costs associated with this work.”  

 

As a preeminent voice of the pharmacy profession in Ontario, the OPA seeks to advance the profession and drive better patient results:

 

“Today, community pharmacies in Ontario are collecting test samples for asymptomatic COVID-19 patients and we expect to be a critical partner with government to deploy rapid testing.” Said OPA CEO, Justin Bates. “Community pharmacists are prepared to offer these solutions, and with the breakthrough of HealthTab’s fast and reliable data reporting, we feel that patients and the community will have the fastest access to the best information.”

 

Challenge

 

Point-of-care testing (POCT) presents a significant opportunity in affordably delivering accurate testing for COVID-19, and other community viral infections, in a scale which will ensure greater coverage of the population.  However, as seen in several jurisdictions, the deployment of these technologies and tests has been undermined by gaps in the ability to quickly and reliably report and share test results.  This is leading to inefficient expenditure of resources and reduced ability to respond to outbreaks quickly and accurately. 1

 

Recommendation

 

The OPA recommends the deployment of POCT and screening in the pharmacy setting utilizing the only real-time data reporting platform and software, HealthTab™.  Given the Government of Canada’s approval and significant purchase of Abbott’s ID Now™  molecular testing device and the PanBio Rapid Antigen Tests, community pharmacy can be utilized to deploy these resources and effectively serve communities with rapid testing and real-time reporting.


 

 

About Avricore Health Inc.

Avricore Health Inc. is committed to becoming a health innovator and applying technologies at the forefront of science to core health issues at the community pharmacy level. The Company’s goal is to empower consumers, patients and pharmacists with innovative technology, products, services and information to monitor and optimize health. www.avricorehealth.com

About the OPA

The Ontario Pharmacists Association is committed to evolving the pharmacy profession and advocating for excellence in practice and patient care. With more than 10,000 members, OPA is Canada's largest advocacy organization, professional development and drug information provider for pharmacy professionals across Ontario. By leveraging the unique expertise of pharmacy professionals, enabling them to practise to their fullest potential, and making them more accessible to patients, OPA is working to improve the efficiency and effectiveness of the healthcare system. The pharmacy sector plays a strong role in Ontario with an economic impact of more than $6.3 billion across 4,600 pharmacies, employing 60,000 Ontarians. https://www.opatoday.com

 

1Reference:

 

Florida cuts ties with Quest Diagnostics after lab failed to report nearly 75K COVID-19 test results

https://www.wtsp.com/article/news/health/coronavirus/florida-cuts-ties-with-quest-diagnostics-after-lab-fails-to-report-thousands-of-test-results/67-6b7f2462-b8a5-40af-8652-38ca57152663

 

Excel spreadsheet error blamed for UK’s 16,000 missing coronavirus cases

https://www.theverge.com/2020/10/5/21502141/uk-missing-coronavirus-cases-excel-spreadsheet-error

 

Government of Canada signs agreement for COVID-19 rapid tests and analyzers: https://www.canada.ca/en/public-services-procurement/news/2020/09/government-of-canada-signs-agreement-for-covid-19-rapid-tests-and-analyzers.html

 

Canada signs deal with Abbott for Panbio COVID-19 antigen tests

https://www.reuters.com/article/us-health-coronavirus-canada-testing-idUSKBN26R320

Cautionary Note Regarding Forward-Looking Statements

Information in this press release that involves Avricore Health's expectations, plans, intentions or strategies regarding the future are forward-looking statements that are not facts and involve a number of risks and uncertainties. Avricore Health generally uses words such as "outlook," "will," "could," "would," "might," "remains," "to be," "plans," "believes," "may," "expects," "intends," "anticipates," "estimate," "future," "positioned," "potential," "project," "remain," "scheduled," "set to," "subject to," "upcoming," and similar expressions to help identify forward-looking statements. In this press release, forward-looking statements include statements regarding: the completion of the placement and the expected timing thereof and the Company's expected use of proceeds from the placement; the unique features that the HealthTabTM platform offers to pharmacists and patients. Forward-looking statements reflect the then-current expectations, beliefs, assumptions, estimates and forecasts of Avricore Health's management. The forward-looking statements in this press release are based upon information available to Avricore Health as of the date of this press release. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Avricore Health and are subject to a number of risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations, including without limitation: failure to meet regulatory requirements; changes in the market; potential downturns in economic conditions; and other risk factors described in Avricore's public filings. These forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update them publicly to reflect new information or the occurrence of future events or circumstances, unless otherwise required to do so by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact:

 

Hector Bremner, CEO 604-773-8943
info@avricorehealth.com 
www.avricorehealth.com 

Exhibit 99.4

Picture 1 

CORRECTION - AVRICORE HEALTH CLOSES $626,000 FIRST TRANCHE OF FINANCING

GlobeNewswire NOV 24, 2020 08:37 PM EST

VANCOUVER, British Columbia, Nov. 24, 2020 (GLOBE NEWSWIRE) -- In a release issued under the same headline on Friday, November 13, by Avricore Health Inc. (TSXV: AVCR), the units issued figure was meant to be 6,260,000, not 6,360,000. The corrected release follows:

Vancouver, British Columbia – November 13, 2020 – AVRICORE HEALTH INC. (TSXV: AVCR) (the “Company” or “Avricore”) announces it has closed the first tranche of its non-brokered private placement for gross proceeds of $626,000. The Company will issue 6,260,000 units at $0.10 per unit and will pay finders fees totaling $22,500 and issue 225,000 finders warrants. Insiders participated in the aggregate amount of $55,000 for 550,000 units. Placement proceeds will be used for general working capital purposes.  

“Despite a very challenging year, our company continues to march down the field in a positive way and we are really pleased to not only be able to raise capital, but also raise it at a premium,” said Avricore Health CEO, Hector Bremner. “While the decision horizon for some investors is further out than this first group, we are confident in the enthusiasm and momentum we have to close out the balance.”

Each Unit consists of one common share and one transferrable share purchase warrant. Each warrant will entitle the holder thereof to purchase one additional common share for a period of 12 months from the closing date of the offering at a price of $0.15 per common share provided that if the closing price of the common shares of the Company on any stock exchange or quotation system on which the common shares are then listed or quoted is equal to or greater than $0.20 for a period of fifteen (15) consecutive trading days, the Company will have the right to accelerate the expiry of the warrants to a date that is not less than ten (10) business days from the date notice is given. The Company may pay finders fees of up to 5% cash and 5% finders warrants on a portion of the placement.

Closing of the Private Placement is subject to final acceptance by the TSX Venture Exchange. All securities issued in connection with the Private Placement will be subject to a four-month hold period from the closing date under applicable Canadian securities laws.

The Private Placement securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or under any state securities laws, and may not be offered or sold, directly or indirectly, or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements. This news release does not constitute an offer to sell or a solicitation to buy such securities in the United States.

Contact:

 

Hector Bremner, CEO 604-773-8943

info@avricorehealth.com 

www.avricorehealth.com 


Page 1 of 2


 

About Avricore Health Inc.

Avricore Health Inc. is committed to becoming a health innovator and applying technologies at the forefront of science to core health issues at the community pharmacy level. The Company's goal is to empower consumers, patients and pharmacists with innovative technology, products, services and information to monitor and optimize health. www.avricorehealth.com

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


Page 2 of 2

Exhibit 99.5

 

 

 

 

 

 

 

 

 

Picture 1 

 

Avricore Health Inc.

 

 

Condensed Interim Consolidated Financial Statements

(Unaudited)

 

For the three and nine months ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notice to Reader

 

Management has prepared the unaudited condensed interim consolidated financial statements for Avricore Health Inc. (the Company) in accordance with National Instrument 51-102 released by the Canadian Securities Administration. The Company discloses that its auditors have not reviewed the unaudited consolidated financial statements for the period ended September 30, 2020.



Avricore Health Inc.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)


 

Note

Unaudited

September 30,

2020

Audited

December 31,

2019

 

 

$

$

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

 

38,108

13,799

Accounts receivable

4

23,477

15,474

Prepaid expenses and deposits

5

117,355

179,123

Inventories

6

176,865

-

 

 

355,805

208,396

 

 

 

 

Intangible assets

8

3

3

Total Assets

 

355,808

208,399

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Current Liabilities

 

 

 

Accounts payable and accrued liabilities

9

313,095

652,460

Lease liabilities

10

-

21,390

Loans payable

11

955,638

-

 

 

1,268,733

673,850

 

 

 

 

SHAREHOLDERS’ DEFICIENCY

 

  

 

Share capital   

12

21,688,071

21,400,106

Subscription

 

-

10,000

Shares to be issued

3

-

100,000

Reserves

12

5,368,490

5,358,462

Deficit

 

(27,969,486)

(27,334,019)

 

 

(912,925)

(465,451)

Total Liabilities and Shareholders’ Deficiency

355,808 

208,399

 

Nature of operations and going concern (Note 1)

Subsequent events (Note 21)

 

 

Approved and authorized on behalf of the Board of Directors on November 30, 2020.

 

 

 

 

        Hector Bremner            David Hall               

 

Hector Bremner, DirectorDavid Hall, Chairman  


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

2


Avricore Health Inc.

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(Expressed in Canadian Dollars)


 

 

Three months ended September 30,

Nine months ended September 30,

 

Note

2020

2019

2020

2019

 

 

$

$

 

$

 

 

 

 

 

 

Revenue

 

8,082

11,083

24,948

24,742

 

 

 

 

 

 

Cost of sales

 

3,325

3,980

9,688

11,486

Gross profit (loss)

 

4,757

7,103

15,260

13,256

 

 

 

 

 

 

Expenses

 

 

 

 

 

Amortization

 

-

-

-

112,216

Consulting

16

39,823

183,994

137,323

442,885

General and administrative

14

20,045

52,587

82,563

210,886

Management Fees

16

67,500

37,500

202,500

112,500

Professional fees

16

30,000

72,839

102,949

199,644

Marketing and communications

13

3,080

46,227

29,601

211,929

Share-based compensation

16

10,028

-

10,028

58,525

 

 

170,476

393,147

564,964

1,348,585

Other income (expense)

 

 

 

 

 

Finance costs

 

(46,071)

-

(113,164)

-

Gain on settlement of debt

 

5,001

-

27,401

-

Write-down of intangible assets

8

-

(313,514)

-

(313,514)

Other income

 

-

29,656

-

5,993

Net loss from continuing operations

 

(206,789)

(669,902)

(635,467)

(1,642,850)

 

 

 

 

 

 

Loss from discontinued operations

15

-

(13,526)

-

(156,999)

 

 

 

 

 

 

Net loss and comprehensive
loss for the period

 

(206,789)

(683,428)

(635,467)

(1,799,849)

 

 

 

 

 

 

Basic and Diluted Loss Per Share

 

 

 

 

 

Continuing operations

 

(0.00)

(0.01)

(0.01)

(0.03)

Discontinued operations

 

-

(0.00)

-

(0.00)

 

 

(0.00)

(0.01)

(0.01)

(0.03)

Weighted Average Number of Common

 Shares Outstanding

62,835,153

49,269,867

58,358,579

45,546,272

 

Segmented information (Note 18)


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

3


Avricore Health Inc.

Condensed Interim Consolidated Statements of Changes in Equity (Deficiency)

(Unaudited)

(Expressed in Canadian Dollars)


 

Number

of Shares

Share

Capital

Shares to be Issued

Shares

Subscribed

Warrant

Reserve

Option

Reserve

 

Deficit

 

Total

 

 

$

$

$

$

$

$

$

Balance, December 31, 2018

40,103,665

20,783,372

211,167

-

733,388

4,386,450

(25,228,411)

885,966

Shares issued for cash

11,058,835

465,760

-

-

171,310

-

-

637,070

Exercise of stock options

73,928

39,807

-

-

-

(19,106)

-

20,701

Shares issued for services

125,081

11,167

(11,167)

-

-

-

-

-

Acquisition of HealthTab Inc.

1,111,110

100,000

(100,000)

-

-

-

-

-

Share subscriptions received

-

-

-

10,000

-

-

-

10,000

Share-based compensation

-

-

-

-

-

58,525

-

58,525

Net loss

-

-

-

-

-

-

(1,799,849)

(1,799,849)

Balance, September 30, 2019

52,472,619

21,400,106

100,000

10,000

904,698

4,425,869

(27,028,260)

(187,587)

Balance, December 31, 2019

52,472,619

21,400,106

100,000

10,000

904,698

4,453,764

(27,334,019)

(465,451)

Bonus shares

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

-

(1,184)

-

 

-

-

-

(1,184)

Share-based compensation

-

-

-

-

-

10,028

-

10,028

Net loss

-

-

-

-

-

-

(635,467)

(635,467)

Balance, September 30, 2020

63,430,584

21,688,071

-

-

904,698

4,463,792

(27,969,486)

(912,925)


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

4


Avricore Health Inc.  

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in Canadian Dollars)


 

Nine months ended

September 30,

 

2020

2019

 

$

$

Operating Activities

 

 

 Net loss from continuing operations

(635,467)

(1,642,850)

Adjustment for the non-cash items:

 

 

 Amortization

-

112,216

 Finance cost

98,564

-

 Share-based payments

10,028

58,525

 Gain on settlement of debt

(27,401)

-

 Write down of receivables

886

-

 Write-down of intangible assets

-

313,514

 

 

 

Change in working capital items:

 

 

 Accounts receivable

(8,889)

-

 Prepaid expenses

53,348

8,194

 Inventories

(176,865)

-

 Accounts payable and accrued liabilities

(185,015)

205,448

Net cash used in operating activities

(870,811)

(944,953)

Net cash provided by operating activities of discontinued operations

-

252,924

 

(870,811)

(692,029)

Investing Activities

 

 

Net cash used in investing activities

-

-

Net cash used in investing activities of discontinued operations

-

-

 

-

-

Financing Activities

 

 

 Proceeds from issuance of shares, net

-

637,070

 Proceeds from exercise of options

-

20,701

 Share subscriptions received

-

10,000

 Share issue cost

(1,184)

-

 Loan proceeds

940,000

-

 Finance cost

(30,000)

-

 Lease payments

(13,696)

-

Net cash provided by financing activities

895,120

667,771

Net cash provided by financing activities of discontinued operations

-

-

 

895,120

667,771

 

 

 

Increase (decrease) in Cash

24,309

(24,258)

Cash and Cash Equivalents, Beginning of Period

13,799

84,442

Cash and Cash Equivalents, End of Period

38,108

60,184

 

 

 

Cash and Cash Equivalents Consist of:

 

 

 Cash

28,108

60,184

 Guaranteed investment certificates

10,000

-

Cash and cash equivalents

38,108

60,184

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 Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


1.NATURE OF OPERATIONS AND GOING CONCERN 

 

Avricore Health Inc. (the “Company”) was incorporated under the Company Act of British Columbia on May 30, 2000. The Company’s common shares trade on the TSX Venture Exchange (the “Exchange”) under the symbol “AVCR” and are quoted on the OTCIQ Market as “NUVPF”. The Company’s registered office is at 700 – 1199 West Hastings Street, Vancouver, British Columbia, V6E 3T5.

 

The Company is involved in the business of health data and point-of-care technologies (“POCT”).

 

The condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has 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 condensed interim consolidated financial statements do not reflect any adjustments, which could be material, to the carrying values of assets and liabilities, which may be required should the Company be unable to continue as a going concern.

 

 

September 30, 2020

December 31, 2019

 

$

$

Deficit

(27,969,486)

(27,334,019)

Working capital (deficit)

(912,928)

(465,454)

 

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. The Company anticipates this could have an adverse impact on its business, results of operations, financial position and cash flows in 2020.

2.BASIS OF PRESENTATION  

 

a)Statement of Compliance  

 

The condensed interim consolidated financial statements for the period months ended September 30, 2020 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), IAS 34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2019. The accounting policies followed in these interim financial statements are consistent with those applied in the Company’s most recent annual financial statements for the year ended December 31, 2019.


 

6


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


2. BASIS OF PRESENTATION (continued) 

 

b)Basis of preparation (continued) 

c)

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 of the annual consolidated financial statements for the year ended December 31, 2019 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 otherwise indicated.

 

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 to the consolidated financial statements. 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 in Note 3(n) of the annual consolidated financial statements for the year ended December 31, 2019. 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.

 

d)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 consolidated financial statements.  Where control of an entity is obtained during a financial year, its results are included in the consolidated statements of 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.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 has been accounted for as an acquisition of assets and liabilities as HealthTab did not meet the definition of a business under IFRS 3, Business Combinations.


 

7


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


4.ACCOUNTS RECEIVABLE  

 

The Company’s accounts receivable consists of the following:

 

 

September 30, 2020

December 31, 2019

 

$

$

Trade receivables

9,922

12,375

GST receivable

13,555

3,099

 

23,477

15,474

 

 

5.PREPAID EXPENSES AND DEPOSITS 

 

The balance consists of prepaid expenses to vendors of $85,400 (December 31, 2019 - $152,704), office security deposit of $nil (December 31, 2019 - $8,420), prepaid business insurance of $19,955 (December 31, 2019 - $5,999) and security deposits of $12,000 (December 31, 2019 - $12,000).

 

6.INVENTORIES 

 

The Company’s inventory consists of the following:

 

September 30, 2020

December 31, 2019

 

$

$

Finished goods – hand sanitizers

176,865

-

 

176,865

-

 

 

7.RIGHT-OF-USE ASSET 

 

Office Lease

 

$

Cost

 

Balance, December 31, 2018

-

Recognized on adoption of IFRS 16

68,253

Additions

-

Balance, December 31, 2019

68,253

 

 

Accumulated Amortization

 

Balance, December 31, 2018

-

Amortization

68,253

Balance, December 31, 2019

68,253

 

 

Carrying value

 December 31, 2019

-

 

Right-of-use asset comprised of the Company’s leased office space. During the year ended December 31, 2019, the Company determined it would terminate the remaining lease, and accordingly amortized 100% of the right-of-use asset to $Nil.

 

During the period ended September 30, 2020, the Company terminated its lease agreement for its office premise. Pursuant to the cancelation, the Company forfeited its deposit of $8,420 and agreed to pay the outstanding rent for the months of January to March, 2020.


 

8


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


8.EQUIPMENT 

 

Office Furniture and Equipment

Computer equipment and Systems

Laboratory Equipment

Leasehold Improvements

Total

 

$

$

$

$

$

Cost

 

 

 

 

 

Balance, December 31, 2018

10,854

3,898

38,896

24,182

77,830

Write down

(10,854)

(3,898)

(38,896)

(24,182)

(77,830)

Balance, December 31, 2019

-

-

-

-

-

 

 

 

 

 

 

Accumulated Amortization

 

 

 

 

 

Balance, December 31, 2018

4,381

2,552

29,409

20,483

56,825

Amortization

1,942

404

2,845

1,110

6,301

Write down

(6,323)

(2,956)

(32,254)

(21,593)

(63,126)

Balance, December 31, 2019

-

-

-

-

-

 

 

 

 

 

 

Carrying value

 

 

 

 

 

As at December 31, 2019

-

-

-

-

-

 

The write-off of equipment of $14,704 during the year ended December 31, 2019 is included in discontinued operations.

 

9.INTANGIBLE ASSETS 

 

 

HealthTab

Corozon

Emerald

Total

 

$

$

$

$

Cost

 

 

 

 

Balance, December 31, 2018

1

1

510,878

510,880

Write down

-

-

(510,877)

(510,877)

Balance, December 31, 2019 and

September 30, 2020

1

1

1

3

 

 

 

 

 

Accumulated Amortization

 

 

 

 

Balance, December 31, 2018

-

-

85,147

85,147

Amortization

-

-

112,216

112,216

Write down

-

-

(197,363)

(197,363)

Balance, December 31, 2019 and

September 30, 2020

-

-

-

-

 

 

 

 

 

Carrying value

 

 

 

 

As at December 31, 2019

1

1

1

3

As at September 30, 2020

1

1

1

3

 

During the year ended December 31, 2019 the Company performed an assessment and determined that the carrying value of the intangible asset exceeded the recoverable amount and accordingly recognized impairment of the intangible asset related to Emerald acquisition in the amount of $313,514. The impairment can be reversed in future periods when there is a change in circumstances and the estimates used to determine the asset's recoverable amount.


 

9


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


10.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES  

 

The Company’s accounts payable and accrued costs consist of the following:

 

 

September 30, 2020

December 31, 2019

 

$

$

Trade accounts payable

313,095

625,460

Accrued liabilities

-

27,000

 

313,095

652,460

 

 

11.LEASE LIABILITIES 

 

 

 

$

Balance, December 31, 2018

-

Recognized on adoption of IFRS 16

68,253

Finance cost

5,144

Lease payments

(52,007)

Balance, December 31, 2019

21,390

Finance cost

726

Lease payments

(22,116)

Balance, September 30, 2020

-

(See Note 7)

 

 

12.LOANS PAYABLE 

 

During the period ended September 30, 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 is for a term of one year from the date of receipt of the funds, bears interest at a rate of 10% per annum and is secured with all of the present and after-acquired property of the Company. The loan is subject to an interest reserve of $100,000 held back from the loan advance. The Company has the right to repay all or any portion of the loan at any time without penalty. 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 three and nine months ended September 30, 2020, the Company recorded $25,206 and $53,699 as interest expense and recorded $20,719 and $44,140 as accretion expense on the loan.

 

During the period ended September 30, 2020, the Company obtained an unsecured bank loan in the amount 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.SHAREHOLDERS’ EQUITY 

 

Authorized share capital

 

Authorized: Unlimited number of common shares without par value.


 

10


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


13.SHAREHOLDERS’ EQUITY (continued) 

 

Issued share capital

 

During the period ended September 30, 2020:

 

The Company issued 5,477,965 common shares at a price of $0.025 per share to settle an outstanding debt 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 shares issued to the related parties are subject to a four month plus one day hold period.

 

The Company issued 2,000,000 common shares valued at $100,000 related to the acquisition of HealthTab (see Note 3).

 

The Company issued 3,480,000 common shares valued at $52,200 as bonus shares pursuant to the loan agreement (see Note 11).

 

During the year ended December 31, 2019:

 

The Company issued 1,111,110 common shares valued at $100,000 related to the acquisition of HealthTab (see Note 3).

 

The Company issued 73,928 common shares pursuant to the exercise of 73,928 stock options for gross proceeds of $20,701. $19,108 was reclassified from reserves to share capital on exercise of the options.

 

The Company issued 125,081 common shares to a vendor valued at $11,167 in consideration for services rendered pursuant to the terms of a service agreement entered into on April 10, 2018.

 

The Company closed a private placement 4,206,435 common shares at a price of $0.07 per share for gross proceeds of $294,450.

 

The Company closed a private placement and issued 6,852,400 units at a price of $0.05 per unit for gross proceeds of $342,620. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire additional common share of the Company at a price of $0.15 per share until August 13, 2021. The fair value of common shares was $171,310 based on share price and, the residual value of $171,310 was allocated to the warrants.  

 

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.


 

11


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


13.SHAREHOLDERS’ EQUITY (continued) 

 

Stock options (continued)

 

The changes in share options including those granted to directors, officers, employees and consultants are summarized as follows:

 

 

Period ended September 30, 2020

Year ended December 31, 2019

 

Number of Options

Weighted Average Exercise Price

Number of Options

Weighted Average Exercise Price

Beginning Balance

5,241,072

$0.13

2,539,000

$0.23

Options granted

-

-

3,095,000

$0.06

Expired/Cancelled

(160,000)

$0.07

(319,000)

$0.22

Exercised

-

-

(73,928)

$0.28

Ending Balance

5,081,072

$0.07

5,241,072

$0.13

Exercisable

5,081,072

$0.07

5,241,072

$0.13

 

The following table summarizes information about share options outstanding and exercisable as at September 30, 2020:

 

Exercise Price

Expiry date

Options

 

 

Outstanding

Exercisable

$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

1,151,072

1,151,072

$0.10 (3)

March 27, 2023

200,000

200,000

$0.10 (4)

April 11, 2023

150,000

150,000

$0.10 (5)

September 12, 2023

140,000

140,000

$0.075

January 24, 2024

280,000

280,000

$0.08

February 28, 2024

140,000

140,000

$0.06

April 1, 2024

610,000

610,000

$0.05

October 1, 2024

1,960,000

1,960,000

 

 

5,081,072

5,081,072

 

(1) Options repriced from $0.15 to $0.10 during the period ended September 30, 2020

(2) Options repriced from $0.28 to $0.10 during the period ended September 30, 2020

(3) Options repriced from $0.24 to $0.10 during the period ended September 30, 2020

(4) Options repriced from $0.21 to $0.10 during the period ended September 30, 2020

(5) Options repriced from $0.125 to $0.10 during the period ended September 30, 2020

 

The weighted average remaining life of the stock options outstanding at September 30, 2020 is 3.18 years.

 

Share-based compensation

 

Share-based compensation of $10,028 was recognized during the period ended September 30, 2020 (2019 - $58,525) for stock options granted, vested, and repriced during the period. Options issued to directors and officers of the Company vested immediately, while those issued to consultants vest over one year, however, the Board may change such provisions at its discretion or as required on a grant-by-grant basis.


 

12


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


13.SHAREHOLDERS’ EQUITY (continued) 

 

Stock options (continued)

 

Share-based payments for options granted and repriced was measured using the Black-Scholes option pricing model with the following assumptions:

 

2020

2019

Expected life

2 – 3 years

5.0 years

Volatility

141% - 180%

110% - 143%

Dividend yield

0%

0%

Risk-free interest rate

0.23% - 0.27%

1.58% - 1.86%

 

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.

 

 

Period ended September 30, 2020

Year ended December 31, 2019

 

Number of Warrants

Weighted Average Exercise Price

Number of Warrants

Weighted Average Exercise Price

Beginning Balance

20,704,664

$0.24

13,852,264

$0.28

Warrants issued

-

-

6,852,400

$0.15

Warrants expired

(8,446,438)

$0.33

-

-

Outstanding

12,258,226

$0.17

20,704,664

$0.24

 

The following table summarizes information about warrants outstanding and exercisable as at September 30, 2020:

 

Exercise Price

Expiry date

Warrants Outstanding

$0.20

June 26, 2022

1,791,159

$0.20

August 3, 2022

742,667

$0.20

November 27, 2022

2,872,000

$0.15

August 13, 2021

6,852,400

 

 

12,258,226

 

The weighted average remaining life of the warrants outstanding at September 30, 2020 is 1.36 years.

 

14.MARKETING AND COMMUNICATION EXPENSES 

 

 

Three months ended

September 30,

Nine months ended

September 30,

 

2020

2019

2020

2019

 

$

$

$

$

Marketing

1,430

3,290

2,279

43,002

Shareholder communications

1,650

42,937

27,322

168,927

 

3,080

46,227

29,601

211,929


 

13


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


15.GENERAL AND ADMINISTRATIVE EXPENSES 

 

 

Three months ended

September 30,

Nine months ended

September 30,

 

2020

2019

2020

2019

 

$

$

$

$

Bank service charges

1,210

1,825

4,011

4,271

Filing and registration fees

4,251

9,638

21,504

65,180

Foreign exchange

84

(254)

6,701

62

Insurance

9,871

4,660

27,804

24,844

Office maintenance

2,740

18,553

11,275

44,820

Rent

1,460

13,264

3,858

38,743

Investor relations

-

-

1,265

1,990

Travel

-

4,901

5,259

30,976

Write down of receivables

429

-

886

-

 

20,045

52,587

82,563

210,886

 

 

16.DISCONTINUED OPERATIONS 

 

During the year ended December 31, 2019, the Company discontinued operations of its OTC pharmaceuticals products business division business segment. During the period ended September 30, 2020 and 2019, the loss attributable to the discontinued operations are as follows:

 

 

Nine months ended September 30,

 

 

2020

2019

 

 

$

$

Sales

 

-

131,660

Marketing, promotional activities

 

-

(18,288)

Net Revenue

 

-

113,372

 

 

 

 

Cost of Sales

 

-

33,095

Gross profit (loss)

 

-

80,277

 

 

 

 

Expenses

 

 

 

Amortization

 

-

4,726

Product registration and development

 

-

4,999

Selling and marketing

 

-

117,610

 

 

-

127,335

Other income (expense)

 

 

 

Write-down of inventories

 

-

(109,941)

 

 

 

 

Net loss from discontinued operations

 

-

(156,999)


 

14


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


16.DISCONTINUED OPERATIONS (continued) 

 

The net cash flows attributable to the discontinued operations are as follows:

 

 

 

Nine months ended September 30,

 

2020

2019

 

$

$

Operating Activities

 

 

 Net loss from discontinued operations

-

(156,999)

Adjustment for the non-cash items:

 

 

 Amortization

-

4,726

 Write-down of inventories  

-

109,941

 

 

 

Change in working capital items:

 

 

 Accounts receivable

-

223,839

 Inventories

-

(7,442)

 Accounts payable and accrued liabilities

-

78,859

 

 

 

Increase (Decrease) in Cash

-

252,924

 

 

17.RELATED PARTY TRANSACTIONS  

 

For the three and nine months ended September 30, 2020 and 2019, the Company recorded the following transactions with related parties:

 

a)$37,500 and $112,500 in management fees to the Chief Executive Officer and former Executive Vice President of the Company (2019 - $nil and $nil). 

 

b)$nil and $nil in consulting fees to the Chief Executive Officer and former Executive Vice President of the Company (2019 - $30,000 and $40,000). 

 

c)$30,000 and $90,000 in management fees to the President and former Chief Executive Officer of the Company (2019 - $37,500 and $112,500). 

 

d)$30,000 and $90,000 in professional fees to a company controlled by the Chief Financial Officer of the Company (2019 - $45,000 and $45,000) 

 

e)$30,000 and $90,000 in consulting fees to the Chief Technology Officer of the Company (2019 - $36,667 and $96,667). 

 

f)$nil and $nil in consulting fees to a company of which a former Chief Financial Officer and a former Corporate Secretary of the Company are employees (2019 - $17,050 and $47,270). 

 

g)$nil and $nil in professional fees to a company controlled by a former Chief Financial Officer of the Company (2019 - $nil and $14,000). 

 

h)The Company issued 5,477,965 common shares at a price of $0.025 per share to settle an outstanding debt 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 shares issued to the related parties are subject to a four month plus one day hold period. 


 

15


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


17.   RELATED PARTY TRANSACTIONS (continued)

 

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:

 

 

 

Three months ended

September 30,

Nine months ended

September 30,

 

2020

2019

2020

2019

 

$

$

$

$

Professional fees

30,000

45,000

90,000

59,000

Management fees

67,500

37,500

202,500

112,500

Consulting fees

30,000

83,717

90,000

183,937

Share-based compensation

8,662

-

8,662

58,525

 

136,162

166,217

391,163

413,962

 

The following amounts due to related parties were included in accounts payable and accrued liabilities as at:

 Due to

September 30,

2020

December 31,

2019

 

$

$

President and former Chief Executive Officer

48,937

134,339

Chief Executive Officer

               40,466

               59,304

Company controlled by the CFO

               10,500

               5,513

Chief Technology Officer

29,500

122,500

Total

             129,403

             321,656

 

 

18.   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 period ended September 30, 2020.

 

19.  SEGMENTED INFORMATION

 

At September 30, 2020, the Company has only one segment, being the HealthTab - Point of Care Business in Canada.

 

During the year ended December 31, 2019, the Company discontinued its over-the-counter (OTC) pharmaceutical products business (see Note 16).


 

16


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


20.   SUPPLEMENTAL CASH FLOW INFORMATION

 

During the nine months ended September 30, 2020, the Company:

 

- Issued in total 2,000,000 common shares valued at $100,000 related to the acquisition of HealthTab (see Notes 3 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

 

During the nine months ended September 30, 2019, the Company:

 

- Issued in total 1,111,110 common shares valued at $100,000 related to the acquisition of HealthTab (see Notes 3 and 13)

- issued 125,081 common shares to a vendor valued at $11,167 in consideration for services rendered pursuant to the terms of a service agreement entered into on April 10, 2018.

 

21. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

 

The Company’s financial instruments include cash, accounts receivable, accounts payable, and lease liabilities. 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 45% of trade receivables are due from one customer at September 30, 2020 (December 31, 2019 – 45% from one customer).


 

17


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


21.  FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

 

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 September 30, 2020, the Company’s liabilities were comprised of accounts payable and accrued liabilities, deferred revenue, and loans payable of $1,268,733 (December 31, 2019 - $673,850).

 

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.

 

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 and accounts 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:


 

18


Avricore Health Inc.  

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited)

(Expressed in Canadian Dollars)


21.   FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

 

d)Fair value of financials instruments (continued) 

 

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.

 

20.SUBSEQUENT EVENTS 

 

Subsequent to the period ended September 30, 2020:

 

a)The Company closed a tranche of a 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 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. The Company’s directors and officers participated in the private placement.  


 

19

 


Exhibit 99.6

 

 

 

Picture 1 

 

 

Avricore Health Inc.

Management's Discussion & Analysis
For the three and nine months ended
September 30, 2020


1 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


This Management Discussion and Analysis ("MD&A") of Avricore Health Inc. ("AVRICORE", the "Company", "we", "us" or "our") for the three and nine months ended September 30, 2020 is prepared as of November 30, 2020. This MD&A should be read in conjunction with the unaudited condensed interim consolidated financial statements for period ended September 30, 2020 and the audited consolidated financial statements for the year ended December 31, 2019 and the related notes thereto.

Our 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 period ended September 30, 2020, 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.


2 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


OVERVIEW

 

Avricore Health Inc. is a total health innovator focusing on revolutionary point-of-care-technologies, HealthTab™ + RASTR Network, to conduct real-world evaluations on treated populations. HealthTab™ is an empowering new way to measure, monitor and improve consumers’ health. Avricore capitalizes on technological advancements and consumer health trends, offering consumers and health providers the ability to take control of health spending and outcomes. The Company has made significant progress in its transition into a world leader in providing life-saving screening tests for consumers and critically valuable real-world evaluation data for drug makers

 

 

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. This global pandemic poses the risk that the Company or its clients, contractors, suppliers, and other partners may be unable to conduct regular business activities for an indefinite period of time. While it is not possible at this time to estimate the impact that COVID-19 could have on the Company's business, the continued spread of COVID-19 and the measures taken by the federal, provincial and municipal governments to contain its impact could adversely impact the Company's business, financial condition or results of operations.

 

COVID-19 also presents opportunities for companies in the health care space to assist in the response to the pandemic. Management is leveraging relationships the Company has developed in its many years in the health care space to explore opportunities to assist in the COVID response. The company is currently exploring the possibility of providing PPE to provincial and federal governments and national drug store chains. The Company has purchase inventory of hand sanitizers and is in the process of selling the product.

 

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™ + RASTR NETWORK – KEY DEVELOPMENTS

Key developments have included:

·Signing of a Letter of Intent (LOI) with a prominent, publicly traded healthcare technology company and drug maker to integrate a propriety point-of-care blood chemistry analyzer into Avricore’s HealthTab™ real-time data reporting system.  

·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 pharmacy partner locations with Shoppers Drug Mart 

·Developing new pilot programs with national pharmacy chains, 

·Advancing discussions with lab service providers,  

·Negotiating agreements with electronic health record service providers, 

·Continued to negotiate new POC service integrations to expand the HealthTab™ testing menu. 


3 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


·Refined the Rapid Access Safety Test Response (RASTR) Network to monetize de-identified data associated with high-value Real-World Evaluation (RWE) clinical trials.  

·Moved forward with negotiations across several target demographics, domestically and internationally, with life-science companies, host-locations and Clinical Research Organizations (CRO). 

 

Hector Bremner was appointed CEO on October 15th, 2019. Hector was formerly a Board Advisor and Executive Vice-President of Branding, Strategic Communications and Public Affairs.  In his time with the Company, Mr. Bremner has refocussed strategic efforts completely around HealthTab™ + RASTR Network. The Company has entered discussions and memorandums of understanding with key business partners including Clinart and Ontario Pharmacy Association. Given the pace of discussions, it is anticipated that the Company will realize its corporate objectives of securing definitive agreements and initiating additional revenue streams in Q4 2020.

 

RASTR, Rapid Access Safety Test Reporting, 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 be used 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 RASTR Network of analyzers, can be shared with life-science companies and other research entities. The traditional clinical trial approach can be limited in the scope of time, demographical outreach, and other inherent exclusionary attributes. RASTR 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 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 through the use of RWE in R&D 

·Entered into strategic partnerships to access new sources of RWD (in fact, all have taken this step)  

The Company believes HealthTab™ + RASTR is very well positioned as a strategic partner and lead in this exciting growth sector. 

 

Currently, HealthTab™ is available in certain Shoppers Drug Marts in the Greater Toronto Area. The Company is currently negotiating with other pharmacies in Canada to place additional HealthTab™ systems. 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.


4 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


Additionally, the Company is in final negotiations with a large healthcare technology and service provider to integrate the HealthTab™ + RASTR model into their offering. The Company anticipates announcing the final terms of this project by late 2020 upon resolution of COVID 19 measures.

 

Established laboratory service providers are seeking to partner with the Company in offering its point-of-care testing as part of their overall menu.  The HealthTab™ + RASTR approach is being embraced as it is the most credible way to deploy such testing within a conventional lab, HealthTab™ + RASTR offers the reliability, accuracy and flexibility the industry 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.

 

Life-Science Approach

 

Avricore believes that Clinical Research Organizations (CROs) are an excellent area of growth. The Company is in late discussions with CLINART, a large Dubai based CRO, to take HealthTab™ + RASTR Network to 15 countries in the Middle-East North-Africa (MENA) region. This opportunity would see the Company supporting CLINART with the clinical research and market development studies they conduct with the world’s largest drug-makers and NGO’s. Our RASTR discussions also include a large US based CRO. The Company has also initiated discussions with four leading international drug makers, as well as research entities in North America, the UK, EU and Middle East. As business normalizes in the context of COVID-19 the Company expects to move forward with these discussions.

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™ + RASTR Network’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.

 

The Company looks forward to continuing the technical discussions and negotiations which are on-going with leading health data and laboratory service providers and announcing the concluded agreements and project plans.

 

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.


5 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


Hema-fer – Iron Therapy

With the Company’s change in direction Avricore has placed Hema-fer, on back order while it is assessing various options for the Hema-fer business.

SIGNIFICANT EVENTS AND TRANSACTIONS

 

Significant events and transactions during the period ended September 30, 2020 and to the date of this MD&A include the following:

 

·The Company closed a tranche of a 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 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 accelerated expiry condition. The Company paid finder’s fee totaling $22,500 and issued 225,000 finder’s warrants. The Company’s directors and officers participated in the private placement. 

 

·The Company settled an outstanding debt of $136,949 through the issuance of 5,477,965 common shares of the Company at a deemed price of $0.025 per share. An aggregate of 1,900,000 Shares were issued to certain directors and officers of the Company. The shares issued to the related parties are subject to a four month plus one day hold period. 

 

·The Company entered into a loan agreement with a third party for a secured loan in the amount of $1,000,000. The Loan is for a term of one year from the date of receipt of the funds, bears interest at a rate of 10% per annum and is secured with all of the present and after-acquired property of the Company. The loan is subject to an interest reserve of $100,000 held back from the loan advance. The Company has the right to repay all or any portion of the loan at any time without penalty. The Company has paid a loan application fee in the amount of $30,000. The Company issued 3,480,000 bonus shares to the lender representing 20% of the aggregate sum of the loan. 

 

·The Company issued 2,000,000 shares in final consideration for the acquisition of the HealthTab™ Inc.  

 

 


6 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


SELECTED FINANCIAL INFORMATION AND ADDITIONAL DISCLOSURE

 

The following financial data for the three years is derived from the Annual Audited Financial Statements and should be read in conjunction with the Financial Statements.

 

 

2019

2018

2017

Total revenue from continuing operations

$33,000 

$15,395 

$- 

Loss from operations of continuing operations

$1,916,252 

$3,458,141 

$1,297,576 

Loss from operations of discontinued operations

$189,356 

$678,661 

$1,439,142 

Loss per share – basic and diluted

Continuing operations 

$0.04 

$0.10 

$0.07 

Discontinued operations 

$0.00 

$0.02 

$0.08 

Total assets

$208,399 

$1,200,205 

$2,900,186 

Total current liabilities

$673,850 

$314,239 

$402,089 

Total non-current financial liabilities

Nil

Nil

Nil

 

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

The Company incurred comprehensive loss of $635,467 for the nine months ended September 30, 2020 (2019 - $1,799,849).

Significant changes are as follows:

 

·Operating expenses decreased to $564,964 (2019 – $1,348,474) a reduction due to aggressive cost cutting measures. 

 

·Amortization expense decreased to $nil (2019 - $112,216) due to write-down of intangible assets in 2019. 

 

·The consulting fees decreased to $137,323 (2019 - $442,885) with decrease in consultant engagements. 

 

·Management fees increased to $202,500 (2019 - $112,500) as a result of appointing a new CEO in October 2019.  

 

·Professional fees decreased to $102,949 (2019 - $199,644) primarily due to a decrease in legal fees. 

 

·Marketing and communications expenses decreased to $29,601 (2019 - $211,929). 

 

·Finance cost of $113,164 (2019 - $nil) is comprised of interest and accretion expense on loans. 

 

·General and administrative expenses decreased to $82,563 (2019 - $210,886) mainly to due to decreases in travel, office maintenance and filing fees. The decrease in rent expense was due to a change in accounting policy upon adoption of IFRS 16. 


7 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


·Write-down of intangible assets of $nil (2019 - $313,514)  

 

·Share-based compensation of $10,028 (2019 - $58,525) was recognized for stock options granted and vested during the period. 

 

·The Company realized loss from discontinued operations of $nil (2019 - $156,999) in relation to discontinuation of its OTC pharmaceuticals business. 

 

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

The Company incurred comprehensive loss of $206,789 for the three months ended September 30, 2020 (2019 - $683,428).

Significant changes are as follows:

·The consulting fees decreased to $39,823 (2019 - $183,994) with decrease in consultant engagements. 

 

·Management fees increased to $67,500 (2019 - $37,500) as a result of appointing a new CEO in October 2019.  

 

·Professional fees decreased to $30,000 (2019 - $72,839) primarily due to a decrease in legal fees. 

 

·Marketing and communications expenses decreased to $3,080 (2019 - $46,227). 

 

·Finance cost of $46,071 (2019 - $nil) is comprised of interest and accretion expense on loans. 

 

·General and administrative expenses decreased to $20,045 (2019 - $52,587) mainly to due to decreases in travel, office maintenance and filing fees. The decrease in rent expense was due to a change in accounting policy upon adoption of IFRS 16. 

 

·Share-based compensation of $10,028 (2019 - $nil) was recognized for stock options granted and vested during the period. 

 

·The Company realized loss from discontinued operations of $nil (2019 - $13,526) in relation to discontinuation of its OTC pharmaceuticals business. 

 

 


8 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


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, 2019. 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

Sep 2020

Jun 2020

Mar 2020

Dec 2019

Sep 2019

Jun 2019

Mar 2019

Dec 2018

 

$

$

$

$

$

$

$

$

Revenue from continuing operations

8,082

8,482

8,384

8,324

11,083

7,556

6,103

6,817

Gross profit (loss) from continuing operations

4,757

4,911

5,592

1,308

7,103

3,270

2,883

2,851

Share-based
compensation

10,028

-

-

27,896

-

29,621

28,904

38,536

Comprehensive Loss

206,789

198,117

230,561

305,760

683,428

531,287

585,137

1,969,234

Loss/Share - continuing and discontinued operations

(0.00)

(0.00)

(0.00)

(0.00)

(0.02)

(0.01)

(0.01)

(0.05)

Total Assets

355,808

532,086

607,061

208,399

410,959

649,308

970,189

1,200,205

 

 

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have been financed through the issuance of common shares. Management anticipate 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:

Nine months ended

September 30,

 

2020

2019

 

$

$

Cash used in operating activities

(870,811)

(692,029)

Cash used in investing activities

-

-

Cash provided by financing activities

895,120

667,771

Cash and Cash Equivalents, closing balance

38,108

60,184

 

There is an overall cash inflow of $24,309 for the period ended September 30, 2020 compared to cash outflow of $24,258 in comparable period in 2019. The change in cash provided or used by various types of activities is the result of change in business direction in 2020 compared to 2019.


9 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 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™ and RASTR, 

·the size, cost and effectiveness of our sales and marketing programs, distribution and marketing arrangements, 

·the ability of the Company to raise capital through the issuance of its securities. 

 

As at September 30, 2020, the Company had a working capital deficit of $912,928 (December 31, 2019: $465,454). We believe that our cash on hand, the expected future cash inflows from the sale of our products, net proceeds from the warrants exercised, if any, may not 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.

 

DISCLOSURE OF OUTSTANDING SHARE DATA

The following table summarizes the Company's outstanding share capital as at report date:

 

 

Common Shares

69,795,584

Stock Options

4,946,072

Stock Warrants

18,743,226

 

 

COMMITMENTS AND AGREEMENTS

Loans payable

 

During the period ended September 30, 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 is for a term of one year from the date of receipt of the funds, bears interest at a rate of 10% per annum and is secured with all of the present and after-acquired property of the Company. The loan is subject to an interest reserve of $100,000 held back from the loan advance. The Company has the right to repay all or any portion of the loan at any time without penalty. The Company has paid a loan application fee in the amount of $30,000. The Company issued 3,480,000 bonus shares to the lender representing 20% of the aggregate sum of the loan.

 

During the period ended September 30, 2020, the Company obtained an unsecured bank loan in the amount 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.


10 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Our condensed interim 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.

 

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, 2019.

 

Inventory valuation

The Company estimates the net realizable values of inventories by 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. Provision is calculated based on the expiry date. 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.


11 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


Useful lives of depreciable assets

The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utilization of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utilization of certain equipment.

 

Intellectual property

The recoverability of the carrying value of the intellectual property is dependent on successful development and commercial stage to the point where revenue is possible. The carrying value of these assets is reviewed by management when events or circumstances indicate that the carrying value may not be recovered. If impairment is determined to exist, an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount.

 

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.

 

 

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


12 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


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.

 

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 45% of trade receivables are due from one customer at September 30, 2020 (December 31, 2019 — 45% from one customer).


13 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


As at September 30, 2020 and December 31, 2019, 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 September 30, 2020, the Company’s financial liabilities were comprised of accounts payable and accrued liabilities, deferred revenue, and loans payable of $1,268,733 (December 31, 2019 - $673,850).

 

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.

 

 

RELATED PARTY TRANSACTIONS

 

For the three and nine months ended September 30, 2020 and 2019, the Company recorded the following transactions with related parties:

 

a)$37,500 and $112,500 in management fees to the Chief Executive Officer and former Executive Vice President of the Company (2019 - $nil and $nil). 

 

b)$nil and $nil in consulting fees to the Chief Executive Officer and former Executive Vice President of the Company (2019 - $30,000 and $40,000). 

 

c)$30,000 and $90,000 in management fees to the President and former Chief Executive Officer of the Company (2019 - $37,500 and $112,500). 

 

d)$30,000 and $90,000 in professional fees to a company controlled by the Chief Financial Officer of the Company (2019 - $45,000 and $45,000) 

 

e)$30,000 and $90,000 consulting fees to the Chief Technology Officer of the Company (2019 - $36,667 and $96,667). 

 

f)$nil and $nil in consulting fees to a company of which a former Chief Financial Officer and a former Corporate Secretary of the Company are employees (2019 - $17,050 and $47,270). 


14 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


 

g)$nil and $nil in professional fees to a company controlled by a former Chief Financial Officer of the Company (2019 - $nil and $14,000). 

 

h)The Company issued 5,477,965 common shares at a price of $0.025 per share to settle an outstanding debt 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 shares issued to the related parties are subject to a four month plus one day hold period. 

 

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:

 

 

Three months ended

September 30,

Nine months ended

September 30,

 

2020

2019

2020

2019

 

$

$

$

$

Professional fees

30,000

45,000

90,000

59,000

Management fees

67,500

37,500

202,500

112,500

Consulting fees

30,000

83,717

90,000

183,937

Share-based compensation

8,662

-

8,662

58,525

 

136,162

166,217

391,163

413,962

 

As at September 30, 2020 the following amounts due to related parties were included in accounts payable and accrued liabilities.

 

 Due to

September 30,

2020

December 31,

2019

 

$

$

President and former Chief Executive Officer

48,937

134,339

Chief Executive Officer

40,466

59,304

Company controlled by the CFO

10,500

5,513

Chief Technology Officer

29,500

122,500

Total

129,403

321,656

 

 

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements, which would require disclosure.


15 | Page


  Avricore Health Inc.

Management's Discussion and Analysis

as at November 30, 2020


CONTACT

 

Officers and Directors
Hector Bremner, CEO, Director

Bob Rai, President, Director
Kiki Smith, CFO
David Hall, Chairman

Rodger Seccombe, CTO
Alan Amstein, Director
David Farnfield, Director

Dr. Robert Sindelar, Director

 

Contact

Avricore Health Inc.

Suite 2300, 1177 West Hastings Street

Vancouver, BC V6E 2K3

Tel: 604 484-1229

 

 


16 | Page

 


Exhibit 99.7

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

 

 

I, Hector D. Bremner, CEO of Avricore Health Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Avricore Health Inc. (the “issuer”) for the interim period ended September 30, 2020. 

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. 

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.  

 

 

Date: November 30, 2020

 

 

“Hector Bremner”

_______________________

Hector D. Bremner, CEO

 

 

NOTE TO READER

 

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

 

i)controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and 

 

ii)a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. 

 

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.  Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

 


Exhibit 99.8

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

 

 

I, Kiki Smith, CFO of Avricore Health Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Avricore Health Inc. (the “issuer”) for the interim period ended September 30, 2020. 

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. 

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.  

 

 

Date: November 30, 2020

 

 

“Kiki Smith”

___________________

Kiki Smith, CFO

 

 

NOTE TO READER

 

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

 

i)controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and 

 

ii)a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. 

 

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.  Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

 



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