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: August 2019
Commission File Number: 000-51848
(Exact name of registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
2300 – 1177 West Hastings Street, Vancouver, BC V6E 2K3 CANADA
(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 xo 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:
99.1News Release, August 6, 2019
99.2Material Change Report, August 6, 2019
99.3News Release, August 14, 2019
99.4Material Change Report, August 14, 2019
99.5News Release, August 20, 2019
99.6Interim Financial Statements for the three and six months ended June 30, 2019
99.7Management’s Discussion & Analysis for the three and six months ended June 30, 2019
99.8Certification of interim filings, CEO
99.9Certification of interim filings, CFO
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: July 22, 2020 | AVRICORE HEALTH INC. |
|
|
| By: /s/ Kiki Smith |
| Kiki Smith |
| Chief Financial Officer |
Avricore Health Welcomes Kiki Smith as Chief Financial Officer
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES
VANCOUVER, British Columbia, Aug. 06, 2019 (GLOBE NEWSWIRE) -- Avricore Health Inc. (TSXV: AVCR, OTC: AVCRF) ("Avricore Health" or the "Company") announces the appointment of Ms. Kiki Smith, CPA, CGA to the role of Chief Financial Officer, where she will oversee the financial team operations, investor relations, advising the Board and regulatory compliance as Corporate Secretary.
With a history of successfully completing transformations and a strong discipline in cost and cash control, Kiki will be joining the Company at an important time as it nears the completion of its own transformation and enters its planned growth phase in Q3/Q4 2019.
Kiki brings over 20 years’ experience as an operations oriented financial executive with sector focuses of mining, oil and gas, real estate, advanced technology, food production and investment fund management.
“I’m very excited to join this team of top-tier leaders, which is committed to building a the HealthTab™ and RASTR brand and technology. Avricore will redefine how consumer healthcare data can be captured and utilized,” said Kiki Smith. “While public company transformations are always challenging, and there is added pressure to perform on stock valuation, I’m impressed with the progress Avricore has made on this ambitious transformation. I look forward to working with the Avricore team to realize the growth, earnings and cash flow on the opportunity horizon.”
Kiki is a member of the Chartered Professional Accountants of British Columbia with the designations of Certified Professional Accountant and Certified General Accountant and holds a Bachelor’s Degree in Economics from University of British Columbia.
Over the last 20 years, Kiki has served as accountant, corporate controller and chief financial officer and currently assists private and public companies in a variety of financial team roles that bring unique strengths to the Company, such as; mergers and acquisitions, financial reporting and regulatory compliance.
“Avricore has been making significant strides on the business development front, thanks to refocusing of our offerings to HealthTab™ and RASTR and Kiki’s talents will be a great addition to our team in providing the strategies needed to manage cash flow and maximize on the opportunities in front of us,” said Avricore Health CEO Bob Rai. “We are moving quickly through key negotiations which will position us to become the leading source of point-of-care driven real-world evaluation health data which will ensure consumers, healthcare teams, regulators and life science companies can make better, evidence-based decisions on preventative health.”
Kiki takes over these responsibilities from Kevin Strong and Deena Siblock who vacated the positions as the Company’s CFO and Corporate Secretary respectively effective August 1, 2019.
The Board and CEO thank them for their services and wish them the best in the future.
For further information, please contact:
Bob Rai, Director and CEO 604-247-2639
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.
FORM 51-102F3
SECURITIES ACT
MATERIAL CHANGE REPORT
Item 1 Name and address of Company
Avricore Health Inc.
810-789 West Pender Street
Vancouver BC V6C 1H2
Item 2 Date of Material Change
August 6, 2019
Item 3 Press Release
News Release, dated August 6, 2019, disseminated via GlobeNewswire under section 7.1 of National Instrument 51-102
Item 4 Summary of Material Change
See attached copy of the August 6, 2019 news release.
Item 5 Full Description of Material Change
See attached copy of the August 6, 2019 news release.
Item 6 Reliance on subsection 7.1(2) or (3) of National Instrument 51-102:
Not applicable.
Item 7 Omitted Information
Not applicable.
Item 8 Senior Officers
Bob Rai, CEO of the Issuer, is knowledgeable about the material change and this report. His business telephone number is 604-247-2639.
Item 9 Date of Report
August 6, 2019
“Bob Rai”
CEO
Avricore Health Closes $340K First Tranche of Placement
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES
VANCOUVER, British Columbia, Aug. 13, 2019 (GLOBE NEWSWIRE) -- Avricore Health Inc. (TSXV: AVCR, OTC: AVCRF) ("Avricore Health" or the "Company") announces that it has closed the first tranche of its previously announced non-brokered private placement by issuing 6,852,400 units (the "Units") at a price of $0.05 per Unit for gross proceeds of $342,620. Each Unit consists of one common share (a "Common Share") and one common share purchase warrant (a "Warrant"). Each Warrant entitles the holder to acquire one additional Common Share at $0.15 per share for 24 months following closing.
The Company intends to use the proceeds from the offering for working capital and marketing costs, including expanding the network of its HealthTabTM operating blood-chemistry analyzers located in community pharmacies in the Greater Toronto Area known as the Rapid Access, Safety Reporting System (RASTR). HealthTabTM is a point-of-care test offered to consumers on a commercially available blood-analyzer that looks at areas ranging from blood sugar, liver, kidney to metabolic functions with the purpose of supplying the consumer with valuable data on their health, while RASTR provides de-individualized data to life-science companies seeking real-world evaluations of treated populations. For more information, please visit www.avricorehealth.com .
A total of up to 30,000,000 Units have been reserved for issuance pursuant to the placement. All securities issued under the placement are subject to a hold period of four months and one day from issuance in accordance with applicable securities laws and the policies of the TSX Venture Exchange.
This news release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and applicable state securities laws.
This news comes just one week after the Company welcomed incoming Chief Financial Officer, Kiki Smith, on August 6, 2019, who brings a strong history of successfully completing transformations through disciplined cost and cash control. The funding and new finance team come at an important time as the Company nears the completion of its transformation and enters the planned growth phase in Q3/Q4 2019. Those discussions center on HealthTabTM and the RASTR Network, which will become the first on-going, harmonized program to conduct real-world evaluations on global treated populations. The Company’s objective is to become the world’s leading source of real-world evaluations health data, fueling evidence-based decisions making for consumers and health teams, plus, lowering the costs of clinical trials and supporting health-focused AI technologies.
The placement constitutes a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions ("MI 61-101"), as insiders of Avricore Health subscribed for an aggregate of 2,040,000 Units for gross proceeds of $102,000. The Company is relying on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in Sections 5.5(b) and 5.7(1)(b) of MI 61-101, respectively, as the Company is not listed on specified markets and the fair market value of the participation in the offering by insiders did not exceed $2,500,000, as determined in accordance with MI 61-101. Avricore Health did not file a material change report in respect of the related party transaction at least 21 days before the closing of the first tranche of the placement as the details of the participation by related parties of the Company were not settled until shortly prior to the closing of the first tranche.
For further information, please contact:
Bob Rai, Director and CEO 604-247-2639
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
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 HealthTab 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.
FORM 51-102F3
SECURITIES ACT
MATERIAL CHANGE REPORT
Item 1 Name and address of Company
Avricore Health Inc.
810-789 West Pender Street
Vancouver BC V6C 1H2
Item 2 Date of Material Change
August 14, 2019
Item 3 Press Release
News Release, dated August 14, 2019, disseminated via GlobeNewswire.
Item 4 Summary of Material Change
Avricore Health Inc. ("Avricore Health" or the "Company") has closed the first tranche of its previously announced non-brokered private placement by issuing 6,852,400 units (the "Units") at a price of $0.05 per Unit for gross proceeds of $342,620. Each Unit consists of one common share (a "Common Share") and one common share purchase warrant (a "Warrant"). Each Warrant entitles the holder to acquire one additional Common Share at $0.15 per share for 24 months following closing.
Item 5 Full Description of Material Change
Avricore Health has closed the first tranche of its previously announced non-brokered private placement by issuing 6,852,400 Units at a price of $0.05 per Unit for gross proceeds of $342,620. Each Unit consists of one Common Share and one Warrant. Each Warrant entitles the holder to acquire one additional Common Share at $0.15 per share for 24 months following closing.
The Company intends to use the proceeds from the offering for working capital and marketing costs, including expanding the network of its HealthTabTM operating blood-chemistry analyzers located in community pharmacies in the Greater Toronto Area known as the Rapid Access, Safety Reporting System (RASTR). HealthTabTM is a point-of-care test offered to consumers on a commercially available blood-analyzer that looks at areas ranging from blood sugar, liver, kidney to metabolic functions with the purpose of supplying the consumer with valuable data on their health, while RASTR provides de-individualized data to life-science companies seeking real-world evaluations of treated populations.
A total of up to 30,000,000 Units have been reserved for issuance pursuant to the placement. All securities issued under the placement are subject to a hold period of four months and one day from issuance in accordance with applicable securities laws and the policies of the TSX Venture Exchange.
The placement constitutes a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions ("MI 61-101"), as insiders of Avricore Health subscribed for an aggregate of 2,040,000 Units for gross proceeds of $102,000. The Company is relying on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in Sections 5.5(b) and 5.7(1)(b) of MI 61-101, respectively, as the Company is not listed on
specified markets and the fair market value of the participation in the offering by insiders did not exceed $2,500,000, as determined in accordance with MI 61-101. Avricore Health did not file a material change report in respect of the related party transaction at least 21 days before the closing of the first tranche of the placement as the details of the participation by related parties of the Company were not settled until shortly prior to the closing of the first tranche.
The facts supporting reliance on the exemption from minority shareholder approval contained in Section 5.7(1)(b) of MI 61-101 are as follows: (i) the Company's securities are listed solely on the TSX Venture Exchange; (ii) insofar as the placement involves interested parties (as defined in MI 61-101), the fair market value of the Common Shares issued and consideration received is less than the $2,500,000 limit permitted under the exemption; (iii) the Company has one or more independent directors in respect of the placement who are not employees of the issuer; and (iv) the placement was unanimously approved by the Company's board of directors.
The following table (and note thereto) sets out the name and position(s) of each "related party" (as defined in MI 61-101) of the Company who subscribed for Units in the first tranche of the placement, and the number and percentage of outstanding Common Shares beneficially owned or controlled, directly or indirectly, by each such related party on an undiluted basis immediately prior to, and immediately following, closing of the first tranche:
Name of Related Party and Position(s) | No. and % of Outstanding Common Shares1 Prior to First Tranche | No. and % of Outstanding Common Shares1 Following First Tranche |
David M. Hall
| 547,618 | 747,618 1.42% |
Robert D. Sindelar
| Nil N/A | 280,000 |
David Farnfield
| Nil N/A | 500,000 |
Bob Sukhwinder Rai
| 961,333 | 1,461,333 |
Kiki Smith | Nil N/A | 560,000 |
Note:
(1)Each Common Share provides the holder with the right to one vote per Common Share.
Neither the Company, nor to the knowledge of the Company after reasonable inquiry, any of the foregoing related parties has knowledge of any material information concerning the Company or its securities that has not been generally disclosed.
Item 6 Reliance on subsection 7.1(2) or (3) of National Instrument 51-102
Not applicable.
Item 7 Omitted Information
Not applicable.
Item 8 Senior Officers
Bob Sukhwinder Rai, CEO of the Issuer, is knowledgeable about the material change and this report. His business telephone number is 604-247-2639.
Item 9 Date of Report
August 14, 2019
“Bob Sukhwinder Rai”
CEO
Avricore Health Corporate Update and Private Placement Extension
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES
VANCOUVER, British Columbia, Aug. 20, 2019 (GLOBE NEWSWIRE) -- Avricore Health Inc. (TSXV: AVCR, OTC: AVCRF) ("Avricore Health" or the "Company") is pleased to provide an update on the significant progress the company has made over the summer to complete its transition into the world leader in providing life-saving screening tests for consumers and critically valuable real-world evaluation data for drug makers.
“All of our efforts this year have been focused on getting the right people in place to advance our technology platform and launching our business development efforts,” said CEO Bob Rai. “I am now confident that with our pace of discussions with key business partners, we will soon realize our corporate objectives of securing meaningful agreements and initial revenues this year.”
The Company recently updated its finance team with well experienced people who have a track record of successfully completing transformations and a strong discipline in cost and cash control.
Business Development First
With the edition of Hector Bremner, EVP Branding, Strategic Communications and Public Affairs, in June 2019 the Company embarked on a strategic review of its product offers and business development strategies.
“I think as a business you need to decide what you are the best in the world at, determine if there is a market for it and then commit yourself completely,” said Hector. “We made some tough decisions and refocused our efforts completely around HealthTab and identified the platform’s power as not just a consumer product, but a globally significant model for revolutionizing real time clinal data for new drug development and the study of treated populations.”
This new focus centers on the powerful real world evaluation data platform HealthTab provides, now called the Rapid Access Safety Test Response Network, or RASTR. This cloud based network is the world’s first harmonized, real-time response system where consumers receive a finger-stick blood test at their local pharmacy via web-enabled blood chemistry analyzer called the Piccolo Xpress. Their bio-markers, which include 21 key results related to heart, liver and kidney function, are received via secure log in which they can then use to better understand their health performance and share with their healthcare team for evidence-based decision making.
De-identified data collected across the RASTR Network of analyzers can be shared with life-science companies and other research entities, based on HealthTab + RASTR being consumer consent driven. This data is critical to evaluated treated populations, as the traditional clinical trial approach can be limited in the scope of time, demographical reach and other inherent exclusionary attributes. Deloitte surveyed life-science companies in 2017 to determine the level of investment and success, and Avricore Health believes that HealthTab + RASTR Network as finally achieved this significant industry objective.
Currently, HealthTab is available in Shoppers Drug Marts in the Greater Toronto Area. Additionally, this summer, the Company began technical negotiations with a Western Canadian pharmacy chain and is working with the pharmacy industry in Canada to partner in securing more pharmacy participation in the network.
Life-Science Approach
The Company currently has initiated discussions with 4 leading international drug makers. However, the best go-to-market approach identified were Clinical Research Organizations (CROs). The Company is in late discussions with a large Dubai based CRO to take HealthTab + RASTR Network to 13 countries in the Middle-East North-Africa (MENA) region. Our RASTR discussions also include a large US based CRO.
Fully Integrated Patient Health Records
Over the last month, the Company has been in technical discussions on the integration of HealthTab into the electronic medical records and pharmacy management systems with a 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 multiple platforms a health provider will use.
The Company looks forward to continuing the technical discussions and negotiations, which are expected to complete by end of Q3 2019.
Seniors Living
The Company has found a strong interest in the HealthTab + RASTR Network from senior living facilities. These facilities, essentially private hospitals with a broad range of patients, have engaged the Company to develop a targeted program.
The value of being able to provide seniors, and their families, with the comfort of real time data on their health’s performance is invaluable, particularly with respect to liver toxicity. A common issue with consumers taking prescription medicines over extended periods of time.
A pilot project with Western Canadian, a seniors living company operating 7000 beds across BC and Alberta, is currently being developed.
Private Placement Offering
The Company also announces that, further to its news releases dated June 5, 2019, July 11, 2019 and July 19, 2019, the TSX Venture Exchange has granted the Company a 30 day extension from the date hereof to close its non-brokered private placement offering of up to 30,000,000 units of the Company (each, a "Unit") at a price of $0.05 per Unit for gross proceeds of up to $1,500,000.
The Company announced on August 14th the closing on an initial tranche of $342,620.
Proceeds will support the Company’s growth as it continues to expand its network of HealthTab™ operating blood-chemistry analyzers, located primarily in community pharmacies, known as the Rapid Access Safety Test Response (RASTR) Network.
Strong Close to 2019
“We have successfully reorganized the Company and are laser-focused on maintaining disciplined cost control and robust business development,” said CEO Bob Rai. “We are poised to have a very strong close to the year and are so grateful for all those that have supported this exciting Company through this transition.”
For further information, please contact:
Bob Rai, Director and CEO 604-247-2639
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
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 HealthTab 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.
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Unaudited Condensed Interim
Consolidated Financial Statements
For the three and six months ended June 30, 2019
Notice to Reader
Management has prepared the unaudited condensed interim consolidated financial statements for Avricore Health Inc. (formerly VANC Pharmaceuticals 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 June 30, 2019.
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
(Expressed in Canadian Dollars)
| Note | June 30, 2019 | December 31, 2018 |
|
| $ | $ |
ASSETS |
|
|
|
|
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
| 29,129 | 84,442 |
Accounts receivable | 4 | 78,918 | 280,280 |
Prepaid expenses | 5 | 206,665 | 286,246 |
Inventories | 6 | 3,226 | 102,499 |
|
| 317,938 | 753,467 |
|
|
|
|
Equipment | 7 | 17,854 | 21,005 |
Intangible assets | 8 | 313,516 | 425,733 |
Total Assets |
| 649,308 | 1,200,205 |
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
Accounts payable and accrued liabilities | 9 | 492,090 | 314,239 |
|
| 492,090 | 314,239 |
SHAREHOLDERS’ EQUITY |
|
|
|
Share capital | 10 | 21,328,796 | 20,783,372 |
Subscription |
| 14,000 | - |
Shares to be issued | 3 | - | 211,167 |
Reserves | 10 | 5,159,257 | 5,119,838 |
Deficit |
| (26,344,835) | (25,228,411) |
|
| 157,218 | 885,966 |
Total Liabilities and Shareholders’ Equity |
| 649,308 | 1,200,205 |
|
|
|
|
Commitments (Note 16)
Segmented information (Note 17)
Subsequent event (Note 20)
Approved and authorized on behalf of the Board of Directors on August 30, 2019.
“Sukhwinder Bob Rai” “David Hall”
Sukhwinder Bob Rai, Director David Hall, Chairman
The accompanying notes are an integral part of these financial statements
Page 2
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
For the three and six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
| Note | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 |
|
|
|
|
|
|
|
| $ |
|
| $ |
Revenue |
|
|
|
|
|
Sales |
| 89,559 | 160,087 | 139,861 | 469,875 |
Marketing, promotional incentives |
| (68,826) | (298) | (68,826) | (154,994) |
Net sales |
| 20,733 | 159,789 | 71,035 | 314,881 |
|
|
|
|
|
|
Cost of Sales |
| 2,696 | 47,678 | 40,569 | 104,841 |
|
|
|
|
|
|
Gross profit (loss) |
| 18,037 | 112,111 | 30,466 | 210,040 |
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Amortization |
| 51,900 | 153.726 | 115,366 | 255.412 |
Consulting |
| 103,381 | 92.816 | 220,381 | 148.316 |
General and administrative | 13, 14 | 82,560 | 86.142 | 160,291 | 181.101 |
Management Fees |
| 37,500 | 37.500 | 75,000 | 78.479 |
Product registration and development | 11 | - | 75,702 | 4,901 | 147,832 |
Professional fees | 14 | 99,132 | 80.437 | 126,805 | 114.676 |
Selling and marketing | 12 | 13,326 | 214,899 | 255,260 | 352,903 |
Share-based compensation | 10, 14 | 29,620 | 97,369 | 58,524 | 324,301 |
|
| 417,419 | 838,591 | 1,016,528 | 1,603,020 |
Other income (expense) |
|
|
|
|
|
Finance costs |
| - | - | - | (342) |
Write-down of inventories | 6 | (106,337) | (74,868) | (106,700) | (97,323) |
Other income (loss) |
| (25,567) | 546 | (23,662) | 5,876 |
|
|
|
|
|
|
Net loss and comprehensive loss for the period |
| (531,287) | (800,802) | (1,116,424) | (1,484,769) |
|
|
|
|
|
|
Basic and Diluted Loss Per Share |
| (0.01) | (0.31) | (0.03) | (0.05) |
Weighted Average Number of Common Shares Outstanding |
| 45,620,219 | 31,068,657 | 42,877,181 | 29,709,248 |
|
|
|
|
|
|
Segmented information (Note 17)
The accompanying notes are an integral part of these financial statements
Page 3
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Condensed Interim Consolidated Statements of Changes in Equity
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
| Number of Shares | Share Capital | Shares to be Issued | Shares Subscribed | Warrant Reserve | Option Reserve |
Deficit |
Total |
Balance, December 31, 2017 | 27,860,623 | 18,340,491 | 973,333 | - | 221,388 | 4,054,494 | (21,091,609) | 2,498,097 |
Issued during six months ended |
|
|
|
|
|
|
|
|
June 30, 2018: |
|
|
|
|
|
|
|
|
Exercise of warrants | 2,975,500 | 603,310 | - |
| (8,210) | - | - | 595,100 |
Shares issued for services | 182,992 | 39,562 | - |
| - | - | - | 39,562 |
Acquisition of HealthTab Inc. | 880,000 | 255,200 | (255,200) |
| - | - | - | - |
Acquisition of Corozon Platform | 909,090 | 200,000 | - |
| - | - | - | 200,000 |
Acquisition of distribution rights | - | - | - |
| 510,879 | - | - | 510,879 |
Share-based compensation | - | - | - |
| - | 324,301 | - | 324,301 |
Net loss | - | - | - |
| - | - | (1,484,769) | (1,484,769) |
Balance, June 30, 2018 | 32,808,205 | 19,438,563 | 718,133 | - | 724,057 | 4,378,795 | (22,576,378) | 2,683,170 |
Balance, December 31, 2018 | 40,103,665 | 20,783,371 | 211,167 | - | 733,387 | 4,386,452 | (25,228,411) | 885,966 |
Shares issued for cash | 4,206,435 | 294,450 | - |
| - | - | - | 294,450 |
Exercise of options | 73,928 | 39,808 | - |
|
| (19,108) | - | 20,700 |
Shares to be issued | 1,236,191 | 211,167 | (211,167) |
| - | - | - | - |
Shares subscribed |
|
|
| 14,000 |
|
|
| 14,000 |
Share-based compensation | - | - | - |
| - | 58,526 | - | 58,526 |
Net loss | - | - | - |
| - | - | (1,116,424) | 1,116,424 |
Balance, June 30, 2019 | 45,620,219 | 21,328,796 | - | 14,000 | 733,387 | 4,425,870 | (26,344,835) | 157,218 |
The accompanying notes are an integral part of these financial statements
Page 4
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Consolidated Statements of Cash Flows
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
| 2019 | 2018 |
| $ | $ |
Operating Activities |
|
|
Net loss | (1,116,424) | (1,484,769) |
Adjustment for the non-cash items: |
|
|
Amortization | 115,368 | 255,412 |
Share-based payments | 58,526 | 324,301 |
Write down of inventories | 106,700- | 97,323 |
|
|
|
Change in working capital items: |
|
|
Accounts receivable | 201,862 | (52,047) |
Prepaid expenses and deposits | 79,581 | 43,862 |
Inventories | (7,427) | (109,192) |
Accounts payable and accrued liabilities | 177,851 | (164,689) |
Net cash used in operating activities | (384,463) | (1,089,799) |
|
|
|
Investing Activities |
|
|
Acquisition | - | (100,000) |
Purchase of equipment | - | (13,333) |
Net cash used in investing activities | - | (113,333) |
|
|
|
Financing Activities |
|
|
Subscription received | 14,000 | - |
Proceeds from issuance of shares, net | 294,450 | - |
Proceeds from exercise of warrants and options | 20,700 | 595,100 |
Net cash provided by financing activities | 329,150 | 595,100 |
|
|
|
Increase (Decrease) in Cash | (55,313) | (608,032) |
Cash and Cash Equivalents, Beginning of period | 84,442 | 559,733 |
Cash and Cash Equivalents (Bank Overdraft), End of period | 29,129 | (48,299) |
|
|
|
Cash and Cash Equivalents Consist of: |
|
|
Cash | 12,181 | (64,855) |
Guaranteed Investment Certificates | 16,948 | 16,556 |
Cash and cash equivalents | 29,129 | (48,299) |
Supplemental cash flow information (Note 18)
The accompanying notes are an integral part of these financial statements
Page 5
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
1.NATURE OF OPERATIONS AND GOING CONCERN
Avricore Health Inc. (formerly VANC Pharmaceuticals 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 symbol “AVCR” and are quoted on the OTCIQ Market as “NUVPF”. The Company’s registered office is at 810 – 789 West Pender Street, Vancouver, British Columbia, V6C 1H2.
The Company’s operations consist of the marketing and distribution of generic and over-the-counter (“OTC”) pharmaceuticals and point of care technology and point of care tests.
The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has always experienced operating losses and negative operating cash flows. Operations have been funded by the issuance of share capital. These conditions may cast substantial doubt on the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon its ability to generate revenue from its operations, or raise additional financing to cover ongoing cash requirements.
The 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.
| Six months ended June 30, 2019 | Year ended December 31, 2018 |
| $ | $ |
Deficit | (26,344,835) | (25,228,411) |
Working capital (deficit) | (174,512) | 439,228 |
Economic dependence
The Company currently has licensing arrangements with three manufacturers to purchase, distribute and commercialize their drug molecules in Canada. The Company derives the majority of its gross sales from two distributors for the three and six months ended June 30, 2019. The ability of the Company to sustain operations is partially dependent on the continued operation of these distributors. The launch of new OTC products diversifies the Company’s portfolio and reduces the risk of the economic dependence.
2.BASIS OF PRESENTATION
a)Statement of Compliance and basis of presentation
The interim consolidated financial statements for the three and six months ended June 30, 2019 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 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, 2018. 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, 2018.
Page 6
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
2.BASIS OF PRESENTATION (continued)
b)Basis of presentation
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 audited consolidated financial statements for the year ended December 31, 2018 and have been consistently applied in each of the periods presented. The consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional currency, unless other indicated.
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(m) of the audited consolidated financial statements for the year ended December 31, 2018. Actual results might differ from these estimates. The Company’s management reviews these estimates and underlying judgments on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the year in which the estimates are revised.
c)Basis of consolidation
Consolidated financial statements include the assets, liabilities and results of operations of all entities controlled by the Company. Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated in preparing the Company’s the consolidated financial statements. Where control of an entity is obtained during a financial year, its results are included in the consolidated statements of 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
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) (Notes 11);
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
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.
Page 7
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
3.ACQUISITION (continued)
The shares to be issued have been valued based on the Company’s share price on the acquisition. Due to the uncertainty associated with future revenue derived from HealthTab, the Company has estimated the 2019 and 2020 share issuances to be $100,000 each.
The aggregate fair values of assets acquired and liabilities assumed were as follows on the acquisition date, December 28, 2017:
|
| $ |
Purchase consideration: |
|
|
Cash |
| 100,000 |
Asset acquisition liability |
| 100,000 |
Shares to be issued |
| 973,333 |
Acquisition costs |
| 28,806 |
|
| 1,202,139 |
|
|
|
Net assets acquired: |
|
|
Cash |
| 38 |
Equipment |
| 64,608 |
Intangible assets |
| 1,140,283 |
Accounts payable and accrued liabilities |
| (2,790) |
Total net assets acquired |
| 1,202,139 |
4.ACCOUNTS RECEIVABLE
The Company’s accounts receivable consists of the following:
| June 30, 2019 | December 31, 2018 |
| $ | $ |
Trade receivables | 64,008 | 193,465 |
GST receivable | 14,410 | 86,815 |
Employee advances | - | - |
| 78,418 | 280,280 |
5.PREPAID EXPENSES AND DEPOSITS
The closing balance consists of prepaid expense to vendors of $194,121 (December 31, 2018 – $218,951), security deposit for office of $8,420 (December 31, 2018 - $8,420), prepaid business insurance of $13,075 (December 31, 2018 - $7,396) and security deposits of $12,000 (December 31, 2018 - $Nil).
6.INVENTORIES
At June 30, 2019 and December 31, 2018, the Company’s inventory consists of the following:
| June 30, 2019 | December 31, 2018 |
| $ | $ |
Finished goods | 3,226 | 102,499 |
| 3,226 | 102,499 |
Inventories expensed to cost of sales during the six months ended June 30, 2019 are $23,113 (2018 - $381,283). During the six months ended June 30, 2019, the Company recorded a write-down of inventory of $106.700 (2018 - $97,323).
Page 8
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
7.EQUIPMENT
| Office Furniture and Equipment | Computer equipment and Systems | Laboratory Equipment | Leasehold Improvements | Total |
Cost | $ | $ | $ | $ | $ |
Balance, December 31, 2017 | 7,491 | 66,870 | 38,896 | 24,182 | 137,439 |
Additions | 5,000 | - | - | - | 5,000 |
Write off | (1,637) | (62,972) | - | - | (64,609) |
Balance, December 31, 2018 and June 30, 2019 | 10,854 | 3,898 | 38,896 | 24,182 | 77,830 |
|
|
|
|
|
|
Accumulated Amortization |
|
|
|
|
|
Balance, December 31, 2017 | 1,612 | 2,130 | 25,342 | 18,634 | 47,718 |
Amortization | 3,264 | 19,422 | 4,067 | 1,849 | 28,602 |
Write off | (495) | (19,000) | - | - | (19,495) |
Balance, December 31, 2018 | 4,381 | 2,552 | 29,409 | 20,483 | 56,825 |
Amortization | 971 | 202 | 1423 | 555 | 3,151 |
Balance, June 30, 2019 | 5,352 | 2,754 | 30,832 | 21,038 | 59,976 |
|
|
|
|
|
|
Carrying value |
|
|
|
|
|
As at December 31, 2017 | 5,879 | 64,740 | 13,554 | 5,548 | 89,721 |
As at December 31, 2018 | 6,473 | 1,346 | 9,487 | 3,699 | 21,005 |
As at June 30, 2019 | 5,502 | 1,144 | 8,064 | 3,144 | 17,854 |
8.INTANGIBLE ASSETS
| HealthTab | Corozon | Emerald | Total |
Cost | $ | $ | $ | $ |
Balance, December 31, 2017 | 1,140,283 | - | - | 1,140,283 |
Acquired assets | - | 231,818 | 510,878 | 742,696 |
Write down | (1,140,282) | (231,817) | - | (1,372,099) |
Balance, December 31, 2018 and June 30, 2019 | 1 | 1 | 510,878 | 510,880 |
|
|
|
|
|
Accumulated Amortization |
|
|
|
|
Balance, December 31, 2017 | 4,166 | - | - | 4,166 |
Amortization | 380,093 | 41,667 | 85,147 | 506,907 |
Write down | (384,259) | (41,667) | - | (425,926) |
Balance, December 31, 2018 | - | - | 85,147 | 85,147 |
Amortization | - | - | 112,215 | 112,215 |
Balance, June 30, 2019 | - | - | 197,362 | 197,364 |
|
|
|
|
|
Carrying value |
|
|
|
|
As at December 31, 2017 | 1,136,117 | - | - | 1,136,117 |
As at December 31, 2018 | 1 | 1 | 425,731 | 425,733 |
As at June 30, 2019 | 1 | 1 | 313,516 | 313,516 |
Page 9
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
8.INTANGIBLE ASSETS (continued)
On April 11, 2018, the Company entered into an asset purchase agreement with Corozon Consulting Corporation for the acquisition of the Corozon Platform. The Corozon Platform consists of two complementary modules: Corozon Academy which offers practical professional education to community pharmacists and Corozon Hardware which is an e-commerce portal that allows pharmacists to order point-of-care diagnostic devices and supplies. For consideration, the Company will pay twelve monthly instalments totaling $50,000 (paid) and issue 909,090 common shares valued at $200,000 (issued) (Note 11).
On April 15, 2018, the Company entered into a supply and distribution agreement with Emerald Health Therapeutics, Inc. (“Emerald”) to sell and distribute certain proprietary endocannabinoid-supporting products in Canada to licensed pharmacies. For consideration, the Company issued 3,030,303 warrants to Emerald valued at $510,878 to acquire 3,030,303 common shares of the Company at a price of $0.33 per share until April 15, 2020 (issued) (Notes 11).
During the year ended December 31, 2018 the Company recognized impairment of the intangible assets related to HealthTab acquisition (note 3) and Corozon Platform acquisition in the amount of $964,354. The impairment can be reversed in future periods when there is a change in the estimates used to determine the asset's recoverable amount.
9.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company’s accounts payable and accrued costs consist of the following:
| June 30, 2019 | December 31, 2018 |
| $ | $ |
Trade accounts payable | 394,054 | 226,575 |
Accrued liabilities | 98,036 | 87,664 |
| 492,090 | 314,239 |
During the year ended December 31, 2018, the Company issued 233,450 common shares to Lampyon Canada Inc. valued at $43,915 in consideration for services rendered pursuant to the terms of a service agreement entered into on April 10, 2018 During the six months ended June 30, 2019 the Company issued 125,081 shares valued at $11,167 for the same services.
10.SHAREHOLDERS’ EQUITY
Authorized share capital
Authorized: Unlimited number of common shares without par value.
Issued share capital
During the six months ended June 30, 2019:
The Company issued 73,928 common shares for exercise of 73,928 stock options for gross proceeds of $20,700. $19,108 was reclassified from reserves to share capital on exercise of the options.
The Company issued 125,081 common shares to Lampyon valued at $11,167 in consideration for services rendered pursuant to the terms of a service agreement entered into on April 10, 2018.
Page 10
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
10.SHAREHOLDERS’ EQUITY (continued)
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 issued 1,111,110 common shares valued at $200,000 related to the acquisition of HealthTab (Note 3).
During the year ended December 31, 2018:
The Company issued 2,666,667 common shares valued at $773,733 related to the acquisition of HealthTab (Note 3).
The Company issued 909,090 common shares valued at $181,818 related to the acquisition of the Corozon Platform.
The Company issued 233,450 common shares to Lampyon valued at $43,915 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 and issued 5,327,335 units at a price of $0.15 per unit for gross proceeds of $799,100. 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 $0.33 per share until July 27, 2020. The Company paid finder’s fees of $18,264 in cash and issued 88,800 finder’s warrants valued at $9,332. The finder’s warrants are exercisable to purchase one common share of the Company at $0.33 per share until July 31, 2020.
The Company issued 131,000 common shares for exercise of 131,000 stock options for gross proceeds of $28,820. $40,180 was reclassified from reserves to share capital on exercise of options.
The Company issued 2,975,500 common shares for exercise of 2,975,500 warrants for gross proceeds of $595,100. $8,210 was reclassified from reserves to share capital on exercise of warrants.
The Company granted 3,030,330 warrants valued at $510,877 to Emerald Health Therapeutics Inc. as consideration for a supply and distribution agreement.
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.
Page 11
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
10.SHAREHOLDERS’ EQUITY (continued)
The changes in share options including those granted to directors, officers, employees and consultants during the six months ended June 30, 2019 and year ended December 31, 2018 are summarized as follows:
| Six months ended June 30, 2019 | Year ended December 31, 2018 | ||
| Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price |
Beginning Balance | 2,539,000 | $0.23 | 2,420,000 | $0.24 |
Options granted | 1,035,000 | $0.10 | 665,000 | $0.23 |
Expired/Cancelled | (319,000) | $0.26 | (415,000) | $0.24 |
Exercised | (73,928) | $0.28 | (131,000) | $0.23 |
Ending Balance | 3,181,072 | $0.19 | 2,539,000 | $0.23 |
Exercisable | 3,178,572 | $0.19 | 2,536,500 | $0.23 |
The following table summarizes information about share options outstanding and exercisable as at June 30, 2019:
Exercise Price | Expiry date | Options | ||
|
| Outstanding | Exercisable | |
$0.15 | July 20, 2022 | 150,000 | 150,000 | |
$0.15 | September 27, 2022 | 150,000 | 150,000 | |
$0.28 | November 15, 2022 | 150,000 | 150,000 | |
$0.28 | December 8, 2022 | 1,181,072 | 1,178,572 | |
$0.24 | March 27, 2023 | 200,000 | 200,000 | |
$0.21 | April 11, 2023 | 175,000 | 175,000 | |
$0.125 | September 12, 2023 | 140,000 | 140,000 | |
$0.15 | January 24, 2024 | 280,000 | 280,000 | |
$0.15 | February 28, 2024 | 140,000 | 140,000 | |
$0.06 | April 1, 2024 | 615,000 | 615,000 | |
|
| 3,181,072 | 3,178,572 |
In the three months ended June 30, 2019 the Company granted 615,000 stock options exercisable for a period of five years at an exercise price of $0.06 per common share to certain directors and officers of the Company. The options vested immediately. The Company recognized stock based compensation expense of $32,584.
In the three months ended March 31, 2019 the Company granted 420,000 stock options exercisable for a period of five years at an exercise price of $0.15 per common share to certain directors and officers of the Company. The options vested immediately. The Company recognized stock based compensation expense of $25,940.
Share-based compensation
Share-based compensation of $32,584 and $58,524 was recognized during the three and six months ended June 30, 2019 (2018 - $63,208 and $324,301) for stock options vested during the current 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.
Page 12
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
10.SHAREHOLDERS’ EQUITY (continued)
Share-based payments for options granted was measured using the Black-Scholes option pricing model with the following assumptions:
| Six months ended June 30, 2019 | Year ended December 31, 2018 |
Expected life | 5.0 years | 5.0 years |
Volatility | 157% | 142% - 157% |
Dividend yield | 0% | 0% |
Risk-free interest rate | 1.80% - 1.86% | 2.03% - 2.24% |
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.
| Six months ended June 30, 2019 | Year ended December 31, 2018 | ||
| Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price |
Beginning Balance | 10,821,961 | $0.27 | 8,381,326 | $0.20 |
Warrants issued | - | - | 5,416,135 | $0.33 |
Exercised | - | - | (2,975,500) | $0.20 |
Outstanding | 10,821,961 | $0.27 | 10,821,961 | $0.27 |
The following table summarizes information about warrants outstanding and exercisable as at June 30, 2019:
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 |
$0.33 | July 31, 2020 | 5,416,135 |
|
| 10,821,961 |
During the year ended December 31, 2018, the fair value of the finders’ warrants was calculated using the Black-Scholes Option Pricing Model using the following assumptions:
| Year ended December 31, |
| 2018 |
Expected life | 2.0 years |
Volatility | 154% - 169% |
Dividend yield | 0% |
Risk-free interest rate | 2.05% - 2.10% |
No warrants were issued during the six months ended June 30 2019.
Page 13
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
11.PRODUCT REGISTRATION AND DEVELOPMENT
| Six months ended June 30, | |
| 2019 | 2018 |
| $ | $ |
Payroll | 4,901 | 64,250 |
Product registration and licensing fees | - | 7,880 |
| 4,901 | 72,130 |
12.SELLING AND MARKETING EXPENSES
| Six months ended June 30, | |
| 2019 | 2018 |
| $ | $ |
Payroll (sales personnel) | 57,729 | 90,487 |
Marketing and advertising | 174,959 | 204,015 |
Distribution | 22,572 | 57,418 |
Travel | - | 983 |
| 255,260 | 352,903 |
13.GENERAL AND ADMINISTRATIVE EXPENSES
| Six months ended June 30, | |
| 2019 | 2018 |
| $ | $ |
Bank service charges | 2,446 | 463 |
Filing and registration fees | 55,542 | 18,106 |
Foreign exchange | 317 | 102 |
Insurance | 20,184 | 8,354 |
Office maintenance | 25,247 | 11,725 |
Payroll | - | 16,986 |
Rent | 25,479 | 12,429 |
Seminar and conferences | 5,000 | 12,571 |
Travel | 26,075 | 14,223 |
| 160,291 | 94,959 |
14.RELATED PARTY TRANSACTIONS
For the three and six months ended June 30, 2019 and 2018, the Company recorded the following transactions with related parties:
a)$37,500 and $75,000 in management fees to the Chief Executive Officer of the Company (2018 - $78,513 and $154,131 in salaries and benefits).
b)$10,000 and $10,000 in consulting fees to the Executive Vice President (2018 - $nil and $nil).
c)$30,000 and $60,000 in consulting fees to the head of the Company’s subsidiary Health Tab Inc. (2018 - $15,000 and $30,000).
d)$5,000 and $30,000 in consulting fees to a company controlled by a Senior Advisor to the Board of Directors (2018 - $nil and $nil).
Page 14
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
14.RELATED PARTY TRANSACTIONS (continued)
e)$30,220 and $30,220 in accounting fees to a Company of which a former Chief Financial Officer and former Corporate Secretary of the Company are employees (2018 - $nil and $nil).
f)$3,500 and $10,500 in accounting fees to a Company controlled by a former Chief Financial Officer (2018 - $10,000 and $19,000).
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 June 30, | Six months ended June 30, | ||
| 2019 | 2018 | 2019 | 2018 |
| $ | $ | $ | $ |
Accounting fees | 33,720 | 15,000 | 44,220 | 25,000 |
Management fees | 37,500 | - | 75,000 | - |
Consulting fees | 45,000 | 15,000 | 105,000 | 30,000 |
Salaries and benefits |
| 75,618 |
| 154,131 |
Share-based compensation | 32,584 | 63,208 | 58,524 | 284,123 |
| 148,804 | 168,826 | 282,744 | 493,254 |
As at June 30, 2019 the following amounts due to related parties were included in accounts payable and accrued liabilities.
|
|
|
Due to | June 30, 2019 | December 31, 2018 |
| $ | $ |
Chief Executive Officer | 36,841 | - |
Executive Vice President | 10,500 | - |
Head of HealthTab | 63,000 | -. |
Company controlled by a former CFO | 15,120 | - |
Company of which a former Chief Financial Officer and former Corporate Secretary are employees | 33,992 | - |
Company controlled by a Senior Advisor to the Board | 22,600 | - |
Balance, end of period | 182,053 | - |
15.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 six months ended June 30, 2019.
Page 15
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
16.COMMITMENTS
Leased premises
The Company has entered into contracts for leased premises, which expire in 2018. In September 2017, the Company extended the lease. Total future minimum lease payments under these contracts are as follows:
| June 30, 2019 |
| $ |
Within 1 year | 38,219 |
2 years | 58,602 |
| 96,821 |
17.SEGMENTED INFORMATION
The company has the following business divisions:
Products Business Division
Marketing and distribution of generic and over-the-counter (OTC) pharmaceutical products and, through the Company's Corozon Platform, the distribution of point of care screening devices and related supplies and training materials.
Point of Care Business Division
Point of care screening services provided through the Company's HealthTab system and software platform.
Summarized financial information concerning reportable segments is shown in the following tables. As at June 30, 2019:
| VANC | HealthTab | Total |
| $ | $ | $ |
Accounts receivable | 77,435 | 983 | 78,418 |
Inventories | 3,226 | - | 3,226 |
Equipment | 17,854 | - | 17,854 |
Intangible assets | 313,515 | 1 | 313,516 |
|
|
|
|
Accounts payable | 488,460 | 3,630 | 492,090 |
Page 16
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
17.SEGMENTED INFORMATION (continued)
VANC Pharmaceuticals | Six months ended June 30, | |
| 2019 | 2018 |
| $ | $ |
Revenue |
|
|
Sales | 126,246 | 463,733 |
Marketing, promotional incentives | (68,826) | (154,994) |
Net sales | 57,420 | 308,739 |
|
|
|
Cost of Sales | 33,063 | 102,366 |
|
|
|
Gross Profit (loss) | 24,357 | 206,373 |
|
|
|
Expenses |
|
|
Amortization | 115,366 | 242,880 |
Consulting | 220,381 | 148,316 |
General and administrative | 229,769 | 179,376 |
Management Fees | 75,000 | 78,479 |
Product registration and development | 4,901 | 147,832 |
Professional fees | 126,805 | 114,676- |
Selling and marketing | 255,260 | 352,903 |
Share-based compensation | 58,524 | 324,301 |
| 1,011,006 | 1,588,764 |
Other income (expense) |
|
|
Finance costs | - | (342) |
Write down of inventories | (106,700) | (97,323) |
Other (loss) income | (23,662) | 5,876 |
|
|
|
Net loss and comprehensive loss for the period | (1,117,011) | (1,474,180) |
HealthTab | June 30, | |
| 2019 | 2018 |
| $ | $ |
Revenue |
|
|
Sales | 13,615 | 6,142 |
Net sales | 13,615 | 6,142 |
|
|
|
Cost of Sales | 7,506 | 2,475 |
|
|
|
Gross Profit (loss) | 6,109 | 3,667 |
|
|
|
Expenses |
|
|
Amortization | - | 12,531 |
General and administrative | 5,522 | 1,725 |
| 5,522 | 14,256 |
|
|
|
Net loss and comprehensive loss for the period | 587 | (10,589)- |
Page 17
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
18.SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended June 30, 2019 the Company:
Issued in total 1,111,110 common shares valued at $200,000 related to the acquisition of HealthTab (Notes 4 and 11).
Issued 125,081 shares to Lampyon Canada Inc valued at $11,167
19.FINANCIAL INSTRUMENTS AND FINANCIAL 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.
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 June 30, 2019 (December 31, 2018 – 51% from one customer).
Pursuant to their collective terms, accounts receivable from customers were aged as follows:
| June 30, 2019 | December 31, 2018 |
| $ | $ |
Not past due | 2,227 | 193,448 |
Under 30 days past due | 79,885 | 27,266 |
31 – 90 days past due | 2,796 | 3,881 |
Over 90 days past due | 8,314 | 55,685 |
| 93,222 | 280,280 |
Page 18
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
19.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.
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 June 30 2019, the Company’s financial liabilities were comprised of accounts payable and accrued liabilities of $481,591 (December 31, 2018 - $314,239).
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.
d)Fair value of financials instruments
The fair values of financial assets and financial liabilities are determined as follows:
Cash and cash equivalents are measured at fair value. For accounts receivable, accounts payable, accrued liabilities and asset acquisition liability 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:
Page 19
Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.)
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2019 and 2018
(Expressed in Canadian Dollars)
19.FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (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 has no financial instruments 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 EVENT
Subsequent to the period ended June 30, 2019 the Company closed the first tranche of a private placement and issued 6,852,480 common shares for gross proceeds of $342,620.
Page 20
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion & Analysis
For the three and six months ended
June 30, 2019
1 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
This Management Discussion and Analysis ("MD&A") of Avricore Health Inc. (formerly VANC Pharmaceuticals Inc.) ("AVRICORE", the "Company", "we", "us" or "our") for the six months ended June 30, 2019 is prepared as of August 30, 2019. This MD&A should be read in conjunction with the un-audited financial statements of the Company for the three and six months ended June 30, 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. (formerly VANC Pharmaceuticals Inc.) can be found on the SEDAR website (www.sedar.com) and on the Company's website (www.vancpharm.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 six months ended June 30, 2019 and 2018 in Avricore's annual and interim 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.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
OVERVIEW
Avricore Health Inc. is a total health innovator capitalizing on technological advancements and consumer health trends, offering consumers and health providers the ability to take control of spending and health outcomes.
The Company had delivered an effective range of generic pharmaceuticals in the past as VANC Pharmaceuticals Inc. Since it's repositioning in late 2017 and official rebranding in late 2018 the Company's new focus is now on health innovations in revolutionary point-of-care-technologies (POCT) called HealthTab + RASTR Network to conduct real-world evaluations on treated populations.
To complete its repositioning and refocused marketing plan, Avricore Health launched a new website, www.avricorehealth.com, in April 2019.
The Company has made significant progress in its transition into the world leader in providing life-saving screening tests for consumers and critically valuable real-world evaluation data for drug makers.
Company efforts this year have been focused on positioning people capable of advancing its technology platform and launching its business development efforts. Given the pace of discussions with key business partners, it is anticipated that the Company will soon realize its corporate objectives of securing meaningful agreements and initial revenues in 2019.
Formerly a Board Advisor, Hector Bremner was appointed Executive Vice-President of Branding, Strategic Communications and Public Affairs, on June 1, 2019. In this role, Mr. Bremner has embarked on a strategic review of the Company’s product offering and business development strategies.
As an outcome of this work, the decision to refocus strategic efforts completely around HealthTab + RASTR Network was taken, as the real-world evaluation data which HealthTab provides, now called the Rapid Access Safety Test Response Network, (RASTR) presents a significant opportunity.
RASTR 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 called the Piccolo Xpress. Their bio-markers, which include 21 key results related to heart, liver and kidney function, are received via secure log in which they can then use to better understand their health performance and share with their healthcare team for evidence-based decision making.
De-identified data collected across the RASTR Network of analyzers can be shared with life-science companies and other research entities, based on HealthTab + RASTR being consumer consent driven. This data is critical to evaluated treated populations, as the traditional clinical trial approach can be limited in the scope of time, demographical reach and other inherent exclusionary attributes. Deloitte surveyed life-science companies in 2017 to determine the level of investment and success, and Avricore Health believes that HealthTab + RASTR Network has finally achieved this significant industry objective.
Currently, HealthTab is available in Shoppers Drug Marts in the Greater Toronto Area. Additionally, this summer, the Company began technical negotiations with a Western Canadian pharmacy chain and is working with the pharmacy industry in Canada to partner in securing more pharmacy participation in the network.
3 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
Life-Science Approach
The best go-to-market approach identified were Clinical Research Organizations (CROs). The Company is in late discussions with a large Dubai based CRO to take HealthTab + RASTR Network to 13 countries in the Middle-East North-Africa (MENA) region. Our RASTR discussions also include a large US based CRO.
The Company has also initiated discussions with four leading international drug makers. ,
Fully Integrated Patient Health Records
Over the last month, the Company has been in technical discussions on the integration of HealthTab into the electronic medical records and pharmacy management systems with a 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 expected to complete by end of Q3 2019.
Seniors Living
The Company has found a strong interest in the HealthTab + RASTR Network from senior living facilities. These facilities, essentially private hospitals with a broad range of patients, have engaged the Company to develop a targeted program.
The value of being able to provide seniors, and their families, with the comfort of real time data on their health’s performance is invaluable, particularly with respect to liver toxicity, a common issue with consumers taking prescription medicines over extended periods of time.
A pilot project with Western Canadian, a seniors living company operating 7000 beds across BC and Alberta, is currently being developed.
Private Placement Offering
Further to the Company’s news releases dated June 5, 2019, July 11, 2019 and July 19, 2019, the TSX Venture Exchange has granted the Company a 30 day extension to close its non-brokered private placement offering of up to 30,000,000 units of the Company (each, a "Unit") at a price of $0.05 per Unit for gross proceeds of up to $1,500,000.
The Company announced on August 14th the closing on an initial tranche of $342,620. Proceeds will support the Company’s growth as it continues to expand its network of HealthTabÔ operating blood-chemistry analyzers, located primarily in community pharmacies, known as the Rapid Access Safety Test Response (RASTR) Network.
4 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
Community Pharmacy Sector
Avricore is focused on expanding and further deploying its HealthTab and online Avricore Platform to best meet the current community pharmacy sector's needs. Community pharmacy is expected to focus increasingly on cognitive services with attendant point of care testing as well as medical cannabis in the future. These offer the pharmacy sector new ways to generate revenue as their margins are being reduced by changes in generic drug reimbursement with the Pan-Canadian Select Molecule Price Initiative for Generic Drugs that came into effect on April 1, 2018.
Board of Directors
Adding to the capacity of the Avricore team is Board Director David Fairfield and Board Advisor David Huston.
Mr. Fairfield brings 35 years of commodity, currency and financial futures markets experience. He had served as Vice President and Officer at George Weston Limited, the parent company of a large food manufacturing and food/pharmacy distribution business including Weston Foods, Loblaw and Shoppers Drug Mart. He has also served as a Board Member of Canadian Oilseed Industry Association (Oilseed Innovation Partners) – Non - Government Agency and holds an Economics Degree from Yale University.
Mr. Huston is a pharmacist by trade and has served as a Director of Pharmacy for two rural hospitals, as well as managing and being an owner/operator of his own community pharmacy. He is currently President & CEO of Providen Pharmacy Logistics and holds a Bsc in Pharmacy and an MBA, in addition to being a Certified Health Manager.
Management has laid the foundations and positioned the Company to capitalize on its competitive advantage with HealthTab + RASTR. Over the next several weeks Avricore will embark on, and announce, several initiatives that will bring revenues from point-of-care testing and sponsored clinical trials on its network of analyzers.
HEALTHTAB + RASTR NETWORK
·Pharmacies continue to face severely reduced revenues as a result of pricing changes by the Government of Canada, as well as regional government actions against rebates. As a result, pharmacy owners are actively looking for innovations in service and value-added services, like HealthTab, to support their businesses growth beyond the traditional dispensing model.
·Since being acquired by Avricore Health Inc. HealthTab has focused on streamlining operations to reduce the time and costs associated with new deployments.
·Key developments have included:
oDeveloping new pharmacy partner locations with Shoppers Drug Mart in Ontario
oDeveloping new pilot programs with national pharmacy chains,
oInitiating a pilot in BC and Alberta for the seniors living sector,
oAdvancing conversations with electronic health record service providers,
5 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
oExpansion in service billables with eight locations in the GTA, BC and Alberta showing an increase over 30% year-over-year.
·Continued to negotiate new PoC service integrations to expand the HealthTab testing menu.
·Developed the Rapid Access Safety Test Response (RASTR) Network to monetize de-identified data associated with high-value Real-World Evaluation (RWE) clinical trials.
·Successfully began negotiations across several target demographics, domestically and internationally, with life-science companies, host-locations (ie: Pharmacy, Seniors Living Centres) and Clinical Research Organizations (CRO).
AVRICORE PLATFORM
This first of its kind, pharmacist facing, portal platform addressing technology and point of care was acquired in 2018 and is comprised of two modules:
·Avricore Academy (e-learning)
·Avricore Store (e-commerce)
This innovative platform experienced success in attracting a subscription paying consumer base and generating revenues.
Scheduled to be re-branded and launched in late 2019, this educational tool and distribution channel will be the first online portal for pharmacists seeking reliable and accurate product knowledge on medicinal cannabis.
The upfront and on-going subscription-based model also allows us to efficiently market new services and products directly to pharmacists throughout Canada such as cannabis modules. Also supports White Label opportunities and other product distribution potential.
As the full launch of the Avricore platform was postponed during the year ended December 31, 2018 the value of the Avricore platform was written down to $1 as at December 31, 2018 as the Company has been conducting a rebranding and refocusing of this platform.
HEMA-FER
The Company generates revenue from Hema-Fer, it's iron replacement therapy, and continues to expand sales of Hema-Fer increasing both the geographic scope and volume of sales by listing with London Drugs in 2017 and Calgary Co-Op, Value Drug Mart and Sobey's in 2018. Hema-Fer is also available at other national pharmacies.
·New physician samples and updated marketing materials to medical clinics continue to be distributed.
·Sales of Hema-Fer through the Amazon store continue to be consistent. New marketing initiatives have been explored and will be launched shortly to drive traffic.
·Avricore continues to have discussions with pharmacy partners to expand the scope of listings to position Hema-Fer as the brand name heme iron supplement of choice.
6 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019
Revenue
The gross revenue was $89,559 and $139,861 for the three and six months ended June 30, 2019 (2018: $160,087 and $469,875). Net sales were $20,733 and $71,035 for the three and six months ended June 30, 2019 (2018: $159,789 and $314,881) after deducting the cost of customer marketing and promotional incentives of $68,826 and $68,826 (2018: $298 and $154,994) for the three and six months ended June 30, 2019. $27,350 of revenue recognized in a prior period was reversed in the current period.
The decrease in gross revenues for the three and six months ended June 30, 2019 is in part due to change in corporate strategy that the Company is going through during the period as described elsewhere in this MD&A.
The Company reviewed its portfolio and is discontinuing generic products.
The Company's sale of higher margin Hema-Fer (BTC) is showing better acceptance within the medical community. The product is listed with all the major distributor's in Canada. There has been a positive trend in the sale of the BTC product from quarter to quarter and the majority of the revenue in the period came from Hema-Fer.
Manufacturing
The Company does not have its own manufacturing facilities and currently relies, and expects to continue to rely, on the third-party manufacturers of the product. The Company has an agreement in place with a local manufacturer in Richmond, BC for the manufacturing of Hema-Fer
Other Operating Expenses
Management improved the disclosure on expense classification to monitor separate activities cost. Selling and Marketing expenses include all expenses related to sales personnel, selling and marketing, and distribution costs. Product registration and development includes all expenses related to acquiring new drugs, scientific consulting, regulatory fees and regulatory personnel. General and administrative cost includes expenses associated with running the day-to-day operations of the business.
Selling and Marketing Expenses
The Company spent $13,326 and $255,260 on sales and marketing (2018: $214,899 and $352,903). The sales and marketing expense consist of sales personnel payroll cost of $57,729 for the six months ended June 30, 2019 (2018: $90,487); marketing and advertising costs in relation to the product sales and promotion in the amount of $174,959 for the six months ended June 30, 2019 (2018: $204,015), logistics and distribution cost of $22,572 for the six months ended June 30, 2019 (2018: $57,418).
Selling and Marketing expense decreased as compared to prior periods is due to a change in corporate strategy as described elsewhere in this MD&A affecting the products and services provided to customers.
7 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
General and administrative expense changes
Amortization decreased to $51,900 and $115,366 for the three and six months ended June 30, 2019 (2018: $153,726 and $255,412) due to the write-down of certain equipment and intellectual property.
The increase in consulting fees to $103,381 and $220,381 compared to the same period in the prior year (2018: $92,816 and $148,316) was mainly due to hiring consultants experienced in business development and promoting contemporary innovative services in the pharmaceutical industry including Health Tab..
Product registration and development costs decreased significantly to $nil and $4,901 (2018: $75,702 and $147,832) due to a reduction in payroll expenses related to development of generic drugs which the Company discontinued selling
Professional fees increased to $99,132 and $126,805 (2018: $80,437 and $114,676) due to additional corporate and financing activities in support of changing the Company’s major business direction.
General and administrative expense decreased to $82,560 and 160,291 (2018: $86142 and $181,101) due to the discontinuation of activities related to generic drug sales. All the general and administrative expenses are in line with the normal course of business operations.
Share-based compensation of $32,584 and $58,524 was recognized during the three and six months ended June 30, 2019 (2018: $63,208 and $324,301) for stock options vested during the current period. The decrease relates to the higher number of stock options vested during the comparative period of the previous year. Options issued to directors and officers of the Company vested immediately, while those issued to consultants vest over one year.
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, 2018. 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 | Jun 2019 | Mar 2019 | Dec 2018 | Sep 2018 | Jun 2018 | Mar 2018 | Dec 2017 | Sep 2017 |
| $ | $ | $ | $ | $ | $ | $ | $ |
Gross revenue | 89,559 | 50,302 | 327,349 | 30,737 | 160,087 | 309,788 | 261,309 | 523,088 |
Net sales | 20,733 | 50,302 | 89,202 | (2,957) | 159,789 | 155,092 | 112,537 | 124,442 |
Gross profit (loss) | 18,036 | 12,430 | (115,305) | (97,651) | 112,111 | 97,929 | 51,300 | 78,334 |
Other operating expenses | 417,419 | 570,205 | 772,256 | 639,730 | 740,676 | 532,509 | 613,189 | 570,502 |
Write-down of inventories | 106,337 | 363 | 67,947 | 61,755 | 74,868 | 22,455 | 298,260 | 56,359 |
Share-based | 29,620 | 28,904 | 38,537 | 9,300 | 97,369 | 226,932 | 133,896 | 51,460 |
Net Loss | 531,287 | 585,137 | 1,969,234 | 682,799 | 800,802 | 683,967 | 994,045 | 599,987 |
Loss/Share | (0.01) | (0.01) | (0.03) | (0.02) | (0.03) | (0.02) | (0.04) | (0.03) |
Total Assets | 649,308 | 970,189 | 1,200,205 | 2,814,837 | 2,882,936 | 2,489,118 | 2,900,186 | 1,411,412 |
8 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
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:
| Six Months Ended June 30 | |
| 2019 | 2018 |
| $ | $ |
Cash used in operating activities | (384,463) | (1,089,799) |
Cash used in investing activities | - | (113,333) |
Cash provided by financing activities | 329,150 | 595,100 |
Cash and Cash Equivalents, closing balance | 29,129 | (48,299) |
There is an overall cash outflow of $55,313 for the six months ended June 30, 2019 compared to cash outflow of $608032 in comparable period in 2018. The change in cash provided or used by carious types of activities is the result of change in business direction in 2019 compared to 2018.
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 Health Tab and RASTR
·to the extent of liquidation of the existing inventory of Generics and OTCs
·the size, cost and effectiveness of our sales and marketing program, distributions and marketing arrangements.
·
As at June 30, 2019, the Company had a working capital deficit of $174512 (December 31, 2018: working capital $439,228). 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.
9 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
DISCLOSURE OF OUTSTANDING SHARE DATA
The following table summarizes the Company's outstanding share capital as at report date:
| Reporting date |
Common Shares | 52,472,699 |
Stock Options | 3,181,072 |
Stock Warrants | 10,821,961 |
COMMITMENTS AND AGREEMENTS
Leased premises
The Company has entered into contracts for leased premises, which expire in September 2021. Total future minimum lease payments under these contracts are as follows:
| June 30, 2019 |
Within 1 year | 50,958 45,861 |
| 96,819 |
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Our consolidated financial statements are prepared in accordance with IFRS. These accounting principles require the Company's management to make estimates, judgments and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes to the consolidated financial statements. The Company's management reviews these estimates and underlying judgments on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the year in which the estimates are revised. Actual results may differ from these estimates under different assumptions or conditions. Significant areas requiring management estimates include accounting for amounts recorded in connection recoverability of inventories, reporting of revenue recognition, bad debt and doubtful accounts, income taxes, accounting for stock-based compensation expense, and commitments and contingencies.
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 yearly consolidated financial statements for the year ended December 31, 2018.
10 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
Inventory valuation
The Company estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by regulatory changes or other market-driven changes that may reduce future selling prices. In determining net realizable value, the Company considers such factors as turnover, historical experience, expiry dates and shelf life of the products. A change to these assumptions could impact the Company's inventory valuation and gross margin. 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
Revenues are recognized when the risks and rewards of ownership have passed to the customer based on the terms of the sale, collection of the relevant receivable is probable, evidence of an arrangement exists and the sales price is fixed or determinable. Risks and rewards of ownership pass to the customer upon successful completion of shipment of pharmaceuticals. Provisions for sales discounts, incentives, and rebates and returns are made based upon historical experiences.
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 its 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
11 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
FINANCIAL INSTRUMENTS AND RISKS
Operational Risk Factors
Limited Operating History
There is no assurance that Avricore will earn profits in the future, or that profitability will be sustained. Operating in the pharmaceutical and biotechnology industry requires substantial financial resources, and there is no assurance that future revenues will be sufficient to generate the funds required to continue AVRICORE business development and marketing activities. In case AVRICORE does not have sufficient capital to fund its operations, the management may be required to restructure the operations.
Going concern
The assessment of the Company's ability to execute its strategy by funding future working capital requirements involves judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has always experienced operating losses and negative operating cash flows. Operations have been funded by the issuance of share capital. These conditions may cast substantial doubt on the Company's ability to continue as a going concern.
Development of Technological Capabilities
The market for Avricore's products is characterized by changing technology and continuing process development. The future success of Company's business will depend in large part upon our ability to maintain and enhance the Company's technological capabilities, develop and market products and services which meet changing customer needs and successfully anticipate or respond to technological changes on a cost effective and timely basis. Although we believe that Company's operations provide the products and services currently required by our customers, there can be no assurance that the Company's process development efforts will be successful or that the emergence of new technologies, industry standards or customer requirements will not render Avricore's products or services uncompetitive. If Avricore needs new technologies and equipment to remain competitive, the development, acquisition and implementation of those technologies and equipment may require us to make significant capital investments.
Economic dependence
The Company currently has licensing arrangements with three manufacturers to purchase, distribute and commercialize their drug molecules in Canada. The Company derives over 88% of its gross sales from three major national distributors for the six months ended June 30, 2019. The Company has decided to discontinue drug sales.. The launch of Health Tab and RASTR diversifies the Company's portfolio and reduces the risk of the economic dependence.
12 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
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 June 30, 2019 (December 31, 2018 — 51% from one customer).
Pursuant to their collective terms, accounts receivable was aged as follows:
| June 30, 2019 | December 31, 2018 |
| $ | $ |
Not past due | 2,227 | 223,249 |
0 — 30 days past due | 79,885 | 25,165 |
31 — 90 days past due | 2,796 | 1,945 |
Over 90 days past due | 8,313 | 29,921 |
| 93,222 | 280,280 |
As at June 30, 2019 and December 31, 2018, 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 June 30, 2019, the Company's financial liabilities were comprised of accounts payable and accrued liabilities of $492,090 (December 31, 2018 - $314,239).
13 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
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 six months ended June 30, 2019 and 2018, the Company recorded the following transactions with related parties:
a)$37,500 and $75,000 in management fees to the Chief Executive Officer of the Company (2018 - $78,513 and $154,131 in salaries and benefits).
b)$10,000 and $10,000 in consulting fees to the Executive Vice President (2018 - $nil and $nil).
c)$30,000 and $60,000 in consulting fees to the head of the Company’s subsidiary Health Tab Inc. (2018 - $15,000 and $30,000).
d)$5,000 and $30,000 in consulting fees to a company controlled by a Senior Advisor to the Board of Directors (2018 - $nil and $nil).
e)$30,220 and $30,220 in accounting fees to a Company of which a former Chief Financial Officer and former Corporate Secretary of the Company are employees (2018 - $nil and $nil).
f)$3,500 and $10,500 in accounting fees to a Company controlled by a former Chief Financial Officer (2018 - $10,000 and $19,000).
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:
14 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
| Three months ended June 30, | Six months ended June 30, | ||
| 2019 | 2018 | 2019 | 2018 |
| $ | $ | $ | $ |
Accounting fees | 33,720 | 15,000 | 44,220 | 25,000 |
Management fees | 37,500 | - | 75,000 | - |
Consulting fees | 45,000 | 15,000 | 105,000 | 30,000 |
Salaries and benefits |
| 75,618 |
| 154,131 |
Share-based compensation | 32,584 | 63,208 | 58,524 | 284,123 |
| 148,804 | 168,826 | 202,744 | 493,254 |
As at June 30, 2019 the following amounts due to related parties were included in accounts payable and accrued liabilities.
|
|
|
Due to | June 30, 2019 | December 31, 2018 |
| $ | $ |
Chief Executive Officer | 36,841 | - |
Executive Vice President | 10,500 | - |
Head of HealthTab | 63,000 | -. |
Company controlled by a former CFO | 15,120 | - |
Company of which a former Chief Financial Officer and former Corporate Secretary are employees | 33,992 | - |
Company controlled by a Senior Advisor to the Board | 22,600 | - |
Balance, end of period | 182,053 | - |
\
ACCOUNTING STANDARDS ISSUED, BUT NOT YET IN EFFECTIVE
The following is an overview of accounting standard changes that the Company will be required to adopt in future years.
IFRS 16 — Leases
IFRS 16 specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee The IASB issued IFRS 16, Leases, in January 2016, which replaces the current guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a finance lease and an operating lease. IFRS 16 requires lessees to recognize a lease liability reflecting future lease payments and a "right-of-use asset" for virtually all lease contracts. The IASB has included an optional exemption for certain short-term leases and leases of low-value assets. IFRS 16 is effective for annual periods beginning on or after January 1, 2019.
15 | Page
Avricore Health Inc.
(formerly VANC Pharmaceuticals Inc.)
Management's Discussion and Analysis
as at August 30, 2019
The Company expects that the impact of IFRS 16 will have on its consolidated financial statements is to record a right to use asset with an offsetting liability for its existing leases, as well as additional disclosure.
The Company estimates the value of the right-of-use assets and corresponding lease liability to be approximately $100,000 on recognition.
Other new standards or amendments are either not applicable or not expected to have a significant impact on the Company's consolidated financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements, which would require disclosure.
CONTACT
Officers and Directors Dr. Robert Sindelar, Director
| Contact Avricore Health Inc. Suite 2300, 1177 West Hastings Street Vancouver, BC V6E 2K3 Tel: 604-247-2639 |
|
|
16 | Page
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Bob Sukhwinder S. Rai, Chief Executive Officer 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 June 30, 2019.
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: August 30, 2019
/s/ Bob Sukhwinder S. Ray
_______________________________
Bob Sukhwinder S. Rai, 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.
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Kiki Smith, CFO 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 June 30, 2019.
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: August 30, 2019
/s/ 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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