Avricore Health Inc.

Exhibit 99.2

Avricore Health Inc.

Condensed Interim Consolidated Financial Statements

(Unaudited)

(Expressed in Canadian Dollars)

For the three and six months ended June 30, 2021 and 2020

Notice to Reader

Management has prepared the unaudited condensed interim consolidated financial statements for Avricore Health Inc. (the “Company”) in accordance with National Instrument 51-102 released by the Canadian Securities Administration. The Company discloses that its auditors have not reviewed the unaudited condensed interim consolidated financial statements for the period ended June 30, 2021 and 2020.

Avricore Health Inc.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

As at,

	Note	Unaudited June 30, 2021	Audited December 31, 2020
		$	$
ASSETS

Current Assets
Cash and cash equivalents		2,290,567	302,715
Accounts receivable	5	19,754	11,928
Prepaid expenses and deposits	6	176,970	125,444
		2,487,291	440,087

Equipment	8	39,083	-
Intangible assets	9	14,725	3
Total Assets		2,541,099	440,090

LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities	10 & 16	143,837	152,569
Loans payable	12	40,000	1,001,562
		183,837	1,154,131

SHAREHOLDERS’ EQUITY (DEFICIENCY)
Share capital	13	26,157,043	22,286,852
Shares subscribed		-	10,000
Reserves	13	5,768,130	5,497,092
Deficit		(29,567,911)	(28,507,985)
		2,357,262	(714,041)
Total Liabilities and Shareholders’ Equity (Deficiency)		2,541,099	440,090

Nature of operations and going concern (Note 1)

Subsequent events (Note 21)

Approved and authorized on behalf of the Board of Directors on August 27, 2021.

“Hector Bremner” “David Hall”

Hector Bremner, DirectorDavid Hall, Chairman

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

Avricore Health Inc.

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

(Unaudited - Expressed in Canadian Dollars)

Three months ended Six months ended

June 30, June 30,

	Note	2021	2020	2021	2020
		$	$	$	$

Revenue		4,939	8,482	12,514	16,866

Cost of sales		5,937	3,571	11,865	6,363
Gross profit		(998)	4,911	649	10,503

Expenses
Amortization	8	3,282	-	3,578	-
Consulting	16	116,237	48,750	189,200	97,500
General and administrative	15	45,297	26,274	94,991	62,518
Management Fees	16	37,500	67,500	130,000	135,000
Marketing and communications	14	76,415	2,308	85,057	26,521
Professional fees	16	40,020	35,057	107,505	72,949
Share-based compensation	16	24,965	-	411,900	-
		343,716	179,889	1,022,231	394,488
Other income (expense)
Finance costs	12	-	(45,539)	(38,438)	(67,093)
Gain on settlement of liabilities		-	22,400	-	22,400
Other income		94	-	94	-

Net loss and comprehensive loss for the period		(344,620)	(198,117)	(1,059,926)	(428,678)

Basic and Diluted Loss Per Share		(0.00)	(0.00)	(0.01)	(0.01)
Weighted Average Number of Common Shares Outstanding		93,819,327	57,952,619	88,488,878	56,095,696

Segmented information (Note 18)

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

Avricore Health Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

	2021	2020
	$	$
Operating Activities
Net loss	(1,059,926)	(428,678)
Adjustment for non-cash items:
Amortization	3,578	-
Finance cost	38,438	52,641
Gain on settlement of liabilities	-	(22,400)
Write-down of receivables	-	457
Share-based payments	411,900	-

Change in working capital items:
Accounts receivable	(7,826)	491
Prepaid expenses and deposits	(51,526)	(127,196)
Deferred revenue	-	43,268
Accounts payable and accrued liabilities	29,768	(209,028)
Net cash used in operating activities	(635,594)	(690,445)

Investing Activities
Purchase of intangible assets	(15,497)	-
Purchase of equipment	(41,886)	-
Net cash used in investing activities	(57,383)	-

Financing Activities
Proceeds from issuance of shares, net	2,404,000	-
Proceeds from exercise of warrants	1,252,862	-
Proceeds from exercise of stock options	121,657	-
Share issuance costs	(97,690)	-
Loan repaid	(1,000,000)	-
Loan proceeds	-	940,000
Finance cost	-	(30,000)
Lease payments	-	(13,696)
Net cash provided by financing activities	2,680,829	896,304

Increase (decrease) in Cash and Cash Equivalents	1,987,852	205,859
Cash and Cash Equivalents, Beginning of Period	302,715	13,799
Cash and Cash Equivalents, End of Period	2,290,567	219,658

Cash and Cash Equivalents Consist of:
Cash	1,980,567	209,658
Guaranteed investment certificates	310,000	10,000
Cash and Cash Equivalents	2,290,567	219,658

Supplemental cash flow information (Note 19)

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

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

1.NATURE OF OPERATIONS AND GOING CONCERN

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

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

The condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has always experienced operating losses and negative operating cash flows. Operations have been funded by the issuance of share capital. These conditions may cast substantial doubt on the Company’s ability to continue as a going concern.

The continuation of the Company as a going concern is dependent upon its ability to generate revenue from its operations, or raise additional financing to cover ongoing cash requirements. The condensed interim consolidated financial statements do not reflect any adjustments, which could be material, to the carrying values of assets and liabilities, which may be required should the Company be unable to continue as a going concern.

	June 30, 2021	December 31, 2020
	$	$
Deficit	`(29,567,911)`	`(28,507,985)`
Working capital (deficiency)	`2,303,454`	`(714,044)`

In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a global pandemic. Since then, several measures have been implemented in Canada and the rest of the world in response to the increased impact from COVID-19. The Company continues to operate the business forward at this time. While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on the Company’s operations, including the duration and impact on the Company’s future plans, cannot be reasonably estimated at this time.

2.BASIS OF PRESENTATION

a)Statement of Compliance

The condensed interim consolidated financial statements for the period ended June 30, 2021 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), IAS 34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2020. 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, 2020.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

2. BASIS OF PRESENTATION (continued)

b)Basis of preparation (continued)

The condensed interim consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The significant accounting policies are presented in Note 3 of the annual consolidated financial statements for the year ended December 31, 2020 and have been consistently applied in each of the periods presented. The condensed interim consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional currency, unless other indicated.

The preparation of condensed interim consolidated financial statements in accordance with IFRS requires the Company’s management to make estimates, judgments and assumptions that affect amounts reported in the condensed interim consolidated financial statements and accompanying notes. The areas involving a higher degree of judgment and complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed below. Actual results might differ from these estimates. The Company’s management reviews these estimates and underlying judgments on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the year in which the estimates are revised.

c)Basis of consolidation

Condensed interim consolidated financial statements include the assets, liabilities and results of operations of all entities controlled by the Company. Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated in preparing the Company’s the condensed interim consolidated financial statements. Where control of an entity is obtained during a financial year, its results are included in the consolidated statements of operations and comprehensive loss from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for that part of the year during which control exists.

These condensed interim consolidated financial statements include the accounts of the Company and its controlled wholly owned subsidiaries, Vanc Marine Pharmaceuticals Inc. and HealthTab™ Inc.

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting estimates and judgments

Estimates

Significant estimates used in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

Inventory valuation

The Company estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by regulatory changes or other market-driven changes that may reduce future selling prices. In determining net realizable value, the Company considers such factors as turnover, historical experience, expiry dates and shelf life of the products. A change to these assumptions could impact the Company’s inventory valuation and gross margin. The Company attempts to sell products with short shelf life with significant rebates. Any unsold products with short shelf life and expired products are written-off.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based payments

The Company grants share-based awards to certain directors, officers, employees, consultants and other eligible persons. For equity-settled awards, the fair value is charged to the statement of operations and comprehensive loss and credited to the reserves over the vesting period using the graded vesting method, after adjusting for the estimated number of awards that are expected to vest.

The fair value of equity-settled awards is determined at the date of the grant using the Black-Scholes option pricing model. For equity-settled awards to non-employees, the fair value is measured at each vesting date. The estimate of warrant and option valuation also requires determining the most appropriate inputs to the valuation model, including the volatility, expected life of warrants and options, risk free interest rate and dividend yield. Changes in these assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company’s options and warrants issued. Management must also make significant judgments or assessments as to how financial assets and liabilities are categorized.

Judgements

Significant judgments used in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

Revenue recognition

Revenue is recognized when the revenue recognition criteria expressed in the accounting policy stated above for Revenue Recognition have been met. Judgment may be required when allocating revenue or discounts on sales amongst the various elements in a sale involving multiple deliverables.

Deferred tax assets

Tax interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change. The determination of income tax expense and deferred tax involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred tax assets and liabilities, and interpretations of laws in the countries in which the Company operates. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these estimates may materially affect the final amount of deferred taxes or the timing of tax payments. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full.

Going concern

The Company’s management has made an assessment of the Company’s ability to continue as a going concern and is satisfied that the Company has the resources to continue in business for the foreseeable future. The factors considered by management are disclosed in Note 1.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

4.ACQUISITION OF HEALTHTAB™ INC.

On December 28, 2017, the Company completed the acquisition of all the common shares of HealthTab™ Inc. (“HealthTab™”). HealthTab™’s primary asset is intellectual property and certain trademarks and web domains related to the design of the HealthTab™ system, being a lab-accurate, point of care testing platform. Under the share purchase agreement, the consideration paid by the Company is as follows:

·Cash payment of $100,000 upon signing of the share purchase agreement (paid);

·Cash payment of $100,000 in six equal monthly instalments after the closing date (paid);

·Issue 880,000 common shares no later than 125 days after the closing date (issued);

·Issue 880,000 common shares no later than 245 days after the closing date (issued);

·Issue 906,667 common shares no later than 365 days after the closing date (issued);

·Issue common shares equal to the higher of $100,000 or 5% of net sales related to HealthTab™ for the year ended December 2018 by January 31, 2019 (issued); and

·Issue common shares equal to the higher of $100,000 or 5% of net sales related to HealthTab™ for the year ended December 2019 by January 31, 2020 (issued)

This acquisition 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.

5.ACCOUNTS RECEIVABLE

The Company’s accounts receivable consists of the following:

	June 30, 2021	December 31, 2020
	$	$
Trade receivables	8,667	9,800
GST receivable	11,087	2,128
	19,754	11,928

6.PREPAID EXPENSES AND DEPOSITS

The balance consists of prepaid expenses to vendors of $137,828 (December 31, 2020 - $103,967), prepaid business insurance of $27,142 (December 31, 2020 - $9,477) and security deposits of $12,000 (December 31, 2020 - $12,000).

7.INVENTORIES

During the year ended December 31, 2020, the Company recorded an inventory write-down of $180,432 related to hand sanitizers purchased during the year.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

8.EQUIPMENT

	Equipment
	$
Cost
Balance, December 31, 2019 and 2020	-
Additions	41,886
Balance, June 30, 2021	41,886

Accumulated Amortization
Balance, December 31, 2019 and 2020	-
Amortization	2,803
Balance, June 30, 2021	2,803

Carrying value
As at December 31, 2020	-
As at June 30, 2021	39,083

9.INTANGIBLE ASSETS

	Software	HealthTab™	Corozon	Emerald	Total
	$	$	$	$	$
Cost
Balance, December 31, 2019 and 2020	-	1	1	1	3
Additions	15,497	-	-	-	15,497
Balance, June 30, 2021	15,497	1	1	1	15,500

Accumulated Amortization
Balance, December 31, 2019 and 2020	-	-	-	-	-
Amortization	775	-	-	-	775
Balance, June 30, 2021	775	-	-	-	775

Carrying value
As at December 31, 2020	-	1	1	1	3
As at June 30, 2021	14,722	1	1	1	14,725

10.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

	June 30, 2021	December 31, 2020
	$	$
Trade accounts payable	143,837	126,569
Accrued liabilities	-	26,000
	143,837	152,569

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

11.LEASE LIABILITIES


	$
Balance, December 31, 2019	`21,390`
Finance cost	`726`
Lease payments	`(22,116)`
Balance, December 31, 2020 and June 30, 2021	`-`

During the year ended December 31, 2020, the Company terminated its lease agreement for its office premise. Pursuant to the cancelation, the Company forfeited its deposit of $8,420 and paid the outstanding rent for the months of January to March, 2020.

12.LOANS PAYABLE

During the year ended December 31, 2020, the Company entered into a loan agreement with a third party for a secured loan in the amount of $1,000,000. The Loan was for a term of one year from the date of receipt of the funds, bore interest at a rate of 10% per annum and was secured with all of the present and after-acquired property of the Company. The loan was subject to an interest reserve of $100,000 held back from the loan advance. The Company paid a loan application fee in the amount of $30,000 and issued 3,480,000 bonus shares with a fair value of $52,500, which was recorded against the carrying value of the loan. During the three and six months ended June 30, 2021, the Company recorded $nil and $21,096 (2020 - $24,923 and $28,493) as interest expense and recorded $nil and $17,342 (2020 - $20,494 and $23,421) as accretion expense on the loan which was been included in finance cost in the condensed interim consolidated statements of operations and comprehensive loss. During the period ended June 30, 2021, the Company repaid the loan at the end of the term.

During the year ended December 31, 2020, the Company received a Canada Emergency Business Account loan of $40,000 to be repaid on or before December 31, 2025. The loan is interest-free until December 31, 2022. Thereafter, the outstanding loan balance will bear interest at the rate of 5% per annum.

13.SHARE CAPITAL

Authorized share capital

Authorized: Unlimited number of common shares without par value.

Issued share capital

During the period ended June 30, 2021:

The Company issued 7,386,160 common shares upon exercise of warrants for gross proceeds of $1,252,862.

The Company issued 1,616,072 common shares upon exercise of stock options for gross proceeds of $121,657.

The Company issued 275,000 common shares valued at $38,500 to a consultant in exchange for services received.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

13.SHARE CAPITAL (continued)

Issued share capital (continued)

On February 12, 2021, the Company completed a non-brokered private placement and issued 7,000,000 units at a price of $0.22 per unit for gross proceeds of $1,540,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.30 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company’s directors and officers participated in the private placement. The Company paid finder’s fee totaling $56,320 and issued 256,000 finder’s warrants valued at $39,206.

On January 28, 2021, the Company closed the final tranche of a non-brokered private placement and issued 8,740,000 units at a price of $0.10 per unit for gross proceeds of $874,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.15 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company’s directors and officers participated in the private placement. The Company paid finder’s fee totaling $27,800 and issued 278,000 finder’s warrants valued at $100,419.

During the year ended December 31, 2020:

The Company closed a tranche of a non-brokered private placement and issued 6,260,000 units at a price of $0.10 per unit for gross proceeds of $626,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.15 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company paid finder’s fee totaling $22,500 and issued 225,000 finder’s warrants valued at $9,833. The Company’s directors and officers participated in the private placement.

The Company issued 5,477,965 common shares in exchange for services received and to settle accounts payables of $136,949. An aggregate of 1,900,000 shares were issued in settlement of $47,500 in amounts owing to certain directors and officers of the Company. The common shares issued to the related parties are subject to a four month plus one day hold period.

The Company issued 105,000 common shares pursuant to the exercise of stock options for gross proceeds of $5,250. $1,422 was reclassified from reserves to share capital on exercise of the options.

The Company issued 2,000,000 common shares valued at $100,000 related to the acquisition of HealthTab™ (see Note 4).

The Company issued 3,480,000 common shares valued at $52,200 as bonus shares pursuant to a loan agreement (see Note 12).

Stock options

The Company has adopted an incentive share purchase option plan under the rules of the Exchange pursuant to which it is authorized to grant options to executive officers, directors, employees and consultants, enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. The options can be granted for a maximum term of ten years and generally vest either immediately or in specified increments of up to 25% in any three-month period.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

13.SHARE CAPITAL (continued)

Stock options (continued)

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

	Period ended June 30, 2021		Year ended December 31, 2020
	Number of Options	Weighted Average Exercise Price	Number of Options	Weighted Average Exercise Price
Beginning Balance	`6,706,072`	`$0.08`	`5,241,072`	`$0.13`
Options granted	`2,090,000`	`$0.24`	`1,730,000`	`$0.08`
Expired/Cancelled	`-`	`-`	`(160,000)`	`$0.07`
Exercised	`(1,616,072)`	`$0.08`	`(105,000)`	`$0.05`
Ending Balance	`7,180,000`	`$0.12`	`6,706,072`	`$0.08`
Exercisable	`6,980,000`	`$0.12`	`6,706,072`	`$0.08`

The following table summarizes information about stock options outstanding and exercisable as at June 30, 2021:

Exercise Price	Expiry date	Options
		Outstanding	Exercisable
$0.15	June 21, 2022	140,000	140,000
$0.10 ⁽¹⁾	July 20, 2022	150,000	150,000
$0.10 ⁽¹⁾	September 27, 2022	150,000	150,000
$0.10 ⁽¹⁾	November 20, 2022	150,000	150,000
$0.10 ⁽²⁾	December 8, 2022	675,000	675,000
$0.10 ⁽³⁾	March 27, 2023	200,000	200,000
$0.10 ⁽⁴⁾	April 11, 2023	150,000	150,000
$0.075	January 24, 2024	280,000	280,000
$0.08	February 28, 2024	140,000	140,000
$0.06	April 1, 2024	175,000	175,000
$0.05	October 1, 2024	1,480,000	1,480,000
$0.08	November 18, 2025	830,000	830,000
$0.08	December 8, 2025	710,000	710,000
$0.19	January 28, 2026	150,000	150,000
$0.25	March 22, 2026	1,800,000	1,600,000
		7,180,000	6,980,000

⁽¹⁾Options repriced from $0.15 to $0.10 during the year ended December 31, 2020

⁽²⁾Options repriced from $0.28 to $0.10 during the year ended December 31, 2020

⁽³⁾Options repriced from $0.24 to $0.10 during the year ended December 31, 2020

⁽⁴⁾Options repriced from $0.21 to $0.10 during the year ended December 31, 2020

The weighted average remaining life of the stock options outstanding at June 30, 2021 is 3.44 years.

Share-based compensation

Share-based compensation of $411,900 was recognized during the period ended June 30, 2021 (2020 - $nil) for stock options granted, vested, and repriced during the period. Options issued to directors and officers of the Company vested immediately, while those issued to consultants vest over one year, however, the Board may change such provisions at its discretion or as required on a grant-by-grant basis.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

13.SHARE CAPITAL (continued)

Share-based compensation (continued)

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

	2021	2020
Expected life	1 – 5 years	2 – 5 years
Volatility	134% - 210%	141% - 180%
Dividend yield	0%	0%
Risk-free interest rate	0.41% - 0.99%	0.23% - 0.47%

Option pricing models require the use of highly subjective estimates and assumptions, including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates.

Warrants

The Company has issued warrants entitling the holders to acquire common shares of the Company. The summary of changes in warrants is presented below.

	Period ended June 30, 2021		Year ended December 31, 2020
	Number of Warrants	Weighted Average Exercise Price	Number of Warrants	Weighted Average Exercise Price
Beginning Balance	`18,743,226`	$0.16	`20,704,664`	$0.24
Warrants issued	`16,274,000`	$0.22	`6,485,000`	$0.15
Warrants exercised	`(7,386,160)`	$0.17	`-`	-
Warrants expired	`-`	-	`(8,446,438)`	$0.33
Outstanding	`27,631,066`	$0.19	`18,743,226`	$0.16

The following table summarizes information about warrants outstanding and exercisable as at June 30, 2021:

Exercise Price	Expiry date	Warrants Outstanding
$0.15	August 13, 2021	3,025,000
$0.15	November 13, 2021	2,765,000
$0.15	November 19, 2021	3,060,000
$0.20	June 26, 2022	993,666
$0.20	August 3, 2022	742,667
$0.20	November 27, 2022	770,733
$0.15	January 28, 2022	9,018,000
$0.15	February 12, 2022	7,256,000
		27,631,066

The weighted average remaining life of the warrants outstanding at June 30, 2021 is 0.55 years.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

14.MARKETING AND COMMUNICATIONS EXPENSES

	Three months ended June 30,		Six months ended June 30,
	2021	2020	2021	2020
	$	$	$	$
Marketing	-	108	-	849
Shareholder communications	76,415	2,200	85,057	25,672
	76,415	2,308	85,057	26,521

15.GENERAL AND ADMINISTRATIVE EXPENSES

	Three months ended June 30,		Six months ended June 30,
	2021	2020	2021	2020
	$	$	$	$
Bank service charges	1,545	1,740	3,840	2,802
Filing and registration fees	16,761	-	42,104	17,497
Foreign exchange	315	4,173	(435)	6,373
Insurance	12,413	11,884	24,160	17,933
Investor relations	3,645	-	5,312	1,265
Office maintenance	7,962	3,925	15,463	8,534
Rent	1,800	2,388	3,210	2,398
Travel	856	1,707	1,337	5,259
Write-down of receivables	-	457	-	457
	45,297	26,274	94,991	62,518

16.RELATED PARTY TRANSACTIONS

For the three and six months ended June 30, 2021 and 2020, the Company recorded the following transactions with related parties:

a)$37,500 and $75,000 in management fees (2020 - $37,500 and $75,000) to the Chief Executive Officer of the Company along with a bonus award of $nil and $35,000 (2020 - $nil and $nil).

b)$nil and $20,000 in management fees to the former President and Chief Executive Officer of the Company (2020 - $30,000 and $60,000).

c)$30,000 and $60,000 in professional fees (2020 - $30,000 and $60,000) to a company controlled by the Chief Financial Officer of the Company along with a bonus award of $nil and $30,000 (2020 - $nil and $nil).

d)$30,000 and $60,000 in consulting fees (2020 - $30,000 and $60,000) to the Chief Technology Officer of the Company along with a bonus award $nil and $35,000 (2020 - $nil and $nil).

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

16.RELATED PARTY TRANSACTIONS (continued)

Related party transactions not otherwise described in the condensed interim 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,
	2021	2020	2021	2020
	$	$	$	$
Consulting fees	30,000	30,000	90,000	60,000
Management fees	37,500	67,500	130,000	135,000
Professional fees	30,000	30,000	95,000	60,000
Share-based compensation	-	-	264,393	-
	97,500	127,500	579,393	255,000

There were no amounts due to related parties as at June 30, 2021 and December 31, 2020.

17.CAPITAL DISCLOSURES

The Company includes shareholders’ equity in the definition of capital. The Company’s objective when managing capital is to maintain sufficient cash resources to support its day-to-day operations. The availability of capital is solely through the issuance of the Company’s common shares. The Company will not issue additional equity until such time when funds are needed and the market conditions become favorable to the Company. There are no assurances that funds will be made available to the Company when required. The Company makes every effort to safeguard its capital and minimize its dilution to its shareholders.

The Company is not subject to any externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the period ended June 30, 2021.

18.SEGMENTED INFORMATION

At June 30, 2021 and December 31, 2020, the Company has only one segment, being the HealthTab™ - Point of Care Business in Canada.

19.SUPPLEMENTAL CASH FLOW INFORMATION

During the six months ended June 30, 2021, the Company:

- Issued common shares against subscriptions of $10,000 received in prior year.

- Issued 275,000 common shares valued at $38,500 for services received.

During the six months ended June 30, 2020, the Company:

- Issued in total 2,000,000 common shares valued at $100,000 related to the acquisition of HealthTab™ (see Notes 4 and 13).

- Issued in total 3,480,000 common shares valued at $52,200 as bonus shares under a loan agreement (see Notes 12).

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

20.FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, loans payable and lease liabilities. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.

This note presents information about the Company’s exposure to each of the above risks and the Company’s objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included throughout the condensed interim consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has implemented and monitors compliance with risk management policies.

a)Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are held through a large Canadian financial institution. The 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, 2021 (December 31, 2020 – 45% from one customer).

b)Liquidity risk

Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company’s reputation. Due to the ongoing COVID-19 pandemic, liquidity risk has been assessed as high.

The Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. The Company anticipates it will have adequate liquidity to fund its financial liabilities through future equity contributions, however, there can be no guarantees that sufficient funds will be raised.

As at June 30, 2021, the Company’s liabilities were comprised of accounts payable and accrued liabilities, and loans payable of $183,837 (December 31, 2020 - $1,154,131).

c)Market risk

Market risk for the Company consists of currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposure within acceptable limits, while maximizing returns.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

20.FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

c)Market risk (continued)

Currency risk

Foreign currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As all of the Company’s purchases and sales are denominated in Canadian dollars, and it has no significant cash balances denominated in foreign currencies, the Company is not exposed to foreign currency risk at this time.

Interest rate risk

Interest rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates. In respect of financial assets, the Company’s policy is to invest cash at floating interest rates and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders.

The Company is not exposed to significant interest rate risk. The Company’s loans payable bear fixed interest rate.

d)Fair value of financials instruments

The fair values of financial assets and financial liabilities are determined as follows:

Cash and cash equivalents are measured at fair value. For accounts receivable, accounts payable, and loans payable carrying amounts approximate fair value due to their short-term maturity;

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities and amounts resulting from direct arm’s length transactions.

Cash and cash equivalents are valued using quoted market prices or from amounts resulting from direct arm’s length transactions. As a result, these financial assets have been included in Level 1 of the fair value hierarchy.

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full contractual term. Derivatives are included in Level 2 of the fair value hierarchy as they are valued using price models. These models require a variety of inputs, including, but not limited to, contractual terms, market prices, forward price curves, yield curves and credit spreads. The Company’s lease liabilities are at this level.

Level 3: Inputs for the asset or liability are not based on observable market data. Currently, the Company has no financial instruments at this level.

21.SUBSEQUENT EVENTS

a)The Company issued 2,153,500 common shares upon exercise of warrants for gross proceeds of $323,025.

b)The Company issued 50,000 common shares upon exercise of stock options for gross proceeds of $4,000.

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

21.SUBSEQUENT EVENTS (continued)

c) 871,500 warrants with exercise price of $0.15 expired unexercised.

d)The Company granted 500,000 stock options to the consultants of the Company at an exercise price of $0.17 per common share. The stock options fully vested on the date of grant and are exercisable for a period of 1 year.

Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

OVERVIEW

Avricore Health is focused on acquiring and developing early-stage technologies aimed at Moving pharmacy forward. Through our flagship offering HealthTab™ (a wholly owned subsidiary), we provide a turnkey point-of-care testing platform, creating value for stakeholders and better outcomes for patients.

The HealthTab™ platform effectively turns pharmacies into community diagnostic centres. It enables pharmacists to take  on a greater role in primary health services, capitalizes on the rapidly growing point-of-care testing market, and ultimately improves the quality of life for patients living with chronic illness.

COVID-19 RESPONSE

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. One year later the pandemic continues to severely impact the environment in which the Company operates.

One benefit is the increased focus on real world evaluations and rapid testing which has brought increased attention to HealthTab™. While continuing HealthTab’s™ primary focus on general health screening it has also been adapted to support COVID-19 testing.

The extent to which the COVID-19 outbreak impacts the Company's results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the spread of the virus and government actions. Management continues to monitor the situation and adjust corporate planning as appropriate.

HEALTHTAB™ – KEY DEVELOPMENTS

Key developments have included:

·15 (increased from an initial 11) participating Shoppers Drug Mart® pharmacies have now received their HealthTab™ systems and are offering screening tests to patients. The program’s primary focus is to screen patients at-risk for diabetes and cardiovascular disease. In-store signage and print material will let customers know they are able to request HealthTab™ tests, and existing patients will be made aware through direct outreach from their Shoppers Drug Mart® pharmacist based on their health profile. Additionally, the first ever third-party HealthTab™ advertising campaign will actively market the program publicly in the participating region.

·The first Shoppers Drug Mart® pharmacy selected to receive the system to begin beta-testing HealthTab™’s systems, reported that more than 90 patients were tested and over 600 results were reported over the initial trial period between July 5 – July 18 at this single location.

·Signing master agreement to pilot Healthtab™ platform for diabetes management in select Shoppers Drug Mart® pharmacies.

·Amendment to the Distribution Agreement adds the Abbott’s popular ID NOW™ molecular testing device which will add onsite testing and reporting capabilities for SARS-CoV-2 as well as Respiratory Syncytial Virus, Influenza A & B and Strep – a powerful combination for detecting infections before they spread.

·Partnered with Ellerca Health Inc. to offer joint diabetes screening and management support.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

·Signing of a Distribution Agreement with Abbott Rapid Diagnostics, to integrate new devices into Avricore’s HealthTab™ to expand its real-time data reporting system capabilities.

·Expanding partnership with Ontario Pharmacists Association (OPA) to promote HealthTab™ to pharmacies conducting COVID-19 testing and government for real-time reporting of test results.

·Developing new pilot programs with national pharmacy chains,

·Advancing discussions with lab service providers,

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

·Refining HealthTab™’s de-centralized clinical trials capabilities to monetize de-identified data associated with high-value Real-World Evaluation (RWE).

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

HealthTab™ is a cloud-based network technology that enables the world’s first harmonized, real-time response system where consumers receive a finger-stick blood test at their local pharmacy via a web-enabled blood chemistry analyzer. These results are available in 12 minutes. Consumers’ bio-markers, which include key results related to heart, liver and kidney function, are received via secure login which they can then be used to better understand their health performance and share with their healthcare team for evidence-based decision making. This one-of-a-kind real-time reporting system opens the door to improved preventative healthcare in public and private health systems.

De-identified data collected, with consumer consent across the HealthTab™ network of analyzers, can be shared with life-science companies and other research entities. The traditional clinical trial approach can be limited in the scope of time, demographical outreach, and other inherent exclusionary attributes. HealthTab™presents a revolutionary model for utilizing the system’s unique ability to offer real-time evaluations of treated populations and real-world evaluation clinical trials.

Between January and February 2020, the Deloitte Center for Health Solutions surveyed multiple leaders from 17 pharmaceutical companies on their organizations’ RWE capabilities. Survey questions revolved around current and future applications for RWE, areas of investment, strategic partnerships, and use of Real World Data (RWD) and RWE in R&D.

·Ninety-four percent of survey respondents believe using RWE in R&D will become important or very important to their organizations by 2022.

·Almost all companies expect to increase investments in talent, technology, and external partnerships to strengthen their RWE capabilities.

·Reduced clinical trial costs and trial failure rates using RWE in R&D

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

The Company believes is very well positioned as a strategic partner and lead in this exciting growth sector. In addition, HealthTab™ is ideally situated to provide Real Time Real World Data (RTRWD). This is an important distinction from RWD because anonymized data can be transmitted in real time versus the lag that is accompanied with RWD that is gathered from clinical reporting systems, insurance claims and adverse event reporting systems.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

Currently, HealthTab™ is available in certain Shoppers Drug Marts in the Greater Toronto Area. The Company has secured commitments with other pharmacies in Canada to place additional HealthTab™ systems and is in negotiations with corporate chains. Furthermore, the Company expanded a partnership agreement with the Ontario Pharmacists Association (OPA) to endorse HealthTab™ to pharmacies conducting COVID-19 testing and government for real-time reporting of test results. The OPA is the largest pharmacists’ association in the country, with over 10,000 members and over 4,600 community pharmacy locations.

The Company has partnered with established laboratory service providers in offering its point-of-care testing as part of their overall menu. HealthTab™ is being embraced as it is the most credible way to deploy point-of-care testing in the pharmacy and community setting where it offers the reliability, accuracy and flexibility the sector needs.

Avricore has enjoyed a robust response from a variety of key industry players including, CROs, labs, pharmacies and researchers and has been engaging in a variety of technical discussions which are anticipated to lead to business. As these conversations progress, the Company will be making announcements in due course.

Life-Science Approach

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

Fully Integrated Patient Health Records

The Company has been in technical discussions on the integration of HealthTab™ into the electronic medical records and pharmacy management systems with a Canadian market leader in the provision of these systems.

HealthTab™‘s API integration capabilities make it ideal to achieve an industry first, where a consumer’s test results can be directly linked to their patient health record, for real-time responses and smooth integration across the multiple platforms a health provider will use.

Community Pharmacy Sector

In an era of rapid change in health care delivery, community pharmacy practice models and community pharmacy business models are both experiencing significant evolution in focus and daunting challenges to be met. We strongly believe that Avricore is a game-changing catalyst for community pharmacy to meet their practice and business challenges and increasingly focus on patient-centred cognitive services with attendant point-of-care testing in the future. Avricore is focused on expanding and further deploying its HealthTab™ and to best meet the current community pharmacy sector's needs.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

SIGNIFICANT EVENTS AND TRANSACTIONS

Significant events and transactions during the period ended June 30, 2021 and to the date of this MD&A include the following:

·The Company repaid the $1,000,000 secured loan from a third party at the end of the term.

·The Company issued 9,539,660 common shares upon exercise of warrants for gross proceeds of $1,575,887.

·The Company issued 1,660,072 common shares upon exercise of stock options for gross proceeds of $125,657.

·On February 12, 2021, the Company completed a non-brokered private placement and issued 7,000,000 units at a price of $0.22 per unit for gross proceeds of $1,540,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.30 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company paid finder’s fee totaling $56,320 and issued 256,000 finder’s warrants. The Company’s directors and officers participated in the private placement.

·On January 28, 2021 the Company closed the final tranche of a non-brokered private placement and issued 8,740,000 units at a price of $0.10 per unit for gross proceeds of $874,000. Each unit consisted of one common share and one share purchase warrant entitling the holder thereof to acquire an additional common share of the Company at a price of $0.15 per share for a period of 12 months from the date of closing subject to an accelerated expiry condition. The Company paid finder’s fee totaling $27,800 and issued 278,000 finder’s warrants. The Company’s directors and officers participated in the private placement.

·On March 22, 2021, the Company granted 1,800,000 stock options to the directors, officers and consultants of the Company at an exercise price of $0.25 per common share. The stock options are exercisable for a period of 5 years. 200,000 consultant options vest 50% after six months with the balance vesting quarterly thereafter. The remaining options vest on the date of grant.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

SELECTED FINANCIAL INFORMATION AND ADDITIONAL DISCLOSURE

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

	2020	2019	2018
Total revenue from continuing operations	`$33,030`	`$33,000`	`$15,395`
Loss from operations of continuing operations	`$1,173,966`	`$1,916,252`	`$3,458,141`
Loss from operations of discontinued operations	`$-`	`$189,356`	`$678,661`
Loss per share – basic and diluted Continuing operations	`$0.02`	`$0.04`	`$0.10`
Discontinued operations	`$0.00`	`$0.00`	`$0.02`
Total assets	`$440,090`	`$208,399`	`$1,200,205`
Total current liabilities	`$1,154,131`	`$673,850`	`$314,239`
Total non-current financial liabilities	Nil	Nil	Nil

QUARTERLY FINANCIAL INFORMATION

The following table highlights selected unaudited consolidated financial data for each of the eight most recent quarters that, in management's opinion, have been prepared on a basis consistent with the audited consolidated financial statements for the year ended December 31, 2020. 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 2021	Mar 2021	Dec 2020	Sep 2020	Jun 2020	Mar 2020	Dec 2019	Sep 2019
	$	$	$	$	$	$	$	$
Revenue from continuing operations	4,939	7,575	`8,082`	`8,082`	`8,482`	`8,384`	`8,324`	`11,083`
Gross profit (loss) from continuing operations	(998)	1,647	`2,220`	`4,757`	`4,911`	`5,592`	`1,308`	`7,103`
Share-based compensation	24,965	386,935	`120,191`	`10,028`	`-`	`-`	`27,896`	`-`
Comprehensive Loss	344,620	715,306	`538,499`	`206,789`	`198,117`	`230,561`	`305,760`	`683,428`
Loss/Share - continuing and discontinued operations	(0.00)	(0.01)	`(0.00)`	`(0.00)`	`(0.00)`	`(0.00)`	`(0.00)`	`(0.02)`
Total Assets	2,541,099	2,740,053	`440,090`	`355,808`	`532,086`	`607,061`	`208,399`	`410,959`

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2021

The Company incurred comprehensive loss of $1,059,926 for the six months ended June 30, 2021 (2020 - $428,678).

Significant changes are as follows:

·Share-based compensation of $411,900 (2020 - $nil) was recognized for stock options granted, vested, and repriced during the period.

·Consulting fees of $189,200 (2020 - $97,500) increased due to increase in consultant engagement for business development and the bonus awarded to the CTO.

·Professional fees of $107,505 (2020 - $72,949) increased mainly due to the bonus awarded to the CFO.

·Marketing and communications expenses increased to $85,057 (2020 - $26,521) mainly due to shareholders’ communication expense.

·Finance cost of $38,438 (2020 - $67,093) includes interest and accretion expense on loans. The decrease is due to repayment of loans.

·General and administrative expenses increased to $94,991 (2020 - $62,518) mainly to due to increases in insurance expense and filing fees.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2021

The Company incurred comprehensive loss of $344,620 for the three months ended June 30, 2021 (2020 - $198,117).

Significant changes are as follows:

·Share-based compensation of $24,965 (2020 - $nil) was recognized for stock options granted, vested, and repriced during the period.

·Consulting fees of $116,237 (2020 - $48,750) increased due to increase in consultant engagement for business development.

·Management fees of $37,500 (2020 - $67,500) decreased due to resignation of the former President.

·Professional fees of $40,020 (2020 - $35,057) increased due increase in professional engagement.

·Marketing and communications expenses increased to $76,415 (2020 - $2,308) mainly due to shareholders’ communication expense.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

·Finance cost of $nil (2020 - $45,539) includes interest and accretion expense on loans. The decrease is due to repayment of loans.

·General and administrative expenses increased to $45,297 (2020 - $26,274) mainly to due to increases in filing fees and investor relations expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have been financed through the issuance of common shares. Management anticipates that additional financings or capital requirements to fund the current commercial operations and working capital will be required to grow the business to a sustainable level.

Cash flows

Sources and Uses of Cash:	Six months ended June 30,
	2021	2020
	$	$
Cash used in operating activities	`(635,594)`	`(690,445)`
Cash used in investing activities	`(57,383)`	`-`
Cash provided by financing activities	`2,680,829`	`896,304`
Cash and Cash Equivalents, closing balance	`2,290,567`	`219,658`

There is an overall cash inflow of $1,987,852 for the period ended June 30, 2021 compared to $205,859 in comparable period in 2020.

Funding Requirements

Management devotes financial resources to the Company's operations, sales and commercialization efforts, regulatory approvals and business development. The Company will require cash to support working capital.

The future funding requirements will depend on many factors including:

·the extent to which we will be commercially successful in launching HealthTab™ and RASTR,

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

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

As at June 30, 2021, the Company had a working capital of $2,303,454 (December 31, 2020 – deficit of $714,044). We believe that our cash on hand, the expected future cash inflows from revenues, net proceeds from the warrants exercised, if any, may 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.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

RELATED PARTY TRANSACTIONS

For the three and six months ended June 30, 2021 and 2020, the Company recorded the following transactions with related parties:

a)$37,500 and $75,000 in management fees (2020 - $37,500 and $75,000) to the Chief Executive Officer of the Company along with a bonus award of $nil and $35,000 (2020 - $nil and $nil).

b)$nil and $20,000 in management fees to the former President and Chief Executive Officer of the Company (2020 - $30,000 and $60,000).

d)$30,000 and $60,000 in consulting fees (2020 - $30,000 and $60,000) to the Chief Technology Officer of the Company along with a bonus award $nil and $35,000 (2020 - $nil and $nil).

Related party transactions not otherwise described in the consolidated financial statements are shown below. The remuneration of the Company’s directors and other members of key management, who have the authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, consist of the following:

	Three months ended June 30,		Six months ended June 30,
	2021	2020	2021	2020
	$	$	$	$
Consulting fees	30,000	30,000	90,000	60,000
Management fees	37,500	67,500	130,000	135,000
Professional fees	30,000	30,000	95,000	60,000
Share-based compensation	-	-	264,393	-
	97,500	127,500	579,393	255,000

There were no amounts due to related parties as at June 30, 2021 and December 31, 2020.

SUBSEQUENT EVENTS

a)The Company issued 2,153,500 common shares upon exercise of warrants for gross proceeds of $323,025.

b)The Company issued 50,000 common shares upon exercise of stock options for gross proceeds of $4,000.

c)871,500 warrants with exercise price of $0.15 expired unexercised.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

DISCLOSURE OF OUTSTANDING SHARE DATA

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

Common Shares	97,016,316
Stock Options	7,630,000
Stock Warrants	24,606,066

COMMITMENTS AND AGREEMENTS

Loans payable

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 annual consolidated financial statements for the year ended December 31, 2020.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

Inventory valuation

Revenue recognition

The Company recognizes revenue to depict the transfer of promised goods and services to clients in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services by applying the following steps:

•Identify the contract with a client;

•Identify the performance obligations in the contract;

•Determine the transaction price;

•Allocate the transaction price to the performance obligations; and

•Recognize revenue when, or as, the Company satisfies a performance obligation.

Revenue may be earned over time as the performance obligations are satisfied or at a point in time which is when the entity has earned a right to payment, the customer has possession of the asset and the related significant risks and rewards of ownership, and the customer has accepted the asset.

The Company's arrangements with clients can include multiple performance obligations. When contracts involve various performance obligations, the Company evaluates whether each performance obligation is distinct and should be accounted for as a separate unit of accounting under IFRS 15, Revenue from Contracts with Customers. Judgment may be required when allocating revenue or discounts on sales amongst the various elements in a sale involving multiple deliverables.

Share-based payments

The fair value of equity-settled awards is determined at the date of the grant using the Black-Scholes option pricing model. For equity-settled awards to non-employees, the fair value is measured at each vesting date. The estimate of warrant and option valuation also requires determining the most appropriate inputs to the valuation model, including the volatility, expected life of warrants and options, risk free interest rate and dividend yield. Changes in these assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company's options and warrants issued. Management must also make significant judgments or assessments as to how financial assets and liabilities are categorized.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

FINANCIAL INSTRUMENTS AND RISKS

Operational Risk Factors

Limited Operating History

There is no assurance that Avricore will earn profits in the future, or that profitability will be sustained. Operating in the pharmaceutical and biotechnology industry requires substantial financial resources, and there is no assurance that future revenues will be sufficient to generate the funds required to continue AVRICORE business development and marketing activities. In case AVRICORE does not have sufficient capital to fund its operations, the management may be required to restructure the operations.

Going concern

The assessment of the Company's ability to execute its strategy by funding future working capital requirements involves judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has always experienced operating losses and negative operating cash flows. Operations have been funded by the issuance of share capital. These conditions may cast substantial doubt on the Company's ability to continue as a going concern.

Development of Technological Capabilities

The market for Avricore's products is characterized by changing technology and continuing process development. The future success of Company's business will depend in large part upon our ability to maintain and enhance the Company's technological capabilities, develop and market products and services which meet changing customer needs and successfully anticipate or respond to technological changes on a cost effective and timely basis. Although we believe that Company's operations provide the products and services currently required by our customers, there can be no assurance that the Company's process development efforts will be successful or that the emergence of new technologies, industry standards or customer requirements will not render Avricore's products or services uncompetitive. If Avricore needs new technologies and equipment to remain competitive, the development, acquisition and implementation of those technologies and equipment may require us to make significant capital investments.

Dependence on Key Personnel

We are dependent to a large extent upon the continued services of our senior management team and other key employees such as sales and technical personnel. There is intense competition for skilled employees and our failure to recruit, train and retain such employees could have an adverse effect on our business, financial condition or operating results.

Financial Instruments and Risk Management

The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and asset acquisition liability. The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company's activities. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

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.

Approximately 45% of trade receivables are due from one customer at June 30, 2021 (December 31, 2020 — 45% from one customer).

As at June 30, 2021 and December 31, 2020, the allowance for doubtful accounts receivable was $nil.

Liquidity risk

Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company's reputation.

The Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. The Company anticipates it will have adequate liquidity to fund its financial liabilities through future equity contributions. As at June 30, 2021, the Company’s financial liabilities were comprised of accounts payable and accrued liabilities, deferred revenue, and loans payable of $183,837 (December 31, 2020 - $1,154,131).

Currency risk

Foreign currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As all of the Company's purchases and sales are denominated in Canadian dollars, and it has no significant cash balances denominated in foreign currencies, the Company is not exposed to foreign currency risk at this time.

Interest rate risk

Interest rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates. In respect of financial assets, the Company's policy is to invest cash at floating interest rates and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. The Company is not exposed to significant interest rate risk.

OFF-BALANCE SHEET ARRANGEMENTS

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

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Avricore Health Inc.

Management's Discussion and Analysis

as of August 27, 2021

CONTACT

Officers and Directors
Hector Bremner, CEO, Director

Kiki Smith, CFO
David Hall, Chairman

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

Dr. Robert Sindelar, Director

Contact

Avricore Health Inc.

PO BOX 49114

Suite 3500, 1055 Dunsmuir St.

Vancouver, BC V7X 1H7

Tel: 604 773-8943

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Exhibit No.	Description	Date filed on SEDAR
99.1	News Release, Healthtab ^TM Testing Now Open to Patients in Select Shoppers Drug Mart ® Pharmacies	August 10, 2021
99.2	Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2021 and 2020	August 27, 2021
99.3	Management’s Discussion and Analysis for the three and six months ended June 30, 2021	August 27, 2021
99.4	CEO Certification	August 27, 2021
99.5	CFO Certification	August 27, 2021

Dated: September 21, 2021	AVRICORE HEALTH INC.

	By: /s/ Kiki Smith
	Kiki Smith
	Chief Financial Officer

	Number of Shares	Share Capital	Shares to be Issued	Shares Subscribed	Warrant Reserve	Option Reserve	Deficit	Total
		$	$	$	$	$	$	$
Balance, December 31, 2019	52,472,619	21,400,106	100,000	10,000	904,698	4,453,764	(27,334,019)	(465,451)
Bonus shares for loan	3,480,000	52,200	-	-	-	-	-	52,200
Acquisition of HealthTab™ Inc.	2,000,000	100,000	(100,000)	-	-	-	-	-
Net loss	-	-	-	-	-	-	(428,678)	(428,678)
Balance, June 30, 2020	57,952,619	21,552,306	-	10,000	904,698	4,453,764	(27,762,697)	(841,929)
Balance, December 31, 2020	69,795,584	22,286,852	-	10,000	914,531	4,582,561	(28,507,985)	(714,041)
Shares issued for cash	15,740,000	2,414,000	-	(10,000)	-	-	-	2,404,000
Exercise of warrants	7,386,160	1,350,419	-	-	(97,557)	-	-	1,252,862
Exercise of stock options	1,616,072	304,587	-	-	-	(182,930)	-	121,657
Share issued for services	275,000	38,500	-	-	-	-	-	38,500
Share issuance costs	-	(237,315)	-	-	139,625	-	-	(97,690)
Share-based compensation	-	-	-	-	-	411,900	-	411,900
Net loss	-	-	-	-	-	-	(1,059,926)	(1,059,926)
Balance, June 30, 2021	94,812,816	26,157,043	-	-	956,599	4,811,531	(29,567,911)	2,357,262