EX-1 2 ex1.htm

 

Exhibit 1

 

 

Avricore Health Inc.

 

Condensed Interim Consolidated Financial Statements

(Unaudited)

 

For the three months ended March 31, 2024 and 2023

(Expressed in Canadian Dollars)

 

Notice to Reader

 

Management has prepared the unaudited condensed interim consolidated financial statements for Avricore Health Inc. (the “Company”) in accordance with National Instrument 51-102 released by the Canadian Securities Administration. The Company discloses that its auditors have not reviewed the unaudited condensed interim consolidated financial statements for the period ended March 31, 2024 and 2023.

 

 

 

 

Avricore Health Inc.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

 

   Note 

Unaudited

March 31, 2024

  

Audited

December 31, 2023

 
      $   $ 
ASSETS             
              
Current Assets             
Cash and cash equivalents      584,041    276,571 
Term deposit      10,000    10,000 
Accounts receivable  4   393,863    427,689 
Prepaid expenses and deposits  5   61,876    38,625 
Inventory      9,045    20,676 
       1,058,825    773,561 
              
Equipment  6   1,687,536    1,717,995 
Intangible assets  7   51,697    46,649 
Total Assets      2,798,058    2,538,205 
              
LIABILITIES             
              
Current Liabilities             
Accounts payable and accrued liabilities  8   577,470    489,218 
Loans payable  9   -    40,000 
       577,470    529,218 
              
SHAREHOLDERS’ EQUITY             
Share capital  10   27,214,564    27,186,114 
Reserves  10   6,573,047    6,558,433 
Deficit      (31,567,023)   (31,735,560)
       2,220,588    2,008,987 
Total Liabilities and Shareholders’ Equity      2,798,058    2,538,205 

 

Nature of operations and going concern (Note 1)

Significant events (Note 18)

 

Approved and authorized for issuance on behalf of the Board of Directors on May 30, 2024.

 

“Hector Bremner”   “David Hall”
Hector Bremner, Director   David Hall, Chairman

 

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

 

1

 

 

Avricore Health Inc.

Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

   Note  2024   2023 
      $   $ 
            
Revenue  14 & 18   1,124,307    629,241 
              
Cost of sales      (639,516)   (418,560)
Gross profit      484,791    210,681 
              
Expenses             
Advertising and promotion      41    2,208 
Amortization      729    312 
Consulting  12   54,000    74,117 
General and administrative  11   138,091    82,450 
Management Fees  12   54,000    54,000 
Shareholder communications      19,886    41,918 
Professional fees  12   32,100    60,960 
Share-based compensation  10 & 12   27,464    88,001 
       (326,311)   (403,966)
Profit / (loss) before other income (expense)      158,480    (193,285)
              
Other income (expense)             
Gain on settlement of debt  9   10,000    - 
Foreign exchange gain (loss)      48    (495)
Interest income      9    2,268 
              
Net profit / (loss) and comprehensive income / (loss) for the period      168,537    (191,512)
Basic and Diluted Earning / (Loss) Per Share      0.00    (0.00)
Weighted Average Number of Common Shares Outstanding      99,740,049    99,294,664 

 

Segmented information (Note 14)

 

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

 

2

 

 

Avricore Health Inc.

Condensed Interim Consolidated Statements of Changes in Shareholder’s Equity

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

   Number
of Shares		   Share
Capital		   Warrant
Reserve		   Option
Reserve		   Deficit   Total 
       $   $   $   $   $ 
Balance, December 31, 2022   99,244,664    27,064,727    901,229    5,032,479    (31,034,345)   1,964,090 
Exercise of options   250,000    76,164    -    (48,664)   -    27,500 
Share-based compensation   -    -    -    88,001    -    88,001 
Net loss for the period   -    -    -    -    (191,512)   (191,512)
Balance, March 31, 2023   99,494,664    27,140,891    901,229    5,071,816    (31,225,857)   1,888,079 
                               
Balance, December 31, 2023   99,644,664    27,186,114    901,229    5,657,204    (31,735,560)   2,008,987 
Exercise of options   225,000    28,450    -    (12,850)   -    15,600 
Share-based compensation   -    -    -    27,464    -    27,464 
Net income for the period   -    -    -    -    168,537    168,537 
Balance, March 31, 2024   99,869,664    27,214,564    901,229    5,671,818    (31,567,023)   2,220,588 

 

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

 

3

 

 

Avricore Health Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

   2024   2023 
   $   $ 
Operating Activities          
Net profit (loss)   168,537    (191,512)
Adjustment for non-cash items:          
Amortization   109,599    78,252 
Share-based payments   27,464    88,001 
Gain on settlement of debt   (10,000)   - 
           
Change in working capital items:          
Accounts receivable   33,826    464,002 
Inventory   11,631    - 
Prepaid expenses and deposits   (23,251)   (149,589)
Deferred revenue   -    (252,000)
Accounts payable and accrued liabilities   88,252    55,593 
Net cash provided by (used in) operating activities   406,058    92,747 
           
Investing Activities          
Intangible assets   (7,570)   (4,532)
Purchase of equipment   (76,618)   (223,485)
Net cash used in investing activities   (84,188)   (228,017)
           
Financing Activities          
Proceeds from exercise of stock options   15,600    27,500 
Loan repaid   (30,000)   - 
Net cash (used in) provide by financing activities   (14,400)   27,500 
           
Increase / (Decrease) in cash and cash equivalents   307,470    (107,770)
Cash and cash equivalents, beginning of period   276,571    620,527 
           
Cash and cash equivalents, end of period   584,041    512,757 

 

Supplemental cash flow information (Note 15)

 

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

 

4

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

1. NATURE OF OPERATIONS AND GOING CONCERN

 

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

 

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

 

The condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities in the normal course of business. The Company has historically experienced operating losses and negative operating cash flows. As at March 31, 2024, the Company has an accumulated deficit of $31,567,023 and working capital of $481,335 which is insufficient to finance the Company’s operations over the next twelve months. These conditions indicate the existence of material uncertainty that may cast substantial doubt on the Company’s ability to continue as a going concern.

 

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

 

2. BASIS OF PRESENTATION

 

a) Statement of Compliance

 

The condensed interim consolidated financial statements for the period ended March 31, 2024 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), IAS 34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2023. The accounting policies followed in these interim financial statements are consistent with those applied in the Company’s most recent annual financial statements for the year ended December 31, 2023.

 

b) Basis of preparation

 

The condensed interim consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The significant accounting policies are presented in Note 3 of the annual consolidated financial statements for the year ended December 31, 2023 and have been consistently applied in each of the periods presented. The condensed interim consolidated financial statements are presented in Canadian dollars, which is also the Company’s and its subsidiary’s functional currency, unless other indicated.

 

5

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

2. BASIS OF PRESENTATION (continued)

 

b) Basis of preparation (continued)

 

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

 

c) Basis of consolidation

 

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

 

These condensed interim consolidated financial statements include the accounts of the Company and its controlled wholly owned Canadian subsidiary HealthTab™ Inc.

 

3. SUMMARY OF MATERIAL ACCOUNTING POLICIES

 

Significant accounting estimates and judgments

 

Share-based payments

 

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

 

The fair value of equity-settled awards is determined at the date of the grant using the Black-Scholes option pricing model. For equity-settled awards to non-employees, the fair value is measured at each vesting date. The estimate of warrant and option valuation also requires determining the most appropriate inputs to the valuation model, including the volatility, expected life of warrants and options, risk free interest rate and dividend yield. Management must also make significant judgments or assessments as to how financial assets and liabilities are categorized.

 

Estimation of useful lives of equipment and software

 

Amortization of equipment and software is dependent upon estimates of their useful lives. The actual lives of the assets are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation, product lifecycles, and maintenance are taken into account.

 

6

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

3. SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)

 

Significant accounting estimates and judgments (continued)

 

Judgements

 

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

 

Revenue recognition

 

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

 

Deferred income taxes

 

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

 

Going concern

 

Management has applied judgements in the assessment of the Company’s ability to continue as a going concern when preparing these financial statements. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The factors considered by management are disclosed in Note 1.

 

4. ACCOUNTS RECEIVABLE

 

The Company’s accounts receivable consists of the following:

 

   March 31, 2024   December 31, 2023 
   $   $ 
Trade receivables   375,363    420,998 
GST receivable   18,500    6,691 
    393,863    427,689 

 

5. PREPAID EXPENSES AND DEPOSITS

 

The balance consists of prepaid expenses to vendors of $43,377 (December 31, 2023 - $16,889), prepaid business insurance of $6,499 (December 31, 2023 - $9,736) and security deposits of $12,000 (December 31, 2023 - $12,000).

 

7

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

6. EQUIPMENT

 

   Equipment 
   $ 
Cost    
Balance, December 31, 2022   1,298,703 
Additions   1,021,572 
Balance, December 31, 2023   2,320,275 
Additions   76,618 
Balance, March 31, 2024   2,396,893 
      
Accumulated Amortization     
Balance, December 31, 2022   190,712 
Amortization   411,568 
Balance, December 31, 2023   602,280 
Amortization   107,077 
Balance, March 31, 2024   709,357 
      
Carrying value     
As at December 31, 2023   1,717,995 
As at March 31, 2024   1,687,536 

 

Equipment is comprised primarily of assets leased to earn revenues.

 

7. INTANGIBLE ASSETS

 

   Software   HealthTab™   Corozon   Emerald   Total 
   $   $   $   $   $ 
Cost                         
Balance, December 31, 2022   40,177           1         1         1    40,180 
Additions   25,288    -    -    -    25,288 
Balance, December 31, 2023   65,465    1    1    1    65,468 
Additions   7,570    -    -    -    7,570 
Balance, March 31, 2024   73,035    1    1    1    73,038 
                          
Accumulated Amortization                         
Balance, December 31, 2022   10,319    -    -    -    10,319 
Amortization   8,500    -    -    -    8,500 
Balance, December 31, 2023   18,819    -    -    -    18,819 
Amortization   2,522    -    -    -    2,522 
Balance, March 31, 2024   21,341    -    -    -    21,341 
                          
Carrying value                         
As at December 31, 2023   46,646    1    1    1    46,649 
As at March 31, 2024   51,694    1    1    1    51,697 

 

8

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

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

 

   March 31, 2024   December 31, 2023 
   $   $ 
Trade accounts payable   498,641    428,677 
GST payable   78,829    60,541 
    577,470    489,218 

 

9. LOANS PAYABLE

 

During the year ended December 31, 2020, the Company received a Canada Emergency Business Account loan of $40,000 to be repaid on or before December 31, 2024. The loan was interest-free until January 18, 2024. In January 2024, the Company repaid the loan principal of $30,000 and received loan forgiveness of $10,000, recorded as gain on settlement of debt.

 

10. SHARE CAPITAL

 

Authorized share capital

 

Authorized: Unlimited number of common shares without par value.

 

Issued share capital

 

During the three months period ended March 31, 2024:

 

The Company issued 225,000 common shares upon exercise of stock options for gross proceeds of $15,600.

 

During the year ended December 31, 2023:

 

The Company issued 400,000 common shares upon exercise of stock options for gross proceeds of $42,500.

 

Stock options

 

The Company has adopted a fixed up to 20% incentive share purchase option plan under the rules of the Exchange pursuant to which it is authorized to grant options to acquire up to 19,925,000 common shares of the Company to executive officers, directors, employees and consultants. The options can be granted for a maximum term of ten years and generally vest either immediately or in specified increments of up to 25% in any three-month period.

 

9

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

10. SHARE CAPITAL (continued)

 

Stock options (continued)

 

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

 

   Period ended March 31, 2024   Year ended December 31, 2023 
   Number
of
Options		   Weighted
Average
Exercise Price		   Number
of
Options		   Weighted
Average
Exercise Price		 
Beginning Balance   10,350,000   $0.17    8,635,000   $0.14 
Options granted   -    -    2,365,000   $0.26 
Expired/Cancelled   -    -    (250,000)  $0.17 
Exercised   (225,000)  $0.06    (400,000)  $0.11 
Ending Balance   10,125,000   $0.15    10,350,000   $0.17 
Exercisable   9,498,750   $0.17    9,132,250   $0.17 

 

The following table summarizes information about stock options outstanding and exercisable as at March 31, 2024:

 

Exercise Price   Expiry date  Options 
       Outstanding   Exercisable 
$0.06   April 1, 2024   55,000    55,000 
$0.05   October 15, 2024   1,470,000    1,470,000 
$0.08   November 18, 2025   500,000    500,000 
$0.08   December 8, 2025   710,000    710,000 
$0.19   January 28, 2026   150,000    150,000 
$0.25   March 22, 2026   1,800,000    1,800,000 
$0.15   August 10, 2027   2,675,000    2,675,000 
$0.15   August 12, 2027   100,000    100,000 
$0.16   October 12, 2027   300,000    300,000 
$0.28   May 15, 2028   1,825,000    1,368,750 
$0.20   June 21, 2028   400,000    300,000 
$0.20   September 15, 2028   140,000    70,000 
         10,125,000    9,498,750 

 

The weighted average remaining life of the stock options outstanding at March 31, 2024 is 2.66 years (December 31, 2023: 2.84 years).

 

Share-based compensation

 

Share-based compensation of $27,464 was recognized during the three months ended March 31, 2024 (2023 - $88,001), respectively, for stock options granted and/or vested during the period. Options issued to directors and officers of the Company vested immediately, while those issued to consultants vest over one year, however, the Board may change such provisions at its discretion or as required on a grant-by-grant basis.

 

10

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

10. SHARE CAPITAL (continued)

 

Share-based compensation (continued)

 

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

 

   2024   2023 
Expected life   -    3.30 years 
Volatility   -    134% - 174%
Dividend yield   -    0%
Risk-free interest rate   -    3.28% - 4.20%

 

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

 

Warrants

 

There were no warrants outstanding at March 31, 2024 and December 31, 2023.

 

Fair value of the finder’s warrants granted is measured using the Black-Scholes pricing model. Black-Scholes pricing models require the use of highly subjective estimates and assumptions, including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates.

 

11. GENERAL AND ADMINISTRATIVE EXPENSES

 

   Three months ended March 31, 
   2024   2023 
   $   $ 
Bank service charges   6,256    1,109 
Filing and registration fees   8,322    9,728 
Insurance   26,703    20,293 
Office maintenance   9,804    13,108 
Payroll   18,925    16,324 
Regulatory fees   233    - 
Rent   4,500    4,500 
Travel   60,098    17,388 
Warranty expense   3,250    - 
    138,091    82,450 

 

12. RELATED PARTY TRANSACTIONS

 

For the period ended March 31, 2024 and 2023, the Company recorded the following transactions with related parties:

 

a) $1,500 in office rent (2023 – $1,500) to a company controlled by the Chief Technology Officer of the Company.
   
b) $3,000 in office rent (2023 – $3,000) to a company controlled by the Chief Financial Officer of the Company.
   
c) $85,417 worth of purchases (2023 - $72,071) to a company controlled by Chief Technology Officer of the Company.

 

11

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

12. RELATED PARTY TRANSACTIONS (continued)

 

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

 

   Three months ended March 31, 
Type of transaction  2024   2023 
   $   $ 
Consulting fees   54,000    54,000 
Management fees   54,000    54,000 
Professional fees   32,100    32,100 
Share-based compensation   20,715    71,646 
    160,815    211,746 

 

There were no amounts due to related parties as at March 31, 2024 and December 31, 2023

 

13. CAPITAL DISCLOSURES

 

The Company includes Common shares, Options reserve and Warrants reserve in the definition of capital net of share issue costs. The Company’s objective when managing capital is to maintain sufficient cash resources to support its day-to-day operations. The availability of capital is solely through the issuance of the Company’s common shares. The Company intends to issue additional equity at such time when funds are needed and the market conditions become favorable to the Company. There are no assurances that funds will be made available to the Company when required. The Company makes every effort to safeguard its capital and minimize its dilution to its shareholders.

 

The Company is not subject to any externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the period ended March 31, 2024.

 

14. SEGMENTED INFORMATION

 

At March 31, 2024 and December 31, 2023, the Company has only one segment, being the HealthTab™ - Point of Care Business in Canada.

 

Revenue from the major customer was $1,109,193 during the three months period ended March 31, 2024 (2023 - $629,241). The major customer purchases goods and services from the Company’s only segment HealthTab™ - Point of Care Business. The loss of this major customer could significantly impact the Company’s revenue and financial position.

 

15. SUPPLEMENTAL CASH FLOW INFORMATION

 

There were no non-cash transactions during the period ended March 31, 2024 and 2023.

 

12

 

 

Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

16. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

 

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

 

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

 

a) Credit risk

 

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are held through a large Canadian financial institution. The Company does not have financial assets that are invested in asset-backed commercial paper.

 

The Company performs ongoing credit evaluations of its accounts receivable but does not require collateral. The Company establishes an allowance for expected credit losses based on the credit risk applicable to particular customers and historical data.

 

Approximately 97% of trade receivables are due from one customer at March 31, 2024 (December 31, 2023 – 99% from one customer).

 

a) Liquidity risk

 

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

 

The Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises funds primarily through public equity financing. Please refer to note 13 to these condensed consolidated interim financial statements regarding the Company’s strategy to raise the funds through equity.

 

Contractual undiscounted cash flow requirements for financial liabilities as at March 31, 2024 are as follows:

 

   Carrying value   Contractual Cash flows   Within 1 year   1 - 5 Years 
   $   $   $   $ 
Trade accounts payable   577,470    577,470    577,470    - 
    577,470    577,470    577,470    - 

 

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Avricore Health Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars)

 

 

16. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

 

b) Market risk

 

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

 

Currency risk

 

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

 

Interest rate risk

 

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

 

c) Fair values of financial instruments

 

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

 

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

 

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

 

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

 

Cash and cash equivalents are measured at fair value on a recurring basis using a level 1 measurement. The carrying amounts of accounts receivable, accounts payable, and loans payable are of approximate fair value due to their short-term maturity or current market rates for similar instruments.

 

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

 

Level 3: Inputs for the asset or liability are not based on observable market data.

 

17. REVENUE

 

Revenues earned are comprised of lease and service of $563,487 (2023 –$311,001) and sale of products of $560,820 (2023 –$318,240). For the periods ended March 31, 2024 and 2023, the Company had one major customer from whom revenues are earned. Please refer to note 14 to this financial statement for the details regarding revenue from the major customer.

 

18. SUBSEQUENT EVENTS

 

●55,000 stock options with an exercise price of $0.06 expired unexercised on April 1, 2024

 

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