Attached files

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EX-32.2 - CERTIFICATION - Cell MedX Corp.cmxc_ex322.htm
EX-32.1 - CERTIFICATION - Cell MedX Corp.cmxc_ex321.htm
EX-31.2 - CERTIFICATION - Cell MedX Corp.cmxc_ex312.htm
EX-31.1 - CERTIFICATION - Cell MedX Corp.cmxc_ex311.htm
EX-21.1 - LIST OF SUBSIDIARIES - Cell MedX Corp.cmxc_ex211.htm
EX-10.70 - LOAN AGREEMENT AND NOTE PAYABLE DATED AUGUST 31, 2020, AMONG CELL MEDX CORP. AND - Cell MedX Corp.cmxc_ex1070.htm
EX-10.69 - LOAN AGREEMENT DATED JULY 3, 2020, AMONG CELL MEDX CORP. AND DAVID JEFFS - Cell MedX Corp.cmxc_ex1069.htm
EX-10.68 - LOAN AGREEMENT AND NOTE PAYABLE DATED APRIL 13, 2020, AMONG CELL MEDX CORP. AND - Cell MedX Corp.cmxc_ex1068.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended May 31, 2020

 

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to ______

 

Commission file number 000-54500

 

Cell MedX Corp.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of

incorporation or organization)

38-3939625

(I.R.S. Employer Identification No.)

 

 

123 W. Nye Ln, Suite 446

Carson City, NV

(Address of principal executive offices)

89706

(Zip Code)

 

Registrant’s telephone number, including area code: (844) 238-2692

 

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Name of each exchange on which registered

 

 

None

N/A

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock - $0.001 par value

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[ ] Yes [X] No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[ ] Yes [X] No


 


 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] Yes [ ] No

 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Larger accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[X]

Smaller reporting company

[X]

(Do not check if a smaller reporting company)

Emerging growth company

[  ]

 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

[ ] Yes [X] No

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $11,948,040 based on average of closing bid and ask for Cell MedX Corp. shares on November 29, 2020.

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

 

Class

Outstanding at September 15, 2020

common stock - $0.001 par value

59,388,564

 

 

 

 

 

 

 

 

 

 


ii


 

Contents

 

 

Part I

1

Item 1. Business.

1

Item 1A. Risk Factors.

10

Item 1B. Unresolved Staff Comments.

14

Item 2. Properties.

14

Item 3. Legal Proceedings.

14

Item 4. Mine Safety Disclosures.

14

Part II

15

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

15

Item 6. Selected Financial Data.

16

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

16

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

24

Item 8. Financial Statements and Supplementary Data.

24

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

25

Item 9A. Controls and Procedures.

25

Item 9B. Other Information

26

Part III

27

Item 10. Directors, Executive Officers, and Corporate Governance.

27

Item 11. Executive Compensation.

30

Item 12. Security Ownership of Certain Beneficial Holders and Management.

32

Item 13. Certain Relationships and Related Transactions, and Director Independence.

35

Item 14. Principal Accounting Fees and Services

35

Item 15. Exhibits, Financial Statements Schedules

36

Signatures

41

 

 

 

 

 

 

 

 

 

 


iii


PART I

 

FORWARD LOOKING STATEMENTS

 

Unless the context otherwise requires, all references in this report to “Cell MedX,” “the Company,” “we,” “us,” or “our” are to Cell MedX Corp., collectively with its wholly owned subsidiary Cell MedX (Canada) Corp.

 

The information in this Annual Report contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined from time to time, in other reports we file with the Securities and Exchange Commission.

 

The forward-looking statements in this Form 10-K for the fiscal year ended May 31, 2020, are subject to risks and uncertainties that could cause actual results to differ materially from the results expressed in or implied by the statements contained in this report. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate.

 

All forward-looking statements are made as of the date of the filing of this Form 10-K and we disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. We may, from time to time, make oral forward-looking statements. We strongly advise that the above paragraphs and the risk factors described in this Annual Report and in our other documents filed with the United States Securities and Exchange Commission should be read for a description of certain factors that could cause our actual results to materially differ from those in the oral forward-looking statements. We disclaim any intention or obligation to update or revise any oral or written forward-looking statements whether as a result of new information, future events or otherwise.

 

ITEM 1. BUSINESS.

 

GENERAL

 

We were incorporated as Plandel Resources, Inc. under the laws of the State of Nevada on March 19, 2010.  On March 24, 2014, we changed our name to Sports Asylum, Inc. and on September 30, 2014, we changed our name to Cell MedX Corp. to reflect our new business direction. On April 26, 2016, we formed a subsidiary, Cell MedX (Canada) Corp., (the “Subsidiary”) under the laws of the Province of British Columbia.

 

We are a biotech company focused on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general health, pain relief, wellness and alleviate complications associated with medical conditions including, but not limited to: diabetes, Parkinson’s disease, high blood pressure, neuropathy and kidney function. Our Subsidiary is engaged in development and manufacturing of therapeutic devices based on our proprietary eBalance® Technology, which harnesses power of microcurrents and their effects on human body.


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BUSINESS OF CELL MEDX

 

eBalance® Technology Acquisition

 

We acquired our proprietary technology for the use of microcurrents for the treatment of diabetes and related ailments, which we call eBalance® Technology, on November 25, 2014, when we entered into a Technology Purchase Agreement with Jean Arnett and Bradley Hargreaves (the “Purchase Agreement”).

 

Pursuant to the Purchase Agreement, Ms. Arnett and Mr. Hargreaves sold to us all of their respective rights, title and interests in and to the eBalance® Technology. In consideration for the sale of the eBalance® Technology, we paid Ms. Arnett and Mr. Hargreaves a total of $100,000 and issued to each of Ms. Arnett and Mr. Hargreaves options for the purchase of up to 10,000,000 shares (20,000,000 shares in total) of our common stock at an initial exercise price of $0.05 per share (the “Options”) of which Options to acquire up to 2,500,000 shares of our common stock vested on August 26, 2015, remaining Options were cancelled pursuant to a letter agreement with Ms. Arnett and Mr. Hargreaves, dated for reference September 26, 2016.

 

eBalance® Technology

 

eBalance® Technology is based on the science of bioelectric signals, their affect on epigenetic events within human body, and ability to modify and affect the behavior of cells, tissue, and organs. Based on this technology Cell MedX is developing a radically different and very promising family of devices whose core technology demarcates it from the approaches currently in use and those in the “future advances” pipeline as reflected in current medical literature.

 

Microcurrent delivery devices used for the treatment of various ailments have been in the marketplace for decades. However, the eBalance® Technology can be distinguished from those devices, which have a limited utility and are not designed to treat various ailments at their core. It is hoped that devices based on the eBalance® Technology will effect metabolic changes much further “upstream” in the pathophysiology or natural history of an ailment.

 

The eBalance® Technology is intended to expand the traditional healthcare model of managing various pathological diseases and ailments, such as diabetes, Parkinson’s disease, neuropathy, poor kidney function, high blood pressure, as well as some others, by enabling patients to manage their symptoms using a biosignal generating device that is simple to use, causes no discomfort, and can easily be incorporated into any lifestyle.

 

Additionally, the Company has developed a medical device system, eBalance® Pro System, for use by healthcare professionals in a clinical setting. This system is intended for use by practitioners to treat patients within their practice using eBalance® microcurrent technology.

 

A research and development plan adopted by the Company included a series of investigations that allowed the Company to move the eBalance® Device from a prototype stage through a series of refinements and enhancements to achieve the safety and efficacy objectives of the eBalance® Device(s) and define a set of claims that are being used for FDA approval through the rigorous Pre-Market Approval (PMA) process, which is currently ongoing, and was successfully used to receive Health Canada Class II Certification for the eBalance® Home System and eBalance® Pro System for general wellness and pain management.  The  Health Canada Certifications received in July and August of 2020, allowed us to define the final marketing claims for our eBalance® products, and will become the foundation for sales & marketing initiatives in the next phase of the Company’s operations. The results of the clinical observational trial the Company finalized during its Fiscal 2018 year (the “Clinical Study”)  and our in-house observations of the effects of the eBalance® technology on human body confirm that claims such as diabetes management, reductions in average blood sugar (HbA1C), improvement of other markers that denote the degree and quality of blood sugar control, pain management, blood pressure control, and alleviation of symptoms associated with Parkinson’s disease, among several other positive results, warrant further investigation of the eBalance® Systems.

 

Scientific Foundations

 

Ion flows and transmembrane gradients produced by ion channels and pumps are key regulators of cell proliferation, migration, and differentiation. Instructive roles for bioelectrical gradients in embryogenesis, regeneration, and neoplasm are being revealed.


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The application of electromagnetic forces to human tissues to effect biologic change has been explored since the 19th century. Recent advances in molecular biology and imaging technology have allowed insight into the sources and downstream consequences of ion flows in complex organisms.

 

In complement to the current focus on molecular genetics and stem cell biology, artificial modulation of bioelectrical signals in somatic tissues is a powerful modality that might result in profound advances in understanding and augmentation of regenerative capacity. Molecular bioelectricity and its role in cell-to-cell signaling and epigenetics (altering cell behavior without altering genes) provides a new pathway to discovery of technologies that can counteract the effects of many diseases.

 

Many cells in the human body are “electrically excitable” including those involved with production of chemical signals that affect blood sugar. One example of such a cell of the endocrine type is the L cell, which resides in the gut and secretes cell glucagon-like peptide-1 (GLP-1), glucagon-like peptide-2 (GLP-2), peptide YY (PYY) and oxyntomodulin. GLP-1 is an enteric hormone that stimulates insulin secretion and improves glycaemia in Type 2 diabetes. There is evidence that in Type 2 diabetes these cells become “unsynchronized”. Growing these cells in tissue culture and subjecting them to specific electrical signals can act to resynchronize their chemical activity, and alter their behavior as a “dispersed” metabolic organ. This serves as an illustration of how endogenous ion flows may serve as key epigenetic regulators of cell behavior, and suggests that bioelectric mechanisms might be harnessed at a whole organism level to cause functional regenerative changes. It is possible that eBalance® Technology may affect these processes, although that has yet to be established. We intend to explore this hypothesis in greater detail during our future clinical trials.

 

Market Opportunity - Diabetes and Its Complications

 

Diabetes care is one of the main opportunities the Company sees for the use of its eBalance® Technology. Diabetes care was also a main objective of the Company’s first clinical observational trial. Diabetes is a severe and debilitating disease with profound consequences, both for the individual and for society. The complications of diabetes are devastating, and the economic costs of care comprise a substantial portion of health care budgets. Despite the best efforts of the scientific community to devise a cure, the incidence of diabetes is on the rise.

 

According to information published by the International Diabetes Federation (“IDF”) in its IDF Diabetes Atlas 9th Edition 2019 (www.diabetesatlas.org), in 2019, approximately 463 million adults (20-79 years) were living with diabetes; by 2045 this will rise to 700 million. A further 374 million people are at an increased risk of developing Type 2 diabetes.[1]

 

Diabetes mellitus (DM) is a heterogeneous group of metabolic disorders characterized by hyperglycemia (high blood sugar levels) with impaired metabolism of carbohydrate, fat and proteins resulting from defects in insulin secretion, insulin action, or both. Diabetes is one of the world’s oldest diseases with the syndrome being discovered centuries ago. The worldwide increase in the prevalence of diabetes has highlighted the need for increased research efforts into treatment options for both the disease itself and its associated complications.

 

Type 1 diabetes is caused by destruction of the insulin secreting (beta) cells of the pancreas. The pathogenesis involves autoimmune processes that lead to an absolute insulin deficiency. Type 2 diabetes is caused by a combination of genetic and non-genetic factors that result in insulin resistance and insulin deficiency. Non-genetic factors include increasing age, high caloric intake, obesity, central adiposity, sedentary lifestyle, and low birth weight. This group comprises approximately 90-95% of cases in the diabetes syndrome.

 

Chronic hyperglycemia leads to various metabolic, hormonal, and physiologic alterations in the body, which further develop a number of secondary complications, resulting in the major increases in morbidity and mortality seen with all types of diabetes. Diabetes dramatically increases the risk of cardiovascular problems, such as coronary artery disease, chest pain (angina), heart attack, stroke, narrowing of arteries (atherosclerosis) and high blood pressure.

 

High blood sugar over time can injure the walls of the tiny blood vessels (capillaries) that nourish nerves, especially in the legs, causing tingling, numbness, burning or pain. Gradually, all sensation can be lost. Nerve damage in the feet or poor blood flow to the feet increases the risk of various foot complications. In diabetics, minor wounds easily become serious infections, which may heal poorly. Severe damage might require toe, foot or leg amputation.

______________________

[1] International Diabetes Federation. (2019). IDF Diabetes Atlas - Ninth Edition - https://www.diabetesatlas.org/en/


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Diabetes can damage the blood vessels of the retina (diabetic retinopathy), potentially leading to blindness. It also increases the risk of other serious vision conditions, such as cataracts and glaucoma. Diabetic hypertension is a major contributor to kidney failure or irreversible end-stage kidney disease, which often requires dialysis or a kidney transplant.

 

Damage to the nerves that control digestion can cause problems with nausea, vomiting, diarrhea or constipation. For men, erectile dysfunction may be an issue. Diabetes may leave people more susceptible to a variety of skin disorders, including bacterial and fungal infections. Type 2 diabetes may increase the risk of Alzheimer's disease.

 

Expansion of Disease Focus

 

Given the size of the market for diabetes control and management, the current eBalance® Technology has significant potential of success based solely on treating complications caused by diabetes. However, in order to capture a larger market share, the Company is looking into developing more specialized software / treatment options which will allow the Company to continue to grow its market share  to sustain the constant revenue streams. The Company anticipates that it will commence development of specialized software to target other ailments such as gout, hypertension, heart disease, neurological disorders, and depression, among others.  As of the date of this Annual Report on Form 10-K, the Company has not determined the timeframe for rolling out such expansion, however, based on the in-house observations of the effects of eBalance® Therapy on the human body, as well as positive response from the Clinical Study subjects, we feel  additional  research and development in the use of eBalance® technology in the treatment of chronic and complex care conditions warrants additional investigation.

 

High blood pressure is the number one risk factor for stroke and a major risk factor for developing a heart disease. Pain is perhaps the number one reason people seek professional medical help and take medications; it is what tells the brain that something is wrong and is caused in part by insufficient electrical charge in cells. eBalance® therapy restores electrical charges to cells it allows for the rapid reduction or elimination of pain from many sources.

 

Empirical Modeling

 

The first-in-human observations took place over many years and were carefully documented. The results of these observations lead to the belief that a specific device with a specific set of bioelectric signals of known waveform, frequency, amplitude, pulse, and duration, accompanied by sensing circuits that respond to fluctuations in the body’s response, in a closed feedback loop, produced cumulative effects that led to remarkable global effects in functional aspects of living in a person who had lived with Type 1 diabetes since age 10. Casual trials in a patient with longstanding Type 2 diabetes, yielded findings of a similar nature in a limited time frame. These observations were followed by broader observational studies by Cell MedX.

 

Effects observed in these observational studies include subjective reports of diminished fatigue, improved cognition, diminished neuropathic limb pain, improved sleep, reduction in swelling of extremities, improved skin appearance in color and texture, and a reduction in visual disturbance. Objective measures included healing of wounds, control of blood pressure leading to discontinuation or reduction of medication, and greatly improved control of blood sugars with remarkable diminution in HbA1C (which reflects average blood sugar over months).  Remarkably, in the context of Type 1 Diabetes with other potential variables remaining the same, insulin requirements diminished to a considerable degree.

 

Clinical Trials

 

During January through March 2015, a preliminary Pilot Trial (the “Pilot Trial”) was conducted which was designed to examine the short-term metabolic impact of a single treatment with eBalance® Technology on two diabetic subjects.  Pre- and post-treatment blood samples from each subject were sent for extensive metabolic pathway analysis at the University of Alberta Metabolomics Unit.

 

From those studies we observed alterations in several pathways, which are known to be deficient in persons with diabetes. The results of the Pilot Trial were notable in that significant shifts in metabolites related to blood sugar handling and disposal occurred in a very short time frame, with the only intervening variable being a 10-minute treatment with eBalance® Technology.


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The findings from the Pilot Trial were then used to inform further experimentation, including selection of metabolic end points for testing during a Phase IB clinical trial, which we started preparations for in July 2015. Due to shortage in available funding, the Phase IB clinical Trial was cancelled.

 

During the fourth quarter of our fiscal 2016 we engaged Nutrasource Diagnostics Inc. (“Nutrasource”) with Dr. Richard Tytus of Hamilton Medical Research Group as the Lead Investigator, to commence observational clinical trial in Canada (“Clinical Study”) to assess and quantify eBalance® technology’s ability to alter key metabolic pathways while targeting improved blood sugar control.

 

Based on finalized investigational protocol, which received Health Canada’s approval on January 12, 2017, the Clinical Study was structured to assess the impact of three months of the eBalance® therapy, as an adjunct treatment, on HbA1c in thirty (30) Type 1 and Type 2 diabetics. The secondary endpoints of the Clinical Study were defined to observe changes from baseline and medical history of each Clinical Study subject in the following:

 

·Insulin sensitivity 

·Diabetic neuropathy 

·Diabetic foot pain and numbness 

·Wound healing 

·Blood pressure 

·Kidney function 

·Any other changes reported by patients 

 

In-patient phase of the Clinical Study was completed on July 24, 2017, and a final clinical report was submitted to Health Canada for final approval on January 19, 2018.

 

All 30 subjects (100%) taking part in the Clinical Study followed through to completion. The treatment was considered safe for the purposes of the Clinical Study. There were no significant treatment-related adverse events or negative abnormalities in routine hematology, biochemistry, vital signs or physical findings for the duration of the Clinical Study.

 

The Clinical Study resulted in clinically significant improvement in several biometric markers, including HbA1c and secondary efficacy endpoints as noted above.

 

Diabetes

 

The Clinical Study, tested the effectiveness of the eBalance® therapy as an adjunct treatment for diabetes and related complications in Type 1 and Type 2 diabetics over three months. The results of the Clinical Study showed that after three months of eBalance® treatments, average fasting blood glucose levels declined by 12.3% from 10.5 to 9.2 millimoles per litre. Plasma insulin declined by 46.7% from 168 to 78 picomoles per liter. These results indicate that, on average, the blood glucose uptake was increased and that less insulin was required to achieve that uptake. HbA1c levels declined by 0.16% from 8.36% to 8.20%. A longer double-blind, placebo-controlled study may be conducted in the future to determine if  HbA1c levels would be further reduced as improving HbA1c by just 1% for individuals with Type 1 or Type 2 diabetes lowers their risk of combined microvascular complications by 25%.[2]

 

One of the largest diabetes clinical trials ever conducted, the UK Prospective Diabetes Study (UKPDS) showed that for every 1% reduction in HbA1c, the relative risk for:

 

·Microvascular complications decreased by 37%;  

·Heart Failure decreased by 16%;  

·Diabetes-related deaths decreased by  21%; and  

·Myocardial infarction decreased by 14%.[3] 

 

______________________

[2] Diabetes Control and Complications Trial (DCCT): https://www.niddk.nih.gov/about-niddk/research-areas/diabetes/blood-glucose-control-studies-type-1-diabetes-dcct-edic.

[3] The UK Prospective Diabetes Study (UKPDS): clinical and therapeutic implications for type 2 diabetes (UKPDS): https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2014359/


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Blood pressure

 

After seven weeks of treatments, systolic pressure, the higher amount of pressure in the arteries during the contraction of the heart muscle, declined by 9.6% from 142 to 128 millimeters of mercury and stabilized at the lower level through to the end of the Clinical Study. During the same period, diastolic pressure, the pressure in the arteries when the heart muscle is between beats, and which is usually represented by a lower number, declined by 10.4% from 78 to 70 millimeters of mercury and also remained at the lower level. The Company has been encouraged to undertake further studies on subjects with higher blood pressures to determine if a proportional effect is obtained.

 

Pain and numbness

 

Neuropathy is nerve damage that can occur with diabetes as a result of high blood glucose levels and high blood pressure. The damage most often affects the extremities and causes pain, tingling or numbness in the hands, arms, legs and feet. Only two subjects suffered from pain at the beginning of the Clinical Study and both reported feeling either less pain or reduced coldness or numbness in their extremities. These findings support the Company’s in-house informal observation and testing results with a number of people who have used eBalance® device. Future studies may recruit subjects who are experiencing pain and loss of feeling.

 

Kidney function (Nephropathy)

 

Nephropathy is damage caused to the small blood vessels in the kidneys by high blood glucose levels and high blood pressure that prevents them from functioning properly or even causes them to fail completely. When the blood vessels in the kidneys are injured, the kidneys cannot clean the blood properly. The body will retain more water and salt than it should, which can result in weight gain and edema. The decrease in eGFR (estimated glomerular filtration rate) observed in the Clinical Study and a reduction in edema seen in our informal testing may warrant further investigation to assess the effect of eBalance® treatments on kidney function in diabetics.

 

Product Development

 

On October 1, 2015, we entered into a development agreement with Mr. Claudio Tassi (the “Development Agreement”) for the development of the first eBalance® Professional Series Device (the “Prototype”). Based on the Development Agreement we agreed to pay Bioformed Aestetic SL (“Bio4Med”), a company Mr. Tassi is a director of, $12,848 (EURO €12,000) and, upon successful completion of the development of the first eBalance® Prototype, to issue to Mr. Tassi 100,000 shares of our common stock. We received the first Prototype in November 2015.

 

On December 4, 2015, we executed a non-binding letter of intent (“LOI”) with Mr. Tassi and Bio4Med. The LOI contemplated that (i) we will enter into a technology development and license agreements with Mr. Tassi and Bio4Med to continue development of therapeutic devices based on the eBalance® Technology; (ii) upon approval of the first Prototype, we will place an order for the production of 25 devises; and (iii) Mr. Tassi will provide his services for an initial term of four months commencing on December 4, 2015.

 

On December 15, 2015, as contemplated under the LOI, we ordered the first batch which consisted of 25 eBalance® Pro devices with the same configuration as the original Prototype, which were manufactured in early 2016. These devices were designed as a stand-alone unit, controlled by proprietary software installed in an external computer specifically designed to be used with the eBalance® device. Once internally tested, the devices were distributed to selected clinics and practitioners as well as used directly by the Company in our in-house observations to see the effects of the eBalance® Therapy on the human body.

 

After several months of testing, we received a feedback from the clinicians and participants, which allowed for further refinement of the devices, which were limited to aesthetics and ease of use. The Company ordered from Bio4Med 20 units of the second generation eBalance® device, which were received in December 2016. These devices were also distributed to practitioners for observations and further testing.

 

 


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In early 2017 the management decided to discontinue negotiations with Bio4Med on technology development and license agreements, as contemplated under the LOI, and chose to move manufacturing of the eBalance® devices to Canada. The decision to move to Canada was the outcome of further research we had done on potential markets, tax implications of manufacturing the devices in Europe versus in Canada, cross border transfer pricing, availability of raw material and the control of the production processes.  As such, in the fourth quarter of our Fiscal 2017, we entered into a production agreement with an ISO 9001 certified manufacturing facility in Coquitlam, BC, and selected other local suppliers for sourcing essential components.

 

On October 16, 2017, we entered into a production development agreement (the “Development Agreement”) with Western Robotics Ltd. (“Western Robotics”) with an objective to enhance our eBalance® device based on the findings from the Clinical Study and the Company’s ongoing in-house observations. The Company paid Western Robotics CAD$250,000 for the initial re-engineering of the eBalance® devices.

 

During the 3rd quarter of our Fiscal 2019, we completed manufacturing of the first batch of the Canadian-built eBalance® devices. The new eBalance® Devices were certified by LabTest Certification Inc. as Class A (professional use) and Class B (in-home use) devices, and conform to CSA, CE and UL standards for electrical safety and emission standards, and are eligible to bear the LabTest Certification Mark with adjacent indicators “C” and “US”.

 

Majority of the eBalance® devices manufactured in the third quarter of our Fiscal 2019 were used for further in-house observations as well as for promotional and introductory material.

 

The successful completion of the first batch of Canadian-built eBalance® Devices allowed us to continue manufacturing and testing of the eBalance® Devices through local wellness and naturopathic clinics. As of the date of this Annual Report, our eBalance® devices include two distinct systems, eBalance® Pro System, and eBalance® Home System.

 

eBalance® Pro System

 

The eBalance® Pro System includes the eBalance® Console which acts as the central controller for three pre-programmed microcurrent algorithms (Wellness, Pain Management, and Dual) referred to as Treatment Options. Treatments are administered to patients using Hand Bars, Foot Plates, and/or Pen Probes. The eBalance® Pro System is for Professional Use by Healthcare practitioners in a clinical setting. The Hand Bars and Foot Plates are used for general wellness and pain management while the Pen Probes are used in localized pain management.

 

eBalance® Home System

 

The eBalance® Home System includes the eBalance® Console which acts as the central controller for three pre-programmed microcurrent algorithms (Wellness, Pain Management, and Dual) referred to as Treatment Options. Treatments are administered using Hand Bars and Foot Plates. The general wellness and pain management treatment are controlled by the eBalance® Console. The eBalance® Home System is for Home Use and is available without a prescription.

 

In order to continue executing on our operating and development plans and move forward with further development and improvements of our devices based on the eBalance® Technology, we will require additional capital. We are planning to raise this capital through debt or equity financing or, most likely, through a combination of both.

 

Medical Device Regulations and Government Approvals

 

The manufacture, packaging, marketing and importing of medical devices is heavily regulated in the United States, Canada and Europe. Further, we expect that any other countries in which we may seek to sell or market devices based on the eBalance® Technology will similarly have an extensive regulatory environment.

 

The U.S. Food and Drug Administration’s (FDA) Center for Devices and Radiological Health (CDRH) is responsible for regulating firms that manufacture, repackage, re-label and/or import medical devices sold in the United States. Health Canada’s Health Products and Food Branch Inspectorate is responsible for regulating the manufacture, labeling, packaging, distribution and import of medical devices sold in Canada.


7


At the end of February 2020, we completed an audit required for certification of our quality management systems (“QMS”) under Stage 2 Medical Device Single Audit Program (“MDSAP”) and under ISO 13485:2016 standard. The audit was carried out by BSI Group Canada Inc. (“BSI”) and included the following:

 

-The effectiveness of our QMS incorporating the applicable regulatory requirements outlined by ISO13485:2016 standard and as required under MDSAP; 

-Product/process-related technologies; 

-Adequate technical documentation for our eBalance® device in relation to ISO13485:2016 standard and MDSAP; and 

-Our ability to comply with these requirements. 

 

The assessment report was finalized in mid-March 2020, and on March 31, 2020, we received Certificate No. FM 716345, certifying that the Company operates a Quality Management System which complies with the requirements of ISO 13485:2016 for design, development and manufacture of microcurrent therapeutic devices for wellness and pain relief, and on June 2, 2020, received a certificate #MDSAP 716274.

 

Following the receipt of ISO and MDSAP certificates, we filed two separate applications for Class II Medical Device Licenses for the eBalance® Pro System and the eBalance® Home System with Health Canada. On July 17, 2020, Health Canada issued a Class II Medical Device License #104925 for our eBalance® Home System, and on August  18, 2020, issued a Class II Medical Device License #105044 for our eBalance® Pro System.

 

Prior to selling our eBalance® Home and Pro Systems for the treatment in the United States, we will be required to apply for an approval from the FDA. As of the date of this Annual Report we are in the process of completing the necessary documentation and testing required for the 510(K) submission to the FDA.

 

Third Party Payers / Private Insurers

 

Reimbursement for medical devices through Medicare and Medicaid in the U.S., and through health protectorates in other nations, is not guaranteed. Third party private payers or private insurers typically follow the lead of government healthcare providers. A decision as to whether a device or treatment is covered involves extensive negotiations and is typically predicated on the concept of health cost savings. If the device can be shown to reduce health care costs through prevention of expensive complications of diabetes, such applications for approvals would be more favorably reviewed.

 

Marketing Plans

 

We intend to commence our marketing plans for eBalance® Home and Pro Systems in Canada in the fall of 2020 by engaging authorized dealers and distributors of medical equipment to market our eBalance® Pro System to professional and institutional users. The eBalance® Home System will be marketed through authorized dealers as well as in-house sales force. In the US, we cannot start marketing our eBalance® devices until such time as we receive FDA approval.

 

During the year ended May 31, 2020, we entered into sales and distribution agreements with several independent consultants, however, due to the delay in receiving Health Canada Licenses, we cancelled and/or delayed engagements with these consultants. As of the date of this Annual Report on Form 10-K, we began negotiations with these and other consultants to restart our marketing efforts.

 

On March 21, 2019, the Company entered into an exclusive worldwide distribution agreement (the “Agreement”) with Live Current Media, Inc. (“LIVC”), an arms-length party, for worldwide distribution rights to eBalance® devices in an end-user market (the “Direct Rights”). To secure the right to earn the exclusive worldwide distribution rights LIVC paid us a one-time fee of $250,000. In order to maintain the exclusivity, LIVC had to order a minimum of 2,000 devices by the end of a 24-month period from the date the eBalance® device receives its 510K clearance from the FDA (the “Initial Term”). We agreed to sell our eBalance® devices to LIVC at a 20% discount to the regular retail price in place at the time of the order (the “License Fee”), with 50% of the License Fee payable at the time of placing an order, and remaining 50% payable on the specified delivery date of the devices. In addition, we agreed that during the Initial Term the License Fee for the eBalance® devices will be fixed at CAD$2,400 per device.


8


In addition to the License Fee, LIVC was required to pay a monthly recurring fee per each eBalance® device equal to 50% of the regular monthly home-use fee set by the Company. Following the Initial Term, the minimum monthly fee was to be $100,000.

 

On January 29, 2020, we entered into a buyback agreement (the “Buyback Agreement”) with LIVC to reacquire the Direct Rights. In order to reacquire the Direct Rights, we agreed to pay LIVC a royalty on all sales of the eBalance® device up to an aggregate $507,500 calculated as follows:

 

1.$25 per eBalance® device sold, not to exceed 3,500 eBalance® devices; and 

2.$5 per month for each eBalance® device generating recurring monthly revenue, up to an aggregate royalty of $420,000. 

 

Should we decide to cancel the recurring monthly fee due to a change in our distribution model, the royalty will be replaced by a one-time payment of $145 per eBalance® device sold up to an aggregate of $507,500.

 

In addition to the royalty, we issued to LIVC share purchase warrants (the “Warrants”) entitling LIVC to purchase up to two million shares of our common stock as follows:

 

1.1,000,000 shares at $0.50 per share (the “$0.50 Warrant”) expiring on March 12, 2023 

2.1,000,000 shares at $1.00 per share (the “$1.00 Warrant”) expiring on March 12, 2023 

 

At our discretion we can accelerate expiry date of the warrants such that if the weighted average closing price (the “WAP”) of our shares over any 30 consecutive trading-day period is equal to or greater than $1.00 per share, the expiry date of the $0.50 Warrant can be accelerated to 30 days following the acceleration notice given by us to LIVC, and if the WAP is equal to or greater than $1.75 per share, the expiry date of the $1.00 Warrant may be accelerated to 30 days following the acceleration notice.

 

Competition

 

The current market for treatments that assist in the control and management of diabetes, its complications, as well as other ailments is highly competitive. However, since our eBalance® Technology is based on the microcurrent therapy, which is not yet widely accepted in traditional medicine, direct competition for eBalance® Technology is not well defined.

 

Indirect competitors include a multitude of pharmaceutical companies that produce various drugs to maintain and prevent diabetes related complications; companies producing glucose monitoring devices, other pharmaceuticals to treat diseases and symptoms.

 

Competitors in electrical therapy include BodiHealth Systems, focusing on pain relief market in US; Electromedical Products International, Inc., the company that developed Alpha-Stim® PPM, which treats and alleviates acute, chronic or postoperative pain using microcurrent therapy, and several other companies currently involved in the microcurrent and electrical current therapies.

 

Patents/Trademarks/Licenses/Franchises/Concessions/Royalty Agreements or Labor Contracts

 

Our eBalance® Technology is not patented. As of the date of the filing of this Annual Report on Form 10-K, we are in the process of determining the best possible options for securing the proprietary technology represented by the eBalance® Technology.

 

To secure the use of the term “eBalance®” during the year ended May 31, 2018, we applied for trademark protection in Canada, the Unites States, Europe and the UK.

 

On May 8, 2019, the European Union approved the Company’s eBalance® trademark application and issued certificate of registration number 017997155 registering the trademark eBalance® in the name of the Company. The eBalance® trademark was also registered in the U.K., bearing the registration number UK00003345540.


9


 

The Company’s eBalance® trademark applications filed with the Canadian Intellectual Property Office on November 14, 2017, and with the United States Patent and Trademark Office on December 11, 2017, continue to be under review. Until such time that Canadian and/or US trademark applications are approved, the Company will be using the designation eBalance®, the standard registered trademark symbol in Europe,  in its marketing efforts and for any print material.

 

On September 6, 2018, we entered into an IP Royalty Agreement with an IP Vendor. Pursuant to the IP Royalty Agreement the Company agreed to acquire certain additional developments and improvements for its eBalance® devices that were developed by the IP Vendor in exchange for a perpetual royalty of USD$350 or CAD$350, depending on the currency the revenue is generated in, for each device sold, distributed or licensed whether through a distributor, sales representative or by the Company itself.

 

Also on September 6, 2018, we entered into a Royalty Agreement with Mr. Richard Jeffs, our major shareholder. Pursuant to the Royalty Agreement, the Company agreed to pay Mr. Jeffs, in perpetuity, a 10% royalty on the revenue the Company receives from its distributors or end-users introduced to the Company by Mr. Jeffs.

 

Number of Total Employees and Number of Full Time Employees

 

We currently have no employees other than our executive officers, who provide their services as independent consultants. We contract for the services of medical and technical staff we require to administer our observational studies and the clinical trials, as well as other consultants on “as needed” basis.

 

ITEM 1A. RISK FACTORS.

 

There is a high degree of risk associated with buying our common stock.  Prospective investors should carefully read this Annual Report on Form 10-K and consider the following risk factors when deciding whether to purchase our shares. These are speculative stocks and should be purchased by only those who can afford to lose their entire investment.

 

The risk factors outlined below are some of the known, substantial, material and potential risks that could adversely affect our business, financial condition, operating results and common share value. We cannot assure that we will successfully address these or any unknown risks and a failure to do so can have a negative impact on your investment.  We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

 

Risks Associated with our Company and our Industry

 

We operate in a highly competitive market. We face competition from large, well established medical device manufacturers and pharmaceutical companies in the market for treating and managing diabetes and related ailments. Many of these companies are very well accepted by health practitioners and have significant resources, and we may not be able to compete effectively.

 

The market for treatment and management of diabetes and related ailments is intensely competitive, subject to rapid change and significantly affected by new product introductions. We compete indirectly with large pharmaceutical and medical device companies, such as Bayer Corp., Becton Dickinson Corp., LifeScan Inc., a division of Johnson & Johnson, the MediSense Inc. and TheraSense Inc. These competitors’ products are based on traditional healthcare model and are well accepted by health practitioners and patients. If these companies decide to penetrate our target market they could threaten our position in the market.

 

 

 


10


 

We are subject to numerous governmental regulations which can increase our costs of developing the eBalance® Technology and products based on this technology.

 

Our products are subject to rigorous regulation by the FDA, Health Canada and numerous international, supranational, federal, and state authorities. The process of obtaining regulatory approvals to market a medical device can be costly and time-consuming, and approvals may not be granted for future products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for, our products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues, and in substantial additional costs. In addition, no assurance can be given that we will remain in compliance with applicable FDA, Health Canada and other regulatory requirements once approval or marketing authorization has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, and advertising and postmarketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns.

 

Changes in the health care regulatory environment may adversely affect our business.

 

A number of the provisions of the U.S. Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and its amendments changed access to health care products and services and established new fees for the medical device industry. Future rulemaking could increase rebates, reduce prices or the rate of price increases for health care products and services, or require additional reporting and disclosure. We cannot predict the timing or impact of any future rulemaking.

 

Inability to protect and enforce our intellectual property rights could adversely affect our financial results.

 

Intellectual property rights, including patents, trade secrets, confidential information, trademarks, tradenames, and other forms of trade dress, are important to our business. An inability to defend, protect and enforce our intellectual property rights could adversely affect our financial results, even if we are successful in developing and marketing products based on the eBalance® Technology. In addition, an adverse outcome in any litigation or interference proceeding could subject us to significant liabilities to third parties and require us to cease using the technology that is at issue or to license the technology from third parties. In addition, a finding that any of our intellectual property rights are invalid could allow our competitors to compete more easily and cost-effectively. Thus, an unfavorable outcome in any patent litigation or interference proceeding could have a material adverse effect on our business, financial condition, or results of operations.

 

The cost to us of any patent litigation or interference proceeding could be substantial. Uncertainties resulting from the initiation and continuation of patent litigation or interference proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and interference proceedings could also absorb significant management time.

 

Competitors' intellectual property may prevent us from selling our products or have a material adverse effect on our future profitability and financial condition.

 

Competitors may claim that our technology infringes upon their intellectual property. Resolving an intellectual property infringement claim can be costly and time consuming and may require us to enter into license agreements. We cannot guarantee that we would be able to obtain license agreements on commercially reasonable terms. A successful claim of patent or other intellectual property infringement could subject us to significant damages or an injunction preventing the manufacture, sale or use of our product. Any of these events could have a material adverse effect on our profitability and financial condition.

 

Our research and development efforts may not result in the development of commercially successful products based on our eBalance® Technology, which may hinder our profitability and future growth.

 

We continue to further research our eBalance® Technology and develop products based on the technology.  In order to develop commercially marketable products, we will be required to commit substantial efforts, funds, and other resources to research and development. A high rate of failure is inherent in the research and development of new products and technologies. We must make ongoing substantial expenditures without any assurance that our efforts will be commercially successful.


11


Failure can occur at any point in the process, including after significant funds have been invested. Planned products may fail to reach the market or may only have limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or infringement of the intellectual property rights of others.

 

Even if we successfully develop marketable products or commercially develop our current technology, we may be quickly rendered obsolete by changing customer preferences, changing industry standards, or competitors' innovations.

 

Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursement. We cannot state with certainty when or whether our products under development will be launched, whether we will be able to develop, license, or otherwise acquire new products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause our products to become obsolete, causing our revenues and operating results to suffer.

 

New products and technological advances by our competitors may negatively affect our results of operations.

 

Our products face intense competition from our competitors. Competitors' products may be safer, more effective, more effectively marketed or sold, or have lower prices or superior performance features than our products. We cannot predict with certainty the timing or impact of the introduction of competitors' products.

 

Significant safety concerns could arise for our products, which could have a material adverse effect on our revenues and financial condition.

 

Health care products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If new safety issues are reported, we may be required to amend the conditions of use for a product. For example, we may be required to provide additional warnings on a product's label or narrow its approved intended use, either of which could reduce the product's market acceptance. If serious safety issues arise with our product, sales of the product could be halted by us or by regulatory authorities. Safety issues affecting suppliers' or competitors' products also may reduce the market acceptance of our products.

 

Inability to attract and maintain key personnel may cause our business to fail.

 

Success depends on the acquisition of key personnel. We will have to compete with other companies both within and outside the healthcare industry to recruit and retain competent employees and consultants. If we cannot maintain qualified personnel to meet the needs of our anticipated growth, we could face material adverse effects on our business and financial condition.

 

We are recently formed, lack operating history and to date have generated only minimal revenues. If we cannot increase our revenues to start generating profits, our investors may lose their entire investment.

 

We are a recently formed company and to date have generated only minimal revenues. No profits have been made to date and if we fail to make any then we may fail as a business and an investment in our common stock will be worth nothing.  We have a limited operating history and thus our progress as well as potential future success cannot be reasonably estimated.  Success has yet to be proven and financial losses should be expected to continue in the near future and at least until such time that we enter commercial production of devices based on the eBalance® Technology, of which there is no assurance. As a new business, we face all the risks of a ‘start-up’ venture including unforeseen costs, expenses, problems, and management limitations and difficulties.  Since inception, we have accumulated deficit of $8,049,520 and there is no guarantee, that we may ever be able to turn a profit or locate additional opportunities, hire additional management and other personnel.


12


 

We need to acquire additional financing, or our business will fail.

 

We must obtain additional capital, or our business will fail. In order to continue development of our eBalance® Technology and to successfully complete observational and clinical trials, we must secure more funds. Currently, we have limited resources and have already accumulated a deficit; aside from the refundable deposit we have received from Live Current Media Inc. as consideration for LOI, we have no immediate sources of financing. Financing may be subject to numerous factors including investor sentiment, acceptance of our technology and so on. We may also have to borrow large sums of money that require substantial capital and interest payments.

 

Risks related to our stock

 

We expect to raise additional capital through the offering of more shares, which will result in dilution to our current shareholders.

 

Raising additional capital through future offerings of common stock is expected to be necessary for our Company to continue. However, there is no guarantee that we will be successful in raising additional capital. Issuance of additional stock will increase the total number of shares issued and outstanding resulting in decrease of the percentage interest held by each of our shareholders.

 

There is a limited market for our common stock meaning that our shareholders may not be able to resell their shares.

 

Our common stock currently has a limited market which may restrict shareholders’ ability to resell their stock or use their stock as collateral. Thus, the shareholders may have to sell their shares privately which may prove exceedingly difficult. Private sales are more difficult and often give lower than anticipated prices.

 

Should a larger public market develop for our stock, future sales of shares may negatively affect their market price.

 

Even if a larger market develops, the shares may be sparsely traded and have wide share price fluctuations. Liquidity may be low despite there being a market, making it difficult to get a return on the investment. The price also depends on potential investor’s feelings regarding the results of our operations, the competition of other companies’ shares, our ability to generate future revenues, and market perception about future of microcurrent technologies.

 

Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.

 

Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

 

·contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; 

·contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; 

·contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; 

·contains a toll-free telephone number for inquiries on disciplinary actions; 

·defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and 

·contains such other information and is in such form, including language, type, size, and format, as the SEC shall require by rule or regulation. 


13


The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

 

We have not paid nor anticipate paying cash dividends on our common stock.

 

We have not declared any dividends on our common stock during the past two fiscal years or at any time in our history. The Nevada Revised Statutes (the “NRS”), provide certain limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

 

(a)we would not be able to pay our debts as they become due in the usual course of business; or 

 

(b)except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution. 

 

We do not expect to declare any dividends in the foreseeable future as we expect to spend any funds legally available for the payment of dividends on the development of our business.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS.

 

None.

 

ITEM 2. PROPERTIES.

 

Our principal executive office is located at 123 W. Nye Ln, Suite 446, Carson City, NV 89706. Our Subsidiary’s principle office is located at 820 - 1130 West Pender Street, Vancouver, BC V6E 4A4. Other than these offices, we do not currently maintain any other facilities, and do not anticipate the need for maintaining other facilities at any time in the foreseeable future.

 

ITEM 3. LEGAL PROCEEDINGS.

 

We are not a party to any pending legal proceedings and, to the best of our knowledge, none of our properties or assets are the subject of any pending legal proceedings.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

 

 

 

 

 


14


 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

MARKET INFORMATION

 

Quotations for our common stock are entered on the OTC Link alternative trading system on the OTCQB marketplace under the symbol “CMXC”. The table below gives the high and low bid information for each fiscal quarter for the last two fiscal years. The bid information was obtained from OTC Markets Group Inc. and reflects inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

 

High & Low Bids

Period ended

High

Low

August 31, 2018

$0.12

$0.06

November 30, 2018

$0.07

$0.05

February 28, 2019

$0.20

$0.05

May 31, 2019

$0.20

$0.11

August 31, 2019

$0.70

$0.10

November 30, 2019

$1.62

$0.332

February 29, 2020

$0.375

$0.17

May 31, 2020

$0.77

$0.2001

 

HOLDERS OF RECORD

 

As of September 15, 2020, we had approximately 55 holders of record, according to a shareholders’ list provided by our transfer agent as of that date. The number of registered shareholders does not include the beneficial owners of common stock held in street name. The transfer agent for Cell MedX’s common stock is Pacific Stock Transfer Company with an address at 6725 Via Austi Pkwy, Suite 300 Las Vegas, NV 89119, and their telephone number is 702-361-3033.

 

DIVIDENDS

 

We have not paid any cash dividends on our common stock since our inception and do not anticipate paying any cash dividends in the foreseeable future.  We plan to retain our earnings, if any, to provide funds for the expansion of our business.

 

Our Articles of Incorporation and Bylaws do not contain any restrictions limiting our ability to declare dividends.  Section 78.288 of the Nevada Revised Statutes prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

 

(a)we would not be able to pay our debts as they become due in the usual course of business; or 

 

(b)our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution. 

 

RECENT SALES OF UNREGISTERED SECURITIES

 

On June 24, 2019, the Company issued 3,950,000 units of its common stock for total gross proceeds of $474,000, and on July 22, 2019, the Company issued further 100,000 units for total gross proceeds of $12,000. Each Unit consisted of one common share of the Company and one share purchase warrant (the “Warrant”) expiring on the second year anniversary of the date of issuance of the Warrant and exercisable into one share of the Company’s common stock at $0.20 per share. The units were issued pursuant to the provisions of Regulation S of the Act to the persons who are not residents of the United States and are otherwise not “U.S. Persons” as that term is defined in Rule 902(k) of Regulation S of the Act.


15


 

On August 28, 2019, Mr. Jeffs, the Company’s major shareholder, exercised his warrants to acquire 7,482,960 shares. To exercise the warrants, Mr. Jeffs chose to apply $374,148, the Company owed under the Line of Credit he made available to the Company and the notes payable the Company issued to Mr. Jeffs against the purchase price of the shares.

 

On July 30, 2020, the Company issued 988,000 units for total gross proceeds of $247,000. Each unit consisted of one common share of the Company and one share purchase warrant entitling the holder to purchase one additional common share for a period of two years after closing at an exercise price of $0.35 per share expiring on January 30, 2021, and at $0.50 per share from January 30, 2021 to July 30, 2022.

 

The units were issued pursuant to the provisions of Regulation S of the Act to the persons who are not residents of the United States and are otherwise not “U.S. Persons” as that term is defined in Rule 902(k) of Regulation S of the Act. The Units to U.S. Persons were issued pursuant to the provisions of Rule 506(b) of Regulation D of the Act who qualify as “accredited investors” as that term is defined under Regulation D of the Act.

 

On July 13, 2020, Mr. Hargreaves, the Company’s VP, Technology and Operations, and 10% security holder, exercised his option to acquire shares of the Company’s common stock by acquiring 1,234,855 shares for total proceeds to the Company of $61,743. The remaining options to acquire 15,145 common shares expired unexercised. On July 13, 2020, Ms. Arnett, the Company’s 10% security holder, exercised her option to acquire shares of the Company’s common stock and acquired 1,250,000 shares for total proceeds to the Company of $62,500. Ms. Arnett and Mr. Hargreaves chose to apply the balances the Company owed to them as at August 13, 2020, towards the exercise price of their options. The shares were issued pursuant to the provisions of Regulation S of the Act, as Mr. Hargreaves and Ms. Arnett are not residents of the United States and are otherwise not “U.S. Persons” as that term is defined in Rule 902(k) of Regulation S of the Act.

 

PENNY STOCK RULES

 

The SEC has adopted regulations that regulate broker-dealer practices in connection with transactions in “penny stocks.” “Penny stocks” are generally defined as being any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our common stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. The application of the “penny stock” rules may affect your ability to resell our securities.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and Item 10(f) of Regulation SK and are not required to provide the information required under this item.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain statements contained in this Annual Report on Form 10-K constitute "forward-looking statements". These statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements.


16


 

Such risks and uncertainties include those set forth under this caption "Management's Discussion and Analysis" and elsewhere in this Form 10-K. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”).

 

General

 

The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole. Actual results may vary from the estimates and assumptions we make.

 

Results of Operation

 

 

Year Ended

May 31,

Percentage

Increase /

 

2020

2019

(Decrease)

Revenue

$

19,634

$

-

n/a

Distribution rights

 

76,190

 

-

n/a

COGS

 

10,236

 

-

n/a

Gross margin

 

85,588

 

-

n/a

Operating expenses

 

 

 

 

 

Amortization

 

1,846

 

580

218.3%

Consulting fees

 

278,890

 

262,902

6.1%

Distribution expenses

 

53,786

 

-

n/a

General and administrative expenses

 

396,201

 

144,819

173.6%

Research and development costs

 

393,216

 

261,907

50.1%

Total operating expenses

 

1,123,939

 

670,208

67.7%

Other items

 

 

 

 

 

Financing costs

 

-

 

(219,052)

(100.0)%

Gain on forgiveness of debt

 

68,816

 

-

n/a

Interest

 

(21,069)

 

(16,721)

26.0%

Loss on reacquisition of distribution rights

 

(102,094)

 

-

n/a

Net loss

$

(1,092,698)

$

(905,981)

20.6%

 

Revenues

 

During the year ended May 31, 2020, we recognized $19,634 in revenue, which consisted of sales of our eBalance® wellness devices to end-users and monthly recurrent revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $10,236 and included $2,243 in royalties we accrued on the sales.

 

During the year ended May 31, 2020, we recorded $76,190 in revenue from rights to distribute our eBalance® devices. On June 6, 2019, we entered into a letter of intent for the wholesale distribution rights to all Mainland China, not including Hong Kong (the “LOI”). As part of the LOI the potential distributor (the “Distributor”) paid a non-refundable fee of $25,000, which we amortized over the term of the LOI, and as of May 31, 2020, the full $25,000 deposit was recognized as revenue. As of May 31, 2020, the LOI expired, and we did not enter into a definitive agreement with the Distributor. In addition, at May 31, 2020, we took into income the deferred revenue associated with non-refundable deposits we received during our Fiscal 2017 year. As at May 31, 2020, the deemed right to return the devices, which we provided as part of our efforts to secure various distribution channels for our eBalance® devices and gather information for our in-house observational studies expired. Therefore the non-refundable deposits were recorded as part of revenue from distribution rights.

 

We did not generate any revenue during the year ended May 31, 2019.


17


As of the date of this Annual Report on Form 10-K, we continue research and further development of our eBalance® Technology and devices based on this technology. During the summer of 2020, Health Canada granted our eBalance® Home and Pro Systems Class II medical device licenses, which allow us to market our eBalance® devices for wellness and pain management. Our certification with FDA continues to be ongoing; at the time of this Annual Report on Form 10-K we are compiling required documentation for a 510(K) premarket submission, which allows us to demonstrate that the eBalance® device is at least as safe and effective as a legally marketed device available on the market. Once this submission is approved, it will allow us to start our commercial activity in the USA.

 

Operating Expenses

 

During the year ended May 31, 2020, our operating expenses increased by 67.7% from $670,208 incurred during the year ended May 31, 2019, to $1,123,939 incurred during the year ended May 31, 2020. The most significant changes were as follows:

 

·During the year ended May 31, 2020, our consulting fees increased by $15,988, from $262,902 we incurred during the year ended May 31, 2019, to $278,890 we incurred during the year ended May 31, 2020. Larger consulting fees during the year ended May 31, 2020, were associated with $25,000 we paid for consultation on setting up our distribution channels in China. 

 

·Our research and development fees for the year ended May 31, 2020, increased by $131,309, from $261,907 we incurred during the year ended May 31, 2019, to $393,216 we incurred during the year ended May 31, 2020. The higher research and development fees during the year ended May 31, 2020, were associated with the MDSAP audit in February of 2020, as well as preparation of the QRM systems required under MDSAP and ISO 13485:2016 standard certification. During our second quarter of Fiscal 2020, our research and development efforts were associated with integration of automated billing module into the eBalance® wellness device’s operating system, and various smaller upgrades to improve user experience. 

 

·During the year ended May 31, 2020, we incurred $53,786 in distribution expenses we paid or accrued to our sales representatives, who began working on distribution of our eBalance® devices in British Columbia, Canada (May 31, 2019 - $Nil). Based on our agreements with the sales representatives, we agreed to pay CAD$350 as commission for each eBalance® device they sell. In order to allow our sales representatives to establish their customer base, we agreed to a monthly fee of CAD$5,000 payable to each sales representative for an initial term of three months, which we extended on a month-to-month basis. Due to a delay in securing the Health Canada Class II device licenses, we suspended our agreements with sales representatives in January 2020. As of the date of this Annual Report on Form 10-K we are discussing the re-engagement of the sales representatives to aid us with the marketing of the eBalance® Home and Pro Systems in Canada. 

 

·Our general and administrative fees for the year ended May 31, 2020, increased by $251,382, or 173.6%, from $144,819 we incurred during the year ended May 31, 2019, to $396,201 we incurred during the year ended May 31, 2020. The largest factor that contributed to this change was associated with our expenditures on corporate communications per our services agreement with Think Ink Marketing, which resulted in $194,043 we recorded during the year ended May 31, 2020, as compared to $14,537 we incurred during the year ended May 31, 2019. Other factors that affected our general and administrative fees were associated with  a $32,120 increase to our accounting and audit fees, which increased from $22,574 during the year ended May 31, 2019, to $54,694 during the year ended May 31, 2020, marketing and advertising fees, which increased by $13,456 to $17,893 during the year ended May 31, 2020, as opposed to $4,437 during the year ended May 31, 2019, a $9,352 increase in professional fees from $3,217 we incurred during the year ended May 31, 2019, to $12,569 we incurred during the year ended May 31, 2020, and a $10,661 increase in office expenses from $6,635 we incurred during the year ended May 31, 2019, to $17,296 we incurred during the year ended May 31, 2020. These increases were in part offset by $15,600 decrease in management fees, which amounted to $39,600 during the year ended May 31, 2020, as opposed to $55,200 we incurred in the comparative period. 


18


 

Other Items

 

During the year ended May 31, 2020, we accrued $21,069 (May 31, 2019 - $16,721) in interest associated with the outstanding notes payable, of which $2,634 (May 31, 2019 - $8,845) were accrued on the notes payable we issued to Mr. Jeffs, our major shareholder, and $5,793 (May 31, 2019 - $6,468) we accrued on the Credit Line with Mr. Jeffs.

 

During the year ended May 31, 2020, we recorded $102,094 loss on reacquisition of distribution rights from Live Current Media Inc. We did not have similar expenses during the year ended May 31, 2019.

 

During the year ended May 31, 2019, we recorded $219,052 in financing costs. These costs were associated with a one-time set-up fee of $25,000 we agreed to pay on Credit Line with Mr. Jeffs; and $193,665 being the fair market value of non-transferable share purchase warrants to acquire up to 7,482,960 common shares we issued to Mr. Jeffs for the Line of Credit and for the funds we received from Mr. Jeffs prior to the Credit Line. We did not have similar expenses during the year ended May 31, 2020.

 

During the year ended May 31, 2020, we recognized $68,816 as gain on forgiveness of debt, when two vendors agreed to forgive the amounts we owed them for the services provided in our fiscal 2015.

 

Liquidity and Capital Resources

 

Working Capital

 

 

Year Ended

May 31,

Percentage

Decrease

 

2020

2019

 

Current assets

$

157,343

$

189,260

(16.9)%

Current liabilities

 

1,679,523

 

1,963,100

(14.4)%

Working capital deficit

$

(1,522,180)

$

(1,773,840)

(14.2)%

 

As of May 31, 2020, we had a cash balance of $45,090, a working capital deficit of $1,522,180 and cash flows used in operations of $925,844 for the period then ended. During the year ended May 31, 2020, we funded our operations with $486,000 received from our private placement financing and $80,000 received on subscription to units of our common stock; $15,000 we borrowed under short-term non-interest bearing advances, and $327,650 we received under convertible loan agreements accumulating interest at 6% per annum, compounded monthly, and due on demand.

 

We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the year ended May 31, 2020. The amount of cash we have generated from our operations to date is significantly less than our current debt obligations. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under the outstanding notes and advances payable, or to service our other debt obligations.  If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that we will be able to continue as a going concern.

 

Cash Flows

 

 

Year Ended

May 31,

 

2020

2019

Cash flows used in operating activities

$

(925,844)

$

(307,542)

Cash flows used in investing activities

 

(2,463)

 

(1,915)

Cash flows provided by financing activities

 

916,422

 

359,125

Effects of foreign currency exchange on cash

 

(197)

 

(696)

Net increase (decrease) in cash during the period

$

(12,082)

$

48,972


19


 

Net Cash Used in Operating Activities

 

Net cash used in operating activities during the year ended May 31, 2020, was $925,844. This cash was primarily used to cover our cash operating expenses of $943,839, to decrease our unearned revenue by $57,904, and amounts due to related parties by $16,518. These uses of cash were offset by decreases in our inventory and other current assets of $20,503 and $16,152, respectively, and by $46,574 and $9,188 increases in our accounts payable and accrued liabilities, respectively.

 

Net cash used in operating activities during the year ended May 31, 2019, was $307,542. This cash was primarily used to cover our cash operating expenses of $664,254, to increase our inventory by $14,499, work in progress by $49,812, and to increase our other current assets by $33,173. These uses of cash were offset by increases in our accounts payable and amounts due to related parties of $141,585 and $50,770, respectively; by $5,035 increase to our accrued liabilities and by $256,806 increase in unearned revenue, of which $250,000 was associated with a deposit we received under the LOI with Live Current Media, Inc, which was later superseded by the definitive agreement for exclusive distribution rights, and $6,806 were associated with a security deposits we received on several eBalance® devices we provided to our potential customers on a 90-day trial.

 

Non-cash transactions

 

During the year ended May 31, 2020, our net loss was affected by the following expenses that did not have any impact on cash used in operations:

 

·$102,094 (2019 - $Nil) we recognized as loss on reacquisition of distribution rights from LIVC pursuant to the Buyback Agreement dated January 29, 2020; 

 

·$21,069 (2019 - $16,721) in interest we accrued on the outstanding notes payable. Of this interest, $2,634 (2019 - $8,845) was accrued on the notes payable we issued to Mr. Jeffs, and $5,793 (2019 - $6,468) was accrued on the $250,000 Credit Line provided to us by Mr. Jeffs; 

 

·$Nil (2019 - $219,052) in financing fees associated with short-term loan agreements and the Credit Line with Mr. Jeffs;  

 

·$20,183 loss (2019 - $5,374) in unrealized foreign exchange, which resulted from fluctuations of Canadian dollar in relation to US dollar, our functional and reporting currency ; and 

 

·$1,846 (2019 - $580) in amortization of equipment we acquired for our manufacturing operations and for our office. 

 

·$3,667 (2019 - $Nil) in non-cash investor relations expenses which were associated with fair market value of the shares we issued to our consultant for investor relation services. 

 

Net Cash Provided by Financing Activities

 

During the year ended May 31, 2020, we received $327,650 under convertible loan agreements, which are payable on demand and accumulate interest at 6% per annum. At discretion of the lenders, the full amount due under the loans can be converted into the units of our common stock at the then-current price of private placement financing. In addition, we received a total of $15,000 in non-interest-bearing advances which are payable on demand. During the same period we received $486,000 on issuance of 4,050,000 units of our common stock, and $80,000 on subscription to units of our common stock, which were issued on July 30, 2020. We did not incur any share-issuance costs associated with the units issued as part of the private placement financing.

 

During the year ended May 31, 2019, we borrowed a total of $23,029 from Mr. Jeffs, our major shareholder. Of this amount CAD$20,000 in principal bore interest at 12% per annum, compounded monthly, was unsecured and payable on demand; and CAD$10,000 was advanced as a non-interest-bearing short-term loan, which was payable within 14 days from the grant. We have not repaid this loan when due, and therefore it was payable on demand. In addition, we borrowed $23,975 (CAD$31,200) from an unrelated party. The loan bears interest at 6% per annum and is compounded monthly. During the same period, we borrowed a total of $62,121 from unrelated parties under non-interest-bearing advances which are payable on demand.


20


On December 27, 2018, we entered into an agreement with Mr. Jeffs, for an unsecured line of credit of up to $250,000 (the “Line of Credit”) of which $100,000 we borrowed on December 20, 2018 and remaining $150,000 we borrowed on January 25, 2019. To set up the Line of Credit, we agreed to a $25,000 setup fee (the “Setup Fee”), which was added to the total amount borrowed under the Line of Credit. The balance borrowed under the Line of Credit as well as the Setup Fee accumulate interest at a rate of 6% per annum and are payable on demand.

 

In consideration for the Line of Credit, we issued Mr. Jeffs non-transferable share purchase warrants (the “Warrants”) to purchase up to 5,000,000 shares of our common stock exercisable at $0.05 per share and expiring on December 27, 2021. The Warrants vested at a rate of 20 warrants for every $1 drawn on the Line of Credit.

 

In addition, in recognition of $124,148 previously advanced by Mr. Jeffs, we issued non-transferable share purchase warrants (the “Additional Warrants”) to purchase up to 2,482,960 shares exercisable at $0.05 per share and expiring on December 27, 2021. The Additional Warrants vested at the time of grant. We determined the value of the Warrants and Additional Warrants to be $193,665, which we recorded as part of additional paid-in capital. Since the funds advanced under the Line of Credit were payable on demand, we expensed $193,665 as financing fees immediately upon receipt of advances.

 

On August 28, 2019, Mr. Jeffs, exercised his warrants to acquire 7,482,960 shares. To exercise the warrants, Mr. Jeffs chose to apply $374,148, the Company owed under the Line of Credit and the notes payable against the purchase price of the shares.

 

Net Cash Used in Investing Activities

 

During the year ended May 31, 2020, we used $2,463 to acquire office equipment.

 

During the year ended May 31, 2019, we spent $1,915 acquiring equipment for the manufacturing of our eBalance® devices.

 

Going Concern

 

The notes to our audited consolidated financial statements at May 31, 2020, disclose our uncertain ability to continue as a going concern. Our current business operations are in an early development stage and as such, we were able to generate only minimal revenue from the operations. Our research and development plans for the near future will require large capital expenditures, which we are planning to mitigate through equity or debt financing, or by requiring upfront deposits from our potential distributors, once we begin commercial production of our eBalance® devices.

 

As at May 31, 2020, we had accumulated a deficit of $8,049,520 since inception and increased sales will be required to fund and support our operations. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. Our audited consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern and therefore be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.

 

Off-Balance Sheet Arrangements

 

None.

 

Critical Accounting Policies

 

An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. We have applied our critical accounting policies and estimation methods consistently.


21


 

Principals of consolidation

 

The consolidated financial statements include the accounts of Cell MedX Corp. and our Subsidiary. On consolidation we eliminate all intercompany balances and transactions.

 

Foreign currency translations and transactions

 

Our functional and reporting currency is the United States dollar. We translate foreign denominated monetary assets and liabilities into their U.S. dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenues and expenses are translated at average rates of exchange during the period. Related translation adjustments as well as gains or losses resulting from foreign currency transactions are reported as part of operating expenses on the statement of operations.

 

The functional currency of our Subsidiary is the Canadian dollar. On consolidation, the Subsidiary translates the assets and liabilities to U.S. dollars using foreign exchange rates which prevailed at the balance sheet date, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the other comprehensive income. As of the date of this Annual Report on Form 10-K we have not entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

Revenue recognition

 

Revenue is measured based on the amount of consideration that is expected to be received by the Company for providing goods or services under a contract with a customer, which is initially estimated with pricing specified in the contract and adjusted primarily for sales returns, discounts and other credits at contract inception then updated each reporting period, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when persuasive evidence of a contract with a customer exists and a performance obligation is identified and satisfied as the customer obtains control of the goods or services. The Company recognizes revenue on the monthly eBalance® treatment packages in the month the packages are provided.

 

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

 

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are in included in cost of revenues.

 

Inventory valuation

 

Inventories are valued at the lower of cost or net realizable value, net of trade discounts received, with costs being determined based on the weighted average cost basis.

 

Research and development costs

 

The Company expenses all in-house research and development costs in the period they were incurred. Acquired research and development costs are capitalized to the extent that the sum of the undiscounted cash flows expected to result from the asset can be reasonably estimated or may be verified by an appraisal in certain instances. In all other instances the costs are expensed in the period they were incurred. Acquired research and development costs for a particular research and development project that have no future economic values, are expensed as research and development costs at the time the costs are incurred.

 

Income taxes

 

Income tax expense is based on pre-tax financial accounting income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The


22


components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not some portion or all of the deferred tax assets will not be realized.

 

Loss per share

 

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted net income per common share includes the potential dilution that could occur upon exercise of the options and warrants to acquire common stock computed using the treasury stock method which assumes that the increase in the number of shares is reduced by the number of shares which could have been repurchased by the Company with the proceeds from the exercise of the options and warrants.

 

Long-lived assets

 

In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount exceeds fair value.

 

Equipment

 

Equipment is stated at cost and is amortized over its estimated useful life on a straight-line basis over two years.

 

Fair value measurements

 

The book value of cash, other current assets, accounts payable, accrued liabilities, notes and advances payable, and due to related parties approximate their fair values due to the short-term maturity of those instruments.  The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

 

Level 1 -quoted prices (unadjusted) in active markets for identical assets or liabilities; 

 

Level 2 -observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices  for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are  observable or whose significant value drivers are observable; and 

 

Level 3 -assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. 

 

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment).  There were no assets or liabilities measured at fair value on a nonrecurring basis during the periods ended May 31, 2020 and 2019.

 

 


23


 

Stock options and other stock-based compensation

 

The Company accounts for the granting of share purchase options to employees using the fair value method whereby all awards to employees are recorded at fair value on the date of the grant. The fair value of all share purchase options is expensed over their vesting period with a corresponding increase to additional capital surplus. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in additional paid-in capital is recorded as an increase to share capital.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of share purchase options. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate.

 

Recent accounting pronouncements

 

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2016-02, “Leases” (“ASU 2016-02”). ASU 2016-02 changes current U.S. GAAP for lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods. Early application is permitted. The Company adopted the ASU 2016-02 on June 1, 2019. As of the date of these financial statements, the Company has no leasing arrangements.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f) of Regulation SK and are not required to provide the information required under this item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

Index to Financial Statements

 

 

 

Page No.

Financial Statements

 

Report of Independent Registered Public Accounting Firm

F-1

Consolidated Balance Sheets as of May 31, 2020 and 2019

F-2

Consolidated Statements of Operations for the years ended May 31, 2020 and 2019

F-3

Consolidated Statement of Stockholders’ Deficit for the years  ended May 31, 2020 and 2019

F-4

Consolidated Statements of Cash Flows for the years  ended May 31, 2020 and 2019

F-5

Notes to the Consolidated Financial Statements

F-6

 

 

 

 

 

 

 

 

 

 

 

 

 

 


24


 

 

 

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of Cell MedX Corp.

 

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Cell MedX Corp. (the "Company") as of May 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ deficit and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, has incurred losses in developing its business and the Company requires additional funds to meet its obligations and the costs of its operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

“DMCL”

DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

 

We have served as the Company’s auditor since 2015

Vancouver, Canada

September 15, 2020

 

 


F-1


 

CELL MEDX CORP.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN US DOLLARS)

 

 

 

May 31, 2020

 

May 31, 2019

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 Cash

$

45,090

 

$

57,172

 Inventory

 

51,886

 

 

73,201

 Other current assets

 

60,367

 

 

58,887

Total current assets

 

157,343

 

 

189,260

 

 

 

 

 

 

 Equipment

 

1,836

 

 

1,281

Total assets

$

159,179

 

$

190,541

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 Accounts payable

$

908,783

 

$

734,281

 Accrued liabilities

 

34,565

 

 

25,635

 Due to related parties

 

233,738

 

 

383,688

 Notes and advances payable

 

502,437

 

 

511,754

 Unearned revenue

 

-

 

 

307,742

Total liabilities

 

1,679,523

 

 

1,963,100

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 Common stock, $0.001 par value, 300,000,000 shares authorized;

   55,915,709 and 44,282,749 shares issued and outstanding

   at May 31, 2020 and 2019, respectively

 

55,916

 

 

44,283

 Additional paid-in capital

 

5,988,153

 

 

5,109,866

 Obligation to issue shares

 

80,000

 

 

-

 Reserves

 

366,493

 

 

14,400

 Accumulated deficit

 

(8,049,520)

 

 

(6,956,822)

 Accumulated other comprehensive income

 

38,614

 

 

15,714

Total stockholders' deficit

 

(1,520,344)

 

 

(1,772,559)

Total liabilities and stockholders’ deficit

$

159,179

 

$

$190,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


F-2


 

CELL MEDX CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(EXPRESSED IN US DOLLARS)

 

 

 

 

Year Ended

May 31,

 

 

2020

 

2019

 

 

 

 

 

Revenue

 

 

 

 

 Sales

 

$

19,634

 

$

-

 Distribution rights

 

 

76,190

 

 

-

 Cost of goods sold

 

 

10,236

 

 

-

 Gross margin

 

 

85,588

 

 

-

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 Amortization

 

 

1,846

 

 

580

 Consulting fees

 

 

278,890

 

 

262,902

 Distribution expenses

 

 

53,786

 

 

-

 General and administrative expenses

 

 

396,201

 

 

144,819

 Research and development costs

 

 

393,216

 

 

261,907

Total operating expenses

 

 

1,123,939

 

 

670,208

 

 

 

 

 

 

 

Other items

 

 

 

 

 

 

 Financing costs

 

 

-

 

 

(219,052)

 Gain on forgiveness of debt

 

 

68,816

 

 

-

 Interest

 

 

(21,069)

 

 

(16,721)

 Loss on reacquisition of distribution rights

 

 

(102,094)

 

 

-

Net loss

 

 

(1,092,698)

 

 

(905,981)

 

 

 

 

 

 

 

Unrealized foreign exchange translation gain

 

 

22,900

 

 

13,175

Comprehensive loss

 

$

(1,069,798)

 

$

(892,806)

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 Basic and diluted

 

$

(0.02)

 

$

(0.02)

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 Basic and diluted

 

 

53,477,515

 

 

44,282,749

 

 

 

 

 

 

 

 

 

 

 

 

 

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


F-3


 

CELL MEDX CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

(EXPRESSED IN US DOLLARS)

 

 

 

 

 

Additional

Obligation

 

 

Accumulated

Other

 

 

Common Stock

Paid-in

to Issue

 

Deficit

Comprehensive

 

 

Shares

Amount

Capital

Shares

Reserves

Accumulated

Income

Total

 

 

 

 

 

 

 

 

 

Balance - May 31, 2018

44,282,749

 

44,283

 

4,916,201

 

-

 

14,400

 

(6,050,841)

 

2,539

 

(1,073,418)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants issued for debt

-

 

-

 

193,665

 

-

 

-

 

-

 

-

 

193,665

Net loss for the year

ended May 31, 2019

-

 

-

 

-

 

-

 

-

 

(905,981)

 

-

 

(905,981)

Translation to reporting

currency

-

 

-

 

-

 

-

 

-

 

-

 

13,175

 

13,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - May 31, 2019

44,282,749

$

44,283

$

5,109,866

 

-

$

14,400

$

(6,956,822)

$

15,714

$

(1,772,559)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

4,050,000

 

4,050

 

481,950

 

-

 

-

 

-

 

-

 

486,000

Shares issued on

exercise of warrants

7,482,960

 

7,483

 

366,665

 

-

 

-

 

-

 

-

 

374,148

Shares issued for services

100,000

 

100

 

21,900

 

-

 

-

 

-

 

-

 

22,000

Obligation to issue shares

-

 

-

 

-

 

80,000

 

-

 

-

 

 

 

80,000

Warrants issued on

reacquisition of

distribution rights

-

 

-

 

-

 

-

 

352,093

 

-

 

-

 

352,093

Cash received from

short sell fees

-

 

-

 

7,772

 

-

 

-

 

-

 

-

 

7,772

Net loss for the year

ended May 31, 2020

-

 

-

 

-

 

-

 

-

 

(1,092,698)

 

-

 

(1,092,698)

Translation to reporting

currency

-

 

-

 

-

 

-

 

-

 

-

 

22,900

 

22,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - May 31, 2020

55,915,709

$

55,916

$

5,988,153

 

80,000

$

366,493

$

(8,049,520)

$

38,614

$

(1,520,344)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


F-4


 

CELL MEDX CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN US DOLLARS)

 

 

 

Year ended

May 31,

 

2020

 

2019

 

 

 

 

Cash flows used in operating activities

 

 

 

 Net loss

$

(1,092,698)

 

$

(905,981)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 Accrued interest on notes payable

 

21,069

 

 

16,721

 Amortization

 

1,846

 

 

580

 Loss on reacquisition of distribution rights

 

102,094

 

 

-

 Financing fees - non-cash

 

-

 

 

219,052

 Investor relation fees - non-cash

 

3,667

 

 

-

 Unrealized foreign exchange

 

20,183

 

 

5,374

Changes in operating assets and liabilities

 

 

 

 

 

 Inventory

 

20,503

 

 

(64,311)

 Other current assets

 

16,152

 

 

(33,173)

 Accounts payable

 

46,574

 

 

141,585

 Accrued liabilities

 

9,188

 

 

5,035

 Unearned revenue

 

(57,904)

 

 

256,806

 Due to related parties

 

(16,518)

 

 

50,770

Net cash flows used in operating activities

 

(925,844)

 

 

(307,542)

 

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 Acquisition of equipment

 

(2,463)

 

 

(1,915)

Net cash used in investing activities

 

(2,463)

 

 

(1,915)

 

 

 

 

 

 

Cash flows provided by financing activities

 

 

 

 

 

 Advances payable

 

15,000

 

 

62,121

 Proceeds from notes payable

 

327,650

 

 

297,004

 Proceeds from units

 

486,000

 

 

-

 Proceeds from subscription to shares

 

80,000

 

 

-

 Cash received from short sell fees

 

7,772

 

 

-

Net cash provided by financing activities

 

916,422

 

 

359,125

 

 

 

 

 

 

Effects of foreign currency exchange on cash

 

(197)

 

 

(696)

Increase (decrease) in cash

 

(12,082)

 

 

48,972

 Cash, beginning

 

57,172

 

 

8,200

 Cash, ending

$

45,090

 

$

57,172

 

 

 

 

 

 

Non-cash financing transactions:

 

 

 

 

 

 Exercise of warrants for debt

$

374,148

 

$

-

 

 

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


F-5


 

CELL MEDX CORP.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

MAY 31, 2020

 

 

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

 

Cell MedX Corp. (Cell MedX, or the “Company”) was incorporated under the laws of the State of Nevada. On April 26, 2016, the Company formed a subsidiary, Cell MedX (Canada) Corp. (“Cell MedX Canada”) under the laws of the province of British Columbia. Cell MedX is a biotech company focusing on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general wellness.

 

Going concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of May 31, 2020, the Company has not achieved profitable operations and has accumulated a deficit of $8,049,520. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock.

 

Risks related to the rapid expansion of the COVID-19 pandemic

The Company is cognizant of the rapid expansion of the COVID-19 pandemic and the resulting global implications. To date, there have been no disruptions to the Company’s day-to-day operations. However, the Company cautions that there continues to be a possibility for potential future implementation of certain restrictions. The impact of these restrictions on the Company’s operations, if implemented, is currently unknown but could be significant.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The audited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are presented in US dollars.

 

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary, Cell MedX Canada. On consolidation, all intercompany balances and transactions are eliminated.

 

Accounting estimates

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, fair value of financial instruments and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


F-6


 

Foreign currency translations and transactions

The Company’s functional and reporting currency is the United States dollar. Foreign denominated monetary assets and liabilities are translated into their U.S. dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenues and expenses are translated at average rates of exchange during the period. Related translation adjustments as well as gains or losses resulting from foreign currency transactions are reported as part of operating expenses on the statement of operations.

 

The functional currency of Cell MedX Canada is the Canadian dollar. On consolidation, the subsidiary translates its assets and liabilities to U.S. dollars using foreign exchange rates which prevailed at the balance sheet date, and translates its revenues and expenses using average exchange rates during the period. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the other comprehensive income/loss. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

Revenue recognition

Revenue is measured based on the amount of consideration that is expected to be received by the Company for providing goods or services under a contract with a customer, which is initially estimated with pricing specified in the contract and adjusted primarily for sales returns, discounts and other credits at contract inception then updated each reporting period, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when persuasive evidence of a contract with a customer exists and a performance obligation is identified and satisfied as the customer obtains control of the goods or services. The Company recognizes revenue on the monthly eBalance® treatment packages in the month the packages are provided.

 

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

 

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are in included in cost of revenues.

 

Inventory valuation

Inventories are valued at the lower of cost or net realizable value, net of trade discounts received, with costs being determined based on the weighted average cost basis.

 

Research and development costs

The Company expenses all in-house research and development costs in the period they were incurred. Acquired research and development costs are capitalized to the extent that the sum of the undiscounted cash flows expected to result from the asset can be reasonably estimated or may be verified by an appraisal in certain instances. In all other instances the costs are expensed in the period they were incurred. Acquired research and development costs for a particular research and development project that have no future economic values, are expensed as research and development costs at the time the costs are incurred.

 

Income taxes

Income tax expense is based on pre-tax financial accounting income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not some portion or all of the deferred tax assets will not be realized.


F-7


 

Loss per share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted net income per common share includes the potential dilution that could occur upon exercise of the options and warrants to acquire common stock computed using the treasury stock method which assumes that the increase in the number of shares is reduced by the number of shares which could have been repurchased by the Company with the proceeds from the exercise of the options and warrants.

 

Long-lived assets

In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount exceeds fair value.

 

Equipment

Equipment is stated at cost and is amortized over its estimated useful life on a straight-line basis over two years.

 

Fair value measurements

The book value of cash, other current assets, accounts payable, accrued liabilities, notes and advances payable, and due to related parties approximate their fair values due to the short-term maturity of those instruments. The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

 

Level 1 -quoted prices (unadjusted) in active markets for identical assets or liabilities; 

 

Level 2 -observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and 

 

Level 3 -assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. 

 

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). There were no assets or liabilities measured at fair value on a nonrecurring basis during the periods ended May 31, 2020 and 2019.

 

Stock options and other stock-based compensation

The Company accounts for the granting of share purchase options to employees using the fair value method whereby all awards to employees are recorded at fair value on the date of the grant. The fair value of all share purchase options are expensed over their vesting period with a corresponding increase to additional capital surplus. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in additional paid-in capital is recorded as an increase to share capital.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of share purchase options. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate.


F-8


 

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2016-02, “Leases” (“ASU 2016-02”). ASU 2016-02 changes current U.S. GAAP for lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods. Early application is permitted. The Company adopted the ASU 2016-02 on June 1, 2019. As of the date of these financial statements, the Company has no leasing arrangements.

 

NOTE 3 - RELATED PARTY TRANSACTIONS

 

Amounts due to related parties, other than notes payable to related parties (Note 9) at May 31, 2020 and 2019:

 

 

May 31, 2020

 

May 31, 2019

Due to the Chief Executive Officer (“CEO”)

$

103,200

 

$

75,600

Due to the Chief Financial Officer (“CFO”)

 

9,533

 

 

33,507

Due to the Vice President (“VP”), Technology and Operations

 

34,219

 

 

54,999

Due to the former Chief Medical Officer(1)

 

n/a

 

 

81,059

Due to the former CEO and director (1)

 

n/a

 

 

51,746

Due to the former VP, Corporate Strategy and 10% shareholder

 

86,786

 

 

86,777

Due to related parties

$

233,738

 

$

383,688

 

(1)The amounts due to former CEO and former Chief Medical Officer have been reclassified to accounts payable, as both persons were not related to the Company as at May 31, 2020. 

 

The amounts due to related parties are unsecured, due on demand and bear no interest.

 

During the years ended May 31, 2020 and 2019, the Company had the following transactions with related parties:

 

 

May 31, 2020

 

May 31, 2019

Management fees to the CEO

$

27,600

 

$

43,200

Management fees to the CFO

 

12,000

 

 

12,000

Consulting fees to the VP, Technology and Operations

 

45,291

 

 

49,336

Interest accrued on loans from a major shareholder (Note 9)

 

8,423

 

 

15,312

Financing expenses to the Company’s major shareholder

 

-

 

 

233,978

Total transactions with related parties

$

93,314

 

$

353,826

 

NOTE 4 - INVENTORY

 

As at May 31, 2020, the inventory consisted of eBalance® devices and accessories held for sale valued at $29,405 (May 31, 2019 - $24,505) and work in progress, that included unfinished eBalance® devices and supplies required for manufacturing valued at $22,481 (May 31, 2019 - $48,696).

 

The cost of eBalance® devices used for further research and development and for in-house observational trials is recognized as part of research and development expense. During the year ended May 31, 2020, the Company recognized $3,897 as the cost of eBalance® devices used in research and development. The cost of eBalance® devices used in marketing and advertising is recognized as part of general and administrative expenses. During the year ended May 31, 2020, the Company recognized $12,266 as the cost of eBalance® devices used for marketing and advertising purposes.

 

NOTE 5 - OTHER CURRENT ASSETS

 

As at May 31, 2020, other current assets consisted of $44,021 in prepaid expenses (May 31, 2019 - $50,331) and $16,346 in receivables associated with GST Cell MedX Canada paid on the taxable supplies (May 31, 2019 - $8,556).


F-9


 

NOTE 6 - EQUIPMENT

 

Changes in the net book value of the equipment at May 31, 2020 and 2019 are as follows:

 

 

May 31,

2020

 

May 31,

2019

Book value, beginning of the year

$

1,281

 

$

-

Changes during the period

 

2,463

 

 

1,915

Amortization

 

(1,846)

 

 

(580)

Foreign exchange

 

(62)

 

 

(54)

Book value, end of the year

$

1,836

 

$

1,281

 

NOTE 7 - UNEARNED REVENUE

 

Changes to the unearned revenue as at May 31, 2020 and 2019:

 

 

May 31, 2020

 

May 31, 2019

Unearned revenue, beginning of the year

$

307,742

 

$

51,585

Deposits on distribution rights

 

25,000

 

 

250,000

Security deposits received from/(refunded to) customers

 

(2,269)

 

 

6,806

Security deposits recognized in sales

 

(4,537)

 

 

-

Non-refundable deposit on distribution rights

 

(25,000)

 

 

-

Reacquisition of distribution rights

 

(250,000)

 

 

-

Non-refundable deposits

 

(51,190)

 

 

-

Foreign exchange

 

254

 

 

(649)

Unearned revenue, end of the year

$

-

 

$

307,742

 

During the year ended May 31, 2020, the Company entered into a letter of intent for the wholesale distribution rights to all Mainland China, not including Hong Kong (the “LOI”). As part of the LOI, the potential distributor (the “Distributor”) paid a non-refundable fee of $25,000, which was amortized over the full length of the LOI. As at May 31, 2020, the LOI has expired, and the Company recorded $25,000 as revenue from distribution rights.

 

On January 29, 2020, the Company entered into a buyback agreement (the “Buyback Agreement’) with its distributor operating under the distribution rights agreement dated March 21, 2019 (the “Underlying Agreement”). Pursuant to the Buyback Agreement, the Company agreed to reacquire the exclusive distribution rights granted under the Underlying Agreement in exchange for a royalty on all sales of the eBalance® device up to an aggregate $507,500, and warrants to acquire up to 2,000,000 shares of the Company’s common stock (the “Warrants”) as follows:

 

·A warrant to acquire up to 1,000,000 shares exercisable at $0.50 per share expiring on March 12, 2023 

·A warrant to acquire up to 1,000,000 shares exercisable at $1.00 per share expiring on March 12, 2023 

 

Both Warrants are subject to acceleration clauses whereby the expiry date of the $0.50-warrant can be accelerated in case where the weighted average closing price (the “WAP”) of the Company’s common shares over any 30-trading-day period is equal to or greater than $1.00 per share; the $1.00-warrant may be accelerated when WAP is equal to or greater than $1.75 per share (Note 10).

 

The Warrants were valued at $352,094 and were recorded as part of reserves. The fair value of the Warrants was valued using the Black-Scholes Option pricing model using the following assumptions:

 

 

January 29, 2020

Expected Warrant Life

5 years

Risk-Free Interest Rate

1.39%

Expected Dividend Yield

Nil

Expected Stock Price Volatility

177%


F-10


 

The transaction resulted in a loss on reacquisition of the distribution rights of $102,094 which was calculated as follows:

 

 

 

January 29, 2020

Non-refundable deposit on distribution rights

$

250,000

Less: Fair market value of warrants

 

352,094

Loss on reacquisition of the distribution rights

$

(102,094)

 

On May 31, 2020, the Company took into income the deferred revenue associated with non-refundable deposits the Company received during its Fiscal 2017 year. As at May 31, 2020, the deemed right to return the devices, which the Company provided as part of its efforts to secure various distribution channels for its eBalance® devices and gather information for its in-house observational studies, expired. Therefore, the non-refundable deposits were recorded as part of revenue from distribution rights.

 

NOTE 8 - REVENUE

 

During the year ended May 31, 2020, the Company’s revenue consisted of sales of its eBalance® devices, and monthly subscriptions to eBalance® microcurrent treatments, in addition the Company also generated revenue through entering into a LOI to sell the rights to the wholesale distribution of eBalance® devices. Following are the details of revenue and associated costs:

 

 

 

Year ended

May 31, 2020

Sales of eBalance® devices

$

19,634

Cost of eBalance® devices

 

(7,993)

Royalty payable

 

(2,243)

Distribution rights (Note 7)

 

76,190

Gross margin

$

85,588

 

NOTE 9 - NOTES AND ADVANCES PAYABLE

 

The tables below summarize the short-term loans and advances outstanding as at May 31, 2020 and 2019:

 

As at May 31, 2020

Principal

Outstanding

Interest Rate

per Annum

 

Accrued

Interest(6)

Total Book

Value

$

327,650

6%

Convertible(1)

$

10,731

$

338,381

 

28,630

6%

Non-convertible(2)

 

3,464

 

32,094

 

6,625

6%

Related party(3)

 

308

 

6,933

 

35,606

6%

Related party(4)

 

1,654

 

37,260

 

87,769

0%

Advances(5)

 

-

 

87,769

$

486,280

 

 

$

16,157

$

502,437

 

As at May 31, 2019

Principal

Outstanding

Interest Rate

per Annum

 

Accrued

Interest(6)

Total Book

Value

$

29,065

6%

Non-convertible(2)

$

1,613

$

30,678

 

114,027

0%-12%

Related party(3)

 

12,533

 

126,560

 

275,000

6%

Related party(4)

 

6,468

 

281,468

 

73,048

0%

Advances(5)

 

-

 

73,048

$

491,140

 

 

$

20,614

$

511,754

 

 

 


F-11


 

(1) Convertible Loans Payable

During the year ended May 31, 2020, in order to support its daily operations and to secure required working capital, the Company entered into several short-term convertible loan agreements with two lenders for a total of $327,650 in exchange for unsecured notes payable due on demand and accumulating interest at 6% annual interest compounded monthly.  Pursuant to the loan agreements, the lenders may convert any portion of principal and/or interest accrued thereon (the “Convertible Amount”) into restricted units of common stock in the capital of the Company on the terms and at a conversion price of the then-current private placement offering. The conversion rights were assessed to have $Nil value.

 

As at May 31, 2020, the Company owed a total of $338,381 (2019 - $Nil) under the convertible loan agreements and recorded $10,731 in interest on these loans (2019 - $Nil).

 

(2) Non-convertible Loans Payable

As at May 31, 2020, the Company owed a total of $32,094 (2019 - $30,678) under two unsecured loan agreements which bear interest at 6% per annum compounded monthly, and are payable on demand. During the year ended May 31, 2020, the Company recorded $1,912 in interest on these loans (2019 - $1,409).

 

(3) Related Party Loans Payable

On August 28, 2019, Mr. Jeffs, the Company’s major shareholder, exercised 2,482,960 warrants to acquire 2,482,960 shares the Company granted in consideration for the funds Mr. Jeffs advanced to the Company during its fiscal 2019 and 2018 years.  To exercise the warrants, Mr. Jeffs chose to apply $124,148, the Company owed under the demand notes payable against the purchase price of the shares (Note 10). The exercise price was first applied to $15,051 (CAD$20,019) in interest accrued on the notes payable, with the remaining $109,097 (CAD$145,110) applied to the principal. The shares were issued on September 9, 2019. As at May 31, 2020, the Company owed Mr. Jeffs $6,933 under the remaining note payable (2019 - $126,560), which continues to accumulate interest at 6% per annum compounded monthly.

 

During the year ended May 31, 2020, the Company recorded $2,634 in interest on the loans with Mr. Jeffs. (2019 - $8,845).

 

(4) Unsecured Line of Credit with Related Party

On December 27, 2018, the Company entered into an agreement with Mr. Jeffs for an unsecured line of credit of up to $250,000 (the “Credit Line”). The funds advanced under the Credit Line accumulate interest at a rate of 6% per annum compounded monthly and are payable on demand. The Company agreed to pay Credit Line set-up fee of $25,000, which was added to the principal and accrues interest at 6% per annum compounded monthly and is payable concurrently with a demand to repay the Credit Line.

 

In consideration for the Credit Line the Company issued to the Lender non-transferable share purchase warrants (the “Warrants”) to purchase up to 5,000,000 Company’s shares exercisable at $0.05 per share and expiring on December 27, 2021. The Warrants vested at a rate of 20 warrants for every $1 drawn on the Credit Line. In addition, in recognition of $124,128 previously advanced by the Lender in series of separate loan agreements, the Company issued to the Lender non-transferable share purchase warrants (the “Additional Warrants”) to purchase up to 2,482,960 shares exercisable at $0.05 per share and expiring on December 27, 2021. The Additional Warrants vested at the time of grant.

 

The Warrants and the Additional Warrants were determined to be detachable from the debt instrument, as the debt instrument did not have to be surrendered to exercise the Warrants. The Company allocated the Proceeds from the credit line proportionally based on the relative fair value of the Credit Line without the Warrants and of the Warrants themselves. The portion of the proceeds allocated to the Warrants was $193,665 and was recorded to additional paid-in capital, and, since the Credit Line was due on demand, the Company expensed $193,665 immediately upon receipt of advances.


F-12


 

Fair value of Warrants was valued using the Black-Scholes Option pricing model using the following assumptions.

 

 

December 27, 2018

Expected Warrant Life

2.92 - 3 years

Risk-Free Interest Rate

2.5 - 2.58%

Expected Dividend Yield

Nil

Expected Stock Price Volatility

161.1% - 161.2%

 

On August 28, 2019, Mr. Jeffs exercised 5,000,000 warrants to acquire 5,000,000 shares of the Company granted to Mr. Jeffs in consideration for the Credit Line. To exercise the warrants, Mr. Jeffs chose to apply $250,000, the Company owed under the Credit Line against the purchase price of the shares (Note 10). The exercise price was first applied to $10,606 in interest accrued on the balance due under the Credit Line, $25,000 was applied towards the Credit Line set-up fee, and the remaining $214,394 was applied to the principal. The shares were issued on September 9, 2019. As at May 31, 2020, the Company owed Mr. Jeffs $37,260 under the Credit Line (2019 - $281,468), which continues to accumulate interest at 6% per annum compounded monthly.

 

During the year ended May 31, 2020, the Company recorded $5,793 in interest on principal outstanding under the Credit Line (2019 - $6,468).

 

(5) Advances Payable

During the year ended May 31, 2020, the Company borrowed $15,000 (2019 - $62,121) from unrelated parties. The advances are non-interest bearing, unsecured, and payable on demand. As at May 31, 2020, a total of $87,769 (2019 - $73,048) was due and payable on account of the advances.

 

(6) Interest Expense

During the year ended May 31, 2020, the Company recorded a total of $21,069 (2019 - $16,721) in interest expense associated with its liabilities under the notes and advances payable.

 

NOTE 10 - SHARE CAPITAL

 

On June 24, 2019, the Company issued 3,950,000 units for total gross proceeds of $474,000, and on July 22, 2019, the Company issued 100,000 units for total gross proceeds of $12,000. Each unit consisted of one common share of the Company and one share purchase warrant (the “2019 Warrant”) expiring on the second-year anniversary of the date of issuance of the 2019 Warrant. Each 2019 Warrant is exercisable into one share of the Company’s common stock at $0.20 per share.

 

On September 9, 2019, the Company issued 7,482,960 common shares of the Company on exercise of 7,482,960 warrants the Company granted to Mr. Jeffs in consideration for the Credit Line and in recognition of $124,128 previously advanced to the Company by Mr. Jeffs in series of separate loan agreements (Note 9). To exercise the warrants, Mr. Jeffs chose to apply $374,148, the Company owed under the Credit Line and notes payable against the purchase price of the shares.

 

On April 2, 2020, the Company entered into a 12-month consulting agreement for strategic business advisory services (the “Agreement”), which commenced on April 1, 2020. As part of the Agreement the Company issued to the consultant 100,000 common shares of the Company valued at $22,000, based on the fair market value of the Company’s shares on the date of the Agreement. As at May 31, 2020, $18,333 were set up as prepaid expenses.

 

At May 31, 2020, the Company received a total of $80,000 in subscriptions to 320,000 units of its common stock. Each subscribed unit consisted of one common share of the Company and one share purchase warrant (the “2020 Warrant”) expiring on the second year anniversary of the date of issuance of the 2020 Warrant. Each 2020 Warrant is exercisable into one share of the Company’s common stock at $0.35 per share during the first six months from the date of closing of the offering, and at $0.50 per share during the remaining life of the 2020 Warrant. The units were issued subsequent to May 31, 2020 (Note 12).


F-13


 

Options

 

The changes in the number of stock options outstanding during the years ended May 31, 2020 and 2019 are as follows:

 

 

Year ended

May 31, 2020

 

Year ended

May 31, 2019

 

Number of

options

Weighted

average

exercise price

 

Number of

options

Weighted

average

exercise price

Options outstanding, beginning

7,050,000

$

0.24

 

9,450,000

$

0.35

Options cancelled

-

$

n/a

 

(2,400,000)

$

0.67

Options outstanding, ending

7,050,000

$

0.24

 

7,050,000

$

0.24

 

Details of options outstanding and exercisable as at May 31, 2020, are as follows:

 

Number of options outstanding

and exercisable

Exercise

price

Grant date

Expiry date

2,500,000(1)

$0.05

November 25, 2014

August 26, 2020

2,500,000(2)

$0.35

August 5, 2015

August 5, 2020

2,050,000

$0.35

August 24, 2017

August 23, 2022

7,050,000

$0.24

 

 

(1)Of these options on August 13, 2020, 1,250,000 options were exercised by the former VP, Corporate Strategy and 10% shareholder and 1,234,855 options were exercised by the Company’s VP of Technology. Remaining 15,145 options expired unexercised. 

(2)The options were issued to the Company’s CEO, and vested Quarterly beginning on August 5, 2015. Each vested tranche can be exercisable during the period of five years after the vesting date. Subsequent to May 31, 2020, 500,000 options issued to the Company’s CEO expired unexercised. 

 

At May 31, 2020, the weighted average remaining contractual life of the stock options outstanding was 0.95 years.

 

Warrants

 

The changes in the number of warrants outstanding during the years ended May 31, 2020, and 2019, are as follows:

 

 

Year ended

May 31, 2020

 

Year ended

May 31, 2019

Warrants outstanding, beginning

20,297,565

 

12,814,605

Warrants issued

6,050,000

 

7,482,960

Warrants exercised

(7,482,960)

 

-

Warrants outstanding, ending

18,864,605

 

20,297,565

 

Details of warrants outstanding as at May 31, 2019, are as follows:

 

Number of

warrants

exercisable

Grant date

Exercise price

2,000,000

March 3, 2016

$0.75 during the period from March 3, 2020 to March 3, 2021

9,094,605

October 12, 2016

$1.25 during the period from October 12, 2019 to October 12, 2020

$1.50 during the period from October 12, 2020 to October 12, 2021

1,480,000

October 12, 2017

$1.50 during the period from October 12, 2019 to October 12, 2020

240,000

February 7, 2018

$1.50 expiring on February 7, 2021

3,950,000

June 24, 2019

$0.20 expiring on June 24, 2021

100,000

July 22, 2019

$0.20 expiring on July 22, 2021

1,000,000

January 29, 2020

$0.50 expiring on March 12, 2023

1,000,000

January 29, 2020

$1.00 expiring on March 12, 2023

18,864,605

 

 


F-14


At May 31, 2020, the weighted average life and exercise price of the warrants was 1.30 years and $0.94, respectively.

 

On January 29, 2020, as part of the Buyback Agreement, the Company issued to its distributor 2,000,000 warrants (the “Warrants”) (Note 7). The Warrants were valued at $352,094 and were recorded as part of reserves (Note 7).

 

Recovery of Short-Swing Profits

 

Effective May 6, 2020, the Company received $7,772 related to the recovery of short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended.

 

NOTE 11 - INCOME TAXES

 

The reported income taxes differ from the amounts obtained by applying statutory rates to the loss before income taxes as follows:

 

 

May 31, 2020

 

May 31, 2019

Net loss

$

(1,092,697)

 

$

(905,981)

Statutory tax rate

 

21%

 

 

21%

Expected income tax recovery

 

(229,466)

 

 

(190,256)

Permanent differences and other

 

(11,534)

 

 

27,256

Effect of foreign exchange

 

(4,000)

 

 

-

Change in valuation allowance

 

245,000

 

 

163,000

Income tax recovery

$

-

 

$

-

 

The Company’s tax-effected future income tax assets and liabilities are estimated as follows:

 

 

May 31, 2020

 

May 31, 2019

Deferred income tax assets (liabilities)

 

 

 

 

 

 Losses carried forward

$

1,206,000

 

$

961,000

 Equipment

 

72,000

 

 

72,000

Less:  Valuation allowance

 

(1,278,000)

 

 

(1,033,000)

Net deferred income tax assets

$

-

 

$

-

 

At May 31, 2020 and 2019, the Company has recorded a valuation allowance for the aggregate of its tax assets as management believes it is more likely than not that the deferred tax asset will not be realized.

 

As at May 31, 2020, the Company had net operating loss carry forwards in the United States of approximately $4,496,000 (2019 - $4,043,000) to reduce future federal and state taxable income. These losses may be carried forward indefinitely.

 

As at May 31, 2020, the Company also had non-capital loss carry forwards of approximately $969,000 (2019 - $432,000) to reduce future Canadian taxable income. These losses expire in 2038 and 2039.

 

The Company is not currently subject to any income tax examinations by any tax authority. Should a tax examination be opened, management does not anticipate any tax adjustments, if accepted, that would result in a material change to its financial position.

 

NOTE 12 - SUBSEQUENT EVENTS

 

Subsequent to May 31, 2020, the Company entered into a loan agreement for $14,744 (CAD$20,000). The loan bears interest at 6% per annum compounded monthly, is unsecured, and payable from the first proceeds of warrants that may be exercised subsequent to the money being lent under the loan agreement or on July 9, 2021, whichever comes first.

 

Subsequent to May 31, 2020, the Company entered into a loan agreement for $65,000. The loan bears interest at 6% per annum compounded monthly, is unsecured, and payable on demand.


F-15


Subsequent to May 31, 2020,The Company issued 988,000, units of its common stock for gross proceeds of $247,000, of which $80,000 were received as at May 31, 2020. Each unit consisted of one common share of the Company and one warrant allowing its holder to acquire on additional common share at $0.35 until January 30, 2021, and at $0.50 per share from January 30, 2021 to July 30, 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


F-16


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

Not applicable

 

ITEM 9A. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

 

In connection with the preparation of this Annual Report on Form 10-K, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of May 31, 2020. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

Based on that evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms due to lack of segregation of duties.

 

Management’s Report on Internal Controls over Financial Reporting

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002 (SOX). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

 

·pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; 

·provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and our Board of Directors; and 

·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. 

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of May 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, it was found that the internal controls cannot be relied upon due to lack of segregation of duties.

 

 


25


 

Our independent auditors have not issued an attestation report on management’s assessment of our internal control over financial reporting. As a result, this Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.

 

Changes in Internal Controls

 

As of the end of the period covered by this report, there have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that materially affected, or are reasonably likely to materially affect, our results of operations.

 

ITEM 9B. OTHER INFORMATION

 

Not applicable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


26


 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

 

Directors and Executive Officers

 

Each of our directors holds office until the earlier of (i) our next annual meeting of our stockholders, (ii) that director’s successor has been elected and qualified, or (iii) that director resigns. Each of our executive officers are appointed by our Board of Directors and holds office until he resigns or is removed by the Board.

 

Our management team is listed below:

 

Name

Age

Positions

Frank McEnulty

63

Chief Executive Officer, Director, and former President

Yanika Silina

42

Chief Financial Officer, Treasurer, Corporate Secretary and Director

Joao (John) da Costa

56

Chief Operating Officer, Director

Bradley Hargreaves

61

Vice President, Technology and Operations and Director

George Adams

69

Director

 

Set forth below is a brief description of the background and business experience of each of our executive officers and directors:

 

Mr. McEnulty has served as a director of our Company since March 6, 2014, and as our Chief Executive Officer and President from March 6, 2014 until December 1, 2017. Mr. McEnulty was reappointed our CEO on September 12, 2018. Prior to closing our acquisition of the eBalance® Technology, on November 25, 2015, Mr. McEnulty also served as our Chief Financial Officer, Treasurer and Secretary. Mr. McEnulty is an experienced executive with an extensive background in finance and accounting. In addition to his entrepreneurial activities, Mr. McEnulty teaches Finance and Management at California State University, Long Beach. Since 1996, Mr. McEnulty has been the President and CEO of Meghan Matthews, Inc., a private investment company. Since 2004, Mr. McEnulty has also been a member of the board and compensation committee for Ojai Oil Company. Ojai Oil Company currently trades on the OTC Pink marketplace. Since September 2014 until January 2015 Mr. McEnulty has been the director of Madison Technologies, Inc. From 1989 through 1995, Mr. McEnulty was the Chief Operating Officer and Vice President of Finance for Tri-Five Property Management, a foreign owned real estate investment company. Mr. McEnulty received a Masters of Business Administration from the University of Southern California and a Bachelor of Science from California State University, Long Beach.

 

Ms. Silina has served as the Company’s Chief Financial Officer and Corporate Secretary since November 24, 2014, and as director since September 26, 2016. Ms. Silina is a Chartered Professional Accountant and holds a Diploma in Management Studies from Thompson Rivers University. Ms. Silina is currently CFO of Stuhini Exploration Ltd. (TSX.V: STU), and a director of Kesselrun Resources Ltd. (TSX.V: KES). Ms. Silina has previously held various management positions with other public companies listed on OTC Link alternative trading system and Canadian Securities Exchange.

 

Mr. da Costa has served as the Company’s Chief Operating Officer and director since June 8, 2020. Mr. da Costa has more than twenty-five years of experience providing bookkeeping and accounting services to both private and public companies and is the founder and President of Da Costa Management Corp. (DCM), a company that has provided management and accounting services to public and private companies since August 2003. Since 2002, Mr. da Costa has been the CFO, and a member of the Board of Directors of Triton Emission Solutions Inc., a company reporting under the United States Securities Exchange Act of 1934 (the "Exchange Act"). In addition to Triton Emission Solutions Inc., Mr. da Costa currently serves as the CFO, Treasurer and a director of Red Metal Resources Ltd., a company reporting under the Exchange Act and engaged in the business of acquiring and exploring mineral claims. Mr. da Costa also currently serves as the CFO and a director of Kesselrun Resources Ltd., a Canadian reporting company listed on the TSX Venture Exchange, and as a director of Live Current Media, Inc., a company reporting under the Exchange Act.


27


 

Mr. Hargreaves’ background is in engineering, with two operations journeyman tickets and four-year operations certification from Shell Canada. During the past nine years Mr. Hargreaves has researched the eBalance® Technology and designed and improved treatment protocols for the treatment of disabilities and related ailments. Mr. Hargreaves provides his expertise and technical support to our research and development team and oversees the continuous development of the project from an engineering perspective.  Mr. Hargreaves has been the director of operations and principal of XC Velle Institute Inc., a privately held technology and spa company, since 2009.  From approximately 2002 to 2009, Mr. Hargreaves worked operations for a privately held spa company that at one point employed up to 15 employees.

 

Dr. Adams has served as a director of our Company since March 23, 2018. Dr. Adams brings with him a wealth of expertise in successfully developing and bringing medical devices to global markets. Dr. Adams is currently a Director and Chief Executive Officer of VentriPoint Diagnostics Ltd. (TSXV:VPT). Dr. Adams is a scientist and a serial entrepreneur with extensive public market experience. His previous positions include CEO of Amorfix Life Sciences (TSX:AMF), Chairman of Sernova Corp (TSXV:SVA) and President and CEO of the UT Innovations Foundation. Prior to this, Dr. Adams held research and executive positions with Boston Scientific Inc., Pfizer Inc., Corvita Canada Inc., University of Ottawa, and Canadian Red Cross.

 

Dr. Adams has been instrumental in founding over 32 companies who have raised $120 million and has been a Director of 10 venture capital funds, 10 start-up companies and two Centres of Excellence. Dr. Adams was awarded a World Economic Foundation Technology Pioneer for 2007 and TBI Company of the year in 2009. Dr. Adams has 124 scientific publications and is a reviewer for major scientific journals, federal granting agencies and Centres of Excellence.  Dr. Adams obtained his BASc and MASc from the University of Waterloo and his PhD in Blood and Cardiovascular Disease, from McMaster University.

 

Significant Employees

 

We have no significant employees other than our officers and directors.

 

Family Relationships

 

There are no family relationships between our executive officers or directors.

 

Involvement in Certain Legal Proceedings

 

During the past ten years, none of Cell MedX’s directors or officers has been:

 

·a person against whom a bankruptcy petition was filed; 

·a general partner or executive officer of any partnership, corporation, or business association against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time; 

·convicted in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 

·the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or commodities trading or banking activities; 

·the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of (1) any court of competent jurisdiction, permanently or temporarily enjoining him or otherwise limiting him from acting, or (2) any Federal or State authority barring, suspending or otherwise limiting for more than 60 days his right to act, as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity, or to be associated with persons engaged in any such activity; 

·found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; 


28


 

·found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 

·the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of: 

·any Federal or State securities or commodities law or regulation, or 

·any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or 

·any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 

·the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 

 

Compliance with Section 16(a) of the Exchange Act.

 

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities (collectively, the “Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Under the SEC regulations, Reporting Persons are required to provide us with copies of all forms that they file pursuant to Section 16(a). Based on our review of the copies of such forms received by us, the following persons have, during the fiscal year ended May 31, 2020, failed to file, on a timely basis, the reports required by Section 16(a) of the Exchange Act:

 

Name and Principal Position

Number of

Late Reports

Transactions Not

Timely Reported

Known Failures to

File a Required Form

Richard Jeffs, major shareholder

3(1)

3

nil

 

 

 

 

(1)Mr. Jeffs was late filing reports on Form 4 reflecting open market transactions that took place on July 29, 2019, April 8, 2020, April 13, 2020, and April 21, 2020. 

 

Nomination Procedure for Directors

 

We do not have a standing nominating committee. Recommendations for candidates to stand for election as directors are made by our Board of Directors. In carrying out their responsibilities, the Board of Directors will consider candidates suggested by stockholders. If a stockholder wishes to formally place a candidate’s name in nomination, however, he or she must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for candidates to be evaluated by the proposed directors must be sent to the Board of Directors, Cell MedX Corp., 123 W. Nye Ln, Suite 446, Carson City, NV 89706.

 

Identification of Audit Committee

 

We do not have a separately-designated standing audit committee. Rather, our entire Board of Directors performs the required functions of an audit committee.

 

Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.

 

As of May 31, 2020, we did not have a written audit committee charter or similar document and have not adopted any specific policies or procedures for the engagement of non-audit services.


29


 

Audit Committee Financial Expert

 

Frank McEnulty, our Chief Executive Officer and a member of our Board of Directors qualifies as an “audit committee financial expert”, as defined by Item 407(d)(5) of Regulation S-K promulgated under the Securities Act of 1933 and the Securities Exchange Act of 1934. Notwithstanding the fact that Mr. McEnulty is not an independent director, we believe that his experience in analyzing and evaluating financial statements, as well as his prior experience being on the board of directors of other public companies will provide us with the guidance we need until we are able to expand our board to include independent directors who have the knowledge and experience to serve on an audit committee.

 

Code of Ethics

 

We have adopted a Code of Ethics that applies to all our executive officers and employees, including our CEO and CFO. Our Code of Ethics is attached as an exhibit to this Annual Report on Form 10-K. We believe that our Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the Code.

 

ITEM 11. EXECUTIVE COMPENSATION.

 

The following table summarizes all compensation received by our Executive Officers for the past two fiscal years:

 

SUMMARY COMPENSATION TABLE

 

Name and

principal position

Year

Salary

Bonus

Stock

Awards

Option

Awards

Non-

Equity

Incentive

Plan

Compensa

tion

Non-

qualified

Deferred

Compen

sation

Earnings

All other

compensation

Total

 

 

($)

($)

($)

($)

($)

($)

($)

($)

Frank McEnulty

CEO and former President

2020

27,600(1)

Nil

Nil

Nil

Nil

Nil

Nil

27,600

2019

43,200(1)

Nil

Nil

Nil

Nil

Nil

Nil

43,200

 

 

 

 

 

 

 

 

 

 

Yanika Silina

CFO

2020

12,000(2)

Nil

Nil

Nil

Nil

Nil

Nil

12,000

2019

12,000(2)

Nil

Nil

Nil

Nil

Nil

Nil

12,000

 

 

 

 

 

 

 

 

 

 

Bradley Hargreaves

Vice President, Technology and Operations

2020

45,291(3)

Nil

Nil

Nil

Nil

Nil

Nil

45,291

2019

49,336(3)

Nil

Nil

Nil

Nil

Nil

Nil

49,336

 

(1)We do not have a written compensation agreement with Mr. McEnulty. Mr. McEnulty is being compensated for management services based on a verbal agreement between us and Mr. McEnulty who invoices us for his services on a quarterly basis. On December 1, 2019, Mr. McEnulty agreed to reduce his management fee from $3,600 per month to $1,000 per month. 

(2)We do not have a written compensation agreement with Ms. Silina. Ms. Silina is being compensated for management services based on a verbal agreement between us and Ms. Silina who invoices us for her services at a monthly rate of $1,000. 

(3)Represents amounts paid or accrued to Mr. Hargreaves for consulting services pursuant to the verbal agreement between the Company and Mr. Hargreaves, who agreed to a consulting fee of CAD$5,000 per month. 


30


 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

 

The following table provides information concerning stock awards for each of our named executive officer, as that term is defined in Item 402(m)(2) of Regulation S-K as of our fiscal year end of May 31, 2020.

 

OPTION AWARDS

Name and Position

No. of

Securities

Underlying

Unexercised

Options (#)

Exercisable

No. of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

Option

Exercise Price

Option

Vesting Date

Option

Expiration Date

 

 

 

 

 

 

Frank McEnulty

500,000(1)

-

$0.35

Aug. 5, 2015

Aug. 5, 2020

Chief Executive Officer

500,000

-

$0.35

Oct. 1, 2015

Oct. 1, 2020

 

500,000

-

$0.35

Jan. 1, 2016

Jan. 1, 2021

 

500,000

-

$0.35

Apr. 1, 2016

Apr. 1, 2021

 

500,000

-

$0.35

Jul. 31, 2016

Jul. 31, 2021

 

 

 

 

 

 

Yanika Silina

300,000

-

$0.35

Aug. 24, 2017

Aug. 23, 2022

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

Bradley Hargreaves

1,250,000(2)

-

$0.05

Aug. 26, 2015

Aug. 26, 2020

Vice President, Technology and Operations

 

 

 

 

 

 

(1)These options expired unexercised. 

(2)On August 13, 2020, Mr. Hargreaves exercised his option to acquire shares of the Company’s common stock and acquired 1,234,855 shares for total proceeds to the Company of $61,743. Remaining 15,145 common shares available under the option expired unexercised. 

 

Executive Officer Employment / Consulting Agreements

 

We do not have employment, consulting, or other compensating plans or arrangements, between us and any one of our named executive officers. There are also no arrangements which provide for specific compensation in the event of resignation, retirement, other form of termination, or from a change of control of Cell MedX, or from a change in a named executive officer’s responsibilities following a change in control.

 

DIRECTOR COMPENSATION

 

The following table sets forth the compensation paid to our directors during our May 31, 2020, fiscal year, other than directors who were also named executive officers as that term is defined in Item 402(m)(2). Compensation paid to directors who were also named executive officers during our May 31, 2020 fiscal year is set out in the tables above.

 

Name and

principal position

Year

Salary

Bonus

Stock

Awards

Option

Awards

Non-

Equity

Incentive

Plan

Compensa

tion

Non-

qualified

Deferred

Compen

sation

Earnings

All other

compensation

Total

 

 

($)

($)

($)

($)

($)

($)

($)

($)

Dr. George Adams

2020

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

 

 

 

 

 

 

 

 

 

 

As of the date of this Annual Report on Form 10-K we do not have any compensation arrangements with Dr. George Adams for acting as a member of our Board of Directors. We anticipate, however, the compensation, once finalized, will commensurate with that received by other directors, including participation in grants of stock options.


31


 

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT.

 

The following tables set forth certain information concerning the number of shares of our common stock owned beneficially as of September 15, 2020, by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers (as defined under Item 402(m)(2) of Regulation S-K), and (iii) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.

 

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following tables does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding. As of September 15, 2020, there were 59,388,564 shares of our common stock issued and outstanding.

 

Security Ownership of Certain Beneficial Owners (greater than 5%)

 

Title of Class

Name and Address of

Beneficial Owner

Amount and Nature of

Beneficial Owner

Percent

of Class

Common Stock

Richard Norman Jeffs

11750 Fairtide Road,

Ladysmith, BC V9G 1K5

13,252,028(1)

21.59%

Common Stock

Jean Arnett

904-1616 Bayshore Drive

Vancouver, BC V6G 3L1

6,250,000

10.52%

Common Stock

Brad Hargreaves

904-1616 Bayshore Drive

Vancouver, BC V6G 3L1

6,234,855

10.50%

Common Stock

Susan Jeffs

11750 Fairtide Road,

Ladysmith, BC V9G 1K5

5,233,334(2)

8.45%

Common Stock

City Group LLC

1201 Orange Street

Suite 600

Wilmington, DE 19801

3,797,294(3)

6.20%

Common Stock

Tradex Capital Corp

1177 W. Hastings Street

Suite 2288

Vancouver, BC V6E 2K3

3,511,576(4)

5.77%

 

 

 


32


 

Security Ownership of Management

 

Title of Class

Name and Address of

Beneficial Owner

Amount and Nature of

Beneficial Owner

Percent

of Class

Common Stock

Frank McEnulty

Chief Executive Officer and Director

123 W. Nye Ln, Suite 446

Carson City, NV 89706

2,561,016(5)

4.17%

Common Stock

Yanika Silina

Chief Financial Officer,

Treasurer, Secretary and Director

820 - 1130 West Pender Street,

Vancouver, BC V6E 4A4

350,000(6)

0.59%

Common Stock

Brad Hargreaves

Vice President, Technology

and Operations and Director

904-1616 Bayshore Drive

Vancouver, BC V6G 3L1

6,234,855

10.50%

Common Stock

Joao (John) da Costa

820 – 1130 West Pender Street

Vancouver, BC V6E 4A4

3,030,000(7)

4.98%

Common Stock

George Adams

Director

7535 Conservation Rd

Guelph, ON N1H 6J1

Nil

Nil

Common Stock

Directors and Executive Officers

(as a group)

12,175,871

20.23%

 

(1)13,252,028 shares listed as being held by Mr. Jeffs include warrants to purchase up to 2,000,000 shares of our common stock exercisable at a price of $0.75 per share expiring on March 3, 2021. 

 

(2)5,233,334 shares listed as being held by Mrs. Jeffs include warrants to purchase up to 666,667 shares of our common stock exercisable at a price of $1.25 per share if exercised no later than on October 12, 2020, and $1.50 if exercised during the period from October 12, 2020 to October 12, 2021, and warrants to purchase up to 1,875,000 common shares at a price of $0.20 per share expiring on June 24, 2021. 

 

(3)3,797,294 shares listed as being held by City Group LLC include warrants to purchase up to 1,898,647 shares of our common stock at an exercise price of $1.25 per share if exercised no later than on October 12, 2020, and $1.50 if exercised during the period from October 12, 2020 to October 12, 2021. 

 

(4)3,511,576 shares listed as being held by Tradex Capital Corp. include warrants to purchase up to 1,500,000 shares of our common stock at an exercise price of $1.25 per share if exercised no later than on October 12, 2020, and $1.50 if exercised during the period from October 12, 2020 to October 12, 2021. 

 

(5)of 2,561,016 shares listed as being held by Mr. McEnulty, 40,000 shares and 40,000 warrants are issued in the name of the McEnulty Family Revocable Living Trust managed by Mr. McEnulty; the warrants expire on July 30, 2022, and can be exercised at $0.35 until January 30, 2021, and at $0.50 if exercised between January 30, 2021 and July 30, 2022. In addition, Mr. McEnulty holds an option to acquire up to 2,000,000 shares of our common stock at a price of $0.35 per share, the options vested in tranches of 500,000 shares and expire on October 1, 2020, January 1, 2021, March 1, 2021, and July 1, 2021 in tranches of 500,000 shares. 

 

(6)350,000 shares listed as being held by Ms. Silina include options to purchase up to 300,000 shares of our common stock at an exercise price of $0.35 per share. 

 

(7)3,030,000 shares listed as being held my Mr. da Costa include options to purchase up to 1,500,000 shares of our common stock at an exercise price of $0.35 per share which were granted to Da Costa Management Corp., the Company Mr. da Costa is the President and sole director of. 


33


Equity Compensation Plans

 

The following table sets forth certain information concerning all equity compensation plans previously approved by stockholders and all previous equity compensation plans not previously approved by stockholders, as of May 31, 2020, our most recent fiscal year end:

 

Equity Compensation Plan Information

 

Plan Category

Number of Securities

to be Issued Upon

Exercise of

Outstanding Options,

Warrants and Rights

(a)

Weighted-Average

Exercise Price

of Outstanding

Options, Warrants

and Rights

(b)

Number of Securities

Remaining Available

for Future Issuance

Under Equity

Compensation Plans

(Excluding Securities

Reflected in Column (a))

(c)

Equity Compensation Plans

Approved By Security Holders

None

Not Applicable

None

Equity Compensation Plans

Not Approved By Security Holders(1)

7,050,000

$0.24

None

(1)At May 31, 2020 we had the following individual compensation arrangements under which we issued options to purchase shares of our common stock: 

 

·On November 24, 2014, we granted to Ms. Arnett and Mr. Hargreaves options to purchase up to 10,000,000 shares (20,000,000 shares in total) of our common stock at an exercise price of $0.05 per share. On September 26, 2016, pursuant to our letter agreement with Ms. Arnett and Mr. Hargreaves, we canceled 17,500,000 common shares of the Company (8,750,000 shares, each), which at the time have not vested; remaining options to acquire up to 2,500,000 shares (1,250,000 shares, each) were exercisable at $0.05 per share and expiring on August 26, 2020. Mr. Arnett and Mr. Hargreaves exercised their options on August 13, 2020. Ms. Arnett exercised her option in full, Mr. Hargreaves acquired 1,234,855 shares and allowed remaining 15,145 to expire. 

·On August 5, 2015, we granted to Mr. McEnulty non-transferrable options to purchase up to 2,500,000 shares of our common stock at an exercise price of $0.35 per share. These options vested in equal installments of 500,000 shares each, with options for the first 500,000 shares vesting on the grant date. The remaining options vested on October 1, 2015, January 1, 2016, April 1, 2016 and July 1, 2016, respectively, and expire on the 5th year anniversary of the applicable vesting date, subject to certain early termination provisions, upon death, or if Mr. McEnulty ceases to act for us in any capacity either voluntarily or as a result of termination or removal for cause. As at the date of this Annual Report on Form 10-K, first instalment of 500,000 shares expired unexercised. 

·On August 24, 2017, we granted to Ms. Silina non-transferrable options to purchase up to 300,000 shares of our common stock at an exercise price of $0.35 per share. The options vested immediately and expire on August 24, 2022. 

·On August 24, 2017, we granted to Da Costa Management Corp., an entity owned and operated by Mr. da Costa, non-transferrable options to purchase up to 1,500,000 shares of our common stock at an exercise price of $0.35 per share. The options vested immediately and expire on August 24, 2022. 

 

Changes in Control

 

We are not aware of any arrangements that might result in a change in control of our Company subsequent to the date of this Annual Report on Form 10-K.


34


 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Director Independence

 

Our common stock is quoted on the OTC Link alternative trading system on the OTCQB marketplace, which does not have director independence requirements. In determining whether any of our directors are independent, we have applied the definition of “independent director” in Section 803 of the NYSE MKT Company Guide. We have determined that, under that definition, as of the date of this Annual Report on Form 10-K, Dr. George Adams is an independent director.

 

Transactions with Related Persons

 

Since June 1, 2018, the directors, executive officers, or holders of more than 5% of our common stock, or members of their immediate families, as described below, have completed transactions with us in which they had direct or indirect material interests that exceeded the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years.

 

Frank McEnulty

 

As at May 31, 2020, we were indebted to Mr. McEnulty, our CEO, and a member of our Board of Directors, in the amount of $103,200 on account of unpaid management fees. On July 30, 2020, Mr. McEnulty acquired 40,000 units of our common stock as part of our non-brokered private placement offering. Mr. McEnulty acquired the units in the McEnulty Family Revocable Living Trust managed by Mr. McEnulty.

 

Yanika Silina

 

As at May 31, 2020, we were indebted to Ms. Silina, our CFO, Treasurer, Corporate Secretary, and a member of our Board of Directors, in the amount of $9,533 on account of unpaid management fees and reimbursable expenses. On July 1, 2020, we agreed to increase Ms. Silina’s monthly fee to $2,500.

 

Bradley Hargreaves

 

As at May 31, 2020, we were indebted to Mr. Hargreaves, our Vice President of Technology and Operations and a member of our Board of Directors, in the amount of $34,219 for unpaid consulting fees and reimbursable expenses.

 

Jean Arnett

 

As at May 31, 2020, we were indebted to Ms. Arnett, our former VP, Corporate Strategy and 10% securityholder, in the amount of $86,786 for unpaid consulting fees.

 

Richard Jeffs

 

As at May 31, 2020, we were indebted to Mr. Jeffs, our major securityholder, in the amount of $44,193 under the notes payable due on demand and accruing interest at 6% per annum compounded monthly.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for Cell MedX’s audit of annual financial statements and for review of financial statements included in Cell MedX’s Form 10-Q’s or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were:

 

2020 - $41,000 - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2019 - $35,000 - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants


35


 

Audit-Related Fees

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of Cell MedX’s financial statements and are not reported in the preceding paragraph:

 

2020 - $Nil - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2019 - $Nil - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

 

Tax Fees

 

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were:

 

2020 - $6,664 - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2019 - $804 - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

 

All Other Fees

 

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) were:

 

2019 - $Nil - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2018 - $Nil - Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

 

Approval Policies and Procedures

 

We do not have a separately standing audit committee.  As such, our entire board of directors acts as our audit committee. Our Board of Directors annually reviews the qualifications of our principal accountant and approves their engagement as our principal accountant prior to their engagement.  All of the non-audit services provided by our principal accountant were either pre-approved by our Board of Directors prior to engagement of the principal accountant for those services, or were approved by our Board of Directors prior to completion of their audit of our annual financial statements

 

Approval Policies and Procedures

 

We do not have a separately standing audit committee. As such, our entire board of directors acts as our audit committee. Our Board of Directors annually reviews the qualifications of our principal accountant and approves their engagement as our principal accountant prior to their engagement.  All of the non-audit services provided by our principal accountant were either pre-approved by our Board of Directors prior to engagement of the principal accountant for those services, or were approved by our Board of Directors prior to completion of their audit of our annual financial statements.

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.

 

Financial Statements

 

The financial statements of Cell MedX Corp. have been included in Item 8 above.

 

Financial Statement Schedules

 

All schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted from this Item 15.


36


 

Exhibits

 

All Exhibits required to be filed with the Form 10-K are included in this Annual Report or incorporated by reference to Cell MedX Corp.’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-54500.

 

Exhibit

 

 

Number

 

Description of Document

3.1

 

Articles of Incorporation (2)

3.2

 

Articles of Merger - Sports Asylum, Inc. and Plandel Resources, Inc.(5)

3.3

 

Articles of Merger - Cell MedX Corp. and Sports Asylum, Inc.(5)

3.4

 

Bylaws (1)

4.1

 

Specimen Stock Certificate (1)

10.4

 

Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(6)

10.5

 

First Amendment Agreement dated October 28, 2014 to that Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(7)

10.6

 

Second Amendment Agreement dated November 13, 2014 to that Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(8)

10.7

 

Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Jean Arnett.(9)

10.8

 

Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Brad Hargreaves.(9)

10.9

 

First Amendment to Stock-Option Agreement dated February 28, 2014 to that Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Jean Arnett.(9)

10.10

 

First Amendment to Stock-Option Agreement dated February 28, 2014 to that Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Brad Hargreaves. (9)

10.11

 

Management Consulting Agreement dated January 13, 2015 among Cell MedX Corp., and Dr. John Sanderson, MD.(10)

10.12

 

Stock Option Agreement dated December 12, 2014 among Cell MedX Corp. and Dr. John Sanderson, MD.(10)

10.13

 

Stock Option Agreement dated August 5, 2015 among Cell MedX Corp. and Frank E. McEnulty.(11)

10.14

 

eBalance® Prototype Development Agreement dated October 1, 2015 among Cell MedX Corp., and Claudio Tassi.(12)

10.15

 

Non-binding Letter of Intent dated December 4, 2015 to Enter into Development Agreement and License Agreement among Cell MedX Corp., Claudio Tassi, and Bioformed Aesthetic S.L.(13)

10.16

 

Loan Agreement and Note Payable dated February 4, 2016, among Cell MedX Corp., and Tradex Capital Corp.

10.17

 

Loan Agreement and Note Payable dated March 2, 2016, among Cell MedX Corp., and Tradex Capital Corp.

10.18

 

Loan Agreement dated March 3, 2016 between Richard Norman Jeffs and Cell MedX Corp.(14)

10.19

 

Loan Agreement and Note Payable dated March 10, 2016, among Cell MedX Corp., and Tradex Capital Corp.(15)

10.20

 

Loan Agreement and Note Payable dated March 30, 2016, among Cell MedX Corp., and Tradex Capital Corp.(16)

10.21

 

Loan Agreement and Note Payable dated March 31, 2016 among Cell MedX Corp., and Richard N. Jeffs.(16)

10.22

 

Loan Agreement and Note Payable dated April 29, 2016, among Cell MedX Corp., and Richard N. Jeffs. (16)

10.23

 

Loan Agreement and Note Payable dated June 1, 2016, among Cell MedX Corp., and Tradex Capital Corp.(16)


37


 

Exhibit

 

 

Number

 

Description of Document

10.24

 

Loan Agreement and Note Payable dated June 2, 2016, among Cell MedX Corp., and Richard N. Jeffs. (16)

10.25

 

Loan Agreement and Note Payable dated June 29, 2016, among Cell MedX Corp., and Tradex Capital Corp.(16)

10.26

 

Loan Agreement and Note Payable dated June 30, 2016, among Cell MedX Corp., and Richard N. Jeffs. (16)

10.27

 

Loan Agreement and Note Payable dated August 8, 2016, among Cell MedX Corp., and Richard N. Jeffs.(16)

10.28

 

Loan Agreement and Note Payable dated August 22, 2016, among Cell MedX Corp., and Tradex Capital Corp.(16)

10.29

 

Letter Agreement dated September 26, 2016, between Jean Arnett, Brad Hargreaves and Cell MedX Corp.(17)

10.30

 

Loan Agreement and Note Payable dated January 6, 2017, among Cell MedX Corp., and Richard N. Jeffs.(18)

10.31

 

Loan Agreement and Note Payable dated February 7, 2017, among Cell MedX Corp., and Richard N. Jeffs.(19)

10.32

 

Loan Agreement and Note Payable dated February 27, 2017, among Cell MedX Corp., and Richard N. Jeffs.(19)

10.33

 

Loan Agreement and Note Payable dated January 11, 2017, among Cell MedX Corp., and Perla Capital Inc.(19)

10.34

 

Loan Agreement and Note Payable dated January 13, 2017, among Cell MedX Corp., and Perla Capital Inc.(19)

10.35

 

Loan Agreement and Note Payable dated February 14, 2017, among Cell MedX Corp., and Perla Capital Inc.(19)

10.36

 

Loan Agreement and Note Payable dated March 8, 2017, among Cell MedX Corp., and Tradex Capital Corp.(19)

10.37

 

Loan Agreement and Note Payable dated April 18, 2017, among Cell MedX Corp., and Perla Capital Inc.(19)

10.38

 

Loan Agreement and Note Payable dated May 5, 2017, among Cell MedX Corp., and Tradex Capital Corp.(19)

10.39

 

Loan Agreement and Note Payable dated July 12, 2017, among Cell MedX Corp., and Richard N. Jeffs. (20)

10.40

 

Stock Option Agreement dated August 24, 2017 among Cell MedX Corp. and Yanika Silina(20)

10.41

 

Stock Option Agreement dated August 24, 2017 among Cell MedX Corp. and Da Costa Management Corp.(20)

10.42

 

Stock Option Agreement dated August 24, 2017 among Cell MedX Corp. and John Giovanni Di Cicco (20)

10.43

 

Product Development Agreement for eBalance® dated October 16, 2017, among Cell MedX Corp. and Western Robotics Ltd.(21)

10.44

 

Management Consulting Agreement between Dr. Terrance Owen and Cell MedX Corp. dated effective as of December 1,  2017.(22)

10.45

 

Loan Agreement and Note Payable dated April 5, 2018, among Cell MedX Corp., and Richard N. Jeffs.

10.46

 

Loan Agreement and Note Payable dated May 8, 2018, among Cell MedX Corp., and Richard N. Jeffs.

10.47

 

Intellectual Property Royalty Agreement between Cell MedX Corp. and Brek Technologies Inc., dated for reference September 6, 2018.

10.48

 

Royalty Agreement between Cell MedX Corp. and Mr. Richard Norman Jeffs, dated for reference September 6, 2018.


38


 

Exhibit

 

 

Number

 

Description of Document

10.49

 

Letter of Intent between the Company and Live Current Media, Inc. dated for reference September 10, 2018.

10.50

 

Loan Agreement and Note Payable dated September 13, 2018, among Cell MedX Corp., and Tradex Capital Corp. (23)

10.51

 

Credit Line Agreement dated December 27, 2018, between Richard Norman Jeffs and Cell MedX Corp.(24)

10.52

 

Distribution Agreement between Cell MedX Corp. and Live Current Media, Inc., dated for reference March 21, 2019. (25)

10.53

 

Loan Agreement and Note Payable dated September 4, 2019, among Cell MedX Corp. and Longview Investment Limited (26)

10.54

 

Loan Agreement and Note Payable dated September 6, 2019, among Cell MedX Corp. and Rain Communications Corp. (26)

10.55

 

Loan Agreement and Note Payable dated September 16, 2019, among Cell MedX Corp. and Longview Investment Limited(26)

10.56

 

Loan Agreement and Note Payable dated September 19, 2019, among Cell MedX Corp. and Rain Communications Corp. (26)

10.57

 

Loan Agreement and Note Payable dated September 20, 2019, among Cell MedX Corp. and Longview Investment Limited(26)

10.58

 

Loan Agreement and Note Payable dated October 30, 2019, among Cell MedX Corp. and Longview Investment Limited (26)

10.59

 

Loan Agreement and Note Payable dated October 30, 2019, among Cell MedX Corp. and Rain Communications Corp. (26)

10.60

 

Loan Agreement and Note Payable dated December 3, 2019, among Cell MedX Corp. and Longview Investment Limited (28)

10.61

 

Loan Agreement and Note Payable dated January 6, 2020, among Cell MedX Corp. and Longview Investment Limited(28)

10.62

 

Loan Agreement and Note Payable dated January 9, 2020, among Cell MedX Corp. and Longview Investment Limited(28)

10.63

 

Loan Agreement and Note Payable dated January 31, 2020, among Cell MedX Corp. and Longview Investment Limited(28)

10.64

 

Buyback agreement between Live Current Media Inc. and Cell MedX Corp., dated January 29, 2020.(27)

10.65

 

Loan Agreement and Note Payable dated February 17, 2020, among Cell MedX Corp. and Longview Investment Limited(28)

10.66

 

Loan Agreement and Note Payable dated March 4, 2020, among Cell MedX Corp. and Longview Investment Limited(28)

10.67

 

Loan Agreement and Note Payable dated March 25, 2020, among Cell MedX Corp. and Longview Investment Limited(28)

10.68

 

Loan Agreement and Note Payable dated April 13, 2020, among Cell MedX Corp. and Longview Investment Limited

10.69

 

Loan Agreement dated July 3, 2020, among Cell MedX Corp. and David Jeffs.

10.70

 

Loan Agreement and Note Payable dated August 31, 2020, among Cell MedX Corp. and Tradex Capital Corp.

14.1

 

Code of Ethics(3)

 

 

 

21.1

 

List of Significant Subsidiaries

 

 

 


39


 

Exhibit

 

 

Number

 

Description of Document

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

 

Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

 

The following materials from this Annual Report on Form 10-K for the years ended May 31, 2020 and 2019 formatted in XBRL (extensible Business Reporting Language):

 

 

(1) Consolidated Balance Sheets at May 31, 2020 and 2019.

 

 

(2) Consolidated Statements of Operations for the years ended May 31, 2020 and 2019.

 

 

(3) Consolidated Statement of Stockholders’ Deficit as at May 31, 2020.

 

 

(4) Consolidated Statements of Cash Flows for the years ended May 31, 2020 and 2019.

 

(1)Filed as an exhibit to the Company’s Registration Statement on Form S-1 filed with SEC on July 13, 2010 

(2)Filed as an exhibit to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed with SEC on October 13, 2010 

(3)Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with SEC on August 26, 2014 

(4)Reserved 

(5)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 9, 2014 

(6)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on October 17, 2014 

(7)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 3, 2014 

(8)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 18, 2014 

(9)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 3, 2014 

(10)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 13, 2015 

(11)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2015 

(12)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2016 

(13)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 15, 2015 

(14)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 9, 2016 

(15)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2016 

(16)Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 13, 2016 

(17)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2016 

(18)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2017 

(19)Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on August 29, 2017 

(20)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 17, 2017 

(21)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 16, 2018 

(22)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on December 5, 2017. 

(23)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2019 

(24)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 31, 2018 

(25)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2019 

(26)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2020 

(27)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2020 

(28)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2020 


40


 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, Cell MedX Corp. has caused this report to be signed on its behalf by the undersigned duly authorized persons.

 

 

CELL MEDX CORP.

 

 

 

 

 

 

 

 

 

Date: September 15, 2020

By:

/s/ Frank E. McEnulty

 

 

Name:

Frank E. McEnulty

 

 

Title:

Chief Executive Officer and Director (Principal Executive Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

Date: September 15, 2020

By:

/s/ Yanika Silina

 

 

Name:

Yanika Silina

 

 

Title:

Chief Financial Officer

 

 

 

(Principal Accounting Officer)

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of Cell MedX Corp. and in the capacities and on the dates indicated have signed this report below.

 

Signature

Title

Date

 

 

 

/s/ Frank E. McEnulty

Frank McEnulty

Chief Executive Officer,

(Principal Executive Officer)

and Member of the Board of Directors

September 15, 2020

 

 

 

/s/ Yanika Silina

Yanika Silina

Chief Financial Officer,

(Principal Financial Officer and Principal

Accounting Officer)

Corporate Secretary, Treasurer

and Member of the Board of Directors

September 15, 2020

 

 

 

/s/ Joao (John) da Costa

Joao (John) da Costa

Chief Operating Officer

and Member of the Board of Directors

September 15, 2020

 

 

 

/s/ Bradley Hargreaves

Bradley Hargreaves

Vice President, Technology and Operations

and Member of the Board of Directors

September 15, 2020

 

 

 

/s/ George Adams

George Adams

Member of the Board of Directors

September 15, 2020

 

 

 

 

 

 

 


41