Avicanna : For the three months ended March 31, 2022

Avicanna Inc.

Condensed Consolidated Interim Financial Statements (Unaudited)

For the Three Months Ended March 31, 2022, and 2021

(Expressed in Canadian dollars, except share and per share amounts)

Avicanna Inc.

Condensed Consolidated Interim Statements of Financial Position

Unaudited (Expressed in Canadian Dollars)

	Note	March 31, 2022		December 31, 2021
ASSETS
Current assets
Cash	$	1,575,620	$	31,004
Amounts receivable	4	3,024,307		2,335,828
Prepaid assets		702,486		901,292
Biological assets	5	434,272		1,083,447
Inventory	6	5,204,354		3,002,059
Total current assets		10,941,039		7,353,630
Right of use asset	9	98,127		147,192
Property and equipment	7	14,992,772		14,321,597
Intangible assets	8	263,049		299,195
Investment	11	-		180,000
Total assets	$	26,294,987	$	22,301,614
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables and accrued liabilities	$	6,589,939	$	7,289,380
Lease liability - current portion	13	102,780		156,247
Loan payable - current portion	15	753,859		1,090,107
Convertible debentures	14	1,300,083		-
Derivative liability	16	16,941		-
Due to related party	17	4,065,027		3,659,931
Total current liabilities		12,828,629		12,195,665
Loan payable	15	382,533		415,826
Deferred revenue	12	2,681,351		2,782,101
Total liabilities		15,892,513		15,393,592
Shareholders' Equity
Share capital	18	68,628,341		66,243,911
Warrants	18	10,359,421		9,621,935
Share-based payment reserve	19	6,575,849		6,847,200
Accumulated other comprehensive loss		(2,891,042)		(4,159,392)
Deficit		(78,773,036)		(77,407,467)
Equity attributable to owners of the parent		3,899,533		1,146,187
Non-controlling interest	20	6,502,941		5,761,835
Total equity		10,402,474		6,908,022
Total liabilities and shareholders' equity	$	26,294,987	$	22,301,614
Nature of operations and going concern uncertainty - Note 1
Subsequent events - Note 25
Approved by the Board
/s/ Dr. Chandra Panchal, Chairman of the Board of Directors	/s/ John McVicar, Audit Committee Chair, Director

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

2

Avicanna Inc.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2022, and 2021

Unaudited

(Expressed in Canadian Dollars)

Three months ended March 31,

	Note		2022		2021
Revenue
Service Revenue	12	$	-	$	4,997
License Revenue	12		100,750		100,750
Product Sales			937,211		165,160
Total Revenue			1,037,961		270,907
Cost of goods sold	6		(593,752)		(90,542)

Gross margin before the undernoted

Fair value changes in biological assets included in inventory sold

Unrealized gain on changes in fair value of biological assets

444,209	180,365
23,752	(8,308)
1,332,526	231,665

Gross margin		1,800,487		403,722
Expenses
General and administrative	22	2,045,487		2,840,555
Share-based compensation	19	153,242		171,781
Depreciation and amortization	7,8,9	253,470		265,039
Expected credit loss	4	-		41,639
Total Expenses		(2,452,199)		(3,319,014)
Other income (expenses)
Foreign exchange gain (loss)		(10,504)		(10,474)
Gain on disposal of capital assets	7	-		53,738
Loss on revaluation of derivative liability		50,956		140,568
Other income		34,238		42,644
Interest expense	14,15	(362,054)		(132,809)
Net loss	$	(939,076)	$	(3,102,761)
Exchange differences on translation of foreign operations		1,586,563		(1,913,827)
Net comprehensive income (loss)	$	643,887	$	(5,016,588)
Net comprehensive income (loss) attributable to non - controlling interest	20	741,106		(605,548)
Net comprehensive loss attributable to Shareholders of the Company	20	(97,219)		(4,411,040)
	$	643,887	$	(5,016,588)
Weighted average number of common shares - basic and diluted		45,973,986		36,344,033
Net income (loss) per share - basic and diluted	$	0.01	$	(0.14)

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

3

Avicanna Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

For the Three Months Ended March 31, 2022, and 2021

Unaudited

(Expressed in Canadian Dollars)

				Common shares		Share-based		Accumulated other	Non-controlling
		Common shares	Warrants	payment	Deficit	Total
		to be Issued	comprehensive loss	interest
					Reserve
	Note	#	$	#	$	$	$	$	$	$	$
December 31, 2021		45,884,282	66,243,911	-	-	9,621,935	6,847,200	(77,407,467)	(4,159,392)	5,761,835	6,908,022
Share based compensation	19	-	-	-	-	-	153,242	-	-	-	153,242
Settlement of RSUs	19	376,875	424,593	-	-	-	(424,593)	-	-	-	-
Issuance of shares - March 2022	18	7,210,194	1,959,837	-	-	531,231	-	-	-	-	2,491,068
Warrants issued with debentures	14	-	-	-	-	206,255	-	-	-	-	206,255
Foreign exchange translation		-	-	-	-	-	-	-	1,268,350	314,613	1,586,563
Net income (loss)		-	-	-	-	-	-	(1,365,569)	-	426,493	(939,076)
March 31, 2022		53,471,351	68,628,341	-	-	10,359,421	6,575,849	(78,773,036)	(2,891,042)	6,502,941	10,402,474
December 31, 2020		35,871,941	57,355,314	101,722	113,526	6,780,037	5,916,475	(62,036,238)	(2,112,995)	7,893,712	13,909,830
Settlement of shares to be issued	19	101,722	113,526	(101,722)	(113,526)	-	-	-	-	-	-
Share based compensation	19	-	-	-	-	-	171,781	-	-	-	171,781
Exercise of RSUs	19	104,781	136,130	10,797	9,177	-	(145,308)	-	-	-	-
Conversion of debentures	14	613,535	1,513,175	-	-	-	-	-	-	-	1,513,175
Exercise of warrants	18	99,595	124,883	-	-	(40,227)	-	-	-	-	84,656
Issuance of units	18	4,480,000	3,599,023	-	-	1,751,027	-	-	-	-	5,350,050
Forfeiture of RSUs and options	19	-	-	-	-	-	(69,793)	69,793	-	-	-
Foreign exchange translation		-	-	-	-	-	-	-	(1,369,469)	(544,358)	(1,913,827)
Net loss		-	-	-	-	-	-	(3,041,571)	-	(61,190)	(3,102,761)
March 31, 2021		41,271,574	62,842,050	10,797	9,177	8,490,837	5,873,156	(65,008,016)	(3,482,464)	7,288,164	16,012,904

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

4

Avicanna Inc.

Condensed Consolidated Interim Statements of Cash Flows

For the Three months Ended March 31, 2022, and 2021

Unaudited

(Expressed in Canadian Dollars)

			For the Three Months Ended
			March 31,
	Note		2022		2021
Cash flows from operating activities
Net loss		$	(939,076)	$	(3,102,761)
Depreciation and amortization	7,8,9		253,470		265,039
Interest on lease liability	13		2,770		6,927
Accretion	14,15		281,615		77,351
Share-based compensation	19		153,242		171,781
Expected credit losses	4		-		41,639
Loss (gain) on fair value of derivative liability	16		(50,956)		140,568
Recognition of deferred revenue	12		(100,750)		(100,750)
Changes in non-cash operating elements of working capital	24		(2,742,234)		(1,045,766)
Cash used in operating activities			(3,141,919)		(3,545,972)
Cash flows from investing activities
Purchase of capital assets	7		(29,567)		-
Proceeds from disposal of capital assets	7		-		225,538
Sale of investments	11		180,000		1,250,000
Cash used in investing activities			150,433		1,475,538
Cash flows from financing activities
Payment of lease liability	13		(56,238)		(60,711)
Increase in balance due to related parties	17		(190,779)		191,388
Repayment of loans	15		(584,015)		-
Proceeds from issuance of debentures, net of issuance costs	14		1,473,238		-
Exercise of warrants	18		-		84,656
Proceeds from issuance of shares, net of issuance costs	18		2,491,068		5,350,050
Cash provided by financing activities			3,133,274		5,565,383
Net decrease in cash			141,788		3,494,949
Effect of foreign exchange differences			1,402,828		(858,018)
Cash, beginning of year			31,004		1,266,732
Cash, end of year		$	1,575,620	$	3,903,663

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

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