Kane Biotech : Three and six months ended June 30, 2022

Consolidated Financial Statements

(Expressed in Canadian Dollars)

KANE BIOTECH INC.

Three and six months ended June 30, 2022 and 2021

In accordance with National Instruments 51-102 released by the Canadian Securities Administrators, the Company discloses its auditors have not reviewed the unaudited financial statements for the three and six months ended June 30, 2022 and 2021.

KANE BIOTECH INC.

Consolidated Statement of Financial Position

			Note		June 30, 2022		December 31, 2021
Assets
Current assets:
		Cash and cash equivalents		$	2,533,178	$	1,153,090
		Trade and other receivables	6,16		487,910		595,608
		Inventory	7		576,279		519,228
		Capital contributions receivable - current	4		491,614		475,261
		Other current assets			153,272		137,223
		Total current assets			4,242,253		2,880,410
Non-current assets:
		Property and equipment	8		1,346,791		1,435,959
		Intangible assets	9		804,969		828,643
		Capital contributions receivable	4		888,847		859,281
		Loan receivable	17(b)		130,000		130,000
		Total non-current assets			3,170,607		3,253,883
Total assets		$	7,412,860	$	6,134,293
Liabilities and Shareholders' Deficit
Current liabilities:
		Accounts payable and accrued liabilities	10	$	1,868,115	$	2,057,774
		Deferred license revenue - current	5		207,644		143,488
		Due to related party	11		8,066		8,066
		Loan payable	12(a)		3,978,981		2,379,040
		Government loans - current	12(b)		126,000		-
		Lease liability - current	13		108,676		132,641
		Total current liabilities			6,297,482		4,721,009
Non-current liabilities:
		Deferred license revenue	5		941,123		777,028
		Government loans	12(b)		1,475,043		1,115,635
		Lease liability	13		1,036,291		1,087,635
		Total non-current liabilities			3,452,457		2,980,298
Shareholders' Deficit
		Share capital	14(b)		23,132,932		22,156,228
		Contributed surplus			7,368,059		5,505,684
		Warrants	14(e)		-		1,662,385
		Minority interest in Stem Animal Health Inc.			2,380,794		2,318,970
		Deficit			(35,218,864)		(33,210,281)
		Total			(2,337,079)		(1,567,014)
		Going concern	2(c)
		Commitments and contingencies	15
Total liabilities and shareholders' deficit		$	7,412,860	$	6,134,293

The notes on pages 5 to 27 are an integral part of these consolidated financial statements.

KANE BIOTECH INC.

Consolidated Statement of Loss and Comprehensive Loss

			Three months		Three months		Six months		Six months
			ended		ended		ended		ended
	Note		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenue
License	4,5	$	500,225	$	35,872	$	536,097	$	65,140
Royalty			51,770		29,258		99,248		66,753
Sales of goods and services			287,584		213,611		769,668		522,887
Total Revenue			839,579		278,741		1,405,013		654,780
Cost of sales-sales of goods and services			200,364		195,157		582,176		405,320
Gross Profit			639,215		83,584		822,837		249,460
Expenses
General and administration		16	951,877		889,092		2,020,125		1,718,358
Research		16	409,429		201,304		761,278		521,649
			1,361,306		1,090,396		2,781,403		2,240,007
Loss from operations			(722,091)		(1,006,812)		(1,958,566)		(1,990,547)
Other expenses (income):
Finance income			(25,858)		(32,148)		(51,375)		(63,677)
Finance costs			155,946		73,744		296,924		156,593
Fair value adjustment - government loans			(60,502)		(54,876)		(262,577)		(80,375)
Foreign exchange gain			2,918		5,357		5,221		6,693
Net other expenses (income)			72,504		(7,923)		(11,807)		19,234
Loss and comprehensive loss for the period		$	(794,595)	$	(998,889)	$	(1,946,759)	$	(2,009,781)
Loss and comprehensive loss attributable to:
Shareholders			(899,991)		(904,487)		(2,008,583)		(1,812,953)
Minority interest			105,396		(94,402)		61,824		(196,828)
Loss and comprehensive loss for the period			(794,595)		(998,889)		(1,946,759)		(2,009,781)
Basic and diluted loss per share for the period	14(f)	$	(0.01)	$	(0.01)	$	(0.02)	$	(0.02)

The notes on pages 5 to 27 are an integral part of these consolidated financial statements.

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KANE BIOTECH INC.

Consolidated Statement of Changes in Deficit

			Share	Contributed				Minority
		Note	Capital		Surplus		Warrants		Interest		Deficit		Total
Balance as of January 1, 2021		$ 20,858,419	$	4,412,956	$	1,844,760	$	2,564,316	$	(28,605,715)	$	1,074,736
Loss and comprehensive loss for the period							(245,346)		(4,604,566)		(4,849,912)
Transactions with owners, recorded
directly in equity
	Share based payments	14(c,d)	-		1,092,162		-		-		-		1,092,162
	Warrants exercised	14(e)	1,297,809		(50,232)		(131,577)		-		-		1,116,000
	Warrants expired	14(e)	-		50,798		(50,798)		-		-		-
	Total transactions with owners		1,297,809		1,092,728		(182,375)		-		-		2,208,162
Balance as of December 31, 2021		$ 22,156,228	$	5,505,684	$	1,662,385	$	2,318,970	$	(33,210,281)	$	(1,567,014)
Loss and comprehensive loss for the period							61,824		(2,008,583)		(1,946,759)
Transactions with owners, recorded
directly in equity
	Issuance of common shares	14(b)	973,704		-		-				-		973,704
	Share based payments	14(c,d)	-		202,990		-		-		-		202,990
	Restricted share units redeemed	14(d)	3,000		(3,000)		-		-		-		-
	Warrants expired	14(e)	-		1,662,385		(1,662,385)		-		-		-
	Total transactions with owners		976,704		1,862,375		(1,662,385)		-		-		1,176,694
Balance as of June 30, 2022		$ 23,132,932	$	7,368,059	$	-	$	2,380,794	$	(35,218,864)	$	(2,337,079)

The notes on pages 5 to 27 are an integral part of these consolidated financial statements.

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KANE BIOTECH INC.

Consolidated Statement of Cash Flows

		Three months ended	Three months ended		Six months ended		Six months ended
	Note		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Cash provided by (used in):
Operating activities:
Loss and comprehensive loss for the period		$	(794,595)	$	(998,889)	$	(1,946,759)	$	(2,009,781)
Adjustments for:
Depreciation of property and equipment	8		45,844		35,260		91,219		45,290
Amortization of intangible assets	9		28,198		11,748		41,706		23,496
Accretion income	4		(23,154)		(29,885)		(45,919)		(59,268)
Accretion expense	12(b)		-		1,582		-		3,433
Interest on loans and finance leases	12,13		154,420		70,350		294,065		140,660
Fair value adjustment - government loan	12(b)		(60,502)		(54,876)		(262,577)		(80,375)
Share based compensation	14(c,d)		86,297		53,513		202,990		120,834
Change in the following:
Trade and other receivables			(95,041)		(9,692)		107,698		240,053
Inventory			(82,522)		(89,528)		(57,051)		(72,376)
Other current assets			19,363		22,320		(16,049)		(12,939)
Accounts payable and accrued liabilities			(275,438)		(147,443)		(189,660)		115,639
Deferred license revenue	5		264,124		132,916		228,251		116,147
Operating line of credit			-		90,000		-		90,000
Cash used in operating activities			(733,006)		(912,624)		(1,552,086)		(1,339,187)
Financing activities:
Deposits - private placement			(340,000)		-		-		-
Issuance of common shares	14(b)		973,704		-		973,704		-
Interest paid on loans and finance leases	12,13		(62,068)		-		(81,584)		-
Warrants exercised	14(e)		-		936,000		-		1,116,000
Repayment of due to related party	11		-		-		-		(13,775)
Repayment of loan payable	12(a)		(200,000)		(125,000)		(400,000)		(250,000)
Proceeds from loan payable	12(a)		1,860,143		-		1,860,143		-
Proceeds from long-term government loans	12(b)		163,967		108,847		675,303		157,493
Repayment of lease liability	13		(36,123)		(13,998)		(70,104)		(26,996)
Cash provided by financing acivities			2,359,623		905,849		2,957,462		982,722
Investing activities:
Purchase of property and equipment	8		(4,221)		(149,229)		(7,256)		(171,488)
Additions to intangible assets	9		(5,154)		(20,951)		(18,032)		(24,145)
Cash used in investing activities			(9,375)		(170,180)		(25,288)		(195,633)
Increase in cash			1,617,242		(176,955)		1,380,088		(552,098)
Cash, beginning of period			915,936		632,780		1,153,090		1,007,923
Cash, end of period		$	2,533,178	$	455,825	$	2,533,178	$	455,825

The notes on pages 5 to 27 are an integral part of these consolidated financial statements.

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