Small Pharma : Q3 2021-22 Financial Statements

SMALL PHARMA INC.

(formerly, Unilock Capital Corp.)

Interim Consolidated Financial Statements

Three and nine months ended November 30, 2021 and 2020 and year ended February 28, 2021

(Expressed in Canadian Dollars)

Independent Auditor's Report

To the Directors of Small Pharma Inc. (formerly, Unilock Capital Corp.):

Opinion

We have audited the interim consolidated financial statements of Small Pharma Inc. (formerly, Unilock Capital Corp.) and its subsidiaries (the "Company"), which comprise the interim consolidated statement of financial position as at November 30, 2021, and the interim consolidated statements of operations and comprehensive loss, changes in equity (deficit) and cash flows for the period from March 1, 2021 to November 30, 2021, and notes to the interim consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying interim consolidated financial statements present fairly, in all material respects, the interim consolidated financial position of the Company as at November 30, 2021, and its interim consolidated financial performance and its interim consolidated cash flows for the period from March 1, 2021 to November 30, 2021 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Interim Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the interim consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matters

The consolidated financial statements for the year ended February 28, 2021 (which include comparative figures as at February 28, 2020 from which the comparative information as at February 29, 2020 has been derived), excluding the adjustments that were applied to restate those consolidated financial statements for the change in presentation currency as described in Note 16, were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on October 18, 2021.

As part of our audit of the interim consolidated financial statements as at November 30, 2021 and for the period from March 1, 2021 to November 30, 2021, we also audited the adjustments that were applied to certain comparative information for the change in presentation currency:

• as at February 28, 2021 and February 29, 2020
• for the year ended February 28, 2021.

In our opinion, such adjustments are appropriate and have been properly applied.

Other than with respect to the adjustments that were applied to restate certain comparative information for the change in presentation currency, we were not engaged to audit, review, or apply any procedures to the consolidated financial statements as at February 28, 2021 and February 29, 2020 or for the year ended February 28, 2021. Accordingly, we do not express an opinion or any other form of assurance on those consolidated financial statements taken as a whole.

The interim consolidated statements of operations and comprehensive loss for the three-month periods ended November 30, 2021 and November 30, 2020, and the interim consolidated statements of operations and comprehensive loss, changes in equity (deficit) and cash flows for the nine-month period ended November 30, 2020, are unaudited.

Other Information

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the interim consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the interim consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the interim consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Interim Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the interim consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of interim consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the interim consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Interim Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the interim consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these interim consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the interim consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the interim consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the interim consolidated financial statements, including the disclosures, and whether the interim consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the interim consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Zhi Huang.

Toronto, Ontario	Chartered Professional Accountants
January 31, 2022	Licensed Public Accountants

SMALL PHARMA INC.

(formerly, Unilock Capital Corp.)

Interim Consolidated Statements of Financial Position (Expressed in Canadian dollars)

	November 30,	February 28,	February 29,
	2021	2021	2020
	$	$	$
ASSETS		(Notes 2(c), 16) (Notes 2(c), 16)
Current assets
Cash	45,623,533	5,777,957	562,797
Trade and other receivables	369,281	475,893	221,546
Prepaid expenses	65,410	261,435	-
Total current assets	46,058,224	6,515,285	784,343
Non-current assets
Property and equipment (Note 4)	62,484	72,008	3,259
Restricted cash (Note 5)	2,500,000	-	-
Total non-current assets	2,562,484	72,008	3,259
Total assets	48,620,708	6,587,293	787,602
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities	3,022,603	1,572,023	78,440
Notes payable (Note 6)	-	8,826,946	-
Derivative liabilities (Note 7)	-	1,958,406	-
Total liabilities	3,022,603	12,357,375	78,440
Shareholders' equity (deficit)
Share capital (Note 9)	69,849,077	3,244,312	3,146,011
Share-based payment reserve (Note 10 & 11)	2,930,250	609,564	-
Accumulated other comprehensive loss	(261,823)	(180,684)	(28,875)
Deficit	(26,919,399)	(9,443,274)	(2,407,974)
Total shareholders' equity (deficit)	45,598,105	(5,770,082)	709,162
Total liabilities and shareholders' equity (deficit)	48,620,708	6,587,293	787,602

Commitments (Note 13)

Subsequent event (Note 17)

Approved and authorized for issuance on behalf of the Board of Directors on January 31, 2022:

/s/ Peter Rands		/s/ George Tziras
Peter Rands, Director		George Tziras, Director

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

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