XPhyto Therapeutics : Interim Financial Report

XPHYTO THERAPEUTICS CORP.

Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2021 and 2020

NOTICE TO READER

Under National Instrument 51-102, Part 4, paragraph 4.3(3)(a), if an auditor has not performed a review of interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of XPhyto Therapeutics Corp. have been prepared by and are the responsibility of the Company's management and approved by the Board of Directors of the Company.

The Company's independent auditor has not performed a review of these unaudited condensed consolidated interim financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.

XPHYTO THERAPEUTICS CORP.

Condensed Consolidated Interim Statements of Financial Position (Unaudited)

(Expressed in Canadian dollars)

		Note	September 30, 2021	December 31, 2020
Assets
Current assets
Cash		$	1,015,481	$	2,584,943
Amounts receivable			424,224		305,671
Inventory			358,750			-
Prepaid expenses			409,363		139,215
Deferred acquisition cost	16		597,153			-
Non-current assets			2,804,971		3,029,829
Property and equipment	4		1,314,001		1,037,537
Intangible assets	5		8,402		14,759
Right-of-use asset	6		3,685,562		4,202,052
Total assets		$	7,812,936	$	8,284,177
Liabilities
Current liabilities
Accounts payable and accrued
liabilities	7	$	589,858	$	965,504
Lease liability	6		135,606		146,842
Convertible debt	8		502,582		353,742
				1,228,046		1,466,088
Non-current liabilities
Lease liability	6		694,801		791,958
Convertible debt	8		2,192,479		2,020,478
Total liabilities			4,115,326		4,278,524
Equity
Shareholders' equity
Share capital	9		35,249,726		24,585,364
Reserves			3,268,547		4,030,006
Equity component of convertible debt	8		265,115		265,115
Accumulated other comprehensive
income			26,428		51,606
Accumulated deficit			(35,112,206)		(24,926,438)
Total shareholders' equity			3,697,610		4,005,653
Total liabilities and shareholders'
equity		$	7,812,936	$	8,284,177
Approved by the Directors on November 26, 2021
	Hugh Rogers (signed)			Wolfgang Probst (signed)

Nature and continuance of operations (Note 1)

Commitments (Note 16)

Subsequent events (Note 18)

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

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XPHYTO THERAPEUTICS CORP.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (Unaudited)

(Expressed in Canadian dollars)

		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2021		2020		2021		2020
Revenues (Note 11)	$	116,931	$	84,622	$	128,314	$	268,324
Cost of sales		(66,065)		-		(66,065)		-
Gross profit		50,866		84,622		62,249		268,324
Operating Expenses
Depreciation and amortization (Note 4, 5 and 6)		204,773		211,462		621,426		685,251
Professional fees (Note 12)		92,895		40,745		299,513		236,640
Consulting fees		290,162		632,326		929,645		1,423,834
Salaries, benefits, and other remuneration
(Note 12)		218,489		187,122		595,786		569,007
Share-based compensation (Note 10 and 12)		5,832		1,118,074		1,234,630		2,078,919
Regulatory fees		42,105		30,350		100,841		69,307
Marketing and advertising		919,682		1,377,823		4,944,032		4,306,558
Office and miscellaneous		67,199		99,642		318,914		367,663
Selling and distribution		7,778		-		7,778		-
Travel and related		23,875		10,362		45,482		34,656
Rent		35,158		8,842		95,899		73,449
Research and lab fees (Note 12)		549,041		1,214,342		2,470,241		2,350,110
Foreign exchange loss		21,155		102,115		21,916		184,505
Total operating expenses		2,478,144		5,033,205		11,686,103		12,379,899
Operating Loss		(2,427,278)		(4,948,583)		(11,623,854)		(12,111,575)
Other income (expense)
Finance costs (Notes 6 and 8)		(173,940)		(37,824)		(506,917)		(234,367)
Impairment of intangible assets and goodwill
(Note 5)		-		(1,958,219)		-		(1,958,219)
Loss on disposal of equipment		-		(19,776)		-		(19,776)
Gain on lease termination		2,431		-		2,431		-
Total other income (expense)		(171,509)		(2,015,819)		(504,486)		(2,212,362)
Loss before income taxes		(2,598,787)		(6,964,402)		(12,128,340)		(14,323,937)
Deferred tax recovery		-		163,000		-		241,451
Loss for the period		(2,598,787)		(6,801,402)		(12,128,340)		(14,082,486)
Cumulative translation adjustment		2,282		(37,494)		(25,178)		72,581
Comprehensive loss for the period		(2,596,505)		(6,838,896)		(12,153,518)		(14,009,905)
Loss Per Share - Basic and Diluted	$	(0.04)	$	(0.11)	$	(0.18)	$	(0.25)
Weighted Average Number of Common
Shares Outstanding		72,282,830		59,499,641		68,645,680		55,792,315

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

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XPHYTO THERAPEUTICS CORP.

Condensed Consolidated Interim Statements of Cash Flows (Unaudited)

(Expressed in Canadian dollars)

		Nine Months Ended
		September 30,
		2021		2020
Operating Activities
Loss for the period	$	(12,128,340)	$	(14,082,486)
Adjustments for:
Depreciation and amortization		621,426		685,251
Share-based compensation		1,234,630		2,078,919
Shares issued per consulting and marketing agreements		50,849		555,600
Shares issued per a development agreement		341,500		159,000
Non-cash marketing and advertising costs		-		355,935
Finance costs		506,917		234,367
Foreign exchange		(30,536)		89,164
Deferred tax recovery		-		(241,451)
Loss on disposal of equipment		-		19,776
Gain on lease termination		(2,431)		-
Impairment on intangible asset and goodwill		-		1,958,219
Changes in non-cash working capital items
Amounts receivable		(118,553)		(308,512)
Prepaid expenses		(270,148)		(158,554)
Inventories		(358,750)		-
Accounts payable and accrued liabilities		(375,648)		320,984
Cash Used in Operating Activities		(10,529,084)		(8,333,788)
Investing Activities
Acquisition of property and equipment		(439,239)		(64,686)
Deferred acquisition cost paid in relation to 3a acquisition (Note 16)		(597,153)		-
Cash Used in Investing Activities		(1,036,392)		(64,686)
Financing Activities
Proceeds from issuance of shares		2,850,000		-
Share issue costs		(228,100)		-
Proceeds from issuance of convertible debenture, net of cash costs		-		1,869,706
Proceeds from exercise of warrants		7,534,096		5,228,614
Proceeds from exercise of options		62,500		1,730,000
Convertible debenture payments		(120,000)		(266,936)
Repayment of lease liabilities		(104,257)		(101,971)
Cash Provided by Financing Activities		9,994,239		8,459,413
Effect of exchange rate on cash		1,775		(792)
Change in cash for the period		(1,569,462)		60,147
Cash and cash equivalents, beginning of period		2,584,943		295,014
Cash and cash equivalents, end of period	$	1,015,481	$	355,161

Supplemental disclosure with respect to cash flows (Note 17)

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

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