UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For
the month of August, 2024.
Commission
File Number: 000-51848
Avricore
Health Inc.
(Exact
name of registrant as specified in its charter)
1120-789
West Pender St, Vancouver, BC, V6C 1H2
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): NO
Note:
Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report
to security holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): NO
Note:
Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that
the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
Exhibits
The
following exhibits are included in this form 6-K:
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
| |
AVRICORE
HEALTH INC. |
| |
|
|
| Date:
September 6, 2024 |
By |
“Kiki
Smith” |
| |
|
Kiki Smith |
| |
|
Chief Financial Officer |
Exhibit
1
AVRICORE
HEALTH CORPORATE UPDATE:
MID-YEAR
RESULTS SHOW STRONG GROWTH, PROFITABILITY
VANCOUVER,
BRITISH COLUMBIA – Aug 29, 2024) – AVRICORE HEALTH INC. (TSXV: AVCR) (the “Company” or “Avricore”)
reports on its mid-year results for 2024 demonstrating the Company’s continued success in maintaining strong growth in revenues
while achieving net profitability.
In
the six months ended June 30, 2024 revenues grew by
84% year-over-year, topping $2,169,513 with gross profit increasing 94% equalling $855,566. This was supported by Q2 2024 revenue increasing
91% against the same period in 2023 to $1,045,206, with gross profit topping $370,775, a 62% gain.
This
success led the Company to recording a net profit of $222,559 and posting a net increase in cash of $279,039.
“Our
success comes from great partners, an incredible team and a shared mission by all that believes everyone deserves better access to care,”
said Hector Bremner, CEO of Avricore. “We’ve put that mission at the centre of what we do and know that the passion for our
mission is growing, and we can do so much more in Canada and globally.”
Second
Consecutive Profitable Quarter
The
Company incurred a comprehensive income of $222,559 for the six months ended June 30, 2024 (2023 - loss $475,737). Revenue grew thanks
to an increase in HealthTab™ systems deployed and tests sold. Gross margin for the period was 39% (2023- 37%) outperforming the
Company’s target margin of 30%. Share-based compensation of $29,062 (2023 - $256,519) was recognized for stock options granted,
vested, and repriced during the period.
| | |
Three months ended June 30 | | |
Six months ended June 30 | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
$ | 1,045,206 | | |
$ | 548,049 | | |
$ | 2,169,513 | | |
$ | 1,177,290 | |
| | |
| | | |
| | | |
| | | |
| | |
| % Change - year over year | |
| 91 | % | |
| | | |
| 84 | % | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
$ | 370,775 | | |
$ | 229,471 | | |
$ | 855,566 | | |
$ | 440,152 | |
| % Change - year over year | |
| 62 | % | |
| | | |
| 94 | % | |
| | |
We’ve
Got What It Takes
As
of this reporting period the Company had a working capital of $609,108 (December 31, 2023 – $244,343) and $329,357 (December 31,
2023 - $427,689) in accounts receivable. Given the positive trend, we believe that our cash resources, along with the net inflows of
revenues from operations and the potential exercising of options, are sufficient to fund our working capital for the next twelve months.
However, should growth opportunities present themselves that would exceed this, we have strategic plans that would ensure we meet demand.
| Sources and Uses of Cash: | |
Period ended June 30, 2024 | |
| | |
2024 | | |
2023 | |
| | |
| $ | | |
| $ | |
| Cash provided by (used in) operating activities | |
| 417,118 | | |
| 227,832 | |
| Cash used in investing activities | |
| (124,679 | ) | |
| (418,488 | ) |
| Cash provided by (used in) financing activities | |
| (13,400 | ) | |
| 42,500 | |
| Cash and Cash Equivalents, closing balance | |
| 555,610 | | |
| 472,371 | |
The
Right Direction
The
following table highlights selected financial data for each of the eight most recent quarters.
| Quarter Ended | |
June 2024 | | |
March 2024 | | |
Dec 2023 | | |
Sep 2023 | | |
June 2023 | | |
Mar 2023 | | |
Dec 2022 | | |
Sep 2022 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| $ | | |
| $ | | |
| $ | |
| Revenue | |
| 1,045,206 | | |
| 1,124,307 | | |
| 1,354,403 | | |
| 953,454 | | |
| 548,049 | | |
| 629,241 | | |
| 997,235 | | |
| 572,228 | |
| Gross profit (loss) | |
| 370,775 | | |
| 484,791 | | |
| 501,466 | | |
| 261,778 | | |
| 229,471 | | |
| 210,681 | | |
| 168,845 | | |
| 215,961 | |
| Share-based compensation | |
| 1,598 | | |
| 27,464 | | |
| 142,765 | | |
| 304,328 | | |
| 168,518 | | |
| 88,001 | | |
| 243,000 | | |
| 58,354 | |
| Comprehensive income (loss) | |
| 54,022 | | |
| 168,537 | | |
| 59,584 | | |
| (285,062 | ) | |
| (284,225 | ) | |
| (191,512 | ) | |
| (244,789 | ) | |
| (180,398 | ) |
| Net profit (loss)/share | |
| 0.00 | | |
| 0.00 | | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) |
| Total Assets | |
| 2,618,384 | | |
| 2,798,058 | | |
| 2,538,205 | | |
| 2,453,136 | | |
| 2,143,810 | | |
| 2,296,565 | | |
| 2,568,983 | | |
| 2,128,017 | |
Looking
Ahead
The
Company sees several near-term positive developments coming throughout the balance of 2024 and into 2025:
| ● | Expanding
its network of pharmacies utilizing HealthTab, |
| ● | working
with pharmacy partners to ensure the maximizing of testing as part of their patient approach, |
| ● | preparing
for potential pharmacy funding announcements by provinces that will support chronic disease
screening and testing, as well as Strep testing, by these trusted healthcare professionals, |
| ● | expanding
the UK feasibility study in collaboration with its partners and securing NHS support for
pharmacy scope, |
| ● | increasing
API connectivity partners to better support patient health records, |
| ● | new
market access pilots and expansions, |
| ● | general
policy shifts in key markets which will open doors to further expansion. |
Overall,
the Company believes it can manage stable growth through cashflow, putting it on a strong footing going forward. If, and when, opportunities
arise that would require additional capital beyond current abilities, the Company can access it and ensure it can meet demand. Growth
in Canada will be a focus; however, international markets present significant opportunity and will eventually represent a larger share
of revenues in time. The market for health services and POCT in pharmacy is growing thanks to public policy decisions which are supporting
the approach. Furthermore, standards being set for POCT in pharmacy are more in line with HealthTab’s approach, making either previously
used and even recently developed approaches increasingly obsolete or unable to meet the modern standard. The Company feels in light of
all this, that it is on the right track and is confident of its strategy.
The
Company also announces that at its annual general meeting held on June 20, 2024, shareholders approved an increase of 45,000 in the number
of stock options available to be issued under the Company’s stock option plan.
HealthTab™
Market Fast Facts
| ● | Point
of Care Testing Market to reach $93.21 Billion USD in 2030 (Source) |
| ● | Nearly
13.6 Million Canadians expected to be diabetic or prediabetic by 2030, with many undiagnosed
(Source) |
| ● | Over
1 in 3 Americans, approximately 88 million people, have pre-diabetes (Source) |
| ● | Close
to 160,000 Canadians 20 years and older are diagnosed with heart disease each year, often
it’s only after a heart attack they are diagnosed. (Source) |
| ● | There
are more that 10,000 pharmacies in Canada, 88,000 pharmacies in the US, nearly 12,000 in
the UK. |
About
HealthTab™
HealthTab™
is a turnkey point-of-care testing solution that combines best-in-class point-of-care technologies with a secure, cloud-based platform
for tackling pressing global health issues. With just a few drops of blood from a finger prick, the system generates lab-accurate results
on the spot and data is reported in real time. The test menu includes up to 23 key biomarkers for screening and managing chronic diseases,
such as diabetes and heart disease (e.g., HbA1c, Lipid Profile, eGFR). HealthTab™ has also recently added capabilities for bacterial
and viral tests, such as strep and COVID-19.
The
HealthTab™ network model is unlike anything in pharmacy today. It gives knowledgeable and trusted pharmacists a greater role in
primary care delivery, while empowering patients to take more control of their health. It also reduces costs and waiting times and provides
many potential revenue streams including equipment leasing & consumables, direct access testing, disease prevention & management
programs, sponsored health programs, decentralized clinical trials, real world data (RWD) sets, and third-party app integration through
API.
About
Avricore Health Inc.
Avricore
Health Inc. (TSXV: AVCR) is a pharmacy service innovator focused on acquiring and developing early-stage technologies aimed at advancing
pharmacy practice and patient care. Through its flagship offering HealthTab™, a wholly owned subsidiary, the Company’s mission
is to make actionable health information more accessible to everyone by creating the world’s largest network of rapid testing devices
in community pharmacies.
Contact:
Avricore
Health Inc.
Hector
Bremner, CEO 604-773-8943
info@avricorehealth.com
www.avricorehealth.com
Cautionary
Note Regarding Forward-Looking Statements
Information
in this press release that involves Avricore Health’s expectations, plans, intentions, or strategies regarding the future are forward-looking
statements that are not facts and involve a number of risks and uncertainties. Avricore Health generally uses words such as “outlook,”
“will,” “could,” “would,” “might,” “remains,” “to be,” “plans,”
“believes,” “may,” “expects,” “intends,” “anticipates,” “estimate,”
“future,” “positioned,” “potential,” “project,” “remain,” “scheduled,”
“set to,” “subject to,” “upcoming,” and similar expressions to help identify forward-looking statements.
In this press release, forward-looking statements include statements regarding: the completion of the placement and the expected timing
thereof and the Company’s expected use of proceeds from the placement; the unique features that the HealthTab™ platform offers
to pharmacists and patients. Forward-looking statements reflect the then-current expectations, beliefs, assumptions, estimates and forecasts
of Avricore Health’s management. The forward-looking statements in this press release are based upon information available to Avricore
Health as of the date of this press release. Forward-looking statements believed to be true when made may ultimately prove to be incorrect.
These statements are not guarantees of the future performance of Avricore Health and are subject to a few risks, uncertainties, and other
factors, some of which are beyond its control and may cause actual results to differ materially from current expectations, including
without limitation: failure to meet regulatory requirements; changes in the market; potential downturns in economic conditions; and other
risk factors described in Avricore’s public filings. These forward-looking statements speak only as of the date on which they are
made, and the Company undertakes no obligation to update them publicly to reflect new information or the occurrence of future events
or circumstances, unless otherwise required to do so by law.
Neither
the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy
Exhibit
2
Avricore
Health Inc.
Condensed
Interim Consolidated Financial Statements
(Unaudited)
For
the three and sixth months ended June 30, 2024 and 2023
(Expressed
in Canadian Dollars)
Notice
to Reader
Management
has prepared the unaudited condensed interim consolidated financial statements for Avricore Health Inc. (the “Company”) in
accordance with National Instrument 51-102 released by the Canadian Securities Administration. The Company discloses that its auditors
have not reviewed the unaudited condensed interim consolidated financial statements for the period ended June 30, 2024 and 2023.
Avricore
Health Inc.
Condensed
Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| | |
Note | |
Unaudited June 30, 2024 | | |
Audited December 31, 2023 | |
| | |
| |
$ | | |
$ | |
| ASSETS | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
Current Assets
| |
| |
| | | |
| | |
| Cash and cash equivalents | |
| |
| 555,610 | | |
| 276,571 | |
| Term deposit | |
| |
| 10,000 | | |
| 10,000 | |
| Accounts receivable | |
4 | |
| 329,357 | | |
| 427,689 | |
| Prepaid expenses and deposits | |
5 | |
| 46,272 | | |
| 38,625 | |
| Inventory | |
| |
| 9,045 | | |
| 20,676 | |
| | |
| |
| 950,284 | | |
| 773,561 | |
| | |
| |
| | | |
| | |
| Equipment | |
6 | |
| 1,610,612 | | |
| 1,717,995 | |
| Intangible assets | |
7 | |
| 57,488 | | |
| 46,649 | |
| Total Assets | |
| |
| 2,618,384 | | |
| 2,538,205 | |
| | |
| |
| | | |
| | |
LIABILITIES | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Current Liabilities | |
| |
| | | |
| | |
| Accounts payable and accrued liabilities | |
8 | |
| 341,176 | | |
| 489,218 | |
| Loans payable | |
9 | |
| - | | |
| 40,000 | |
| | |
| |
| 341,176 | | |
| 529,218 | |
| | |
| |
| | | |
| | |
| SHAREHOLDERS’ EQUITY | |
| |
| | | |
| | |
| Share capital | |
10 | |
| 27,215,835 | | |
| 27,186,114 | |
| Reserves | |
10 | |
| 6,574,374 | | |
| 6,558,433 | |
| Deficit | |
| |
| (31,513,001 | ) | |
| (31,735,560 | ) |
| | |
| |
| 2,277,208 | | |
| 2,008,987 | |
| Total Liabilities and Shareholders’ Equity | |
| |
| 2,618,384 | | |
| 2,538,205 | |
Nature
of operations and going concern (Note 1)
Approved
and authorized for issuance on behalf of the Board of Directors on August 29, 2024.
| “Hector
Bremner” |
|
“David
Hall” |
| |
|
|
| Hector
Bremner, Director |
|
David
Hall, Chairman |
The
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Avricore
Health Inc.
Condensed
Interim Consolidated Statements of Operations and Comprehensive Income (Loss)
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
| | |
| |
Three months ended June 30 | | |
Six months ended June 30 | |
| | |
Note | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| |
$ | | |
$ | | |
$ | | |
$ | |
| Revenue | |
14 & 17 | |
| 1,045,206 | | |
| 548,049 | | |
| 2,169,513 | | |
| 1,177,290 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Cost of sales | |
| |
| (674,431 | ) | |
| (318,578 | ) | |
| (1,313,947 | ) | |
| (737,138 | ) |
| Gross profit | |
| |
| 370,775 | | |
| 229,471 | | |
| 855,566 | | |
| 440,152 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Expenses | |
| |
| | | |
| | | |
| | | |
| | |
| Advertising and promotion | |
| |
| - | | |
| - | | |
| 41 | | |
| 2,208 | |
| Amortization | |
6 & 7 | |
| 730 | | |
| 781 | | |
| 1,459 | | |
| 1,093 | |
| Consulting | |
12 | |
| 54,000 | | |
| 54,000 | | |
| 108,000 | | |
| 128,117 | |
| General and administrative | |
11 | |
| 98,272 | | |
| 101,780 | | |
| 236,363 | | |
| 184,230 | |
| Management Fees | |
12 | |
| 54,000 | | |
| 54,000 | | |
| 108,000 | | |
| 108,000 | |
| Shareholder communications | |
| |
| 17,006 | | |
| 41,767 | | |
| 36,892 | | |
| 83,685 | |
| Professional fees | |
12 | |
| 91,106 | | |
| 92,766 | | |
| 123,206 | | |
| 153,726 | |
| Share-based compensation | |
10 & 12 | |
| 1,598 | | |
| 168,518 | | |
| 29,062 | | |
| 256,519 | |
| | |
| |
| (316,712 | ) | |
| (513,612 | ) | |
| (643,023 | ) | |
| (917,578 | ) |
| Profit / (loss) before other income (expense) | |
| |
| 54,063 | | |
| (284,141 | ) | |
| 212,543 | | |
| (477,426 | ) |
Other income (expense) | |
| |
| | | |
| | | |
| | | |
| | |
| Gain on settlement of debt | |
9 | |
| - | | |
| - | | |
| 10,000 | | |
| - | |
| Interest income | |
| |
| 184 | | |
| 111 | | |
| 193 | | |
| 2,379 | |
| Foreign exchange gain (loss) | |
| |
| (225 | ) | |
| (195 | ) | |
| (177 | ) | |
| (690 | ) |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Net profit / (loss) and comprehensive income / (loss) for the period | |
| |
| 54,022 | | |
| (284,225 | ) | |
| 222,559 | | |
| (475,737 | ) |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Basic and Diluted Earning / (Loss) Per Share | |
| |
| 0.00 | | |
| (0.00 | ) | |
| 0.00 | | |
| (0.00 | ) |
Weighted Average Number of Common Shares Outstanding | |
| |
| | | |
| | | |
| | | |
| | |
Basic
| |
| |
| 99,871,642 | | |
| 99,628,180 | | |
| 99,805,845 | | |
| 99,462,344 | |
| Diluted | |
| |
| 105,606,642 | | |
| 99,628,180 | | |
| 105,540,845 | | |
| 99,462,344 | |
Segmented
information (Note 14)
The
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Avricore
Health Inc.
Condensed
Interim Consolidated Statements of Changes in Shareholder’s Equity
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
| | |
Number
of Shares | | |
Share
Capital | | |
Warrant
Reserve | | |
Option
Reserve | | |
Deficit | | |
Total | |
| | |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| Balance, December 31, 2022 | |
| 99,244,664 | | |
| 27,064,727 | | |
| 901,229 | | |
| 5,032,479 | | |
| (31,034,345 | ) | |
| 1,964,090 | |
| Exercise of options | |
| 400,000 | | |
| 121,387 | | |
| - | | |
| (78,887 | ) | |
| - | | |
| 42,500 | |
| Share-based compensation | |
| - | | |
| - | | |
| - | | |
| 256,519 | | |
| - | | |
| 256,519 | |
| Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (475,737 | ) | |
| (475,737 | ) |
| Balance, June 30, 2023 | |
| 99,644,664 | | |
| 27,186,114 | | |
| 901,229 | | |
| 5,210,111 | | |
| (31,510,082 | ) | |
| 1,787,372 | |
| Balance, December 31, 2023 | |
| 99,644,664 | | |
| 27,186,114 | | |
| 901,229 | | |
| 5,657,204 | | |
| (31,735,560 | ) | |
| 2,008,987 | |
| Exercise of options | |
| 245,000 | | |
| 29,721 | | |
| - | | |
| (13,121 | ) | |
| - | | |
| 16,600 | |
| Share-based compensation | |
| - | | |
| - | | |
| - | | |
| 29,062 | | |
| - | | |
| 29,062 | |
| Net income for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| 222,559 | | |
| 222,559 | |
| Balance, June 30, 2024 | |
| 99,889,664 | | |
| 27,215,835 | | |
| 901,229 | | |
| 5,673,145 | | |
| (31,513,001 | ) | |
| 2,277,208 | |
The
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Avricore
Health Inc.
Condensed
Interim Consolidated Statements of Cash Flows
For
the six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Operating Activities | |
| | | |
| | |
| Net profit (loss) | |
| 222,559 | | |
| (475,737 | ) |
| Adjustment for non-cash items: | |
| | | |
| | |
| Amortization | |
| 221,223 | | |
| 167,172 | |
| Share-based payments | |
| 29,062 | | |
| 256,519 | |
| Gain on settlement of debt | |
| (10,000 | ) | |
| - | |
| | |
| | | |
| | |
| Change in working capital items: | |
| | | |
| | |
| Accounts receivable | |
| 98,332 | | |
| 556,860 | |
| Inventory | |
| 11,631 | | |
| - | |
| Prepaid expenses and deposits | |
| (7,647 | ) | |
| (28,527 | ) |
| Deferred revenue | |
| - | | |
| (252,000 | ) |
| Accounts payable and accrued liabilities | |
| (148,042 | ) | |
| 3,545 | |
| Net cash provided by (used in) operating activities | |
| 417,118 | | |
| 227,832 | |
| | |
| | | |
| | |
| Investing Activities | |
| | | |
| | |
| Intangible assets | |
| (16,320 | ) | |
| (7,484 | ) |
| Purchase of equipment | |
| (108,359 | ) | |
| (411,004 | ) |
| Net cash used in investing activities | |
| (124,679 | ) | |
| (418,488 | ) |
| | |
| | | |
| | |
| Financing Activities | |
| | | |
| | |
| Proceeds from exercise of stock options | |
| 16,600 | | |
| 42,500 | |
| Loan repaid | |
| (30,000 | ) | |
| - | |
| Net cash (used in) provide by financing activities | |
| (13,400 | ) | |
| 42,500 | |
| | |
| | | |
| | |
| Increase / (Decrease) in cash and cash equivalents | |
| 279,039 | | |
| (148,156 | ) |
| Cash and cash equivalents, beginning of period | |
| 276,571 | | |
| 620,527 | |
| Cash and cash equivalents, end of period | |
| 555,610 | | |
| 472,371 | |
Supplemental
cash flow information (Note 15)
The
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
1.
NATURE OF OPERATIONS AND GOING CONCERN
Avricore
Health Inc. (the “Company”) was incorporated under the Company Act of British Columbia on May 30, 2000. The Company’s
common shares trade on the TSX Venture Exchange (the “Exchange”) under the symbol “AVCR” and are quoted on the
OTCQB Market as “AVCRF”. The Company’s registered office is at 700 – 1199 West Hastings Street, Vancouver, British
Columbia, V6E 3T5.
The
Company is involved in the business of health data and point-of-care technologies (“POCT”).
The
condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern,
which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities
in the normal course of business. The Company has historically experienced operating losses and negative operating cash flows. As at
June 30, 2024, the Company has an accumulated deficit of $31,513,001 and working capital of $609,108 which is insufficient to finance
the Company’s operations over the next twelve months. These conditions indicate the existence of material uncertainty that may
cast substantial doubt on the Company’s ability to continue as a going concern.
The
continuation of the Company as a going concern is dependent upon its ability to generate revenue from its operations and/or raise additional
financing to cover ongoing cash requirements. The condensed interim consolidated financial statements do not reflect any adjustments,
which could be material, to the carrying values of assets and liabilities, which may be required should the Company be unable to continue
as a going concern.
2.
BASIS OF PRESENTATION
a)
Statement of Compliance
The
condensed interim consolidated financial statements for the period ended June 30, 2024 have been prepared in accordance with International
Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), IAS
34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all the information and disclosures
required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial
statements as at and for the year ended December 31, 2023. The accounting policies followed in these interim financial statements are
consistent with those applied in the Company’s most recent annual financial statements for the year ended December 31, 2023.
b)
Basis of preparation
The
condensed interim consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical
costs, modified where applicable. The significant accounting policies are presented in Note 3 of the annual consolidated financial statements
for the year ended December 31, 2023 and have been consistently applied in each of the periods presented. The condensed interim consolidated
financial statements are presented in Canadian dollars, which is also the Company’s and its subsidiary’s functional currency,
unless other indicated.
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
2.
BASIS OF PRESENTATION (continued)
b)
Basis of preparation (continued)
The
preparation of condensed interim consolidated financial statements in accordance with IFRS requires the Company’s management to
make estimates, judgments and assumptions that affect amounts reported in the condensed interim consolidated financial statements and
accompanying notes. The areas involving a higher degree of judgment and complexity, or areas where assumptions and estimates are significant
to the condensed interim consolidated financial statements are disclosed below. Actual results might differ from these estimates. The
Company’s management reviews these estimates and underlying judgments on an ongoing basis, based on experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted
for prospectively in the year in which the estimates are revised.
c)
Basis of consolidation
Condensed
interim consolidated financial statements include the assets, liabilities and results of operations of all entities controlled by the
Company. Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are
eliminated in preparing the Company’s the condensed interim consolidated financial statements. Where control of an entity is obtained
during a financial year, its results are included in the condensed interim consolidated statements of operations and comprehensive loss
from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for that
part of the year during which control exists.
These
condensed interim consolidated financial statements include the accounts of the Company and its controlled wholly owned Canadian subsidiary
HealthTab™ Inc.
3.
SUMMARY OF MATERIAL ACCOUNTING POLICIES
Significant
accounting estimates and judgments
Share-based
payments
The
Company grants share-based awards to certain directors, officers, employees, consultants and other eligible persons. For equity-settled
awards, the fair value is charged to the statement of operations and comprehensive loss and credited to the reserves over the vesting
period using the graded vesting method, after adjusting for the estimated number of awards that are expected to vest.
The
fair value of equity-settled awards is determined at the date of the grant using the Black-Scholes option pricing model. For equity-settled
awards to non-employees, the fair value is measured at each vesting date. The estimate of warrant and option valuation also requires
determining the most appropriate inputs to the valuation model, including the volatility, expected life of warrants and options, risk
free interest rate and dividend yield. Management must also make significant judgments or assessments as to how financial assets and
liabilities are categorized.
Estimation
of useful lives of equipment and software
Amortization
of equipment and software is dependent upon estimates of their useful lives. The actual lives of the assets are assessed annually and
may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation, product lifecycles,
and maintenance are taken into account.
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
3.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
Significant
accounting estimates and judgments (continued)
Judgements
Significant
judgments used in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements
are as follows:
Revenue
recognition
Revenue
is recognized when the revenue recognition criteria expressed in the accounting policy stated above have been met. Judgment may be required
when allocating revenue or discounts on sales amongst the various elements in a sale involving multiple deliverables.
Deferred
income taxes
Tax
interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change. The determination
of income tax expense and deferred tax involves judgment and estimates as to the future taxable earnings, expected timing of reversals
of deferred tax assets and liabilities, and interpretations of laws in the countries in which the Company operates. The Company is subject
to assessments by tax authorities who may interpret the tax law differently. Changes in these estimates may materially affect the final
amount of deferred taxes or the timing of tax payments. If a positive forecast of taxable income indicates the probable use of a deferred
tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full.
Going
concern
Management
has applied judgements in the assessment of the Company’s ability to continue as a going concern when preparing these financial
statements. In assessing whether the going concern assumption is appropriate, management takes into account all available information
about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The factors considered
by management are disclosed in Note 1.
4.
ACCOUNTS RECEIVABLE
The
Company’s accounts receivable consists of the following:
| | |
June 30, 2024 | | |
December 31, 2023 | |
| | |
$ | | |
$ | |
| Trade receivables | |
| 323,102 | | |
| 420,998 | |
| GST receivable | |
| 6,255 | | |
| 6,691 | |
| | |
| 329,357 | | |
| 427,689 | |
5.
PREPAID EXPENSES AND DEPOSITS
The
balance consists of prepaid expenses to vendors of $31,022 (December 31, 2023 - $16,889), prepaid business insurance of $3,250
(December 31, 2023 - $9,736) and security deposits of $12,000 (December 31, 2023 - $12,000).
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
6.
EQUIPMENT
| | |
Equipment | |
| | |
$ | |
| Cost | |
| | |
| Balance, December 31, 2022 | |
| 1,298,703 | |
| Additions | |
| 1,021,572 | |
| Balance, December 31, 2023 | |
| 2,320,275 | |
| Additions | |
| 108,359 | |
| Balance, June 30, 2024 | |
| 2,428,634 | |
| | |
| | |
| Accumulated Amortization | |
| | |
| Balance, December 31, 2022 | |
| 190,712 | |
| Amortization | |
| 411,568 | |
| Balance, December 31, 2023 | |
| 602,280 | |
| Amortization | |
| 215,742 | |
| Balance, June 30, 2024 | |
| 818,022 | |
| | |
| | |
| Carrying value | |
| | |
| As at December 31, 2023 | |
| 1,717,995 | |
| As at June 30, 2024 | |
| 1,610,612 | |
Equipment
is comprised primarily of assets leased to earn revenues.
7.
INTANGIBLE ASSETS
| | |
Software | | |
HealthTab™ | | |
Corozon | | |
Emerald | | |
Total | |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| Cost | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2022 | |
| 40,177 | | |
| 1 | | |
| 1 | | |
| 1 | | |
| 40,180 | |
| Additions | |
| 25,288 | | |
| - | | |
| - | | |
| - | | |
| 25,288 | |
| Balance, December 31, 2023 | |
| 65,465 | | |
| 1 | | |
| 1 | | |
| 1 | | |
| 65,468 | |
| Additions | |
| 16,320 | | |
| - | | |
| - | | |
| - | | |
| 16,320 | |
| Balance, June 30, 2024 | |
| 81,785 | | |
| 1 | | |
| 1 | | |
| 1 | | |
| 81,788 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated Amortization | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2022 | |
| 10,319 | | |
| - | | |
| - | | |
| - | | |
| 10,319 | |
| Amortization | |
| 8,500 | | |
| - | | |
| - | | |
| - | | |
| 8,500 | |
| Balance, December 31, 2023 | |
| 18,819 | | |
| - | | |
| - | | |
| - | | |
| 18,819 | |
| Amortization | |
| 5,481 | | |
| - | | |
| - | | |
| - | | |
| 5,481 | |
| Balance, June 30, 2024 | |
| 24,300 | | |
| - | | |
| - | | |
| - | | |
| 24,300 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Carrying value | |
| | | |
| | | |
| | | |
| | | |
| | |
| As at December 31, 2023 | |
| 46,646 | | |
| 1 | | |
| 1 | | |
| 1 | | |
| 46,649 | |
| As at June 30, 2024 | |
| 57,485 | | |
| 1 | | |
| 1 | | |
| 1 | | |
| 57,488 | |
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
8.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The
Company’s accounts payable and accrued liabilities consist of the following:
| | |
June 30, 2024 | | |
December 31, 2023 | |
| | |
$ | | |
$ | |
| Trade accounts payable | |
| 296,086 | | |
| 428,677 | |
| GST payable | |
| 45,090 | | |
| 60,541 | |
| | |
| 341,176 | | |
| 489,218 | |
9.
LOANS PAYABLE
During
the year ended December 31, 2020, the Company received a Canada Emergency Business Account loan of $40,000 to be repaid on or before
December 31, 2024. The loan was interest-free until January 18, 2024. In January 2024, the Company repaid the loan principal of $30,000
and received loan forgiveness of $10,000, recorded as gain on settlement of debt.
10.
SHARE CAPITAL
Authorized
share capital
Authorized:
Unlimited number of common shares without par value.
Issued
share capital
During
the period ended June 30, 2024:
The
Company issued 245,000 common shares upon exercise of stock options for gross proceeds of $16,600.
During
the year ended December 31, 2023:
The
Company issued 400,000 common shares upon exercise of stock options for gross proceeds of $42,500.
Stock
options
The
Company has adopted a fixed up to 20% incentive share purchase option plan under the rules of the Exchange pursuant to which it is authorized
to grant options to acquire up to 19,970,000 common shares of the Company to executive officers, directors, employees and
consultants. The options can be granted for a maximum term of ten years and generally vest either immediately or in specified increments
of up to 25% in any three-month period.
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
10.
SHARE CAPITAL (continued)
Stock
options (continued)
The
changes in stock options including those granted to directors, officers, employees and consultants are summarized as follows:
| | |
Period ended June 30, 2024 | | |
Year ended December 31, 2023 | |
| | |
Number of Options | | |
Weighted Average Exercise Price | | |
Number of Options | | |
Weighted Average Exercise Price | |
| Beginning Balance | |
| 10,350,000 | | |
$ | 0.17 | | |
| 8,635,000 | | |
$ | 0.14 | |
| Options granted | |
| - | | |
| - | | |
| 2,365,000 | | |
$ | 0.26 | |
| Expired/Cancelled | |
| (55,000 | ) | |
$ | 0.06 | | |
| (250,000 | ) | |
$ | 0.17 | |
| Exercised | |
| (245,000 | ) | |
$ | 0.07 | | |
| (400,000 | ) | |
$ | 0.11 | |
| Ending Balance | |
| 10,050,000 | | |
$ | 0.17 | | |
| 10,350,000 | | |
$ | 0.17 | |
| Exercisable | |
| 10,015,000 | | |
$ | 0.17 | | |
| 9,132,250 | | |
$ | 0.17 | |
The
following table summarizes information about stock options outstanding and exercisable as at June 30, 2024:
| Exercise Price | | |
Expiry date | |
Options | |
| | | |
| |
Outstanding | | |
Exercisable | |
| $ | 0.05 | | |
October 15, 2024 | |
| 1,450,000 | | |
| 1,450,000 | |
| $ | 0.08 | | |
November 18, 2025 | |
| 500,000 | | |
| 500,000 | |
| $ | 0.08 | | |
December 8, 2025 | |
| 710,000 | | |
| 710,000 | |
| $ | 0.19 | | |
January 28, 2026 | |
| 150,000 | | |
| 150,000 | |
| $ | 0.25 | | |
March 22, 2026 | |
| 1,800,000 | | |
| 1,800,000 | |
| $ | 0.15 | | |
August 10, 2027 | |
| 2,675,000 | | |
| 2,675,000 | |
| $ | 0.15 | | |
August 12, 2027 | |
| 100,000 | | |
| 100,000 | |
| $ | 0.16 | | |
October 12, 2027 | |
| 300,000 | | |
| 300,000 | |
| $ | 0.28 | | |
May 15, 2028 | |
| 1,825,000 | | |
| 1,825,000 | |
| $ | 0.20 | | |
June 21, 2028 | |
| 400,000 | | |
| 400,000 | |
| $ | 0.20 | | |
September 15, 2028 | |
| 140,000 | | |
| 105,000 | |
| | | | |
| |
| 10,050,000 | | |
| 10,015,000 | |
The
weighted average remaining life of the stock options outstanding at June 30, 2024 is 2.42 years (December 31, 2023: 2.84 years).
Share-based
compensation
Share-based
compensation of $1,598 and $29,062 was recognized during the three and six months ended June 30, 2024 (2023 - $168,518 and $256,519),
respectively, for stock options granted and/or vested during the period. Options issued to directors and officers of the Company vested
immediately, while those issued to consultants vest over one year, however, the Board may change such provisions at its discretion or
as required on a grant-by-grant basis.
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
10.
SHARE CAPITAL (continued)
Share-based
compensation (continued)
Share-based
payments for options granted and repriced was measured using the Black-Scholes option pricing model with the following assumptions:
| | |
2024 | | |
2023 | |
| Expected life | |
| - | | |
| 3.30 years | |
| Volatility | |
| - | | |
| 134% - 174 | % |
| Dividend yield | |
| - | | |
| 0 | % |
| Risk-free interest rate | |
| - | | |
| 3.28% - 4.20 | % |
Option
pricing models require the use of highly subjective estimates and assumptions, including the expected stock price volatility. Changes
in the underlying assumptions can materially affect the fair value estimates.
Warrants
There
were no warrants outstanding at June 30, 2024 and December 31, 2023.
Fair
value of the finder’s warrants granted is measured using the Black-Scholes pricing model. Black-Scholes pricing models require
the use of highly subjective estimates and assumptions, including the expected stock price volatility. Changes in the underlying assumptions
can materially affect the fair value estimates.
11.
GENERAL AND ADMINISTRATIVE EXPENSES
| | |
Three months ended
June 30, | | |
Six months ended
June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Bank service charges | |
| 1,339 | | |
| 1,757 | | |
| 7,595 | | |
| 2,866 | |
| Filing and registration fees | |
| 7,287 | | |
| 31,230 | | |
| 15,609 | | |
| 40,958 | |
| Insurance | |
| 21,972 | | |
| 23,997 | | |
| 48,675 | | |
| 44,290 | |
| Office maintenance | |
| 10,264 | | |
| 10,129 | | |
| 20,068 | | |
| 23,237 | |
| Payroll | |
| 18,767 | | |
| 16,730 | | |
| 37,692 | | |
| 33,054 | |
| Regulatory fees | |
| 391 | | |
| 7,286 | | |
| 624 | | |
| 7,286 | |
| Rent | |
| 5,800 | | |
| 4,500 | | |
| 10,300 | | |
| 9,000 | |
| Travel | |
| 29,202 | | |
| 6,151 | | |
| 89,300 | | |
| 23,539 | |
| Warranty expense | |
| 3,250 | | |
| - | | |
| 6,500 | | |
| - | |
| | |
| 98,272 | | |
| 101,780 | | |
| 236,363 | | |
| 184,230 | |
12.
RELATED PARTY TRANSACTIONS
For
the three and six months ended June 30, 2024 and 2023, the Company recorded the following transactions with related parties:
| a)
|
$2,800
and $4,300 in office rent (2023 – $1,500 and $3,000) to a company controlled by the Chief Technology Officer of the Company. |
| |
|
| b)
|
$3,000
and $6,000 in office rent (2023 – $3,000 and $6,000) to a company controlled by the Chief Financial Officer of the Company. |
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
12.
RELATED PARTY TRANSACTIONS (continued)
| c)
|
$115,113
and $200,530 worth of purchases (2023 - $89,190 and $170,290) to a company controlled by Chief Technology Officer of the Company.
|
Related
party transactions not otherwise described in the condensed consolidated interim financial statements are shown below. The remuneration
of the Company’s directors and other members of key management, who have the authority and responsibility for planning, directing
and controlling the activities of the Company directly or indirectly, consist of the following:
| Type of transaction | |
Three months ended
June 30, | | |
Six months ended
June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Consulting fees | |
| 54,000 | | |
| 54,000 | | |
| 108,000 | | |
| 108,000 | |
| Management fees | |
| 54,000 | | |
| 54,000 | | |
| 108,000 | | |
| 108,000 | |
| Professional fees | |
| 32,100 | | |
| 32,100 | | |
| 64,200 | | |
| 64,200 | |
| Share-based compensation | |
| - | | |
| 138,169 | | |
| 20,715 | | |
| 209,815 | |
| | |
| 140,100 | | |
| 278,269 | | |
| 300,915 | | |
| 490,015 | |
There
were no amounts due to related parties as at June 30, 2024 and December 31, 2023
13.
CAPITAL DISCLOSURES
The
Company includes Common shares, Options reserve and Warrants reserve in the definition of capital net of share issue costs. The Company’s
objective when managing capital is to maintain sufficient cash resources to support its day-to-day operations. The availability of capital
is solely through the issuance of the Company’s common shares. The Company intends to issue additional equity at such time when
funds are needed and the market conditions become favorable to the Company. There are no assurances that funds will be made available
to the Company when required. The Company makes every effort to safeguard its capital and minimize its dilution to its shareholders.
The
Company is not subject to any externally imposed capital requirements. There were no changes in the Company’s approach to capital
management during the period ended June 30, 2024.
14.
SEGMENTED INFORMATION
At
June 30, 2024 and December 31, 2023, the Company has only one segment, being the HealthTab™ - Point of Care Business in Canada.
Revenue
from the major customer was $1,045,206 and $2,169,513 during the three and six months period ended June 30, 2024 (2023 - $522,156 and
$1,151,397 ). The major customer purchases goods and services from the Company’s only segment HealthTab™ - Point of
Care Business. The loss of this major customer could significantly impact on the Company’s revenue and financial position.
15.
SUPPLEMENTAL CASH FLOW INFORMATION
There
were no non-cash transactions during the period ended June 30, 2024 and 2023.
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
16.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The
Company’s financial instruments include cash and cash equivalents, term deposit, accounts receivable, accounts payable and loans
payable. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set
appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. The
Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.
This
note presents information about the Company’s exposure to each of the above risks and the Company’s objectives, policies
and processes for measuring and managing these risks. Further quantitative disclosures are included throughout the condensed interim
consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s
risk management framework. The Board has implemented and monitors compliance with risk management policies.
a)
Credit risk
Credit
risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations and arises primarily from the Company’s cash and cash equivalents and accounts receivable. The Company’s cash
and cash equivalents are held through a large Canadian financial institution. The Company does not have financial assets that are invested
in asset-backed commercial paper.
The
Company performs ongoing credit evaluations of its accounts receivable but does not require collateral. The Company establishes an allowance
for expected credit losses based on the credit risk applicable to particular customers and historical data.
Approximately
97% of trade receivables are due from one customer at June 30, 2024 (December 31, 2023 – 99% from one customer).
a)
Liquidity risk
Liquidity
risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company’s reputation. Liquidity
risk has been assessed as moderate.
The
Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that
there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises
funds primarily through public equity financing. Please refer to note 13 to these condensed consolidated interim financial statements
regarding the Company’s strategy to raise the funds through equity.
Contractual
undiscounted cash flow requirements for financial liabilities as at June 30, 2024 are as follows:
| | |
Carrying value | | |
Contractual Cash flows | | |
Within 1 year | | |
1 - 5 Years | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Trade accounts payable | |
| 296,086 | | |
| 296,086 | | |
| 296,086 | | |
| - | |
| | |
| 296,086 | | |
| 296,086 | | |
| 296,086 | | |
| - | |
Avricore
Health Inc.
Notes
to the Condensed Interim Consolidated Financial Statements
For
the three and six months ended June 30, 2024 and 2023
(Unaudited
- Expressed in Canadian Dollars)
16.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
b)
Market risk
Market
risk for the Company consists of currency risk and interest rate risk. The objective of market risk management is to manage and control
market risk exposure within acceptable limits, while maximizing returns.
Currency
risk
Foreign
currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As
all of the Company’s purchases and sales are denominated in Canadian dollars, and it has no significant cash balances denominated
in foreign currencies, the Company is not exposed to foreign currency risk at this time.
Interest
rate risk
Interest
rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates. In respect
of financial assets, the Company’s policy is to invest cash at fixed interest rates and cash reserves are to be maintained in cash
equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. The Company is not exposed to significant
interest rate risk.
c)
Fair values of financial instruments
The
fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels
of the fair value hierarchy are described below:
Level
1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities and amounts
resulting from direct arm’s length transactions.
Cash
and cash equivalents are valued using quoted market prices or from amounts resulting from direct arm’s length transactions. As
a result, these financial assets have been included in Level 1 of the fair value hierarchy.
The
fair values of financial assets and financial liabilities are determined as follows:
Cash
and cash equivalents are measured at fair value on a recurring basis using a level 1 measurement. The carrying amounts of accounts receivable,
accounts payable, and loans payable are of approximate fair value due to their short-term maturity or current market rates for similar
instruments.
Level
2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly,
for substantially the full contractual term. Derivatives are included in Level 2 of the fair value hierarchy as they are valued using
price models. These models require a variety of inputs, including, but not limited to, contractual terms, market prices, forward price
curves, yield curves and credit spreads.
Level
3: Inputs for the asset or liability are not based on observable market data.
17.
REVENUE
Revenues
earned are comprised of lease and service of $581,166 and $1,144,653 (2023 –$387,206 and 698,207) for the three and six months
ended June 30, 2024 and sale of products of $464,040 and $1,024,860 (2023 –$160,843 and $479,083). For the periods ended June 30,
2024 and 2023, the Company had one major customer from whom revenues are earned. Please refer to note 14 to this financial statement
for the details regarding revenue from the major customer.
Exhibit
3
Avricore
Health Inc.
Management’s
Discussion & Analysis
For
the three and six months ended
June
30, 2024
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
This
Management Discussion and Analysis (“MD&A”) of Avricore Health Inc. (“AVRICORE”, the “Company”,
“we”, “us” or “our”) for the period ended June 30, 2024 is prepared as of August 29, 2024. This MD&A
should be read in conjunction with the unaudited condensed interim financial statements for the three and six months ended June 30, 2024
and the audited consolidated financial statements for the years ended December 31, 2023 and the related notes thereto.
Our
consolidated financial statements are prepared in accordance International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”). This MD&A contains “forward-looking statements”
and the non-GAAP performance measures that are subject to risk factors set out in a cautionary note contained herein.
All
amounts are expressed in Canadian dollars unless otherwise indicated.
Additional
information about Avricore Health Inc. can be found on the SEDAR website (www.sedarplus.ca) and on the Company’s website
(www.avricorehealth.com).
FORWARD
LOOKING STATEMENTS
This
MD&A contains or incorporates forward-looking statements within the meaning of Canadian securities legislation (collectively, “forward-looking
statements. These forward-looking statements relate to, among other things, revenue, earnings, changes in cost and expenses, capital
expenditures and other objectives, strategic plans and business development goals, and may also include other statements that are predictive
in nature or that depend upon or refer to future events or conditions, and can generally be identified by words such as “may”,
“will”, “expects”, “anticipates”, “intends”, “plans”, “believes”,
“estimates” or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations
of future events or circumstances are forward-looking statements. These statements are not historical facts but instead represent only
Avricore’s expectations, estimates and projections regarding future events.
Although
the Company believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees
of future performance and involve certain risks and uncertainties that are difficult to predict. Undue reliance should not be placed
on such statements. Certain material assumptions are applied in making forward-looking statements and actual results may differ materially
from those expressed or implied in such statements. Known and unknown factors could cause actual results to differ materially from those
expressed or implied in the forward-looking statements. Important assumptions, influencing factors, risks and uncertainties are referred
to in the body of this MD&A, in the press release announcing the Company’s financial results, and in Avricore’s condensed
interim financial statements and the notes thereto. These documents are available at www.sedarplus.ca.
The
forward-looking statements contained in this MD&A are made as at the date of this MD&A and, accordingly, are subject to change
after such date. Except as required by law, Avricore does not undertake any obligation to update or revise any forward-looking statements
made or incorporated in this MD&A, whether as a result of new information, future events or otherwise.
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
OVERVIEW
Avricore
Health is focused on acquiring and developing early-stage technologies aimed at advancing pharmacy practice and patient care. Through
our flagship offering HealthTab™ (a wholly owned subsidiary), we provide a turnkey point-of-care testing platform, creating value
for stakeholders and better outcomes for patients.
The
HealthTab™ platform effectively transforms pharmacies into community point-of-care diagnostic centers. HealthTab™ enables
pharmacists to take on a greater role in primary health services and direct patient care. By capitalizing on the rapidly growing point-of-care
testing market. HealthTab™ ultimately improves the quality of life for patients living with chronic illness.
POST
COVID-19 ENVIRONMENT
In
March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. Four years later the pandemic’s aftershocks
continue to impact the environment in which the Company operates.
One
benefit is the increased focus on real world evaluations and rapid point-of-care testing (POCT) which has brought increased attention
to HealthTab™. While continuing HealthTab’s™ primary focus on general health screening it has also been adapted to
support virological testing.
In
2024, it is estimated over 6 million Canadians do not have a access to a family doctor, and only 29% of those who can are able to access
them in a timely manner. This challenge is expected to get worse, as 29% of family doctors are planning on retiring or changing careers
in the next 12 – 36 months.
That
pharmacy is playing a critical role in filling the gaps that have been created and reducing expenses, as they can offer timely services
in an efficient manner utilizing healthcare team members with lower billable rates. This is attractive in the current economy and stretched
public health budgets.
HEALTHTAB™
– KEY DEVELOPMENTS
Key
developments have included:
| ● | In
the six months ended June 30, 2024 revenue increased by 84% year over year to $2,169,513
and gross profit increased by 94% to $855,566. |
| ● | In
the three months ended June 30, 2024 revenue increased by 91% year over year to $1,045,206
and gross profit increased by 62% to $370,775. |
| ● | In
the six months ended June 30, 2024 the Company recorded net profit of $222,559 and a net
increase in cash of $279,039. |
| ● | Avricore
has partnered with Ascensia Diabetes Care to integrate their blood glucose monitoring systems,
CONTOUR®NEXT GEN and CONTOUR®NEXT ONE, with Avricore’s HealthTab™ platform.
The collaboration aims to improve diabetes management for patients and pharmacists in Canada
by linking daily blood glucose testing data to the patient’s HealthTab™ account.
This integration will provide a more comprehensive health data tool for combating diabetes.
The technical work is expected to be completed by Q3 of this year, with ongoing efforts to
encourage patient engagement. Ascensia Diabetes Care is a global company focused on supporting
people with diabetes and is a subsidiary of PHC Holdings Corporation. |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
| ● | In
September 2023, the Company announced its first testing location within Rexall’s Pharmacy
Walk-In Clinic in Sherwood Park, Alberta. That location, a first for Rexall as well, offers
both the Afinion 2™ blood-chemistry analyzer as well as the ID Now™ molecular
platform by Abbott Rapid Diagnostics, giving patients quick access to their test results,
and allowing for immediate consultation with their pharmacist. |
| ● | Subsequent
to the initial launch, the Company was pleased to announce further expansion of HealthTab™
with Rexall Pharmacy Group ULC (“Rexall”). The Companies have been working closely
to develop the best patient approaches and internal workflows to ensure the most successful
deployment of this powerful point-of-care testing platform. |
| ● | The
next steps with Rexall will be to deploy a minimum of another 20 locations spread out between
stores in Alberta and Ontario. After each deployment, the teams will collaborate to assess
deployment workflow, refine processes and identify further deployment opportunities based
on patient and pharmacist feedback. |
| ● | Avricore’s
HealthTab™ platform has been selected by a collaborative effort involving Barts Heart
Centre and HEART UK to assess the feasibility of community pharmacists in the UK providing
cholesterol testing alongside blood pressure checks for cardiovascular risk evaluation. The
study aims to build on the success of over 930,000 blood pressure checks conducted in 6,000
pharmacies as part of an NHS initiative. With NHS England allocating £645 million (approx.
$1.1 billion CDN$) to increase access to primary care in community pharmacy, HealthTab™
will support pharmacists in delivering vital support for chronic diseases. |
| ● | Signing
a reseller agreement between HealthTab™ Inc. and Abbott Rapid Diagnostics Limited UK
& Ireland. This agreement provides a foundation for HealthTab™ to purchase and
distribute the Afinion™ 2 and associated tests for diabetes and heart disease screening
in community pharmacies in the United Kingdom. |
| ● | The
Company has significantly expanded the number of Shoppers Drug Mart pharmacies offering its
HealthTab™ point-of-care testing platform under a renewed Master Service Agreement
(MSA) to 784 locations nation-wide. In addition to Shoppers Drug Mart pharmacies, this new
MSA and corresponding Statement of Work (SOW) provides for affiliated locations under the
Loblaws family of brands, to utilize HealthTab™ upon request. |
| ● | 781
HealthTab™ systems were operating in Shoppers Drug Mart® and Loblaw family stores
including pharmacist walk-in clinics as of June 30, 2024; 479 in Ontario and 92 in British
Columbia, 21 in Nova Scotia, 163 in Alberta, 3 in Prince Edward Island, 1 in Saskatchewan
and 22 in New Brunswick. The Company was honoured to have HealthTab™ placed in the
first pharmacist-led primary healthcare clinic located in Lethbridge, Alberta. Not only was
this the first clinic, it was also the first system placed in a Real Canadian Superstore®,
as well as its first Alberta location. |
| ● | Subsequent
to June 30, 2024 an additional 3 systems have been deployed for a total of 784 participating
Shoppers Drug Mart® pharmacies and Loblaw family stores offering screening tests to patients
via HealthTab™ systems as of the date of this report. |
| ● | In
226 of these locations, the Company has deployed Abbott’s ID Now™, either in combination
with the Afinion 2™ or standalone, to offer confirmed molecular testing for virus detection
in community pharmacies. Last year’s “tripledemic” (Flu, RSV and Covid)
strained the Canadian healthcare system beyond its breaking point. This year scientists are
concerned about a heavily mutated Covid variant. Pharmacy will play a key a role in these
battles and confirmed tests results means faster responses, better treatment and less spread
of these infectious diseases. |
| ● | Subsequent
to June 30, 2024, 6 systems commenced operating at Rexall Stores in Alberta, Ontario and
Saskatchewan. |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
| ● | While
flu season strains pharmacies’ capacity for chronic disease screening and management,
having the ID Now™ means HealthTab™ can support pharmacies with confirmed molecular
testing for virus detection during these critical months of the year and diversify the Company’s
revenues. |
| ● | The
innovative practice of pharmacist-led primary healthcare clinics is expected to expand, as
provinces struggle to meet the health care needs of their residents and recruit more family
physicians. The program’s primary focus is to screen patients at-risk for diabetes
and cardiovascular disease. In-store signage and print material will let customers know they
are able to request HealthTab™ tests, and existing patients will be made aware through
direct outreach from their Shoppers Drug Mart® or Real Canadian Superstore® pharmacist
based on their health profile. On March 28th, 2023, the Government of Canada tabled
its budget for the year ahead, including a 10-year funding agreement with the Nation’s
provinces to increase healthcare funding. This new funding approach is novel for the fact
that each province will have specific agreements, opposed to the more traditional generalized
formula. This approach is expected to bring substantial innovations related to healthcare
data and new healthcare service delivery models, as the provinces agreed to make changes
to rules and practices which have limited data-flow optimization and healthcare access. |
| ● | The
Canadian Medical Association expressed support for many of the initiatives on March 30th,
2023, in relation to the healthcare agreement and encouraged government to institute recommendations
from the Addressing Canada’s Health Workforce Crisis report from the Standing
Committee on Health. One of the key items they pointed to was “…optimizing
scopes of practice for health professionals…”. |
| ● | Most
provinces have already begun expanding the scope of practice of their pharmacists, with 7
provinces allowing these healthcare professionals to prescribe for minor ailments and 8 provinces
either allowing or will soon allow them to order and interpret lab results. HealthTab™
is uniquely situated to support the expanding scope of pharmacy practice. |
| ● | As
of July 1st, 2022, the Government of Ontario brought into effect an expanded scope
of practice for community pharmacists in the province, joining Alberta in this growing and
increasingly popular approach. This includes limited prescribing for minor ailments, as well
as the ability to perform certain point-of-care tests to assist patients with managing chronic
disease. Approved tests include glucose, HbA1c and lipids, all of which HealthTab™
currently offers with the Abbott Afinion 2™. Also announced as part of this plan in
Ontario, is a second stage of scope modifications, which began on January 1, 2023. This stage
allows for limited prescribing for minor ailments and certain prescription renewals, further
enhancing the value of community pharmacy in direct patient care. |
| ● | These
changes, and increasing demand, means Canadian pharmacy business is rapidly evolving before
our eyes, from being product focused to care service focused. At $51.4 billion, the industry
already represents a significant impact on healthcare, and the anticipated increase in funding
and new service offerings, including point-of-care testing, will mean this practice will
play an even more impactful role going forward. |
| ● | During
the pilot with Shoppers Drug Mart®, over 15,000 HealthTab™ tests were completed
for more than 6,900 patients. The data collected confirmed that the patients tested had a
high prevalence of previously undiagnosed diabetes, pre-diabetes and heart disease and significant
near-term risk for major health events. Almost 60 per cent of patients needed an intervention
to better manage their chronic disease. On average, 31 percent received a new chronic medication,
28 percent required a change in their current medication, and 235 patients were newly identified
as diabetic. Patients also reported in post surveys that they valued receiving this information
from their pharmacists, and those pharmacists indicated that HealthTab™ enabled an
increase in the value of services they were able to provide to their patients. |
| ● | Developed
a unique quality assurance program with a third-part reference laboratory to offer HealthTab™
pharmacies industry leading validation for point-of-care instruments and test consumables. |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
| ● | Expanding
capabilities, signing of a non-exclusive, pilot supplier distribution agreement in Canada
between HealthTab™ Inc., and Abbott, with respect to the handheld blood chemistry analyzer,
i-STAT Alinity. The agreement allows HealthTab™ to now also distribute Abbott’s
novel point-of-care i-STAT Alinity and its associated tests for creatinine in Canadian pharmacies
to better support patients with important information about their renal function. |
| ● | Expanding
capabilities, amendment to the Distribution Agreement adds Abbott’s popular ID NOW™
molecular testing device which will add onsite testing and reporting capabilities for SARS-CoV-2
as well as Respiratory Syncytial Virus (RSV), Influenza A & B and Streptococcus –
a powerful combination for detecting infections before they spread. |
| ● | Developing
new pilot programs with national pharmacy chains, |
| ● | Continuing
to negotiate new and novel POC diagnostic device integrations to strategically expand the
HealthTab™ testing menu. |
| ● | Refining
HealthTab™’s de-centralized clinical trials capabilities to make actionable and
to monetize de-identified data associated with high-value Real-World Evaluation (RWE). |
| ● | Moving
forward with negotiations across several target demographics, domestically and internationally,
with pharmacies, life-science companies, host-locations, and Clinical Research Organizations
(CRO). |
HealthTab™
is a cloud-based network technology that enables the world’s first harmonized, real-time response system where consumers receive
a finger-stick blood test at their local pharmacy via a web-enabled clinical grade blood chemistry analyzer. These results are available
in 12 minutes. Consumers’ biomarkers, which include key results related to heart, liver and kidney function, are received via secure
login which they can then use to better understand their health performance and share with their healthcare team for evidence-based decision
making. This one-of-a-kind real-time reporting system opens the door to improved preventative healthcare in public and private health
systems.
De-identified
data collected, with consumer consent across the HealthTab™ network of analyzers, can be shared with life-science companies and
other research entities including the clinical research industry. The traditional clinical trial approach can be limited in the scope
of time, demographical outreach, and other inherent exclusionary attributes. HealthTab™ presents
a revolutionary model for utilizing the system’s unique ability to offer real-time evaluations of treated populations and real-world
evaluation clinical trials.
It
is clear that patients and healthcare providers are increasingly leveraging vast amounts of patient data, including clinical histories,
genetic information, and real-time monitoring data, to make more informed and personalized decisions. This data-driven approach enhances
diagnostic accuracy, tailors treatment plans, and improves overall patient outcomes.
Despite
this trend, currently, only about 3% of the health data generated globally is actively utilized in patient care. This means that a staggering
97% of health data goes unused. Despite the enormous volume of health data produced, challenges such as data privacy concerns, lack of
interoperability, and insufficient data governance frameworks significantly limit its application in clinical settings. Improving the
utilization of this data could revolutionize patient care by enabling more personalized treatments, early disease detection, and better
health outcomes overall. (source / source).
This
opportunity is being addressed by HealthTab by bring real-time data generation together with machine-driven insights and automated dissemination
into the pharmacy, driving data utilization.
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
HealthTab™
is being embraced as it is the most sophisticated and credible way to deploy and manage point-of-care testing in the pharmacy and community
setting where it offers the reliability, accuracy and flexibility the sector needs. The Company sees increasing demand due to public
policy changes and shifts in healthcare globally, and with a proven track record now established, HealthTab™ is best positioned
to capitalize on this opportunity.
Fully
Integrated Patient Health Records
The
Company is being engaged in discussions for the integration of HealthTab™ into the electronic medical records and pharmacy management
systems within Canada and international markets in order to solve for the data-silos which are commonplace, making the user-experience
better for patient and providers, as well as supporting research opportunities.
HealthTab™’s
API integration capabilities make it ideal to achieve an industry first, where a consumer’s test results can be directly linked
to an electronic medical record as well as a patient’s personal health record, for real-time responses and smooth integration across
the multiple platforms a health provider will use.
Community
Pharmacy Sector
In
an era of rapid change in health care delivery, community pharmacy practice models and community pharmacy business models are both experiencing
significant evolution in focus and daunting challenges to be met. We strongly believe that Avricore is a game-changing catalyst for community
pharmacy to meet their practice and business challenges and increasingly focus on patient-centred cognitive services with attendant point-of-care
testing in the future. Avricore is focused on expanding and further deploying its HealthTab™ and to best meet the current community
pharmacy sector’s needs.
Selected
Financial Information and Additional Disclosure
The
following financial data for the three years is derived from the Annual Audited Consolidated Financial Statements and should be read
in conjunction with the Consolidated Financial Statements.
| | |
2023 | | |
2022 | | |
2021 | |
| Total revenue | |
$ | 3,485,147 | | |
$ | 1,768,374 | | |
$ | 122,808 | |
| Loss from operations | |
$ | 701,215 | | |
$ | 818,228 | | |
$ | 1,708,132 | |
| Loss per share – basic and diluted | |
$ | 0.01 | | |
$ | 0.01 | | |
$ | 0.02 | |
| Total assets | |
$ | 2,538,205 | | |
$ | 2,568,983 | | |
$ | 2,281,393 | |
| Total current liabilities
(1) | |
$ | 529,218 | | |
$ | 604,893 | | |
$ | 84,477 | |
| Total non-current financial liabilities | |
| Nil | | |
| Nil | | |
| Nil | |
| (1) | 2022
Current liabilities include deferred revenue of $252,000 for which the Company completed
delivery in Q1 2023. |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
QUARTERLY
FINANCIAL INFORMATION
The
following table highlights selected unaudited consolidated financial data for each of the eight most recent quarters. These results are
not necessarily indicative of results for any future period and you should not rely on these results to predict future performance.
| Quarter Ended | |
June
2024 | | |
March
2024 | | |
Dec
2023 | | |
Sep
2023 | | |
June
2023 | | |
Mar
2023 | | |
Dec
2022 | | |
Sep
2022 | |
| | |
| | |
| | |
| | |
| | |
| | |
$ | | |
$ | | |
$ | |
| Revenue | |
| 1,045,206 | | |
| 1,124,307 | | |
| 1,354,403 | | |
| 953,454 | | |
| 548,049 | | |
| 629,241 | | |
| 997,235 | | |
| 572,228 | |
| Gross profit (loss) | |
| 370,775 | | |
| 484,791 | | |
| 501,466 | | |
| 261,778 | | |
| 229,471 | | |
| 210,681 | | |
| 168,845 | | |
| 215,961 | |
Share-based
compensation | |
| 1,598 | | |
| 27,464 | | |
| 142,765 | | |
| 304,328 | | |
| 168,518 | | |
| 88,001 | | |
| 243,000 | | |
| 58,354 | |
| Comprehensive income (loss) | |
| 54,022 | | |
| 168,537 | | |
| 59,584 | | |
| (285,062 | ) | |
| (284,225 | ) | |
| (191,512 | ) | |
| (244,789 | ) | |
| (180,398 | ) |
| Net profit (loss)/share | |
| 0.00 | | |
| 0.00 | | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) |
| Total
Assets | |
| 2,618,384 | | |
| 2,798,058 | | |
| 2,538,205 | | |
| 2,453,136 | | |
| 2,143,810 | | |
| 2,296,565 | | |
| 2,568,983 | | |
| 2,128,017 | |
RESULTS
OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2024 and 2023
| | |
Three
months ended June
30 | | |
Six
months ended June
30 | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
$ | 1,045,206 | | |
$ | 548,049 | | |
$ | 2,169,513 | | |
$ | 1,177,290 | |
| | |
| | | |
| | | |
| | | |
| | |
| % Change - year over year | |
| 91 | % | |
| | | |
| 84 | % | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
$ | 370,775 | | |
$ | 229,471 | | |
$ | 855,566 | | |
$ | 440,152 | |
| % Change - year over year | |
| 62 | % | |
| | | |
| 94 | % | |
| | |
The
Company incurred a comprehensive income of $222,559 for the six months ended June 30, 2024 (2023 - loss $475,737).
Significant
changes are as follows:
| ● | Revenue
increased to $2,169,513 (2023 - $1,177,290) a 84% increase due to an increase in HealthTab™
systems deployed and tests sold. Gross profit amounted to $855,566 (2023 – $440,152)
a 94% increase. Gross margin for the period was 39% (2023- 37%) outperforming the Company’s
target margin of 30%. |
| ● | Share-based
compensation of $29,062 (2023 - $256,519) was recognized for stock options granted, vested,
and repriced during the period. |
| ● | Consulting
fees decreased to $108,000 (2023 - $128,117) due to fewer consultants engaged compared to
the previous year. |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
| ● | General
and administrative expenses increased to $236,363 (2023 - $184,230) mainly due to increase
in operations as compared with the previous year. |
| ● | Management
fees remained unchanged at $108,000 (2023 - $108,000). |
| ● | Shareholder
communications expense decreased to $36,892 (2023 - $83,685) due to reduced campaigning compared
to previous year. |
| ● | Professional
fees decreased to $123,206 (2023 – 153,726) due to the timing of invoicing of audit
fees. |
RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2024
| ● | The
Company incurred comprehensive income of $54,022 for the three months ended June 30, 2024
(2023 – loss of $284,225). |
Significant
changes are as follows:
| ● | Revenue
increased to $1,045,206 (2023 - $548,049) a 91% increase, due to an increase in HealthTab™
systems deployed and tests sold. Gross profit increased to $370,775 (2023 – $229,471)
a 62% increase. Gross margin for the period was 35% (2023- 42%) outperforming the Company’s
target margin of 30%. |
| ● | Cost
of sales increased to $674,431 (2023 – $318,578) due to increase in scale of operations. |
| ● | Share-based
compensation of $1,598 (2023 - $168,518) was recognized for stock options granted, vested,
and repriced during the period. |
| ● | Shareholder
communications expense decreased to $17,006 (2023 - $41,767) due to reduced campaigning compared
to previous year. |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
LIQUIDITY
AND CAPITAL RESOURCES
The
Company’s operations have been financed through the issuance of common shares. Management anticipates that additional financings
or capital requirements to fund the current commercial operations and working capital will be required to grow the business to a sustainable
level.
Cash
flows
| Sources and Uses of Cash: | |
Period ended June 30, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Cash provided by (used in) operating
activities | |
| 417,118 | | |
| 227,832 | |
| Cash used in investing activities | |
| (124,679 | ) | |
| (418,488 | ) |
| Cash provided by (used in) financing activities | |
| (13,400 | ) | |
| 42,500 | |
| Cash and Cash Equivalents,
closing balance | |
| 555,610 | | |
| 472,371 | |
There
is an overall cash inflow of $279,039 for the six months ended June 30, 2024 compared to the cash outflow of $148,156 in the comparable
period in 2023.
Funding
Requirements
Management
devotes financial resources to the Company’s operations, sales and commercialization efforts, regulatory approvals and business
development. The Company will require cash to support working capital.
The
future funding requirements will depend on many factors including:
| ● | the
extent to which we will be commercially successful in launching HealthTab™, |
| | |
| ● | the
size, cost and effectiveness of our sales and marketing programs, distribution and marketing
arrangements, |
| | |
| ● | the
ability of the Company to raise capital through the issuance of its securities. |
As
at June 30, 2024, the Company had a working capital of $609,108 (December 31, 2023 – $244,343) and $329,357 (December 31, 2023
- $427,689) in accounts receivable. We believe that our cash on hand, the expected future cash inflows from revenues, net proceeds from
the options exercised, if any, may be sufficient to finance our working capital within the next twelve months. If our existing cash resources
together with the cash we generate from the sales of our products are insufficient to fund our working capital, operational needs, we
may need to sell additional equity or debt securities or seek additional financing through other arrangements.
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
RELATED
PARTY TRANSACTIONS
For
the three and six months ended June 30, 2024 and 2023, the Company recorded the following transactions with related parties:
| a) | $2,800
and $5,300 in office rent (2023 – $1,500 and $1,500) to a company controlled by the
Chief Technology Officer of the Company. |
| b) | $3,000
and $6,000 in office rent (2023 – $3,000 and $6,000) to a company controlled by the
Chief Financial Officer of the Company. |
| c) | $115,113
and $200,530 worth of purchases (2023 - $89,190 and $170,290) to a company controlled by
Chief Technology Officer of the Company. |
Related
party transactions not otherwise described in the consolidated financial statements are shown below. The remuneration of the Company’s
directors and other members of key management, who have the authority and responsibility for planning, directing and controlling the
activities of the Company directly or indirectly, consist of the following:
| Type of transaction | |
Three months ended
June 30, | | |
Six months ended
June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Consulting fees, Director &
CTO | |
| 54,000 | | |
| 54,000 | | |
| 108,000 | | |
| 108,000 | |
| Management fees, CEO | |
| 54,000 | | |
| 54,000 | | |
| 108,000 | | |
| 108,000 | |
| Professional fees, CFO | |
| 32,100 | | |
| 32,100 | | |
| 64,200 | | |
| 64,200 | |
| Share-based compensation | |
| - | | |
| 138,169 | | |
| 20,715 | | |
| 209,815 | |
| | |
| 140,100 | | |
| 278,269 | | |
| 300,915 | | |
| 490,015 | |
There
were no amounts due to related parties as at June 30, 2024 (December 31, 2023 - $Nil).
DISCLOSURE
OF OUTSTANDING SHARE DATA
The
following table summarizes the Company’s outstanding share capital as at report date:
| Common Shares | |
| 99,889,664 | |
| Stock Options | |
| 10,050,000 | |
| Warrants | |
| - | |
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
COMMITMENTS
AND AGREEMENTS
Loans
payable
During
the year ended December 31, 2020, the Company received a Canada Emergency Business Account loan of $40,000 to be repaid on or before
December 31, 2024. The loan was interest-free until January 18, 2024. In January 2024, the Company repaid the loan principal of $30,000
and received loan forgiveness of $10,000, recorded as gain on settlement of debt.
FINANCIAL
INSTRUMENTS AND RISKS
Operational
Risk Factors
Limited
Operating History
There
is no assurance that Avricore will earn profits in the future, or that profitability will be sustained. Operating in the pharmaceutical
and biotechnology industry requires substantial financial resources, and there is no assurance that future revenues will be sufficient
to generate the funds required to continue AVRICORE business development and marketing activities. In case AVRICORE does not have sufficient
capital to fund its operations, the management may be required to restructure the operations.
Going
concern
The
assessment of the Company’s ability to execute its strategy by funding future working capital requirements involves judgment. Estimates
and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The
condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern
which assumes that the Company will continue in operations for the foreseeable future and be able to realize assets and satisfy liabilities
in the normal course of business. The Company has always experienced operating losses and negative operating cash flows. Operations have
been funded by the issuance of share capital. These conditions may cast substantial doubt on the Company’s ability to continue
as a going concern.
Development
of Technological Capabilities
The
market for Avricore’s products is characterized by changing technology and continuing process development. The future success of
Company’s business will depend in large part upon our ability to maintain and enhance the Company’s technological capabilities,
develop and market products and services which meet changing customer needs and successfully anticipate or respond to technological changes
on a cost effective and timely basis. Although we believe that Company’s operations provide the products and services currently
required by our customers, there can be no assurance that the Company’s process development efforts will be successful or that
the emergence of new technologies, industry standards or customer requirements will not render Avricore’s products or services
uncompetitive. If Avricore needs new technologies and equipment to remain competitive, the development, acquisition and implementation
of those technologies and equipment may require us to make significant capital investments.
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
Dependence
on Key Personnel
We
are dependent to a large extent upon the continued services of our senior management team and other key employees such as sales and technical
personnel. There is intense competition for skilled employees and our failure to recruit, train and retain such employees could have
an adverse effect on our business, financial condition or operating results.
Financial
Instruments and Risk Management
The
Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and loans payable. The
Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. The Company has exposure
to credit risk, liquidity risk and market risk as a result of its use of financial instruments.
The
Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The
Board has implemented and monitors compliance with risk management policies.
Credit
risk
Credit
risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations and arises primarily from the Company’s cash and cash equivalents and accounts receivable. The Company’s cash
and cash equivalents are held through a large Canadian financial institution. The cash equivalent is composed of a guaranteed investment
certificate and is issued by a Canadian bank with high investment-grade ratings. The Company does not have financial assets that are
invested in asset-backed commercial paper.
The
Company performs ongoing credit evaluations of its accounts receivable but does not require collateral. The Company establishes an allowance
for doubtful accounts based on the credit risk applicable to particular customers and historical data. Approximately 97% of trade receivables
are due from one customer at June 30, 2024 (December 31, 2023 – 99% from one customer).
Liquidity
risk
Liquidity
risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company’s reputation.
The
Company monitors its spending plans, repayment obligations and cash resources, and takes actions with the objective of ensuring that
there is sufficient capital in order to meet short-term business requirements. To facilitate its expenditure program, the Company raises
funds primarily through public equity financing. The Company anticipates it will have adequate liquidity to fund its financial liabilities
through future equity contributions, however, there can be no guarantees that sufficient funds will be raised. As at June 30, 2024, the
Company’s liabilities $341,176 (December 31, 2023 - $529,218) were comprised of accounts payable $341,176 (December 31, 2023 –
489,218), and loans payable $Nil (December 31, 2023 – $40,000).
Avricore Health Inc. Management’s Discussion and Analysis as of August 29, 2024 |
Currency
risk
Foreign
currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. As
all of the Company’s purchases and sales are denominated in Canadian dollars, and it has no significant cash balances denominated
in foreign currencies, the Company is not exposed to foreign currency risk at this time.
Interest
rate risk
Interest
rate risk is the risk that fair values or future cash flows will fluctuate as a result of changes in market interest rates. In respect
of financial assets, the Company’s policy is to invest cash at floating interest rates and cash reserves are to be maintained in
cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. The Company is not exposed to
significant interest rate risk.
OFF-BALANCE
SHEET ARRANGEMENTS
The
Company does not have any off-balance sheet arrangements, which would require disclosure.
CONTACT
Officers
and Directors |
|
Contact
|
|
|
|
| Hector
Bremner, CEO, Director |
|
Avricore
Health Inc. |
| |
|
|
| Rodger
Seccombe, CTO, Director |
|
Suite
1120 - 789 West Pender St. |
| |
|
Vancouver,
BC V6C 1H2 |
| Kiki
Smith, CFO |
|
|
| |
|
Tel:
604 773-8943 |
| David
Hall, Chairman |
|
|
| |
|
|
| Alan
Arnstein, Director |
|
|
| |
|
|
| Christine
Hrudka, Director |
|
|
| |
|
|
| Dr.
Robert Sindelar, Director |
|
|
| |
|
|
| Thomas
Teahen, Director |
|
|
Exhibit
4
Form
52-109FV2
Certification
of Interim Filings
Venture
Issuer Basic Certificate
I,
Hector D. Bremner, CEO of Avricore Health Inc., certify the following:
| 1. |
Review:
I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Avricore
Health Inc. (the “issuer”) for the interim period ended June 30, 2024. |
| |
|
| 2.
|
No
misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any
untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| |
|
| 3. |
Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the
other financial information included in the interim filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date:
August 29, 2024
| “Hector
Bremner” |
|
| Hector D. Bremner, CEO |
|
NOTE
TO READER
In
contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in
NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment
and maintenance of
|
| |
| i) |
controls
and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual
filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation; and |
| |
|
| ii) |
a
process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with the issuer’s GAAP. |
| |
|
| The
issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge
to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability
of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109
may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports
provided under securities legislation. |
Exhibit
5
Form
52-109FV2
Certification
of Interim Filings
Venture
Issuer Basic Certificate
I,
Kiki Smith, CFO of Avricore Health Inc., certify the following:
| 1. |
Review:
I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Avricore
Health Inc. (the “issuer”) for the interim period ended June 30, 2024. |
| |
|
| 2.
|
No
misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any
untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| |
|
| 3. |
Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the
other financial information included in the interim filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date:
August 29, 2024
| “Kiki
Smith” |
|
| Kiki Smith, CFO |
|
NOTE
TO READER
In
contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in
NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment
and maintenance of
|
| |
| i) |
controls
and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual
filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation; and |
| |
|
| ii) |
a
process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with the issuer’s GAAP. |
| |
|
| The
issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge
to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability
of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109
may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports
provided under securities legislation. |
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