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Nevis Brands Inc
Symbol	NEVI
Shares Issued	38,140,326
Recent Sedar+ Documents

Nevis Brands begins trading on CSE, closes financing

2023-07-06 10:31 ET - News Release

Subject: Nevis Brands Inc. PDF Document File: Attachment Press Release -July 6. 2023 Nevis Brands Inc.pdf NEVIS BRANDS INC. (FORMERLY PASCAL BIOSCIENCES INC.) Listing on the CSE and Close balance of a $2,000,000 Private Placement VANCOUVER, BRITISH COLUMBIA, July 6, 2023- Nevis Brands Inc. ("Nevis" or the "Company") (OTC:PSCBF) (FSE: 6PB-FF): Nevis is pleased to advise that its common shares ("Shares") are listed on the CSE today. The second tranche of the previously announced $2,000,000 private placement closed with the issue of 4,805,000 shares of the Company ("Shares") at a deemed price of $0.10 per Share. 2,402,500 Share purchase warrants ("Warrants") were issued to the subscribers to the private placement to acquire 2,402,500 additional Shares, exercisable for one year at a price of $0.20 per Share. A finder's fee of $32,235 was paid and the finder was issued 230,250 Warrants on the same terms as the private placement Warrants. This completes the balance of the reorganization of the Company announced on December 9, 2022. All Shares have a hold period expiring November 7, 2023 The Company's CSE form 2A dated June 30, 2023 attached to this news release provides the details of the Reorganization. On Behalf of the Board of Directors John Kueber About Nevis Brands Inc. Based in Seattle, WA, Nevis innovates and develops cannabis products that have been consumed by millions of consumers across multiple markets in the United States. Led by our flagship brand Major(TM) (www.drinkmajor.com) Nevis partners with leading cannabis product manufacturers and distributors to enhance their product offerings by providing popular, proven brands in their respective territories. For additional information contact: John Kueber, CEO, 425-380-2151 E-mail: john@nevisbrands.com THE CANADIAN SECURITIES EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OR ADEQUACY OF THIS RELEASE. NO SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN. Forward-Looking Statements DISCLAIMER Certain statements in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 or forward-looking information under applicable Canadian securities legislation that may not be based on historical fact, includin g without limitation statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and similar expressions. Such forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause our actual results, events or developments, or industry results, to be materially different from any future results, events or developments express or implied by such forward-looking statements or information. Such factors include, among others, our stage of development, lack of 1 any product revenues, additional capital requirements, risk associated with the completion of clinical trials and obtaining regulatory approval to market our products, the ability to protect our intellectual property, dependence on collaborative partners and the prospects for negotiatin g additional corporate collaborations or licensing arrangements and their timing. Specifically, certain risks and uncertainties that could cause such actual events or results expressed or implied by such forward-looking statements and information to differ materially from any future events or results expressed or implied by such statements and information include, but are not limited to, the risks and uncertainties that: products that we develop may not succeed in preclinical or clinical trials, or future products in our targeted corporate objectives; our future operating results are uncertain and likely to fluctuate; we may not be able to raise additional capital; we may not be successful in establishing additional corporate collaborations or licensing arrangements; we may not be able to establish marketing and the costs of launching our products may be greater than anticipated; we have no experience in commercial manufacturing; we may face unknown risks related to intellectual property matters; we face increased competition from pharmaceutical and biotechnology companies; and other factors as described in detail in our filings with the Canadian securities regulatory authorities at www.sedar.com. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements and information, which are qualified in their entirety by this cautionary statement. All forward-looking statements and information made herein are based on our current expectations and we undertake no obligation to revise or update such forward- looking statements and information to reflect subsequent events or circumstances, except as required by law. 2 3 NEVIS BRANDS INC. (formerly Pascal Biosciences Inc.) CSE FORM 2A LISTING STATEMENT Date: June 30, 2023 1 TABLE OF CONTENTS SUMMARY 2 2. CORPORATE STRUCTURE 12 3. GENERAL DEVELOPMENT OF THE BUSINESS 12 5. SELECTED CONSOLIDATED FINANCIAL INFORMATION 34 6. MANAGEMENT'S DISCUSSION AND ANALYSIS 35 7. MARKET FOR SECURITIES 35 8. CONSOLIDATED CAPITALIZATION 35 9. OPTIONS TO PURCHASE SECURITIES 36 10. DESCRIPTION OF THE SECURITIES 38 11. ESCROWED SECURITIES 40 12. PRINCIPAL SHAREHOLDERS 40 13. DIRECTORS AND OFFICERS 41 14. CAPITALIZATION 47 15. EXECUTIVE COMPENSATION 50 16. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS 51 17. RISK FACTORS 51 18. PROMOTERS 56 19. LEGAL PROCEEDINGS 56 20. INTEREST OF MANAGEMENT AND OTHERS IN 57 MATERIAL TRANSACTIONS 57 21. AUDITORS, TRANSFER AGENT, AND REGISTRAR 57 22. MATERIAL CONTRACTS 57 23. INTEREST OF EXPERTS 57 24. OTHER MATERIAL FACTS 57 25. FINANCIAL STATEMENTS 58 Schedule A Consolidated year-end audited financial statements of Nevis Brands Inc. for the years ended November 30, 2022 and November 30, 2021 Schedule B MD&A of Nevis Brands Inc. for the financial years ended November 30, 2022 and 2021 Schedule C Consolidated audited financial statements of Nevis Brands Inc. for the years ended November 30, 2021 and 2020 Schedule D MD&A of Nevis Brands Inc. for the financial years ended November 30, 2021 and 2020 Schedule E Audited carveout income statement of SoRSE for the three years ended December 31, 2022, December 31, 2021, and December 31, 2020 Schedule F Audited carveout statement of acquired assets of THC Essentials as at June 30, 2023 Schedule G Pro-forma financial statements for the year ended November 30, 2022 2 GLOSSARY "APA" or "Asset Purchase Agreement" means the asset purchase agreement between SoRSE as seller and the Company as buyer for the sale of the assets of THC Essentials to the Company by SoRSE dated February 11, 2023 as amended on June 8, 2023. "BCBCA" means the British Columbia Business Corporations Act. "Cannabis" means the psychoactive dried flower buds, leaves, or other parts of the cannabis plant, including distillate derived from the extraction of cannabis oil. "Company" means Nevis Brands Inc. (formerly Pascal Biosciences Inc.) "CSE" means the Canadian Securities Exchange. "CSE Listing Date" means the date the Company's Shares are listed on the CSE. "Emulsion Technology" means SoRSE's Emulsion Technology, which is a proprietary, patent-pending emulsion technology that transforms oil into a water-compatible form for use in beverages, edibles, tinctures, and topicals. It converts a Licensee's THC Distillate to a water-soluble solution that is added to the Licensed Products. "License" means a license granted by SoRSE to beverage manufacturers and distributors. "Licensed Know-How" means all technical information, trade secrets, recipes, formulas, specifications, procedures, techniques, etc. required for the production of the Licensed Products. "Licensed Products" means beverages manufactured using the Licensed Know-How. "Licensee" means an entity that has been granted a License. "Nevis U.S." means Nevis Brands U.S. Inc., the wholly owned U.S. subsidiary of the Company. "Reporting Issuer" means a company that is subject to the reporting requirements of the securities commission where it is listed as a reporting issuer. Currently, it is a reporting issuer in the provinces of British Columbia, Alberta, and Ontario. "Services Agreement" means the services agreement between the Company and SoRSE, attached as Schedule H-1 to the APA. "Shares" means the common shares of the Company. "SoRSE" means SoRSE Technology Corporation. "State" means a state of the United States of America. "State Marijuana Rules" means the laws of a State relating to the possession, production, manufacturing, distribution, and commercial sale of Cannabis. "THC" means tetrahydrocannabinol, the substance primarily responsible for the effects of marijuana on a person's mental state. "Trademark" means the THC Essentials Trademarks. "TSX.V" means the TSX Venture Exchange. "US" means the United States of America. 1 "Warrant" means a Share purchase warrant to purchase one additional Share of the Company. SUMMARY The following is a summary of the principal features of this Listing Statement and should be read together with the more detailed information and financial data and statements contained elsewhere in this Listing Statement. Certain capitalized terms used in this summary are defined under "Glossary." The The Company was incorporated pursuant to the BCBCA on January 28, 2011, as MC Partners Company: Inc. and was listed as a capital pool company, as defined by Policy 2.4 - Capital Pool Companies (the "CPC Policy") of the TSX Venture Exchange (the "TSX.V"), in May 2012. On May 24, 2013, the Company acquired all of the issued and outstanding shares of bioMmune Advanced Technologies Inc., a private company that was formed to commercially exploit a number of patents and patent applications relating to certain medical technologies. The acquisition constituted the Company's "Qualifying Transaction" under the CPC Policy. On May 22, 2013, the Company changed its name to "bioMmune Technologies Inc." On March 30, 2017, the Company changed its name to Pascal Biosciences Inc. On June 12, 2023 the Company changed the name to Nevis Brands Inc. The Company's wholly owned subsidiary is Nevis Brands U.S. Inc. ("Nevis U.S.") ( formerly Pascal U.S. Inc.)., It was incorporated on March 27, 2017, under the Washington Business Corporations Act and operated a research lab in Seattle, Washington until it closed in November 2021. On November 22, 2022, the Company signed a term sheet dated November 22, 2022, with SoRSE to acquire the assets of its operating business called THC Essentials, which includes the Licenses to beverage manufacturers, licensed in their respective states of the US to manufacture and sell THC beverages. On December 6, 2022, the Company was advised by the TSX.V that it would not accept the acquisition of THC Essentials because it would not comply with the TSX.V cannabis policy. The Company signed the Asset Purchase Agreement with SoRSE dated February 10, 2023. It was amended several times to extend the Closing Date with a final amendment dated June 8, 2023 to extend the Closing Date to June 30, 2023. The Shares were delisted from the TSX.V at the close of trading on May 23, 2023. The Company has received conditional acceptance to list on the CSE. Listing will be subject to the Company fulfilling all the listing requirements of the CSE, including, without limitation, the distribution of the Shares to a minimum number of public shareholders and the Company meeting certain financial and other requirements. The Company is a reporting issuer in each of the provinces of British Columbia, Alberta, and Ontario. Reorg- The Company has undertaken a reorganization involving: anization (i) Delisting from the TSX.V which took place on May 23, 2023; (ii) Listing on the CSE; (iii) A name change and consolidation of its Shares on a ratio of one new Share for five old Shares took place on June 12, 2023; (iv) The issue of Shares for debt; (v) A payment plan with creditors; (vi) A change of directors and a new CEO which took place on June 12, 2023; (vii) A private placement of $2,000,000 by the issued of 20,000,000 Shares and Warrants (the "Private Placement") ; and 2 (viii) A Change of Business by the acquisition of the assets of THC Essentials which closed on June 30, 2023. collectively (the "Reorganization") to be completed on the Listing Date. On June 30, 2023 the shares for debt were issued, the acquisition of THC Essentials and $1,519,500 of the Private Placement closed. The balance of $460,500 is scheduled to close on the Listing Date. The Company obtained the approval of the Reorganization on May 11, 2023 from shareholders (excluding officer and directors) holding 36,957,501 Shares, representing 56.34% of the issued Shares. Change of Business: Acquisition of the assets of THC Essentials is a critical part of the Reorganization described below. An Asset Purchase Agreement ("APA") was signed on February 11, 2023, between SoRSE and the Company, to acquire from SoRSE the assets of the operating business called THC Essentials (the "THC Essentials Acquisition") for a purchase price of U.S. $1,125,000 and the issue of 3,555,000 Shares. It was amended several times to extend the Closing Date, with a final amendment on June 8, 2023 to extend the closing date to June 30, 2023 and to increase the number of Shares issued to SoRSE from 3,555,000 to 3,775,000. The acquisition closed on June 30, 2023. The APA is posted on the Company's profile at www.Sedar.com. The assets being acquired are: (i) The name "THC Essentials" and the following trademarks: Major, Happy Apple, Pearl, Utopia, Atomic Apple, Vertus, Velvet Swing and Velvet Kiss; (ii) Product formulas, designs, and recipes sold under the trademarks and brands; (iii) Assignment of all licenses and royalty agreements and associated royalty revenue from the sale of beverages infused with SoRSE's Emulsion Technology by SorSE licensees in Washington, Oregon, California, Arizona, Colorado, and Ohio; and (iv) All remaining inventory and equipment. The equipment is a basic bottle-filling machine and a machine to heat the labels and shrink-wrap the labels around the bottles. It is currently in a client's bottling plant in Portland, Oregon. The equipment is loaned to clients to help new clients get started with the manufacturer of the Licensed Products The assets of THC Essentials being acquired from SoRSE exclude SoRSE's Emulsion Technology. The purchase price is U.S. $1,125,000, of which U.S. $625,000 was paid on June 30, 2023 and the balance of U.S. $500,000 is payable 12 months from the Closing Date. On June 30, 2023 SoRSE was issued 3,775,000 consolidated Shares at a deemed price of $0.10 per Share, equal to 9.90% of the aggregate issued shares on Closing. The Company was required to raise $1,500,000 at Closing from which the US $625,000 will be paid. Specifics of the APA: (i) Promissory Note: Interest: On June 30, 2023, the Company and Nevis U.S. signed a promissory note for the outstanding balance of the purchase price of U.S.$500,000, payable 12 months from the closing of the APA. Interest of 7.5% per annum will be paid and due 13 months from the Closing of the APA. The promissory note is secured by a security agreement over the assets of the Company that has been signed by the Company and Nevis U.S. In the event of a default by the Company, the U.S.$500,000 plus interest will be immediately due and payable. Incidents of default are: a sale of substantially all of the Company's assets, the Shares being delisted from the CSE, a failure to meet continuous disclosure obligations, collection or enforcement proceedings, commencement of litigation against the Company exceeding U.S.$250,000, commencement of bankruptcy, winding up or dissolution proceedings, or assumption of or incurring 3 debt greater than or in seniority to the U.S.$500,000. In the event of a default, the interest rate increases to 15% per annum. (ii) On Closing, the Company and Nevis U.S. signed a security agreement providing a first charge in favour of SoRSE over the assets of the Company. (iii) Anti-dilution: In the event that the Company issues Shares at a price of less than CAD$0.05 per Share in the first year following Closing, the Company will issue Shares to SoRSE in an amount sufficient to provide SoRSE a 9.9% shareholding in the issued Shares. (iv) Indemnity: Each of the Company and SoRSE agree to indemnify the other from any claims, lawsuits, losses, liabilities, or litigation expenses arising from a breach of the APA. Services Agreement The Company and SoRSE signed a three-year Services Agreement to be effective at the Closing of the APA. SoRSE has agreed to sell its Emulsion Technology to the Company on a non-exclusive basis. Specifics of the Services Agreement: (i) The Company can only purchase emulsion technology from SoRSE. SoRSE can reject an order but is required to use commercially reasonable efforts to accept all purchase orders. (ii) SoRSE has agreed to not increase the price of its Emulsion Technology for one year to any Licensee that is active as at the Closing Date. Thereafter, the price is subject to change. (iii) Termination would result from a breach of the Services Agreement, a party becoming insolvent or subject to bankruptcy proceedings, a violation of any State Marijuana Regulations, or failure by the Company to pay two or more consecutive purchase orders. Each party will indemnify the other for any claims, lawsuits, losses, liabilities, or litigation expenses arising from a breach of the Services Agreement. (iv) Non-compete: SoRSE has agreed to not engage in the sale or licensing of any branded consumer products infused with THC cannabinoids in the U.S. for a period of three years following the Closing Date. The Company has agreed that, during the restricted period, SoRSE may provide formulation, production, cannabinoid emulsion, or any other related services to current and future customers of SorSE who engage in the sale or licensing of branded consumer products infused with any cannabinoids, including without limitation delta-9-tetrahydrocannabinol (THC) cannabinoids, or otherwise compete directly or indirectly with the Company. (v) New Market Exclusivity. If the Company is the first customer of SoRSE to sell commercially a Product containing 100 mg of THC per unit in a certain state, then Seller shall refrain from selling its Services to another customer selling a similar product ("Similar Product") in that specific state for a period of 12 months (the "Exclusivity Period"); the Company is required to pay in advance at the beginning of the Exclusivity Period a dollar amount equal to 10 kg of distillate converted at SorSE's market rate at that point in time and to purchase SoRSE's Emulsion Technology to convert at least an additional 10 kg of distillate within six months of the Launch Date. If, prior to the Launch Date, SoRSE is already engaged with another customer that is either already selling a Similar Product in that state, or is already in development of a Similar Product intended for sale in that state, then SoRSE is not obligated to grant an Exclusivity Period to the Company. In the event that an Exclusivity Period is granted, SoRSE can engage with other customers in the development of a Similar Product, which cannot be sold commercially in that state during the Exclusivity Period. The Service Agreement is a schedule to the APA. General Security Agreement: The Company also signed a general security agreement dated June 30, 2023 granting SoRSE a security interest over all of the assets of the Company. The Security Agreement is attached as a schedule to the APA. 4 SoRSE is a private company owned by more than 100 shareholders, all of whom are arms-length to the Company. None of them will own 5% or more of the issued Shares upon completion of the Reorganization. Delisting from the TSX.V and listing on the CSE. The THC Essentials Acquisition was reviewed by the TSX.V on December 6, 2022. At that time, the TSX.V advised that it was unable to accept the proposed acquisition because it did not comply with TSX.V policy regarding cannabis. The THC Essentials operations are not involved in cultivation, processing, or any aspect of the cannabis business, but the revenue for THC Essentials is from THC- infused beverages ("Infused Beverages"). Although the THC Essentials business does not "Touch the Leaf," the TSX.V is of the view that the Products from which the Company will receive a royalty are illegal under U.S. federal law, although legal in the states where the Products are sold. The press release also announced that the Company had decided to delist from the Exchange (subject to the approval of the majority of the minority shareholders), apply to the CSE to list its Shares, and complete the reorganization upon listing of the Shares on the CSE. The Reorganization will be completed on the Listing Date. Payment Plan Agreements with Creditors The Company has entered into Payment Plan Agreements with five arms-length creditors owed $212,512.95 and with the CEO, who is owed $13,920, to repay them over periods ranging from two months to 18 months. The aggregate amount due the creditors for the 12 months following listing on the CSE is $180,463. See "Narrative Description of the Business Use of Funds," "Description of the Securities Prior Sales," and "Material Contract." Debt Settlement by the Issue of Pre-Consolidation Shares for Debt On June 30, 2023, the Company issued 1,246,372 consolidated Shares for Debt at a deemed price of $0.40 per Share. The Shares have a hold period of four months and one day from the date of issue. Former Director and $ Amount # of # of Post-Consolidation CEO Pre- Shares at a deemed price One arms-length 134,500.00 Consolidation of $0.40 per Share creditor 56,339.59 Shares Patrick Gray, Director 402,209.02 100,000 Total 593,048.61 500,000 140,849 704,245 1,005,523 5,027,613 1,246,372 6,231,858 Name Change and Consolidation of the Shares On June 12, 2023, the Company changed its name to Nevis Brands Inc., changed the name of its U.S. subsidiary to Nevis Brands Inc., and consolidated the Shares on the basis of one new Share for five old Shares. Private Placement of $2,000,000 The Company has arranged the Private Placement of $2,000,000 by the issue of 20,000,000 Post- Consolidation units on the Listing Date. Each unit ("Unit") is composed of one Share and one-half Share purchase warrant. One Whole warrant entitles the holder to purchase one additional Share at a price of $.20 per Share for a term of 12 months. The private placement finder will be paid a commission of 7% of gross proceeds of $1,525,500 placed by the finder and will be issued 762,500 Share purchase warrants, equal to 5% of the 15,255,000 Units placed by the finder exercisable for one year at an exercise price of $0.20 per Share. On June 30, 2023 $1,519,500 of the Private Placement closed. The balance of $480,500 is scheduled to close on the Listing Date. 5 New Board and Officers The officers and directors are and on the Listing Date will be: John Kueber (new appointment on June 12, 2023) CEO, Director Harold Forzley CFO, Corporate Secretary John Bell (new appointment on June 12, 2023) Director Vahan Ajamian (new appointment on June 12, 2023) Director Patrick Gray Director See Item 13, "Directors and Officers," for more details about the officers and directors. Listing on the CSE On April 25, 2023, the Company received conditional acceptance to list the Shares on the CSE. Listing will be subject to the Company fulfilling all the listing requirements of the CSE, including, without limitation, the distribution of the Shares to a minimum number of public shareholders, the Company meeting certain financial and other requirements and completing the Reorganization on the Listing Date. Prior and Resulting Share Structure $ Number of Shares Number of Shares % Post-Consolidation Pre-Consolidation (on the basis of one new 36.52 Share for five old 3.47 Issued Shares 593,048.61 65,594,769 Shares) Shares for Debt 2,000,000 6,231,858 at an 13,118,954 Private Placement agreed price of $0.08 per Share 1,246,372 at a price of $0.40 per Share SorSE Shares 377,500 20,000,000 at a deemed 50.11 price of $0.10 per Share 9.90 Total 100 3,775,000 at a deemed price of $0.10 per Share 38,140,326 On April 26, 2023, the Company obtained shareholder approval for the Reorganization from shareholders representing *% of the issued shares prior to the Reorganization. Upon closing of all aspects of the Reorganization, no person or entity will own 10% or more of the issued Shares, and there will not be a change of control as no one entity will own 20% or more of the issued Shares. See "General Description of the Business" and "Narrative Description of the Business" Currency Unless otherwise indicated, all currency amounts reflected herein are stated in Canadian dollars and references to "CAD". "$" or "dollars" are references to Canadian dollars. 6 Use of Funds Available Funds and Principal Purposes Working Capital: As of May 31, 2023, the Company had a consolidated working capital deficiency of approximately $943,583, comprised of current assets of $180,789 comprised of cash and cash equivalents of $153,849, prepaid expenses of $19,841, and receivables of $7,099, minus current liabilities of $1,124,372, comprised of accounts payables and accrued liabilities of $814,166 and a short-term loan payable of $310,206. The short-term loan was to pay the Company's operating expenses and the costs of the Reorganization. Regarding the current liabilities of $1,124,372: : (i) $593,048.61 has been settled by the issue of 1,246,372 consolidated Shares at $.40 per Share; and (ii) $179,912.49 is being paid in the year following the month after the Listing Date to creditors pursuant to the Payment Plan. The balance of $45,776.55 due to these creditors will be paid in the second year following the Listing Date. The balance of the accounts payable and short-term loan is $277,195.60. Available Funds: After paying a commission of $106,785, equal to 7% of the $1,525,500 raised by a finder for the Private Placement of $2,000,000, the net proceeds will be $1,893,215. Principal Purposes of the estimated available funds are as follows: Estimated Cost ($) Item THC Essentials Acquisition price paid on the Listing Date 825,000 (1) General and administrative costs (see Table 1 below) 185,400 2023 Marketing/Operations (See "Narrative Description of the Business") 224,400(1) Creditors on the payment plan 179,912 Balance of current accounts payable and short term loan 277,195 Non current liabilities Balance of Reorganization costs and Closing and Listing costs 53,592 Unallocated 45,000 Total 102,716 1,893,215 (1) U.S.$625,000 is due to SoRSE on the Listing Date. The figure of CAD$825,000 is based on the Bank of Canada U.S. $ exchange rate of 1.32 on June 27, 2023. The figure of $224,400 for the U.S. operation for 12 months post Listing is also based on the same exchange rate. In the event of a change in the exchange rate these two figures may increase or decrease. Table 1 Monthly Amount Annual Amount General and Administrative Expenses of the $ $ Company (Consolidated) CFO, corporate secretary fees (See "Directors and 2,800 33,600 Executive Officers") CSE monthly listing fees 1,000 12,000 Legal 1,000 12,000 Audit fees 2,500 30,000 Annual filing fees 1,800 Transfer Agent 150 6,000 Seattle office, accounting, misc. 500 72,000 Accounting, tax compliance, and bookkeeping 6,000 18,000 services 1,500 Total 15,450 185,400 7 Risk Investment in the Shares is highly speculative and involves a significant degree of Factors: risk. Prospective investors should carefully consider and evaluate all risks and uncertainties involved in an investment in the Shares, including the following: additional financial requirements of the Company; t h e volatility of publicly traded securities; the Company's ability to continue as a going concern; negative cash flow from its operations to the date of this Listing Agreement; the payment of dividends; risks relating to the business of the Company, such as t h e limited operating history of THC Essentials, which started in 2018; uninsurable risks; political risks in the U.S. regarding the non-medical use of cannabis; environmental risks; licenses; competitive risks; dependence on key management; risks associated with the business model additional funding requirements; risks related to the COVID-19 pandemic; conflicts of interest; and lack of operating experience. There is the risk that the lawsuit against the Company by the former CEO will be successful; in that event, the Company will not have the funds to pay any award of damages and costs. An investment in the Company's securities is suitable only for those knowledgeable and sophisticated investors who are willing to risk the loss of their entire investment. Investors should consult their own professional advisors to assess the investment. See "Risk Factors" for greater detail on these and other risk factors. SELECTED CONSOLIDATED FINANCIAL INFORMATION Statement of Operations of the Company Fiscal Year Fiscal Year Fiscal Year Ended ended ended Nov. 30, 2022 Nov. 30, 2021 Nov. 30, 2020 (audited) (audited) (audited) (C$) (C$) (C$) Revenue 0 0 0 (457,001) (1,038,208) (1,284,496) Expense (480,280) (1,088,931) (1,237,927) Net income (loss) Net income (loss) per Share (0.01) (0.02) (0.02) Weighted average number of Shares 65,546,824 63,484,358 55,400,349 outstanding 18,892 155,518 120,714 Balance Sheet (973,893) (646,483) (473,053) Total assets Short term liabilities 0 0 0 Long term liabilities (819,990) (419,295) (352,339) Shareholder's equity (deficiency) Cash dividends per Share 0 0 0 Consolidated financial statements for the years ended November 30, 2022, and November 30, 2021, and for the years ended November 30, 2021, and November 30, 2020, are attached as Schedule "A" and Schedule "C," respectively, to this Listing Statement. MD&A for the financial years ended November 30, 2022, and November 30, 2021, are attached as schedules "B" and "D," respectively, to this Listing Statement. 8 GENERAL Certain capitalized terms and phrases used in this Listing Statement are defined in the "Glossary of Terms" above. Prospective purchasers should rely only on the information contained in this Listing Statement and should not rely on parts of the information contained in this Listing Statement to the exclusion of others. T he C om p a n y has not authorized any other person to provide additional or different information. If any person provides additional, different, or inconsistent information, including information or statements in media articles about the Company, it should not be relied on. This Listing Statement includes summary descriptions of certain material agreements of the Company (see "Material Contracts"). The summary descriptions disclose provisions that the Company considers to be material but are not complete and are qualified by reference to the terms of the material agreements, which will be filed with the Canadian securities regulatory authorities and will be available under the Company's profile on SEDAR at www.sedar.com. Investors are encouraged to read the full text of such material agreements. FORWARD-LOOKING STATEMENTS This Listing Statement contains forward-looking statements that relate to the Company's current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled "Summary of Listing Statement," "Description of the Business," "Use of Proceeds," "Selected Financial Information and Management's Discussion and Analysis," and "Risk Factors." In some cases, these forward-looking statements can be identified by words or phrases such as "may," "might," "will," "expect," "anticipate," "estimate," "intend," "plan," "indicate," "seek," "believe," "predict," or "likely," or the negatives of these terms, or other similar expressions intended to identify forward-looking statements. The Company has based these forward-looking statements on its current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy, and financial needs. These forward-looking statements include, among other things, statements relating to: dot The intention to complete the listing of the Shares on the CSE and complete the closing of the balance of the Private Placement of $480,500 of the $2,000,000 private placement on the Listing Date; dot The Company's expectation that the funds available and/or revenues derived from its operations will be sufficient to cover its expenses over the next 12 months; dot The success of the Company's business activities and programs; dot The timing and amount of future plans, costs of production, capital expenditures, and costs and timing of the development of the Company's business; dot The estimates of expected or anticipated economic returns in relation to development of the Company's business; dot Projections of market prices and costs for the Licensed Products; dot U.S. federal and state regulation of recreational cannabis; dot Requirements for additional capital and the Company's expectations regarding its ability to raise capital; dot The Company's plans and expectations for the Licensed Products; dot The intention to retain Licenses, brands, and Trademarks; dot Statements relating to the business and future activities of, and developments related to the Company to the 9 date of this Listing Statement and thereafter; dot Timing and costs associated with completing the manufacture and delivery of the bottles, tops, labels, and shipping boxes used for the Licensed Products; and dot The Company's expected business objectives for the next 12 months. Forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate, and are subject to risks and uncertainties. In making the forward-looking statements included in this Listing Statement, the Company has made various material assumptions, including but not limited to (i) obtaining necessary regulatory approvals; (ii) that regulatory requirements will be maintained; (iii) general business and economic conditions, including that financial markets will not be adversely impacted by the COVID-19 pandemic and other global issues; (iv) the Company's ability to successfully execute its plans and intentions; (v) the availability of financing on reasonable terms; (vi) the Company's ability to attract and retain skilled staff; (vii) anticipated results of marketing and sales activities; (viii) predictable changes to market prices and other predicted trends regarding factors underlying the market for the Licensed Products; (ix) the commercial viability of the Licensed Products being developed; (x) the Company's expectations regarding competition; (xi) the Company's ability to continue to achieve commercial sales of the Licensed Products; (xii) the Company's ability to rely on third parties to manufacture, develop, distribute, and sell the Licensed Products; and (xiii) the Company's ability to meet the listing requirements of the CSE and have access to a market where Shares may be sold. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties, and assumptions, prospective purchasers of Shares should not place undue reliance on these forward-looking statements. Whether actual results, performance, or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under "Risk Factors," which include: dot The limited operating history of THC Essentials and no assurance of continuing profitability; dot Uncertainty about the Company's ability to continue as a going concern; dot The Company's actual financial position and results of operations may differ materially from the expectations of the Company's management; dot The Company may not be able to secure additional financing for current and future operations and capital projects; dot Inherent uncertainties and risks associated with the Licensed Products; dot The possibility that future results will not be consistent with the Company's expectations; dot The risk that the brands and Trademarks that support the Licensed Products could be challenged; dot Risks related to the Company's ability to attract and retain qualified personnel, including the ability to keep essential operational staff in place as a result of COVID-19; dot Uncertainties related to global financial and economic conditions and the impact of market reaction to the COVID-19 pandemic, including potential disruptions to the manufacture, marketing, and sales of the Licensed Products; dot Risks associated with the Licensed Products being subject to change by U.S. state regulations; dot Competition for, among other things, capital acquisitions of resources and skilled personnel; dot Uninsured risks and hazards; 10 dot Risks associated with potential conflicts of interest of the Company's executive officers and directors; dot The market price for Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company's control; dot Changes in market dynamics, including business relationships and competition; dot The safety, efficacy, and quality of the Licensed Products and the consumer perception thereof; dot Conflicts with third parties to manufacture, develop, distribute, and sell the Licensed Products; dot Recall of the Licensed Products; and dot Negative cash flow from the Company's operations. If any of these risks or uncertainties materializes, or if assumptions underlying the forward-looking statements prove incorrect, actual results might vary materially from those anticipated in those forward-looking statements. Information contained in forward-looking statements in this Listing Statement is provided as of the date of this Listing Statement, and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information or future events or results, except to the extent required by applicable securities laws. The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking statements contained herein. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking statements. MARKET AND INDUSTRY DATA Unless otherwise indicated, information contained in this Listing Statement concerning the industry and the markets in which the Company intends to operate, including its general expectations and market position, market opportunities, and market share, is based on information from independent industry organizations, other third-party sources and publicly available information. Unless otherwise indicated, the Company's estimates are derived from publicly available information released by independent industry analysts and third-party sources as well as data from its internal research, and include assumptions made by the Company that it believes to be reasonable based on its knowledge of the industry and markets. The Company's internal research and assumptions have not been verified by any independent source, and the Company has not independently verified any third-party information. While the Company believes the market position, market opportunity, and market share information included in this Listing Statement is generally reliable, such information is inherently imprecise. In addition, projections, assumptions, and estimates of the Company's future performance, and the future performance of the industry and markets in which the Company operates, are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the headings "Forward-Looking Statements" and "Risk Factors." 11 2. CORPORATE STRUCTURE Name, Address, and Incorporation The Company was incorporated pursuant to the BCBCA on January 28, 2011, as MC Partners Inc., and was listed as a capital pool company, as defined by Policy 2.4 - Capital Pool Companies (the "CPC Policy") of the TSX Venture Exchange (the "TSXV"), in May 2012. On May 24, 2013, the Company acquired all of the issued and outstanding shares of bioMmune Advanced Technologies Inc., a private company that was formed to commercially exploit a number of patents and patent applications relating to certain medical technologies. The acquisition constituted the Company's "Qualifying Transaction" under the CPC Policy. On May 22, 2013, the Company changed its name to "bioMmune Technologies Inc." On March 30, 2017, the Company changed its name to Pascal Biosciences Inc. On June 12, 2023, the Company changed its name to Nevis Brands Inc. and consolidated its Shares on the basis of one new Share for five old Shares. The Company's registered office is located at 880 580 Hornby Street, Vancouver, British Columbia, Canada, V6C 3B6. The head office is located at 1600 40th Avenue, Seattle, Washington 98122. That address will change upon locating a new office in Seattle to be effective in July 2023. The Company is a reporting issuer in each of the provinces of British Columbia, Alberta, and Ontario. 2.3 Intercorporate Relationships The Company's wholly owned subsidiary is Pascal Biosciences U.S. Inc. ("Pascal U.S.), incorporated on March 27, 2017, under the Washington Business Corporations Act. Pascal U.S. operated a research lab in Seattle, Washington, USA until it closed in November 2021. Its registered and head office is located at 1600 40th Avenue, Seattle, Washington 98122. This address will change after completion of the Reorganization and listing on the CSE, at which time a new office will be located. Pascal Biosciences Inc. 100% Pascal Biosciences U.S. Inc. 3. GENERAL DEVELOPMENT OF THE BUSINESS 3.1 Introduction The Company's Shares were listed on the TSXV in May 2012 under the trading symbol "PAS," and it was classified as a Tier 2 Biotechnology Issuer. The Company has undertaken a reorganization involving: (i) Delisting from the TSX.V and listing on the CSE; (ii) A name change and consolidation of its Shares on a ratio of one new Share for five old Shares; (iii) The issue of Shares for debt; (iv) A change of directors and a new CEO; (v) A private placement of $2,000,000 ("Private Placement"); and (vi) Acquisition of the assets of a business called THC Essentials (the "THC Essentials Acquisition"). collectively (the "Reorganization"). The details of the Reorganization are disclosed in the balance of Section 3.1. 12 On April 25, 2023, the Company received conditional approval to list on the CSE, subject to the Company fulfilling all the listing requirements of the CSE, including, without limitation, the distribution of the Shares to a minimum number of public shareholders, the Company meeting certain financial and other requirements, obtaining shareholder approval, and completing the Reorganization on the Listing Date. Shareholder approval of the Reorganization was obtained on May 11, 2023 by a vote of 36,957,501 representing 56.34% of the issued Shares. At the closing of trading, on May 23, 2023, the Shares were delisted from the TSXV. On June 12, 2023, the name was changed to Nevis Brands Inc., and the Shares were consolidated on a ratio of one new share for five old Shares. On June 12, 2023, three new directors were appointed to the board of directors, four directors resigned, and a new CEO was appointed. See "Directors and Officers." On June 30, 2023: i) 1,246,372 consolidated Shares for Debt were be issued; (ii) the THC Essentials Acquisition closed and (iii) and the Private Placement was partially closed. On June 30, 2023 the Company closed $1,519,500 of the Private Placement. The balance of $480,500 is scheduled to close on July 6, 2023. Overview of the Company's business prior to the Reorganization Until November 2021, when the research lab closed, the principal business of the Company was the research and development of products for the treatment of cancers and improvement of the immune system, with a specific focus on cancer research at its laboratory located in Seattle, Washington. Three-Year History Developments in the year ended November 30, 2020 On March 24, 2020, the Company closed a private placement, whereby SoRSE Technology Corporation ("SoRSE") purchased 3,793,548 units of the Company at a price of $0.09 per Unit for gross proceeds of $341,419. Each Unit consisted of one Share and one Share purchase warrant, exercisable at a price of $0.15 for 18 months. None of the warrants were exercised. On June 12, 2020, 387,594 Share purchase warrants, exercisable at a price of $0.40 per Share, expired. In July 2020, the Company filed a provisional patent titled: "Method of Treating Coronavirus Infections with Cannabinoids and Derivatives." On September 14, 2020, the Company and SRSE announced that they had entered into a Collaborative Research Agreement (the "Agreement") to advance the Company's PAS-393, an immune-stimulating cannabinoid for cancer treatment, into clinical testing. They agreed to share their respective technologies to test PAS-393 in human volunteers, enabling the testing of cancer patients treated with checkpoint inhibitors. SRSE provided U.S.$750,000 in research funding to Pascal throughout the 15-month collaboration and paid for related research expenditures. Pursuant to the Agreement, as at March 30, 2021, the Company has received U.S.$300,000 from SRSE (U.S.$50,000 for each of September 2020 through February 2021), which was applied against salaries. During the year ended November 30, 2020, SoRSE was to acquire Pascal US and reimburse Pascal US for legal fees for this transaction. The transaction was cancelled, and the Company recorded $50,773 in accounts receivables from SoRSE. On November 30, 2020, the Company issued 1,153,825 Shares to related parties to settle debt owing of $230,765. During the year, stock options were granted to various persons. None were exercised. Developments in the year ended November 30, 2021 On February 8, 2021, and March 17, 2021, the Company closed a private placement by issuing 7,500,000 Units at a price of $0.10 per Unit for gross proceeds of $560,000. Each Unit consisted of one Share and one Share purchase 13 warrant exercisable at a price of $0.15 per Share for a period of 24 months from the date of closing. None of the warrants were exercised. On March 18, 2021, the Company was awarded a grant of U.S.$321,406 from the National Cancer Institute of the U.S. National Institutes of Health. The two-year award was used to fund development of the Company's antibody drug for acute lymphoblastic leukemia, which is the most common childhood leukemia. On September 3, 2021, the Company announced the appointment of Robert Gietl as CEO and president. On November 15, 2021, the Collaborative Research Agreement with SoRSE Technologies Inc. expired and was not renewed. During the year, stock options were granted to various persons, none of which were ever exercised. Developments in the year ended November 30, 2022 On January 3, 2022, the Company removed Robert Gietl as CEO and President. Mr. Gietl has commenced a legal action in the Supreme Court of B.C. claiming damages, interest and costs, payment of unpaid salary of $230,000, and the issue of 500,000 shares. On January 14, 2022, 500,000 Shares were issued to Robert Gietl for his services as CEO of the Company for the months of September and October 2021. The Company has filed a statement of defense. See Legal Proceedings under the heading "Risk Factors." He has not been paid for his services for November and December 2021. On February 28, 2022, Brian Bapty was appointed CEO and President and appointed to the board of directors. On February 28, 2022, he was granted 500,000 stock options exercisable at a price of $0.08 per Share for a period of five years, to vest quarterly over one year. On November 22, 2022, the Company signed a term sheet with SoRSE Technology Corporation ("SoRSE") of Seattle, Washington, to acquire from it the business line of THC Essentials (excluding SoRSE's patented Emulsion Technology) that licenses its trademarks to manufacturers to make wholesale finished cannabis drinks for sale at retail in exchange for a royalty. The assets being acquired are Licenses and a small amount of inventory and portable equipment used for bottling that is lent out to Licensees to start their operations. This equipment is currently with one of the Licensees. On November 28, 2022, the Company signed a termination/settlement agreement with Brian Bapty, former CEO and Director, to pay unpaid salary of $139,500 via the payment of $5,000 and the issue of 500,000 Pre-Consolidation Shares and to confirm that his stock options will expire on November 27, 2023. See "Material Agreements." On November 30, 2022, the Company signed an agreement with Dr. Patrick Gray, a director, to settle liabilities of $402,209.02 through the issue of 5,027,613 Pre-Consolidation Shares at a price of $.08 per Share. See "Material Agreements." On November 30, 2022, the Company signed an arms-length agreements with one creditor to settle liabilities of $56,339.59 through the issue of 704,245 pre-Consolidation Shares at a price of $.08 per Share. See ("Material Agreements"). On November 30, 2022, the Company signed payment plan agreements with seven creditors to pay $178,518.50 over a period of 15 months. Developments after November 30, 2022 On December 6, 2022, the Company issued a press release announcing the Reorganization. On December 9, 2022, the Company issued a press release announcing that the TSX.V had reviewed the proposed asset acquisition of THC Essentials and was unable to accept it because of the TSX.V cannabis policy. The press release also announced that it had decided to delist from the Exchange (subject to the approval of the majority of the 14 minority shareholders), apply to the CSE to list its Shares, and complete the reorganization upon listing the Shares on the CSE. The Reorganization will complete on the Listing Date. The Company signed an agreement with SoRSE dated February 10, 2023, to acquire the assets of THC Essentials. On February 13, 2023, the Company applied to list its shares on the CSE. On April 25, 2023, the Company received conditional acceptance from the CSE to list the Shares on the CSE, subject to meeting certain financial and distribution requirements, obtaining shareholder approval to the de-listing and completing the Reorganization on the Listing Date. At the close of trading on May 23, 2023 the Shares were delisted from the TSX.V. On June 12, 2023 the Company changed its name to Nevis Brands Inc., consolidated the Shares with a ratio of one new Share for five old Shares, accepted the resignations of three of the four directors, and appointed three new directors and a new CEO. See "Directors and Executive Officers." On January 3, 2022, the Company removed Robert Gietl as CEO and President. On January 14, 2022, 500,000 Shares were issued to Robert Gietl for his services as CEO of the Company for the months of September and October 2021. He has not been paid for his services for November and December 2021. Mr. Gietl commenced a legal action in the Supreme Court of B.C. claiming damages, interest and costs, payment of unpaid salary of $230,000, and the issue of 500,000 shares. On June 22, 2023 a settlement agreement of $126,000 was reached. $46,000 (which is included in the Use of Funds) will be paid on July 14, 2023. There will be six monthly payments of $12,000 to be paid on the 14th day of the months of August, 2023 to January 14, 2024. One final payment of $8,000 will be paid on February 14, 2023. On June 30, 2023: i) 1,246,372 consolidated Shares for Debt were issued; (ii) the THC Essentials Acquisition closed and (iii) and the Private Placement was partially closed. On June 30, 2023 the Company closed $1,519,500 of the Private Placement. The balance of $480,500 is scheduled to close on July 6, 2023. Bankruptcy, Receivership, Receiverships, Restructuring There have not been any bankruptcy, receivership, or similar proceedings against the Company or its subsidiaries; any voluntary bankruptcy, receivership, or similar proceedings; or any material restructuring transactions by the Company or any of its subsidiaries within the two most recently completed financial years. Social and Environmental Policies and Seasonal and Environmental Issues There are no social and environmental policies or seasonal and environmental issues that have affected or are expected to affect the Company and its business. Material Restructurings Since March 24, 2013, when the Company completed its Qualifying Transaction on the TSX.V, there had not been any material restructuring until the Reorganization announced on December 6, 2022. The closing of the $2,000,000 Private Placement and the THC Essentials Acquisition are to close concurrently on the Listing Date. A condition of both closings is that the Shares be listed on the CSE. REORGANIZATION Delisting from the TSX.V and listing on the CSE. The THC Essentials Acquisition was reviewed by the TSX.V on December 6, 2022. At that time, the TSX.V advised that it was unable to accept the proposed acquisition because it did not comply with TSX.V policy regarding cannabis. The THC Essentials operations are not involved in cultivation, processing, or any aspect of the cannabis business, but the revenue for THC Essentials is from THC infused beverages ("Infused Beverages"). Although the THC Essentials business does not "Touch the Leaf," the TSX.V is of the view that the Licensed Products from which the Company will receive a royalty are illegal under U.S. federal law, although legal in the states where the Licensed Products are sold. The press release also announced that it had decided to delist from the Exchange (subject to the approval of the 15 majority of the minority shareholders), apply to the CSE to list its Shares, and complete the reorganization upon listing the Shares on the CSE. The Reorganization will complete on the Listing Date. Name Change and Consolidation of the Shares On June 12, 2023, the Company changed its name to Nevis Brands Inc., and consolidated the Shares on the basis of one new Share for five old Shares resulting in an issued Share capital of 13,118,954 Shares. Payment Plan Agreements with Creditors The Company has entered into Payment Plan Agreements with eight creditors owed $183,518.50 to repay them over periods ranging from 2 months to 15 months. One additional creditor will be paid $42,508.80 over a period of 18 months. The aggregate amount to be paid to the nine creditors for the 12 months following listing on the CSE is $180,138. Payment Plan Agreements 1. Agreement dated November 30, 2023, with Brian Bapty, former CEO, to settle debt of $5,000 payable on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 2. Agreement dated November 30, 2023, with Joanne McClusky, lawyer, to settle debt of $19,624.59 by the payment of $1,308 in 15 monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 3. Agreement dated November 30, 2023, with Harold Forzley, CEO, to settle debt of $13,920 by the payment of $2,784 in five monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 4. Agreement dated November 30, 2023, with Gale Capital Corp. to settle debt of $30,000 by the payment of $2,000 in 15 monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 5. Agreement dated November 30, 2023, with Malaspina Consultants Inc. to settle debt of $6,000 by the payment of $3,000 in two monthly payments commencing on the earlier of of June 30, 2023, or the first full month after the Shares are listed on the CSE. 6. Agreement dated November 30, 2023, with Christi Wood to settle debt of $44,037 by the payment of $2,936 in 15 monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 7. Agreement dated November 30, 2023, with Mo Mousa to settle debt of $24,694.35 by the payment of $2,682.84 in 15 monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 8. Agreement dated November 30, 2023, with Thomas Deckworth to settle debt of $40,242.56 by the payment of $2,682.84 in 15 monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. 9. Agreement dated November 30, 2023, with Mohammed Mousa to settle debt of $24,694.35 by the payment of $1,646.29 in 15 monthly payments commencing on the earlier of June 30, 2023, or the first full month after the Shares are listed on the CSE. Debt Settlement by the Issue of Consolidated Shares The Company entered into three shares-for-debt agreements with three creditors as follows: 16 1. Agreement dated November 30, 2022, between the Company and Larry Tjoelker, former VP of Research, of Greenbank, Washington, to settle monies owed to him of $53,048.80 by the issue of 663,110 Pre-Consolidation Shares at a price of $.08 per Share. 2. Agreement dated November 30, 2022, between the Company and Dr. Patrick Gray, Director, of Seattle, Washington, to settle monies owed to him of $402,209.02 by the Issue of 3,569,6700 Pre-Consolidation Shares at a price of $.08 per Share. 3. Agreement dated November 28, 2022, between the Company and Dr. Brian Bapty, former Director and CEO, of West Vancouver, British Columbia, to settle unpaid CEO fees by the issue of 500,000 Pre-Consolidation Shares at a price of $.08 per Share. On June 30, 2023, the Company issued 1,246,372 Post-Consolidation Shares for Debt. All Shares will have a hold period of four months and one day from the issue date. Former director and CEO $ amount Post Consolidation Shares at a deemed Patrick Gray, director price of $0.40 per Share One arms- length creditor 134,500.00 Total 402,209.02 100,000 56,339.59 1,005,523 593,048.61 140,849 1,246,372 See "Narrative Description of the Business" and "Description of the Securities Prior Sales." Private Placement of $2,000,000 The Company has arranged a private placement of $2,000,000 by the issue of 20,000,000 Post-Consolidation Units. Each Unit is composed of one Share and one-half Share purchase warrant. One whole warrant entitles the holder to purchase one additional Share at a price of $0.20 per Share for a term of one from the date of issue. The finder will receive a commission of $106,785, equal to 7% of gross proceeds raised by them and 762,750 share purchase warrants equal to 5% of the Shares placed by them, exercisable for one year from the Listing Date at an exercise price of $0.20 per Share. On June 30, 2023 the Company closed $1,519,500 of the Private Placement. The balance of $480,500 is scheduled to close on July 6, 2023. All Shares will have a hold period of four months and one day from the date of issue. Change of Business: Acquisition of the assets of THC Essentials The APA was signed on February 10, 2023 between SoRSE and the Company to acquire from SoRSE its operating business called THC Essentials (the "Transaction") . The APA was amended several times with a final amendment on June 8, 2023 to extend the Closing to no later than June 30, 2023. Closing must be on the Listing Date. The assets being acquired are: (i) the name "THC Essentials" and trademarks Major, Happy Apple, Pearl, Utopia, Atomic Apple, Vertus, Velvet Swing, and Velvet Kiss; (ii) product formulas, designs, and recipes sold under the trademarks and brands; (iii) assignment of all licenses and royalty agreements and associated royalty revenue from the sale of beverages infused with SoRSE's Emulsion Technology by SorSE licensees in Washington, Oregon, California, Arizona, Colorado, and Ohio; and (iv) all remaining inventory and equipment. The equipment is a basic bottle-filling machine and a machine to heat the labels and shrink wrap the labels around the bottles. It is currently in a client's bottling plant in Portland, Oregon. The equipment is loaned to clients to help new clients get started with the manufacturer of the Licensed Products The assets of THC Essentials being acquired from SoRSE exclude the intellectual property related to SoRSE's Emulsion Technology. The purchase price is U.S.$1,125,000 (U.S.$625,000 payable at closing of the Transaction and U.S.$500,000 in 12 months) and Shares equal to 9% of the aggregate issued shares on Closing which will be 3,775,000 consolidated Shares at a deemed price of $0.10 per Share. The Company was required to raise $1,500,000 at Closing from which 17 the U.S. $625,000 will be paid. Specifics of the APA: (i) Promissory Note: Interest: The Company has signed a promissory note for the U.S.$500,000. Interest of 7.5% per annum will be paid and due 13 months from the Closing. The promissory note is secured by a security agreement against the assets of the Company. In the event of a default by the Company, the U.S.$500,000 plus interest will be immediately due and payable. Incidents of default are a sale of substantially all of the Company's assets, its Shares being delisted from the CSE, a failure to meet continuous disclosure obligations, collection or enforcement proceedings, commencement of litigation against the Company exceeding $100,000, the Company commencing bankruptcy, winding up or dissolution proceedings, assumption or incurring of debt greater than or in seniority to the U.S.$500,000, or SoRSE decides an adverse change has occurred in the financial affairs of the Company. In the event of a default, the interest rate increases to 15% per annum. (ii) Non-compete: SoRSE has agreed to not engage in the sale or licensing of any branded consumer products infused with THC cannabinoids in the United States for a period of three years following the Closing Date. Notwithstanding the foregoing and except as contemplated in the Service Agreement, Buyer agrees that, during the Restricted Period, Seller may provide formulation, production, cannabinoid emulsion, or any other related services to any other parties, including current and future customers of Seller, who engage in the sale or licensing of branded consumer products infused with any cannabinoids, including without limitation delta-9-tetrahydrocannabinol (THC) cannabinoids, or otherwise compete directly or indirectly with the Business Unit. (iii) Anti-dilution: In the event that the Company issues Shares at a price of less than $0.05 per Share, the Company will issue Shares to SoRSE in an amount sufficient to provide SoRSE a 9.9% shareholding in the issued Shares. (iv) Indemnity: Each of the Company and SoRSE agree to indemnify the other from any claims, lawsuits, losses, liabilities, or litigation expenses arising from a breach of the APA. Services Agreement The Company and SoRSE have agreed to a three-year Services Agreement to be effective at the Closing of the APA. SoRSE has agreed to sell its Emulsion Technology to the Company on a non-exclusive basis. The Services Agreement will be effective on the closing of the APA on the Listing Date. It is attached as Schedule H-1 to the APA. Specifics of the Services Agreement: (i) The Company can only purchase emulsion technology from SoRSE. SoRSE can reject an order but is required to use commercially reasonable efforts to accept all purchase orders. (ii) SoRSE has agreed to not increase the price of its Emulsion Technology for one year to any Licensee that is active as at the Closing Date. Thereafter, the price is subject to change. (iii) Termination would result from a breach of the Services Agreement, a party becoming insolvent or subject to bankruptcy proceedings, a violation of any State Marijuana Regulations, or failure by the Company to pay two or more consecutive purchase orders. Each party will indemnify the other for any claims, lawsuits, losses, liabilities, litigation expenses arising from a breach of the Services Agreement. (iv) Non-compete: SoRSE has agreed to not engage in the sale or licensing of any branded consumer products infused with THC cannabinoids in the U.S. for a period of three years following the Closing Date. The Company has agreed that, during the restricted period, SoRSE may provide formulation, production, cannabinoid emulsion, or any other related services to current and future customers of SorSE who engage in the sale or licensing of branded consumer products infused with any cannabinoids, including without limitation delta-9-tetrahydrocannabinol (THC) cannabinoids, or otherwise compete directly or indirectly with the Company. (v) New Market Exclusivity. If the Company is the first customer of SoRSE to sell commercially ("Launch Date") a Product containing 100 mg of THC per unit in a certain state, then Seller shall refrain from selling its Services to another customer selling a similar product ("Similar Product") in that specific state for a period of 12 months 18 (the "Exclusivity Period"); the Company is required to pay in advance at the beginning of the Exclusivity Period a dollar amount equal to 10 kg of distillate converted at SoRSE's market rate at that point in time and to purchase SoRSE's Emulsion Technology to convert at least an additional 10 kg of distillate within six months of the Launch Date. If, prior to the Launch Date, SoRSE is already engaged with another customer that is either already selling a Similar Product in that state or already in development of a Similar Product intended for sale in that state, then SoRSE is not obligated to grant an Exclusivity Period to the Company. In the event that an Exclusivity Period is granted, SoRSE can engage with other customers in the development of a Similar Product, which cannot be sold commercially in that state during the Exclusivity Period. SoRSE is a private company owned by more than 100 shareholders, all of whom are arms-length to the Company and its current and proposed new officers and directors. None of them will own 5% or more of the issued Shares upon completion of the Reorganization. Prior and Resulting Share Structure $ Number of Shares Number of Shares % Post-Consolidation Pre-Consolidation (on the basis of one new 36.44 Share for five old 3.90 Issued Shares 65,594,769 Shares) on the Listing 50.0 Shares for debt Date 9.90 593,048.61 100 13,118,954 Private Placement 2,000,000 1,246,372 at a price of SoRSE Shares 3,775,000 $0.40 per Share Total 20,000,000 at a price of $0.10 per Share 3,775,000 at a price of $0.10 per Share 38,140,325 On closing of all aspects of the Reorganization on the Listing Date, there will not be a change of control, as no one person will own 20% or more of the issued Shares. No one person will own 10% of the issued Shares on completion of the Reorganization. 3.3 Trends The market segments for cannabis beverages in which the Company will operate have competitive product lines available online and in retail stores. The Issuer's competitive positioning will depend on its ability to distinguish the Licensed Products in the cannabis beverage markets. The Company is unaware of any particular trends that would affect its business, operations, and the Licensed Products. COVID-19 has not unduly affected the operations of THC Essentials. Except for the occasional manufacturer of the bottles in British Columbia, the bottles, tops, and labels are made in the U.S. for shipment to the Licensees. There have been occasional delays of up to a week in the manufacture of the bottles, which is not necessarily related to COVID- 19. There have been no delays in the creation of the labels used on the bottles. Global financial and economic conditions are currently very unpredictable for many reasons, including the war in Ukraine and its effect on the delivery of commodities, including agricultural products; the supply of Russian oil and gas; the price and delivery of oil and gas from other countries; inflation in most countries of the world; and the ongoing effect of the COVID-19 virus, which is impacting businesses globally by disrupting supply chains, travel, production, and consumption, threatening operations and financial markets. Many industries are impacted by these market conditions. It is not expected that these factors will significantly impact the Company's operations and future plans. Additional key impacts of the 19 current financial market turmoil include contraction in credit markets and the credit lines required by businesses, resulting in a widening of credit risk; devaluations and high volatility in global equity, commodity, foreign exchange, and monetary markets; as well as a lack of market liquidity. Such factors may significantly impact the Issuer's operations and future plans. The Company intends to continue to License its Trademarks and Licensed Know- How for the Licensed Products primarily in the U.S., where minimal disruption is expected. See "Narrative Description of the Business" and "Risk Factors." 4. NARRATIVE DESCRIPTION OF THE BUSINESS The Cannabis Drink Industry The Market THC Essentials' target market is the U.S. cannabis consumer. The cannabis market is still in its early stages in the U.S. and is growing rapidly. While the Company may evaluate international licensing in the future, the Company believes its most interesting expansion opportunities are in certain states within the U.S. Following the 2022 U.S. election, 21 states plus Washington D.C. have legalized cannabis for adults for recreational purposes. Those states, along with an additional 18 states that have legalized medical use of cannabis, bring the total population of U.S. residents living in a state (or D.C.) with legalized medical or adult-use cannabis to over 71% of the national population. The current US Cannabis market is a $60 billion industry, with beverages representing approximately 1% of the cannabis market. Beverages are one of the fastest growing segments of the cannabis industry. Source: New Frontier Data The industry expansion is fueled by several forces, including the following: The addition of new legal markets as more states reform their cannabis laws; Sustained growth in demand in legal states as consumers make the transition from the unregulated market to the legal one; and Increased cannabis consumption as the public recognition of cannabis's expansive therapeutic value grows, and cannabis is diversified for varying medical and wellness uses. 20 While competitive forces and economies of scale may drive down both wholesale and retail prices, continued growth in consumer demand is expected to ensure sustained positive market growth through 2025. The cannabis beverage market in the U.S. was estimated to be U.S.$566.4 million in the year 2020 and is forecast to reach U.S.$1.7 billion by 2027 (Global Industry Analysts Inc. Report, October 2022). In the past, cannabis edibles and beverages were seen by some as a less attractive way to enjoy cannabis because of uneven experiences. However, with improved infusion technologies that have allowed for consistent dosing and onset of effects, beverages, gummies, and other cannabis-infused food and drinks have increased in popularity. Because cannabis beverages can offer a similar social experience during times of alcohol abstinence, new potential markets have developed. Today, several hundred brands comprise the cannabis beverage landscape, with a variety of flavors and dosages throughout the United States in those states that have legalized recreational cannabis consumption. Companies that are much larger in size and have much more financial resources than those available to the Issuer are making Infused Beverages and have larger shares of the Infused Beverage Market. See item 4, "Description of the Business Competition." Cannabis drinks The cannabis drink segment is the fastest-growing area of the cannabis industry Cannabis beverages are evolving to meet consumer demand for both low-dose and high-dose products as well as an array of consumer tastes. As this segment continues to grow, several trends have emerged: Continued leadership by high-dose beverages but also growth of low-dose beverages In the early days of the cannabis beverage market, doses from 2.5 mg to 100 mg of THC were offered in various formats, such as carbonated, still, waters, and sugar-based beverages. Beverages with the higher dosing became market leaders and dominated sales in various legal markets. However, recently, the market has begun to see growth in lower- dose formats. Headset, a firm that tracks sales metrics in the cannabis industry, published a report in early 2022 showing that, over a two-year period between January 2020 and January 2022, consumers spent a collective US $25.4 million on major branded cannabis beverage products and U.S.$23.9 million on Keef Cola products. CANN Social Tonics (under 10mg per unit) also did well in this time period, posting just shy of U.S.$20 million in sales. THC Essentials owns one of the leading brands (Major TM) in the high-dose (100 mg) category. Competitors include Ray's Lemonade, Uncle Arnies, and Pabst High Seltzer. THC Essentials has strong market share and sells 10-15% of all THC beverages in the United States in the high-dose category and 20-25% of all THC cannabis beverages in Washington State. Recreational cannabis is available in 21 states in the United States. Currently, the Licensed Products are available in five states. Implementation of functional ingredients along with cannabis Consumers and budtenders have mostly chosen a beverage based on flavor profile, cannabis content, and the ability to enjoy cannabis without smoking. However, more recently, some products have emerged that combine other ingredients, such as caffeine and adaptogens, that provide consumers with other functional ingredients that they often find in non-cannabis beverages. Development of trusted, recognizable brands With the proliferation of brands in mature markets such as Washington and California, consumers choose brands where they have some familiarity and trust built with an already established positive experience. This will make it more challenging for new brands to enter the marketplace and allow existing brands to execute brand extensions to other size, flavor profile, and functional ingredients. Integrating packaging with measurement Many consumers purchase a high-dose cannabis beverage with the intent of enjoying the effects of cannabis over several sessions. As such, Major and other products have introduced packaging such as dosing strips and measurement cups, where consumers may accurately deliver dosing appropriate to the experience they are seeking. 21 Business Model: How the THC Essentials Business Has Operated: The THC Essentials business model is "asset-light" and focused on the licensing of its trademarks to established licensed partners in each legal cannabis state, which use the THC Essentials recipes and formulas and the Emulsion Technology in the Licensed Products. The Company forms partnerships with production and distribution partners in licensed facilities to support the business in each state and typically collects a royalty of 10-20% of sales. THC Essentials is the owner of each Product formula and brand trademark. Partners typically sell the Licensed Products at wholesale for U.S.$5-8, with THC Essentials collecting U.S.$1.50 to U.S.$2.00 per unit. While THC Essentials assists partners with initial production, package design, and co-marketing, sales and distribution are handled by the licensed partners along with subsequent production. THC Essentials has licensed beverage manufacturers / Licensees in six states, five of which are operational. Under the Licenses, the Licensee is responsible for all production, operations, and marketing. THC Essentials is only responsible for the provision of bottles, labels, and flavors, the collection of revenues from its partners, and investing in certain marketing it deems strategically advantageous. The Company plans to expand the Licensed Products to more states in 2023. How it started: THC Essentials was founded as a division of Seattle-based SoRSE to develop innovative cannabis products that proved the effectiveness of SoRSE's Emulsion Technology, used to create safe and effective cannabis beverages with even dosing and stability and faster onset. THC Essentials launched its first cannabis beverage in November 2018. Happy AppleTM quickly became the top- selling beverage in the Washington State market and was followed by additional Licensed products, including UtopiaTM, Velvet SwingTM, and Pearl. In late 2019, it introduced Major, which supplanted Happy Apple as the top- selling beverage in Washington State. At this point in the business, SoRSE handled all parts of the business, including acquiring THC distillate and beverage manufacturing, In 2020, SoRSE created the THC Essentials division and moved to a licensing model where it licensed partners the exclusive right to manufacture Major and other brands and sell/distribute the THC-infused beverages ("THC Infused Beverages") to retailers. Through this process, THC Essentials removed itself from all cannabis-related operations. The Licensees are licensed in states in the U.S. where cannabis for recreation is legal. The Licensees purchase THC Distillate from local providers in each state, engage SoRSE in the process of emulsification (which makes the THC Distillate water-soluble), and perform bottling and distribution. SoRSE travels to Licensee manufacturing facilities and converts the Licensee's THC Distillate using SoRSE's Emulsion Technology, which produces a water-soluble solution of the THC Distillate that is added to the beverages. THC Essentials provides packaging (bottles, labels, and flavoring) and assists with brand development. THC Essentials outsources the manufacture of the bottles, which are shipped directly to the clients. This acts as a way to track sales and determine the royalties. It also has the labels made and shipped to the Licensees, which attach the labels to the bottles. Upon closing of the THC Essentials Acquisition, the Company will not be in the business of cannabis production or sales and will not be involved in providing cannabis products and services for cultivation, distribution, or consumption. With the acquisition of THC Essentials, the Company will continue to be a developer of recipes, formulas, and brands for the Licensed Products. SoRSE will, independently of the Issuer, provide the Emulsion Technology for the Licensed Products. The Licenses There are six Licenses, five of which are active. The sixth, for California, is inactive and was not renewed due to the cost of business in California. The Licenses are exclusive, non-transferable Licenses from SoRSE to use the Trademarks and Licensed Know-How manufacture and sell the Licensed Products in the territory defined by the License (Statewide). The Licenses are assigned by SoRSE to the Company effective on closing of the THC Essentials Acquisition. The assignment agreement will exclude SoRSE's Emulsion Technology. Licensee employees are trained in the manufacture of the Licensed Products. This training is done by the Company CEO John Kueber, who was the manager of THC Essentials until September 2022. There are annual sales milestone 22 requirements ("Annual Sales Milestones"), which, if not met, will result in a loss of exclusivity, allowing the Company to grant Licenses to other parties in the territory and termination of the License. By written agreement, additional products can be added to the Licensed Products. Limited sub-licensing by a sub-licensee is allowed with the consent of the Company. No ingredients are provided by the Company. A Licensee purchases all brand packaging (bottles, labels, caps, and shipping boxes), flavour kits, and marketing materials from the Company. A Licensee sets its own wholesale price. The Company's indemnification for losses by a Licensee is limited to losses arising from a material breach of the License by the Company, gross negligence, or wilful misconduct, and the Company is not responsible for consequential damages. The five active licenses are with the following Licensees, all of which are licensed by the states in which they operate: 1. New Gen Holdings, Inc. of Phoenix, Wyoming. Date: August 27, 2021, for a term of three years in the state of Arizona. Under the agreement, The Partner agrees to produce, sell, and distribute the Products. The Partner has also agreed to certain quality controls and inspections during the term. Both parties have agreed to and fulfilled certain marketing commitments in the first year to ensure that the products are successful in the marketplace. Annual Sales Milestones for the three years of the License are U.S.$500,000, U.S.$1,000,000, and U.S.$1,500,000. 2. Appalachian Pharm Processing of Jackson, Ohio. Agreement executed November 10, 2021, for a term of three years in the state of Ohio to license the Major TM product. Under the agreement, Appalachian Pharm agrees to produce, sell, and distribute the Products. The Partner has also agreed to certain quality controls and inspections during the term. Both parties have agreed to certain marketing commitments in the first year to ensure that the products are successful in the marketplace. The Partner began selling in Ohio in 2022. Annual Sales Milestones for the three years of the License are U.S.$100,000, U.S. $350,000, and U.S.$700,000. 3. EH Enterprises Management, Inc., of Seattle, Washington Date: February 27, 2020, for a term of five years in the territory of the state of Washington. This Licensee is a Washington State Liquor and Cannabis Board approved and licensed processor of marijuana and operates a licensed marijuana processing facility. Under the terms of the agreement, EH has exclusive rights to produce and sell THC Essentials products in Washington. EH is subject to quality control guidelines throughout the term and is subject to quality control inspections. EH is responsible for all capital investments throughout the term and is subject to consulting fees should assistance be necessary. EH agrees to pay royalties based on products on sold and for certain packaging provided in connection with the products. 4. Greenpoint Oregon, Inc. of Portland, Oregon SoRSE / THC Essentials executed a license agreement with Greenpoint Oregon, Inc. on December 8, 2020, for a term of one year in the state of Oregon. It is automatically renewable each year unless a notice of termination is sent 60 days prior to termination. The company has successfully launched THC Essentials products and has continued to provide royalties related to the selling of the Products. Greenpoint pays royalties based on products sold along with certain bonus payments based on revenue milestones. The term of the agreement with Greenpoint has expired; the companies continue to work under the terms of the agreement in good faith and may extend the agreement in 2023. - Revocable, non-transferable, non-sub-licensable license for a specified territory in the State in which the Licensee conducts business. - Consultation and training fee - Manufacturing quotas - Product recalls are the responsibility of the Licensees unless caused by the Company by breach of the License Agreement - Licensee and the Company provide mutual indemnifications, however, neither party is liable for any indirect, incidental, consequential, exemplary, special, or punitive damages. This limitation in damages does not apply to damages arising from violations of State Marijuana Rules, breaches of confidentiality, the License, gross negligence, and intentional misconduct. 23 - Licensee is required to carry product liability and contractual liability insurance with the single combined limit of U.S.$1,000,000 per occurrence and U.S.$2,000,000 aggregate and any other insurance required by the State Marijuana Rules. - Licensee is required to perform tests and inspections specified in the Product Specifications provided by the Company. 5. Love's Oven, LLC of Denver Colorado Date: March 17, 2022, for a term of three years in the state of Colorado. Love's Oven produces, sells, and distributes Major and pays royalties based on products sold. Annual Sales Milestones for the three years of the License are U.S.$300,000, U.S. $1,000,000, and U.S.$1,500,000. Under the agreement, The Partner agrees to produce, sell, and distribute the Products. The Partner has also agreed to certain quality controls and inspections during the term. Both parties have agreed to certain marketing commitments in the first year to ensure that the products are successful in the marketplace. The Licensed Products The Licensed Products use SoRSE's Emulsion Technology, a core ingredient that allows for superior taste and smell and allows for the effects of THC to take effect within 15 minutes, a notable difference from most other cannabis edibles that have unpredictable onsets of 45 minutes to 2 hours. Both consumer and pharmacokinetic studies have shown that beverages with SoRSE's Emulsion Technology deliver the effects of cannabis within 15 minutes and have a predictable offset of 90-120 minutes. They also provide significant production advantages and have proven shelf stability, a significant challenge with cannabis beverages. THC Essentials has delivered other product formats, including PearlTM, a THC concentrate, and Velvet Swing, a cannabis sex lubricant. While these products have not had the same sales success as the THC beverages, the Company believes that as the market continues to grow, these products will gain in popularity as consumers continue to seek new formats to enjoy cannabis. 24 Bottling, Labels, and Flavoring The Company provides packaging as part of its fee in collecting royalties. THC Essentials procures proprietary designed bottles from several manufacturers in California and British Columbia. Bottles are produced and sent either directly to the manufacturers of the cannabis drinks or to the Company to hold in inventory. Typically, the Company has procured bottles on a "just-in-time" basis but may purchase in greater bulk to realize better pricing. THC Essentials produces labels in a similar manner. Labels and associated packaging are designed by THC Essentials specifically for each state's regulatory requirements, printed, and sent directly to our partners for production. Flavors specific to each Licensed Product are purchased in bulk and held in storage and provided to customers at each production run as part of their royalty payment. Flavoring represents less then 1% of each unit but offers another control in the royalty collection process and protection of intellectual property related to each Licensed Product. Revenue Model: SoRSE has been generating revenue from licensing the trademarks for the cannabis drinks since 2018. The revenue from the license/royalty agreements that are being acquired is below. Revenues are not associated with the sale of the THC Emulsion but from the brands and formulas. Expenses are attributed to certain packaging and administration costs, amounting to approximately 50% of royalty revenues. Revenue to the Company will be derived from royalties paid from wholesale sales by the Licensees from the continued licensing of the Trademarks and Licensed Know-How. The royalties range from 10% to 20% of gross sales by the drink manufacturers. See Schedule E, Audited carveout income statement of SoRSE, regarding the operations of THC Essentials. THC Essentials will comprise 100% of the business operations of the Company. Competitive Advantage and Competition Competition for THC Essentials is comprised of both direct competitors with beverage products as well as all other cannabis products, such as edibles and smokeable flower. The cannabis industry is highly fragmented due to the nature of its early stage and a lack of federal legalization efforts. The six largest U.S. MSOs combined accounted for approximately U.S.$5.0 billion (20%) of cannabis industry revenue in 2021. No single competitor represented as much as 5% of the total. Approximately 9,900 small companies, with average revenues of around U.S.$1.6 million, accounted for over 60% of total industry sales. (Benzinga report, November 2022). As the industry gets closer to federal legalization, a wave of consolidation is anticipated as companies seek to position themselves to achieve economies of scale in production, marketing, and logistics that are not yet available in the state regulatory regimes. Direct competitors to THC Essentials are listed below. These are companies that are specifically focused on the production, manufacturing, and distribution of cannabis beverages. THC Essentials believes that it possesses a structural advantage over these companies in being an "asset-light" company focused on licensing that does not require capital investment in property, equipment, or salesforces. 25 Competitor Comparison THC Essentials competes with a variety of products and companies in each market where it currently operates. Competitor Description of Business, Size of Assets, and Comparison to THC Essentials Name and Website Licensed Products Location Dogtown Pioneers www.rayslemonade.com Produced and Sold as smaller-format shots. The taste Inc. (private) distributed in Washington State only. of Major has been said to be superior, but Rays has been an excellent marketer Keef (private; https://keefbrands.com/thc-beverages/ of its products at low price points. Colorado-based, Established in Boulder, Colorado in 2010, Keef Keef provides a series of beverages in sells in several Brands is a leader in the cannabis beverage the 100 mg category. Its product format states) space with a suite of products offering Infused has traditionally been in a can, which Beverages as an alternative to alcohol. can be a detriment as consumers often wish to consume over a period of time. Cann (private; www.drinkcann.com Cann says it is reshaping Cann is a leading cannabis beverage several markets) social drinking with its microdosed, non- brand. The company has a focus on alcoholic beverages advertised as vegan, lower-dose products, which are Uncle Arnies gluten-free, and with only 35 calories. Each preferred by early "canna-curious" (private; Cann has five all-natural ingredients with a users. Major outperforms Cann where California) strength that is similar to a beer or glass of users are looking for a more potent wine. There are no artificial sweeteners or beverage with stronger effects. flavors, sugar substitutes, or cannabis taste. https://unclearnies.com Uncle Arnies has been a leader for 100 mg Iced Tea Lemonade. It has been the cannabis beverages in California. With best-selling cannabis beverage in California a strong flavor profile and compelling and is adding more flavors and products to the marketing, it is a challenging brand. It also sells cannabis edibles. competitor. Major challenges Uncle Arnies by providing a wider array of flavors and delivery in a resealable bottle that can be enjoyed over time. The Company is not renewing the License for California. Specialized Skill and Knowledge Over time, the Company has developed specialized knowledge regarding the marketing of cannabis beverages using certain programs related to "budtender" education. This includes the provisioning of certain literature, rewards programs (where legal), and online training platforms that allow for retail salespeople to explain the advantages of THC Essentials products. In addition, the Company provides its Licensees insight and know-how regarding the production of beverages for both small-scale and large-scale production, testing, analysis, and storage. While many producers have knowledge regarding the creation of flower-based products, many are not experienced in the production of cannabis beverages. Intellectual Property Patents In January 2018, the Company filed a provisional patent application, "Cannabinoids and derivatives for promoting immunogenicity of tumour and other infected cells", covering cannabinoid-like compounds that restore immune recognition of cancer cells thus increasing their subsequent destruction. The non-provisional application was filed on January 21, 2019 with co-inventors from UBC. This provisional patent has recently been returned to UBC. Pursuant to the terms of the license agreement with the University of Washington in October 2018, the Company has retained the patent portfolio surrounding development of a cannabinoid-based product for the treatment of glioblastoma multiforme and brain metastases. The patent "Composition and methods for treating glioblastoma" 26 filed in August 2011 by the University of Washington was granted by the United States Patent and Trademark Office in May 2015 (US Patent Number: 9,034,895) with expiry in November 2031. In August 2018, the University of Washington filed a provisional patent titled "Modified Carbazoles Destabilize Microtubules and Kill Glioblastoma Multiforme Cells and BRAF Mutant Cancers," covering the cannabinoid-based compounds for treatment of glioblastomas and brain metastases. In August 2019, the Company filed a non- provisional patent application for patent protection. The Company has returned these provisional patents to the University of Washington. In July 2019, the Company filed a provisional patent titled "Composition and Methods of Targeting the Pre-B Cell Receptor for the Treatment of Leukaemias and Lymphomas. In July 2020, the Company filed a non-provisional application for patent protection. The company has abandoned this patent application. In July 2020, the Company filed a provisional patent titled: "Method of Treating Coronavirus Infections with Cannabinoids and Derivatives". In July 2021, the Company filed a non-provisional application for patent protection. This patent has been returned to UBC. PATENT COUNTRY APPLICANT/ASSIGNEE TITLE FILING/EXP STATUS NUMBER US Pascal Biosciences DATE 16/963,894 Pascal Biosciences Cannabinoids and Australia Pascal Biosciences Derivatives for 22-Jul-20 Published AU- (AU) Pascal Biosciences Promoting 2019210332 Pascal Biosciences Immunogenicity of 19-Aug-20 Published Canada Tumor and Infected CA- (CA) Cells 14-Jul-20 Published 3096287 Cannabinoids and Europe Derivatives for 18-Aug-20 Published EP-3743061 (EP) Promoting Immunogenicity of 9-Jul-20 Published IL-275934 Israel (IL) Tumor and Infected Cells Cannabinoids and Derivatives for Promoting Immunogenicity of Tumor and Infected Cells Cannabinoids and Derivatives for Promoting Immunogenicity of Tumor and Infected Cells Cannabinoids and Derivatives for Promoting Immunogenicity of Tumor and Infected Cells 27 U.S Trademark Applications No. Case No. Status Applicant Mark International Classes Comments 1. 181.1881.US.ITU Allowed SoRSE PEARL2O IC 032: drinking water; water Statement of Use (1) beverages; bottled drinking or Extension of Time Technology water, all of the foregoing due by 4/6/2023. containing hemp seed derived 87/902,970 Corporation products and containing no CBD or THC. Filed: 5/1/18 Principal register Basis: 1(b) 2. 181.1885.US.ITU Allowed SoRSE IC 005: Medical lubricants, Statement of Use due namely, vaginal lubricants; by 3/3/2023. No Technology personal lubricants; personal more extensions of sexual lubricants. time available. 87/902,978 Corporation Filed: 5/1/18 Principal register Notice of Allowance (2) on 3/3/2020. Basis: 1(b) Statement of Use or Fifth (last) Extension 3. 181.1886.US.ITU Allowed SoRSE UTOPIA IC 032: Sparkling water; of Time due by flavored sparkling water; 9/9/2023. Technology flavored water; powders for use in water beverages; all of the Notice of Allowance 87/902,985 Corporation foregoing containing hemp seed on 3/9/2021. derived products. Statement of Use or Filed: 5/1/18 Fifth (last) Extension IC 032: Non-alcoholic beer; of Time due by Principal register non-alcoholic barley flavored 7/12/2023. drinks; all of the foregoing Basis: 1(b) containing hemp seed derived Notice of Allowance products and containing no on 1/12/2021. 4. 181.1905.US.ITU Allowed SoRSE REEB CBD or THC. Technology 87/902,996 Corporation Filed:5/1/18 Principal register Basis: 1(b) 5. 181.1906.US.ITU Allowed SoRSE PEARL IC 032: drinking water; water Statement of Use or beverages; bottled drinking Extension of Time Technology MIXER water, all of the foregoing due by 4/6/2023. containing hemp seed derived 87/903,001 Corporation products and containing no Notice of Allowance CBD or THC. on 10/6/2020. Filed: 5/1/18 Principal register SoRSE MAJOR Non-carbonated fruit flavored Awaiting Basis: 1(b) Technology beverages; non-carbonated fruit Examination 6. 181.2314.US.ITU New Corporation flavored beverages containing 97/786,860 hemp Filed 2/8/2023 (1) Statement of Use is evidence that the trademark is being used. (2) A Notice of Allowance is a written notification from the USPTO that a specific mark has survived the opposition period following publication in the Trademark Official Gazette and has consequently been allowed; it does not mean that the mark has registered yet. 28 Registered WA Trademarks No. Case No. Status Applicant Mark Inte rnational Comme nts PEARL2O Classes 1. 181.1881.WA. Registered Sorse VERTUS Renewal Date: TM Technology IC 032: Light beverages. 3/8/2028 Corporation No. 1078241 Date: 3/8/2018 Sorse IC 0333/8:.W23ines and Spirits Renewal Date: 2. 181.1882.WA. Registered Technology 3/8/2028 TM No. 1078242 Corporation Date: 3/8/2018 Sorse HAPPY IC 032: Light beverages. Renewal Date: 3. 181.1883.WA. Registered Technology APPLE 3/8/2028 TM No. 1078239 Corporation Date: 3/8/2018 Sorse VELVET IC 005: Pharmaceutical Renewal Date: 4. 181.1885.WA. Registered Technology SWING 3/8/2028 TM No. 1078243 Corporation Date: 3/8/18 5. 181.1886.WA. Registered Sorse UTOPIA IC 032: Light beverages. Renewal Date: Technology REEB IC 032: Light Beverages 3/8/2028 TM No. 1078240 Corporation Renewal Date: 3/8/18 Date: 1/25/2024 6. 181.1905.WA. Registered Sorse ITU Technology No. 1079270 Corporation Date: 1/25/2019 29 Foreign Trademark Applications No. Case No. Country/Status Applicant. Title International Class Comments 1 181.1881.CA.ITU Canada SoRSE Pearl20 IC 032: Aerated mineral water; aerated First renewal Re gistered Technology water; carbonated mineral water; carbonated fee due by No.1885646 No.: 1,083,107 Corporation water; distilled drinking water; effervescent 10/2/2030. Filed 3/1/18 Date: 10/2/2020 SoRSE water; 2 181.1883.CA.ITU Technology No.1885647 Canada Corporation flat water; flavoured water; mineral water; Filed 3/1/18 Re gistered SoRSE No.: 1,075,737 Technology sparkling water; soda water; spring water; 3 181.1885.CA.TM Date: Corporation No.1885649 3/23/2020 tonic water; drinking water; bottled drinking Filed 3/1/18 Canada SoRSE Re gistered Technology water; aerated mineral water, aerated water, 4 181.1905.CA.TM No.: 1,075,733 Corporation No.1927902 Date: carbonated mineral water, carbonated water, Filed 10/30/18 3/23/2020 distilled drinking water, effervescent water, Canada Allowed flat water, flavoured water, mineral water, sparkling water, soda water, spring water, tonic water infused with cannabis; drinking water infused with cannabis; bottled drinking water infused with cannabis HAPPY IC 032: Fruit Flavored drinks; fruit flavored First renewal APPLE carbonated drinks; fruit drinks; fruit flavored fee due by drinks infused with cannabis; fruit flavored 3/23/2030. carbonated drinks infused with cannabis; fruit infused with cannabis. First renewal fee due by VELVET IC 005: Medical lubricants, namely, vaginal 3/23/2030. SWING lubricants; personal lubricants; personal sexual lubricants; medical lubricants, namely, vaginal lubricants infused with cannabis; personal lubricants infused with cannabis; personal sexual lubricants infused with cannabis; medical lubricants infused with cannabis. REEB IC 032: Non alcoholic beer, non alcoholic barley Approval flavored drinks. Notice of 6/10/2022 5 181.1906.CA.TM Canada SoRSE PEARL IC 032: Water; drinking water, water beverages; First renewal Technology MIXER bottled drinking water due by No.1927903 Re gistered Corporation 09/21/2031 Filed 10/30/18 No.: 1,109,880 SoRSE MAJOR IC 032: Non-carbonated fruit flavored beverages. Awaiting 6 181.1949.MA.TM Date: No.1963897 09/21/2021 Technology Examination Filed 5/21/19 Canada Pending Corporation 7 181.1949.MA.TM EU SoRSE MAJOR IC 032: Non-carbonated fruit flavored beverages. Renewal by Registered Appl Technology 5/21/2029 No.A0086222 Reg. No. 1474452 Corporation 30 Personnel As at the date of this Listing Statement, the Company does not have any employees. On completion of the Reorganization, the Company will employ John Kueber as the CEO to run its THC Essentials operations in Seattle, Washington. No other employees are anticipated at this time, as the Company outsources the manufacture and shipping of the bottles and labels used by its manufacturing partners to make the Products. The Company may retain a director of marketing and operations assistant as its business develops and revenues become adequate to support an additional employee. 2023 Marketing/Operations In 2023, the Company plans to grow its overall revenues and royalties with the following strategies: 1. Continue to expand to additional states: The Company is engaged in discussions with potential partners in Nevada, Illinois, and Michigan and expects to launch its products in those states in early 2023. 2. Introduce new flavors to existing partners: Currently, Major's five flavors account for 98% of revenues for THC Essentials. Through the introduction of Major Sleep and Major Awake to Washington, Oregon, Arizona, and Ohio, the Company believes it can increase sales and royalty revenues. 3. Continue to develop the Major brand: In recent years, SoRSE has engaged in very little marketing. It invested in budtender education, social media, and some light promotion, but the Company believes that investing in some additional awareness of the Major product will results in greater sales beyond what it invests in promotion. Business Activity/Milestone Timeframe Investment U.S.$ Expand marketing in existing markets May 2023 $10,000/year Launch Nevada Market May 2023 $10,000/year Launch Michigan Market May 2023 $10,000/year Launch Illinois Market July 2023 $20,000/year Launch additional products to AZ, OH, and OR July 2023 $20,000/year Cannabis store marketing, Social Media Marketing March 2023 to February $50,000/year 2024 Industry events and outreach. awareness building March 2023 to February $50,000/year 2024 Total U.S. $ $170,000 Total Canadian $ $224,400 *The Bank of Canada exchange rate for U.S. $ on June 27, 2023 was 1.32. The CEO, John Kueber, and the Company have entered into an engagement agreement dated January 4, 2023, effective on the Listing Date, to retain the Mr. Kueber as the CEO of the Company, to appoint him as a director, pay him a monthly salary of U.S.$10,000, and to grant him 1,790,000 Stock Options, effective on the Listing Date, exercisable at a price of $0.10 for a term of five years. Mr. Kueber's salary will be paid from the revenue from THC Essentials operations. 31 Available Funds and Principal Purposes Working Capital: As of May 31, 2023, the Company had a consolidated working capital deficiency of approximately $943,583, comprised of current assets of $180,789 comprised of cash and cash equivalents of $153,849, prepaid expenses of $19,841, and receivables of $7,099, minus current liabilities of $1,124,372, comprised of accounts payables and accrued liabilities of $814,166 and a short-term loan payable of $310,206. The short-term loan was to pay the Company's operating expenses and the costs of the Reorganization. Regarding the current liabilities of $1,124,372: (i) $593,048.61 has been settled by the issue of 1,246,372 consolidated Shares at $.40 per Share; and (ii) $179,912.49 is being paid in the year following the month after the Listing Date to creditors pursuant to the Payment Plan. The balance of $45,776.55 due to these creditors will be paid in the second year following the Listing Date. The balance of the accounts payable and short-term loan is $277,195.60. Available Funds: After paying a commission of $106,785, equal to 7% of the funds raised by the finder for the Private Placement of $2,000,000, the net proceeds will be $1,893,215. Principal Purposes of the estimated available funds are as follows: Estimated Cost ($) Item THC Essentials Acquisition price paid on the Listing Date 825,000 (1) General and administrative costs (see Table 1 below) 185,400 2023 Marketing/Operations (See "Narrative Description of the Business") 224,500(1) Creditors on the payment plan 179,912 Balance of current accounts payable and short term loan 277,195 Non current liabilities 53,592 Balance of Reorganization costs and Closing and Listing costs 45,000 Unallocated 102,716 Total 1,893,215 (1) U.S.$625,000 is due to SoRSE on the Listing Date. The figure of CAD$825,000 is based on the Bank of Canada U.S. $ exchange rate of 1.32 on June 27, 2023. The figure of $224,400 for the U.S. operation for 12 months post Listing is based on the same exchange rate. In the event of a change in the exchange rate these two figures may increase or decrease. Table 1 Monthly Amount Annual Amount General and Administrative Expenses of the $ $ Company (Consolidated) CFO, corporate secretary fees (See "Directors and 2,800 33,600 Executive Officers") CSE monthly listing fees 1,000 12,000 Legal 1,000 12,000 Audit fees 2,500 30,000 Annual filing fees 1,800 Transfer Agent 150 6,000 Seattle office, accounting, misc. 500 72,000 Accounting, tax compliance, and bookkeeping 6,000 18,000 services 1,500 Total 15,450 185,400 32 The actual amount that the Company spends in connection with each intended use of funds may vary significantly from the amounts specified above and will depend on a number of factors, including those listed under the heading "Risk Factors" and the success of the Company's Business Plan. See "Narrative Description of the Business." The Company intends to spend the funds available to it as stated in this Listing Statement. However, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary for the Company to achieve its stated business objectives. The actual use of available funds will vary depending on the Company's operating and capital needs from time to time and will be subject to the discretion of the management of the Company. Business Objectives and Milestones The Company's business objective is to list on the CSE and to expand its operations in the U.S. General administrative costs of $185,400, payments to creditors of $179,912, and liabilities of $197,393 will be paid in the first 12 months following listing. See "Use of Funds." Event Time Frame $ Listing on the CSE Within a week of the date of this Listing Statement Expand Operations in the U.S. Continuously over 12 months post listing 228,395 The Board may, in its discretion, approve asset or corporate acquisitions or investments based upon the Board's consideration of the qualitative aspects of the subject acquisitions, including risk profile, technical upside, asset quality, and other factors. Such acquisitions may require shareholder or regulatory approval. See "Narrative Description of the Business." The Company intends to spend a significant portion of the funds available to it according to the "Use of Funds" as stated in this Listing Statement. However, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary. See "Narrative Description of the Business" and "Risk Factors." The Company had negative cash flows for the year ended November 30, 2022, of ($480,289) and for the year ended November 30, 2021, of ($1,088,931). There is no assurance that the Company will be able to generate a positive cash flow from its expected and planned operations for the next 12 months. As a result, the Company may be required to raise additional capital or other types of financing. There is no assurance that these financings will be available when needed or that they will be on terms favourable to the Company. Refer to: (i) "Executive Summary Statement of Operations"; (ii) "Risk Factors"; (iii) Consolidated financial statements of the Company for the years ended November 30, 2022, and November 30, 2021, and the accompanying Management Discussion and Analysis for the year ended November 30, 2022, which are attached hereto as Schedules A and B; (iv) Consolidated financial statements of the Company for the years ended November 30, 2021, and November 30, 2020, and the accompanying Management Discussion and Analysis for the year ended November 30, 2021, which are attached hereto as Schedules C and D; (vi) Audited carveout income statements of SoRSE for the years 2022, 2021, and 2020, which are attached hereto as Schedule E; and (vii) Audited carveout statement of acquired assets of THC Essentials as at June 30, 2023, which are attached hereto as Schedule F; (vi) Pro-forma statements of the Company to November 30, 2022, which are attached hereto as Schedule G. 33 5. SELECTED CONSOLIDATED FINANCIAL INFORMATION Statement of Operations of the Company Fiscal Year Fiscal Year ended ended Fiscal Year Ended Nov. 30, 2021 Nov. 30, 2020 (audited) (audited) Nov. 30, 2022 (audited) Revenue 0 0 0 (444,117) (1,038,208) (1,284,496) Expense (356,165) (1,088,931) (1,237,927) Net income (loss) Net income (loss) per Share (0.01 (0.02) (0.02) Weighted average number of Shares 65,546,824 63,484,358 55,400,349 outstanding 155,903 155,518 120,714 Balance Sheet (973,893) (646,483) (473,053) Total assets Short term liabilities 0 0 0 Long term liabilities (819,990) (419,295) (352,339) Shareholder's equity (deficiency) Cash dividends per Share 0 0 0 Comparative audited financial statements for the fiscal years ended November 30, 2022, and November 30, 2021, and comparative audited financial statements for the years ended November 30, 2021, and November 30, 2020 , are attached as Schedule "A" and Schedule "C," respectively, to this Listing Statement. MD&A for the financial years ended November 30, 2022, and November 30 2021, are attached as schedules "B" and "D," respectively, to this Listing Statement. 34 Summary of Quarterly Results The following table presents selected quarterly financial information of the Company for the eight most recently completed quarters of operation, prepared in accordance with IFRS and expressed in Canadian dollars. 2023 2022 2021 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 $ $ $ $ $ $ $ Revenue 0 0 0 0 0 0 0 0 Net and Comprehensive Gain (loss) (132,634) 201,453 94,730 48,633 135,464 402,196 241,275 286,089 Basic and (0.00) (0.00) (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) Diluted loss Per Share Dividends The Company has not paid any dividends since incorporation, and it has no plans to pay dividends for the foreseeable future. The directors of the Company will determine if and when dividends should be declared and paid in the future based on the Company's financial position at the relevant time. All of the Common Shares are entitled to an equal share of any dividends declared and paid. 6. MANAGEMENT'S DISCUSSION AND ANALYSIS The MD&A for the financial year ended November 30, 2022, is attached as Schedule "B" hereto. The MD&A for the financial year ended November 30, 2021, is attached as Schedule "D" hereto. 7. MARKET FOR SECURITIES The Company was listed on the TSX.V from May 2012 until May *, 2023, when it delisted from the TSX.V. It has applied to list its Shares on the CSE. The CSE has issued a conditional listing letter, dated April *, 2023. Listing will be subject to the Company fulfilling all the listing requirements of the CSE, including, without limitation, the distribution of the Shares to a minimum number of public shareholders, the Company meeting certain financial and other requirements and completing the Reorganization on the Listing Date. 8. CONSOLIDATED CAPITALIZATION The following table sets forth the share and loan capital of the Company as at the dates below. The table should be read in conjunction with, and is qualified in its entirety by, the Company's consolidated financial statements for the years ended November 30, 2022, and November 30, 2021, and the MD&A for the financial year ended November 30, 2022, attached as Schedules "A" and "B," and the consolidated financial statements for the years ended November 30, 2021, and November 30, 2020, and the MD&A for the financial year ended November 30, 2021, attached as Schedules "C" and "D." 35 Description Amount Outstanding Outstanding as at Outstanding on Outstanding Authorized at the as at the date of this completion of the on a fully date of this Nov. 30, 2022 Listing Statement Reorganization on diluted Listing Statement (audited) (unaudited) (1) the Listing Date. basis (unaudited)(2) (unaudited)(3) Shares Unlimited 65,594,768 29,560,325 38,140,325 51,633,075 (1) This figure is the 65,594,768 issued as at November 30, 2022, consolidated to 13,118,954 Shares. (2) This figure includes: (1) 13,118,954 Shares issued prior to the Listing Date; (ii) 1,246,372 consolidated Shares for Debt issued on June 30, 2023; (iii) 15,195,000 Shares issued on June 30, 2023 as a partial close of the Private Placement of $2,000,000 and (iv) 3,775,000 Shares issued on June 39, 20230 for the Acquisition of THC Essentials. (3) This figures includes: (i) 38,140,325 Shares issued on the Listing Date; (ii) 2,730,000 Shares issued on the exercise of Stock Options; (iii) 10,000,000 Shares on the exercise of 10,000,000 warrants issued to the subscribers of the Private Placement; (iv) 762,750 Shares issued on the exercise of 762,750 share purchase warrants issued on the Listing Date to the Finders for the Private Placement. See "General Development of the Company," "Options to Purchase Securities," and "Material Contracts." 9. OPTIONS TO PURCHASE SECURITIES Stock Option Plan: The Company had a "10% rolling" stock option plan, whereby a maximum of 10% of the issued Common Shares, from time to time, may be reserved for issuance under the Option Plan provided that as long as the Company is a capital pool company (as defined in the policies of the TSXV), such number may not exceed 10% of the Common Shares outstanding as at the closing of the Company's initial public offering. On June 12, 2023, the Directors approved a replacement 10% rolling stock option plan compliant with the polices of the CSE, which has the same terms as the prior stock option plan except that the exchange referred to is now the CSE. Shareholder acceptance of the new plan will be obtained at the next annual and special general meeting of the Company. The Option Plan is administered by the Company's board of directors. The current option plan has the following principal terms. It is anticipated that the new option plan will have the same terms. 1. The aggregate number of Common Shares that may be issued and sold under the Option Plan will not exceed 10% of the issued and outstanding Common Shares at the time of grant of any Option under the Option Plan. 2. The option price of any Common Shares in respect of which an Option may be granted shall be fixed by the Board provided that the minimum exercise price shall not be less than the market price of the Common Shares at the time the option is granted, less the discounts permitted by the CSE. 3. Options under the Option Plan may be granted by the Board to directors, senior officers, employees, or consultants of the Company, collectively known as the "Participants." 4. Options granted under the Option Plan are exercisable over a period not exceeding ten years, provided that notwithstanding the foregoing, if the term of any Option granted under the Option Plan ends on a day occurring during a blackout period (being the period imposed by the Company during which insiders are prohibited from trading in the securities of the Company) or within nine business days thereafter, such expiry date of the Option shall be automatically extended without any further act or formality to the date that is the tenth business day after the end of the blackout period, such tenth business day to be considered the expiry date for such Option for all purposes under the Option Plan. 36 5. Subject to any vesting restrictions imposed by the CSE, the Board may determine, in its sole discretion, the time during which Options shall vest and the method of vesting, or that no vesting restriction shall exist. 6. No single Participant may be granted options to purchase a number of Common Shares equaling more than 5% of the issued Common Shares in any one 12-month period unless the Company has obtained disinterested shareholder approval in respect of such grant and meets applicable CSE requirements. 7. Options shall not be granted if the exercise thereof would result in the issuance of more than 2% of the issued Common Shares in any 12-month period to any one consultant of the Company (or any of its subsidiaries). 8. Options shall not be granted if the exercise thereof would result in the issuance of more than 2% of the issued Common Shares of the Company in any 12-month period to persons employed to provide investor relations activities. Options granted to consultants performing investor relations activities will contain vesting provisions such that vesting occurs over at least 12 months with no more than one-fourth of the options vesting in any three-month period. 9. If a Participant ceases to be a technical consultant / non-technical consultant or employee of the Company or any of its subsidiaries as a result of retirement, resignation, or termination without cause, such Participant shall have the right for a period of 90 days (or until the normal expiry date of the option rights of such a Participant, if earlier) from the date of ceasing to be a technical consultant / non-technical consultant or employee to exercise all unexercised option rights of that Participant under the Option Plan to the extent that they were exercisable on the date of ceasing to be a technical consultant / non-technical consultant or employee, provided that if such Participant was engaged in investor relations activities, such exercise must occur within 30 days after the cessation of the Participant's services to the Company (subject to extension at the discretion of the Board). 10. If a Participant ceases to be a director or officer of the Company or any of its subsidiaries as a result of retirement, resignation, or termination without cause, subject to the discretion of the Board, such Participant shall have the right for a period of one year (or until the normal expiry date of the option rights of such a Participant, if earlier) from the date of ceasing to be a director or officer to exercise all unexercised option rights of that Participant under the Option Plan to the extent that they were exercisable on the date of ceasing to be a director or officer. 11. No right or interest of any Participant in or under the Option Plan is assignable or transferable, in whole or in part, either directly or by operation of law or otherwise in any manner except by bequeath or the laws of descent and distribution. 12. In the event that an Option granted under the Option Plan expires unexercised, is terminated by reason of dismissal of the Participant for cause, or is otherwise lawfully cancelled prior to exercise of the option, the option Common Shares that were issuable thereunder will be returned to the Option Plan and will be eligible for reissuance. 13. Subject to applicable approval of the CSE, the Board may, at any time, suspend or terminate the Option Plan, or amend or revise the terms of the Option Plan, provided that no such amendment or revision shall result in a material adverse change to the terms of any Options theretofore granted under the Option Plan, unless shareholder approval, or disinterested shareholder approval, as the case may be, is obtained for such amendment or revision. 37 The following table summarizes the allocation of the Stock Options granted and authorized to be granted by the Company to the date of this Listing Statement. Optionee Number of Exercise Price Expiry Date Options Post- Post- Consolidation Consolidation Executive officers as a group (1) 1,790,000 $0.10 Five years from the Listing Date Directors as a group (2) 450,000 $0.10 Five years from the Listing Date Directors as a group 75,000 $1.75 August 2, 2023 Directors as a group 80,000 $0.40 April 26, 2026 Former directors as a group 100,000 $0.40 April 26, 2026 Former directors as a group 40,000 $0.75 August 2, 2023 Former directors as a group 85,000 $1.75 August 2, 2023 Former directors as a group 110,000 $0.40 April 26, 2026 Total 2,730,000 (1) Issued to John Kueber, the CEO (2) Issued to John Bell as to 250,000 and to Vahan Ajamian as to 200,000. Outstanding Warrants on the Listing Date Number of Warrants Number of Warrants Exercise Price Expiry Date Pre-Consolidation Post-Consolidation Post-Consolidation 10,000,000(1) 0.20 One year from the Listing Date 762,250 (2) 0.20 One year from the Listing Date (1) On the closing of the Private Placement of 20,000,000 Units on the Listing Date, subscribers to the Private Placement will receive one Share and one-half Share Purchase warrant. One whole warrant will entitle the holder to acquire one additional Share. (2) On the closing of the Private Placement of 20,000,000 Units on the Listing Date, a finder will be issued 762,500 warrants equal to 5% of the 15,255,000 Units placed by the finder. 10. DESCRIPTION OF THE SECURITIES Authorized and Issued Share Capital The Issuer's authorized share capital consists of an unlimited number of Shares without par value, of which 33,335,325 Shares are issued and outstanding at the date of this Listing Statement. On the Listing Date: (i) 4,805,000 Shares will be issued to close the Private Placement resulting in 38,140,325 Shares issued on the Listing Date. See "General Development of the Business" and "Material Contracts". Shares All of the Shares of the Issuer rank equally as to voting rights, participation in a distribution of the assets of the Issuer on the liquidation, dissolution, or winding-up of the Issuer, and entitlement to dividends. The holders of the Shares are entitled to receive notice of all meetings of shareholders and to attend and vote such shares at the meetings. Each Share carries with it the right to one vote. The Shares do not have pre-emptive rights, are not subject to redemption, have no sinking or purchase fund provisions, have no provisions restricting the issuance of additional securities or any other material restrictions, nor a requirement to contribute additional capital. Holders of the Shares are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor. In the event of dissolution or winding up of the affairs of the Issuer, holders of the Shares are entitled to share rateably in all 38 assets of the Issuer remaining after payment of all amounts due to creditors. Listing of the Shares is subject to the Company fulfilling all of the listing requirements of the CSE. Prior Sales No shares have been issued in the past 12 months. Stock Exchange Price The Shares were listed and posted for trading on the TSX.V under the trading symbol "PAS" until being delisted on May *, 2023. The Shares are also listed on the Frankfurt Stock Exchange, symbol 6PB-FF and traded on the OTC, symbol PSCBF. The following table sets forth the high and low trading prices and trading volume of the Common Shares as reported by the TSX.V for its two most recently completed financial years ending November 30, 2022, and November 30, 2021, and for the month of December 2022 through December 5, 2022, when the Shares were halted from trading. Month High ($) Low ($) Total Volume December 2022 0.02 0.02 4,000 November 2022 0.02 0.02 116,490 October 2022 0.30 0.02 266,296 September 2022 0.02 0.02 185,173 August 2022 0.02 0.02 791,393 July 2022 0.04 0.03 936,618 June 2022 0.05 0.04 914,677 May 2022 0.05 0.04 818,033 April 2022 0.09 0.05 1,320,411 March 2022 0.10 0.08 556,400 February 2022 0.09 0.08 392,099 January 2022 0.08 0.06 1,173,370 December 2021 0.12 0.08 1,661,115 November 2021 0.11 0.085 591,038 October 2021 0.10 0.08 475,100 September 2021 0.10 0.075 1,405,499 August 2021 0.095 0.075 805,133 July 2021 0.12 0.08 591,038 June 2021 0.14 0.095 927,216 May 2021 0.13 0.10 595,226 April 2021 0.10 0.08 1,316,936 March 2021 0.105 0.09 917,567 February 2021 0.145 0.095 2,502,358 January 2021 0.135 0.095 2,147,260 December 2020 0. 16 0.11 1,091,916 39 11. ESCROWED SECURITIES Escrow under NP 46-201 As at the date of this Listing Statement, no Shares are subject to escrow. 12. PRINCIPAL SHAREHOLDERS Upon completion of the Reorganization, on the Listing Date, there will be 38,140,325 Shares issued and, to the knowledge of the Company's directors and officers, no person will beneficially own or exercise, directly or indirectly, control or direction over more than 10% of the votes attached to the Shares. 40 13. DIRECTORS AND OFFICERS Name, Occupation and Security Holding Name, Position with Date of Principal Occupation for Past Five Shares Shares % of Appoint Years Held as of Held on Shares Company and -ment the Date of Completi Held on to This on of the completi Province and Country Office Listing Reorgani on of the Statement zation on Reorgani of Residence the zation on 1,445,000 Listing the John Kueber June 12, CEO of jrrny.com 2016-2019 until Date Listing CEO and Director 2023 acquisition by SoRSE in 2019; Date Executive Vice President and Chief 1,445,00 3.79% Seattle, Washington Revenue Officer of SoRSE from 0 February 2019 until September 2022; CEO and director of the Company from June 12, 2023. Harold Forzley May 4, Since August 1986, Mr. Forzley has 0 0 0 CFO 2020 operated Harold Forzley Consulting, 500,000 Corporate Secretary which provides accounting services, 500,000 1.31% June 12, business plans, and corporate analysis. British Columbia, 2023 Canada CEO of Onbelay Capital Inc. from John Bell (1) 1995 to present; director of Canopy Director and Chairman Growth Corporation from 2014 to of the Board of 2020; corporate director of several Directors private and public firms. The list of public firms is shown below his name Cambridge, Ontario following this table. Vahan Ajamian (1) June 12, Capital Markets Advisor at High Tide 0 200,000 0.52% Director 2023 Inc. (a Canadian cannabis company 1,760,175 1,760,175 4.61% Toronto, Ontario still active) from October 2020 to Decemb present; CFO & Corporate Secretary of Patrick Gray (1) er 8, Vext Science Inc. (a U.S. cannabis Director 2015 company still active) from March 2021 Seattle, Washington to May 2022; Managing Director, Chairman of the Audit Analyst Relations of MedMen Committee Enterprises, Inc. (a U.S. Cannabis company still active) in 2018 and 2019. Equity Research Analyst at Beacon Securities Ltd., providing coverage principally of cannabis stock, still active) from 2014 to 2018. 2015 to present: Director of Pascal Biosciences Inc. 2012 to September 3, 2021 and January *, 2023 to February *, 2023, CEO of Pascal Biosciences Inc. (1) Member of Audit Committee. 41 The term of office of the directors currently expires every year at the time of the Company's annual general meeting. The term of the office of the officers expires at the discretion of the Company's directors subject to any contractual terms. Aggregate Ownership of Securities The directors and officers of the Company, as a group, currently beneficially own, directly, or indirectly, 3,705,175 Shares representing 10.24% of the current issued and outstanding Shares of the Company. On completion of the Reorganization, the directors and officers as a group will own 3,905,175 Shares, representing 10.24% of the issued and outstanding Shares. On a fully diluted basis, assuming all 2,730,000 options are exercised, they will own 6,635,175 Shares representing 12.85% of the issued and outstanding Shares of the Company. Management Experience The following is a brief description of the management and key personnel of the Corporation. John Kueber, Age 51 CEO and Director In 1993, John Kueber was granted a B.A. from the University of Washington and completed the Canadian Securities Course. John Kueber served as the Executive Vice President and Chief Revenue Officer for SoRSE from February 2019 until September 2022. During this time, he has been responsible for securing numerous licensing and revenue opportunities for the company, generating in excess of $20,000,000 in revenues. He has also founded, operated, and secured acquisitions for numerous early stage companies, including the following: Superbuild.com, Inc. (acquired by Hardware.com Inc. / Onvia Inc); Founder/CEO 1997-1999. Onvia was acquired by Deltek. Lucernex.com (acquired by Accruent Inc.); CEO 2000-2001. Accruent is still operating. Speechforms Inc. / Spoken Inc. (merged; acquired by Avaya Holdings Corp); Founder/CEO, 2001-2005. Avaya is still operating as a leader in the telecommunications industry. K Media Inc. (DBA Urban Pages Media; acquired by Tiger Oak Media Inc.) Mr. Kueber was the Founder/CEO from 2005 to 2008. Tiger Oak Media Inc. operated until 2021 and sold its assets to various parties. From 2015-2018, Mr. Kueber was an interim CEO at several companies helping with turnarounds (Purehome.com, jrrny.com). From 2016 to 2019, he was CEO of Jrrny Inc. (a proprietary social media and influencer platform, jrrny.com). In 2019, he sold Jrrny Inc. to SoRSE and became its Chief Revenue Office / Executive Vice President. Mr. Kueber has not previously been a director of officer of a Reporting Issuer. Employment Agreement The Company and Mr. Kueber have signed a retainer letter dated December 29, 2022. Upon listing on the CSE, Mr. Kueber has agreed to a monthly salary of U.S.$10,000, which he has agreed will be paid from the revenue from THC Essentials. As a result, it is not included in the general and administrative expenses of the Company. If there is no revenue, he will not be paid. He has also been granted 1,790,000 Stock Options to acquire 1,790,000 Shares at a price of $0.10 per Share for a term of five years, to be effective post-closing of the Private Placement and THC Essentials acquisition on the Listing Date. 42 Mr. Kueber plans to spend 100% of his working time on the business of the Company. He has not signed a non- disclosure or non-competition agreement. Harold ("Hardy") Forzley, Age 70 CFO, Corporate Secretary Mr. Forzley was granted a B.A. Commerce from Simon Fraser University, located in Burnaby, B.C., on May 1, 1978. He was licensed as a Certified Professional Accountant by the Chartered Professional Accountants of British Columbia in December 1980. Since August 1986, he has operated Harold Forzley Consulting, which provides accounting services, business plans, and corporate analysis. Mr. Forzley plans to spend 10% of his working time on the business of the Company. He has not signed a non- disclosure or non-competition agreement. Other Reporting Company Experience Mr. Forzley is and has been a director and officer of other reporting companies operating in a variety of industries, as listed below. Name of Reporting Company Name or Exchange Position From To Pacific Cascade Minerals Inc. or Market Director and TSX.V President December 2006 Cabbay Holdings Corp. Director Grande Portage Resources Ltd. CSE Director and July 2018 February 2020 TSX.V CFO South Star Mining Corp. Director September 2006 April 2016 TSX.V September 2005 December 2012 Canada Strategic Metals Inc. TSX.V Director May 2010 November 2012 Non-Management Directors John Bell, Age 75 Director Cambridge, Ontario Mr. Bell earned a degree in Business at the Ivey School at Western University in 1970. Mr. Bell earned his CPA in 1973 and his FCPA in 2008. He earned his ICD.D designation from the Institute of Corporate Directors in 2012. He is Chairman of Stack Capital Inc., a TSX-listed company investing in later-stage, pre-public private companies. He is Chairman of Pure Jamaican Limited, a producer of medical pharmaceutical cannabis for export. From 2014 to 2020, he was a BOD member and Chair of Canopy Growth and Canopy Rivers. He was founder, owner, and CEO of Shred-Tech Inc., a global manufacturer of shredding and recycling equipment and creator of the mobile shredding industry. He was owner and CEO of Polymer Technologies Inc., a global manufacturer of auto parts. He was Chairman and principal shareholder of BSM Technologies Inc. (TSX), a fleet management company, He was CEO and director of ATS Automation (TSX), with 23 global plants. A believer in community service, John has contributed to numerous organizations, including Cambridge Memorial Hospital (Chairman), Waterloo Regional Police (Chairman), Waterloo Region Prosperity Council (Chairman), and Crohn's and Colitis Canada (National Secretary). He is currently a Governor of the Stratford Festival. He has been granted 250,000 Stock Options, effective on the Listing Date, to acquire 250,000 Shares at an exercise price of $0.10 per Share for a term of five years. 43 Other Reporting Company Experience Mr. Bell is and has been a director of other reporting companies operating in a variety of industries, as listed below. Name of Reporting Company Position Name or From To Exchange Stack Capital Inc. Chair or Market April 2021 July 2022 Cure Pharmaceuticals Holding Director Nov. 2019 Corp. Chair TSX Hexo Corp. Director Canopy Growth Corporation Director OTCQX Canopy Rivers Director, Chair Director TSX Dec. 2021 Feb. 2022 Canopy Rivers Director TSX Oct. 2014 Director TSXV May 2018 March DelMar Pharmaceuticals Director 2020 Strongco Corporation Director July 2019 NeutriSci International Inc. Reliq Health Technologies Inc. TSX July 2019 Sept. 2020 BSM Technologies Ltd. NASDAQ Feb. 2013 June 2020 TSX TSXV July 2010 March TSXV April 2016 TSXV March 2015 2019 August 2016 June 2015 Feb. 2006 May 2014 Mr. Bell plans to spend 10% of his working time on the business of the Company. He has not signed a non- disclosure or non-competition agreement. Vahan Ajamian, Age 43 Director Toronto, Ontario Mr. Ajamian received his Chartered Financial Analyst (CFA) designation in 2013 from the CFA Institute headquartered in Charlottesville, Virginia, and his CPA designation from the Ontario Society of Chartered Professional Accountants in 2005. He earned a B. Commerce in 2002 from Trinity College, University of Toronto, and an IB diploma and OSSD in 1998 from Upper Canada College in Toronto, Ontario. Mr. Ajamian has held the following positions: CFO & Corporate Secretary of Vext Science Inc. (a U.S. cannabis company still active), from March 2021 to May 2022; Capital Markets Advisor of High Tide Inc. (a Canadian cannabis company still active) from January 2020 to March 2021; Managing Director, Analyst Relations of MedMen Enterprises, Inc. (a U.S. Cannabis company still active) in 2018 and 2019; Equity Research Analyst at Beacon Securities Ltd., providing coverage principally on cannabis stocks (still active), from 2014 to 2018; Equity Research Associate at TD Securities from 2006 to 2013; and Senior auditor at KPMG LLP from 2002 to 2006. 44 Other Reporting Company Experience Mr. Ajamian is and has been an officer of other reporting companies operating in the cannabis area as listed below: Name of Reporting Company Position Name of From To Exchange Vext Science Inc. CFO or Market March 2021 May 2022 High Tide Inc. VP Capital CSE Markets October March TSXV 2020 2021 He has been granted 200,000 Stock Options, effective on the Listing Date, to acquire 200,000 Shares at an exercise price of $0.10 per Share for a term of five years. Mr. Ajamian plans to spend 10% of his working time on the business of the Company. He has not signed a non- disclosure or non-competition agreement. Dr. Patrick Gray, Age 71 Director Seattle Washington Dr. Gray received a B.Sc. Biology in 1971 from the University of Oregon, located in Eugene, Oregon, and a Ph.D. Chemistry in 1978 from the University of Colorado in Boulder, Colorado. From 2015 to the present, he has been a director of the Company. From 2012 to September 2021 and from February 11, 2023 to April * 2023, he was CEO of the Company. Dr. Gray has 119 published papers in his field of expertise and holds over 40 patents spanning more than 20 different technologies. Mr. Gray plans to spend 10% of his working time on the business of the Company. He has not signed a non- disclosure or non-competition agreement. Cease Trade Orders, Bankruptcies, Penalties, or Sanctions Cease Trade Orders Mr. Forzley is a director of Pacific Cascade Minerals Inc., which had a cease trade order ("CTO") issued to it by the British Columbia Securities Commission on February 5, 2016 for failure to file annual audited financial statements. Pacific Cascade Minerals Inc. filed all the required financial statements. The CTO was revoked on April 27, 2020. To the Corporation`s knowledge, and other than as disclosed herein, no existing director, executive officer, or shareholder holding a sufficient number of securities of the Corporation to materially affect the control of the Corporation is, as at the date of this Listing Statement, or was within ten years prior to the date of this Listing Statement, a director, chief executive officer or chief financial officer of any company, including the Corporation, that: (i) Was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer, or chief financial officer; or (ii) Was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer, or chief financial officer and that resulted from an event that occurred while that person was acting in that capacity as director, chief executive officer, or chief financial officer. 45 For the purposes herein, "order" means: (a) A cease trade order; (b) An order similar to a cease trade order; or (c) An order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days. None of the directors or executive officers of the Company, or a shareholder holds a sufficient number of securities of the Company to affect materially the control of the Company. See "Principal Securityholders." Halt Trades and Bankruptcies To the Corporation`s knowledge, and other than as disclosed herein, no existing director or executive officer or a shareholder holding a sufficient number of securities of the Company to materially affect the control of the Corporation: (a) Is, as at the date of this Listing Statement, or has been within the 10 years before the date of this Listing Statement, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt; made a proposal under any legislation relating to bankruptcy or insolvency; was subject to or instituted any proceedings, arrangement, or compromise with creditors; or had a receiver, receiver manager, or trustee appointed to hold its assets; (b) Has, within the 10 years before the date of this Listing Statement, become bankrupt; made a proposal under any legislation relating to bankruptcy or insolvency; become subject to or instituted any proceedings, arrangement, or compromise with creditors; or had a receiver, receiver manager, or trustee appointed to hold the assets of the director, executive officer, or shareholder. Penalties or Sanctions To the Corporation`s knowledge, and other than as disclosed herein, no existing director or executive officer or a shareholder holding a sufficient number of securities of the Corporation to materially affect the control of the Corporation has been subject to: (a) Any penalties or sanctions imposed by a court relating to provincial and territorial securities legislation or by a provincial or territorial securities regulatory authority, or has entered into a settlement agreement with a provincial or territorial securities regulatory authority; or (b) Any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. Conflicts of Interest The directors of the Company will not be devoting all of their time to the affairs of the Company, as they have employment outside of the Company and some are directors and officers of other companies, some of which are in the same business as the Company. The directors and officers of the Company are required by law to act in the best interests of the Company. They have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to the Company may result in a breach of their obligations to the other companies, and in certain circumstances, this could expose the Company to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of the Company. Such conflicting legal obligations may expose the Company to liability to others and impair its ability to achieve its business objectives. 46 14. CAPITALIZATION 14.1 Prepare and file the following chart for each class of securities to be listed: Issued Capital Number of Number of % of Issued % of Public Float Securities Securities (Non- Issued (Non-Diluted) (Fully Diluted) (Fully Diluted) Diluted) Total outstanding (A) 38,140,326 51,633,075 100% 100% Held by Related Persons or 3,905,175 6,635,175 10.24% 12.85 employees of the Issuer or Related Person of the Issuer, or by persons or companies who beneficially own or control, directly or indirectly, more than a 5% voting position in the Issuer (or who would beneficially own or control, directly or indirectly, more than a 5% voting position in the Issuer upon exercise or conversion of other securities held) (B) Total Public Float (A-B) 34,325,150 44,997,900 89.76 87.15 Freely-Tradeable Float Number of outstanding securities 25,021,372 36,021,372 65.60 69.45 subject to resale restrictions, including restrictions imposed by pooling or other arrangements or in a shareholder agreement, and securities held by control block holders (C) Total Tradeable Float (A-C) 13,118,954 13,118,954 34.40 34.40 47 Public Securityholders (Registered) Instruction: For the purposes of this report, "public securityholders" are persons other than persons enumerated in section (B) of the previous chart. List registered holders only. Class of Security Size of Holding Number of Holders Total Number of Securities 1 - 99 securities 100 - 499 securities 1 200 500 - 999 securities 1,000 - 1,999 securities 1 820 2,000 - 2,999 securities 3,000 - 3,999 securities 1 3,000 4,000 - 4,999 securities 5,000 or more securities 14 24,558,611 14 24,562,631 Public Securityholders (Beneficial) Instruction: Include (i) beneficial holders holding securities in their own name as registered shareholders; and (ii) beneficial holders holding securities through an intermediary where the Issuer has been given written confirmation of shareholdings. For the purposes of this section, it is sufficient if the intermediary provides a breakdown by number of beneficial holders for each line item below; names and holdings of specific beneficial holders do not have to be disclosed. If an intermediary or intermediaries will not provide details of beneficial holders, give the aggregate position of all such intermediaries in the last line. Class of Security Size of Holding Number of Holders Total Number of Securities 1 - 99 securities 33 1,203 100 - 499 securities 70 16,168 500 - 999 securities 34 23,349 1,000 - 1,999 securities 43 50,091 2,000 - 2,999 securities 46 100,103 3,000 - 3,999 securities 11 32,161 4,000 - 4,999 securities 20 83,105 5,000 or more securities 170 15,097,338 48 Unable to confirm 51 21,532,763 Non-Public Securityholders (Registered) Instruction: For the purposes of this report, "non-public securityholders" are persons enumerated in section (B) of the issued capital chart. Class of Security Size of Holding Number of Holders Total Number of Securities 1 - 99 securities 100 - 499 securities 500 - 999 securities 1,000 - 1,999 securities 2,000 - 2,999 securities 3,000 - 3,999 securities 4,000 - 4,999 securities 5,000 or more securities 4 3,905,175 4 3,905,175 14.2 Provide the following details for any securities convertible or exchangeable into any class of listed securities Description of Security (include conversion / Number of convertible / Number of listed securities exercise terms, including conversion / exercise exchangeable securities issuable upon conversion / price) outstanding exercise None other than as disclosed elsewhere. See Item 9 "Options to Purchase Securities" regarding outstanding 2,730,000 issued stock options and stock options to be granted. Outstanding Warrants on the Listing Date Number of Warrants Exercise Price Expiry Date Post-Consolidation 10,000,000(1) 0.20 One year from the Listing Date One year from the Listing Date 762,750 (2) 0.20 (1) These Warrants were issued to the subscribers of the Private Placement. (2) These Warrants were issued to the finders of the Private Placement. 14.3 Provide details of any listed securities reserved for issuance that are not included in section 14.2. All securities reserved for issuance are described elsewhere in this Listing Statement. 49 15. EXECUTIVE COMPENSATION During the year ended November 30, 2022, the Company had three NEOs: Brian Bapty, CEO; Robert Gietl, CEO; and Harold Forzley, CFO. Compensation Discussion and Analysis In assessing the compensation of its executive officers, for the year ended November 30, 2022 and prior years, the Company did not have in place any formal objectives, criteria or analysis; compensation payable is currently determined by the Board of Directors. The Company's remuneration strategy is based on achieving the overall objective of growing net tangible assets and profitability. The Company has a 10% rolling Stock Option Plan. One current director, Patrick Gray, and the former directors and the former CEO have stock options. On the Listing Date, the grant of Stock Options to the new CEO and new directors will be effective. See "Options to Purchase Shares." At this time, there are compensation agreements with the CEO and the CFO. See "Directors and Officers" for full details. Option-Based Awards: No option-based awards have been granted. Compensation of Named Executive Officers of the Company: The following table sets forth the compensation of the named executive officers and persons earning more than $150,000 annually for the three most recently completed fiscal years. 50 Non-Equity Incentive Share Opt- Plan Compensation - ion- Base Based ($)(f) Pen- All Other Total d Awar sion Compen- Com- Name and Awar ds Annual Long- Value sation pen- principal ds ($) ($) ($) sation position Salary ($) (e) Incent- Term (g) (h) ($) (a) ($) (d) (i) Year (c) Nil 28,772 ive Incentive Nil (b) Nil Nil Nil 139,500(1) Nil Nil Plans Plans Nil Nil Nil (f1) (f2) Nil Nil Brian Bapty, 2022 23,000 Nil Nil Nil Nil 168,272 CEO(1) 2021 69,000 2020 Nil Nil Nil Nil Nil Nil Robert Gietl, Nil Former CEO 2022 33,600 Nil Nil Nil Nil Nil 2021 16,800 Harold 2020 Nil Nil Nil Nil Nil Nil 23,000 Forzley, CFO 2022 Nil 31,082 Nil Nil Nil Nil Judi Dalling, 2021 Former CFO 2020 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 33,600 Nil Nil Nil Nil Nil 16,800 Nil Nil Nil Nil Nil Nil Larry 2022 Nil Nil Nil Nil Nil Nil Nil Nil Tjoelker, VP 2021 42,500 Nil Nil Nil Nil Nil Nil 42,500 Research 2020 102,000 Nil Nil Nil Nil Nil 20,000 122,000 Tom 2022 7,566 Nil Nil Nil Nil Nil Nil 7,566 Deckwerth, 2021 179,511 Nil Nil Nil Nil Nil 36,895 232,675 VP 2020 189,389 Nil Nil Nil Nil Nil 34,380 233,769 Therapeutic Development 2022 7,566 Nil Nil Nil Nil Nil Nil 7,566 2022 179,511 Nil Nil Nil Nil Nil 74,420 253,931 2021 198,489 Nil Nil Nil Nil Nil 36,032 234,521 16. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS None of the directors and executive officers are indebted to the Company. The Company does not have a securities purchase program or other programs regarding indebtedness of the directors and executive officers. 17. RISK FACTORS The following are certain factors relating to the business of the Company. These risks and uncertainties are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company or currently deemed immaterial by the Company may also impair the operations of the Company. If any such risks actually occur, shareholders of the Company could lose all or part of their investment; the business, financial condition, liquidity, results of operations, and prospects of the Company could be materially adversely affected; and the ability of the Company to implement its growth plans could be adversely affected. The acquisition of any of the securities of the Company is speculative, involving a high degree of risk, and should be undertaken only by persons whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. An investment in the securities of the Company should not constitute a major portion of an individual's investment portfolio and should only be made by persons who can afford a total loss of their investment. Investors should evaluate carefully the following risk factors associated with the Company's securities. 51 Risks Pertaining to the Company's Business Limited Operating History The new business of the Company, THC Essentials, has a limited operating history upon which its business and future prospects may be evaluated. Although there is a prior history of revenue from the THC Essential Trademarks, the Company will be subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its operating goals. In order for the Company to meet future operating requirements, it will need to be successful in its growth, marketing, and sales efforts. There are no assurances that the Licensed Products can be successfully marketed in the future or that there will not be U.S. FDA changes in rules, an initiation of investigations, other regulatory actions taken, or changes in state regulations. Additionally, where the Company experiences increased production and future sales, its current limited operational infrastructure may require changes to scale its business efficiently and effectively to keep pace with demand and achieve long-term profitability. If the Company's future Licensed Products are not accepted by future customers, the Company's operating results may be materially and adversely affected. As the Company produces new Licensed Products, there is no guarantee that the market will embrace the new Licensed Products. Regulatory Risks and Uncertainties Although none of the current licensed Products currently require regulatory approval other than the requirement that the Licensees be licensed under state cannabis laws, there is no assurance that this will continue, as the states in which recreational cannabis is legal could at any time impose new regulatory requirements. The success of the Company's business is dependent on its activities continuing to being permissible under applicable state laws, and any change could have a material negative impact on the Company's business and success. There can be no assurance that the Company will not experience difficulties with its efforts to comply with applicable regulations as they change in the future or that its continued compliance efforts (or failure to comply with applicable requirements) will not have a material adverse effect on the Company's results of operations, business, prospects, and financial condition. Plans for Growth The Company intends to continue to license the Trademarks and Licensed Know-How and supply the bottles and labels for the Products in the states in which the Licensed Product are currently sold and to expand to other states where recreational cannabis is legal. If the Company experiences growth, it will place a significant strain on the Company's management systems and resources and impede the implementation of its business strategy in a rapidly evolving market, which may have a material adverse effect on the Company's business, financial condition, results of operations, and prospects. Limited Marketing and Sales Capabilities The Company will, for the immediate future, have limited marketing and sales capabilities, and there can be no assurance that it will be able to develop or acquire these capabilities at the level needed, on a cost-effective basis, or at all, to expand the sale of the Licensed Products through industry sales alliance and other business partners. The Company's dependence upon third parties for the production, marketing, or sale, as applicable, of the Licensed Products could have a material adverse effect on the Company's business, financial condition, and results of operations. Compared to other companies involved in the cannabis industry, the Company is very small, has few resources, and must limit its marketing and product development. The Issuer is a small company in an industry dominated by many larger companies that have substantial amounts of capital and management expertise. The Issuer does not have the human resources or financial resources to compete with senior companies in the cannabis industry, which could and probably would spend more time and money developing and marketing infused beverages. As a result, the Company must limit its marketing and product development unless it raises further capital, likely by the sale of its Shares, which will dilute your investment. No Assurance of Continued Commercial Success The Company's continuing success depends on its ability to establish and maintain working partnerships with industry participants in order to market the Licensed Products, the Company's ability to supply a sufficient amount of its bottles and labels to meet market demand, and the number of competitors within each jurisdiction within which the Company may be engaged from time to time. There can be no assurance that the Company or its industry partners will be successful in their respective efforts to continue sales and to expand the markets in which the cannabis drinks are sold. 52 No Profits or Significant Revenues THC Essentials has been operating only since 2018, so there has been no significant history upon which to evaluate its performance and future prospects. THC Essentials operations are subject to all the business risks associated with new enterprises. These include likely fluctuations in operating results as the Company makes investments in product opportunities and reacts to developments in its market, including the purchasing patterns of customers and the effect of competitors. In addition, there is no assurance that future profitability will be sustained or that future revenues will be sufficient to generate the funds required for the Company to fund its operations, business development, and marketing. If the Company fails to do so, it may be required to reduce its sales and marketing efforts or forego certain business operations. The Company will only be able to pay dividends on any shares once its directors determine that it is financially able to do so. The Company cannot make any assurance that it will be profitable in the next three years or generate sufficient revenues to pay dividends to the holders of the Shares. Reliance on Third-Party Manufacturers and Licensees The Company does not manufacture any of the items used in the manufacture of the Licensed Products. It will continue to outsource the manufacture of the bottles, tops, labels, and shipping boxes to various manufacturers that ship the bottles and labels to the Licensees. There can be no assurances that these manufacturers will be able to continue to meet the Company's timetable and requirements or that the Company will be able to arrange for alternative third- party manufacturing sources on commercially reasonable terms or in a timely manner, which could delay the fulfillment of orders for bottles, tops, labels, and shipping boxes. The Company's dependence upon the third-party manufacturers may adversely affect its profit margins and its ability to ensure the manufacture and delivery of the bottles, tops, labels, and shipping boxes on a timely and competitive basis. Trademark Protection Failure to register new trademarks and maintain existing Trademarks by the Company could require a rebranding of the Licensed Products, resulting in a material adverse impact on its business. There is no guarantee that the Company will be able to identify and diligently defend such rights against any third parties' usage of the same or similar marks. Trademark protection is important to protect the Company's brand development and good will. If the Company infringes upon the trademark of another company, the Company may be forced to stop using those marks and could be liable for damages caused by any such infringement. Promoting the Brand Promoting the Company's brand will be critical to creating and expanding a customer base and to realizing cash flow. If the Company fails to successfully promote its brand or incurs excessive expenses in this effort, its business and financial results from operations could be materially adversely affected. Competition There is intense competition in the cannabis industry. There are a large number of companies, both public and private, that have much greater resources than those of the Company. See "Narrative Description of the Business Competition." Customer Demand The Company intends to target a large and diverse customer base to achieve its desired level of revenue. The Company's ability to attract customers is dependent on a number of factors, including offering high-quality products at a competitive price, the strength of its competitors, and the abilities of its sales and marketing teams. The failure to attract customers or obtain new business from existing customers may result in the Company not achieving its desired level of revenue as quickly as anticipated, if at all. Costs of Operating as a Reporting Issuer As a Reporting Issuer, the Company will continue to incur significant legal, accounting, and other expenses. As a Reporting Issuer, the Company is subject to various securities rules and regulations, which impose various requirements on the Company, including the requirement to establish and maintain effective disclosure and financial controls and corporate governance practices. The Company's management and other personnel need to devote a substantial amount of time to these compliance initiatives. 53 Reliance on Key Personnel The Company is dependent upon the services of its management team for the successful operation of its business. The loss of these services could affect the business. If the Company cannot successfully recruit and retain the personnel it needs, or replace key personnel after departure, the Company's ability to develop and manage its business will be impaired. John Kueber's ongoing involvement as the Company's CEO is important to the Company's success. Novel Coronavirus "COVID-19" The outbreak of COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, including the implementation of travel bans, self- imposed quarantine periods, and social distancing, have caused material disruption to businesses globally, resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company. However, depending on the length and severity of the pandemic, COVID-19 could impact the Company's operations and could impair the Company's ability to raise funds, depending on COVID-19's effect on capital markets. To the knowledge of the Company's management as of the date hereof, COVID-19 does not present, at this time, any specific known impacts to the Company in relation to the timelines, business objectives, or disclosed milestones related thereto. The Company is not currently aware of any changes in laws, regulations, or guidelines, including tax and accounting requirements, arising from COVID-19, which would be reasonably anticipated to materially affect the Company's business. Litigation The Company is not subject to any litigation and is unaware of any possible litigation proceedings. A settlement agreement was reached, on June 22, 2023 with the former CEO, Robert Gietl. Refer to "Developments after November 30, 2022" in Item 3 for full details. Inflation Inflationary pressure may also affect Company's labour, commodity, and other input costs, which could affect Company's financial condition and the production of the Products. Throughout 2021 and 2022, global inflationary pressures increased, caused by the ongoing COVID-19 global pandemic and related lockdowns, and the war in Ukraine, which has caused increasing global energy costs and a shortage of agricultural commodities. Environmental, Health and Safety Laws and Regulations The Company's operations not affected by environmental, health, and safety regulations as it does not manufacture any items used in the Licensed Products. Financial and Accounting Risks Negative Cash Flow from Operating Activities and Additional Capital Requirements The Company has had negative cash flow from operating activities from inception to the date of this Listing Statement. Positive cash flow is now dependent on the operations from its acquisition of THC Essentials. Future capital investment may be required for the Company's future operations. The Company's net losses have had and will continue to have an adverse effect on, among other things, shareholder equity, total assets, and working capital. Accordingly, the Company may be required to obtain additional financing in order to meet its future cash commitments. There is no assurance that additional financing will be available on terms acceptable to the Company. 54 Availability of Financing The Company has limited financial resources, and there is no assurance that additional funding will be available to the Company for further operations since it will depend upon the capital market conditions and the business success of the Company. If adequate funds are not available or not available on acceptable terms, the Company may not be able to take advantage of opportunities or respond to competitive pressures and remain in business. Financial Position and Results of Operations The Company's actual financial position and results of operations may differ materially from management's expectations, and the Company's revenue, net income, and cash flow may differ materially from the Company's projected revenue, net income, and cash flow. The process for estimating the Company's revenue, net income, and cash flow requires the use of judgment in determining the appropriate assumptions and estimates. These estimates and assumptions may be revised as additional information becomes available and as additional analyses are performed and may not prove to be accurate, and other factors may affect the Company's financial condition or results of operations. Risks Related to Securities of the Company No Public Market for the Shares There is currently no public market where the Shares may be sold, as the Shares have been halted from trading by the TSX.V. The Company has received conditional acceptance from the CSE to list the Shares, but there is no assurance that will happen. There can be no assurance that an active trading market for the Shares will develop or, if developed, that any market will be sustained. Fluctuations in the market price of the Shares could cause investors to lose all or part of their investments. Factors that could cause fluctuations in the trading price of the Shares include: (a) announcements of new offerings of Shares and new Licensed Products, commercial relationships, acquisitions, or other events by the Company and its competitors; (b) price and volume fluctuations in the overall stock market from time to time; (c) significant volatility in the market price and trading volume of comparable companies; (d) fluctuations in the trading volume of the Shares or the size of the Company's public float; (e) actual or anticipated changes or fluctuations in the results of operations; (f) whether the results of operations meet the expectations of securities analysts or investors; (g) litigation involving the Company, its industry, or both; (h) regulatory developments; (i) general economic conditions and trends; (j) major catastrophic events; (k) escrow releases or sales of large blocks of the Shares; (l) departures of key employees or members of management; or (m) an adverse impact from any of the other stated risks. CSE Listing If the Company fails to list the Shares on the CSE, the liquidity for its Shares will be significantly impaired. In addition, in the future, the Company's securities may fail to meet the continued listing requirements to be listed on the CSE. If the CSE delists the Shares, the Company could face significant material adverse consequences, including a limited availability of market quotations for the Shares, a limited amount of news and analyst coverage of the Company, and a decreased ability to issue additional securities or obtain additional financing in the future. Volatile Market Price for Shares The market price of the Shares may be volatile. The volatility may affect the ability of holders to sell the Shares at an advantageous price or at all. Market price fluctuations in the Shares may be adversely affected by a variety of factors relating to the Company's business, including fluctuations in the Company's operating and financial results, such results failing to meet the expectations of securities analysts or investors and downward revisions in securities analysis' estimates in connection therewith, sales of additional Shares, governmental regulatory action, adverse changes in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Company or its competitors, along with a variety of additional factors, including, without limitation, those set forth under the heading "Forward-Looking Statements." In addition, the market price for securities on stock markets, including the CSE, is subject to significant price and trading fluctuations. These fluctuations have resulted in volatility in the market prices of securities that often have been unrelated or disproportionate to changes in operating performance. These broad market fluctuations may materially adversely affect the market price of the Company. Additionally, the value of the Shares is subject to market value fluctuations based upon factors that influence the Company's operations, such as legislative or regulatory developments, competition, technological change, and changes in interest rates or foreign exchange rates. There can be no assurance that the market price of the Shares will not experience significant fluctuations in the future, including fluctuations that are unrelated to the Company's performance. 55 No Dividends The Company's current policy is, and will be, to retain earnings to finance the development and enhancement of its Products and to otherwise reinvest in its business. Therefore, the Company does not anticipate paying cash dividends on the Shares in the foreseeable future. Until the time that the Company does pay dividends, which it might never do, its shareholders will not be able to receive a return on their Shares unless they sell them. Enforcement of Judgments Against Certain Persons John Kueber, a director and CEO of the Company, resides outside Canada. Mr. Kueber has appointed Joanne McClusky, legal counsel in Vancouver, as his agent for service of process in Canada. It may not be possible for investors to enforce judgements obtained in Canada against Mr. Kueber. There is some doubt as to the enforceability in the United States by a court in original actions, or in actions to enforce judgments of Canadian courts, of civil liabilities predicated upon such applicable Canadian provincial securities laws or otherwise. A court in the United States may refuse to hear a claim based on a violation of Canadian provincial securities laws or otherwise on the grounds that such jurisdiction is not the most appropriate forum to bring such a claim. Even if a court in the United States agrees to hear a claim, it may determine that the local law in the United States, and not Canadian law, is applicable to the claim. If Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by foreign law in such circumstances. 18. PROMOTERS Patrick Gray and John Kueber are the promoters of the Company. They were the persons principally involved in the negotiations to acquire THC Essentials and the private placement of $2,000,000 essential to the Reorganization of the Company. See "General Description of the Business" and "Narrative Description of the Business." Pursuant to an agreement dated January 4, 2023, Mr. Kueber will be paid U.S.$10,000 per month by the Company from the revenue from THC Essentials and was granted stock options to acquire 1,790,000 Shares at a price of $0.10 per Share effective on the Listing Date for a term of five years. Mr. Kueber was appointed a director and CEO of the Company on June 12, 2023 and will directly manage and operate the THC Essentials operations. On the Listing Date, he will have 1,790,000 stock options to acquire 1,790,000 Shares at a price of $.10 per Share for a term of five years. Patrick Gray will continue as an independent director and Chairman of the Audit Committee. Upon completion of the Reorganization on the Listing Date, he will own 1,760,175 Shares, representing 4.61% of the issued and outstanding Shares, and have the following Stock Options: 75,000 at an exercise price of $1.75 until August 2, 2023 and 80,000 at an exercise price of $0.40 until April 20, 2026. See "Executive Officers and Directors." 19. LEGAL PROCEEDINGS The Company is not involved in any legal proceedings. A settlement agreement was reached with the former CEO, Robert Gietl. In item 3, see "Developments after November 30, 2022 which discloses the terms of the settlement agreement. Regulatory Actions There are no current regulatory actions against the Company, and there have not been any: (a) Penalties or sanctions imposed against the Company by a court relating to provincial and territorial securities legislation or by a securities regulatory authority within the three years immediately preceding the date hereof; (b) Other penalties or sanctions imposed by a court or regulatory body against the Company necessary to contain full, true, and plain disclosure of all material facts relating to the securities being listed; and (c) Settlement agreements that the Company entered into before a court relating to provincial and territorial securities legislation or with a securities regulatory authority within the three years 56 immediately preceding the date hereof. 20. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS None of the following persons or companies have had any material interest, directly or indirect, in any transaction within the three years before the date of the Listing Statement, or in any proposed transaction, that has materially affected or will materially affect the Issuer or a subsidiary of the Issuer: (a) Any director or executive officer of the Issuer; (b) A person or company that is the direct or indirect beneficial owner of, or who exercises control or direction over, more than 10 percent of any class or series of outstanding voting securities; and (c) An associate or affiliate of any of the persons or companies referred to in paragraphs (a) or (b). The proposed new CEO, John Kueber who will be running the new business, THC Essentials was the manager of the THC Essentials for the period from 2018 to September 2022. 21. AUDITORS, TRANSFER AGENT, AND REGISTRAR Smythe LLP, Chartered Professional Accountants, is auditor of the Company and a member of the Chartered Professional Accountants of British Columbia. Smythe is located at 475 Howe Street, #1700, Vancouver, B.C. V6C 2B3. The Company's transfer agent and registrar is Computershare Trust Company of Canada ("Computershare"). Computershare's register of transfers for the Shares is located at 880-580 Hornby Street, Vancouver, British Columbia, Canada, V6C 3B6. 22. MATERIAL CONTRACTS 1. Transfer Agent Agreement dated February 6, 2012, with Computershare Investor Services Inc. This agreement was filed on SEDAR on February 9, 2012. 2. Asset Purchase Agreement between the Company and SoRSE, dated February 10, 2023, as amended on March 31, 2023, April 2, 2023 and April *, 2023. The Service Agreement referred to on page 4 of this Listing Statement is Schedule H-1 of the Asset Purchase Agreement. 23. INTEREST OF EXPERTS Smythe LLP, Chartered Professional Accountants, is the independent registered public accounting firm of the Company and is independent within the meaning of the Code of Professional Conduct of the Chartered Professional Accountants of British Columbia. It does not own any securities of the Company. 24. OTHER MATERIAL FACTS There are no material facts about the Company and its securities that are not disclosed under the preceding items and are necessary for the Listing Statement to contain full, true, and plain disclosure of all material facts relating to the Issuer and its securities. 57 25. FINANCIAL STATEMENTS Consolidated year-end audited financial statements of the Company for the years ended November 30, 2022, and November 30, 2021, are attached as Schedule A. Consolidated financial statements of the Company for the years ended November 30, 2021, and November 30, 2020, is attached as Schedule B. Audited carveout income statement of SoRSE for the three years ended December 31, 2022, December 31, 2021, and December 31, 2020, are attached as Schedule E. Audited carveout statement of acquired assets of THC Essentials as at June 30, 2023, which are attached as Schedule F. Pro-forma financial statements for the year ended November 30, 2022, are attached as Schedule G. 58 Schedule A Consolidated financial statements for the years ended November 30, 2022 and November 30, 2021 Of Nevis Brands Inc. (formerly Pascal Biosciences Inc.) PASCAL BIOSCIENCES INC. Page Consolidated Financial Statements 2-4 For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) 5 6 Index 7 Independent Auditors' Report to the Shareholders 8 Consolidated Financial Statements 9-24 Consolidated Statements of Financial Position Consolidated Statements of Loss and Comprehensive Loss Consolidated Statements in Shareholders' Deficiency Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF PASCAL BIOSICENCES INC. Opinion We have audited the consolidated financial statements of Pascal Biosciences Inc. (the "Company"), which comprise: the consolidated statements of financial position as at November 30, 2022 and 2021; the consolidated statements of loss and comprehensive loss for the years then ended; the consolidated statements of changes in shareholders' deficiency for the years then ended; the consolidated statements of cash flows for the years then ended; and the notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at November 30, 2022 and 2021, and its consolidated financial performance and consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS"). Basis for Opinion We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss of $480,280 during the year ended November 30, 2022 and, as of that date, the Company's working capital deficiency is $832,380. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. Other Information Management is responsible for the other information. The other information comprises Management's Discussion and Analysis. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. VANCOUVER LANGLEY NANAIMO SMYTHE LLP | smythecpa.com 1700 475 Howe St 600 19933 88 Ave 201 1825 Bowen Rd Vancouver, BC V6C 2B3 Langley, BC V2Y 4K5 Nanaimo, BC V9S 1H1 T: 604 687 1231 T: 604 282 3600 T: 250 755 2111 F: 604 688 4675 F: 250 984 0886 2 F: 604 357 1376 We obtained Management's Discussion and Analysis prior to the date of this auditors' report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditors' Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. SMYTHE LLP | smythecpa.com VANCOUVER LANGLEY NANAIMO 1700 475 Howe St 600 19933 88 Ave 201 1825 Bowen Rd Vancouver, BC V6C 2B3 Langley, BC V2Y 4K5 Nanaimo, BC V9S 1H1 T: 604 687 1231 T: 604 282 3600 T: 250 755 2111 F: 604 688 4675 F: 250 984 0886 3 F: 604 357 1376 Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. The engagement partner on the audit resulting in this independent auditors' report is Michelle Chi Wai So. Chartered Professional Accountants Vancouver, British Columbia February 23, 2023 SMYTHE LLP | smythecpa.com VANCOUVER LANGLEY NANAIMO 1700 475 Howe St 600 19933 88 Ave 201 1825 Bowen Rd Vancouver, BC V6C 2B3 Langley, BC V2Y 4K5 Nanaimo, BC V9S 1H1 T: 604 687 1231 T: 604 282 3600 T: 250 755 2111 F: 604 688 4675 F: 250 984 0886 4 F: 604 357 1376 Pascal Biosciences Inc. Notes 2022 2021 Consolidated Statements of Financial Position $ $ (Expressed in Canadian Dollars) 4 As at November 30: 5 8,370 - 3,245 3,192 ASSETS 6, 10 7,208 142,007 Current 10 18,823 145,199 Cash 7 - 9,989 Prepaid expenses 7 18,823 155,188 Receivables 7 Total current assets - 7,759 626,586 588,944 Equipment 224,617 Total assets 49,780 851,203 LIABILITIES 646,483 Current liabilities 111,725 962,928 - Bank indebtedness 646,483 Accounts payable and accrued liabilities Short-term loan payable 13,052,100 13,026,100 - 46,000 Total current liabilities 424,152 712,851 Accounts payable (14,420,357) (14,276,246) Total liabilities (944,105) (491,295) SHAREHOLDERS' DEFICIENCY Equity attributable to shareholders 18,823 155,188 Share capital "Terry Pearson" Shares to be Issued _________________________ Reserves Director Deficit Total shareholders' deficiency Total liabilities and shareholders' deficiency Approved on behalf of the Board: "Patrick W. Gray" _________________________ Director The accompanying notes are an integral part of these consolidated financial statements. 5 Pascal Biosciences Inc. Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars) For the years ended November 30 Notes 2022 2021 General and administrative expenses 5 93,659 68,978 Accounting and audit fees 10 38,459 71,293 Administrative and general office 4, 10 16,325 Amortization 8,294 Bank charges and interest 4 3,901 5,585 Consulting fees 7, 10 3,306 132,348 Salaries and benefits 232,821 291,607 Foreign exchange loss 4 25,698 Insurance 5 19,848 2,284 Investor relations and marketing 6 (4,683) 40,280 Legal fees 19,673 108,947 Research and development (48,628) 16,522 Share-based payments 47,470 57,775 Transfer agent, listing and filing fees 17,937 200,027 Travel and entertainment (754) 26,188 Total general and administrative expenses (457,001) Other Income 49 Bad debt expense (129,477) (1,038,208) Interest income 1,402 Gain on sale of equipment 7,281 (50,723) Gain on debt settlement - 97,515 Net loss and comprehensive loss for the year (480,280) - (1,088,931) Loss per share, basic and diluted (0.01) Weighted average common shares outstanding - basic and diluted (0.02) 65,546,824 63,484,358 The accompanying notes are an integral part of these consolidated financial statements. 6 Pascal Biosciences Inc. Consolidated Statements in Shareholders' Deficiency (Expressed in Canadian Dollars) Common Shares Option Total Number of Shareholders' Reserve Shares Amount Shares to be Deficit Deficiency Issued $ 887,921 Balance, November 30, 2020 57,594,769 $ $ $ $ Shares issued for cash 7,500,000 12,331,652 - 9,500 (13,571,912) (352,339) Share issuance costs - - - Shares to be issued in lieu of salaries - 740,500 - - - 750,000 Share-based payments - (46,052) - (46,052) Fair value transfer on expiry and cancellation 46,000 200,027 - of options - - - - 46,000 Net loss for the year - - - (384,597) 200,027 65,094,769 - Balance, November 30, 2021 - - - 384,597 - Share issuance costs 500,000 - 46,000 712,851 (1,088,931) (1,088,931) Shares issued in lieu of salaries - 13,026,100 - Share-based payments - (20,000) (46,000) - (14,276,246) (491,295) Fair value transfer on expiry of options - 46,000 - - (20,000) Net loss for the year 65,594,769 - - 47,470 - - - - (336,169) - 47,470 Balance, November 30, 2022 - - - 13,052,100 - 336,169 424,152 (480,280) (480,280) (14,420,357) (944,105) The accompanying notes are an integral part of these consolidated financial statements. 7 Pascal Biosciences Inc. 2022 2021 Consolidated Statements of Cash Flows $ $ (Expressed in Canadian Dollars) For the years ended November 30: (480,280) (1,088,931) Cash provided by (used in): 8,294 16,325 Operating activities: 47,470 200,027 (97,515) Net loss for the year (7,281) - Items not involving cash: - 46,000 Amortization 129,477 50,723 Share-based payments Gain on debt settlement (53) 7,406 Gain on sale of equipment 5,322 (108,928) Shares issued for services 246,882 Bad debt expense (147,684) 262,450 (614,928) Changes in non-cash working capital: 8,976 Prepaid expenses - Receivables - Accounts payable and accrued liabilities 174,837 624,500 (20,000) 45,630 Investing activity: 154,837 Proceeds from sale of equipment (46,052) 16,129 624,078 Financing activities: (7,759) Shares issued for cash 9,150 Proceeds from short-term loan 8,370 (16,909) Share issuance costs - (7,759) Net change in cash 48,774 Bank indebtedness, beginning of year (46,000) 125,500 Cash (bank indebtedness), end of year - Supplemental cash flow information: - Short-term loan payable applied to shares issued for cash Shares issued for services applied to accounts payable Shares issued for services applied to share capital The accompanying notes are an integral part of these consolidated financial statements. 8 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) 1. NATURE OF OPERATIONS AND GOING CONCERN Pascal Biosciences Inc. (the "Company") was incorporated on January 28, 2011 pursuant to the Business Corporations Act (British Columbia). On May 24, 2013, the Company acquired all of the issued and outstanding shares of bioMmune Advanced Technologies Inc. ("BAT"), a private company (incorporated on July 5, 2012) formed to commercially exploit a number of patents and patent applications that surround three technologies. On March 27, 2017, the Company incorporated a wholly owned subsidiary in Seattle, Washington, named Pascal Biosciences US, Inc. ("Pascal (US)"). The Company is a Tier 2 Biotechnology Issuer engaged in the research and development of products for the treatment of cancers and for improvement of the immune system, trading on the TSX Venture Exchange (the "Exchange") under the trading symbol "PAS". Subsequent to the year ended November 30, 2022, the Company plans to de-list from the Exchange and list on the Canadian Securities Exchange ("CSE") upon receiving approval (Note 14). The Company's head office is Suite 304, 4000 Mason Road, Seattle, WA 98195. The Company has not generated any revenues and has incurred losses since inception. The Company expects to spend a significant amount of capital to fund research and development. As a result, the Company expects that its operating expenses will increase significantly, and consequently, will require significant revenues to become profitable. Even if the Company does become profitable, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company cannot predict when, if ever, it will be profitable. There can be no assurances that the intellectual property of the Company will meet applicable regulatory standards, obtain required regulatory approvals, be capable of being produced in commercial quantities at reasonable costs, or be successfully marketed. These consolidated financial statements have been prepared under the assumption of a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at November 30, 2022, the Company has a working capital deficiency of $832,380 (2021: $501,284) and reported a net loss of $480,280 (2021: $1,088,931). The Company's ability to maintain its existence is dependent upon the continuing support of its creditors and its success in obtaining new equity financing for its ongoing operations. Financing options available to the Company include equity financings and loans. These conditions indicate the existence of material uncertainties that may cast significant doubt as to the ability of the Company to meet its obligations as they come due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. Realization values of the Company's assets may be substantially different from carrying values as shown in these condensed interim consolidated financial statements and, accordingly, should the Company be unable to continue as a going concern, the adjustments could be material. Since January 2020, the outbreak of the worldwide COVID-19 pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company may face disruption to operations, supply chain delays, travel and trade restrictions, and impacts on economic activity in affected countries can be expected that are difficult to quantify. In addition, the COVID-19 pandemic has created a dramatic slowdown in the global economy. The duration and enduring impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results, condition, and financings (equity and debt) of the Company in future periods. 9 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about by the COVID-19 pandemic's impact on global industrial and financial markets which may reduce share prices and financial liquidity, thereby limiting access to additional capital. 2. STATEMENT OF COMPLIANCE, BASIS OF PRESENTATION (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Accounting Standards, as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements were authorized for issue by the Board of Directors on February 23, 2023. (b) Basis of measurement These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit or loss ("FVTPL"), which are stated at their fair values. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are the same as those disclosed in Note 3. (c) Functional and presentation currency These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its wholly owned subsidiaries, BAT and Pascal (US). 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, BAT and Pascal (US). A subsidiary is an entity in which the Company has control, where control requires exposure or rights to variable returns and the ability to affect those returns through power over the investee. All significant intercompany transactions and balances have been eliminated upon consolidation. (b) Impairment of non-financial assets At the end of each reporting period, the Company reviews the carrying amounts of long-lived assets to determine whether there is an indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment charge (if any). 10 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) The recoverable amount used for this purpose is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its recorded amount, the recorded amount of the asset is reduced to its recoverable amount. An impairment charge is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to a maximum amount equal to the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. (c) Research and development costs Research costs, including costs for new patents and patent applications, are expensed in the period in which they are incurred. Development costs are expensed in the period in which they are incurred unless certain criteria, including technical feasibility, commercial feasibility, intent and ability to develop and use the technology, are met for deferral and amortization. No development costs have been deferred to date. (d) Government assistance Government grants are recognized when there is reasonable assurance that the Company has met the requirements of the approved grant program and there is reasonable assurance that the grant will be received. Grants that compensate the Company for expenses incurred are recognized in profit or loss in reduction thereof on a systematic basis in the same years in which the expenses are recognized. Grants that compensate the Company for the cost of an asset are applied against the cost of the asset and recognized in profit or loss on a systematic basis over the useful life of the asset. (e) Share capital Common shares issued by the Company are classified as shareholders' equity (deficiency). Incremental costs directly attributable to the issuance of shares are recognized as a deduction from shareholders' equity (deficiency). Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated using the residual method whereby proceeds are allocated first to common shares based on the market trading price of the common shares, and any remaining balance is allocated to warrants. (f) Share-based payments The Company accounts for share-based payments using a fair value-based method with respect to all share-based payments measured and recognized, to directors, employees and non-employees. 11 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) For directors and employees, the fair value of the options is measured at the date of grant. For non-employees, the options are recorded at the fair value of the goods or services received. When the value of the goods or services received in exchange for the share-based payments cannot be reliably estimated, the fair value is measured using the Black-Scholes option pricing model. When options and warrants are exercised, the related amount in the options and warrants reserve is transferred to share capital. When options and warrants expire unexercised, such amounts are transferred to deficit. (g) Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method of tax allocation, deferred income tax assets and liabilities are determined based on differences between financial statement carrying amounts of existing assets and liabilities, and their respective tax basis (temporary differences). Deferred income tax assets and liabilities are measured using the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in operations in the period in which the change is enacted or substantively enacted. The amount of deferred income tax assets recognized is limited to the amount of the benefit that is probable of being realized. (h) Functional currency translation Amounts recorded in foreign currency are translated into Canadian dollars as follows: i. Monetary assets and liabilities, at the rate of exchange in effect as at the consolidated statement of financial position date; ii. Non-monetary assets and liabilities, at the exchange rates prevailing at the time of acquisition of the assets or assumption of the liabilities; and iii. Revenues and expenses (excluding amortization, which is translated at the same rate as the related asset), at the rate of exchange on the transaction date. Gains and losses arising from this translation of foreign currency are included in determination of profit or loss for the year. (i) Significant accounting judgments, estimates and assumptions The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Significant assumptions about the future and other sources of estimated uncertainty that management has made as at the consolidated statements of financial position date that could result in a material adjustment to the carrying amount of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: 12 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) Critical Accounting Estimates Critical accounting estimates and assumptions made by management that may result in a material adjustment to the carrying amounts of assets and liabilities include, but are not limited to, the following: Accounts receivable Accounts receivable is recorded at the estimated recoverable amount, which involves the estimate of uncollectable amounts. Share-based payments The fair value of share-based payments is subject to the limitations of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices and changes in other subjective input assumptions that can materially affect the fair value estimate. Critical Accounting Judgments Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements include, but are not limited to, the following: Going concern The assessment of the Company's ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual research and development programs, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Treatment of research and development expenses The application of the Company's accounting policy for research and development expenditures requires judgment in determining whether it is likely that the future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Significant judgment is required to distinguish between the research and development phases. Estimates and assumptions may change if new information becomes available. If new information suggests future economic benefits are unlikely, the amount capitalized is written off to profit or loss. Recovery of deferred tax assets The measurement of income taxes payable and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws. The actual amount of income taxes only becomes final upon filing and 13 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the consolidated financial statements. Functional currency The functional currency of the Company and its subsidiaries is the currency of their respective primary economic environment, and the Company reconsiders the functional currency if there is a change in events and conditions, which determined the primary economic environment. Discontinued operations Judgment is applied in determining whether disposal groups represent a component of the entity, the results of which should be recorded as discontinued operations in the consolidated statements of loss and comprehensive loss. (j) Earnings (loss) per share The Company presents basic and diluted earnings (loss) per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of shares outstanding during the period. The computation of diluted earnings (loss) per share assumes the exercise or contingent issuance of securities only when such exercise or issuance would have a dilutive effect on the earnings (loss) per share. (k) Equipment Equipment is recorded at cost less accumulated amortization and accumulated impairment losses. Amortization is recorded using the declining-balance method and is intended to depreciate the cost of the assets over their estimated useful lives as follows: Lab equipment 20% Computer equipment 55% (l) Financial instruments Financial assets The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument. The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income or measured at fair value through profit or loss. Financial assets measured at amortized costs A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost. The Company's business model for such financial assets is to hold the assets in order to collect contractual cash flows. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding. 14 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary. The Company's receivables are classified as amortized costs. Financial assets measured at fair value through other comprehensive income ("FVTOCI") A financial asset measured at fair value through other comprehensive income is recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in other comprehensive income. The Company does not have financial assets classified as FVTOCI. Financial assets measured at fair value through profit or loss ("FVTPL") A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises. The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss). The Company's cash is classified as FVTPL. Financial liabilities Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities subsequently measured at amortized cost. All interest-related charges are reported in profit or loss within interest expense, if applicable. The Company's financial liabilities include accounts payable and accrued liabilities; short-term loan payable are classified as financial liabilities subsequently measured at amortized cost. 4. RESEARCH AND DEVELOPMENT During the year ended November 30, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH). This two-year award will fund development of Pascal's antibody drug for Acute Lymphoblastic Leukemia (ALL), which is the most common childhood leukemia. During the year ended November 30, 2022, the Company incurred $39,882 (US$30,802) (2021: $48,162/US$38,418) in research and development expenditures against income of $90,379 (US$69,803) (2021: $48,162/US $38,418) in funding from NIH. On September 14, 2020, the Company and SRSE announced that they have entered into a Collaborative Research Agreement (the "Agreement") to advance Pascal's immune-stimulating cannabinoid PAS-393 into clinical testing in humans. Pascal (US) and SRSE will share their respective technologies to test the cannabinoid PAS-393 in human volunteers, enabling testing of cancer patients treated with checkpoint inhibitors. 15 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) SRSE will provide US$750,000 in research funding to Pascal (US) throughout the 15-month collaboration and will pay for related research expenditures. During the year ended November 30, 2022, the Company received $nil (2021: $563,801/US$500,000) of research funding, which is included in salaries and benefits and has an account receivable of $nil (2021: $127,920/US$100,000). The Company also wrote off accounts receivable of $129,477 (US$100,000) in relation to research funding from SRSE. 5. EQUIPMENT Cost Lab Computer Total Equipment Equipment Balance, November 30, 2020 and 2021 71,629 Dispositions $ 67,228 $ 4,401 $ (1,695) Balance, November 30, 2022 69,934 $ (815) $ (880) $ $ 66,413 $ 3,521 $ Accumulated Amortization $ 44,966 $ 349 $ 45,315 14,398 1,927 16,325 Balance, November 30, 2020 2,276 $ 61,640 Charge for the year $ 59,364 $ 1,245 7,049 3,521 $ 8,294 Balance, November 30, 2021 69,934 Charge for the year $ 66,413 $ 2,125 $ - $ 9,989 Balance, November 30, 2022 $ 7,864 $ - Carrying Value Balance, November 30, 2021 $ - $ Balance, November 30, 2022 During the year ended November 30, 2022, the Company disposed of some computer and lab equipment, which resulted in a gain of $7,281. 6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES On March 21, 2022, the Company entered into a settlement agreement with an arm's length party to settle debt of $116,550 for $30,000 in cash, resulting in a gain on debt settlement of $86,550. On November 30, 2022, the Company entered into a settlement agreement with an arm's length party to settle debt of $53,136 for $42,171 in cash, resulting in a gain on debt settlement of $10,965. 7. SHARE CAPITAL (a) Authorized The authorized share capital of the Company consists of an unlimited number of common shares without par value. 16 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) (b) Common shares Year ended November 30, 2022 On January 4, 2022, the Company issued 500,000 common shares, with a fair value of $46,000 to the former CEO per his employment agreement in lieu of two months' worth of salary. The fair value of $46,000 was recorded as shares to be issued in lieu of salary as at November 30, 2021. Year ended November 30, 2021 On February 8, 2021, the Company closed the first tranche of a private placement by issuing 5,600,000 Units at a price of $0.10 per Unit for gross proceeds of $560,000. Each Unit consists of one common share and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional common share of the Company at a price of $0.15 per share for a period of 24 months from the date of closing, subject to an acceleration clause which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The warrants will expire upon 30 days from the date the Company provides notice in writing to the warrant holders via a news release. The Company paid $32,200 in finder's fees related to the closing of the first tranche. On March 17, 2021, the Company closed the second tranche of the non-brokered private placement by issuing 1,900,000 Units at a price of $0.10 per Unit for gross proceeds of $190,000. Part of the gross proceeds was paid by settling $125,500 of the short-term loan payable. Each Unit consists of one common share and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional common share of the Company at a price of $0.15 for a period of 24 months from the date of closing, subject to an acceleration clause, under which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The warrants will expire upon 30 days from the date the Company provides notice in writing to the warrant holders via a news release. The Company paid $1,365 in finder's fees and incurred cash share issuance costs of $12,487 related to the closing of the second tranche. The Company allocated $9,500 of the gross proceeds to warrants using the residual method. (c) Stock options During the year ended November 30, 2012, the Company adopted a stock option plan, which provides that the Board of Directors may, from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and consultants of the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares and exercisable for five years from the date of grant. 17 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) A summary of the Company's outstanding stock options and changes is as follows: Outstanding, November 30, 2020 Quantity Weighted Average Granted 3,915,000 Exercise Price ($) Expired 3,775,000 Cancelled 0.37 (1,510,000) 0.09 Outstanding, November 30, 2021 (392,000) 0.27 Granted 5,788,000 0.72 Expired 500,000 0.19 0.08 Outstanding, November 30, 2022 (1,613,000) 0.32 Exercisable as at November 30, 2022 4,675,000 0.14 4,550,000 0.14 On February 28, 2022, the Company granted 500,000 stock options to the current CEO. The stock options are exercisable at a price of $0.08 per share, for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 1.73%, expected dividend rate of 0%, expected volatility of 94.02%, and forfeiture rate of 0%. The fair value of the options was calculated at $28,772. The share-based payment expense recognized during the year ended November 30, 2022 was $26,999 (2021: $nil). On September 3, 2021, the Company granted 500,000 stock options to the former CEO. The stock options are exercisable at a price of $0.08 per share, for a period of five years and vest immediately on the grant. The fair value of the stock options was estimated using the Black-Scholes option- pricing model with the following weighted average assumptions: risk-free interest rate of 0.98%, expected dividend rate of 0%, expected volatility of 95.83%, and forfeiture rate of 0%. The fair value of the options was calculated at $31,082. The share-based payment expense recognized during the year ended November 30, 2022 was $nil (2021: $31,082). On April 20, 2021, the Company granted 2,875,000 stock options to directors, employees and consultants of the Company. The stock options are exercisable at a price of $0.08 per share, for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.75%, expected dividend rate of 0%, expected volatility of 94.59%, and forfeiture rate of 0%. The fair value of the options was calculated at $164,478. The share-based payment expense recognized during the year ended November, 2022 was $19,421 (2021: $123,603). On December 18, 2020, the Company granted 400,000 stock options to directors and employees of the Company. The stock options are exercisable at a price of $0.15, for a period of five years and vest quarterly over one year. The fair value of the stock options was estimated using the Black- Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.35%, expected dividend rate of 0%, expected volatility of 94.21%, and forfeiture rate of 0%. The fair value of the options was calculated at $42,621. The share-based payment expense recognized during the year ended November 30, 2022 was $525 (2021: $42,096). 18 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) On May 28, 2019, the Company granted 198,000 stock options to consultants, exercisable at a price of $0.20 per share. The stock options will vest quarterly over 36 months and expire on May 28, 2022. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 1.48%, expected dividend rate of 0%, expected volatility of 87.39%, and forfeiture rate of 0%. The fair value of the options was calculated at $21,651. The share-based payment expense recognized during the year ended November 30, 2022 was $525 (2021: $3,246). Option pricing models require the use of highly subjective estimates and assumptions. The expected volatility assumption is based on the historical and implied volatility of the Company's common share price on the Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options' expected life. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. Based on the best estimate, management applied the estimated forfeiture rate of 0% in determining the expense recorded in the accompanying consolidated statements of operations and comprehensive loss. The options outstanding at November 30, 2022 are as follows: Weighted Weighted Average Average Remaining Contractual Life Expiry Date Outstanding Exercisable Exercise Price (Years) ($) 0.09 January 3, 2023 500,000 500,000 0.08 0.16 January 28, 2023 100,000 100,000 0.29 0.67 800,000 800,000 0.35 3.05 August 2, 2023 400,000 400,000 0.15 3.39 December 18, 2025 2,375,000 2,375,000 0.08 4.25 500,000 375,000 0.08 2.57 April 20, 2026 4,675,000 4,550,000 0.14 February 28, 2022 (d) Share purchase warrants A summary of the Company's outstanding share purchase warrants and changes is as follows: Balance, November 30, 2020 Quantity Weighted Weighted Issued Average Exercise Average 3,793,548 Remaining Balance, November 30, 2021 7,500,000 Price ($) Contractual Life Expired 11,293,548 (Years) (3,793,548) 0.15 Balance, November 30, 2022 7,500,000 0.15 1.31 0.15 1.22 0.15 0.91 0.15 0.00 0.22 19 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) The warrants outstanding at November 30, 2022 are as follows: Expiry Date Number Outstanding Weighted Average Weighted Average February 8, 2023 5,600,000 Remaining 1,900,000 Exercise Price ($) March 17, 2023 7,500,000 0.15 Contractual Life 0.15 (Years) 0.15 0.19 0.29 0.22 8. INCOME TAXES As at November 30, 2022, the Company has non-capital losses of approximately $5,896,000, which may be applied against future income for Canadian income tax purposes and non-capital losses of approximately $6,082,000, which may be applied against future income for US income tax purposes. The potential future tax benefits of these losses have not been recorded in these consolidated financial statements. The losses expire as follows: 2031 $ 2032 13,000 2033 88,000 2034 396,000 2035 528,000 2036 657,000 2037 652,000 2038 796,000 2039 2,599,000 2040 3,348,000 2041 1,300,000 2042 881,000 720,000 11,978,000 20 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) A reconciliation of income tax provision computed at Canadian statutory rates to the reported taxes is as follows: Loss before income taxes 2022 2021 Income tax as statutory rates $ $ (480,280) (1,088,931) Expected income tax recovery 27.00% 27.00% Non-deductible items Temporary differences attributed to: (129,676) (294,011) 12,817 54,007 Change in timing differences Under (over) provided in prior years 30,482 (13,204) Foreign exchange (912) 181,433 Unused tax losses and tax offsets not recognized (88,330) 37,203 Total income tax recovery 175,619 34,572 - - The Company recognizes tax benefits on losses or other deductible amounts generated where the criteria for the recognition of deferred tax assets have been met. The following are the deductible temporary differences for which no deferred tax assets are recognized in the consolidated financial statements, as it is not probable that the deferred tax assets will be realized in the future: Non-capital losses carried forward 2022 2021 Equipment, patents and licenses $ $ Share issuance costs Cumulative eligible capital 11,978,000 11,258,000 1,615,000 1,649,000 44,000 125,000 69,000 69,000 13,706,000 13,101,000 9. CAPITAL RISK MANAGEMENT The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of any identified business opportunities and to maintain a flexible capital structure for the benefit of its stakeholders. The Company includes shareholders' equity (deficiency), comprised of issued share capital, reserves and deficit in the definition of capital. The Company manages the capital structure and makes adjustments to it in light of changes in the economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, enter into joint venture arrangements, acquire or dispose of assets, or adjust the amount of cash. The Board of Directors does not establish quantitative return on capital criteria for management but rather relies on the expertise of the Company's management to manage its capital to be able to sustain the future development of the Company's business. The Company is not subject to externally imposed capital 21 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) requirements. There were no changes in the Company's approach to capital management during the year ended November 30, 2022. 10. RELATED PARTY TRANSACTIONS The following is a summary of related party transactions that occurred during the years ended November 30, 2022 and 2021: Services provided by: 2022 2021 Key management salaries/fees $ $ Director and officer salaries/fees Share-based payments a) 203,666 307,811 Benefits b) 15,132 417,284 39,937 139,193 18,163 120,799 276,898 985,087 Related parties include: a) Key management salaries include amounts paid to the current CEO, former CEO and the CFO. b) Director and officer salaries include amounts paid to the Vice President of Research and the Vice President of Therapeutic Development. Included in accounts payable and accrued liabilities is $473,595 (2021: $233,820) payable to directors and officers of the Company. The amounts in accounts payable and accrued liabilities are non-interest bearing and due within 30 days except an amount of $24,146 which is due in the next two years. Additionally, there are loans to the Company by a director of the Company totaling $224,617 (US $137,818) (2021: $49,780 /US$34,318). The loan is unsecured, is due on demand and bears no interest. On November 30, 2022, the Company entered into agreements with non-arm's length parties stating that Company will issue 1,204,245 common shares of the Company and $5,000 in cash to settle debt of $195,840. As at November 30, 2022, the Company has not issued the common shares and the full amount is recorded in accounts payable and accrued liabilities. 11. FINANCIAL INSTRUMENTS (a) Fair value Financial instruments recognized at fair value on the consolidated statements of financial position must be classified in one of the following three fair value hierarchy levels: Level 1 measurement based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities; Level 2 measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability; or Level 3 measurement based on inputs that are not observable (supported by little or no market activity) for the asset or liability. 22 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) As at November 30, 2022 and 2021, the Company's financial instruments are comprised of cash, receivables, bank indebtedness and accounts payable and accrued liabilities. The carrying amounts reported in the consolidated statements of financial position for cash, receivables, short-term loan payable, and accounts payable and accrued liabilities approximate fair values due to the short- term maturities of these financial instruments. (b) Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The Company considers its exposure to credit risk to be low, as its cash is deposited with a large financial institution with a strong credit rating. During the year ended November 30, 2022, the Company recorded a provision of $129,477 against receivables from SRSE. (c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meets its financial obligations as they become due. The Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due. At November 30, 2022, the Company had cash of $8,370 (2021: $nil) available to apply against short-term business requirements and current liabilities of $851,203 (2021: $646,483). All of the liabilities presented as accounts payable and accrued liabilities are due within 90 days of November 30, 2022. The short-term loan payable is due on demand. (d) Currency risk The Company is exposed to currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than the Canadian dollar. The Company does not manage currency risks through hedging or other currency management tools. As at November 30, 2022 and 2021, the Company's net exposure to foreign currency risk is as follows: US dollars 2022 2021 $ $ Cash (Bank indebtedness) 6,169 (8,140) Accounts receivable - Accounts payable 100,000 Short-term loan payable (233,320) (265,944) (99,818) (34,318) Net exposure to foreign currency risk (326,969) (208,402) Canadian dollar equivalent (441,670) (266,588) Based on the above net foreign currency exposure, and assuming all other variables remain constant, a 7% weakening or strengthening of the Canadian dollar against the US dollar would have an immaterial effect on the Company's net loss and comprehensive loss. 23 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2022 and 2021 (Expressed in Canadian Dollars) (e) Other price risk Other price risk is the risk that future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk. 12. SEGMENTED INFORMATION The Company has one operating segment, biotechnology research and development, with lab and computer equipment in the United States of America. The Company closed down its biotechnology research and development segment subsequent to the year (Note 14). 13. CONTINGENCY On February 8, 2022, the Company received a Notice of Civil Claim against the Company from a former officer of the Company for damages due to a breach of contract and wrongful termination. The claim against the Company is for 500,000 common shares of the Company to be issued to the former officer, punitive damages, interest and costs. The 500,000 common shares with the fair value of $46,000 were issued during the year ended November 30, 2022. No other amounts have been accrued in respect of this claim. On January 19, 2023, the Company received a Notice of Application from the former officer. Given the nature of the claim, it is not currently possible for the Company to predict the outcome or reasonably estimate the possible financial effect of damages in connection with the Notice of Application issued on January 19, 2023. No amounts have been accrued in respect of this claim. 14. EVENTS SUBSEQUENT TO THE YEAR On December 30, 2022, the Company entered into an agreement with a non-arm's length party to settle debt of $402,209 by issuing 5,027,613 common shares of the Company at a deemed price of $0.08 per share. Transaction with SRSE On February 11, 2023, the Company signed an asset purchase agreement (the "Agreement") with SRSE to acquire from SRSE the assets comprising THC Essentials. The purchase price of US$1,125,000 will be paid as follows: (i) a secured promissory note of US$500,000, bearing interest at 7.5% per annum payable 13 months from the closing date, (ii) an aggregate of the greater of 3,555,000 post-consolidation shares and 9.9% of the number of post-consolidation shares Pascal has issued and outstanding on the listing date, and (iii) US$625,000 payable at the closing of the transaction. The Company will sign a promissory note and a security agreement which secures the Company assets until the US$500,000 plus interest of 7.5% is paid. The closing of the transaction is conditional of the Company listing on the CSE. Subsequent to the year, the Company closed down its research labs and stopped its research and development activities related to cancer programs. The Company evaluated the change in their business in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, and determined that it did not meet the definition of discontinued operations as it did not represent a separate major line of business. 24 Schedule B Management discussion and analysis of the of Financial Condition and Results of Operations for the Financial year ended November 30, 2022 of Nevis Brands Inc. (formerly Pascal Biosciences Inc.) PASCAL BIOSCIENCES INC. Suite 304, 4000 Mason Road, Seattle WA 98195 Form 51-102F1 Management's Discussion & Analysis of Financial Condition and Results of Operations for the Financial Year Ended November 30, 2022 Date: February 23, 2023 Management's Discussion and Analysis The following management's discussion and analysis (MD&A) of the financial information of Pascal Biosciences Inc. (the "Company") and results of operations should be read in conjunction with the Company's audited consolidated financial statements for the year ended November 30, 2022. These documents are intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as forward-looking statements relating to future performance. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and include the operating results of the Company. This MD&A was reviewed by the Audit Committee and subsequently approved and authorized for issue by the Board of Directors on February 23, 2023. The information contained within this MD&A is current to February 23, 2023. The Company's critical accounting estimates, significant accounting policies and risk factors have remained substantially unchanged and are still applicable to the Company unless otherwise indicated. All amounts are expressed in Canadian Dollars unless noted otherwise. Forward-Looking Statements This MD&A contains forward-looking statements within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature are forward-looking, and the words "believe," "expect," "plan," "may," "will," "could," "leading," "intend," estimate," or words of a similar nature are generally intended to identify forward-looking statements. Forward-looking statements in this MD&A include, but are not limited to, statements with respect to the Company's: dot expected future loss and accumulated deficit levels; dot projected financial position and estimated cash burn rate; dot expectations about the timing of achieving milestones and the cost of development programs; dot requirements for, and the ability to obtain future funding on favourable terms or at all; dot projections for the development of our core technologies, particularly with respect to the timely and successful completion of trials and availability of results from such studies and efficacy; dot expectations about its product's safety and efficacy; dot expectations regarding the progress and the successful and timely completion of the various stages of regulatory processes; dot ability to secure strategic partnerships with larger pharmaceutical and biotechnology companies; dot expectations regarding the acceptance of our products and technologies by the market; 1 dot ability to retain and access appropriate staff, management and expert advisors; and dot expectations with respect to existing and future corporate alliances and licensing transactions with third parties, and the receipt and timing of any payments to be made by the Company or to the Company in respect of such arrangements. All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but rather on management's expectations regarding future activities, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, known and unknown, that contribute to the possibility that the predictions, forecasts, projections or other forward-looking statements will not occur. In evaluating forward-looking statements, readers should specifically consider various factors, including the risks outlined under the heading "Risk Factors" in this MD&A. Some of these risks and assumptions include, among others: dot substantial fluctuation of losses from quarter to quarter and year to year due to numerous external risk factors, and anticipation that the Company will continue to incur significant losses in the future; dot uncertainty as to the Company's ability to raise additional funding to support operations; dot the Company's ability to generate product revenue to maintain our operations without additional funding; dot the risks associated with the development of the Company's product candidates which are at early stages of development; dot reliance on third parties to plan, conduct and monitor our pre-clinical studies and clinical trials; dot the Company's product candidates may fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or may not otherwise produce positive results; dot risks related to filing Investigational New Drug applications (INDs), to commence clinical trials and to continue clinical trials if approved; dot the risks of delays and inability to complete clinical trials due to difficulties involved in enrolling patients; dot competition from other biotechnology and pharmaceutical companies; dot the Company's reliance on the capabilities and experience of its key executives and scientists and the resulting loss of any of these individuals; dot the Company's ability to adequately protect trade secrets; dot the Company's ability to source and maintain licenses from third-party owners; and dot the risk of patent-related litigation. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements. Any forward-looking statements represent estimates only as of the date of this MD&A and should not be relied upon as representing estimates as of any subsequent date. The Company undertakes no obligation to update any forward- looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as may be required by securities legislation. 2 Overview The Company was incorporated on January 28, 2011 pursuant to the Business Corporations Act (British Columbia). On May 24, 2013, the Company acquired all the issued and outstanding shares of bioMmune Advanced Technologies Inc. ("BAT"), a private company (incorporated on July 5, 2012) formed to commercially exploit a number of patents and patent applications that surround three technologies. On March 27, 2017, the Company incorporated a wholly owned subsidiary in Seattle, Washington, named Pascal Biosciences US, Inc. ("Pascal (US)"). The Company is a Tier 2 Biotechnology Issuer targeting therapies for serious diseases. Pascal is developing treatments for cancer with targeted therapies for glioblastoma and acute lymphoblastic leukaemia. In addition, the Company is developing cannabinoid-based therapeutics for application to control cancer and COVID-19. Pascal's portfolio includes a small molecule therapeutic, PAS-403, that the Company is advancing into clinical trials for the treatment of glioblastoma, and PAS-393, an immune-stimulatory cannabinoid to be used in combination with checkpoint inhibitor therapy for cancer treatment. The Company trades on the TSXV Exchange under the trading symbol "PAS". Subsequent to the year ended November 30, 2022, the Company plans to de-list from the Exchange and list on the Canadian Securities Exchange ("CSE") upon receiving approval. Additional information relating to the Company can be found on the SEDAR website at www.sedar.com. Overall Performance Research and Development In March 2017, Pascal Biosciences (US), Inc. began operating a research and development lab in Seattle, Washington. The Company currently has one full-time employee: the interim CEO and the Chairman of the Board of Directors. To contribute to research efforts during the coronavirus pandemic, Pascal scientists searched for compounds, including cannabinoids, that have activity against SARS-CoV-2 in cell-based assays. On July 14, 2020, the Company announced that it has discovered certain cannabinoids that block replication of SARS-CoV-2, the coronavirus that causes COVID-19. The best cannabinoid tested had potency similar to that of remdesivir, an approved drug from Gilead that decreases recovery time for COVID-19 patients. On September 14, 2020, the Company and SRSE Technology Corporation ("SRSE") announced that they entered into a Collaborative Research Agreement (the "Agreement") to advance Pascal's PAS-393, an immune-stimulating cannabinoid for cancer treatment, into clinical testing. Under the Agreement, Pascal and SRSE shared their respective technologies to optimize both the cannabinoid and its formulation, aiming ultimately to test PAS-393 in cancer patients treated with checkpoint inhibitors. This partnership leveraged SRSE's industry-leading formulation technology with Pascal's proprietary cannabinoid molecule for testing in clinical trials. The Agreement was anchored by Pascal's intellectual property which covers the use of cannabinoids in cancer patients treated with checkpoint inhibitors. SRSE provided US $650,000 in research funding to Pascal throughout the 15-month collaboration and paid for related research expenditures, which was applied against salaries. The relative success of this agreement has the Company considering an increased focus on collaborative and contract research to offset the cost of internal programs. On September 22, 2020, the Company confirmed that certain cannabinoids block SARS-CoV-2 replication in two different assays and subsequently demonstrated the effect in two additional in vitro models of infection. Pascal believes it is the first to identify a cannabinoid that directly inhibits replication of the virus, and has applied for patent protection for this unique discovery. The data suggest that a Pascal-identified cannabinoid has the potential to limit the severity and progression of COVID-19. On March 18, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH). This two-year award will fund development of Pascal's antibody drug for B cell Precursor Acute Lymphoblastic Leukaemia (ALL), which is the most common childhood leukaemia. On February 11, 2023, the Company signed an asset purchase agreement (the "Agreement") with SoRSE to acquire from SoRSE the assets comprising THC Essentials. The purchase price of US$1,125,000 will be paid as follows: (i) a secured promissory note of US$500,000, bearing interest at 7.5% per annum payable 13 months from the closing date, (ii) an aggregate of the greater of 3,555,000 post-consolidation shares and 9.9% of the number of post-consolidation shares Pascal has issued and outstanding on the listing date, and (iii) US$625,000 payable at the closing of the transaction. The Company will sign a promissory note and a security agreement which secures the Company assets until the U.S. $500,000 plus interest of 7.5% is paid. The closing of the transaction is conditional of the Company listing on the CSE. 3 Subsequent to November 30, 2022, the Company closed down its research labs and stopped its research and development activities related to cancer programs. The Company evaluated the change in their business in accordance with IFRS 5, Non- current Assets Held for Sale and Discontinued Operations, and determined that it did not meet the definition of discontinued operations as it did not represent a separate major line of business. Please refer to "Core Technologies" below for updates on the Company's research and development. Share Capital On December 18, 2020, the Company granted 400,000 stock options to directors and employees of the Company. The stock options are exercisable at a price of $0.15, for a period of five years and vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.35%, expected dividend rate of 0%; expected volatility of 94.21% and forfeiture rate of 0%. The fair value of the options was calculated at $42,621. On February 8, 2021, the Company closed the first tranche of a private placement by issuing 5,600,000 Units for gross proceeds of $560,000. Each Unit consists of one common share and one common share purchase warrant (each a "Warrant"). Each Warrant entitles the holder to purchase one additional common share of the Company at a price of $0.15 per share for a period of 24 months from the date of closing, subject to an acceleration clause, under which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The Warrants will expire upon 30 days from the date the Company provides notice in writing to the Warrant holders via a news release. The Company paid $32,200 in finder's fees related to the closing of the first tranche. On March 17, 2021, the Company closed the second tranche of a non-brokered private placement by issuing 1,900,000 Units at a price of $0.10 per Unit for gross proceeds of $190,000. Each Unit consists of one common share and one common share purchase warrant (each a "Warrant") Each Warrant entitles the holder to purchase one additional common share of the Company at a price of $0.15 per share for a period of twenty-four months from the date of closing, subject to an acceleration clause, under the exercise acceleration clause, which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The Warrants will expire upon 30 days from the date the Company provides notice in writing to the Warrant holders via a news release. The Company paid $1,365 in finder's fees and incurred cash share issuance costs of $12,487 related to the closing of the second tranche. The Company allocated $9,500 of the gross proceeds to warrants using the residual method. On April 20, 2021, the Company granted an aggregate of 2,875,000 stock options to directors, employees and consultants, pursuant to the Company's stock option plan and subject to the policies of the TSX Venture Exchange. The stock options are exercisable at a price of $0.08 per share, exercisable for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.75%, expected dividend rate of 0%; expected volatility of 94.59% and forfeiture rate of 0%. The fair value of the options was calculated at $164,478. On September 3, 2021, the Company granted 500,000 stock options to the Company's former CEO. The stock options are exercisable at a price of $0.08 per share, exercisable for a period of five years and vest immediately on grant. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.98%, expected dividend rate of 0%; expected volatility of 95.83% and forfeiture rate of 0%. The fair value of the options was calculated at $31,082. On January 4, 2022, the Company issued 500,000 common shares, with a fair value of $46,000 to the former CEO per his employment agreement in lieu of two months' worth of salary. The fair value of $46,000 was recorded as shares to be issued in lieu of salary as at November 30, 2021. On February 28, 2022, the Company granted 500,000 stock options to the current CEO, Brian Bapty. The stock options are exercisable at a price of $0.08 per share, for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 1.73%, expected dividend rate of 0%, expected volatility of 94.02%, and forfeiture rate of 0%. The fair value of the options was calculated at $28,772. 4 During the year ended November 30, 2022, 1,613,000 stock options, with a weighted average exercise price of $0.32 per share expired. As a result, the Company transferred $336,169 from share-based payment reserve to retained earnings. Management On March 22, 2021, the Company announced the resignation of a director of the Company, Dr. Karoly Nikolich and the appointment of Kevin Egan to the position of Chief Business Officer. In addition, Judi Dalling retired as CFO as at April 30, 2021. On June 16, 2021, the Company announced the appointment of Hardy Forzley as Chief Financial Officer of the Company. On August 31, 2021, Mr. Mark van der Horst retired as Vice President, Corporate Communications, and Kevin Egan retired as Chief Business Officer. On September 7, 2021, the Company announced the appointment of Rob Gietl as Chief Executive Officer, President and Director. Mr. Gietl succeeded Dr. Patrick Gray, who now is Chairman of the Board of Directors. On February 8, 2022, the Company received a Notice of Civil Claim against the Company from a former officer of the Company for damages due to a breach of contract and wrongful termination. The claim against the Company is for 500,000 common shares of the Company to be issued to the former officer, punitive damages, interest and costs. The 500,000 common shares were issued during the year ended November 30, 2022. No other amounts have been accrued in respect of this claim. On January 19, 2023, the Company received a Notice of Application from a former officer, seeking damages due to a breach of contract and wrongful termination. Given the nature of the claim, it is not currently possible for the Company to predict the outcome or reasonably estimate the possible financial effect of damages in connection with the Notice of Application issued on January 19, 2023. On February 28, 2022, the Company appointed Dr. Brian Bapty as its new Chief Executive Officer, President and Director and granted him 500,000 stock options. The stock options are exercisable at a price of $0.08 per share, for a period of five years, vesting quarterly over one year. On November 30, 2022, Dr. Brian Bapty ceased to be Chief Executive Officer, President and Director and Dr. Patrick Gray was appointed interim Chief Executive Officer and President. On March 21, 2022, the Company entered into a settlement agreement with an arm's length party to settle debt of $116,550 for $30,000 in cash, resulting in a gain on debt settlement of $86,550. On November 30, 2022, the Company entered into a settlement agreement with an arm's length party to settle debt of $53,136 for $42,171 in cash, resulting in a gain on debt settlement of $10,965. On November 30, 2022, the Company entered into agreements with non-arm's length parties stating that Company will issue 1,204,245 common shares of the Company and $5,000 in cash to settle debt of $195,840. On December 30, 2022, the Company entered into an agreement with a non-arm's length party to settle debt of $402,209 by issuing 5,027,613 common shares of the Company at a deemed price of $0.08 per share. As at the date of this document, the Company has not issued the common shares for debt. Financial Position The audited consolidated statement of financial position as of November 30, 2022 indicates a cash position of $8,370 (2021: $nil). Current assets are comprised of prepaid expenses of $3,245 (2021: $3,192) and accounts receivable of $7,208 (2021: $142,007). Non-current assets at November 30, 2022 are comprised of computer and lab equipment of $nil (2021: $9,989). Current liabilities at November 30, 2022 total $851,203 (2021: $646,483), comprised of bank indebtedness of $nil (2021: $7,759), accounts payable and accrued liabilities of $626,586 (2021: $588,944) and short-term loan due to a related party of $224,617 (2021: $49,780). Non-current liabilities at November 30, 2022 are comprised of long-term accounts payable of $111,725 (2021: $nil). Shareholders' equity is comprised of share capital of $13,052,100 (2021: $13,026,100), shares to be issued of $nil (2021: $46,000) and reserves of $424,152 (2021: $712,851). 5 As at November 30, 2022, the Company had a working capital deficit of $832,380 (2021: $501,284). The weighted average number of common shares outstanding, basic and diluted as at November 30, 2022 was 65,546,824 (2021: 63,484,358). Core Technologies 1. Cannabinoid-based therapeutic for glioblastoma: Glioblastoma is an aggressive type of cancer that arises in cells called astrocytes that support nerve cells. It can occur in the brain and spinal cord. It is a devastating cancer due to limited treatment options, its high rate of recurrence and aggressive nature. Glioblastoma strikes approximately 15,000 patients each year in North America and the median survival time is only 14 months. Therapies for glioblastoma are limited to surgery, radiation, and the chemotherapeutic drug temozolomide. Pascal's PAS-403 is a cannabinoid-derived molecule that kills patient-derived glioblastoma cells. PAS-403 is a mitotic inhibitor that blocks cell division. Several mitotic inhibitors already approved for cancer treatment show substantial benefit in reducing solid tumour burden when combined with other chemotherapeutic. However, unlike PAS-403, none of these drugs cross the blood-brain barrier and therefore have no activity on glioblastoma cells. PAS-403 kills cultured glioblastoma cells from patients and is very effective in a mouse model of glioblastoma. The alkylating drug, temozolomide, is currently licenced and used as a first line treatment for glioblastoma. Since temozolomide has a different mechanism of action compared to PAS-403, the two drugs should synergize and will possibly provide a superior method of treatment. Pascal has developed a manufacturing process for PAS-403 and completed much of the preclinical pharmacology efforts required for filing an Investigational New Drug with the FDA. 2. VpreB antibody for the treatment of B cell precursor acute lymphoblastic leukaemia (ALL) and other leukaemias and lymphomas: ALL is the most common childhood cancer, with the incidence peaking at approximately two to five years of age. In addition, ALL affects some older individuals with approximately 45% of ALL patients above age twenty. On an annual basis, more than 6,500 people in North America and approximately 40 cases per 1,000,000 people worldwide, present with the disease. Current treatment practices utilize harsh chemotherapy regimens. While effective in many patients, the near and long-term consequences of chemotherapy can be disabling. Therefore, there is a need for new strategies to address relapsed disease and ultimately replace chemotherapy as a frontline treatment. ALL is caused by genetic lesions that arise during the earliest stages of B lymphocyte development. Pascal has derived and selected monoclonal antibodies against a unique target, the pre-B Cell Receptor ("Pre-BCR"), that is specifically expressed on the surface of these pre-B cells and not expressed during subsequent stages of B cell development. The pre-BCR is also present on ALL cells. Therefore, in addition to killing the leukaemia cells, Pascal's antibodies, directed against one of the components of the pre-BCR, VpreB, should only deplete the earliest stages of developing B cells, leaving more mature B cells available to combat infection by their normal role-secretion of antibodies. Careful direct examination of large gene expression databases and exploration of the scientific literature revealed the unexpected expression of VpreB mRNA by tumour cells of subsets of acute myelogenous leukaemia (AML) and non- Hodgkin lymphoma ("NHL") patients. Experiments to screen cancer cells from large panels of these patients by immunocytochemistry using the VpreB antibody are planned. If the molecular data are confirmed at the protein level, a VpreB biomarker assay will be developed for identifying AML and NHL patients that may also benefit from VpreB antibody treatment. 3. Novel natural compounds that are able to increase antigen expression on the surface of tumour cells, making them more visible to the immune system. These molecules will be useful as cancer therapeutics by enabling increased killing of cancer cells by the immune system. Many cancer cells, including those that are metastatic, escape immune recognition and elimination after selection by immune editing whereby tumour antigens are not properly displayed on the cell surface and thus can not be properly recognized by the immune system. These escape variants do not express sufficient Major Histocompatibility Complex I ("MHC-I") molecules and their associated tumour antigen peptides at the cell surface. Thus, these tumour cells evade recognition by host immune surveillance mechanisms, making them resistant to most immunotherapeutic approaches for elimination of cancer. In February 2014, the Company entered into an agreement with the University of British Columbia ("UBC") whereby UBC conducted research to identify compounds that increase the expression of the Transporter of Antigen Processing ("TAP1") protein, a part of the antigen processing pathway, critical for MHC-I expression. Several 6 compounds that restored the presentation of tumour antigens at the cancer cell surface were identified. By developing a high-throughput screening assay applied to extracts from deep-sea sponges, the Company identified several unique molecules that induce antigen presentation in metastatic prostate and lung carcinomas. From these extracts, new chemical structures that exhibit efficient restoration of MHC-I expression were identified. Subsequently, screening of additional extracts and purified compounds was performed, and several more active compounds were identified. One compound, curcuphenol, was initially identified as a leading candidate for immune upregulation. Searching the chemical structure of curcuphenol against large chemical databases revealed that some structural elements of curcuphenol are found in certain cannabinoids, compounds found in extracts of the Cannabis sativa plant. Four hundred cannabinoids were tested for their ability to induce MHC-I expression in human cancer cell lines. Several distinct cannabinoids registered positive in this assay, with the most potent inducing MHC-I expression levels to approximately half of the levels induced by interferon gamma, a natural powerful physiologic inducer of MHC-1. Specifically, Pascal has identified a natural cannabinoid with good potency and pharmacologic properties. Pascal intends to develop this cannabinoid, PAS-393, as a therapeutic compound that will render cancer cells more visible to immune surveillance. Such a molecule has the potential to increase cancer cell recognition, thus dramatically increasing the efficacy of checkpoint inhibitors (therapeutic monoclonal antibodies) which release the cancer killing effects of cytolytic T cells. 4. Cannabinoid therapeutic for treating COVID-19: The coronavirus pandemic has triggered a massive, worldwide effort to develop effective vaccines and treatments for COVID-19. Despite the previous global focus on cancer research and treatment, the tremendous disruption of entire economies and health care systems worldwide stimulated Pascal's scientists to direct efforts towards a cannabinoid-based treatment for COVID-19. The decision was made to test a variety of cannabinoids for effects on the SARS-CoV-2 coronavirus since previously published data suggest that some cannabinoids have anti-viral functions. In addition, it has been shown that cannabinoids can upregulate major histocompatibility complex Type 1 (MHC-I) molecules that are expressed on the surface of tumour cells. As has been demonstrated in several infection models, this MHC upregulation also helps the immune system identify virus-infected cells. It has been observed that cannabis extracts downregulate the expression of receptors for the SARS- CoV-2 virus. Furthermore, some cannabinoids have immunomodulatory activity that can mitigate the uncontrolled inflammatory response known as a "cytokine storm" and subsequent upregulation of inflammatory proteins, which are often seen in the most severe COVID-19 patients. Since cannabinoids have the potential to limit the severity and progression of COVID-19, selected compounds were tested in a cell-based assay. It was found that one of Pascal's lead cannabinoids inhibits SARS-CoV-2 growth in primate cells in vitro. Pascal has since confirmed this SARS-CoV-2 anti-viral activity in four different laboratories, using different assay conditions and different strains of SARS-CoV-2. Significantly, the potency of the Pascal-selected cannabinoid in this assay was similar to that of remdesivir, a drug authorized by the FDA for emergency treatment of COVID-19. These initial observations illuminate the potential of cannabinoids for the treatment of COVID-19. Our initial results suggest that cannabinoids may act upon the virus or the virus-infected host cells cell to reduce virus infectivity or viral replication. However, it is likely that the scope of the benefit to the patient will extend far beyond the direct effect on the virus-cell interaction. The capacity of certain cannabinoids to restore cancer cell recognition by the immune system has been previously demonstrated. Many viruses, as with certain cancers, render their host cells invisible to immune recognition to protect them from destruction and removal. Cannabinoids may reverse this effect. In addition, cannabinoids are known for their anti-inflammatory properties. Thus, they may benefit the patient, much like dexamethasone does, in the later phase of disease when run-away inflammation is one of the main causes of tissue injury and even death. Patents Intellectual property and other proprietary rights are essential to the Company's business. The Company has filed patent applications to protect technology, inventions and improvements of inventions that are important for the development of the business. In January 2018, the Company filed a provisional patent application, "Cannabinoids and derivatives for promoting immunogenicity of tumour and other infected cells", covering cannabinoid-like compounds that restore immune recognition of cancer cells thus increasing their subsequent destruction. The non-provisional application was filed January 21, 2019 and the Company is continuing to pursue the application. 7 Pursuant to the terms of the license agreement with the University of Washington in October 2018, the Company has retained the patent portfolio surrounding development of a cannabinoid-based product for the treatment of glioblastoma multiforme and brain metastases. The patent "Composition and methods for treating glioblastoma" filed in August 2011 by the University of Washington was granted by the United States Patent and Trademark Office in May 2015 (US Patent Number: 9,034,895) with expiry in November 2031. In August 2018, the University of Washington filed a provisional patent titled "Modified Carbazoles Destabilize Microtubules and Kill Glioblastoma Multiforme Cells and BRAF Mutant Cancers," covering the cannabinoid-based compounds for treatment of glioblastomas and brain metastases. In August 2019, the Company filed a non-provisional patent application for patent protection. The Company is continuing to pursue the application. In July 2019, the Company filed a provisional patent titled "Composition and Methods of Targeting the Pre-B Cell Receptor for the Treatment of Leukaemias and Lymphomas. In July 2020, the Company filed a non-provisional application for patent protection and is continuing to pursue this application. In July 2020, the Company filed a provisional patent titled: "Method of Treating Coronavirus Infections with Cannabinoids and Derivatives". In July 2021, the Company filed a non-provisional application for patent protection and is continuing to pursue this application. Results of Operations During the year ended November 30, 2022, the Company reported a net loss and comprehensive loss of $480,280 ($0.01 basic and diluted loss per share) compared to a net loss and comprehensive loss of $1,088,931 ($0.02 basic and diluted loss per share) for the year ended November 30, 2021. Selected Annual Information The following table provides a brief summary of the Company's financial operations for the three most recently completed financial years. Total Revenues Year Ended Year Ended Year Ended Net Loss and Comprehensive Loss November 30, November 30, November 30, Net Loss per share, basic and diluted Total Assets 2022 2021 2020 Weighted Average Number of Shares Outstanding $nil $nil $nil Shareholders' Equity (Deficit) $480,280 $1,088,931 $1,237,927 $0.01 $0.02 $0.02 $18,823 $155,188 $120,714 65,546,824 63,484,358 55,400,349 (944,105) (491,295) (352,339) During the year ended November 30, 2022, the Company saw significant year over year decreases in share-based payments of $152,557, consulting fees of $129,042, investor relations and marketing of $113,630, and research and development of $106,403 (Please refer to Analysis of Quarterly Results below). Similarly, during the year ended November 30, 2021, the Company saw significant year over year decreases in consulting fees of $84,044, salaries and benefits of $399,930, and research and development of $82,702. Summary of Quarterly Results The following table presents selected quarterly financial information of the Company for the eight most recently completed quarters of operation prepared in accordance with IFRS and expressed in Canadian Dollars. 2022 2021 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 $ $ $ $ $ $ $ $ Revenue - - - - - - - - Net and comprehensive (gain) loss 201,453 94,730 48,633 135,464 402,196 241,275 286,089 159,371 Basic and diluted Loss per share (0.00) (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) 0.00 8 Share-based payments impacts expenses and net and comprehensive loss as follows: Q4 2022: $4,174, Q3 2022: $7,816, Q2 2022: $19,972, Q1 2022: $15,508, Q4 2021: $25,446, Q3 2021: $102,602, Q2 2021: $70,826 and Q1 2021: $1,153. Losses during the most recent three quarters are significantly lower due mainly to reduced salaries and research and development expenses. During Q4 of 2021, the Company received US $50,000 from SRSE, recorded a receivable of US $100,000, pursuant to the collaborative research agreement, and applied these funds against salary expense. The Company recorded a bad debt expense of $129,477 during Q4 2022 and $50,723 during Q4 2021. The Company also recognized a gain on debt settlement of $86,550 during Q2 2022. The Company's significant accounting policies are set out in Note 3 of the audited annual consolidated financial statements as at and for the year ended November 30, 2022. Analysis of Quarterly Results Three Months Ended Year Ended November 30, November 30, Notes 2022 2021 2022 2021 $ $ $ $ Accounting and audit fees 44,719 47,967 93,659 68,978 Administrative and general office 1,812 15,898 38,459 71,293 2,274 16,325 Amortization 827 3,245 8,294 316 908 3,901 5,585 Bank charges and interest 3,306 132,348 23,028 67,296 232,821 291,607 Consulting fees a) 15,963 81,169 25,698 19,848 2,284 Salaries and benefits b) 4,987 4,921 (4,683) 40,280 59 6,022 19,673 108,947 Foreign exchange 69,081 (48,628) 16,522 4,815 9,571 47,470 57,775 Insurance (15,553) 12,645 17,937 200,027 25,446 (754) 26,188 Investor relations and marketing c) 4,174 7,304 129,477 2,814 (1,402) 49 Legal fees - (7,281) 50,723 (13) 50,723 (97,515) Research and development d) 129,477 - - - Share-based payments e) - - - (7,281) - Transfer agent, listing and filing fees (10,965) Travel and entertainment Bad debt expense Interest income Gain on sale of equipment Gain on debt settlement a) Consulting fees: The decrease was mainly due to the resignation of Judi Dalling effective April 30, 2021. Further, there was a reclassification from consulting fees to share issue costs during the year ended November 30, 2022. b) Salaries and benefits: During the year ended November 30, 2022, the Company laid off most of its employees due to cash constraints. In addition, as the 15-month collaboration with SRSE was over, the Company did not receive any funding to offset against salaries. c) Investor relations and marketing: During the year ended November 30, 2022, the Company decreased its investor relations activities due to cash constraints as compared to the year ended November 30, 2021, when there was cash inflow from the proceeds of the private placement. d) Research and development: During the year ended November 30, 2022, research and development was reduced due to cash constraints. During the year ended November 30, 2022, there is a recovery of 48,628 of research and development due to the Company receiving more funding from the NIH grant than expenses incurred. 9 e) Share-based payments: The decrease is due to 500,000 stock options being granted during the year ended November 30, 2022 as compared to 3,775,000 stock options granted during the year ended November 30, 2021. f) Bad debt expense: During the year ended November 30, 2022, the Company recorded a bad debt expense of $129,477 related to research funding from SoRSE that was not received, compared to bad debt expense of $50,723 during the year ended November 30, 2021, related to a legal reimbursement from SoRSE. g) Gain on debt settlement: The Company recorded a gain on debt settlement of $97,515 on debt with multiple arm's length parties, compared to a gain on debt settlement of $nil during the year ended November 30, 2021. Liquidity & Capital Resources The Company has financed its operations to date through the issuance of common shares. Working capital November 30, November 30, Deficit 2022 2021 $ $ (832,380) (501,284) 14,420,357 14,276,246 During the year ended November 30, 2022, net cash used in operating activities was $147,684 (2021: $614,928), comprised of a loss of $480,280 (2021: $1,088,931) net of amortization expense of $8,294 (2021: $16,325), share-based payments of $47,470 (2021: $200,027) gain on debt settlement of $97,515 (2021: $nil), gain on sale of equipment of $7,281 (2021: $nil), shares issued for services of $nil (2021: $46,000), bad debt expense of $129,477 (2021: $50,723), an increase in prepaid expenses of $53 (2021: decrease of $7,406), a decrease in accounts receivable of $5,322 (2021: increase of $108,928), and an increase in accounts payable and accrued liabilities of $246,882 (2021: increase of $262,450). During the year ended November 30, 2022, cash from investing activities was $8,976 (2021: $nil), comprised of proceeds from the sale of equipment. During the year ended November 30, 2022, cash from financing activities was $154,837 (2021: $624,078), comprised of proceeds from short-term loan less share issuance costs (refer to Share Capital above). During the year ended November 30, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH), which will further augment the Company's cash position. This two- year award will fund development of Pascal's antibody drug for Acute Lymphoblastic Leukaemia (ALL). During the year ended November 30, 2022, the Company incurred $39,882 (US$30,802) (2021: $48,162/US$38,418) in research and development expenditures against income of $90,379 (US$69,803) (2021: $48,162/US$38,418) in funding from NIH. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that would potentially affect current or future operations or the financial condition of the Company. 10 Related Party Transactions The following is a summary of related party transactions that occurred during the years ended November 30, 2022 and 2021: Services provided by: 2022 2021 Key management salaries/fees $ $ Director and officer salaries/fees Share-based payments a) 203,666 307,811 Benefits b) 15,132 417,284 39,937 139,193 18,163 120,799 276,898 985,087 Related parties include: a) Key management salaries include amounts paid to the current CEO, former CEO and the CFO b) Director and officer salaries include amounts paid to the Vice President of Research and the Vice President of Therapeutic Development. Included in accounts payable and accrued liabilities is $473,595 (2021: $233,820) payable to directors and officers of the Company. The amounts in accounts payable and accrued liabilities are non-interest bearing and due within 30 days. Additionally, there are loans to the Company by a director of the Company totalling $224,617 (US $137,818) (2021: $49,780 /US$34,318). The loan is unsecured, is due on demand and bears no interest. On November 30, 2022, the Company entered into agreements with non-arm's length parties stating that Company will issue 1,204,245 common shares of the Company and $5,000 in cash to settle debt of $195,840. As at November 30, 2022, the Company has not issued the common shares and the full amount is recorded in accounts payable and accrued liabilities. Contingency On February 8, 2022, the Company received a Notice of Civil Claim against the Company from a former officer of the Company for damages due to a breach of contract and wrongful termination. The claim against the Company is for 500,000 common shares of the Company to be issued to the former officer, punitive damages, interest and costs. The 500,000 common shares with the fair value of $46,000 were issued during the year ended November 30, 2022. No other amounts have been accrued in respect of this claim. On January 19, 2023, the Company received a Notice of Application from the former officer. Given the nature of the claim, it is not currently possible for the Company to predict the outcome or reasonably estimate the possible financial effect of damages in connection with the Notice of Application issued on January 19, 2023. No amounts have been accrued in respect of this claim. Financial Instruments & Other Instruments (a) Fair value Financial instruments recognized at fair value on the consolidated statements of financial position must be classified in one of the following three fair value hierarchy levels: Level 1 measurement based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities; Level 2 measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability; or Level 3 measurement based on inputs that are not observable (supported by little or no market activity) for the asset or liability. As at November 30, 2022 and 2021, the Company's financial instruments are comprised of cash, receivables, bank indebtedness and accounts payable and accrued liabilities. The carrying amounts reported in the consolidated statements of financial position for cash, receivables, short-term loan payable, and accounts 11 payable and accrued liabilities approximate fair values due to the short-term maturities of these financial instruments. (b) Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The Company considers its exposure to credit risk to be low, as its cash is deposited with a large financial institution with a strong credit rating. During the year ended November 30, 2022, the Company recorded a provision of $129,477 against receivables from SoRSE. (c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meets its financial obligations as they become due. The Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due. At November 30, 2022, the Company had cash and cash equivalents of $8,370 (2021: $nil) available to apply against short-term business requirements and current liabilities of $851,203 (2021: $646,483). All of the liabilities presented as accounts payable and accrued liabilities are due within 90 days of November 30, 2022. The short-term loan payable is due on demand. (d) Currency risk The Company is exposed to currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than the Canadian dollar. The Company does not manage currency risks through hedging or other currency management tools. As at November 30, 2022 and 2021, the Company's net exposure to foreign currency risk is as follows: US dollars 2022 2021 $ $ Cash Accounts receivable 6,169 (8,140) Accounts payable - 100,000 Short-term loan (265,944) (233,320) (34,318) (99,818) Net exposure to foreign currency risk (326,969) (208,402) Canadian dollar equivalent (441,670) (266,588) Based on the above net foreign currency exposure, and assuming all other variables remain constant, a 7% weakening or strengthening of the Canadian dollar against the US dollar would have an immaterial effect on the Company's net loss and comprehensive loss. (e) Other price risk Other price risk is the risk that future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk. Risks and Uncertainties Overview An investment in the Company's shares should be considered highly speculative due to the nature of the Company's business and the present stage of its development. In evaluating the company and its business, shareholders should carefully consider, in addition to the other information contained in this management discussion and analysis, the following risk factors. These risk factors are not a definitive list of all risk factors associated with the Company. It is believed that these are the factors that could cause actual results to be different from expected and historical results. Investors should not rely upon forward- looking statements as a prediction of future results. 12 Competition The market for the Company's technology is highly competitive. The Company competes with other research teams who are also examining potential therapeutics with regards to cancer, viral infection, and other disorders. Many of its competitors have greater financial and operational resources and more experience in research and development than the Company. These and other companies may have developed or could in the future develop new technologies that compete with the Company's technologies or even render its technologies obsolete. Competition in the Company's markets is primarily driven by: dot timing of technological introductions; dot ability to develop, maintain and protect proprietary products and technologies; and dot expertise of research and development team. Litigation to Protect Company's Intellectual Property The Company's future success and competitive position depends in part upon its ability to maintain its intellectual property portfolio. There can be no assurance that any patents will be issued on any existing or future patent applications. Even if such patents are issued, there can be no assurance that any patents issued or licensed to the Company will not be challenged. The Company's ability to establish and maintain a competitive position may be achieved in part by prosecuting claims against others who it believes to be infringing its rights. In addition, enforcement of the Company's patents in foreign jurisdictions will depend on the legal procedures in those jurisdictions. Even if such claims are found to be invalid, the Company's involvement in intellectual property litigation could have a material adverse effect on its ability to distribute any products that are the subject of such litigation. In addition, the Company's involvement in intellectual property litigation could result in significant expense, which could materially adversely affect the use responsibilities, whether or not such litigation is resolved in the Company's favour. Clinical testing and Regulatory approval Since the Company's success is dependent on the successful completion of a third party pre-clinical trials, regulatory approval and introduction of its technology into the market and since the Company has completed none of the tasks at this time, the Company does not know if it will be able to complete them. The timing of these events can vary dramatically due to factors such as delays or failures in the Company's clinical trials and the uncertainties inherent in the regulatory approval process. The Company might not be able to obtain the necessary results from its pre-clinical trials or to gain regulatory approval necessary for licensing its technology. The Company's failure to achieve these objectives will mean that an investor will not be able to recoup their investment or to receive a profit on their investment. Intellectual Property The Company's success depends to a significant degree upon its ability to develop, maintain and protect proprietary products and technologies. The Company files patent applications in the United States, Canada, Europe, and selectively in other foreign countries as part of its strategy to protect its proprietary products and technologies. However, patents provide only limited protection of the Company's intellectual property. The assertion of patent protection involves complex legal and factual determinations and is therefore uncertain and expensive. The Company cannot provide assurances that patents will be granted with respect to any of its pending patent applications, that the scope of any of its patents will be sufficiently broad to offer meaningful protection, or that it will develop additional proprietary technologies that are patentable. The Company's current patents could be successfully challenged, invalidated or circumvented. This could result in the Company's patent rights failing to create an effective competitive barrier. Losing a significant patent or failing to get a patent to issue from a pending patent application that the Company considers significant could have a material adverse effect on its business. The laws governing the scope of patent coverage in various countries continue to evolve. The laws of some foreign countries may not protect the Company's intellectual property rights to the same extent as the laws of Canada and the United States. The Company holds patents only in selected countries. Therefore, third parties may be able to replicate technologies covered by the Company's patents in countries in which it does not have patent protection. Legal Proceedings In the course of the Company's business, the Company may from time to time have access to confidential or proprietary information of third parties, and these parties could bring a claim against the Company asserting that it has misappropriated their technologies and had improperly incorporated such technologies into its products. Due to these factors, there remains a constant risk of intellectual property litigation affecting the Company's business. In the future, the Company may be made a party to litigation involving intellectual property matters and such actions, if determined adversely, could have a material adverse effect on the Company. 13 Dependence upon Management Although the Company Issuer is expected to have experienced senior management and personnel, it will be substantially dependent upon the services of a few key personnel. The loss of the services of any of these personnel could have a material adverse effect on the business of the Company. The Company may not be able to attract and retain personnel on acceptable terms given the intense competition for such personnel among high technology enterprises, including biotechnology, and healthcare companies, universities and non-profit research institutions. If it loses any of these persons, or is unable to attract and retain qualified personnel, its business, financial condition and results of operations may be materially and adversely affected. Going Concern The ability of the Company to continue as a going concern is dependent on its ability to generate future profitable operations and to obtain additional debt or equity financing. There can be no assurance that the Company's operations will achieve profitability in the future or that the the Company will be able to successfully obtain financing on commercially reasonable terms or at all. Substantial Capital Requirements and Liquidity Substantial additional funds for the Company's research and development programs will be required. No assurances can be given that the the Company will be able to raise the additional funding that may be required for such activities. To meet such funding requirements, the Company may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations, or even cease its operations. Reliance on Third Parties The Company is relying on a third party to assist it in conducting both pre-clinical and clinical trials. If this third party does not successfully carry out their contractual duties or meet expected deadlines, the Company may not be able to obtain regulatory approval for or commercialize its technology. Unproven market The Company believes that there will be many different applications for its technologies and that the anticipated market for these technologies will continue to expand. However, no assurance can be given that these beliefs will be correct owing, in particular, to competition from existing technologies or new technologies and the yet to be established replication of the Company's pre-clinical results. Limited Operating History The Company has neither a history of earnings nor has it paid any dividends and it is unlikely to pay dividends or enjoy earnings in the immediate or foreseeable future. Conflicts of Interest Certain of the directors and officers of the Company are engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies (including research and development companies) and, as a result of these and other activities, such directors and officers may become subject to conflicts of interest. The Business Corporations Act, (British Columbia) ("BCBCA") provides that in the event that a director has a material interest in a contract or proposed contract or agreement that is material to an issuer, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA. Market risk The Company's securities trade on public markets and the trading value thereof is determined by the evaluations, perceptions and sentiments of both individual investors and the investment community taken as a whole. Such evaluations, perceptions and sentiments are subject to change, both in short term time horizons and longer term time horizons. An adverse change in investor evaluations, perceptions and sentiments could have a material adverse outcome on the Company and its securities. Share Price Volatility and Price Fluctuations In recent years, the securities markets in Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies, have experienced wide fluctuations which have not necessarily been related to the 14 operating performance, underlying asset values or prospects of such companies. There can be no assurance that these price fluctuations and volatility will not continue to occur. Global Uncertainty The Company's business could be adversely affected by the effects of health epidemics and pandemics, including the global COVID-19 pandemic. In December 2019, a novel strain of COVID-19 was reported in China. Since then, COVID-19 has spread globally, to include Canada, the United States, several European countries, Asia, Australia and New Zealand and Africa. The spread of COVID-19 from China to other countries has resulted in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a "pandemic," or a worldwide spread of a new disease, on March 11, 2020. Many countries around the world, including Canada, have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus, and have closed non-essential businesses. The spread of COVID-19, which has caused a broad impact globally, may materially affect the Company economically. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic has resulted in significant disruption of global financial markets, reducing the Company's ability to access capital, which could in the future negatively affect the Company's liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company's business and the value of the Company's common shares. The continued spread of COVID-19 globally could also adversely affect the Company's planned clinical trial operations, including its ability to initiate the trials on the expected timelines and recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geographic areas. Further, the COVID-19 outbreak could result in delays in clinical trials due to prioritization of hospital resources toward the outbreak, restrictions in travel, potential unwillingness of patients to enrol in trials at this time, or the inability of patients to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services. In addition, the Company relies on independent clinical investigators, contract research organizations and other third-party service providers to assist in managing, monitoring and otherwise carrying out preclinical studies and clinical trials, and the outbreak may affect their ability to devote sufficient time and resources to the Company's programs or to travel to sites to perform work for us. The global outbreak of COVID-19 continues to rapidly evolve. The extent to which COVID-19 may impact the Company's business, operations and clinical trials will depend on future developments, including the duration of the outbreak, travel restrictions and social distancing in Canada and other countries, the effectiveness of actions taken in Canada, the United States and other countries to contain and treat the disease and whether Canada and other countries are required to move to complete lock-down status. The ultimate long-term impact of COVID-19 is highly uncertain and cannot be predicted with confidence. Other MD&A requirements Information available on SEDAR As specified by National Instrument 51-102, the Company advises readers of this MD&A that important additional information about the Company is available on the SEDAR website www.sedar.com. Disclosure by venture issuer An analysis of the material components of the Company's general and administrative expenses is disclosed in the audited consolidated financial statements for the years ended November 30, 2022 and 2021. Outstanding share data Common shares issued and outstanding as at November 30, 2022 are described in detail in Note 6 to the audited consolidated financial statements for the years ended November 30, 2022 and 2021. 15 As at the date of this document, the Company had the following number of securities outstanding: Number of shares $ Number of Exercise Expiry date options price Issued and outstanding 65,594,769 13,052,100 800,000 $0.35 August 2, 2023 500,000 $0.08 November 30, 2023 400,000 $0.15 December 18, 2025 2,375,000 $0.08 April 20, 2026 Number of share purchase warrants 1,900,000 $0.15 March 17, 2023 16 Schedule C Consolidated financial statements for the years ended November 30, 2021 and November 30, 2020 of Nevis Brands Inc. (formerly Pascal Biosciences Inc.) PASCAL BIOSCIENCES INC. Page Consolidated Financial Statements 2-4 For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) 5 6 Index 7 Independent Auditors' Report to the Shareholders 8 Consolidated Financial Statements 9-26 Consolidated Statements of Financial Position Consolidated Statements of Loss and Comprehensive Loss Consolidated Statements in Shareholders' Deficiency Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF PASCAL BIOSCIENCES INC. Opinion We have audited the consolidated financial statements of Pascal Biosciences Inc. (the "Company"), which comprise: the consolidated statements of financial position as at November 30, 2021 and 2020; the consolidated statements of loss and comprehensive loss for the years then ended the consolidated statements of changes in shareholders' deficiency for the years then ended; the consolidated statements of cash flows for the years then ended; and the notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at November 30, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS"). Basis for Opinion We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss of $1,088,931 during the year ended November 30, 2021 and, as of that date, the Company has a deficit of $14,276,246. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. Other Information Management is responsible for the other information. The other information comprises the Management's Discussion & Analysis. Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audits of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits, and remain alert for indications that the other information appears to be materially misstated. 2 We obtained the Management's Discussion & Analysis prior to the date of this auditors' report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditors' report. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditors' Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. 3 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. The engagement partner on the audit resulting in this independent auditors' report is Michelle Chi Wai So. Chartered Professional Accountants Vancouver, British Columbia March 23, 2022 4 Pascal Biosciences Inc. Notes 2021 2020 Consolidated Statements of Financial Position $ $ (Expressed in Canadian Dollars) 8,13 As at November 30: 5 3,192 10,598 142,007 83,802 ASSETS 145,199 94,400 Current 9,989 26,314 Prepaid expenses 155,188 120,714 Receivables 7,759 16,909 Total current assets 10 588,944 326,494 Equipment Total assets 10 49,780 129,650 LIABILITIES 646,483 473,053 Current liabilities 6 13,026,100 12,331,652 Bank indebtedness Accounts payable and accrued liabilities 10 46,000 - Short-term loan payable 6 712,851 887,921 Total liabilities (14,276,246) (13,571,912) SHAREHOLDERS' DEFICIENCY Equity attributable to shareholders (491,295) (352,339) Share capital 155,188 120,714 Shares to be Issued Reserves "Terry Pearson" Deficit _________________________ Director Total shareholders' deficiency Total liabilities and shareholders' deficiency Approved on behalf of the Board: "Patrick W. Gray" _________________________ Director The accompanying notes are an integral part of these consolidated financial statements. 5 Pascal Biosciences Inc. Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars) For the years ended November 30 Notes 2021 2020 $ $ General and administrative expenses 5 Accounting and audit fees 10 68,978 36,354 Administrative and general office 4, 8, 10 71,293 52,537 Amortization 16,325 12,478 Bank charges and interest 4, 13 Consulting fees 6, 10 5,585 6,676 Salaries and benefits 132,348 216,392 Foreign exchange loss 8 291,607 691,537 Insurance 6 Investor relations and marketing 2,284 7,092 Legal fees 40,280 56,761 Research and development 108,947 12,967 Share-based payments 16,522 Transfer agent, listing and filing fees 57,775 4,481 Travel and entertainment 200,027 140,477 Total general and administrative expenses 26,188 Other Income 15,521 Bad debt expense 49 31,060 Interest income (1,038,208) Gain on debt settlement 163 (50,723) (1,284,496) Net loss and comprehensive loss for the year - - - Loss per share, basic and diluted 416 Weighted average common shares outstanding - basic and diluted (1,088,931) 46,153 (1,237,927) (0.02) 63,484,358 (0.02) 55,400,349 The accompanying notes are an integral part of these consolidated financial statements. 6 Pascal Biosciences Inc. Common Shares Option Total Consolidated Statements in Shareholders' Deficiency Number of Shareholders' (Expressed in Canadian Dollars) Shares Amount Shares to be Reserve Deficit Deficiency Balance, November 30, 2019 Issued Shares issued for cash Shares issued for debt 52,647,396 $ $ $ $ $ Share-based payments 3,793,548 11,805,621 - 1,115,120 (12,576,705) 344,036 Fair value transfer on expiry of options 1,153,825 - 341,419 Net loss for the year - 341,419 - - - 184,612 - 184,612 - - - 15,521 Balance, November 30, 2020 - - 15,521 - Shares issued for cash - - (242,720) 242,720 - Share issuance costs 57,594,769 - - - (1,237,927) (1,237,927) Shares to be issued in lieu of salaries 7,500,000 - Share-based payments - 46,000 887,921 (13,571,912) (352,339) Fair value transfer on expiry and cancellation of - 12,331,652 - 9,500 - 750,000 options - 740,500 - - (46,052) Net loss for the year (46,052) - - 46,000 - - 200,027 Balance, November 30, 2021 - 200,027 - - - (384,597) 384,597 - - - - - (1,088,931) (1,088,931) 65,094,769 13,026,100 46,000 (14,276,246) 712,851 (491,295) The accompanying notes are an integral part of these consolidated financial statements. 7 Pascal Biosciences Inc. 2021 2020 Consolidated Statements of Cash Flows $ $ (Expressed in Canadian Dollars) For the years ended November 30 (1,088,931) (1,237,927) Cash provided by (used in): 16,325 12,478 Operating activities: 200,027 15,521 (46,153) Net loss for the year - 46,000 - Items not involving cash: 50,723 - Amortization Share-based payments 7,406 16,933 Gain on settlement of debt (108,928) (69,495) Shares issued for services 445,814 Bad debt expense 262,450 (862,829) (614,928) Changes in non-cash working capital: 341,419 Prepaid expenses 624,500 129,650 Receivables 45,630 Accounts payable and accrued liabilities - (46,052) 471,069 Financing activities: 624,078 (391,760) Shares issued for cash 374,851 Proceeds from short-term loan 9,150 (16,909) Share issuance costs (16,909) - Net change in bank indebtedness (7,759) - Cash (bank indebtedness), beginning of year - Bank indebtedness, end of year - Supplemental cash flow information: - 125,500 Interest paid Taxes paid Short-term loan payable applied to shares issued for cash The accompanying notes are an integral part of these consolidated financial statements. 8 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) 1. NATURE OF OPERATIONS AND GOING CONCERN Pascal Biosciences Inc. (the "Company") was incorporated on January 28, 2011 pursuant to the Business Corporations Act (British Columbia). On May 24, 2013, the Company acquired all of the issued and outstanding shares of bioMmune Advanced Technologies Inc. ("BAT"), a private company (incorporated on July 5, 2012) formed to commercially exploit a number of patents and patent applications that surround three technologies. On March 27, 2017, the Company incorporated a wholly owned subsidiary in Seattle, Washington, named Pascal Biosciences US, Inc. ("Pascal (US)"). The Company is a Tier 2 Biotechnology Issuer engaged in the research and development of products for the treatment of cancers and for improvement of the immune system, trading on the TSX Venture Exchange (the "Exchange") under the trading symbol "PAS". The Company's head office is Suite 304, 4000 Mason Road, Seattle, WA 98195. The Company has not generated any revenues and has incurred losses since inception. The Company expects to spend a significant amount of capital to fund research and development. As a result, the Company expects that its operating expenses will increase significantly, and consequently, will require significant revenues to become profitable. Even if the Company does become profitable, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company cannot predict when, if ever, it will be profitable. There can be no assurances that the intellectual property of the Company, or other technologies it may acquire, will meet applicable regulatory standards, obtain required regulatory approvals, be capable of being produced in commercial quantities at reasonable costs, or be successfully marketed. The Company plans to undertake additional laboratory and animal studies with respect to its intellectual property, and there can be no assurance that the results from such studies or trials will result in a commercially viable product or will not identify unwanted side effects. These consolidated financial statements have been prepared under the assumption of a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at November 30, 2021, the Company has an accumulated deficit of $14,276,246 (2020: $13,571,912) and reported a net loss of $1,088,931 (2020: $1,237,927). The Company's ability to maintain its existence is dependent upon the continuing support of its creditors and its success in obtaining new equity financing for its ongoing operations. Financing options available to the Company include equity financings and loans. These conditions indicate the existence of material uncertainties that may cast significant doubt as to the ability of the Company to meet its obligations as they come due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. Realization values of the Company's assets may be substantially different from carrying values as shown in these condensed consolidated interim financial statements and, accordingly, should the Company be unable to continue as a going concern, the adjustments could be material. Since January 2020, the outbreak of the worldwide COVID-19 pandemic, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company may face disruption to operations, supply chain delays, travel and trade restrictions, and impacts on economic activity in affected countries can be expected that are difficult to quantify. In addition, the COVID-19 pandemic has created a dramatic slowdown in the global economy. The duration and enduring impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results, condition, and financings (equity and debt) of the Company in future periods. 9 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about by the COVID-19 pandemic's impact on global industrial and financial markets which may reduce share prices and financial liquidity, thereby limiting access to additional capital. 2. STATEMENT OF COMPLIANCE, BASIS OF PRESENTATION (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Accounting Standards, as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements were authorized for issue by the Board of Directors on March 23, 2022. (b) Basis of measurement These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit or loss ("FVTPL"), which are stated at their fair values. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3. (c) Functional and presentation currency These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its wholly owned subsidiaries, BAT and Pascal (US). 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, BAT and Pascal (US). A subsidiary is an entity in which the Company has control, where control requires exposure or rights to variable returns and the ability to affect those returns through power over the investee. All significant intercompany transactions and balances have been eliminated upon consolidation. (b) Impairment of non-financial assets At the end of each reporting period, the Company reviews the carrying amounts of long-lived assets to determine whether there is an indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment charge (if any). 10 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) The recoverable amount used for this purpose is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its recorded amount, the recorded amount of the asset is reduced to its recoverable amount. An impairment charge is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to a maximum amount equal to the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. (c) Research and development costs Research costs, including costs for new patents and patent applications, are expensed in the period in which they are incurred. Development costs are expensed in the period in which they are incurred unless certain criteria, including technical feasibility, commercial feasibility, intent and ability to develop and use the technology, are met for deferral and amortization. No development costs have been deferred to date. (d) Government assistance Government grants are recognized when there is reasonable assurance that the Company has met the requirements of the approved grant program and there is reasonable assurance that the grant will be received. Grants that compensate the Company for expenses incurred are recognized in profit or loss in reduction thereof on a systematic basis in the same years in which the expenses are recognized. Grants that compensate the Company for the cost of an asset are applied against the cost of the asset and recognized in profit or loss on a systematic basis over the useful life of the asset. (e) Share capital Common shares issued by the Company are classified as shareholders' equity (deficiency). Incremental costs directly attributable to the issuance of shares are recognized as a deduction from shareholders' equity (deficiency). Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated using the residual method whereby proceeds are allocated first to common shares based on the market trading price of the common shares, and any remaining balance is allocated to warrants. (f) Share-based payments The Company accounts for share-based payments using a fair value-based method with respect to all share-based payments measured and recognized, to directors, employees and non-employees. 11 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) For directors and employees, the fair value of the options is measured at the date of grant. For non-employees, the options are recorded at the fair value of the goods or services received. When the value of the goods or services received in exchange for the share-based payments cannot be reliably estimated, the fair value is measured using the Black-Scholes option pricing model. When options and warrants are exercised, the related amount in the options and warrants reserve is transferred to share capital. When options and warrants expire unexercised, such amounts are transferred to deficit. (g) Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method of tax allocation, deferred income tax assets and liabilities are determined based on differences between financial statement carrying amounts of existing assets and liabilities, and their respective tax basis (temporary differences). Deferred income tax assets and liabilities are measured using the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in operations in the period in which the change is enacted or substantively enacted. The amount of deferred income tax assets recognized is limited to the amount of the benefit that is probable of being realized. (h) Functional currency translation Amounts recorded in foreign currency are translated into Canadian dollars as follows: i. Monetary assets and liabilities, at the rate of exchange in effect as at the consolidated statement of financial position date; ii. Non-monetary assets and liabilities, at the exchange rates prevailing at the time of acquisition of the assets or assumption of the liabilities; and iii. Revenues and expenses (excluding amortization, which is translated at the same rate as the related asset), at the rate of exchange on the transaction date. Gains and losses arising from this translation of foreign currency are included in determination of profit or loss for the year. (i) Significant accounting judgments, estimates and assumptions The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Significant assumptions about the future and other sources of estimated uncertainty that management has made as at the consolidated statements of financial position date that could result in a material adjustment to the carrying amount of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: 12 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) Critical Accounting Estimates Critical accounting estimates and assumptions made by management that may result in a material adjustment to the carrying amounts of assets and liabilities include, but are not limited to, the following: Share-based payments The fair value of share-based payments is subject to the limitations of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices and changes in other subjective input assumptions that can materially affect the fair value estimate. Critical Accounting Judgments Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements include, but are not limited to, the following: Going concern The assessment of the Company's ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual research and development programs, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Accounts receivable Accounts receivable is recorded at the estimated recoverable amount, which involves the estimate of uncollectible amounts. Treatment of research and development expenses The application of the Company's accounting policy for research and development expenditures requires judgment in determining whether it is likely that the future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Significant judgment is required to distinguish between the research and development phases. Estimates and assumptions may change if new information becomes available. If new information suggests future economic benefits are unlikely, the amount capitalized is written off to profit or loss. Recovery of deferred tax assets The measurement of income taxes payable and deferred income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws. The actual amount of income taxes only becomes final upon filing and 13 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the consolidated financial statements. Functional currency The functional currency of the Company and its subsidiaries is the currency of their respective primary economic environment, and the Company reconsiders the functional currency if there is a change in events and conditions, which determined the primary economic environment. (j) Earnings (loss) per share The Company presents basic and diluted earnings (loss) per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of shares outstanding during the period. The computation of diluted earnings (loss) per share assumes the exercise or contingent issuance of securities only when such exercise or issuance would have a dilutive effect on the earnings (loss) per share. (k) Equipment Equipment is recorded at cost less accumulated amortization and accumulated impairment losses. Amortization is recorded using the declining-balance method and is intended to depreciate the cost of the assets over their estimated useful lives as follows: Lab equipment 20% Computer equipment 55% (l) Financial instruments Financial assets The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument. The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income or measured at fair value through profit or loss. Financial assets measured at amortized costs A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost. The Company's business model for such financial assets, is to hold the assets in order to collect contractual cash flows. The contractual terms of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding. A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary. The Company's receivables are classified as amortized costs. 14 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) Financial assets measured at fair value through other comprehensive income ("FVTOCI") A financial asset measured at fair value through other comprehensive income is recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in other comprehensive income. The Company does not have financial asset classified as FVTOCI. Financial assets measured at fair value through profit or loss ("FVTPL") A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises. The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss). The Company does not have any financial asset classified as FVTPL. Financial liabilities Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities subsequently measured at amortized cost. All interest-related charges are reported in profit or loss within interest expense, if applicable. The Company's financial liabilities include accounts payable and accrued liabilities, short-term loan payable and bank indebtedness are classified as financial liabilities subsequently measured at amortized cost. 4. GOVERNMENT ASSISTANCE During the year ended November 30, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH). This two-year award will fund development of Pascal's antibody drug for Acute Lymphoblastic Leukemia (ALL), which is the most common childhood leukemia. During the year ended November 30, 2021, the Company incurred US$38,418 (2020: $nil) in research and development expenditures against income of US$38,418 (2020: $nil) in funding from NIH. 15 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) During the year ended November 30, 2020, Pascal (US) applied to the US Small Business Administration for emergency funds from the Paycheck Protection Plan ("PPP loan") and received $206,144 for funding its operations in Seattle. The PPP loan has an interest rate of 1%, which is deferred for ten months and is forgivable if used to retain employees. The PPP loan has a maturity of two years and the full amount is forgivable when the Company applies for forgiveness and as long as Pascal (US)'s employee and compensation levels are maintained, loan proceeds are spent on payroll costs and other eligible expenses and at least 60% of the proceeds are spent on payroll costs. The Company has recognized the full forgiveness in the year ended November 30, 2020 as the Company has received full forgiveness for the PPP loan from the US Small Business Administration. The government assistance of $206,144 is included as a reduction of salaries and benefits. 5. EQUIPMENT Cost Lab Computer Total Equipment Equipment Balance November 30, 2019 14,271 Transfer from assets held for sale (note 8) $ 9,870 $ 4,401 $ 57,358 71,629 Balance November 30, 2020 and 2021 57,358 - Accumulated Amortization $ 67,228 $ 4,401 $ Balance, November 30, 2019 $ 7,176 $ 149 $ 7,325 Transfer from assets held for sale (note 8) - 25,512 Charge for the year 25,512 12,478 200 45,315 Balance November 30, 2020 12,278 349 $ 16,325 Charge for the year 1,927 61,640 $ 44,966 $ 2,276 $ Balance November 30, 2021 26,314 Carrying Value 14,398 4,052 $ 9,989 Balance, November 30, 2020 2,125 $ Balance, November 30, 2021 $ 59,364 $ $ 22,262 $ $ 7,864 $ 6. SHARE CAPITAL (a) Authorized The authorized share capital of the Company consists of an unlimited number of common shares without par value. (b) Common shares Year ended November 30, 2021 On March 17, 2021, the Company closed the second tranche of the non-brokered private placement by issuing 1,900,000 Units at a price of $0.10 per Unit for gross proceeds of $190,000. Part of the gross proceeds was paid by settling $125,500 of the short-term loan payable. Each Unit consists of one common share and one common share purchase warrant. Each warrant will entitle 16 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) the holder to purchase one additional common share of the Company at a price of $0.15 for a period of 24 months from the date of closing, subject to an acceleration clause, under which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The warrants will expire upon 30 days from the date the Company provides notice in writing to the warrant holders via a news release. The Company paid $1,365 in finder's fees and incurred cash share issuance costs of $12,487 related to the closing of the second tranche. The Company allocated $9,500 of the gross proceeds to warrants using the residual method. On February 8, 2021, the Company closed the first tranche of a private placement by issuing 5,600,000 Units at a price of $0.10 per Unit for gross proceeds of $560,000. Each Unit consists of one common share and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional common share of the Company at a price of $0.15 per share for a period of 24 months from the date of closing, subject to an acceleration clause which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The warrants will expire upon 30 days from the date the Company provides notice in writing to the warrant holders via a news release. The Company paid $32,200 in finder's fees related to the closing of the first tranche. Year ended November 30, 2020 On November 30, 2020, the Company issued 1,153,825 common shares of the Company to related parties to settle debt owing of $230,765. The shares were issued at a fair value of $184,612 and a gain on debt settlement of $46,153 was recorded. On March 24, 2020, the Company completed a non-brokered private placement for gross proceeds of $341,419 and issued 3,793,548 units (each a "Unit") to SRSE Technology Corporation (the "Purchaser"), at a price of $0.09 per Unit. Each Unit consists of one common share and one common share purchase warrant (each a "Warrant"). Each Warrant will entitle the Purchaser to purchase one additional common share at a price of $0.15 until March 24, 2022. (c) Stock options During the year ended November 30, 2012, the Company adopted a stock option plan, which provides that the Board of Directors may, from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and consultants of the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares and exercisable for five years from the date of grant. 17 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) A summary of the Company's outstanding stock options and changes is as follows: Outstanding, November 30, 2019 Quantity Weighted Average Expired 5,050,000 Exercise Price ($) Outstanding, November 30, 2020 (1,135,000) 0.33 Granted 3,915,000 0.34 Expired 3,775,000 0.37 Cancelled 0.09 (1,510,000) 0.19 Outstanding, November 30, 2021 (392,000) 0.72 Exercisable as at November 30, 2021 5,788,000 0.19 4,467,500 0.22 On September 3, 2021, the Company granted 500,000 stock options to the former CEO, Rob Gietl. The stock options are exercisable at a price of $0.08 per share, for a period of five years and vest immediately on the grant. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.98%, expected dividend rate of 0%, expected volatility of 95.83%, and forfeiture rate of 0%. The fair value of the options was calculated at $31,082. The share-based payment expense recognized during the year ended November 30, 2021 was $31,082 (2020: $nil). On April 20, 2021, the Company granted 2,875,000 stock options to directors, employees and consultants of the Company. The stock options are exercisable at a price of $0.08 per share, for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.75%, expected dividend rate of 0%, expected volatility of 94.59%, and forfeiture rate of 0%. The fair value of the options was calculated at $164,478. The share-based payment expense recognized during the year ended November 30, 2021 was $123,603 (2020: $nil). On December 18, 2020, the Company granted 400,000 stock options to directors and employees of the Company. The stock options are exercisable at a price of $0.15, for a period of five years and vest quarterly over one year. The fair value of the stock options was estimated using the Black- Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.35%, expected dividend rate of 0%, expected volatility of 94.21%, and forfeiture rate of 0%. The fair value of the options was calculated at $42,621. The share-based payment expense recognized during the year ended November 30, 2021 was $42,096 (2020: $nil). On May 28, 2019, the Company granted 198,000 stock options to consultants, exercisable at a price of $0.20 per share. The stock options will vest quarterly over 36 months and expire on May 28, 2022. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 1.48%, expected dividend rate of 0%, expected volatility of 87.39%, and forfeiture rate of 0%. The fair value of the options was calculated at $21,651. The share-based payment expense recognized during the year ended November 30, 2021 was $3,246 (2020: $8,430). On August 3, 2018, the Company granted 2,100,000 stock options to officers, directors and consultants, exercisable at a price of $0.35 per share. 1,475,000 of the stock options will vest 18 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) quarterly over 12 months and expire on August 3, 2023. 625,000 of the stock options will vest quarterly over 24 months and expire on August 3, 2021. The fair value of 1,475,000 of the stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of 2.35%, expected dividend rate of 0%, expected volatility of 93.22%, and forfeiture rate of 0%. The fair value of the stock options was estimated at $372,000. The fair value of 625,000 of the stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of 2.35%, expected dividend rate of 0%, expected volatility of 97.21%, and forfeiture rate of 0%. The fair value of the stock options was estimated at $134,324. The share-based payment expense recognized during the year ended November 30, 2021 was $nil (2020: $7,091). Option pricing models require the use of highly subjective estimates and assumptions. The expected volatility assumption is based on the historical and implied volatility of the Company's common share price on the Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options' expected life. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. Based on the best estimate, management applied the estimated forfeiture rate of 0% in determining the expense recorded in the accompanying consolidated statements of operations and comprehensive loss. The options outstanding at November 30, 2021 are as follows: Weighted Weighted Average Average Remaining Contractual Life Expiry Date Outstanding Exercisable Exercise Price December 18, 2021 150,000 ($) (Years) December 18, 2021 475,000 0.05 150,000 (1) 0.29 0.05 March 22, 2022 50,000 0.31 March 22, 2022 100,000 475,000 (1) 0.35 0.31 0.41 April 30, 2022 35,000 50,000 (1) 0.33 0.41 April 30, 2022 100,000 0.49 May 28, 2022 198,000 100,000 (1) 0.35 0.57 June 27, 2022 505,000 1.16 January 28, 2023 100,000 35,000 0.33 1.67 August 2, 2023 800,000 4.05 December 18, 2025 400,000 100,000 0.35 4.39 April 20, 2026 2,375,000 4.78 September 3, 2026 500,000 165,000 0.20 2.83 5,788,000 505,000 0.33 100,000 0.29 800,000 0.35 300,000 0.15 1,187,500 0.08 500,000 0.08 4,467,500 0.19 (1) Subsequent to November 30, 2021, 775,000 options expired unexercised. 19 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) (d) Share purchase warrants A summary of the Company's outstanding share purchase warrants and changes is as follows: Quantity Weighted Weighted Average Exercise Average Remaining Price ($) Contractual Life (Years) Balance, November 30, 2019 387,594 0.40 Issued 0.27 Expired 3,793,548 0.15 1.31 Balance, November 30, 2020 (387,594) 0.40 - Issued 1.31 3,793,548 0.15 1.22 Balance, November 30, 2021 0.91 7,500,000 0.15 11,293,548 0.15 The warrants outstanding at November 30, 2021 are as follows: Expiry Date Number Outstanding Weighted Average Weighted Average Remaining March 24, 2022 3,793,548 (1) Exercise Price ($) February 8, 2023 5,600,000 0.15 Contractual Life 0.15 March 17, 2023 1,900,000 0.15 (Years) 0.15 0.31 11,293,548 1.19 1.29 0.91 (1) Subsequent to November 30, 2021, 3,793,548 warrants expired unexercised. 20 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) 7. INCOME TAXES As at November 30, 2021 the Company has non-capital losses of approximately $5,539,000, which may be applied against future income for Canadian income tax purposes and non-capital losses of approximately $5,673,000, which may be applied against future income for US income tax purposes. The potential future tax benefits of these losses have not been recorded in these consolidated financial statements. The losses expire as follows: 2031 $ 2032 13,000 2033 88,000 2034 396,000 2035 528,000 2036 657,000 2037 652,000 2038 796,000 2039 2,599,000 2040 3,348,000 2041 1,300,000 835,000 11,212,000 A reconciliation of income tax provision computed at Canadian statutory rates to the reported taxes is as follows: Loss before income taxes 2021 2020 Income tax as statutory rates $ $ (1,237,927) Expected income tax recovery (1,088,931) 27.00% Non-deductible items 27.00% Temporary differences attributed to: (334,240) (294,011) 4,191 Change in timing differences 54,007 Under (over) provided in prior years - Foreign exchange (13,204) (36,539) Unused tax losses and tax offsets not recognized 181,433 (37,464) 404,052 Total income tax recovery 37,203 34,572 - - The Company recognizes tax benefits on losses or other deductible amounts generated where the criteria for the recognition of deferred tax assets have been met. The following are the deductible temporary differences for which no deferred tax assets are recognized in the consolidated financial statements, as it is not probable that the deferred tax assets will be realized in the future: 21 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) Non-capital losses carried forward 2021 2020 Equipment, patents and licenses $ $ Share issuance costs Cumulative eligible capital 11,212,000 10,368,000 1,649,000 2,229,000 125,000 264,000 69,000 69,000 13,055,000 12,930,000 8. COLLABORATIVE RESEARCH AGREEMENT During the year ended November 30, 2020, the Company entered into a term sheet with SRSE Technology Corporation ("SRSE") whereby SRSE will acquire all of the issued and outstanding equity interests of Pascal (US) for a consideration of US$10,000,000, which will be paid (i) as US$9,500,000 through the issuance of SRSE Class C common stock and (ii) US$500,000 as cash (the "Transaction"). On May 27, 2020, the Company and SRSE mutually agreed not to proceed with the Transaction and the term sheet was terminated. Accordingly, assets and liabilities of Pascal (US) were no longer classified as net liabilities held for sale. In accordance with the Term Sheet, SRSE will reimburse the Company for up to $100,000 legal fees in connection with the Transaction. During the year ended November 30, 2021, the Company wrote off accounts receivable of $50,773 in relation to the legal reimbursement from SRSE. On September 14, 2020, the Company and SRSE announced that they have entered into a Collaborative Research Agreement (the "Agreement") to advance Pascal's immune-stimulating cannabinoid PAS-393 into clinical testing in humans. Pascal (US) and SRSE will share their respective technologies to test the cannabinoid PAS-393 in human volunteers, enabling testing of cancer patients treated with checkpoint inhibitors. SRSE will provide US$750,000 in research funding to Pascal (US) throughout the 15-month collaboration and will pay for related research expenditures. During the year ended November 30, 2021, the Company received $563,801 (US$500,000) (2020: $206,864/US$154,079) of research funding and recorded an account receivable of $127,920 (US$100,000) (2020: $nil), which is included in salaries and benefits. 9. CAPITAL RISK MANAGEMENT The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of any identified business opportunities and to maintain a flexible capital structure for the benefit of its stakeholders. The Company includes shareholders' equity (deficiency), comprised of issued share capital, reserves and deficit in the definition of capital. The Company manages the capital structure and makes adjustments to it in light of changes in the economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, enter into joint venture arrangements, acquire or dispose of assets, or adjust the amount of cash. The Board of Directors does not establish quantitative return on capital criteria for management but rather relies on the expertise of the Company's management to manage its capital to be able to sustain the future 22 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) development of the Company's business. The Company is not subject to externally imposed capital requirements. There were no changes in the Company's approach to capital management during the year ended November 30, 2021. 10. RELATED PARTY TRANSACTIONS The following is a summary of related party transactions that occurred during the years ended November 30, 2021 and 2020: Services provided by: 2021 2020 $ $ Key management salaries/fees Director and officer salaries/fees a) 307,811 311,389 Share-based payments Benefits b) 417,284 554,233 139,193 - 120,799 123,704 985,087 989,326 Related parties include: a) Key management salaries include amounts paid to the CEO, former CEO and the CFO. b) Director and officer salaries include amounts paid to the Vice President of Research, the Vice President of Therapeutic Development and the Chief Business Officer. Included in accounts payable and accrued liabilities is $233,820 (2020: $69,522) payable to directors and officers of the Company. The amounts in accounts payable and accrued liabilities are non-interest bearing and due within 30 days. Included in the above are loans to the Company by a director of the Company totaling $49,780 (US $34,318) (2020: $129,650 /US$100,000). The loan is unsecured, is due on demand and bears no interest. At November 30, 2021 the Company has the commitment to issue 500,000 common shares to the former CEO, Rob Gietl, per his employment agreement in lieu of two months' worth of salary (Note 15). 11. COMMITMENTS Commitments over the next five fiscal years are as follows: a) Consulting agreement for bookkeeping services to Pascal (US) for an annual fee of US $24,000. During the year ended November 30, 2021, this was increased to an annual fee of US $36,000. The Company has also entered into the following agreements: a) University of Washington: On October 9, 2018, the Company entered into an exclusive license agreement with the University of Washington ("UW") to develop a cannabinoid-based product for the treatment of glioblastoma multiforme and brain metastases. Under the terms of the agreement, the Company will pay the annual fees (US Dollars) as follows: October 9, 2020 $ 5,000 (paid) October 9, 2021 $ 10,000 Every year thereafter until first sale $ 25,000 23 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) 12. FINANCIAL INSTRUMENTS (a) Fair value Financial instruments recognized at fair value on the consolidated statements of financial position must be classified in one of the following three fair value hierarchy levels: Level 1 measurement based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities; Level 2 measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability; or Level 3 measurement based on inputs that are not observable (supported by little or no market activity) for the asset or liability. As at November 30, 2021 and 2020, the Company's financial instruments are comprised of bank indebtedness, accounts receivables, and accounts payable and accrued liabilities. The carrying amounts reported in the consolidated statements of financial position for bank indebtedness, receivables, short-term loan payable, and accounts payable and accrued liabilities approximate fair values due to the short-term maturities of these financial instruments. (b) Credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of receivables. The Company limits its exposure to credit loss by having its receivables from an entity it has been in business with for a long time. The carrying amount of financial assets represents the maximum credit exposure. (c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meets its financial obligations as they become due. The Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due. At November 30, 2021, the Company had cash and cash equivalents of $nil (2020: $nil) available to apply against short-term business requirements and current liabilities of $646,483 (2020: $473,053). All of the liabilities presented as accounts payable and accrued liabilities are due within 90 days of November 30, 2021. The short-term loan payable is due on demand. (d) Currency risk The Company is exposed to currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than the Canadian dollar. The Company does not manage currency risks through hedging or other currency management tools. 24 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) As at November 30, 2021 and 2020, the Company's net exposure to foreign currency risk is as follows: US dollars 2021 2020 $ $ Bank indebtedness (8,140) Accounts receivable 100,000 (12,506) Accounts payable - Short-term loan payable (265,944) (34,318) (112,555) (100,000) Net exposure to foreign currency risk (208,402) (225,061) Canadian dollar equivalent (266,588) (282,931) Based on the above net foreign currency exposure, and assuming all other variables remain constant, a 7% weakening or strengthening of the Canadian dollar against the US dollar would have an immaterial effect on the Company's net loss and comprehensive loss. (e) Other price risk Other price risk is the risk that future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk. 13. RESEARCH AND DEVELOPMENT During the year ended November 30, 2021, the Company incurred $57,775 (2020: $140,477) in research and development expenditures against income of $752,184 (2020: $206,864) and an account receivable of $127,920 in funding from SRSE (Note 8). 14. SEGMENTED INFORMATION The Company has one operating segment, biotechnology research and development, with lab and computer equipment in the United States of America. 15. EVENTS SUBSEQUENT TO THE YEAR Subsequent to November 30, 2021, the Company issued 500,000 common shares, with a fair value of $46,000 to the former CEO, Rob Gietl, per his employment agreement in lieu of two months' worth of salary. On February 8, 2022, the Company received a Notice of Civil Claim against the Company from a former officer of the Company for damages due to a breach of contract and wrongful termination. The claim against the Company is for 500,000 common shares of the Company to be issued to the former officer, punitive damages, interest and costs. The 500,000 common shares were issued subsequent to year end. No other amounts have been accrued in respect of this claim. On February 28, 2022, the Company granted 500,000 stock options to the CEO. The stock options are exercisable at a price of $0.08 per share, for a period of five years, vesting quarterly over one year. 25 Pascal Biosciences Inc. Notes to the Consolidated Financial Statements For the Years Ended November 30, 2021 and 2020 (Expressed in Canadian Dollars) In March 2022, the Company entered into agreements with non-arm's length and arm's length parties to settle debt of $474,812 by issuing 4,478,276 common shares of the Company at a deemed price of $0.08 per share and $30,000 in cash. On March 16, 2022, the Company signed a term sheet with Shape Capital Pty Ltd. (Shape) of Melbourne, Victoria, an investment and advisory firm, which will provide a three-year, convertible note for $2,000,000. The note is non-interest bearing and is structured to advance to Pascal tranches of $55,000 per month which, at the option of the investors in the note, can be doubled to $110,000 on any given month. With each drawdown, Pascal will issue common shares to satisfy the note. The number of shares issued will be based on a Conversion Price equal to 90% of the average of five daily volume-weighted average prices (VWAPs), selected by the Investor, during the 22 trading days prior to the Conversion Notice. If that price is less than the Discounted Market Price, as defined by the TSX.V, the Conversion Price will be the Discounted Market Price. The Company is being charged an administration fee by Shape of $130,000 ($65,000 within 3-days of acceptance, and $65,000 at twelve months), and a commitment fee of $80,000. The $210,000 will be paid by the issue of 2,100,000 Shares at deemed price of $0.10 per Share. Investors will be issued 2,200,000 Share purchase warrants to acquire, for one year, one further Share. This transaction is subject to TSX approval. 26 Schedule D Management discussion and analysis of the Financial Condition and Results of Operations for the Financial year ended November 30, 2021 of Nevis Brands Inc.(formerly Pascal Biosciences Inc.) PASCAL BIOSCIENCES INC. Suite 304, 4000 Mason Road, Seattle WA 98195 Form 51-102F1 Management's Discussion & Analysis of Financial Condition and Results of Operations for the Financial Year Ended November 30, 2021 Date: March 25, 2022 Management's Discussion and Analysis The following management's discussion and analysis (MD&A) of the financial information of Pascal Biosciences Inc. (the "Company") and results of operations should be read in conjunction with the Company's audited consolidated financial statements for the year ended November 30, 2021. These documents are intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as forward-looking statements relating to future performance. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and include the operating results of the Company. This MD&A was reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on March 23, 2022. The information contained within this MD&A is current to March 25, 2022. The Company's critical accounting estimates, significant accounting policies and risk factors have remained substantially unchanged and are still applicable to the Company unless otherwise indicated. All amounts are expressed in Canadian Dollars unless noted otherwise. Forward-Looking Statements This MD&A contains forward-looking statements within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature are forward-looking, and the words "believe," "expect," "plan," "may," "will," "could," "leading," "intend," estimate," or words of a similar nature are generally intended to identify forward-looking statements. Forward-looking statements in this MD&A include, but are not limited to, statements with respect to the Company's: dot expected future loss and accumulated deficit levels; dot projected financial position and estimated cash burn rate; dot expectations about the timing of achieving milestones and the cost of development programs; dot requirements for, and the ability to obtain future funding on favourable terms or at all; dot projections for the development of our core technologies, particularly with respect to the timely and successful completion of trials and availability of results from such studies and efficacy; dot expectations about its product's safety and efficacy; dot expectations regarding the progress and the successful and timely completion of the various stages of regulatory processes; dot ability to secure strategic partnerships with larger pharmaceutical and biotechnology companies; dot expectations regarding the acceptance of our products and technologies by the market; 1 dot ability to retain and access appropriate staff, management and expert advisors; and dot expectations with respect to existing and future corporate alliances and licensing transactions with third parties, and the receipt and timing of any payments to be made by the Company or to the Company in respect of such arrangements. All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but rather on management's expectations regarding future activities, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, known and unknown, that contribute to the possibility that the predictions, forecasts, projections or other forward-looking statements will not occur. In evaluating forward-looking statements, readers should specifically consider various factors, including the risks outlined under the heading "Risk Factors" in this MD&A. Some of these risks and assumptions include, among others: dot substantial fluctuation of losses from quarter to quarter and year to year due to numerous external risk factors, and anticipation that the Company will continue to incur significant losses in the future; dot uncertainty as to the Company's ability to raise additional funding to support operations; dot the Company's ability to generate product revenue to maintain our operations without additional funding; dot the risks associated with the development of the Company's product candidates which are at early stages of development; dot reliance on third parties to plan, conduct and monitor our pre-clinical studies and clinical trials; dot the Company's product candidates may fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or may not otherwise produce positive results; dot risks related to filing Investigational New Drug applications (INDs), to commence clinical trials and to continue clinical trials if approved; dot the risks of delays and inability to complete clinical trials due to difficulties involved in enrolling patients; dot competition from other biotechnology and pharmaceutical companies; dot the Company's reliance on the capabilities and experience of its key executives and scientists and the resulting loss of any of these individuals; dot the Company's ability to adequately protect trade secrets; dot the Company's ability to source and maintain licenses from third-party owners; and dot the risk of patent-related litigation. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements. Any forward-looking statements represent estimates only as of the date of this MD&A and should not be relied upon as representing estimates as of any subsequent date. The Company undertakes no obligation to update any forward- looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as may be required by securities legislation. 2 Overview The Company was incorporated on January 28, 2011 pursuant to the Business Corporations Act (British Columbia). On May 24, 2013, the Company acquired all of the issued and outstanding shares of bioMmune Advanced Technologies Inc. ("BAT"), a private company (incorporated on July 5, 2012) formed to commercially exploit a number of patents and patent applications that surround three technologies. On March 27, 2017, the Company incorporated a wholly owned subsidiary in Seattle, Washington, named Pascal Biosciences US, Inc. ("Pascal (US)"). The Company is a Tier 2 Biotechnology Issuer targeting therapies for serious diseases. Pascal is developing treatments for cancer with targeted therapies for glioblastoma and acute lymphoblastic leukaemia. In addition, the Company is developing cannabinoid-based therapeutics for application to control cancer and COVID-19. Pascal's portfolio includes a small molecule therapeutic, PAS-403, that the Company is advancing into clinical trials for the treatment of glioblastoma, and PAS-393, an immune-stimulatory cannabinoid to be used in combination with checkpoint inhibitor therapy for cancer treatment. The Company trades on the TSXV Exchange under the trading symbol "PAS". Additional information relating to the Company can be found on the SEDAR website at www.sedar.com. Overall Performance Research and Development In March 2017, Pascal Biosciences (US), Inc. began operating a research lab in Seattle, Washington. The Company currently has six full-time employees: the CEO, the Chairman of the Board of Directors and four employees who conduct research and drug development. To contribute to research efforts during the coronavirus pandemic, Pascal scientists searched for compounds, including cannabinoids, that have activity against SARS-CoV-2 in cell-based assays. On July 14, 2020, the Company announced that it has discovered certain cannabinoids that block replication of SARS-CoV-2, the coronavirus that causes COVID-19. The best cannabinoid tested had potency similar to remdesivir, a recently approved drug from Gilead that decreases recovery time for COVID-19 patients. On September 14, 2020, the Company and SRSE Technology Corporation ("SRSE") announced that they entered into a Collaborative Research Agreement (the "Agreement") to advance Pascal's PAS-393, an immune-stimulating cannabinoid for cancer treatment, into clinical testing. Under the Agreement, Pascal and SRSE shared their respective technologies to optimize both the cannabinoid and its formulation, aiming ultimately to test PAS-393 in cancer patients treated with checkpoint inhibitors. This partnership leveraged SRSE's industry-leading formulation technology with Pascal's proprietary cannabinoid molecule for testing in clinical trials. The Agreement was anchored by Pascal's intellectual property which covers the use of cannabinoids in cancer patients treated with checkpoint inhibitors. SRSE provided US $650,000 in research funding to Pascal throughout the 15-month collaboration and paid for related research expenditures and the Company recorded an account receivable of $127,920 (US $100,000 for October and November 2021), which was applied against salaries. On September 22, 2020, the Company confirmed that certain cannabinoids block SARS-CoV-2 replication in two different assays and subsequently demonstrated the effect in two additional in vitro models of infection. Pascal believes it is the first to identify a cannabinoid that directly inhibits replication of the virus, and has applied for patent protection for this unique discovery. The data suggest that a Pascal-identified cannabinoid may have the potential to limit the severity and progression of COVID-19. On March 18, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH). This two-year award will fund development of Pascal's antibody drug for B cell Precursor Acute Lymphoblastic Leukaemia (ALL), which is the most common childhood leukaemia. On September 7, 2021, the Company announced the appointment of Rob Gietl as Chief Executive Officer, President and Director. The Company granted 500,000 stock options exercisable at a price of $0.08, for a period of five years, vesting immediately on grant. The Company further issued 500,000 shares at a deemed price in lieu of cash for his services for September and October 2021. Please refer to "Core Technologies" below for updates on the Company's research and development. 3 Share Capital On December 18, 2020, the Company granted 400,000 stock options to directors and employees of the Company. The stock options are exercisable at a price of $0.15, for a period of five years and vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.35%, expected dividend rate of 0%; expected volatility of 94.21% and forfeiture rate of 0%. The fair value of the options was calculated at $42,621. On February 8, 2021, the Company closed the first tranche of a private placement by issuing 5,600,000 Units for gross proceeds of $560,000. Each Unit consists of one common share and one common share purchase warrant (each a "Warrant"). Each Warrant entitles the holder to purchase one additional common share of the Company at a price of $0.15 per share for a period of 24 months from the date of closing, subject to an acceleration clause, under which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The Warrants will expire upon 30 days from the date the Company provides notice in writing to the Warrant holders via a news release. The Company paid $32,200 in finder's fees related to the closing of the first tranche. On March 17, 2021, the Company closed the second tranche of a non-brokered private placement by issuing 1,900,000 Units at a price of $0.10 per Unit for gross proceeds of $190,000. Each Unit consists of one common share and one common share purchase warrant (each a "Warrant") Each Warrant entitles the holder to purchase one additional common share of the Company at a price of $0.15 per share for a period of twenty-four months from the date of closing, subject to an acceleration clause, under the exercise acceleration clause, which the Company may exercise once the Units are free of resale restrictions and if the Company's shares are trading at or above a volume weighted average price of $0.40 for 10 consecutive trading days. The Warrants will expire upon 30 days from the date the Company provides notice in writing to the Warrant holders via a news release. The Company paid $1,365 in finder's fees and incurred cash share issuance costs of $12,487 related to the closing of the second tranche. The Company allocated $9,500 of the gross proceeds to warrants using the residual method. On April 20, 2021, the Company granted an aggregate of 2,875,000 stock options to directors, employees and consultants, pursuant to the Company's stock option plan and subject to the policies of the TSX Venture Exchange. The stock options are exercisable at a price of $0.08 per share, exercisable for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 0.75%, expected dividend rate of 0%; expected volatility of 94.59% and forfeiture rate of 0%. The fair value of the options was calculated at $164,478. On September 3, 2021, the Company granted 500,000 stock options to the Company's CEO. The stock options are exercisable at a price of $0.08 per share, exercisable for a period of five years and vest immediately on grant. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk- free interest rate of 0.98%, expected dividend rate of 0%; expected volatility of 95.83% and forfeiture rate of 0%. The fair value of the options was calculated at $31,082. During the year ended November 30, 2021, 1,510,000 stock options, with a weighted average exercise price of $0.27 per share were expired, unexercised and $392,000 stock options with a weighted average exercise price of $0.72 per share were cancelled. As a result, the Company transferred $384,597 from share-based payment reserve to retained earnings. Management On March 22, 2021, the Company announced the resignation of a director of the Company, Dr. Karoly Nikolich and the appointment of Kevin Egan to the position of Chief Business Officer. Further, Judi Dalling retired as CFO as at April 30, 2021. On June 16, 2021, the Company announced the appointment of Hardy Forzley as Chief Financial Officer of the Company. On August 31, 2021, Mr. Mark van der Horst retired as Vice President, Corporate Communications, and Kevin Egan retired as Chief Business Officer. On September 7, 2021, the Company announced the appointment of Rob Gietl as Chief Executive Officer, President and Director. Mr. Gietl takes over from Dr. Patrick Gray, who now is Chairman of the Board of Directors. 4 On February 8, 2022, the Company received a Notice of Civil Claim against the Company from a former officer of the Company for damages due to a breach of contract and wrongful termination. The claim against the Company is for 500,000 common shares of the Company to be issued to the former officer, punitive damages, interest and costs. The 500,000 common shares were issued subsequent to year end. No other amounts have been accrued in respect of this claim. On February 28, 2022, the Company appointed Brian Bapty as its new Chief Executive Officer President and Director and granted him 500,000 stock options. The stock options are exercisable at a price of $0.08 per share, for a period of five years, vesting quarterly over one year. In March 2022, the Company entered into agreements with non-arm's length parties and arm's length parties to settle debt of $474,812 by issuing 4,478,276 common shares of the Company at a deemed price of $0.08 per share and $30,000 in cash. On March 16, 2022, the Company signed a term sheet with Shape Capital Pty Ltd. (Shape) of Melbourne, Victoria, an investment and advisory firm, which will provide a three-year, convertible note for $2,000,000. The note is non-interest bearing and is structured to advance to Pascal tranches of $55,000 per month which, at the option of the investors in the note, can be doubled to $110,000 on any given month. With each drawdown Pascal will issue common shares to satisfy the note. The number of shares issued will be based on a Conversion Price equal to 90% of the average of five daily volume-weighted average prices (VWAPs), selected by the Investor, during the 22 trading days prior to the Conversion Notice. If that price is less than the Discounted Market Price, as defined by the TSX.V, the Conversion Price will be the Discounted Market Price. The Company is being charged an administration fee by Shape of $130,000 ($65,000 within 3-days of acceptance, and $65,000 at twelve months), and a commitment fee of $80,000. The $210,000 will be paid by the issue of 2,100,000 Shares at deemed price of $0.10 per Share. Investors will be issued 2,200,000 Share purchase warrants to acquire, for one year, one further Share. The term sheet is subject to TSX.V approval. Financial Position The audited consolidated statement of financial position as of November 30, 2021 indicates a cash position of $nil (2020: $nil). Current assets are comprised of prepaid expenses of $3,192 (2020: $10,598) and accounts receivable of $142,007 (2020: $83,802). Non-current assets at November 30, 2021 are comprised of computer and lab equipment of $9,989 (2020: $26,314). Current liabilities at November 30, 2021 total $646,483 (2020: $473,053), comprised of bank indebtedness of $7,759 (2020: $16,909), accounts payable and accrued liabilities of $588,944 (November 30, 2020: $326,494) and short-term loan due to a related party of $49,780 (November 30, 2020: $129,650). Shareholders' equity is comprised of share capital of $13,026,100 (2020: $12,331,652), shares to be issued of $46,000 (2020: $nil) and reserves of $712,851 (2020: $887,921). On February 8, 2021, the Company closed the first tranche of a non-brokered private placement for net proceeds of $527,800 by issuing 5,600,000 units. On March 17, 2021, the Company closed the second and last tranche of a non-brokered private placement for net proceeds of $176,148. As at November 30, 2021, the Company had a working capital deficit of $501,284 (2020: $378,653). The weighted average number of common shares outstanding, basic and diluted as at November 30, 2021 was 63,484,358 (November 30, 2020: 55,400,349). Core Technologies 1. Cannabinoid-based therapeutic for glioblastoma: Glioblastoma is an aggressive type of cancer that arises in cells called astrocytes that support nerve cells. It can occur in the brain and spinal cord. It is a devastating cancer due to its high rate of recurrence, limited treatment options and aggressive nature. Glioblastoma strikes approximately 15,000 patients each year in North America and the median survival time is only 14 months. Therapies for glioblastoma are limited to surgery, radiation, and the chemotherapeutic drug temozolomide. Pascal's PAS-403 is a cannabinoid-derived molecule that kills patient-derived glioblastoma cells. PAS-403 is a mitotic inhibitor that blocks cell division. Several mitotic inhibitors already approved for cancer treatment show substantial benefit in reducing solid tumours when combined with other chemotherapeutic. However, unlike PAS-403, none of these drugs cross the blood-brain barrier and therefore have no activity on glioblastoma cells. PAS-403 kills cultured glioblastoma cells from patients and is very effective in a mouse model of glioblastoma. The alkylating drug, temozolomide, is currently licenced and used as a first line treatment for 5 glioblastoma. Since temozolomide has a different mechanism of action compared to PAS-403, the two drugs should synergize and will possibly provide a superior method of treatment. Pascal has developed a manufacturing process for PAS-403 and completed much of the preclinical pharmacology efforts required for filing an Investigational New Drug with the FDA. 2. VpreB antibody for the treatment of B cell precursor acute lymphoblastic leukaemia (ALL) and other leukaemias and lymphomas: ALL is the most common childhood cancer, with the incidence peaking at approximately two to five years of age. In addition, ALL affects some older individuals with approximately 45% of ALL patients above age twenty. On an annual basis, more than 6,500 people in North America and approximately 40 cases per 1,000,000 people worldwide, present with the disease. Current treatment practices utilize harsh chemotherapy regimens. While effective in many patients, the near and long-term consequences of chemotherapy can be disabling. Therefore, there is a need for new strategies to address relapsed disease and ultimately replace chemotherapy as a frontline treatment. ALL is caused by genetic lesions that arise during the earliest stages of B lymphocyte development. Pascal has derived and selected monoclonal antibodies against a unique target, the pre-B Cell Receptor ("Pre-BCR"), that is specifically expressed on the surface of these pre-B cells and not expressed during subsequent stages of B cell development. The pre-BCR is also present on ALL cells. Therefore, in addition to killing the leukaemia cells, Pascal's antibodies, directed against one of the components of the pre-BCR, VpreB, should only deplete the earliest stages of developing B cells, leaving more mature B cells available to combat infection by secretion of antibodies. Careful direct examination of large gene expression databases and exploration of the scientific literature revealed the unexpected expression of VpreB mRNA by tumour cells of subsets of acute myelogenous leukaemia (AML) and non- Hodgkin lymphoma ("NHL") patients. Experiments to screen cancer cells from large panels of these patients by immunocytochemistry using the VpreB antibody are planned. If the molecular data are confirmed at the protein level, a VpreB biomarker assay will be developed for identifying AML and NHL patients that may also benefit from VpreB antibody treatment. 3. Novel natural compounds that are able to increase antigen expression on the surface of tumour cells, making them more visible to the immune system. These molecules will be useful as cancer therapeutics by enabling increased killing of cancer cells by the immune system. Many cancer cells, including those that are metastatic, escape immune recognition and elimination after selection by immune editing whereby tumour antigens are not properly displayed on the cell surface and thus can not be properly recognized by the immune system. These escape variants do not express sufficient Major Histocompatibility Complex I ("MHC-I") molecules and their associated tumour antigen peptides at the cell surface. Thus, these tumour cells evade recognition by host immune surveillance mechanisms, making them resistant to most immunotherapeutic approaches for elimination of cancer. In February 2014, the Company entered into an agreement with the University of British Columbia ("UBC") whereby UBC conducted research to identify compounds that increase the expression of the Transporter of Antigen Processing ("TAP1") protein, a part of the antigen processing pathway, critical for MHC-I expression. Several compounds that restored the presentation of tumour antigens at the cancer cell surface were identified.By developing a high-throughput screening assay applied to extracts from deep-sea sponges, the Company identified several unique molecules that induce antigen presentation in metastatic prostate and lung carcinomas. From these extracts, new chemical structures that exhibit efficient restoration of MHC-I expression were identified. Subsequently, screening of additional extracts and purified compounds was performed, and several more active compounds were identified. One compound, curcuphenol, was initially identified as a leading candidate for immune upregulation. Searching the chemical structure of curcuphenol against large chemical databases revealed that some structural elements of curcuphenol are found in certain cannabinoids, compounds found in extracts of the Cannabis sativa plant. 400 cannabinoids were tested for their ability to induce MHC-I expression in human cancer cell lines. Several distinct cannabinoids registered positive in this assay, with the most potent inducing MHC-I expression levels to approximately half of the levels induced by interferon gamma, a natural powerful physiologic inducer of MHC-1. Specifically, Pascal has identified a natural cannabinoid with good potency and pharmacologic properties. Pascal intends to develop this cannabinoid, PAS-393, as a therapeutic compound that will render cancer cells more visible to immune surveillance. Such a molecule has the potential to increase cancer cell recognition, thus dramatically increasing the efficacy of checkpoint inhibitors (therapeutic monoclonal antibodies) which release the cancer killing effects of cytolytic T cells. 6 4. Cannabinoid therapeutic for treating COVID-19: The coronavirus pandemic has triggered a massive, worldwide effort to develop effective vaccines and treatments for COVID-19. Despite the previous global focus on cancer research and treatment, the tremendous disruption of entire economies and health care systems worldwide stimulated Pascal's scientists to direct efforts towards a cannabinoid-based treatment for COVID-19. The decision was made to test a variety of cannabinoids for effects on the SARS-CoV-2 coronavirus since previously published data suggest that some cannabinoids have anti-viral functions. In addition, it has been shown that cannabinoids can upregulate major histocompatibility complex Type 1 (MHC-I) molecules that are expressed on the surface of tumour cells. As has been demonstrated in several infection models, this MHC upregulation also helps the immune system identify virus-infected cells. It has been observed that cannabis extracts downregulate the expression of receptors for the SARS- CoV-2 virus. Furthermore, some cannabinoids have immunomodulatory activity that can mitigate the uncontrolled inflammatory response known as a "cytokine storm", which is often seen in the most severe COVID-19 patients. Since cannabinoids have the potential to limit the severity and progression of COVID-19, selected compounds were tested in a cell-based assay. It was found that one of Pascal's lead cannabinoids inhibits SARS-CoV-2 growth in primate cells in vitro. Pascal has since confirmed this SARS-CoV-2 anti-viral activity in four different laboratories, using different assay conditions and different strains of SARS-CoV-2. Significantly, the potency of the Pascal-selected cannabinoid in this assay was similar to that of remdesivir, a drug authorized by the FDA for emergency treatment of COVID-19. These initial observations illuminate the potential of cannabinoids for the treatment of COVID-19. Our initial results suggest that cannabinoids may act upon the virus or the virus-infected host cells cell to reduce virus infectivity or viral replication. However, it is likely that the scope of the benefit to the patient will extend far beyond the direct effect on the virus-cell interaction. The capacity of certain cannabinoids to restore cancer cell recognition by the immune system has been previously demonstrated. Many viruses, like certain cancers, render their host cells invisible to immune recognition to protect them from destruction and removal. Cannabinoids may reverse this effect. In addition, cannabinoids are known for their anti-inflammatory properties. Thus, they may benefit the patient, much like dexamethasone does, in the later phase of disease when run-away inflammation is one of the main causes of tissue injury and even death. Patents Intellectual property and other proprietary rights are essential to the Company's business. The Company has filed patent applications to protect technology, inventions and improvements of inventions that are important for the development of the business. In January 2018, the Company filed a provisional patent application, "Cannabinoids and derivatives for promoting immunogenicity of tumour and other infected cells", covering cannabinoid-like compounds that restore immune recognition of cancer cells thus increasing their subsequent destruction. The non-provisional application was filed January 21, 2019 and the Company is continuing to pursue the application. Pursuant to the terms of the license agreement with the University of Washington in October 2018, the Company has retained the patent portfolio surrounding development of a cannabinoid-based product for the treatment of glioblastoma multiforme and brain metastases. The patent "Composition and methods for treating glioblastoma" filed in August 2011 by the University of Washington was granted by the United States Patent and Trademark Office in May 2015 (US Patent Number: 9,034,895) with expiry in November 2031. In August 2018, the University of Washington filed a provisional patent titled "Modified Carbazoles Destabilize Microtubules and Kill Glioblastoma Multiforme Cells and BRAF Mutant Cancers," covering the cannabinoid-based compounds for treatment of glioblastomas and brain metastases. In August 2019, the Company filed a non-provisional patent application for patent protection. The Company is continuing to pursue the application. In July 2019, the Company filed a provisional patent titled "Composition and Methods of Targeting the Pre-B Cell Receptor for the Treatment of Leukaemias and Lymphomas. In July 2020, the Company filed a non-provisional application for patent protection and is continuing to pursue this application. In July 2020, the Company filed a provisional patent titled: "Method of Treating Coronavirus Infections with Cannabinoids and Derivatives". In July 2021, the Company filed a non-provisional application for patent protection and is continuing to pursue this application. 7 Results of Operations During the year ended November 30, 2021, the Company reported a net loss and comprehensive loss of $1,088,931 ($0.02 basic and diluted loss per share) compared to a net loss and comprehensive loss of $1,237,927 ($0.02 basic and diluted loss per share) for the year ended November 30, 2020. Selected Annual Information The following table provides a brief summary of the Company's financial operations for the three most recently completed financial years. Total Revenues Year Ended Year Ended Year Ended Net Loss and Comprehensive Loss November 30, November 30, November 30, Net Loss per share, basic and diluted Total Assets 2021 2020 2019 Weighted Average Number of Shares Outstanding $nil $nil $nil Shareholders' Equity (Deficit) $1,088,931 $1,237,927 $3,412,176 $0.02 $0.02 $0.06 $155,188 $120,714 $455,481 63,484,358 55,400,349 52,647,396 (491,295) (352,339) $344,036 During the year ended November 30, 2021, the Company saw significant year over year decreases in consulting fees of $84,044, salaries and benefits of $399,930, and research and development of $82,702 (Please refer to Analysis of Quarterly Results below). Similarly, during the year ended November 30, 2020, the Company saw significant year over year decreases in research and development of $782,144, salaries and benefits of $757,591 and consulting fees of $196,567. Summary of Quarterly Results The following table presents selected quarterly financial information of the Company for the eight most recently completed quarters of operation prepared in accordance with IFRS and expressed in Canadian Dollars. 2021 2020 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 $ $ $ $ $ $ $ $ Revenue - - - - - - - - Net and comprehensive 402,196 241,275 286,089 159,371 (4,899) 320,275 421,165 501,386 (gain) loss (0.01) (0.00) (0.00) Basic and diluted 0.00 0.00 0.01 0.01 0.01 Loss per share Share-based payments impacts expenses and net and comprehensive loss as follows: Q4 2021: $25,446, Q3 2021: $102,602, Q2 2021: $70,826, Q1 2021: $1,153, Q4 2020: $1,460, Q3 2020: $1,831, Q2 2020: $3,962 and Q1 2020: $8,268. Losses during the most recent five quarters are significantly lower due mainly to reduced salaries and research and development expenses. During Q4 of 2021, the Company received US $50,000 from SRSE and recorded a receivable of US $100,000, pursuant to the collaborative research agreement, and applied these funds against salary expense. The Company recorded a bad debt expense of $50,723 during Q4 2021. The Company also recognized a gain on debt settlement of $46,153 during Q4 2020. The Company's significant accounting policies are set out in Note 3 of the audited annual consolidated financial statements as at and for the year ended November 30, 2021. 8 Analysis of Quarterly Results Three Months Ended Year Ended November 30, November 30, Accounting and audit fees Notes 2021 2020 2021 2020 Administrative and general office $ $ $ $ Amortization a) Bank charges and interest b) 47,967 30,000 68,978 36,354 Consulting fees c) 15,898 8,288 71,293 52,537 Salaries and benefits d) 3,245 1,084 16,325 12,478 Foreign exchange e) 3,896 5,585 6,676 Insurance 908 132,348 216,392 Investor relations and marketing 67,296 33,405 291,607 691,537 Legal fees 81,169 (188,099) Research and development 2,284 7,092 Share-based payments 4,921 11,429 40,280 56,761 Transfer agent, listing and filing fees 6,022 17,027 108,947 12,967 Travel and entertainment 69,081 3,967 16,522 4,481 Bad debt expense 9,571 5,406 57,775 140,477 Interest income 12,645 115,629 200,027 15,521 Gain on debt settlement 25,446 1,460 26,188 31,060 7,304 2,426 49 163 - 122 50,723 - 50,723 - - - (416) - - (46,153) - (46,153) a) Consulting fees: The decrease was mainly the result of fees paid to a director of the Company in relation to financial consulting during the year ended November 30, 2020 as compared to $nil during year ended November 30, 2021 and due to the resignation of Judi Dalling effective April 30, 2021. b) Salaries and benefits: During Fiscal 2021, the Company had four full-time employees and one part-time employee compared to Fiscal 2020, when it had six full-time employees. c) Investor relations and marketing: During the year ended November 30, 2021, the Company increased its investor relations activities due to the cash inflow from the proceeds of the private placement as compared to the year ended November 30, 2020, when cash flows were lower. d) Research and development: During the year ended November 30, 2021, research and development was reduced due to cash constraints. e) Share-based payments: The increase is due to 3,775,000 stock options being granted during the year ended November 30, 2021 as compared to nil stock option granted during the year ended November 30, 2020. Liquidity & Capital Resources The Company has financed its operations to date through the issuance of common shares. Working capital November 30, November 30, Deficit 2021 2020 $ $ (501,284) (378,653) 14,276,246 13,571,912 9 During the year ended November 30, 2021, net cash used in operating activities was 614,928 (2020: $862,829), comprised of a loss of $1,088,931 (2020: $1,237,927) net of amortization expense of $16,325 (2020: $12,478), share-based payments of $200,027 (2020: $15,521), gain on settlement of debt of $nil (2020: $46,153), shares issued for services of $46,000 (2020: $nil), bad debt expense of $50,723 (2020: $nil), a decrease in prepaid expenses of $7,406 (2020: $16,933), an increase in accounts receivable of $108,928 (2020: $69,495), and an increase in accounts payable and accrued liabilities of $262,450 (2020: $445,814). During the year ended November 30, 2021, cash from financing activities was $624,078 (2020: $471,069), comprised of shares issued for cash and proceeds from short-term loan less share issuance costs (refer to Share Capital above). During the year ended November 30, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH), which will further augment the Company's cash position. This two- year award will fund development of Pascal's antibody drug for Acute Lymphoblastic Leukaemia (ALL), which is the most common childhood leukaemia. During the year ended November 30, 2021, the Company incurred US$38,418 (2020: $nil) in research and development expenditures against income of US$38,418 (2020: $nil) in funding from NIH. Subsequent to November 30, 2021, the Company signed a term sheet with Shape of Melbourne, Victoria, an investment and advisory firm, which will provide a three-year, convertible note for $2,000,000. This will address the Company's liquidity issue and fund its operations. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that would potentially affect current or future operations or the financial condition of the Company. Related Party Transactions The following is a summary of related party transactions that occurred during the year ended November 30, 2021 and 2020. Services provided by: 2021 2020 Key management salaries/fees $ $ Director and officer salaries/fees Share-based payments a) 307,811 311,389 Benefits b) 417,284 554,233 139,193 - 120,799 123,704 985,087 989,326 Related parties include: a) Key management salaries include amounts paid to the CEO, former CEO and the CFO b) Director and officer salaries include amounts paid to the Vice President of Research, the Vice President of Therapeutic Development and the Chief Business Officer. Included in accounts payable and accrued liabilities is $233,820 (2020: $69,522) payable to directors and officers of the Company. Included in the above are loans to the Company by a director of the Company totalling $49,780 (US $34,318). The loan is unsecured, is due on demand and bears no interest. At November 30, 2021 the Company has the commitment to issue 500,000 shares to the CEO per his employment agreement in lieu of two months' worth of salary. Commitments Commitments over the next five fiscal years are as follows: a) Consulting agreement with Mo Mousa to provide bookkeeping services to Pascal (US) for an annual fee of USD $24,000. During the year ended November 30, 2021, this was increased to an annual fee of US $36,000. The Company has also entered into the following agreements: 10 a) University of Washington: On October 9, 2018, the Company entered into an exclusive license agreement with the University of Washington ("UW") to develop a cannabinoid-based product for the treatment of glioblastoma multiforme and brain metastases. Under the terms of the agreement, the Company will pay annual fees (US Dollars) as follow: October 9, 2020 $ 5,000 (paid) October 9, 2021 $ 10,000 Every year thereafter until first sale $ 25,000 Financial Instruments & Other Instruments (a) Fair value Financial instruments recognized at fair value on the consolidated statements of financial position must be classified in one of the following three fair value hierarchy levels: Level 1 measurement based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities; Level 2 measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability; or Level 3 measurement based on inputs that are not observable (supported by little or no market activity) for the asset or liability. As at November 30, 2021 and 2020, the Company's financial instruments are comprised of bank indebtedness, receivables, and accounts payable and accrued liabilities. The carrying amounts reported in the consolidated statements of financial position for bank indebtedness, receivables, shortterm loan payable, and accounts payable and accrued liabilities approximate fair values due to the short-term maturities of these financial instruments. (b) Credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of receivables. The Company limits its exposure to credit loss by having its receivables from an entity it has been in business with for a long time. The carrying amount of financial assets represents the maximum credit exposure. (c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meets its financial obligations as they become due. The Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due. At November 30, 2021, the Company had cash and cash equivalents of $nil (2020: $nil) available to apply against short-term business requirements and current liabilities of $646,483 (2020: $473,053). All of the liabilities presented as accounts payable and accrued liabilities are due within 90 days of November 30, 2021. (d) Currency risk The Company is exposed to currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than the Canadian dollar. The Company does not manage currency risks through hedging or other currency management tools. 11 As at November 30, 2021 and 2020, the Company's net exposure to foreign currency risk is as follows: US dollars 2021 2020 $ $ Cash Accounts receivable (8,140) (12,506) Accounts payable 100,000 - Short-term loan (265,944) (34,318) (112,555) (100,000) Net exposure to foreign currency risk (208,402) (225,061) Canadian dollar equivalent (266,588) (282,931) Based on the above net foreign currency exposure, and assuming all other variables remain constant, a 7% weakening or strengthening of the Canadian dollar against the US dollar would have a material effect on the Company's net loss and comprehensive loss. (e) Other price risk Other price risk is the risk that future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk. Risks and Uncertainties Overview An investment in the Company's shares should be considered highly speculative due to the nature of the Company's business and the present stage of its development. In evaluating the company and its business, shareholders should carefully consider, in addition to the other information contained in this management discussion and analysis, the following risk factors. These risk factors are not a definitive list of all risk factors associated with the Company. It is believed that these are the factors that could cause actual results to be different from expected and historical results. Investors should not rely upon forward- looking statements as a prediction of future results. Competition The market for the Company's technology is highly competitive. The Company competes with other research teams who are also examining potential therapeutics with regards to cancer, viral infection, and other disorders. Many of its competitors have greater financial and operational resources and more experience in research and development than the Company. These and other companies may have developed or could in the future develop new technologies that compete with the Company's technologies or even render its technologies obsolete. Competition in the Company's markets is primarily driven by: dot timing of technological introductions; dot ability to develop, maintain and protect proprietary products and technologies; and dot expertise of research and development team. Litigation to Protect Company's Intellectual Property The Company's future success and competitive position depends in part upon its ability to maintain its intellectual property portfolio. There can be no assurance that any patents will be issued on any existing or future patent applications. Even if such patents are issued, there can be no assurance that any patents issued or licensed to the Company will not be challenged. The Company's ability to establish and maintain a competitive position may be achieved in part by prosecuting claims against others who it believes to be infringing its rights. In addition, enforcement of the Company's patents in foreign jurisdictions will depend on the legal procedures in those jurisdictions. Even if such claims are found to be invalid, the Company's involvement in intellectual property litigation could have a material adverse effect on its ability to distribute any products that are the subject of such litigation. In addition, the Company's involvement in intellectual property litigation could result in significant expense, which could materially adversely affect the use responsibilities, whether or not such litigation is resolved in the Company's favour. 12 Clinical testing and Regulatory approval Since the Company's success is dependent on the successful completion of a third party pre-clinical trials, regulatory approval and introduction of its technology into the market and since the Company has completed none of the tasks at this time, the Company does not know if it will be able to complete them. The timing of these events can vary dramatically due to factors such as delays or failures in the Company's clinical trials and the uncertainties inherent in the regulatory approval process. The Company might not be able to obtain the necessary results from its pre-clinical trials or to gain regulatory approval necessary for licensing its technology. The Company's failure to achieve these objectives will mean that an investor will not be able to recoup their investment or to receive a profit on their investment. Intellectual Property The Company's success depends to a significant degree upon its ability to develop, maintain and protect proprietary products and technologies. The Company files patent applications in the United States, Canada, Europe, and selectively in other foreign countries as part of its strategy to protect its proprietary products and technologies. However, patents provide only limited protection of the Company's intellectual property. The assertion of patent protection involves complex legal and factual determinations and is therefore uncertain and expensive. The Company cannot provide assurances that patents will be granted with respect to any of its pending patent applications, that the scope of any of its patents will be sufficiently broad to offer meaningful protection, or that it will develop additional proprietary technologies that are patentable. The Company's current patents could be successfully challenged, invalidated or circumvented. This could result in the Company's patent rights failing to create an effective competitive barrier. Losing a significant patent or failing to get a patent to issue from a pending patent application that the Company considers significant could have a material adverse effect on its business. The laws governing the scope of patent coverage in various countries continue to evolve. The laws of some foreign countries may not protect the Company's intellectual property rights to the same extent as the laws of Canada and the United States. The Company holds patents only in selected countries. Therefore, third parties may be able to replicate technologies covered by the Company's patents in countries in which it does not have patent protection. Legal Proceedings In the course of the Company's business, the Company may from time to time have access to confidential or proprietary information of third parties, and these parties could bring a claim against the Company asserting that it has misappropriated their technologies and had improperly incorporated such technologies into its products. Due to these factors, there remains a constant risk of intellectual property litigation affecting the Company's business. In the future, the Company may be made a party to litigation involving intellectual property matters and such actions, if determined adversely, could have a material adverse effect on the Company. Dependence upon Management Although the Company Issuer is expected to have experienced senior management and personnel, it will be substantially dependent upon the services of a few key personnel. The loss of the services of any of these personnel could have a material adverse effect on the business of the Company. The Company may not be able to attract and retain personnel on acceptable terms given the intense competition for such personnel among high technology enterprises, including biotechnology, and healthcare companies, universities and non-profit research institutions. If it loses any of these persons, or is unable to attract and retain qualified personnel, its business, financial condition and results of operations may be materially and adversely affected. Going Concern The ability of the Company to continue as a going concern is dependent on its ability to generate future profitable operations and to obtain additional debt or equity financing. There can be no assurance that the Company's operations will achieve profitability in the future or that the the Company will be able to successfully obtain financing on commercially reasonable terms or at all. Substantial Capital Requirements and Liquidity Substantial additional funds for the Company's research and development programs will be required. No assurances can be given that the the Company will be able to raise the additional funding that may be required for such activities. To meet such funding requirements, the Company may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations, or even cease its operations. 13 Reliance on Third Parties The Company is relying on a third party to assist it in conducting both pre-clinical and clinical trials. If this third party does not successfully carry out their contractual duties or meet expected deadlines, the Company may not be able to obtain regulatory approval for or commercialize its technology. Unproven market The Company believes that there will be many different applications for its technologies and that the anticipated market for these technologies will continue to expand. However, no assurance can be given that these beliefs will be correct owing, in particular, to competition from existing technologies or new technologies and the yet to be established replication of the Company's pre-clinical results. Limited Operating History The Company has neither a history of earnings nor has it paid any dividends and it is unlikely to pay dividends or enjoy earnings in the immediate or foreseeable future. Conflicts of Interest Certain of the directors and officers of the Company are engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies (including research and development companies) and, as a result of these and other activities, such directors and officers may become subject to conflicts of interest. The Business Corporations Act, (British Columbia) ("BCBCA") provides that in the event that a director has a material interest in a contract or proposed contract or agreement that is material to an issuer, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA. Market risk The Company's securities trade on public markets and the trading value thereof is determined by the evaluations, perceptions and sentiments of both individual investors and the investment community taken as a whole. Such evaluations, perceptions and sentiments are subject to change, both in short term time horizons and longer term time horizons. An adverse change in investor evaluations, perceptions and sentiments could have a material adverse outcome on the Company and its securities. Share Price Volatility and Price Fluctuations In recent years, the securities markets in Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies, have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that these price fluctuations and volatility will not continue to occur. Global Uncertainty The Company's business could be adversely affected by the effects of health epidemics and pandemics, including the global COVID-19 pandemic. In December 2019, a novel strain of COVID-19 was reported in China. Since then, COVID-19 has spread globally, to include Canada, the United States, several European countries, Asia, Australia and New Zealand and Africa. The spread of COVID-19 from China to other countries has resulted in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a "pandemic," or a worldwide spread of a new disease, on March 11, 2020. Many countries around the world, including Canada, have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus, and have closed non-essential businesses. The spread of COVID-19, which has caused a broad impact globally, may materially affect the Company economically. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic has resulted in significant disruption of global financial markets, reducing the Company's ability to access capital, which could in the future negatively affect the Company's liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company's business and the value of the Company's common shares. The continued spread of COVID-19 globally could also adversely affect the Company's planned clinical trial operations, including its ability to initiate the trials on the expected timelines and recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geographic areas. Further, the COVID-19 outbreak could result in delays in clinical trials due to prioritization of hospital resources toward the outbreak, restrictions in travel, potential unwillingness of patients to enrol in trials at this time, or the 14 inability of patients to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services. In addition, the Company relies on independent clinical investigators, contract research organizations and other third-party service providers to assist in managing, monitoring and otherwise carrying out preclinical studies and clinical trials, and the outbreak may affect their ability to devote sufficient time and resources to the Company's programs or to travel to sites to perform work for us. The global outbreak of COVID-19 continues to rapidly evolve. The extent to which COVID-19 may impact the Company's business, operations and clinical trials will depend on future developments, including the duration of the outbreak, travel restrictions and social distancing in Canada and other countries, the effectiveness of actions taken in Canada, the United States and other countries to contain and treat the disease and whether Canada and other countries are required to move to complete lock-down status. The ultimate long-term impact of COVID-19 is highly uncertain and cannot be predicted with confidence. Other MD&A requirements Information available on SEDAR As specified by National Instrument 51-102, the Company advises readers of this MD&A that important additional information about the Company is available on the SEDAR website www.sedar.com. Disclosure by venture issuer An analysis of the material components of the Company's general and administrative expenses is disclosed in the consolidated financial statements for the years ended November 30, 2021 and 2020. Outstanding share data Common shares issued and outstanding as at November 30, 2021 are described in detail in Note 6 to the audited consolidated financial statements for the years ended November 30, 2021 and 2020. As at the date of this document March 25, 2022, the Company had the following number of securities outstanding: Number of shares $ Number of Exercise Expiry date options price Issued and outstanding 65,594,769 13,072,100 35,000 $0.33 April 30, 2022 100,000 $0.35 April 30, 2022 198,000 $0.20 May 28, 2022 505,000 $0.33 June 27, 2022 100,000 $0.29 January 28, 2023 800,000 $0.35 August 2, 2023 400,000 $0.15 December 18, 2025 2,375,000 $0.08 April 20, 2026 500,000 $0.08 September 3, 2026 500,000 $0.08 February 28, 2027 Number of share purchase warrants 5,600,000 $0.15 February 8, 2023 1,900,000 $0.15 March 17, 2023 15 Schedule E Audited carved out income statement of SoRSE Technology Corporation for the three years ended December 31, 2022, December 31, 2021, and December 31, 2020 Sorse Technology Corporation Carveout Income Statements For the years ended December 31, 2022, 2021 and 2020 INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Shareholders of SoRSE Technology Inc. Opinion We have audited the carveout income statements for the years as at December 31, 2022, 2021 and 2020 of THC Essentials, a business unit of Sorse Technology Corporation (the Company) and related notes to the carveout income statements (together the "financial statements"). In our opinion, the carveout income statements for the years as at December 31, 2022, 2021 and 2020 of the Company presents fairly, in all material respects, its operations for the years then ended in accordance with International Financial Reporting Standards (IFRS). Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the schedule in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter Basis of Accounting and Restriction on Distribution We draw attention to Note 1, which describes the basis of preparation. The financial statements are prepared to assist the Company to meet the requirements of the Canadian Securities Exchange. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Other than the matter described in the Emphasis of Matter section, we have determined there are no key audit matters to be communicated in our report. Responsibilities of Management and Those Charged with Governance Management is responsible for the preparation of financial statements in accordance with International Financial Reporting Standards (IFRS) and for such internal control as management determines is necessary to enable the preparation of the schedule that is free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this schedule. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: dot Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. dot Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. dot Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the schedule or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. dot Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management. dot Evaluate the overall presentation, structure, content of the financial statements including the disclosures and whether the financial statements represent the underlying transaction and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. June 30, 2023 Marko Glisic GreenGrowth CPAs 10250 Constellation Blvd. Los Angeles, CA 90067 Sorse Technology Corporation 12/31/2022 12/31/2021 Carveout Income Statement (Expressed in USD) $ 1,554,263 $ 1,696,423 420,457 923,128 Revenue 773,295 Cost of Goods Sold 1,133,806 Gross Margin 212,661 388,666 8,322 Personnel Expenses 11,265 Rent & Facilities Expenses 204,423 190,034 Marketing Expenses 194,393 107,714 Travel & Entertainment Expenses 99,638 SG&A Expenses 898,387 62,117 Total Expenses 580,848 $ 235,420 Net Income $ 192,447 Sorse Technology Corporation 12/31/2021 12/31/2020 Carveout Income Statement (Expressed in USD) $ 1,696,423 $ 238,391 923,128 273,167 Revenue 773,295 (34,776) Cost of Goods Sold Gross Margin 212,661 28,764 8,322 - Personnel Expenses Rent & Facilities Expenses 190,034 30,655 Marketing Expenses 107,714 - Travel & Entertainment Expenses 62,117 SG&A Expenses 580,848 67,405 Total Expenses 126,825 $ 192,447 Net Income / (Loss) $ (161,600) Notes to Carveout Income Statements for THC Essentials 1. NATURE OF OPERATIONS Sorse Technology Corporation (the "Company") was incorporated on August 10, 2017 under the General Corporation Law of the State of Delaware, in the United States of America. The corporate headquarters of the Company is located at 401 Queen Anne Ave N, Seattle, WA 98119. As a minor component of its overall business, the Company has developed multiple formulas, and registered multiple trademarks for branded consumer beverages which incorporate cannabis as a key functional ingredient (the "Products"). However, the Company does not manufacture or distribute the Products; the Company has negotiated license and manufacturing agreements with multiple business partners in different states with the USA (each a "Manufacturing Partner"). The Company provides the branding collateral, trademark licenses, and formulas to these Manufacturing Partners who are responsible for the actual production and distribution of the Products. In return for licensing the trademarks and formulas to the Manufacturing Partners, each of them pays a royalty or licensing fee to the Company. These licensing fees are typically structured as either a set dollar amount per unit produced, or a percentage of the net sales of the Products at wholesale prices. The business line described above is commonly referred to as "THC Essentials" by the Company and it is this specific business unit, and no other part of the Company, that constitutes the basis for the Carveout Income Statements contained herein. 2. STATEMENT OF COMPLIANCE, BASIS OF PRESENTATION (a) Statement of Compliance The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These carveout financial statements were authorized for issue by the Board of Directors on April 10, 2023. (b) Basis of Measurement The financial statements of the Company have been prepared on an accrual basis and are based on historical costs. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the carve out financial statements. (c) Functional and Presentation Currency These consolidated financial statements are presented in United States dollars, which is the functional currency of the Company. Notes to Carveout Income Statements for THC Essentials (Cont.) 3. REVENUE Revenue consists of licensing fees, royalty fees, and the sale of product packaging, including bottles, caps, and labels. The Company recognizes revenue in accordance with IFRS 15, "Revenue from Contracts with Customers" and it is measured based on the consideration the Company expects to be entitled to in exchange for licensing its trademarks and other intellectual property, as well as for physical product packaging. The five steps to the new revenue recognition approach are the following: 1) Identify the contract with the customer; 2) Identify the performance obligations; 3) Determine the transaction price; 4) Allocate the transaction price based on the performance obligations; and 5) Recognize revenue based on the performance obligations. Revenue comprises the fair value of consideration received or receivable for the sale of goods in the ordinary course of the Company's activities. Revenue is shown net of any discounts and applicable excise taxes. Revenue is recognized upon the satisfaction of the performance obligation. For the sale of product packaging, the Company satisfies its performance obligation and transfers control upon either the delivery of the packaging to the customer, or at the time that the customer consumes the packaging in the course of manufacturing finished goods at their location. For the licensing and royalty payments, the Company satisfies its performance obligation at the time that the customer utilizes the Company's licensed trademarks in the production and sale of finished goods. Payment is typically due within 30 days of the invoice date. 4. CRITICAL JUDGEMENTS AND ESTIMATES The preparation of consolidated financial statements in conformity with IFRS requires the Company's management to make judgements, estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may differ from those estimates. Estimates and judgements are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable. 5. PURCHASE TRANSACTION Pursuant to the Purchase Agreement, Pascal agreed to purchase a limited selection of assets from the Company, all of which are directly related to the Company's business unit known internally as THC Essentials. The assets being purchased include inventory, equipment, customer contracts, and trademarks. No other assets of the Company, and none of the liabilities of the Company are being acquired by Pascal pursuant to the Purchase Agreement. Inventory consists of packaging materials, raw ingredients and other unfinished goods. There are no finished goods held in inventory. Raw ingredients held in inventory do not consist of any hemp or cannabis related materials. Notes to Carveout Income Statements for THC Essentials (Cont.) 5. PURCHASE TRANSACTION (Cont.) The Purchase Agreement describes the consideration to be paid for the assets as follows: a) a secured promissory note in the principal amount of US$500,000 and bearing interest at 7.5% per annum; b) an aggregate of the greater of (i) 3,775,000 post consolidation shares and (ii) 9.9% of the number of post-consolidation shares Buyer has issued and outstanding on the listing date; and c) a cash payment at closing in the amount of US$625,000. Schedule F Audited carved out statement of assets being acquired of SoRSE Technology Corporation for the three years ended June 30, 2023, 2022 and 2021. Sorse Technology Corporation Statement of Assets Being Acquired As at June 30, 2023. Sorse Technology Corporation Audited Carveout Statement of Acquired Assets of THC Essentials as at June 30, 2023 (Expressed in USD) INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Shareholders of SoRSE Technology Inc. Opinion We have audited the statement of acquired assets of THC Essentials, a business unit of Sorse Technology Corporation (the Company) as at June 30, 2023 and related notes to the financial statements (together the "financial statements"). In our opinion, the statement of acquired assets of the Company as at June 30, 2023 presents fairly, in all material respects, the financial position as at June 30, 2023 in accordance with International Financial Reporting Standards (IFRS). Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the schedule in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter Basis of Accounting and Restriction on Distribution We draw attention to Note 1, which describes the basis of preparation. The financial statements are prepared to assist the Company to meet the requirements of the Canadian Securities Exchange. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Other than the matter described in the Emphasis of Matter section, we have determined there are no key audit matters to be communicated in our report. Responsibilities of Management and Those Charged with Governance Management is responsible for the preparation of financial statements in accordance with International Financial Reporting Standards (IFRS) and for such internal control as management determines is necessary to enable the preparation of the schedule that is free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Sorse Technology Corporation Audited Carveout Statement of Acquired Assets of THC Essentials as at June 30, 2023 (Expressed in USD) Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this schedule. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: dot Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. dot Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. dot Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the schedule or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. dot Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management. dot Evaluate the overall presentation, structure, content of the financial statements including the disclosures and whether the financial statements represent the underlying transaction and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. June 30, 2023 Marko Glisic GreenGrowth CPAs 10250 Constellation Blvd. Los Angeles, CA 90067 Sorse Technology Corporation Audited Carveout Statement of Acquired Assets of THC Essentials as at June 30, 2023 (Expressed in USD) Assets 06/30/2023 Current Assets $ 167,794 Inventory 167,794 Non-current assets 16,001 Equipment 978,955 Trademarks 994,956 TOTAL ASSETS $ 1,162,750 Notes to the Audited Statement of Acquied Assets of THC Essentials As of June 30, 2023 1. STATEMENT OF COMPLIANCE, BASIS OF PRESENTATION The statement of assets being acquired as of June 30, 2023 from Sorse Technology Corporation (the "Company") have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and specifically in accordance with IFRS 3. The value assigned to the assets acquired and liabilities assumed in the transaction are based upon the relative fair value. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The statement of assets and liabilities being acquired is presented in United States dollars, which is the functional currency of the Company. 2. INVENTORY Inventory consists of packaging materials, raw ingredients, and other unfinished goods. There are no finished goods held in inventory. Raw ingredients held in inventory do not consist of any hemp or cannabis related materials. As a matter of course, Sorse typically values inventory at cost and is subsequently recorded as "cost of goods sold" on the statements of income in the same period of the recognition of revenue associated with those inventory items. 3. EQUIPMENT As a matter of course, Sorse typically values equipment at cost, net of accumulated depreciation and any impairment losses, if applicable. The Company uses a five-year straight line depreciation schedule for all equipment, unless a specific piece of equipment warrants a different useful life calculation. Equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the profit or loss in the period the asset is derecognized. The assets' residual values, useful lives and methods of depreciation are reviewed at each reporting date, and adjusted prospectively, if appropriate. 4. CONTRACTS & TRADEMARKS The customer contracts that will be assigned to Pascal Biosciences, Inc. ("Pascal") as delineated in the Asset Purchase Agreement, dated February 11, 2023 (the "Purchase Agreement"), are valued based on management's best estimates of the inherent fair value of those contracts, using management's judgement in conformity with IFRS. Management utilized the following methodology to estimate this value: Notes to the Audited Statement of Acquired Assets of THC Essentials As of June 30, 2023 (Cont.) 4. CONTRACTS & TRADEMARKS (Cont.) 1. Management first estimated the consideration in the Purchase Agreement to be $1,162,750 using a combination of the cash to be delivered at closing, plus the cash to be delivered as part of the promissory note, plus an estimate of the value of the equity consideration which was calculated using the approximate number of shares expected to be granted to Sorse at closing, multiplied by the most recent public stock price of Pascal. The fair market value of the equity consideration was calculated based on 3,775,000 shares of Pascal stock multiplied by the $0.10 price per share that Pascal is currently conducting a private placement for. 2. From this figure, management deducted the book value of all of the other assets, other than trademarks and contracts, listed in the Purchase Agreement that are being acquired by Pascal. 3. Through this method of deduction, the remaining amount of $978,955 was determined to be the value of the trademarks and contracts. 5. PURCHASE TRANSACTION Pursuant to the Purchase Agreement, Pascal agreed to purchase a limited selection of assets from the Company, all of which are directly related to the Company's business unit known internally as THC Essentials. The assets being purchased include inventory, equipment, customer contracts, and trademarks. No other assets of the Company, and none of the liabilities of the Company are being acquired by Pascal pursuant to the Purchase Agreement. Inventory consists of packaging materials, raw ingredients and other unfinished goods. There are no finished goods held in inventory. Raw ingredients held in inventory do not consist of any hemp or cannabis related materials. The Purchase Agreement describes the consideration to be paid for the assets as follows: a) a secured promissory note in the principal amount of US$500,000 and bearing interest at 7.5% per annum; b) an aggregate of the greater of (i) 3,775,000 post consolidation shares and (ii) 9.9% of the number of post-consolidation shares Buyer has issued and outstanding on the listing date; and c) a cash payment at closing in the amount of US$625,000. Schedule G Pro-forma financial statements for the year ended November 30, 2022 0f Nevis Brands Inc. (formerly Pascal Biosciences Inc.) NEVIS BRANDS INC. Pro-Forma Consolidated Financial Statements For the Year Ended November 30, 2022 (Unaudited - Expressed in Canadian Dollars) Index Page Notice of no Auditor Review of Pro-Forma Consolidated Financial Statements 2 Pro-Forma Consolidated Financial Statements Pro-Forma Consolidated Statements of Financial Position 3 Pro-Forma Consolidated Statements of Loss and Comprehensive Loss 4 Notes to the Consolidated Financial Statements 5-6 NOTICE OF NO AUDITOR REVIEW OF PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS In accordance with National Instrument 51-102, released by the Canadian Securities Administrators, the Company discloses that its independent auditors have not reviewed the pro-forma consolidated financial statements for the year ended November 30, 2022. Nevis Brands Inc. Pro-Forma Consolidated Statements of Financial Position (Unaudited - Expressed in Canadian Dollars) As at November 30: ASSETS Pascal Biosciences Inc. Notes Pro-forma Pro-forma Current November 30, 2022 Adjustments Consolidated $ 2(a) Cash 2(b) $ 2022 8,370 2(c) 2(d) $ 2(e) Prepaid expenses 3,245 1,860,000 1,136,057 Receivables 7,208 2(d) (5,000) Inventory 3,245 Total current assets - 2(d) (201,067) 7,208 18,823 2(d) (844,250) 268,951 Equipment 1,415,461 THC Trademarks - 318,004 26,260 - - 1,601,939 Total assets - 3,043,660 18,823 268,951 1,396,638 26,260 1,601,939 3,024,837 LIABILITIES 626,586 2(b) (373,432) 163,812 Current liabilities (89,342) 2(c) (224,617) - Accounts payable and accrued liabilities 675,400 675,400 224,617 2(b) 839,212 Short-term loan payable (11,991) Promissory note payable - 2(d) - (111,725) 839,212 Total current liabilities 851,203 (123,716) Accounts payable 111,725 2(c) Total liabilities 962,928 SHAREHOLDERS' DEFICIENCY 13,052,100 2(a) 1,860,000 15,912,786 Equity attributable to shareholders 623,186 2(b) 377,500 424,152 Share capital - (14,132,490) 2(d) (30,137) Reserves 318,004 Deficit 424,152 (14,420,357) 2(b) 2(e) Total shareholders' deficiency (944,105) 3,148,553 2,204,448 Total liabilities and shareholders' deficiency 18,823 3,024,837 3,043,660 The accompanying notes are an integral part of these pro-forma consolidated financial statements. 3 Nevis Brands Inc. Pro-Forma Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited - Expressed in Canadian Dollars) For the year ended November 30, 2022 Pascal Notes Pro-forma Pro-forma Biosciences Adjustments Consolidated Inc. For the Year Ended 2022 November 30, 2022 Revenues - 2(e) 2,099,499 2,099,499 Revenues (567,954) Cost of goods sold - 2(e) (567,954) 1,531,545 Gross Profit - 2(e) 1,531,545 General and administrative expenses 93,659 - 93,659 Accounting and audit fees 38,459 173,051 Administrative and general office 2(e) 134,592 Amortization 8,294 8,294 Bank charges and interest 3,901 - 3,901 Consulting fees 3,306 3,306 Salaries and benefits 232,821 - 757,832 Foreign exchange loss 25,698 25,698 Insurance 19,848 - 19,848 Investor relations and marketing (4,683) (4,683) Legal fees 19,673 2(e) 525,011 19,673 Research and development (48,628) (48,628) Marketing - 276,135 Rent - 15,217 Share-based payments - - 47,470 Transfer agent, listing and filing fees 47,470 17,937 Travel and entertainment 17,937 - 261,832 Total general and administrative expenses (754) (1,670,542) (457,001) - Other Income (129,477) Bad debt expense - 1,402 Interest income 7,281 Gain on sale of equipment 2(e) 276,135 67,378 Gan on debt settlement 2(e) 15,217 (192,413) Net income (loss) and comprehensive income (loss) for the year - - 2(e) 262,586 (1,213,541) (129,477) - 1,402 - 7,281 - 97,515 2(b) (30,137) (480,280) 287,867 The accompanying notes are an integral part of these pro-forma consolidated financial statements. 4 Nevis Brands Inc. Notes to the Pro-Forma Consolidated Financial Statements For the Year Ended November 30, 2022 (Unaudited - Expressed in Canadian Dollars) 1. BASIS OF PRESENTATION The unaudited pro-forma consolidated financial statements of Nevis Brands Inc. (the "Company") have been prepared by its management based on financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") and International Accounting Standards, as issued by the International Accounting Standards Board ("IASB") to give effect to the proposed Transaction. On February 11, 2023, the Company signed an asset purchase agreement (the "Agreement") with SRSE to acquire from SRSE the assets comprising THC Essentials. The purchase price of US$1,125,000 will be paid as follows: (i) a secured promissory note of US$500,000, bearing interest at 7.5% per annum payable 13 months from the closing date, (ii) an aggregate of the greater of 3,555,000 post-consolidation shares and 9.9% of the number of post-consolidation shares Pascal has issued and outstanding on the listing date, and (iii) US$625,000 payable at the closing of the transaction. The Company will sign a promissory note and a security agreement which secures the Company assets until the US$500,000 plus interest of 7.5% is paid. The closing of the transaction is conditional of the Company listing on the CSE. On March 31, 2023, the Agreement was amended, to specify that 3,775,000 consolidated shares are to be issued as part of the consideration for the THC assets. It is management's opinion that the pro-forma consolidated financial statements include all adjustments necessary for fair presentation, in all material respects, of the transactions described in Note 2 and are in accordance with IFRS. The unaudited pro-forma consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the years ended November 30, 2022 and 2021. The unaudited pro-forma consolidated balance sheet and unaudited pro-forma consolidated statements of (loss) income give effect to the Transaction as if it had occurred on December 1, 2021. The unaudited pro- forma consolidated financial statements have been prepared for illustrative purposes only and may not be indicative of the resulting entities' financial position or operating results that would have occurred if the Transaction had been in effect at the dates indicated. Actual amounts recorded upon consummation of the Transaction will likely differ from those recorded in the unaudited pro-forma consolidated financial statements. 2. PRO-FORMA TRANSACTION AND ADJUSTMENTS The pro-forma consolidated financial statements reflect the following assumptions and adjustments: (a) The Company plans to raise 2,000,000 to fund the purchase of the assets comprising THC Essentials. The company expects to incur 7% cash share issue costs. (b) On November 30, 2022, the Company entered into agreements with non-arm's length parties stating that Company will issue 1,204,245 common shares of the Company and $5,000 in cash to settle debt of $195,840. On December 30, 2022, the Company entered into an agreement with a non-arm's length party to settle debt of $402,209 by issuing 5,027,613 common shares of the Company. The common shares have been valued at $0.10 per share, concurrent with the private placement being issued at the listing date. These pro-forma consolidated financial statements assume the shares for debt have been issued and the debt has been settled, resulting in a loss on debt settlement of $30,137. The $30,137 loss is calculated as follows: 5 Nevis Brands Inc. Notes to the Pro-Forma Consolidated Financial Statements For the Year Ended November 30, 2022 (Unaudited - Expressed in Canadian Dollars) Larry Tjoelker Debt outstanding Debt settled # of shares Value of Forgiveness Patrick Gray at Nov 30, 2022 with cash issued shares of debt Brian Bapty 56,340 - 704,245 70,425 (14,085) 402,209 - 5,027,613 502,761 (100,552) 139,500 5,000 50,000 598,049 5,000 500,000 623,186 84,500 6,231,858 (30,137) (c) On November 30, 2022, the Company entered into agreements with arm's length and non-arm's length parties stating that Company will repay existing debt with cash over a period of up to 18 months, once the proposed transaction completes. These pro-forma consolidated financial statements assume the debt has been settled. (d) Per the Agreement with SRSE to acquire from SRSE the assets comprising THC Essentials, the purchase price of US$1,125,000 will be paid as follows: (i) a secured promissory note of US$500,000, bearing interest at 7.5% per annum payable 13 months from the closing date, (ii) an aggregate of the greater of 3,555,000 post-consolidation shares and 9.9% of the number of post- consolidation shares Pascal has issued and outstanding on the listing date, and (iii) US$625,000 payable at the closing of the transaction. On March 31, 2023, the Agreement was amended, to specify that 3,775,000 consolidated shares are to be issued as part of the consideration for the THC assets. The total purchase consideration will be $1,897,150, which is the total Canadian value of the US$625,000 cash payment, US$500,000 promissory note and the estimated fair value of the 3,775,000 common shares to be issued, using a conversion rate of 1 USD = 1.3508 CAD as shown below. Cash Component USD CAD Promissory Note $ $ Shares 377,500 shares at $0.10/share 625,000 844,250 500,000 675,400 279,464 377,500 1,404,464 1,897,150 Upon completion of the acquisition, the fair value of all identifiable assets acquired will be determined. The preliminary purchase price allocation is summarized as follows: Inventory $ Equipment 268,951 Trademarks 26,260 1,601,939 1,897,150 (e) For purposes of these pro-forma consolidated financial statements, the actual 2022 revenues, cost of goods sold and expenses of THC Essentials and Pascal Biosciences have been used. THC Essential's figures have been translated using a conversion rate of 1 USD = 1.3508 CAD. 6 Nevis Brands Inc. 65,594,769 Notes to the Pro-Forma Consolidated Financial Statements 13,118,954 For the Year Ended November 30, 2022 20,000,000 (Unaudited - Expressed in Canadian Dollars) 1,246,372 (f) At November 30, 2022, the shares outstanding are as follows: 3,775,000 38,140,326 Balance, November 30, 2022, pre transaction with SRSE Shares post 5:1 share consolidation Shares issued for cash Shares issued for debt Shares issued for acquisition of THC Essentials assets Balance, November 30, 2022, post transaction with SRSE 7 CERTIFICATE OF THE ISSUER Pursuant to a resolution duly passed by its Board of Directors, Nevis Brands Inc. hereby applies for the listing of the above-mentioned securities on the Exchange. The foregoing contains full, true, and plain disclosure of all material information relating to (full legal name of the Issuer). It contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in light of the circumstances in which it was made. Dated at Vancouver, B.C. This 30th day of June 2023. "John Kueber" "Harold Forzley" Chief Executive Officer - John Kueber Chief Financial Officer - Harold Forzley "Vahan Ajamian" "Patrick Gray" Vahan Ajamian - Director "John Kueber" Patrick Gray Director Promoter - John Kueber . "Patrick Gray" __________________________________________________ Promoter - Patrick Gray 1