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FSD Pharma Inc. – ‘20-F’ for 12/31/21 – ‘EX-15.1’

On:  Thursday, 3/31/22, at 8:09am ET   ·   For:  12/31/21   ·   Accession #:  1062993-22-9034   ·   File #:  1-39152

Previous ‘20-F’:  None   ·   Next:  ‘20-F’ on 3/31/23 for 12/31/22   ·   Latest:  ‘20-F’ on 4/2/24 for 12/31/23   ·   7 References:   By:  FSD Pharma Inc. – Latest ‘20-F’ on 4/2/24 for 12/31/23 By:  FSD Pharma Inc. – Next ‘20-F’ on 3/31/23 for 12/31/22 To:  FSD Pharma Inc. – ‘6-K’ on / for 9/21/21 To:  FSD Pharma Inc. – ‘6-K’ on 5/5/21 for 5/14/21 To:  FSD Pharma Inc. – ‘6-K’ on / for 2/11/21 To:  FSD Pharma Inc. – ‘6-K’ on / for 3/18/20 To:  FSD Pharma Inc. – ‘40FR12B’ on 12/6/19 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/31/22  FSD Pharma Inc.                   20-F       12/31/21  132:39M                                    Newsfile Corp./FA

Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual or Annual-Transition Report by a Foreign     HTML   2.06M 
                Non-Canadian Issuer -- form20f                                   
 2: EX-1.1      Underwriting Agreement or Conflict Minerals Report  HTML     43K 
                -- exhibit1-1                                                    
 3: EX-2.1      Plan of Acquisition, Reorganization, Arrangement,   HTML     58K 
                Liquidation or Succession -- exhibit2-1                          
 9: EX-4.10     Instrument Defining the Rights of Security Holders  HTML     35K 
                -- exhibit4-10                                                   
10: EX-4.11     Instrument Defining the Rights of Security Holders  HTML     36K 
                -- exhibit4-11                                                   
11: EX-4.12     Instrument Defining the Rights of Security Holders  HTML     34K 
                -- exhibit4-12                                                   
12: EX-4.14     Instrument Defining the Rights of Security Holders  HTML     70K 
                -- exhibit4-14                                                   
13: EX-4.15     Instrument Defining the Rights of Security Holders  HTML     78K 
                -- exhibit4-15                                                   
14: EX-4.16     Instrument Defining the Rights of Security Holders  HTML     82K 
                -- exhibit4-16                                                   
15: EX-4.17     Instrument Defining the Rights of Security Holders  HTML     82K 
                -- exhibit4-17                                                   
 4: EX-4.2      Instrument Defining the Rights of Security Holders  HTML    251K 
                -- exhibit4-2                                                    
 5: EX-4.4      Instrument Defining the Rights of Security Holders  HTML     33K 
                -- exhibit4-4                                                    
 6: EX-4.5      Instrument Defining the Rights of Security Holders  HTML     75K 
                -- exhibit4-5                                                    
 7: EX-4.6      Exhibit44.6                                         HTML     36K 
 8: EX-4.9      Instrument Defining the Rights of Security Holders  HTML     41K 
                -- exhibit4-9                                                    
16: EX-8.1      Opinion of Counsel re: Tax Matters -- exhibit8-1    HTML     33K 
19: EX-13.1     Annual or Quarterly Report to Security Holders --   HTML     35K 
                exhibit13-1                                                      
20: EX-13.2     Annual or Quarterly Report to Security Holders --   HTML     35K 
                exhibit13-2                                                      
22: EX-99.1     Miscellaneous Exhibit -- exhibit99-1                HTML     34K 
17: EX-12.1     Statement re: the Computation of Ratios --          HTML     37K 
                exhibit12-1                                                      
18: EX-12.2     Statement re: the Computation of Ratios --          HTML     37K 
                exhibit12-2                                                      
21: EX-15.1     Letter re: Unaudited Interim Financial Info --      HTML    359K 
                exhibit15-1                                                      
28: R1          Document And Entity Information                     HTML    116K 
29: R2          Consolidated Statements of Financial Position       HTML    107K 
30: R3          Consolidated Statements of Loss and Comprehensive   HTML     91K 
                Loss                                                             
31: R4          Consolidated Statements of Changes in               HTML     87K 
                Shareholder's Equity                                             
32: R5          Consolidated Statements of Cash Flows               HTML    116K 
33: R6          Nature of business                                  HTML     48K 
34: R7          Basis of presentation                               HTML     53K 
35: R8          Significant accounting policies                     HTML     81K 
36: R9          Acquisition of Prismic                              HTML     49K 
37: R10         Acquisition of Lucid                                HTML     50K 
38: R11         Assets held for sale                                HTML     99K 
39: R12         Other receivables                                   HTML     42K 
40: R13         Prepaid expenses and deposits                       HTML     42K 
41: R14         Investments                                         HTML     95K 
42: R15         Right-of-use asset                                  HTML     43K 
43: R16         Intangible assets                                   HTML     50K 
44: R17         Trade and other payables                            HTML     51K 
45: R18         Notes payable                                       HTML     43K 
46: R19         Lease obligations                                   HTML     52K 
47: R20         Warrants Liability                                  HTML     39K 
48: R21         Share capital                                       HTML    169K 
49: R22         Share-based compensation                            HTML    231K 
50: R23         Loss per share                                      HTML     44K 
51: R24         General and administrative                          HTML     53K 
52: R25         Income Taxes                                        HTML     66K 
53: R26         Commitments and contingencies                       HTML     56K 
54: R27         Related party transactions                          HTML     48K 
55: R28         Capital Management                                  HTML     38K 
56: R29         Financial Instruments and Risk Management           HTML     45K 
57: R30         Segmented information                               HTML     37K 
58: R31         Subsequent events                                   HTML     38K 
59: R32         Significant accounting policies (Policies)          HTML    109K 
60: R33         Nature of business (Tables)                         HTML     43K 
61: R34         Significant accounting policies (Tables)            HTML     40K 
62: R35         Acquisition of Prismic (Tables)                     HTML     49K 
63: R36         Acquisition of Lucid (Tables)                       HTML     48K 
64: R37         Assets held for sale (Tables)                       HTML     97K 
65: R38         Other receivables (Tables)                          HTML     42K 
66: R39         Prepaid expenses and deposits (Tables)              HTML     42K 
67: R40         Investments (Tables)                                HTML     85K 
68: R41         Right-of-use asset (Tables)                         HTML     42K 
69: R42         Intangible assets (Tables)                          HTML     48K 
70: R43         Trade and other payables (Tables)                   HTML     52K 
71: R44         Notes Payable (Tables)                              HTML     41K 
72: R45         Lease obligations (Tables)                          HTML     53K 
73: R46         Share capital (Tables)                              HTML    159K 
74: R47         Share-based compensation (Tables)                   HTML    234K 
75: R48         Loss per share (Tables)                             HTML     43K 
76: R49         General and administrative (Tables)                 HTML     52K 
77: R50         Income Taxes (Tables)                               HTML     69K 
78: R51         Related party transactions (Tables)                 HTML     43K 
79: R52         Nature of business - Schedule of ownership          HTML     51K 
                percentage in subsidiaries (Details)                             
80: R53         Significant accounting policies - Schedule of       HTML     55K 
                estimated useful lives of assets (Details)                       
81: R54         Acquisition of Prismic (Narrative) (Details)        HTML     51K 
82: R55         Acquisition of Prismic - Schedule of black scholes  HTML     78K 
                options pricing model (Details)                                  
83: R56         Acquisition of Prismic - Schedule of identifiable   HTML     50K 
                assets acquired and liabilities assumed (Details)                
84: R57         Acquisition of Lucid (Narrative) (Details)          HTML     56K 
85: R58         Acquisition of Lucid - Schedule of Black Scholes    HTML     77K 
                options pricing model (Details)                                  
86: R59         Acquisition of Lucid - Schedule of identifiable     HTML     49K 
                assets acquired and liabilities assumed (Details)                
87: R60         Assets held for sale (Narrative) (Details)          HTML     52K 
88: R61         Assets held for sale - Schedule of components of    HTML     39K 
                assets held for sale (Details)                                   
89: R62         Assets held for sale - Schedule of net loss and     HTML     77K 
                comprehensive loss from discontinued operations                  
                (Details)                                                        
90: R63         Assets held for sale - Schedule of cash flows from  HTML     75K 
                discontinued operations (Details)                                
91: R64         Other receivables - Schedule of other receivables   HTML     42K 
                (Details)                                                        
92: R65         Prepaid expenses and deposits - Schedule of         HTML     42K 
                prepaid expenses and deposits (Details)                          
93: R66         Investments (Narrative) (Details)                   HTML    206K 
94: R67         Investments - Schedule of investments (Details)     HTML     91K 
95: R68         Right-of-use asset (Narrative) (Details)            HTML     39K 
96: R69         Right-of-use asset - Schedule of right-of-use       HTML     45K 
                asset (Details)                                                  
97: R70         Intangible assets (Narrative) (Details)             HTML     52K 
98: R71         Intangible assets - Schedule of intangible assets   HTML     53K 
                (Details)                                                        
99: R72         Trade and other payables - Schedule of trade and    HTML     43K 
                other payables (Details)                                         
100: R73         Trade and other payables - Schedule of accrued      HTML     47K  
                liabilities (Details)                                            
101: R74         Notes Payable (Narrative) (Details)                 HTML     51K  
102: R75         Notes Payable - Schedule of notes payable           HTML     42K  
                (Details)                                                        
103: R76         Lease obligations - Schedule of lease obligations   HTML     49K  
                (Details)                                                        
104: R77         Lease obligations - Schedule of maturity analysis   HTML     48K  
                of operating lease payments (Details)                            
105: R78         Warrants Liability (Narrative) (Details)            HTML     72K  
106: R79         Share capital (Narrative) (Details)                 HTML    279K  
107: R80         Share capital - Schedule of reconciliation of the   HTML     89K  
                share capital (Details)                                          
108: R81         Share capital - Schedule of changes in number of    HTML     50K  
                warrants outstanding (Details)                                   
109: R82         Share capital - Schedule of fair value assumptions  HTML     52K  
                of warrants (Details)                                            
110: R83         Share capital - Schedule of warrants outstanding    HTML     95K  
                and exercise price (Details)                                     
111: R84         Share-based compensation (Narrative) (Details)      HTML     67K  
112: R85         Share-based compensation - Schedule of changes in   HTML     70K  
                number of share options (Details)                                
113: R86         Share-based compensation - Schedule of fair value   HTML     57K  
                assumptions of share options granted (Details)                   
114: R87         Share-based compensation - Schedule of exercise     HTML    216K  
                price and weighted average contractual term of                   
                share options outstanding and exercisable                        
                (Details)                                                        
115: R88         Share-based compensation - Schedule of share-based  HTML     47K  
                compensation (Details)                                           
116: R89         Loss per share - Schedule of loss per share         HTML     44K  
                (Details)                                                        
117: R90         General and administrative - Schedule of general    HTML     57K  
                and administrative expense (Details)                             
118: R91         Income Taxes (Narrative) (Details)                  HTML     41K  
119: R92         Income Taxes - Schedule of provision for income     HTML     53K  
                taxes (Details)                                                  
120: R93         Income Taxes - Schedule of deferred tax assets      HTML     40K  
                (Liabilities) (Details)                                          
121: R94         Income Taxes - Schedule of temporary differences    HTML     52K  
                for which deferred tax assets not recognised                     
                (Details)                                                        
122: R95         Income Taxes - Schedule of non-capital loss         HTML     43K  
                carryforwards (Details)                                          
123: R96         Commitments and contingencies (Narrative)           HTML     92K  
                (Details)                                                        
124: R97         Related party transactions (Narrative) (Details)    HTML     82K  
125: R98         Related party transactions - Schedule of key        HTML     42K  
                management personnel compensation (Details)                      
126: R99         Capital management (Narrative) (Details)            HTML     36K  
127: R100        Subsequent events (Narrative) (Details)             HTML     47K  
130: XML         IDEA XML File -- Filing Summary                      XML    223K  
128: XML         XBRL Instance -- form20f_htm                         XML   3.44M  
129: EXCEL       IDEA Workbook of Financial Reports                  XLSX    159K  
24: EX-101.CAL  XBRL Calculations -- huge-20211231_cal               XML    183K 
25: EX-101.DEF  XBRL Definitions -- huge-20211231_def                XML   1.17M 
26: EX-101.LAB  XBRL Labels -- huge-20211231_lab                     XML   4.85M 
27: EX-101.PRE  XBRL Presentations -- huge-20211231_pre              XML   1.53M 
23: EX-101.SCH  XBRL Schema -- huge-20211231                         XSD    613K 
131: JSON        XBRL Instance as JSON Data -- MetaLinks              490±   687K  
132: ZIP         XBRL Zipped Folder -- 0001062993-22-009034-xbrl      Zip    657K  

FSD PHARMA INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

As used in this management's discussion and analysis of financial condition and results of operations ("MD&A"), unless the context indicates or requires otherwise, all references to the "Company", "FSD", "we", "us" or "our" refer to FSD Pharma Inc., together with our subsidiaries, on a consolidated basis as constituted on December 31, 2021.

This MD&A for the three months ended and fiscal years ended December 31, 2021 and 2020 should be read in conjunction with the Company's audited consolidated financial statements and the accompanying notes for the fiscal years ended December 31, 2021 and 2020. The financial information presented in this MD&A is derived from the Company's audited consolidated financial statements for the year ended December 31, 2021 and 2020 ("financial statements") which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All amounts are in United States dollar except where otherwise indicated.

This MD&A is dated as of March 30, 2022.

FORWARD-LOOKING INFORMATION

The information provided in this MD&A, including information incorporated by reference, contains certain “forward‐looking information” or “forward-looking statements” within the meaning of Canadian securities laws and United States securities laws (collectively, “forward‐looking statements”). Forward-looking statements relate to future events or future performance, business prospects or opportunities of the Company that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management made in light of management’s experience and perception of historical trends, current conditions and expected future developments. All statements other than statements of historical fact may be forward-looking statements.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking statements. Forward-looking statements are often, but not always, identified by words or phrases such as “hope”, “would”, “seek”, “anticipate”, “believe”, “expect”, “plan”, “continue”, “estimate”, “will”, “predict”, “intend”, “forecast”, “future”, “target”, “project”, “capacity”, “could”, “should”, “might”, “focus”, “proposed”, “scheduled”, “outlook”, “potential”, “may” or similar expressions and includes suggestions of future outcomes, including, but not limited to statements about: discussions concerning the Company’s exploration of near-term funding strategies; the Company’s plans to advance the research & development of product candidates to commercialization through studies and clinical trials, including anticipated timing and associated costs; the application and the costs associated with such planned trials, and the Company’s ability to obtain required funding and the terms and timing thereof; the expansion of our product offering(s), our business objectives and the expected impacts of previously announced acquisitions and developments; the investigational new drug FDA application process and any review thereof and its affects on our business objectives; the sale of substantially all of the assets of FV Pharma (as defined below), including the Facility (as defined below) and the Facility Property (as defined below), and timing thereof. Readers are cautioned not to place undue reliance on forward-looking statements as the Company’s actual results may differ materially and adversely from those expressed or implied.

The Company has made certain assumptions with respect to the forward-looking statements regarding, among other things: the Company’s ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Company operates; the interest of potential purchasers in the Company’s product candidates; anticipated and unanticipated costs; the government regulation of the Company’s activities and product candidates; the timely receipt of any required regulatory approvals; the Company’s ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the Company’s ability to conduct operations in a safe, efficient and effective manner; and the Company’s expansion plans and timeframe for completion of such plans.

Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that such statements will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially and adversely from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the limited operating history of the Company and history of losses, and anticipated significant losses for the foreseeable future incurred to pursue commercialization of product candidates; the Company’s inability to file INDs (as defined below) on timelines it reasonably anticipates, if at all; the Company’s ability to identify, license or discover additional product candidates; the product candidates being in the preclinical development stage; the Company’s reliance on its product candidates; the Company’s ability to successfully develop new commercialized products or find a market for their sale; the impact of any future recall of the Company’s products; the Company’s ability to promote and sustain its products, including any restrictions or constraints on marketing practices under the regulatory framework in which the Company operates; failure to achieve the degree of market acceptance and demand for our products or product candidates by physicians, patients, healthcare payors, and others in the medical community which are necessary for commercial success, including due to the possibility that alternative, superior treatments may be available prior to the approval and commercialization of product candidates, should such approval be received at all; failure of clinical trials to demonstrate substantial evidence of the safety and/or effectiveness of product candidates, which could prevent, delay or limit the scope of regulatory approval and commercialization, including from difficulties encountered in enrolling patients in clinical trials, and reliance on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, or results from future clinical testing which may demonstrate opposing evidence and draw negative conclusions regarding the effectiveness of any product candidate, including the effectiveness of Lucid-MS as a treatment for multiple sclerosis or Lucid-PSYCH as a treatment for major depressive disorder or other mental health disorders; results of earlier studies or clinical trials not being predictive of future clinical trials and initial studies or clinical trials not establishing an adequate safety or efficacy profile for the Company’s product candidates to justify proceeding to advanced clinical trials or an application for regulatory approval; potential side effects, adverse events or other properties or safety risks of the Company’s product candidates, which could delay or halt their clinical development, prevent their regulatory approval, cause suspension or discontinuance of clinical trials, abandonment of a product candidate, limit their commercial potential, if approved, or result in other negative consequences; preliminary, interim data obtained from the Company’s clinical trials that it may announce or publish from time to time may not be indicative of future scientific observations or conclusions as more patient data becomes available, further analyses are conducted, and as the data becomes subject to subsequent audit and verification procedures; inability to establish sales and marketing capabilities, or enter in to agreements with third parties, to sell and market any product candidates that the Company may develop; the ability to provide the capital required for research, product development, operations and marketing; violations of laws and regulations resulting in repercussions; risks inherent in an pharmaceutical business and the development and commercialization of pharmaceutical products, including the inability to accurately predict timing or amounts of expenses, requirements of regulatory authorities, and completion of clinical studies on anticipated timelines, which may encounter substantial delays or may not be able to be completed at all; delays in clinical trials; psychedelic-inspired drugs possibly never being approved as medicines or other therapeutic applications; the Company’s inability to attain or maintain the regulatory approvals it needs in any jurisdiction to commercialize, distribute or sell any product candidate or other pharmaceutical products; failure of counterparties to perform contractual obligations; changes, whether anticipated or not, in laws, regulations and guidelines that may result in significant compliance costs for the Company, including in relation to restrictions on branding and advertising, regulation of distribution and excise taxes; uncertainty associated with insurance coverage and reimbursement status for newly-approved pharmaceutical products, which could result in product candidates becoming subject to unfavourable pricing regulations, third-party coverage and reimbursement practices, or healthcare reform initiatives, including legislative measures aimed at reducing healthcare costs; conditions in the global economy and capital markets, including impacts to trade and public health or geopolitical risks, as a result of impacts of COVID-19 or otherwise; the Company’s anticipated negative cash flow from operations and non-profitability for the foreseeable future; the inability to obtain required additional financing on terms favourable to the Company or at all; the dilutive effects of future sales or issuances of equity securities and the conversion of outstanding securities to Class B shares; the Company’s dual class share structure; the market price of the Class B shares possibly being subject to wide price fluctuations; whether an active trading market for the Company’s Class B shares (as defined below) is sustained; the Company’s ability to identify and execute future acquisitions or dispositions effectively, including the ability to successfully manage the impacts of such transactions on its operations; lack of dividends, and reinvestment of retained earnings, if any, into the Company’s business; risk related to the sale of the Facility and Facility Property, including whether the Company will be able to sell the Facility and/or the Facility Property on terms favourable to the Company, or at all; the Company’s reliance on management, key persons and skilled personnel; reliance on contract manufacturing facilities; manufacturing problems that could result in delay of the Company’s development or commercialization programs; the Company’s expected minimal environmental impacts; insurance and uninsured risks; claims from suppliers; conflicts of interest between the Company and its directors and officers; the Company’s ability to manage its growth effectively; the Company’s ability to realize production targets; supply chain interruptions and the ability to maintain required supplies of, equipment, parts and components; the Company’s ability to successfully implement and maintain adequate internal controls over financial reporting or disclosure controls and procedures; results of litigation; the dependence of the Company’s operations, in part, on the maintenance and protection of its information technology systems, and the information technology systems of its third-party research institution collaborators, CROs or other contractors or consultants, which could face cyber-attacks; failure to execute definitive agreements with entities in which the Company has entered into letters of intent or memoranda of understanding; unfavourable publicity or consumer perception towards the product candidates; reputational risks to third parties with whom the Company does business; failure to comply with laws and regulations; the Company’s reliance on its own market research and forecasts; competition from other technologies and pharmaceutical products, including from synthetic production, new manufacturing processes and new technologies, and expected significant competition from other companies with similar businesses, and significant competition in an environment of rapid technological and scientific change; the Company’s ability to safely, securely, efficiently and cost-effectively transport our products to consumers; liability arising from any fraudulent or illegal activity, or other misconduct or improper activities that the Company’s directors, officers, employees, contractors, consultants, commercial partners or vendors may engage in, including noncompliance with regulatory standards and requirements; unforeseen claims made against the Company, including product liability claims or regulatory actions; reliance on single-source suppliers, including single-course suppliers for the acquisition of the drug substance and drug product for any of the product candidates; inability to obtain or maintain sufficient intellectual property protection for the Company’s product candidates; third-party claims of intellectual property infringement; patent terms being insufficient to protect competitive position on product candidates; inability to obtain patent term extensions or non-patent exclusivity; inability to protect the confidentiality of trade secrets; inability to protect trademarks and trade names; filing of claims challenging the inventorship of the Company’s patents and other intellectual property; invalidity or unenforceability of patents, including legal challenges to patents covering any of the product candidates; claims regarding wrongfully used or disclosed confidential information of third parties; inability to protect property rights around the world; risks related to the Company’s status as a foreign private issuer; the Company taking advantage of reduced disclosure requirements applicable to emerging growth companies; the Company’s classification as a “passive foreign investment company”; that the Company’s international business operations, including expansion to new jurisdictions, could expose it to regulatory risks or factors beyond our control such as currency exchange rates and changes in governmental policy; risks related to expansion of international operations; the Company’s ability to produce and sell products in, and export products to, other jurisdictions within and outside of Canada and the United States, which is dependent on compliance with additional regulatory or other requirements; regulatory regimes of locations for clinical trials outside of Canada and the United States; failure to obtain approval to commercialize product candidates outside of Canada and the United States; if clinical trials are conducted for product candidates outside of Canada and the United States, the FDA, Health Canada and comparable regulatory authorities may not accept data from such trials, or the scope of such approvals from regulatory authorities may be limited; and other factors beyond the Company’s control.

The Company cautions that the foregoing list of important risk factors and uncertainties is not exhaustive. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated, intended or projected. There is no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. You should carefully consider the matters discussed under “Risks Factors” in our Annual Information Form for the year ended December 31, 2020, Short Form Base Shelf Prospectus dated June 16, 2020, Prospectus Supplement dated February 11, 2021 and in the section of our Annual Report titled “Item 3. Key Information—D. Risk Factors”.

The forward-looking statements contained or incorporated by reference in this MD&A are made as of the date of this MD&A or as otherwise specified. Except as required by applicable securities law, we undertake no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of factors affecting those statements, whether as a result of new information, future events or otherwise or the foregoing lists of factors affecting this information.

All of the forward-looking information contained in this MD&A is expressly qualified by the foregoing cautionary statements.

Additional information relating to FSD can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

OVERVIEW

The Company was formed under and is governed by the provisions of the Business Corporations Act (Ontario) (the "OBCA") on November 1, 1998 pursuant to the amalgamation of Olympic ROM World Inc., 1305206 Ontario Company, 1305207 Ontario Inc., Century Financial Capital Group Inc. and Dunberry Graphic Associates Ltd. The Company’s registered office is located at 199 Bay Street, Suite 4000, Toronto, Ontario, M5L 1A9.

On March 15, 2018, the Company’s shareholders approved the amendments contemplated by the Articles of Amendment at the 2018 annual and special meeting of the shareholders, pursuant to which, among other things, the Company’s shareholders approved certain changes to the capital structure of the Company.

On May 24, 2018, pursuant to Articles of Amendment, the Company changed its name to "FSD Pharma Inc." and the capital structure of the Company was reorganized to create a new class of Class A shares, amend the terms of and re-designate the existing common shares as Class B shares, and eliminate the existing non-voting Class A preferred shares and non-voting Class B preferred shares.

On May 29, 2018, the Class B shares commenced trading on the Canadian Stock Exchange under the trading symbol “HUGE”.

On October 16, 2019, the Company amended its articles of incorporation to complete a consolidation of all of its issued and outstanding share capital. Pursuant to the amendment, all of the issued and outstanding Class A shares and Class B shares were consolidated on the basis of one post-consolidation share for every 201 pre-consolidation shares of the Company (the “Consolidation”). Unless otherwise noted, presentation in this MD&A of the number of Class A shares, Class B shares, stock options, warrants and the issue or exercise prices and any other data related to the foregoing securities are all presented on a post-Consolidation basis.

On January 9, 2020, the Class B Shares commenced trading on the Nasdaq under the trading symbol “HUGE”.

FSD Pharma Inc. ("FSD" or the "Company"), through its wholly owned subsidiaries, FSD Biosciences, Inc., Prismic Pharmaceuticals Inc., and Lucid Psycheceuticals Inc. is a pharmaceutical research and development ("R&D") company focused on developing over time multiple applications of its three  compounds:

1. Ultra micro-palmitoylethanolamide (“PEA”) or FSD-PEA (formerly called FSD-201), which is a licensed compound (as described below);

2. Lucid-PSYCH (formerly Lucid-201); and

3. Lucid-MS (formerly Lucid-21-302), which is a licensed compound (as described below).

The Company filed an Investigational New Drug Application ("IND") with the FDA on August 28, 2020, for PEA and was approved on September 25, 2020, to initiate a Phase 2(a) clinical program for the use of PEA to treat COVID-19, the disease caused by the SARS-CoV-2 virus. The trial was targeting a total of 352 random patients in a controlled, double-blind multicenter study.

Following the May 14, 2021, annual general and special meeting of shareholders, the Company retained an independent biotechnology and pharma focused firm to evaluate PEA's current potential commercial viability for the SARS-CoV-2 virus indication and to undertake a review of its Phase 2 clinical program to assist the Company in determining its viability and, more broadly, evaluating the general current commercial viability of PEA. In particular, the Company was concerned with the pace of progress in advancing the Phase 2 clinical program during a period in which COVID-19 treatments and vaccination rates evolved significantly and competitive products were being successfully advanced. The biotechnology investment bank reported its findings and the Company concluded that, while there are potential commercial opportunities for PEA, specifically the treatment of COVID-19 by PEA is unlikely to be commercially viable. Based on this information, on August 24, 2021, the Company elected to terminate the current Phase 2 clinical trials for the treatment of COVID-19 in order to concentrate its resources on more commercially viable opportunities for PEA. The Company continues to evaluate Phase 2 indications to potentially target for PEA that will realize value creation for shareholders.

As of the date hereof, the Company currently has four material subsidiaries:

(i) FSD Biosciences Inc. ("FSD Biosciences"), which is wholly owned by the Company and incorporated under the laws of the State of Delaware;

(ii) FV Pharma Inc. ("FV Pharma"), which is wholly owned by the Company and incorporated under the OBCA;

(iii) Lucid Psycheceuticals Inc. (“Lucid”), which is wholly owned by the Company and incorporated under the OBCA; and

(iv) Prismic Pharmaceuticals Inc. (“Prismic”), which is wholly owned by the Company and incorporated under the laws of the State of Arizona.

In July 2020, the Company decided to primarily focus its efforts and resources on the pharmaceutical and biotechology business operated through FSD Biosciences Inc. Between March 2018 and June 2020, the Company made investments in and entered into agreements with a number of cannabis-related ventures (the “Cannabis Investments”). All material Cannabis Investments have been liquidated or terminated. As of September 30, 2020, the Company, ended all activities of FV Pharma. As a result, the Company is no longer engaged in cannabis-related activities and is in the process of liquidating all of FV Pharma's assets, including the sale of its Facility and/or the adjacent real estate. On February 23, 2022, the Company entered into a firm agreement in connection with the sale of the Facility and the Facility Property. See further discussion below under "Discontinued Operations" and “Subsequent Events”.

FSD Pharma Inc.

Through the acquisition of Prismic Pharmaceuticals Inc. (“Prismic”), the Company acquired an exclusive, worldwide license (excluding Italy and Spain) to exploit for certain specified pharmaceutical purposes patents and other intellectual property rights to PEA owned by Epitech Group SpA (“Epitech”). Pursuant to a royalty agreement between Prismic and FSD Pharma, Prismic holds the right to receive, from FSD, a percentage of the net sales of products developed for conditions relating to pain in humans and certain other conditions using certain intellectual property owned or controlled by Epitech or its affiliates including those relating to PEA. PEA is a naturally occurring substance that is produced within the body in response to inflammation. FSD Pharma is currently seeking to advance pharmaceutical development programs centered on PEA that meet one or more selected criteria. All efforts are intended to be founded on a biological plausibility of an efficacious effect with a high safety profile.

The Company has successfully completed Phase 1 first-in-human safety and tolerability study for PEA and has found the compound to be safe with no serious adverse side effects. This study also validated considerable scientific literature already published in the European Union that claims safety and tolerability of PEA. PEA is currently being dispensed in Italy and Spain as a prescription based medical food supplement since 2004.

The Company received permission from the FDA in June 2020 to submit an IND Application for the use of PEA to treat COVID-19, the disease caused by the SARS-CoV-2 virus.

The Company submitted to the FDA an IND Application for the use of PEA in August 2020.

In September 2020, the Company received authorization from the FDA to initiate Phase 2 clinical program for the use of PEA to treat COVID-19.

On August 24, 2021, the Company announced it was terminating the Phase 2 clinical program specific to treating COVID-19, while the Company continues to evaluate other indications to potentially target for PEA. The Company had retained an independent biotechnology and pharma-focused investment banking firm to evaluate FSD-PEA’s current potential commercial viability for COVID-19 treatment (the “FSD-PEA Review”). The findings of the FSD-PEA Review suggested that while there were potential commercial opportunities for FSD-PEA, the treatment of COVID-19 by FSD-PEA is specifically unlikely to be commercially viable.

Epitech License Agreement

On January 8, 2020, the Company entered into an amended and restated license agreement with Epitech, as further amended in July 2020 (defined in this subsection as the "License Agreement"), which amended and restated the license agreement between Prismic and Epitech through which Prismic secured certain intellectual property rights to PEA from Epitech. The License Agreement grants the Company an exclusive, worldwide license (excluding Italy and Spain where the Company is not licensed and Epitech remains entitled to commercialize the Licensed Products (as defined herein), directly or indirectly) (the "Epitech License") to research, manufacture and commercialize products (defined in this subsection as the "Licensed Products") that are developed using certain proprietary formulations of PEA owned by Epitech and that are to be used to treat chronic kidney disease in humans or, if a prescription drug, any other human condition that is related to pain and chronic pain. In addition, under the terms of the Epitech License, as further amended on July 9, 2020, if Epitech develops or commercializes a prescription drug for the treatment of any other human condition unrelated to pain and chronic pain (a "Different Prescription Drug") in its territory, the Company has a first refusal right to use Epitech's patents to develop and commercialize this Different Prescription Drug in its territory (i.e. worldwide excluding Italy and Spain). Should the Company exercise this right, but then fail to demonstrate commercially reasonable efforts to develop the Different Prescription Drug in the two years following, Epitech would be free to exploit and/or license to third parties the use of the patents for the Different Prescription Drug. Finally, the Epitech License provides the Company with a nonexclusive license to use Epitech's scientific and technical know-how with respect to FSD-PEA in connection with the development or commercialization of the Licensed Products discussed above.

Under the terms of the License Agreement, the Company is required to make payments to Epitech upon the achievement of specified milestones. The Company was required to pay the non-refundable sum of $300,000 on or before October 31, 2019. Upon first notification by the FDA of approval of a New Drug Application, the non-refundable sum of $700,000 is due and payable to Epitech. Within thirty days of the first notification by the FDA of approval of a New Drug Application, the Company is required to pay the non-refundable sum of $500,000. Within ten business days of the first notification of approval of a Supplemental New Drug Application by the FDA, the Company is required to pay the non-refundable sum of $1,000,000 to Epitech.

The License Agreement also specifies certain royalty payments. Pursuant to the License Agreement, the Company must pay Epitech 25% (in the case of non-prescription drug rights) and 5% (in the case of prescription drug rights) of any one-off lump sum payments it receives as consideration for granting a sub-license to a third-party with respect to a Licensed Product. In addition, the Company is required to pay either: (a) 7% of net sales of the Licensed Products in a product regulatory category other than prescription drugs placed on the market by the Company; (b) 25% of the royalties received by the Company from sub-licensees (such royalties, the "Net Receipts") where Licensed Products in a product regulatory category other than prescription drugs are placed on the market by such sub-licensees; or (c) 5% of net sales or Net Receipts of the Licensed Products that are prescription drugs.

Unless otherwise terminated in accordance with its terms, the Epitech License will remain in force until the Company is no longer obligated to pay royalties under the License Agreement, which obligation will expire on a country-by-country basis when the last valid claim of the Licensed Patents covering the Licensed Products in a given country expires. The approval of a therapeutically equivalent, generic version of the Licensed Product(s) in a country will conclusively demonstrate that a valid claim does not cover the Licensed Products in that country. If there are no patents covering the Licensed Products in a country, royalties are payable for the license of the scientific and technical know-how under the Epitech License until expiration of the last-to expire Epitech patent that relates to PEA.

The above description of the License Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which is available under the Company's SEDAR and EDGAR profiles.

Innovet License Agreement

On March 9, 2021, the Company entered into the Innovet License Agreement (defined in this subsection as the "License Agreement") with Innovet Italia S.R.L. ("Innovet"). The License Agreement grants the Company an exclusive, worldwide license (excluding Italy, and subject to a first refusal right maintained by Innovet, any other country in Europe) to research, manufacture and commercialize products using certain proprietary formulations of ultra-micro PEA (defined in this subsection as the "Licensed Products") to treat gastro-intestinal diseases in canines and felines. The License Agreement provides that the Company shall develop the Licensed Products with a view to submitting an Investigational Animal Drug Application with the FDA within thirty-six (36) months of the date of the agreement and shall submit a New Animal Drug Application within sixty (60) months of the effective date of the agreement.

Under the terms of the License Agreement, the Company will be required to make payments to Innovet upon the achievement of specified milestones. An initial non-refundable sum of US$500,000 was payable to Innovet on the effective date of the License Agreement and a second non-refundable sum of US$250,000 will be due and payable to Innovet on the first anniversary of the effective date of the License Agreement. Within thirty business days of the first notification of approval of a New Animal Drug Application by the FDA of the first Licensed Product to receive such approval in the United States, the Company is required to pay an additional non-refundable sum of US$750,000 to Innovet. None of the specified milestones have been met to date and there is no guarantee or assurance that they will be met in the future.

The License Agreement also specifies certain royalty payments. Pursuant to the License Agreement, the Company is required to pay Innovet 14% of any one-off lump sum payments it receives as consideration for granting a sub-license to a third-party with respect to a Licensed Product. In addition, the Company is required to pay 5% of net sales of the Licensed Products.

The above description of the License Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which is available under the Company's SEDAR and EDGAR profiles.

Lucid-MS Agreement

On May 19, 2021, prior to its acquisition by the Company, Lucid entered into a license agreement with the University Health Network (“UHN”) that governs the world-wide licensing of certain intellectual property rights and data associated with Lucid-MS. Under the terms of the agreement, the Company shall pay a yearly license maintenance fee of C$100,000 to UHN until the first commercial sale of a product utilizing the intellectual property licensed to the Company under the agreement, including Lucid-MS is made.

Under the agreement the Company is committed to minimum milestones payments of $nil and maximum milestones payments of C$12,500,000 if all product development and regulatory milestones are met.

Furthermore, the Company is also responsible to pay revenue milestone payments and royalties if revenue milestones from commercial sales are achieved. Milestones can be extended by mutual agreement.

Lucid-PSYCH Agreement

On October 1, 2021, the Company entered into an agreement with Covar Pharmaceuticals Inc. (“Covar”), a contract development and manufacturing services organization, to commence work on providing research quantities of the Company’s drug candidate, Lucid-PSYCH, on an exclusive basis for further clinical evaluation (the “Covar Agreement”). Covar’s research and development facility is licensed to handle psychoactive compounds such as Lucid-PSYCH, which are “controlled substances” listed under the Controlled Drugs and Substances Act (Canada). Pursuant to the Covar Agreement, Covar will produce non-good manufacturing practices and good manufacturing practices Lucid-PSYCH for use in the Company’s planned pre-clinical and Phase 1 clinical trials, respectively.

Cannabis Licenses

The Company held three licenses from Health Canada: (i) a Cultivation License (defined below); (ii) a Processing License (defined below); and (iii) a Sale for Medical Purposes License (collectively, the "Licenses").

On July 30, 2020, the Company announced that it has notified Health Canada of the Company’s decision to forfeit the licenses of FV Pharma and suspend all cannabis-related activities of FV Pharma. As of September 30, 2020, the Company ended all activities of FV Pharma and had surrendered its Licenses. The Company is in the process of liquidating all of FV Pharma's assets, including the sale of its Cobourg facility and/or the adjacent real estate. See further discussion below under "Discontinued Operations" and “Subsequent Events”.

The Facility

FV Pharma's facility is located at 520 William Street, Cobourg, Ontario, K9A 3A5 (the "Facility"). The Company also owns the 64-acre property on which the Facility is located (the “Facility Property”). FV Pharma acquired the Facility in November 2017. The Facility has 581,538 square feet of building space. The Company is actively exploring a sale of the Facility and/or the Facility Property. On February 23, 2022, the Company entered into a firm agreement in connection with the sale of the Facility and the Facility Property. See further discussion below under "Discontinued Operations" and “Subsequent Events”.

The Company has no contractual arrangements and has no commitments for capital expenditures with respect to the Facility or the Facility Property.

IMPACT OF COVID-19

The outbreak of the novel strain of coronavirus, specifically identified as "COVID-19," has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The extent to which COVID-19 and any other pandemic or public health crisis impacts the Company's business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be predicted with any meaningful precision, including new information which may emerge concerning the severity of the COVID-19 virus and the actions required to contain the COVID-19 virus or remedy its impact, among others. 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 and its operating subsidiaries in future periods.

The Company's clinical trials for the use of FSD-PEA, a compound to treat suspected or confirmed cases of COVID-19, were placed on hold during the year pending the completion of a study to assess the commercial viability of FSD-PEA as a treatment for COVID-19. Following the completion of the study, the Company announced on August 24, 2021, that it was terminating the Phase 2 clinical program specific to treating COVID-19. The impact of COVID-19 did not have a material impact on the continuing operations or financial results of the Company for the years ended December 31, 2021 and 2020.

CHANGE IN FUNCTIONAL AND PRESENTATION CURRENCY TO UNITED STATES DOLLAR

The Company changed its functional currency from the Canadian dollar (C$) to the United States dollar (US$) as of October 1, 2020. The change in functional currency was the result of a review of the primary economic environment in which the entity operates and the currency that mainly influences the underlying transactions entered into by the Company.

The Company elected to change its presentation currency from the Canadian dollar to the United States dollar effective October 1, 2020. The change in presentation currency was a voluntary change which is accounted for retrospectively. The change in presentation currency was made to better reflect the Company's business activities. For comparative reporting purposes, historical financial information has been translated to United States dollar using the exchange rate as at October 1, 2020, which is the date of the change in the functional and presentation currency. The impact of the retrospective application to the December 31, 2019 and 2018 financial information was included the Company's December 31, 2020 audited financial statements.

DISCONTINUED OPERATIONS

As previously noted, in March 2020, the Company decided to focus its efforts and resources on the pharmaceutical business and initiated a process to sell the Facility and Facility Property and exit the medical cannabis industry. The Company is actively marketing the Facility and Facility Property for sale and expects that the sale of the Facility and Facility Property will be completed within the next twelve months. On February 23, 2022, the Company entered into a firm agreement in connection with the sale of the Facility and the Facility Property. See further discussion below under “Subsequent Events”.

Assets held for sale consists of the Facility and Facility Property. It is anticipated that no liabilities of the Company will be transferred as part of any proposed transaction. Results of operations related to the Facility are reported as discontinued operations for the year ended December 31, 2021 and 2020.

In accordance with IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations, the assets held for sale were assessed for impairment based on fair value less costs to sell. The fair value was measured using the price at which the Company expects to receive for the disposal of the Facility and Facility Property in its current state less estimates for the costs of disposal. The fair value less costs to sell was higher than the carrying value of the Facility and Facility Property, resulting in recognition of the resulting group at carrying value.

ACQUISITION OF LUCID

On September 21, 2021, the Company acquired all of the issued and outstanding common shares of Lucid, an early-stage Canadian-based specialty pharmaceutical company focused on the development of therapies to treat critical neurodegenerative diseases for total consideration of $7,290,731. In connection with the closing of the Lucid acquisition, Dr. Lakshmi Kotra, maintained his position as Lucid’s CEO.

Prior to the acquisition, the Company’s interim CEO and Executive Co-Chairman of the Board beneficially held approximately 4.5% ownership interest in Lucid through an entity related to this individual.

It was determined that the acquisition of Lucid did not qualify as a business combination in accordance with IFRS 3 - Business Combinations, and therefore it was accounted for as an asset acquisition. The individual identifiable assets acquired and liabilities assumed were identified. The purchase consideration was first allocated to the fair values of the acquired cash and cash equivalents, other receivables, and trade and other payables, as their carrying values was determined to equal their fair values. The remaining purchase price was allocated to the acquired intangible assets.

The total consideration for the purchase of Lucid was $7,290,731. The purchase consideration consisted of $7,023,732 of Class B shares, $196,436 of share options and $70,563 of warrants. 304,880 Class B Shares and all of the warrants issued as part of the consideration for the Lucid acquisition were issued to an entity related to the interim CEO and Executive Co-chairman of the Board in exchange for securities of Lucid held by the entity prior to the completion of the Lucid acquisition. The fair value of the Class B shares was determined based on a total of 4,502,392 shares issued and a fair value of $1.56 per share, which reflects the share price on the date of acquisition. The fair value of the 161,091 share options and 112,162 warrants issued as part of the consideration were determined using the Black-Scholes options pricing model with the following assumptions:

The allocation of the total consideration to the fair value of the identifiable assets acquired and liabilities assumed as at the date of the acquisition was as follows:

The Company also capitalized $128,320 of acquisition related costs to the acquired intellectual property.

SELECTED FINANCIAL HIGHLIGHTS

The following table presents selected financial information for the three months and year ended December 31, 2021 and 2020:

The following table presents selected financial information for the three months and years ended December 31, 2020 and 2019:

OVERALL FINANCIAL PERFORMANCE

Three months and year ended December 31, 2021

For the three months and year ended December 31, 2021, general and administrative expenses were $3,817,541 and $15,926,103, respectively, compared to $2,323,347 and $10,058,083 for the comparative periods in the prior year. This represents an increase of $1,494,194 or 64% for the three months ended December 31, 2021, and an increase of $5,868,020 or 58% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. The increase for the three months ended December 31, 2021, is primarily related to investor relations expenses. The increase for the year ended December 31, 2021, is primarily related to one-time professional fees incurred during the period due to litigation and the process leading up to the Company's contested annual general and special meeting of the shareholders held on May 14, 2021.

For the three months and year ended December 31, 2021, external research and development fees were $852,393 and $6,328,104, respectively, compared to $2,456,010 and $7,832,847 for the comparative periods in the prior year. This represents a decrease of $1,603,617, or 65% for the three months ended December 31, 2021, and a decrease of $1,504,743 or 19% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. For the three months ended December 31, 2020, and the year ended December 31, 2020, external research and development fees were incurred for the research and development of PEA, for Phase 2 Safety and Tolerability testing and COVID-19 study that terminated in August 2021.

For the three months and year ended December 31, 2021, share-based payments expense was $341,567 and $7,443,930, respectively, compared to $215,255 and $8,052,011 for the comparative periods in the prior year. This represents an increase of $126,312 or 59% for the three months ended December 31, 2021, and a decrease of $608,081 or 8% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. Share-based payments change based on the variability in the number of options granted, vesting periods of the options, the grant date fair values and share-based bonuses issued.

For the three months and year ended December 31, 2021, depreciation and amortization was $1,107,477 and $4,045,523, respectively, compared to $967,957 and $3,900,458 for the comparative periods in the prior year. This represents an increase of $139,520 or 14% for the three months ended December 31, 2021, and an increase of $145,065 or 4% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. Depreciation and amortization is primarily related to the amortization of intellectual property.

For the three months and year ended December 31, 2021, net loss was $6,347,723 and $35,285,429, respectively, compared to $4,378,271 and $31,799,793 for the three months and year ended December 31, 2020. Net loss for the three months and year ended December 31, 2021, is comprised of net loss from continuing operations of, respectively, $6,163,133 and $33,937,956 and net loss from discontinued operations of, respectively, $184,590 and $1,347,473 compared to net loss from continuing operations for the three months and year ended December 31, 2020 of, respectively, $3,964,147 and $28,452,232 and net loss from discontinued operations of, respectively, $414,124 and $3,347,561.

The Company concluded the year ended December 31, 2021, with cash of $35,259,645 (December 31, 2020 - $17,524,822).

Three months ended December 31, 2020

For the three months ended December 31, 2020, general and administrative expenses were $2,323,347 compared to $2,413,316 for the comparative period in the prior year. This represents a decrease of $89,969 or 4% for the three months ended December 31, 2020. 

For the three months ended December 31, 2020, external research and development fees were $2,456,010 compared to $nil for the three months ended December 31, 2019, representing an increase of $2,456,010 or 100% for the three months ended December 31, 2020. The increase is related to expenses incurred for the research and development of PEA, for Phase 1 and 2 Safety and Tolerability testing, FDA IND Application and COVID-19 study.

For the three months ended December 31, 2020, share-based payments expense was $215,255 compared to $2,885,792 for the three months ended December 31, 2019. This represents decrease of $2,670,537 or 93% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The decrease in share-based payments is due to the variability in the number of options granted, vesting periods of the options, the grant date fair values and one time share-based payments approved by the Board of Directors as compensation in December 2019 of $1,340,929.

For the three months ended December 31, 2020, depreciation and amortization was $967,957 compared to $979,389 for the three months ended December 31, 2019. This represents a decrease of $11,432 or 1% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. Depreciation and amortization is primarily related to the amortization of intellectual property acquired through the acquisition of Prismic on June 29, 2019.

For the three months ended December 31, 2020, net loss was $4,378,271 compared to $12,836,967 for the three months ended December 31, 2019. Net loss for the three months ended December 31, 2020, is comprised of net loss from continuing operations of $3,964,147 and net loss from discontinued operations of $414,124 compared to net loss from continuing operations of $11,523,123 and net loss from discontinued operations of $1,313,844 for the three months ended December 31, 2019.

Year ended December 31, 2020

For the year ended December 31, 2020, general and administrative expenses were $10,058,083 compared to $8,407,427 for the comparative period in the prior year. This represents an increase of $1,650,656 or 20% for the year ended December 31, 2020, primarily related to expanded operations associated with the acquisition of Prismic in June 2019 and higher professional fees and insurance expense as a result of the NASDAQ listing in January 2020.

For the year ended December 31, 2020, external research and development fees were $7,832,847 compared to $nil for the year ended December 31, 2019, representing an increase of $7,832,847 or 100% for the year ended December 31, 2020. The increase is related to expenses incurred for the research and development of PEA, FDA Investigational New Drug Application, Phase 1 Safety and Tolerability testing, Phase 2 clinical trials, and COVID-19 study.

For the year ended December 31, 2020, share-based payments expense was $8,052,011 compared to $12,082,930 for the year ended December 31, 2019. This represents a decrease of $4,030,919 or 33% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The decrease in share-based payments is due to the variability in the number of options granted, vesting periods of the options, the grant date fair values and one-time share-based payments approved by the Board of Directors as compensation.

For the year ended December 31, 2020, depreciation and amortization was $3,900,458 compared to $1,943,048 for the year ended December 31, 2019. This represents an increase of $1,957,410 or 101% for the year ended December 31, 2020, compared to the equivalent period in the prior year. Depreciation and amortization is primarily related to the amortization of intellectual property acquired through the acquisition of Prismic on June 29, 2019.

For the year ended December 31, 2020, net loss was $31,799,793 compared to $39,129,520 for the year ended December 31, 2019. Net loss for the year ended December 31, 2020, is comprised of net loss from continuing operations of $28,452,232 and net loss from discontinued operations of $3,347,561, compared to net loss from continuing operations of $34,080,963 and net loss from discontinued operations of $5,048,557 for the year ended December 31, 2019.

RESULTS OF OPERATIONS

The following table outlines our consolidated statements of loss for three months and years ended December 31, 2021 and 2020:

REVIEW OF OPERATIONS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2021 AND 2020

General and administrative

General and administrative expenses for the three months and years ended December 31, 2021 and 2020 are comprised of:

Professional fees

Professional fees increased from $498,295 to $1,257,870 or 152% and increased from $2,734,123 to $6,256,165 or 129% for, respectively, the three months and year ended December 31, 2021, compared to the equivalent periods in the prior year. Professional fees fluctuate from period to period based on the nature of the transactions the Company undertakes. For the year ended December 31, 2021, the increase is primarily due to litigation and the Company’s contested annual general and special shareholders meeting held on May 14, 2021.

General office, insurance and administration expenditures

General office, insurance and administration expenditures for the three months and years ended December 31, 2021 and 2020 are comprised of the following:

Insurance, shareholders and public company costs

Insurance, shareholders and public company costs increased from $360,125 to $561,519 or 56% and increased from $2,048,726 to $2,678,906 or 31% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. These costs primarily consist of insurance and other related expenditures associated with being a publicly-listed Company on the NASDAQ. The primary reason for the increase for the year ended December 31, 2021, compared to the equivalent periods in the prior year is due to an increase in the cost of director and officers' insurance.

Travel, meals and entertainment

Travel, meals and entertainment expenses decreased from $211,816 to $70,844 or 67% and decreased from $608,876 to $212,496 or 65% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Travel, meals and entertainment expenses fluctuate from period to period based on the nature of the transactions the Company undertakes.

Office and general administrative

Office and general administrative expenses decreased from $325,804 to $273,041 or 16% and decreased from $958,557 to $588,399 or 39% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Office and general administrative expenses may vary from period to period based on operational activities.

Consulting fees

Consulting fees decreased from $435,090 to $186,119 or 57% and increased $1,775,269 to $2,196,812 or 24% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes.

Salaries, wages and benefits

Salaries, wages and benefits expenses decreased from $973,125 to $686,001 or 30% and increased from $2,656,162 to $2,856,887 or 8% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The decrease is primarily due to reduced headcount for the three months ended December 31, 2021, compared to the three months ended December 31, 2020. The increase for the year ended December 31, 2021, is primarily due to expenses incurred in connection with the termination of employment of employees during the period and employer health tax offset by lower headcount. 

Investor relations

Investor relations expenses increased from $54,630 to $948,669 or 1637% and increased from $541,944 to $1,642,653 or 203% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The increase is primarily related to higher spending on investor relations and marketing during the three months and year ended December 31, 2021.

Building and facility costs

Building and facility costs decreased from $232,766 to $48,805 or 80% and increased from $586,926 to $759,590 or 29% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Such costs include property taxes, security services, repairs and maintenance expenditures and utilities. The decrease in the three months ended December 31, 2021, compared to the equivalent period in the prior year is due to costs incurred in the prior year related to restoration of the Heritage Building located on the Facility property. The increase for the year ended December 31, 2021, compared to the equivalent period in the prior year is primarily due to environmental land studies of the Facility Property incurred in preparation for sale.

Foreign exchange gain (loss)

Foreign exchange gain (loss) decreased from a loss of $312,856 and $186,959 to a loss of $12,299 and a gain of $146,587 for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The primary reason for the foreign exchange change was due to the strengthening of the Canadian dollar relative to the US dollar and its impact on cash balances denominated in the Canadian dollar.

External research and development fees

External research and development fees decreased from $2,456,010 to $852,393 or 65% and decreased from $7,832,847 to $6,328,104 or 19% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. For the three months ended December 31, 2020, and the year ended December 31, 2020, external research and development fees were incurred for the research and development of PEA, for Phase 2 Safety and Tolerability testing and COVID-19 study that terminated in August 2021.

Share-based payments

Share-based payments increased from $215,255 to $341,567 and decreased from $8,052,011 to $7,443,930 for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. This represents an increase of $126,312, or 59%. for the three months ended December 31, 2021, and a decrease of $608,081 or 8% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. Share-based payments change based on the variability in the number of options granted, vesting periods of the options, the grant date fair values and share-based bonuses.

Depreciation and amortization

Depreciation and amortization increased from $967,957 to $1,107,477 or 14% and increased from $3,900,458 to $4,045,523 or 4% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The increase is primarily due to additions from the acquisition of Lucid during the period. Depreciation and amortization is primarily related to the intellectual property.

Finance expense

For the three months and year ended December 31, 2021, finance expense was $29,205 and $69,404 compared to $32,967 and $235,581, respectively, for the three months and year ended December 31, 2020. Finance expense is primarily comprised of interest on notes payable assumed on acquisition of Prismic Pharmaceuticals in June 2019. The Company settled a certain balance of notes payable, resulting in lower finance expense for the three months and year ended December 31, 2021, compared to the equivalent periods in the prior year.

Loss (gain) on settlement of financial liability

For the three months and year ended December 31, 2021, the Company recognized a gain on settlement of financial liabilities of $nil and $49,792, compared to $420,936 and $680,164, respectively for the three months and year ended December 31, 2020. The gain recognized is primarily due to the settlement of Prismic notes payable and trade and other payables for Class B shares and cash. The difference between the carrying value of the notes payable and trade and other liabilities and the consideration given was recorded as gain on settlement.

Loss (gain) on change in fair value of warrants and derivative liability

In August 2020, the Company issued warrants as part of a private placement that did not meet the IFRS definition of equity due to the exercise price being denominated in United States Dollar, which was not the functional currency of the Company at the time resulting in a variability in exercise price. As such, the warrants were recognized as a derivative liability with a fair value of $3,289,069 at the time of issuance.

The fair value of the warrants liability as at December 31, 2020 was $1,447,910. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $1.56, risk-free interest rate of 0.33% and annualized volatility of 117%. The Company recognized a gain on change in fair value of $1,927,041 for the year ended December 31, 2020.

The fair value of the warrants liability as at December 31, 2021, was $765,403 resulting in a gain on change in fair value of $682,507 for the year ended December 31, 2021. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $1.02, risk-free interest rate of 1.22% and annualized volatility of 120%. The Company recognized a gain on change in fair value of $663,400 and $682,507 for the three months and year ended December 31, 2021.

As at December 31, 2019, the fair value of the derivative liability was $1,990,788. The fair value was determined based on the additional common shares of the Company required to be issued to Solarvest BioEnergy Inc. ("Solarvest") to meet the minimum liquidation value of $2,256,900. On February 4, 2020, the Company issued 225,371 Class B subordinate voting shares to Solarvest as settlement of the derivative liability. The fair value of the shares issued was determined to be $1,356,373. The Company recognized a gain of $634,415 on settlement of the derivative liability.

Loss (gain) on changes in fair value of investments

The Company has various investments accounted for at fair value through profit or loss resulting in recognition of loss/gain as the fair value fluctuates.

REVIEW OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The following table outlines our consolidated statements of loss for the years ended December 31, 2020 and 2019:

General and administrative

General and administrative expenses for the years ended December 31, 2020 and 2019 are comprised of:

Professional fees decreased from $3,101,136 to $2,734,123 or 12% for the year ended December 31, 2020, compared to the equivalent period in the prior year. Professional fees fluctuate from period to period based on the nature of the transactions the Company undertakes.

General office, insurance and administration expenditures

General office, insurance and administration expenditures for the year ended December 31, 2020 and 2019 are comprised of the following:

Insurance, shareholders and public company costs

Insurance, shareholders and public company costs increased from $579,056 to $2,048,726 or 254% for the year ended December 31, 2020, compared to the equivalent periods in the prior year. The increase is primarily due to higher insurance costs associated with being a NASDAQ listed entity as of January 9, 2020.

Travel, meals and entertainment

Travel, meals and entertainment expenses decreased from $750,642 to $608,876 or 19% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The decrease is primarily due to the impact of travel restrictions related to COVID-19 in 2020.

Office and general administrative

Office and general administrative expenses increased from $412,852 to $958,557 or 132% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The increase for the year ended December 31, 2020, compared to the equivalent period in the prior year is related to the acquisition of Prismic and growth of the bioscience operations and administrative costs incurred related to the research and development of PEA and clinical trials.

Consulting fees

Consulting fees increased from $1,675,258 to $1,775,269 or 6% for the year ended December 31, 2020, compared to the equivalent period in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes.

Salaries, wages and benefits

Salaries, wages and benefits expenses increased from $1,705,696 to $2,656,162 or 56% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The increase is primarily due to key management personnel hired as full-time salaried employees during the year-ended December 31, 2020.

Investor relations

Investor relations expenses decreased from $2,241,275 to $541,944 or 76% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The decrease is primarily related to lower spending on investor relations and marketing during the year ended December 31, 2020.

Building and facility costs

Building and facility costs decreased from $676,798 to $586,926 or 13% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The decrease is primarily related to the discontinued operations of FV Pharma. Costs include property taxes, security services, repairs and maintenance expenditures and utilities.

Foreign exchange gain

Foreign exchange gain increased from $nil to $186,959 or 100% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The primary reason for the foreign exchange gain was due to the increase in strength of the Canadian dollar relative to the US dollar and its impact on cash balances held in Canadian dollars. 

External research and development fees

External research and development fees increased from $nil to $7,832,847 or 100% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The increase is related to expenses incurred for the research and development of PEA, FDA Investigational New Drug Application, Phase 1 Safety and Tolerability testing, Phase 2 clinical trials, and COVID-19 study.

Share-based payments

Share-based payments decreased from $12,082,930 to $8,052,011 or 33% for the year ended December 31, 2020, compared to the equivalent period in the prior year. The decrease in share-based payments is due to the variability in the number of options granted, vesting periods of the options, the grant date fair values and one-time share-based payments approved by the Board of Directors as compensation during 2019.

Depreciation and amortization

Depreciation and amortization increased from $1,943,048 to $3,900,458 or 101% for the year ended December 31, 2020, compared to the equivalent period in the prior year. Depreciation and amortization is primarily related to the amortization of intellectual property acquired through the acquisition of Prismic on June 29, 2019. 

Impairment of right-of-use asset

For the year ended December 31, 2020, impairment of right-of-use asset was $89,860 compared to $50,888 for the year ended December 31, 2019. The increase is due to the impairment of the right-of-use asset related to an office lease. As of March 31, 2020, the Company did not occupy the leased premise and has been unsuccessful in subleasing the space. The Company recognized an impairment loss of $89,860 for the year ended December 31, 2020, resulting in right-of-use asset balance of $nil.

Finance expense

For the year ended December 31, 2020, finance expense was $235,581, compared to $155,316 for the year ended December 31, 2019. Finance expense is primarily comprised of interest on notes payable assumed on acquisition of Prismic Pharmaceuticals in June 2019. The increase for the year ended December 31, 2020, compared to the equivalent period in the prior year is due to twelve months of interest recorded in 2020 compared to six months in 2019.

Loss (gain) on settlement of financial liability

For the year ended December 31, 2020, the Company recognized a gain on settlement of financial liabilities of $680,164 compared to a loss on settlement of financial liabilities of $18,665 for the year ended December 31, 2019. The gain recognized during the year-ended December 31, 2020, is primarily due to the settlement of Prismic notes payable and trade and other payables for Class B shares and cash. The difference between the carrying value of the notes payable and trade and other liabilities and the consideration given was recorded as gain on settlement.

Loss (gain) on change in fair value of warrants and derivative liability

As at December 31, 2019, the fair value of the derivative liability was $1,990,788. The fair value was determined based on the additional common shares of the Company required to be issued to Solarvest BioEnergy Inc. ("Solarvest") to meet the minimum liquidation value of $2,256,900. On February 4, 2020, the Company issued 225,371 Class B subordinate voting shares to Solarvest as settlement of the derivative liability. The fair value of the shares issued was determined to be $1,356,373. The Company recognized a gain of $634,415 on settlement of the derivative liability.

In August of 2020 the Company issued warrants as part of a private placement that did not meet the IFRS definition of equity due to the exercise price being denominated in United States Dollar, which was not the functional currency of the Company at the time resulting in a variability in exercise price. As such, the warrants were recognized as a derivative liability with a fair value of $3,289,069 at the time of issuance. The derivative liability was remeasured at fair value of $1,447,910 on December 31, 2020. The Company recognized a gain on change in fair value of $1,927,041 for the year ended December 31, 2020.

Loss on changes in fair value of investments

The Company has various investments accounted for at fair value through profit or loss resulting in recognition of loss/gain as the fair value fluctuates. The table below summarizes the change in fair value of these investments during the year. 

REVIEW OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019

The following table outlines our consolidated statements of loss for three months ended December 31, 2020 and 2019:

General and administrative

General and administrative expenses for the three months December 31, 2020 and 2019 are comprised of:

Professional fees

Professional fees decreased from $953,062 to $498,295 or 48% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The decrease is primarily related to costs incurred during the three months ended December 31, 2019, associated with the NASDAQ listing. Professional fees fluctuate from period to period based on the nature of the transactions the Company undertakes.

General office, insurance and administration expenditures

General office, insurance and administration expenditures for the three months December 31, 2020 and 2019 are comprised of the following:

Insurance, shareholders and public company costs

Insurance, shareholders and public company costs increased from $303,514 to $360,126 or 19% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The increase is primarily due to higher insurance costs associated with being a NASDAQ listed entity as of January 9, 2020.

Travel, meals and entertainment

Travel, meals and entertainment expenses decreased from $344,894 to $211,816 or 39% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The decrease is primarily due to the impact of travel restrictions related to COVID-19 in 2020.

Office and general administrative

Office and general administrative expenses are related to expenditures for continued operations. The increase for the three months ended December 31, 2020, compared to the equivalent period in the prior year is related to the growth of the bioscience operations and administrative costs incurred related to the research and development of PEA and clinical trials as the Company is focused on the growth of the operations.

Consulting fees

Consulting fees decreased from $445,065 to $435,090 or 2% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes.

Salaries, wages and benefits

Salaries, wages and benefits expenses increased from $293,488 to $973,125 or 232% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The increase is primarily due to key management hired as salaried employees in January 2020 and severance expense recorded during the three months ended December 31, 2020.

Investor relations

Investor relations expenses decreased from $393,236 to $54,630 or 86% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The decrease is primarily related to lower spending on investor relations and marketing during the three months ended December 31, 2020.

Building and facility costs

Building and facility costs increased from $34,204 to a $232,766 or 581% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. Such costs include property taxes, security services, repairs and maintenance expenditures and utilities. The increase for the three months ended December 31, 2020, compared to the equivalent period in the prior year is due these costs being recognized as an expense, whereas certain costs were capitalized to biological assets and inventory production in the prior period.

Foreign exchange gain

Foreign exchange gain increased from $nil to $312,856 or 100% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The primary reason for the foreign exchange gain was due to the increase in strength of the Canadian dollar relative to the US dollar and its impact on cash balances held in Canadian dollars.

External research and development fees

External research and development fees increased from $nil to $2,456,010 or 100% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The increase is related to expenses incurred for the research and development of PEA, FDA Investigational New Drug Application, Phase 1 Safety and Tolerability testing, Phase 2 clinical trials, and COVID-19 study.

Share-based payments

Share-based payments decreased from $2,885,792 to $215,255 or 93% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. The decrease in share-based payments is due to the variability in the number of options granted, vesting periods of the options, the grant date fair values and one-time share-based payments approved by the Board of Directors as compensation for the three months ended December 31, 2019.

Depreciation and amortization

Depreciation and amortization decreased from $979,389 to $967,957 or 1% for the three months ended December 31, 2020, compared to the equivalent period in the prior year. Depreciation and amortization is primarily related to the intellectual property recognized on the acquisition of Prismic on June 29, 2019.

Finance expense

For the three months ended December 31, 2020, finance expense was $32,967 compared to $83,199 for the three months ended December 31, 2019. Finance expense is primarily comprised of interest on notes payable assumed on acquisition of Prismic Pharmaceuticals in June 2019. During the year ended December 31, 2020, the Company has settled a significant balance of notes payable, resulting in lower finance expense for the three months ended December 31, 2020, compared to the equivalent period in the prior year.

Loss (gain) on settlement of financial liability

For the three months ended December 31, 2020, the gain on settlement of financial liability was $420,936. The gain recognized during the three months ended December 31, 2020, is primarily due to the settlement of Prismic notes payable and trade and other payables. The difference between the carrying value of the notes payable and trade and other liabilities and the consideration given was recorded as a gain on settlement.

Loss (gain) on change in fair value of warrants and derivative liability

In August of 2020 the Company issued warrants as part of a private placement that did not meet the IFRS definition of equity due to the exercise price being denominated in United States Dollar, which was not the functional currency of the Company at the time resulting in a variability in exercise price. As such, the warrants were recognized as a derivative liability with a fair value of $3,289,069 at the time of issuance. The derivative liability was remeasured at fair value of $1,447,910 on December 31, 2020, resulting in a gain on change in fair value of $1,254,299 for the three months ended December 31, 2020.

For the three months ended December 31, 2019, loss on change in fair value of derivative liability is related to investments in Pharmadrug Inc. and Solarvest BioEnergy Inc. Both investments were acquired by issuing equity instruments in the Company and the investment agreements guaranteed a minimum value of the Company's equity to Pharmadrug Inc. and Solarvest BioEnergy Inc. resulting in recognition of derivative liability under IFRS. This expense represents change in the derivative liability from date of initial measurements to December 31, 2019. These investments were acquired during the year ended December 31, 2019.

Loss (gain) on changes in fair value of investments

The Company has various investments accounted for at fair value through profit or loss resulting in recognition of loss/gain as the fair value fluctuates.

REVIEW OF DISCONTINUED OPERATIONS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2021 AND 2020

The following table outlines our net loss from discontinued operations for the three months and years ended December 31, 2021 and 2020:

Revenue

Revenue was $nil and $nil from discontinued operations for the three months and years December 31, 2021, compared to $nil and $14,514, for the equivalent period in the prior year, respectively. The decrease is due to the Company discontinuing its cannabis operations.

Cost of revenue

For the three months and year ended December 31, 2021, cost of revenue from discontinued operations was $nil and $nil compared to $nil and $1,032,010, for the equivalent periods in the prior year, respectively. The decrease for the year ended December 31, 2021, compared to the equivalent period in the prior year is primarily due to FV Pharma forfeiting its licenses and ceasing all operations at the end of July 2020 and discontinuing the sale of cannabis. Cost of revenue includes the cost of inventory sold, production costs expensed and impairment charges. Direct and indirect production costs include labor, processing, testing, packaging, quality assurance, security, inventory, shipping, depreciation of production equipment, production management and other related expenses.

Unrealized loss on changes in fair value of biological assets

Unrealized loss on change in fair value of biological assets for the three months and year ended December 31, 2021, was $nil and $nil compared to $nil and $166,886, for the equivalent period in the prior year, respectively. As of December 31, 2021, the Company did not have any biological assets.

General and administrative

General and administrative expenses from discontinued operations decreased from $455,448 to $201,028 and decreased from $1,665,541 to $1,412,392 for the three months and year ended December 31, 2021, respectively, compared to the equivalent period in the prior year. The decrease for the three months and year ended December 31, 2021, compared to the three months and year ended December 31, 2020, is due to FV Pharma creasing all activities.

Depreciation and amortization

Depreciation and amortization from discontinued operations for the three months and year ended December 31, 2021, was $nil and $nil compared to $nil and $90,340, for the equivalent periods in the prior year, respectively. Depreciation and amortization expense decreased as the Company ceased depreciation of these assets upon recognition as being held for sale in March 2020.

REVIEW OF DISCONTINUED OPERATIONS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2020 AND 2019

The following table outlines our net loss from discontinued operations for the three months and years ended December 31, 2020 and 2019: