Full Year Results

Ondine Biomedical Inc.

10 May 2023

Ondine Biomedical Inc.

("Ondine Biomedical", "Ondine" or the "Company")

(All figures are expressed in Canadian Dollars, unless otherwise stated)

Full Year Results for the Twelve Months Ended 31 December 2022

Ondine Biomedical Inc. (AIM:OBI), an AIM-listed, Canadian biomedical company, is pleased to announce its audited results for the year ended 31 December 2022.

Carolyn Cross, CEO, said:

"We are pleased to report significant steps forward in our clinical development and commercialization strategy this year, as well substantially advancing preparations for our Phase 3 study of Steriwave nasal photodisinfection. Alongside the FDA process, we are making commercial inroads into the UK, Spain and Mexico where we have already gained regulatory approval. In our home market of Canada, we now have 9 hospital installations and clinical pilots. Once Steriwave nasal photodisinfection has been granted approval in the US, we look forward to commercial rollout starting with our long-term partner HCA Healthcare, one of the largest hospital groups in the US.

"While we are focusing on the FDA Phase 3 trial and key near-term commercialization opportunities, we remain excited by the broader applications of our photodisinfection platform technology. Now more than ever, as healthcare systems continue to struggle with record patient backlogs, staff shortages, and inflationary pressures alongside rising antimicrobial resistance, we have strong conviction in the long-term prospects for our business."

Operational Highlights, Including Post Year-End Events

· Ondine successfully completed its primary Phase 2 clinical study. Additionally, Ondine also completed a second study designed to support upcoming regulatory submissions and to inform Phase 3 trial design.

· Phase 3 preparations continue to be the primary focus for the Company. Considerable progress has been made toward the necessary project management, clinical trial site identification, HCA Healthcare operational integration, and recruitment planning. CRO and regulatory consultants have also been identified and are working with the Company on the FDA strategy and final clinical trial design. Development of the clinical trial drug and device components is largely complete. Outstanding items still to be addressed include site contracting, training and operational planning, manufacturing of the clinical trial product, CRO interactions, and FDA meetings to agree to the Phase 3 clinical development plan.

· Ondine has expanded further into the Canadian hospital market using a clinical pilot model. The number of hospital installations and clinical pilots in Canada now stands at 9 - a substantial increase from last year.

· In addition to the rollout of pilot installations in Canada, Ondine has initiated commercialization in three further countries - the UK, Spain, and Mexico - which, together with Canada, represent a market of over 270 million people. These countries are medically influential and have sophisticated private medical and academic facilities which serve medical tourists as well as their own populations.

· During Q1 2023, the Company continued to build up its sales processes, key personnel, organizational infrastructure, and inventory to support commercial growth objectives. Ondine has established a network of local distributors in target markets discussed above, in order to leverage existing relationships and boost distribution and aftermarket support infrastructure. The Company is working with leading key opinion leaders in these territories across the therapy areas where SSIs induce the greatest economic burden. These approaches are designed to foster broad adoption of Steriwave, as well as to generate additional data for other key market initiatives.

· When COVID-19 interrupted Ondine's Canadian healthcare commercialization efforts, the Company was able to use its existing capacity to serve the needs of a large meat processing plant in Manitoba, Canada. Approximately 1,500 meat processing workers used Ondine's Steriwave therapy on a weekly basis over the year, which was credited with protecting essential workers and substantially reducing outbreaks in the plant. Safety data collected during this large-scale and multi-use deployment, which ended in August 2021, are expected to support regulatory filings. Outcomes of this deployment have now been submitted for peer review and publication.

· Ondine has invested considerable resources into the next generation of efficient, injection-molded, disposable light activator units. These medical devices reduce disposable material footprint, significantly reduce cost of goods, and enhance performance. The design is compatible with the medication management and dispensing units employed in large hospital operations.

Financial Highlights

· Cash and cash equivalents of $13.1 million as at 31 December 2022 (2021: $29.9million)

· Revenues of $0.6 million (2021: $2.6 million). The decrease was anticipated and primarily due to the loss of pandemic-related sales to the meat processing plants as vaccinations became available.

· Research and development expenses for the year ended 31 December 2022 were $6.3 million (2021: $5.0 million). The increase in R&D expenses was driven primarily by the costs of the three clinical studies and the increase in personnel needed to support these trials, as well as the Phase 3 clinical trial preparations.

· General and administrative expenses were $10.9 million (2021: $13.0 million). The $2.1 million decrease was largely due to the difference in one-time costs in 2021 associated with share-based costs and the initial public offering on the AIM Market of the London Stock Exchange.

· The Company's marketing and sales expenses were $1.4 million (2021: $0.4 million). This increase of $1.0 million was due to the addition of personnel and the expansion of sales and marketing activities aimed at pursuing sales opportunities in Canada, UK, Spain, and Mexico, largely through distributorships.

· Loss before tax for the year was $19.5 million (2021: $50.1 million). In 2021 the company recognized a loss of $31.6 million due to debt settlement.

Dr. Nicolas Loebel, President and Chief Technology Officer of the Company, will provide a live presentation relating to the Full Year Results via Investor Meet Company today at 4:30 pm BST. The presentation is open to all existing and potential shareholders. Questions can be submitted via your Investor Meet Company dashboard at any time during the live presentation. The recording and related slides will be made available after the presentation on the Company's website: www.ondinebio.com/investors/reports-documentation/

Investors can sign up to Investor Meet Company for free and add to meet ONDINE BIOMEDICAL INC. via: https://www.investormeetcompany.com/ondine-biomedical-inc/register-investor/.

A full overview of the 2022 fiscal year will be presented in our upcoming Annual Report 2022, which will be posted to shareholders and available on the Company's website in due course: www.ondinebio.com/investors/reports-documentation/.

The Annual General Meeting is to be held on May 24, 2023.

Ondine Biomedical Inc.

Angelika Vance, Corporate Communications +001 (1) 604 838 2702

Singer Capital Markets (Nominated Adviser and Joint Broker)

Aubrey Powell, Asha Chotai, Sam Butcher +44 (0)20 7496 3000

RBC Capital Markets (Joint Broker)

Rupert Walford, Kathryn Deegan +44 (0) 20 7653 4000

Vane Percy & Roberts (Media Contact)

Simon Vane Percy, Amanda Bernard +44 (0) 77 1000 5910

About Ondine Biomedical Inc.

Ondine Biomedical Inc. is a Canadian headquartered company innovating in the field of photodisinfection therapies. Ondine has a pipeline of investigational products, based on its proprietary photodisinfection platform, in various stages of development. Ondine's nasal photodisinfection technology is approved in several jurisdictions under the brand name Steriwave™. It has been awarded the CE mark and, in the US, has been granted Qualified Infectious Disease Product designation and Fast Track status by the FDA. Products beyond nasal photodisinfection include therapies for a variety of medical indications such as chronic sinusitis, ventilator-associated pneumonia, burns, and other indications.

Chairman's Statement

Dear Shareholder,

The past year has been exceptionally challenging for healthcare systems globally as they wrestled with COVID-19 and its aftermath. Hospitals faced record patient wait-lists, staffing shortages, and inflationary pressures that undermined already stretched budgets. In the US, half of hospitals lost money in 2022 as a result. Antimicrobial resistance (AMR), already a leading cause of death worldwide, further exacerbates these cost pressures and has been reported to add €8,500 to €34,000 to the cost of healthcare-associated infections (HAIs) in the EU. Without new antimicrobial solutions, these costs and fatalities are likely to rapidly rise in coming years.

Our discussions with infection control professionals at hospitals across Europe and North America over the past year have cemented our conviction that Ondine has a unique solution that can help with these pressing long- and short-term healthcare challenges. Our technology is proven to kill all types of pathogens, giving it the potential to substantially reduce reliance on antibiotics, anti-fungal and anti-viral drugs. This provides us with a strong pipeline of opportunities across multiple therapy areas. While we are presently focused on the prevention of HAIs and surgical site infections (SSIs) in particular, themselves multi-billion-dollar markets, our product pipeline gives us the opportunity to expand far beyond those markets.

We recognize the challenges of introducing a completely new disruptive technology, as working with regulatory authorities and updating healthcare pathways always takes time. Ondine has invested over $200 million in building its knowledge base, IP portfolio, and robust product pipeline, as well as establishing the accelerator programs and NDA foundation for exclusivity in the US following FDA approval. This strong foundation puts us in the best possible position to move forward.

I am also fortunate to have a Board with such considerable expertise in healthcare systems, pharma, and MedTech, who have themselves worked to introduce new technologies to the market. Their support, strategic advice, and counsel are a great strength for the Company.

Advancing US regulatory approval

We were pleased to report the outcomes of our US Phase 2 clinical trial in September 2022. The Phase 2 trial met both its primary and secondary endpoints, the treatment was found to be safe and well tolerated, and there were no treatment-related reportable adverse events.

Since then, Ondine has been working with its clinical research partners, including long-standing partner HCA Healthcare, to prepare for the upcoming US Phase 3 trial, which the Company intends to commence this year subject to US FDA authorization to proceed.

Growing awareness and recognition

Since listing on the London AIM Exchange just over a year ago, Ondine has delivered on its core objectives. The Company has continued to demonstrate the clinical efficacy and impact of its photodisinfection technology through poster and paper publications, as well as a program of real-world pilots. The use of our lead product, Steriwave™, for the prevention of SSIs has now expanded to hospitals and clinics across Canada and Europe.

We have published substantial additional evidence in a number of peer-reviewed papers and posters over the past year. These include both independent and Ondine-sponsored studies, and the strong outcomes highlight the demand and opportunity that the Company's patented photodisinfection technology presents.

These results, whether they are focusing on preventing SSIs, eliminating multidrug-resistant ESKAPE pathogens, or treating early-onset COVID-19, demonstrate that photodisinfection is highly effective at safely eliminating pathogens in just a few minutes of treatment.

Our work to establish pilot programs in several countries has allowed us to engage with healthcare teams across many different clinical specialties and is driving further awareness of photodisinfection as an antimicrobial solution. We believe that photodisinfection will become the standard of care for topical disinfection due to its efficacy across all microorganism classes, rapid mechanism of action, safety, ease of use, and lack of antimicrobial resistance formation.

Solid foundation supports a bright future

We have a bold ambition: to introduce photodisinfection into all healthcare systems across the world, in order to protect patients against the growing threat of drug-resistant infection. I believe that with our strong clinical trial program, commercialization strategy, and expert team we are in an exceptionally strong position to deliver this vision.

On behalf of the Board, I would like to extend heartfelt thanks to our team, trusted suppliers, and client partners for their great accomplishments over the past year. I would also like to thank our shareholders whose belief in, and commitment to, our vision is vitally important and hugely appreciated.

Jean Charest

Chairman

CEO's Statement

At the tail end of 2021, Ondine Biomedical was admitted onto the Alternative Investment Market (AIM) of the London Stock Exchange. Use of proceeds for the C$37.7 million raised at IPO were to complete the US Phase 2 clinical trial and to substantially prepare for the US Phase 3 clinical trial in support of US FDA approval. We are pleased to report that during 2022, and despite COVID-19 disruptions, the Company successfully accomplished both milestones and more.

Phase 2 clinical trial

During the year, we initiated, completed, and reported results of our Phase 2 BENEFIT-PDT clinical trial, conducted at HCA Healthcare's Memorial Health University Medical Center in Savannah Georgia, a 612-bed acute-care teaching hospital and Level 1 trauma centre. The study met its primary endpoint with S. aureus eliminated or significantly decreased in 86% of nasal carriers (p<0.001), confirming that a single, five-minute treatment of nasal photodisinfection significantly reduces a major cause of surgical site infections in pre-surgical patients. The study also met the secondary endpoint. Analysis of follow-up data demonstrated that treated patients showed a substantially lower SSI rate than the US national average (0.6 vs 3%).

Phase 3 clinical trial preparations

We have made significant progress toward Phase 3 clinical trial readiness. Clinical trial sites, CROs, and other key clinical and regulatory support partners have been identified and are working with us in Phase 3 planning and optimization. Substantial work has been undertaken to enhance manufacturing processes, reduce cost of goods, and establish automation so that we are in position to launch commercial-equivalent product into the Phase 3 study.

Finally, the extensive documentation required for Type B and C meetings with FDA has been established, with a focus on clinical study protocol, appropriate surgical procedures, biostatistical design and chemistry manufacturing control processes. Assuming FDA approval to proceed, we believe that the Company is operationally on track to initiate the Phase 3 study within 2023.

Additional photodisinfection evidence and publications

Strong evidence findings from several other in vitro and clinical studies - our own as well as those conducted by independent research teams - were published this past year.

ESKAPE pathogens: In vitro results presented at the World Anti-Microbial Resistance Congress, in Maryland, USA, showed Ondine's photodisinfection technology eliminates all ESKAPE pathogens with a high degree of efficacy. ESKAPE pathogens are group of highly infectious and antibiotic-resistant bacteria responsible for some of the deadliest HAIs. Photodisinfection is the only known antimicrobial to be able to achieve these outcomes within an extremely short (5-minute) treatment window, without harming human tissue, and without generating resistance.

Pathogens associated with prosthetic joint infections: The research team at University Hospital of Zurich presented and published their findings from an in vitro study which demonstrated that photodisinfection eradicates >99.99% (up to 7 log₁₀ kill) of the key pathogens in biofilms associated with implantable joint infections, with no reported regrowth. These results were presented at the recent Swiss Society for Microbiology (SSM) Annual Congress 2022 in Lausanne, Switzerland and published earlier this year in the journal Antibiotics.

SARS-CoV-2 viral infectivity reduction: Results from a 2021 COVID-19 study conducted by the Sunnybrook Research Institute (Toronto, Canada), in which patients who tested positive for COVID-19 were treated with Ondine's nasal photodisinfection (Steriwave), were published in Nature | Scientific Reports. The results demonstrated that Steriwave effectively inactivated SARS-CoV-2 in the nose of patients with COVID-19 with 90% of patient samples showing decreased viral infectivity and 70% showing no detectable virus after a single five-minute treatment.

Treatment of vaccinated COVID-19 patients: Following these impressive results from Sunnybrook, we sponsored a clinical trial with a leading research hospital in Spain to demonstrate the effectiveness of nasal decolonization to treat vaccinated COVID-19 patients with early symptoms. During the first quarter, Clínica Universidad de Navarra completed the randomized controlled study, the results of which were published in Frontiers in Cellular and Infection Microbiology. The trial outcomes demonstrated that nasal photodisinfection treatment rapidly and substantially suppresses SARS-CoV-2 viral replication and infectivity in the nasal cavity of vaccinated patients. Over six times fewer PCR-positive patients were found in the treatment arm compared to controls.

In an important research breakthrough, Steriwave therapy was shown to be associated with induction of T-cell mediated immunity against SARS-CoV-2, implying the treatment acted as a kind of topical vaccine against the virus. CD4 and CD8 T-cell responses against SARS-CoV-2 spike protein in the treatment arm were almost double the control group responses at 20 weeks. This has significant implications for other respiratory diseases as well as the next pandemic and will serve as the basis for studies with larger sample sizes in the future.

COVID-19 transmission reduction: During the height of the COVID-19 pandemic, Ondine responded to the commercial needs of two meat processing plants, including one of Canada's largest integrated pork producers. Food processing facilities are known to be at high risk for the transmission of infectious diseases. Results of Steriwave deployment demonstrating significant reduction of COVID-19 transmission and outbreaks were presented at the European Society of Photodynamic PDT-PDD Conference in Nancy, France and the findings from this research have been submitted for publication in a peer-reviewed journal.

Meat Disinfection Initiative

The successful deployment among essential workers in the meat processing industry identified an opportunity for disinfection of meat products in order to improve food safety. Ondine was awarded funding of nearly $735,000 from the Government of Canada and Agriculture and Agri-Food Canada (AAFC) towards development of a food-safe photodisinfection method for Canada's meat packing industry. Results from this work - undertakenwith collaboration partner Chinook Contract Research (Airdrie, Alberta) - demonstrated photodisinfection was highly effective against key food-borne pathogens commonly found on food processing surfaces as well as those directly located on chicken, beef, and pork meat, paving the way for Canadian leadership in food safety innovation.

The Canadian meat processing industry has an urgent need for the development of technologies to reduce the incidence of food-borne pathogens including bacteria, fungi, viruses, and protozoa. Eradicating these invasive microbes will help protect the $9.4 billion (2021) Canadian meat export industry, as well enhance as the lives and welfare of Canadian consumers, workers, and livestock, by reducing the incidence of food-borne illnesses. Ondine will continue to apply for non-dilutive funding from Canadian government agencies to progress the translation of our photodisinfection technology into this new business area.

Commercial and operational foundations

Our commercial focus in 2022 was highly strategic, in order to establish the appropriate foundations for marketing and sales success. We are investing in the creation of rigorous process-driven approaches to customers, alongside development of appropriate performance indicators, marketing messages, evidence-based literature reviews, and medical-science liaison protocols. During the year, we expanded commercial operations into a carefully chosen set of 3 new countries: Mexico, Spain, and the United Kingdom. These countries as well as Canada collectively have a population of 270 million people and have demonstrated particular interest in controlling AMR and HAI in private-care hospital settings. The countries support billions of dollars of private-pay clientele and foreign patients engaging in medical tourism.

Ondine has selected distribution partners in each of these jurisdictions. Initial efforts are centered around establishing pilot trials in reference hospitals to engage the early support of local opinion leaders. Regional validation is a key success factor in any new territory and during 2022, we worked with these local distributors to plan, organize and implement pilot studies, as well as train their sales forces and integrate operations with Ondine's quality management system and post-market surveillance capabilities.

Awards

Our leadership in photodisinfection (also known scientifically as 'antimicrobial photodynamic therapy') was recognized by leading clinicians and researchers in the field. Ondine's President and Chief Technology Officer, Dr. Nicolas Loebel received the Lifetime Achievement Award by the International Photodynamic Association at the annual Photodynamic Therapy and Photodiagnostic Symposium in Nancy, France. The award recognizes the role that Dr. Loebel and his Ondine team have played in successfully translating photodisinfection from bench to field, demonstrating safety, efficacy, and significant cost savings to patients and healthcare systems in Canada and other countries.

Sincere appreciation of the extraordinary support of our many stakeholders

I am enormously proud of our dedicated team (past and present) and grateful for the growing number of external supporters who have undertaken to help us with our mission. It takes an extraordinary effort to bring important, disruptive, new technologies to light, buttressed with years of clinical data across leading research centers to evidence the safety, efficacy and the value proposition needed for widespread adoption. Over the past 25 years, Ondine has made these investments into the photodisinfection platform, paid these dues and is now looking forward to a bright future.

Enabling worldwide access to the power of photodisinfection is our bold vision. It takes a committed team of passionate and talented individuals, supported by numerous networks, agencies, and organizations, to turn this vision into a reality. We have every confidence in the capabilities, efforts, and commitment of our growing team. I would like to express my sincerest appreciation for the many dedicated professionals - both inside and outside of our company - for their immense contribution, financial investments, and tireless efforts in 2022.

On behalf of the Board and the entire Ondine team, we would like to thank our stakeholders for their confidence and continued support of our efforts to bring photodisinfection-based products to the world.

Carolyn Cross

Chief Executive Officer

The following are the Company's audited financial statements for the year ended 31 December 2022. They will also be made available for download on the Company's website at www.ondinebio.com/investors/reports-documentation. All amounts are in Canadian Dollars, unless otherwise stated.

Ondine Biomedical Inc.

Consolidated Statements of Financial Position

(In thousands of Canadian dollars)

	Note	December 31, 2022	December 31, 2021
Assets
Current assets
Cash		$ 13,125	$ 30,365
Restricted cash	3	147	-
Accounts and other receivables	4	182	248
Inventory	5	1,294	1,061
Prepaid expenses and deposits	6	381	1,830
		15,129	33,504
Non-current assets
Property and equipment	7	1,404	601
Other assets	6	36	35
		1,440	636
Total Assets		$ 16,569	$ 34,140
Liabilities
Current liabilities
Cheques issued in excess of funds on deposit		$ -	$ 497
Accounts payable and other liabilities	8	3,548	3,277
Current portion of lease liability	9	359	148
		3,907	3,922
Non-current liabilities
Lease liability	9	537	94
Other long-term liabilities	10	481	467
Total Liabilities		4,925	4,483
Equity
Share capital	11	235,042	235,037
Contributed surplus	14	10,528	10,528
Reserves		17,996	16,636
Deficit		(251,922)	(232,544)
Total Shareholders' Equity		11,644	29,657
Total Liabilities and Shareholders' Equity		$ 16,569	$ 34,140

Going concern - Note 1; Commitments and contingencies - Note 15; Subsequent events - Note 23

Approved on behalf of the Board:

"Carolyn Cross"

"Jean Charest"

Ondine Biomedical Inc.

Consolidated Statements of Loss and Comprehensive Loss

(In thousands of Canadian dollars, except share and per share amounts)

Year ended December 31,
		Note	2022	2021

Revenue		14,16	$ 638	$ 2,569
Cost of goods sold	18		(351)	(1,315)
Gross margin			287	1,254
Expenses		19
General and administration			10,909	12,970
Research and development			6,280	4,982
Marketing and sales			1,401	364
Depreciation and amortization		7	460	458
			19,050	18,774
Loss from operations			(18,763)	(17,520)

Other income (expense)
Government loan forgiveness		10	-	518
Accretion and interest expense			(30)	(1,212)
Change in fair value of embedded derivative			-	(424)
Interest income			191	-
Loss on disposal of property and equipment			(82)	-
Loss on write-down of prepaid expenses		6	(1,330)	-
Loss on debt settlement			-	(31,626)
Other income (expense)			4	(7)
Foreign exchange gain			638	186
			(609)	(32,565)
Net loss for the year			(19,372)	(50,085)
Other comprehensive loss
Exchange differences on translation of foreign operations⁽¹⁾			(85)	(12)
Total comprehensive loss			$ (19,457)	$ (50,097)

Net loss per share

Basic and diluted

$ (0.10)

$ (0.63)

Weighted average number of shares outstanding

Basic and diluted

194,588,245

79,637,956

(1) May be reclassified to profit or loss in subsequent periods.

Ondine Biomedical Inc.

Consolidated Statements of Changes in Equity

(In thousands of Canadian dollars, except share amounts)

	Number of common shares (Note 11)	Number of preferred shares (Note 11)	Share capital	Contributed surplus	Share-based payment reserve	Currency translation reserve	Accumulated Deficit	Non-controlling interest	Equity
Balance, January 1, 2021	70,671,262	3,000,000	$ 119,529	$ 10,378	$ 18,801	$ (386)	(182,136)	$ (14)	$ (33,828)
Services received at no charge - Note 14	-	-	-	150	-	-	-	-	150
Issuance of share capital on debt settlement	78,211,095	-	70,759	-	-	-	-	-	70,759
Issuance of share capital on conversion of preferred shares	3,336,345	(3,000,000)	3,000	-	-	-	-	-	3,000
Issuance of share capital upon initial public offering	41,668,716	-	37,723	-	-	-	-	-	37,723
Issuance of share capital for shares of Sinuwave Technologies Corporation	343,750	-	309	-	-	-	(323)	14	-
Issuance of share capital on exercise of stock options	1,231,131	-	5,682	-	(5,680)	-	-	-	2
Shares bought back into treasury	(877,775)	-	(799)	-	-	-	-	-	(799)
Share-based payments - Note 12	-	-	-	-	3,913	-	-	-	3,913
Total comprehensive loss for the year	-	-	-	-	-	(12)	(50,085)	-	(50,097)
Share issuance costs	-	-	(1,167)	-	-	-	-	-	(1,167)
Balance, December 31, 2021	194,584,524	-	235,037	10,528	17,034	(398)	(232,544)	-	29,657
Balance, January 1, 2022	194,584,524	-	235,037	10,528	17,034	(398)	(232,544)	-	29,657
Issuance of share capital for share of Sinuwave Technologies Corporation - Note 3	8,333	-	5	-	-	-	(6)	-	(1)
Share-based payments - Note 12	-	-	-	-	1,445	-	-	-	1,445
Total comprehensive loss for the year	-	-	-	-	-	(85)	(19,372)	-	(19,457)
Balance, December 31, 2022	194,592,857	-	$ 235,042	$ 10,528	$ 18,479	$ (483)	$ (251,922)	$ -	$ 11,644

Ondine Biomedical Inc.

Consolidated Statements of Cash Flows

(In thousands of Canadian dollars)

	Year ended December 31,
	Note	2022	2021
Cash flows from (used in) operating activities
Net loss for the year		$ (19,372)	$ (50,085)
Adjustments for non-cash items:
Depreciation of right-of-use assets	7	274	234
Depreciation and amortization of other property and equipment and intangible assets	7	219	280
Accretion and interest expense		30	1,212
Non-cash salary compensation	14	-	150
Share-based payments	12	1,445	3,913
Unrealized foreign exchange (gain) loss		(478)	90
Change in fair value of financial instruments		-	424
Government loan forgiveness		-	(518)
Loss on disposal of property and equipment		82	-
Loss on write-down of prepaid expenses	6	1,330	-
Loss on debt settlement		-	31,626
Other		23	3
Changes in non-cash working capital	20	102	120
Non-cash change in other long-term liabilities		-	11
Net cash used in operating activities		(16,345)	(12,540)
Cash flows from (used in) financing activities
Loan proceeds from related parties		-	2,827
Loan repayments to related parties		-	(652)
Convertible loan notes proceeds		-	3,840
Convertible loan notes repayments			(30)
Interest paid		(23)	-
Repayment of lease obligations		(252)	(256)
Government loans proceeds			414
Proceeds from issuance of common shares			37,727
Repurchase of common shares			(799)
Share issuance costs		-	(1,167)
Net cash from financing activities		(275)	41,904
Cash flows used in investing activities
Purchase of property and equipment	7	(311)	(77)
Net cash used in investing activities		(311)	(77)
		2022	2021
Net decrease in cash, cash equivalents and restricted cash		$ (16,931)	$ 29,287
Effect of foreign exchange rate change on cash, cash equivalents and restricted cash		335	(45)
Cash, cash equivalents and restricted cash, beginning of year		29,868	626
Cash, cash equivalents and restricted cash, end of year		$ 13,272	$ 29,868

Supplemental cash flow information	20

Cash, cash equivalents and restricted cash are comprised of:

	2022	2021
Cash	$ 13,125	$ 30,365
Restricted cash	147	-
Cheques issued in excess of funds on deposit	-	(497)
Cash, cash equivalents and restricted cash, end of year	$ 13,272	$ 29,868

Ondine Biomedical Inc.

Notes to the Consolidated Financial Statements

Year ended December 31, 2022 and 2021

(In thousands of Canadian dollars, except as otherwise indicated)

1. Nature of operations and going concern

Ondine Biomedical Inc. (the "Company") was incorporated under the British Columbia Business Corporations Act on September 9, 1996. The Company is a biotechnology company engaged in the development and commercialization of innovative anti-infective therapies covering a broad spectrum of bacterial, fungal and viral infections primarily using antimicrobial photodynamic therapy ("aPDT") as a platform technology for its products, which are used as an alternative to topical antibiotics. The Company's aPDT products employ laser-based activation of proprietary compounds to treat a wide range of infections. The address of the Company's corporate office is 888-1100 Melville Street, Vancouver, BC, Canada. The common shares of the Company are listed on the AIM Market of the London Stock Exchange under the symbol "OBI.L".

These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to meet its obligations and continue its operations in the normal course of business for at least twelve months from December 31, 2022.

The Company has a history of incurring significant losses and as at December 31, 2022, had an accumulated deficit of $251,922 (December 31, 2021 - $232,544). As at December 31, 2022, the Company had a cash and cash equivalents of $13,125 (December 31, 2021 - $29,868) and a positive working capital balance of $11,222 (December 31, 2021 - $29,582). In the year ended December 31, 2022, cash used in operating activities totaled $16,345 (December 31, 2021 - $12,540).

The Company's ability to continue as a going concern is dependent on its ability to develop profitable operations and/or to continue to obtain the necessary financing to meet its corporate expenditures and discharge its liabilities in the normal course of business. The Company will need to raise funds through public or private equity and/or debt financings. Although the Company has been successful in raising finance in the past there can be no assurance that it will be successful in the future. If the Company is unable to generate positive cash flows or obtain adequate financing, the Company may need to curtail operations. These factors give rise to material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. The consolidated financial statements do not give effect to adjustments to carrying values and to the classification of assets and liabilities that would be required if the Company were unable to continue as a going concern and such adjustments could be material.

2. Basis of preparation

(a) Statement of compliance

These consolidated financial statements have been presented in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB').

Certain comparative figures have been reclassified to conform to the current year's presentation. The reclassifications have no effect on the previously reported assets, liabilities and previously reported net loss for the year ended December 31, 2021.

The consolidated financial statements were approved and authorized for issue by the Board of Directors on May 8, 2023.

(b) Basis of measurement

The consolidated financial statements have been prepared on a going concern basis under the historical cost basis as stated in the accounting policies. The expenses within the consolidated statements of loss and comprehensive loss are presented by function. Refer to Note 19 for details of expenses by nature.

These consolidated financial statements are presented in Canadian dollars. The parent company's functional currency is Canadian dollars while the functional currency of the Company's subsidiaries are their respective local currencies, except Ondine International Holdings Ltd and Ondine International A.G. whose functional currencies are United States dollars.

(d) Use of estimates, assumptions and judgments

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the amounts reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on management's knowledge of current events and actions the Company may undertake in the future, actual results may differ from the estimates and the differences may be material.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are revised and in any future years affected. Significant judgments, estimates and assumptions used in applying the Company's accounting policies that have the most significant effects on the amounts in the consolidated financial statements are summarized below.

Significant judgments:

Going concern

Management applied judgment in determining that there are no material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern. The assessment of the Company's ability to continue as a going concern and to raise sufficient funds to pay for its ongoing corporate expenditures, discharge its liabilities for the ensuing year, and to fund planned development and commercialization of its products, involves significant judgment based on historical experience and other factors including expectation of future events that are believed to be reasonable under the circumstances.

Convertible financial instruments

Convertible loan notes are hybrid financial instruments which are accounted for separately by their components. The financial liability components have been initially measured at fair value and will subsequently be measured at amortized cost. The identification of convertible notes components is based on interpretations of the contractual arrangement and therefore requires judgment from management. The separation of the components affects the initial recognition of the convertible debenture at issuance and the subsequent recognition of interest. The determination of the fair value of the liability is also based on a number of assumptions, including contractual future cash flows, discount rates and the presence of any derivative financial instruments.

Revenue recognition

Determining whether the goods are considered distinct performance obligations requires judgment. Management exercises judgment to evaluate these arrangements to determine whether the goods are considered distinct performance obligations that should be accounted for separately from each other. A good is distinct if the customer can benefit from it on its own or together with other readily available resources and the Company's promise to transfer the good is separately identifiable from other promises in the contract. Management has determined that the goods are distinct performance obligations. Where a contract consists of more than one performance obligation, revenue is allocated to each based on their standalone selling price.

Estimates and assumptions:

Provision for excess and obsolete inventory

A significant estimate for the Company is its allowance for excess and obsolete inventory. The allowance is based upon management's assessment of a variety of factors, including, among other things, expected selling prices, technological change, product obsolescence, regulatory clearance timeframes, and the demand for the Company's products in the market as compared to the number of units currently on hand.

Fair value of embedded derivatives

The Company is required to determine the fair value of embedded derivatives, such as the conversion features, separate from the convertible loan notes, and the Company is required to determine the classification of the embedded derivative as either a financial liability or an equity instrument. Fair values for embedded derivatives are determined using valuation techniques and require estimates of most likely conversion scenarios, per share fair value, redemption dates, and volatility at the balance sheet date as the financial instruments are not traded in an active market.

Share-based payments

Share-based payment charges are determined using the Black-Scholes option pricing model ("Black-Scholes model") based on estimated fair values of all share-based awards at the date of grant and are expensed to the statement of loss and comprehensive loss over each awards' vesting period. The Black Scholes model utilizes subjective assumptions such as expected fair value of shares, volatility, expected life of the options, risk free interest rate, forfeiture rates and applicable future performance conditions and exercise patterns.

Share-based compensation provided to a consultant takes into account the number of warrants expected to vest based on achieving different milestones in relation to regulatory approval. It is reasonably possible that future estimates of the actual outcome and timing may be different than assumptions used in the preparation of these consolidated financial statements and a material change in share-based compensation reflected in the consolidated statement of loss and comprehensive loss may occur.

Income taxes

The Company's operations are conducted in multiple jurisdictions with complex tax laws and regulations that can require significant interpretation. As such is the case, the Company and the tax authorities could disagree on tax filing positions and any reassessment of the Company's filing positions could result in material adjustments to tax expense, taxes payable and deferred income taxes.

3. Significant accounting policies

The accounting policies below have been applied consistently by the Company and all of its subsidiaries.

(a) Basis of consolidation

The consolidated financial statements include the accounts of the Company and its principal subsidiaries:

Name	Place of incorporation	Functional currency	Percentage of ownership
Ondine Research Laboratories	Washington, United States	USD	100%
Ondine Biomedical U.S., Inc.	Washington, United States	USD	100%
Champion ENT Products, Inc.	Wyoming, United States	USD	100%
Advanced Photodynamic Technologies, Inc.	Minnesota, United States	USD	100%
Sinuwave Technologies Corporation	Nevada, United States	USD	100%
Ondine Biomedical Limited	United Kingdom	GBP	100%
Ondine International Holdings Ltd.	Barbados	USD	100%
Ondine Bio Inc.	Canada	CAD	100%
Ondine International AG	Switzerland	USD	100%

On July 22, 2022, the Company acquired 25,000 shares of Sinuwave Technologies Corporation in exchange for issuing 8,333 shares of the Company, which increased the Company's interest of Sinuwave Technologies Corporation to 100% (2021 - 99.96%). Due to the increase in the Company's ownership, the fair value of the consideration paid of $5 has been allocated to deficit.

On December 15, 2022, the Company acquired 100% of Ondine International AG's ("OIAG") common shares with cash consideration CHF100 ($145) in exchange for 100,000 common shares of OIAG. The primary purpose of OIAG is to hold various intellectual property.

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns though its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intercompany balances and transactions are eliminated in the consolidated financial statements.

Non-controlling interests ("NCI") in the net assets of consolidated subsidiaries are identified separately from the Company's equity therein. NCI consists of the amount of those interests at the date of the original business combination and the non-controlling shareholder's share of changes in equity since the date of the combination. Losses applicable to the non-controlling shareholders in excess of the non-controlling shareholders' share of changes in equity are allocated to the non-controlling shareholders.

b) Foreign currency

The consolidated financial statements are presented in Canadian dollars.

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Company's subsidiaries at exchange rates as at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rates in effect at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate in effect when the fair value was determined. Foreign currency differences are generally recognized in net income/(loss). Non-monetary items that are measured based on historical cost in a foreign currency are translated to the functional currency using the exchange rate in effect at the date of the transaction giving rise to the item.

Foreign operations

The assets and liabilities of foreign operations are translated to the presentation currency using exchange rates at the reporting date. The income and expenses of foreign operations are translated to the presentation currency using the monthly average exchange rates. Foreign currency differences are recognized in other comprehensive income/(loss).

Cash includes cash on hand and restricted cash deposits relating to the acquisition of common shares of Ondine International A.G.

(d) Inventory

Inventory cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories, cost includes an appropriate share of production under normal operating capacity.

Raw materials are recorded at the lower of cost, determined on a specific item basis, and replacement cost. Finished goods are recorded at the lower of weighted average cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. The Company assesses the net realizable value of inventory at each reporting date.

(e) Financial instruments

(i) Non-derivative financial assets

All financial assets are initially recorded at fair value and upon initial recognition are classified as; those to be measured subsequently at fair value (either through other comprehensive income ("FVOCI") or profit or loss ("FVTPL")) or those to be measured at amortized cost. The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

Financial assets classified as amortized cost are measured using the effective interest method less any allowance for impairment. The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period.

Financial assets classified as FVOCI are measured at fair value with unrealized gains and losses recognized in other comprehensive income (loss) except for losses in value that are considered other than temporary or a significant or prolonged decline in the fair value of that investment below its cost. Such losses are recorded in the consolidated statements of loss and comprehensive loss. The Company does not have any financial assets classified as FVOCI.

Transaction costs associated with FVTPL financial assets are expensed as incurred while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset and amortized to profit or loss as part of the application of the effective interest method.

In accordance with IFRS 9, Financial Instruments ("IFRS 9"), all of the Company's financial assets, which consist primarily of cash and accounts receivable, are categorized at amortized cost.

(ii) Non-derivative financial liabilities

All financial liabilities are initially recorded at fair value and upon initial recognition are either designated as FVTPL or classified as amortized cost.

Financial liabilities classified as amortized cost are initially recognized at fair value less directly attributable transaction costs and, after initial recognition, are subsequently measured at amortized cost using the effective interest method. Financial liabilities designated as FVTPL include financial liabilities designated upon initial recognition as FVTPL. Derivatives are also classified as FVTPL unless they are designated as effective hedging instruments. Transaction costs on financial liabilities designated as FVTPL are expensed as incurred. Fair value changes on financial liabilities designated as FVTPL are recognized through profit or loss.

(iii) Compound instruments

The component parts of compound instruments issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement.

If the conversion feature meets the definition of equity, the fair value of the liability component is estimated at the date of issue of the instrument using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured.

If the conversion feature of a convertible loan note issued does not meet the definition of an equity instrument, it is classified as an embedded derivative and measured accordingly. The debt component of the instrument is determined by deducting the fair value of the equity conversion option at inception from the fair value of the consideration received for the instrument as a whole. This amount (the debt component) is recorded as a liability on an amortized cost basis using the effective interest rate method until extinguished upon conversion or at the instrument's maturity date.

(iv) Embedded derivatives

Derivatives embedded in financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

(v) Derivative financial instruments

Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of the reporting date. The resulting gain or loss is recognized in profit or loss immediately.

(vi) Derecognition of financial assets and liabilities

Financial assets are derecognized when the rights to receive cash flows from the assets expire or the financial assets are transferred and the Company has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized directly in equity is recognized in profit or loss.

Financial liabilities are derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

(vii) Preferred shares

Preferred shares are financial instruments accounted for as either a financial liability or an equity instrument. As the preferred shares issued by the Company are redeemable by the holder, they have been assessed to be financial liabilities and have been initially measured at fair value and subsequently measured at amortized cost.

(f) Property and equipment

Items of property and equipment are measured at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes any expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in a manner intended by management. Gains and losses on the disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment.

Depreciation is calculated on a declining balance basis except for leasehold improvements, demonstration equipment and right of use assets which are on a straight-line basis over their useful lives and are generally recognized in profit or loss.

Estimated useful lives of property and equipment are as follows:

Computer equipment 3 years

Laboratory and office equipment 3 years

Furniture and fixtures 5 years

Manufacturing equipment and tools 5 years

Demonstration equipment 5 years

Leasehold improvements Term of lease

Right-of-use assets Term of lease

Depreciation methods, useful lives and residual values are reviewed at the reporting date and adjusted as appropriate.

(g) Intangible assets

Intangible assets consist of technology licenses, patents and trademarks and are recorded at cost less amortization and accumulated impairment losses. Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at the end of each reporting date.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in profit or loss in the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortized, however they are tested for impairment at each reporting date either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed each reporting date to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

(h) Impairment

(i) Impairment of financial assets

An expected credit loss ("ECL") model applies to financial assets measured at amortized cost and debt investments at FVOCI, but not to investments in equity instruments. The Company's financial assets measured at amortized cost and subject to the ECL model consist primarily of accounts receivable.

The Company measures the loss allowance on accounts receivable at an amount equal to the lifetime ECL. To measure ECL on a collective basis, trade receivables are grouped based on similar credit risk and aging. The expected loss rates are based on the Company's historical credit losses experienced and are updated to reflect the effects of the current conditions and forecasts of future conditions that did not affect the period on which the historical data is based.

Accounts receivable are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to make contractual payments for a period of greater than 90 days past due.

(ii) Impairment of non-financial assets

Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs of disposal, the asset is written down to its recoverable amount. An impairment loss is charged to profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows ("cash generating units" or "CGU"s). These are typically individual properties or projects.

(i) Share capital

Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability. Common shares are classified as equity instruments. Costs incurred to issue shares are deferred until the shares are issued, at which time these costs are charged against share capital.

(j) Share-based payments

The Company grants stock options and warrants to employees, directors, officers and consultants pursuant to the stock option plan described in Note 12. The fair value method of accounting for share-based compensation transactions is used.

For graded vested share options, IFRS 2, Share-based Payment ("IFRS 2") requires the use of the attribution method, which requires that the Company treat each installment as a separate share option grant with a different fair value.

The fair value of share-based payments to non-employees is based on the fair value of the goods or services received, when these can be measured reliably. In the event that no reliable measurement can be made, the fair value of the options and warrants granted will be used.

(k) Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income (loss).

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(l) Provisions

Provisions are recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of resources will be required to settle the obligation. Provisions are determined by discounting the expected future cash outflows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Management uses judgment to estimate the amount, timing and probability of the liability based on facts known at the reporting date. The unwinding of the discount is recognized as a finance cost.

(m) Revenue recognition

The Company generates revenues from sales of hardware and consumables. Hardware sales consist of lasers. Consumable sales consist of single use disposable treatment kits. Product revenues are derived primarily from standard direct order product sales. The Company has contracts with customers to deliver both lasers and consumables as part of a single arrangement.

Revenue is allocated to the respective performance obligation based on relative transaction prices and is recognized as goods are delivered to the customer. Revenue is measured as the amount of consideration expected to be received in exchange for the goods transferred.

Revenue from the sale of products in the normal course of activities is measured at the fair value of the consideration received or receivable, net of returns and trade discounts. The Company recognizes revenue when customers obtain control of the product, which is when transfer of title of ownership of goods have passed and when there is a present right to payment. Invoices are generated and revenue is recognized at that point in time.

(n) Government grants and subsidies

Government grants related to income are presented as part of profit or loss as incurred, either as other income or deducted from the related expense. A forgivable loan from the government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan. When the criteria for forgiveness has been satisfied and forgiveness can be reasonably assured, the loan balance is released to the consolidated statement of comprehensive income.

(o) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in the Company's consolidated statements of loss and comprehensive loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized will include the cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditures are expensed as incurred. Capitalized development expenditures will be measured at cost less accumulated amortization and accumulated impairment losses.

To date, all of the research and development ("R&D") costs have been expensed as all of the criteria for capitalization have not yet been met.

(p) Finance income/(expense)

Finance income/(expense) comprises interest expense on convertible debentures, the accretion of the discount on the conversion of convertible debentures into common shares or other equity of the Company and the subsequent recovery of the discount.

(q) Loss per share

Basic loss per share is calculated by dividing the loss for the year attributable to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflects the potential dilution of securities that could share in earnings of an entity. For years, where the issue of shares upon the exercise of stock options and/or warrants would be anti-dilutive, diluted loss per common share is the equivalent to basic loss per common share.

4. Accounts and other receivables

	December 31, 2022	December 31, 2021
Trade receivables	$ 133	$ 158
Other receivables	49	90
	$ 182	$ 248

The following table reflects the loss allowance for trade receivables balance:

	December 31, 2022	December 31, 2021
Gross carrying value	$ 997	$ 1,022
Expected credit loss allowance	(864)	(864)
Trade receivables - net	$ 133	$ 158

5. Inventory

	December 31, 2022	December 31, 2021
Raw materials	$ 943	$ 561
Finished goods	351	500
	$ 1,294	$ 1,061

During the year ended December 31, 2022, raw materials and finished goods included in cost of goods sold amounted to $252 (December 31, 2021 - $1,257). During the year ended December 31, 2022 and 2021, inventory valued at $69 and $3, respectively was written off and reflected within cost of goods sold.

6. Prepaids and deposits, and non-current assets

	December 31, 2022	December 31, 2021
Prepaid insurances	$ 252	$ 391
Lease deposits	36	35
Other prepaid costs	129	1,439
	$ 417	$ 1,865
Less: Current portion of prepaid expenses and deposits	$ 381	$ 1,830
Other non-current assets	$ 36	$ 35

During the year ended December 31, 2022, the Company wrote-off $1,330 of prepaid assets that are unlikely to be realized (December 31, 2021 - $nil). The amounts relate to future services with a broker that was replaced in 2022 and a purchase order deposit with a manufacturer for a discontinued product.

7. Property and equipment

The Company's property and equipment gross carrying amounts and accumulated depreciation were as follows:

	Computer equipment	Furniture and fixtures	Lab and office equipment	Leasehold improvements	Manufacturing equipment and tools	Demo equipment	Right-of-use	Total
Cost
Balance, January 1, 2021	$ 193	$ 225	$ 382	$ 279	$ 513	$ 378	$ 762	$ 2,732
Additions	21	-	-	-	57	20	178	276
Disposals	-	-	-	-	-	(20)	(139)	(159)
Exchange adjustment	-	(1)	-	(1)	1	-	(4)	(5)
Balance, December 31, 2021	$ 214	$ 224	$ 382	$ 278	$ 571	$ 378	$ 797	$ 2,844
Additions	88	16	30	-	177	-	877	1,188
Transfers and other	-	-	33	-	-	131	-	164
Disposals and derecognition	(38)	-	-	-	-	(335)	(630)	(1,003)
Exchange adjustment	27	6	27	14	33	(10)	42	139
Balance, December 31, 2022	$ 291	$ 246	$ 472	$ 292	$ 781	$ 164	$ 1,086	$ 3,332
Accumulated depreciation
Balance, January 1, 2021	$ 151	$ 219	$ 350	$ 279	$ 433	$ 160	$ 469	$ 2,061
Additions	19	1	10	-	22	57	234	343
Disposals and derecognition	-	-	-	-	-	(20)	(139)	(159)
Exchange adjustment	1	-	-	(1)	2	(4)	-	(2)
Balance, December 31, 2021	$ 171	$ 220	$ 360	$ 278	$ 457	$ 193	$ 564	$ 2,243
Additions	50	6	24	-	55	83	275	493
Transfers and other	-	-	23	-	-	(20)	-	3
Disposals and derecognition	(38)	-	-	-	-	(225)	(630)	(893)
Exchange adjustment	10	4	26	14	15	1	12	82
Balance, December 31, 2022	$ 193	$ 230	$ 433	$ 292	$ 527	$ 32	$ 221	$ 1,928
Net book value
December 31, 2021	$ 43	$ 4	$ 22	$ -	$ 114	$ 185	$ 233	$ 601
December 31, 2022	$ 98	$ 16	$ 39	$ -	$ 254	$ 132	$ 865	$ 1,404

During the year ended December 31, 2022, depreciation of $30 (December 31, 2021 - $55) was allocated to cost of goods sold (Note 18), $3 was allocated to inventory (December 31, 2021 - $nil) and $460 to operating expenses (December 31, 2021 - $288).

8. Accounts payable and other liabilities

	December 31, 2022	December 31, 2021
Accounts payable	$ 388	$ 1,202
Accrued liabilities	1,110	556
Employee related payables	1,970	1,424
Accrued interest	80	95
	$ 3,548	$ 3,277

9. Lease liability

			Office Space
As at January 1, 2022			$ 242
Additions			866
Interest accretion			26
Lease payments			(252)
Exchange adjustment			14
As at December 31, 2022			$ 896

	December 31, 2022	December 31, 2021
Current portion	$ 359	$ 148
Non-current	537	94
Total lease liability	$ 896	$ 242

During the year ended December 31, 2022, Ondine Research Laboratories, Inc., a subsidiary of the Company, entered into a property lease with a maturity date of May 31, 2025 and an effective interest rate of 11.07%.

The Company's leases are for office spaces and a laboratory property. Interest expense on lease obligations for the year ended December 31, 2022 was $26 (December 31, 2021 - $13). The expense relating to variable lease payments not included in the measurement of lease obligations was $132 (December 31, 2021 - $129). This consists of variable lease payments for operating costs and property taxes. Total cash outflow for leases was $410 (December 31, 2021 - $381), including $252 (December 31, 2021 - $243) of principal payments on lease obligations.

As at December 31, 2022, the minimum annual payments under these leases, including an estimate of operational costs for its office and laboratory premises based on current costs, is provided below.

2023	$ 586
2024	603
2025	222
	$ 1,411

10. Other long-term liabilities

Other long-term liabilities represent government guaranteed loans received. The balances of the government loans are as follows:

		December 31, 2022	December 31, 2021
Paycheck Protection Program	a	$ 421	$ 394
Other		60	73
Total other long-term liabilities		$ 481	$ 467

(a) Paycheck Protection Program

In 2020 and 2021, Ondine Research Laboratories, Inc. and Ondine Biomedical U.S., Inc., subsidiaries of the Company received an unsecured advance of US$735 ($939) under the Paycheck Protection Program ("PPP"), which is guaranteed by the Small Business Administration ("US SBA"), pursuant to the Coronavirus Aid, Relief and Economic Security Act. The loan bears interest at 1% per annum and is repayable, in blended payments, over a two year term. In 2021, the Company filed a loan forgiveness application for the advance received in 2020, and the Company was granted full loan forgiveness by the US SBA in 2021 of US$424 ($518) and this portion of the loan balance was released to the consolidated statement of comprehensive income in 2021. Subject to the satisfaction of certain conditions, the remainder of the loan may be forgiven if the proceeds are used to fund qualifying expenditures such as payroll and benefits costs, rent, and utilities costs over an elected coverage period. As at December 31, 2022, the loan of US$311 ($421) (December 31, 2021 - US$311 ($394)) was recorded as part of "other long-term liabilities' in the consolidated statement of financial position.

11. Share capital

(a) Common Stock

Authorized

An unlimited number of common shares without par value.

Issued

As at December 31, 2022, the Company's issued share capital comprised of 194,592,857 common shares (December 31, 2021 - 194,584,524).

(b) Preferred Stock

Authorized

An unlimited number of fixed-value, voting, preferred shares, entitled to a non-cumulative dividend of 6% per annum, redeemable and retractable at $1/share.

Issued

As at December 31, 2022, the Company's issued preferred share capital comprised of nil preferred shares (December 31, 2021 - nil).

12. Share-based payments

(a) Stock Option Plan

On November 1, 2021, the Board of Directors approved and adopted an amended stock option plan for the Company which provides for the grant of stock options to directors, officers, employees and consultants from time to time at the discretion of the directors. Under the terms of the amended stock option plan, the maximum number of options authorized for issuance is 10% of the issued and outstanding common shares in any 10-year period for any Employee' share scheme and the maximum number of options authorized for issuance is 5% of the issued and outstanding common shares in any 10-year period for any executive share scheme. As at December 31, 2022, the maximum number of total options that can be outstanding are 19,459,286 (December 31, 2021 - 19,458,452).

A summary of the status of the stock options outstanding is as follows:

	December 31, 2022		December 31, 2021
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
Outstanding, beginning of year	6,833,000	$ 1.42	9,203,356	$ 1.98
Options granted	2,890,000	0.77	7,337,994	1.76
Options exercised	-	-	(2,328,356)	0.43
Options expired	(250,000)	(0.90)	-	-
Options forfeited	(141,750)	1.72	(1,282,500)	1.77
Options cancelled	(1,261,250)	2.59	(6,097,494)	2.98
Outstanding, end of year	8,070,000	$ 1.07	6,833,000	$ 1.42
Exercisable, end of year	4,371,250	$ 1.13	4,233,748	$ 1.33

Share-based payments expense for the year ended December 31, 2022, in the amount of $1,693 (December 31, 2021 - $2,571) was recorded.

The outstanding options for the the year ended December 31, 2022 is as follows:

Exercise price	Number of options	Remaining life (years)
$ 0.01	200,000	3.75
$ 0.36	330,000	4.94
$ 0.49	600,000	4.74
$ 0.50	140,000	0.91
$ 0.90	4,095,000	1.58
$ 0.91	50,000	4.17
$ 0.93	1,905,000	4.10
$ 2.70	650,000	0.91
$ 3.00	100,000	3.55
$ 1.00	8,070,000	2.58

The fair value of stock options granted during the year ended December 31, 2022 were estimated with the Black-Scholes model using the following assumptions at the time of grant:

Dividend yield		0%
Annualized volatility		70% - 76%
Risk-free interest rate		1.61% - 3.45%
Expected life of options (years)		5
Forfeiture rate		14%

Volatility was estimated by using the historical volatility of other companies that the Company considers comparable that have trading history and volatility history. The expected life in years represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on Canadian government benchmark bonds with a term equal to or a remaining term that approximates the expected life of the options.

The weighted average fair value of stock options granted during the twelve months ended December 31, 2022, was $0.68 per option (December 31, 2021 - $0.56). As at December 31, 2022, stock options outstanding had a remaining contractual life of 2.58 years (December 31, 2021 - 2.73 years).

(b) Warrants

On May 30, 2020, December 23, 2020 and December 1, 2021, the Company granted warrants entitling the holders to acquire common shares of the Company as consideration for ongoing consulting and advisory services. A summary of the status of the warrants outstanding is as follows:

	December 31, 2022		December 31, 2021
	Number of warrants	Weighted average exercise price	Number of warrants	Weighted average exercise price
Outstanding, beginning of year	2,795,845	$ 1.42	1,350,000	$ 2.33
Warrants granted	-	-	1,945,845	0.92
Warrants expired	(500,000)	3.00	-	-
Warrants cancelled	-	-	(500,000)	1.92
Outstanding, end of year	2,295,845	$ 1.08	2,795,845	$ 1.42
Exercisable, end of year	2,295,845	$ 1.08	2,795,845	$ 1.42

The expense for the year ended December 31, 2022 was $nil (December 31, 2021 - $724). As at December 31, 2022, warrants outstanding had a remaining contractual life of 2.0 years (December 31, 2021- nil years).

On December 15, 2020, the Company entered into an agreement to provide shares in exchange for services provided. As at December 31, 2022, the Company recognized a recovery of $247 (2021 - expense of $618) to accrue for the share based payments.

13. Income taxes

Income tax expense differs from the amount that would be computed by applying the federal and provincial statutory tax rates to the earnings before income taxes. A reconciliation to the effective tax is as follows:

	Years ended December 31,
	2022	2021
Loss before income taxes	$ (19,372)	$ (50,086)
Statutory income tax rate	27%	27%
Income tax (recovery)	$ (5,230)	$ (13,523)
Non-deductible expenses	1,326	1,268
Tax rate differences	383	270
Other differences	(151)	(552)
Foreign exchange differences	(1,047)	(57)
True up: adjustment of provision to tax return	8,146	-
Change in unrecognized deferred tax assets	(3,427)	12,594
Income tax (recovery)	$ -	$ -

Deferred income tax assets are only recognized to the extent that the realization of tax loss carry-forwards is determined to be probable. As at December 31, 2022, the Company has not recognized any income tax assets.

Effective January 1, 2019, the Canadian federal and British Columbia provincial corporate tax rates are 15% and 12%, respectively. All deferred tax assets and liabilities are measured at the combined 27% tax rate. As a result of tax legislation enacted in the U.S. at the end of 2017, the federal U.S. corporate tax rate applicable to years subsequent to 2017 was substantially reduced.

The Company has unrecognized deferred tax assets and liabilities as follows:

		December 31, 2022		December 31, 2021
	Deferred tax assets:
	Tax losses carried forward	$ 29,430		$ 34,473
	General Business Credit	1,827		1,608
	Other	27		11
	Amortization of research and development expenses	803		-
	Share issue costs	1,214		1,277
	Equipment and leasehold improvements		140	121
	Intangible assets		653	481
	Total deferred tax assets		34,094	37,971
	Deferred tax liabilities:
Fair value of financial instruments			-	(452)
	Total deferred tax liabilities		-	(452)
	Unrecognized deferred tax asset		(34,094)	(37,519)
	Net deferred tax assets		$ -	$ -

The Company has non-capital loss carryforwards in Canada of $56,110, in the United States of US$38,620 ($52,307), in Barbados of US$6,359 ($8,613), in Switzerland of US$89 ($121) and in the United Kingdom of GBP£28 ($45), all expiring between 2023 - 2041. The losses are available to reduce taxable income in Canada, the US, Barbados and UK respectively. As at December 31, 2022, the non-capital loss carryforwards that expire on December 31 of each respective year are as follows:

Expiry date	Amount
Pre-2032	$ 40,534
2032	6,713
2033	7,775
2034	7,245
2035	3,844
2036	2,988
Thereafter until 2041	48,096
	$ 117,195

14. Related party transactions

(a) Revenues, product shipments and expenses

Year ended December 31,
	2022	2021
Product sales (i)	$ 9	$ -

(i) Product sales for the year ended December 31, 2022 were to a related company. The revenue associated with product shipments was not recognized due to revenue recognition conditions not being met, and the cost of the product shipped to a related company was included in cost of goods sold. The revenue associated with product shipments will be recognized in a subsequent year(s) upon invoice payment. For the year ended December 31, 2022, there was $33 (December 31, 2021- $16) of products shipped to a related party company for which revenue was not recognized.

(b) Compensation of key management personnel

The Company's key management personnel have the authority and responsibility for planning, directing and controlling activities of the Company and consists of the Company's executive officers and directors.

Year ended December 31,
	2022	2021
Compensation and other short-term benefits	$ 2,293	$ 1,852
Directors' fees	616	179
Share-based payments	296	1,950
	$ 3,205	$ 3,981

The CEO and controlling shareholder of the Company provided her services to the Company without salary compensation, thereby waiving her right to receive a monthly salary as set out in her employment contract for the six months ended June 30, 2021. In the same period, a notional expense of $150 has been recorded to 'contributed surplus' in the consolidated statements of loss and comprehensive loss and charged to reserves in the consolidated statements of changes in equity. Subsequent to June 30, 2021, the CEO and controlling shareholder of the Company had her salary compensation reinstated per the employment contract. As at December 31, 2022, the cumulative notional expense is $10,528 (December 31, 2021 - $10,528).

		December 31, 2022	December 31, 2021
Included in accounts payable and other liabilities		$ 714	$ 1,015

Loans payable to related parties are due to the personal holding company of the Company's controlling shareholder. The loans payable to related parties are unsecured. No amount payable was in respect of services provided. The related party balances included in accounts payable and other liabilities consist of bonus payable and the current portion of loans payable to related parties.

15. Commitments and contingencies

Open purchase order commitments as at December 31, 2022 were $887 (December 31, 2021 - $1,508) for the purchase of inventory and contracted development and clinical services.

The Company has the following contingency at December 31, 2022:

(i) The Company's Barbadian subsidiary held intellectual property in Barbados until December 22, 2022. As a result of the Barbados Companies (Economic Substance) Act passed in 2019, the Barbadian subsidiary must comply with economic substance requirements set out in the legislation. If the Barbadian subsidiary cannot establish economic substance in Barbados, the Barbadian subsidiary could be subject to additional financial penalties and/or could be struck from the register of companies. On December 22, 2022, the Company transferred the intellectual property from the Barbadian subsidiary to a new Swiss subsidiary via an intercompany sale at a fair value which was determined by an independent third party. Challenges from Barbadian, Swiss, Canadian or United States authorities regarding any of the foregoing, which results in an unfavorable outcome, could have a material impact on the financial position and operating results of the Company.

(ii) The Company and certain of its affiliates have also been named as defendants in certain legal actions in the normal course of business, none of which management believes singularly or cumulatively, will have a material impact on the results of operations and financial position of the Company.

16. Segmented information

Management has determined that the Company has one reportable operating segment, aPDT products. This segment accounts for all of the Company's revenue, cost of goods sold and operating expenses. Determination of the operating segment was based on the level of financial reporting to the Company's chief operating decision makers. Revenues are attributed to the geographic area where the customer is located.

Year ended December 31,
	2022	2021
Product revenue
Canada	$ 596	$ 2,501
Other	42	68
	$ 638	$ 2,569

Revenue from significant customers are as follows:

Year ended December 31,
	2022	2021
Customer 1	$ -	$ 1,128
Customer 2	-	727
Customer 3	504	422
Other	134	292
	$ 638	$ 2,569

A summary of non-current assets (excluding other assets) by geographical area based on the location of the asset is as follows:

	December 31, 2022	December 31, 2021
Canada	$ 245	$ 353
United States	1,159	248
	$ 1,404	$ 601

17. Financial risk management and financial instruments

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 Unadjusted quoted market prices in active markets for identical assets or liabilities;

Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is not based on observable market data.

As at December 31, 2022, the carrying values of cash, restricted cash, accounts and other receivables, and accounts payable and other liabilities approximate their fair values because of their nature, relatively short maturity dates.

(a) Management of risks arising from financial instruments

The overall responsibility for the establishment and oversight of the Company's risk management policies resides with the Board of Directors. The Company's risk management policies are established to identify, analyze and manage the risks faced by the Company and to implement appropriate procedures to monitor risks and adherence to established controls. Risk management policies and systems are reviewed periodically in response to the Company's activities and to ensure applicability. The Company, through its financial assets and liabilities, is exposed to certain risks as follows:

Credit risk

The Company is exposed to credit risk arising from the possibility that cash held, receivables and amounts due from related parties are non-recoverable. However, the Company believes that its exposure to credit risk in relation to the cash and receivables is low. All of the cash held by the Company and its subsidiaries was held with reputable financial institutions. The Company has evaluated accounts receivable and determined an expected credit loss allowance of $864 for the year ended December 31, 2022 (December 31, 2021 - $864). During the period ended December 31, 2022, the Company recorded a bad debt expense of $nil (December 31, 2021- $nil).

Foreign currency risk

The results of the Company's operations are subject to currency transaction and translation risks. The fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates in Canada, the United States, the United Kingdom, Barbados, and Switzerland and is exposed to foreign exchange risk due to fluctuations in the US$, GBP, Barbadian Dollar, and Swiss Franc against the Canadian dollar. Foreign exchange risk arises from financial assets and liabilities denominated in currencies other than the functional currency of the respective entities. The Company's primary risk is associated with fluctuations between the US$ and Canadian dollar, and the GBP and Canadian dollar.

The Company has determined that the effect of a 10% increase or decrease in the US$ and GBP against the Canadian dollar on net financial assets and liabilities, as at December 31, 2022, including cash, accounts receivables, accounts payable and other liabilities denominated in US$, and GBP would result in an increase or decrease of approximately $979 (December 31, 2021- $2,811) in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2022.

Interest rate risk

Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The Company did not incur or have any other interest-bearing assets or liabilities.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company ensures that there is sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash. The Company's principal sources of liquidity are cash provided by operations, related party loans, debt and equity issuances. The Company projects and monitors its cash requirements to accommodate changes in liquidity needs (Note 1).

In addition to the commitments in Note 9 and Note 15, the Company has the following contractual financial liabilities as at December 31, 2022:

	Carrying amount	Contractual cash flows	Less than one year	More than one year
Financial liabilities
Accounts payable and other liabilities	$ 3,548	$ 3,548	$ 3,548	$ -
Other long-term liabilities	481	481	-	481
	$ 4,029	$ 4,029	$ 3,548	$ 481

18. Cost of goods sold

Year ended December 31,
	2022	2021
Inventory - Note 5	$ 252	$ 1,257
Inventory write-off - Note 5	69	3
Depreciation - Note 7	30	55
	$ 351	$ 1,315

19. Expenses by nature

General and administration, research and development, marketing and sales, and depreciation and amortization expenses are comprised of the following expenses by nature:

Year ended December 31,
	2022	2021
Salaries and benefits	$ 9,172	$ 5,647
Professional fees, contractors and consultants	3,929	6,754
Clinical trial costs	1,248	99
Office and lab costs	1,483	1,069
Share based payment	1,445	3,912
Travel and entertainment	506	332
Depreciation and amortization	451	458
Technology costs	423	236
Advertising and promotion	229	143
Delivery and logistics	164	124
	$ 19,050	$ 18,774

During the year ended December 31, 2022, Ondine Research Laboratories Inc. and Ondine Biomedical U.S., Inc. received Employee Retention Credit, a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic from the Internal Revenue Service of US$123 ($160) (2021 - US$84 ($105)) and recorded it to the Comprehensive Statements of Loss and Comprehensive Loss against salaries and benefits.

During the year ended December 31, 2022, the Company entered into Contribution Agreement with His Majesty the King in Right of Canada as represented by the Minister of Agriculture and Agri-Food in which the Company was approved by a maximum contribution from the Minister of Agriculture and Agri-Food of $735 for eligible approved expenses for research. During the year ended December 31, 2022, the Company received $418 and recorded it to the Comprehensive Statements of Loss and Comprehensive Loss against salaries and benefits and professional fees, contractors and consultants.

20. Supplementary cash flow information

Year ended December 31,
	2022	2021
Changes in non-cash working capital items
Accounts and other receivables	$ 66	$ 296
Inventory	(337)	(673)
Prepaid expenses and deposits	126	(1,656)
Accounts payable and other liabilities	247	2,153
	$ 102	$ 120

21. Ultimate controlling party

The Company's CEO is the ultimate controlling party of the Company, personally owning and/or controlling through her personal holding company a total of 55.7% of the issued common shares of the Company as at December 31, 2022 (December 31, 2021 - 55.7%).

22. Capital management

The Company's objectives when managing capital are to ensure sufficient liquidity for operations and adequate funding for growth and capital expenditures while maintaining an efficient balance between debt and equity.

The Company's capital consists of items included in shareholders' equity, debt facilities net of cash, cash equivalents and restricted cash.

In order to facilitate the management of capital, the Company prepares annual expenditure budgets that are updated as necessary and dependent on various factors, including successful deployment of capital and industry conditions. The annual budgets are approved by the Board of Directors. The Company is not subject to any externally imposed capital requirements.

Management believes that existing cash resources, together with cash generated through operations and funds raised through public or private equity and/or debt financings, will generate sufficient liquidity to meet operating cash requirements for at least the next twelve months.

23. Subsequent events

Subsequent to December 31, 2022, the following transactions had occurred:

1. On March 27, 2023, the Board of Directors approved the grant of 125,000 stock options to the Company's employees and consultants at an exercise price of £0.1725 in accordance with the Company's stock option plan. The stock options are exercisable for a period of 5 years and must meet certain vesting criteria.

2. From March 1, 2023 to April 25, 2023, the Company entered into agreements and commitments for contracted services for a total scope of work up to $593 primarily related to marketing, strategy and clinical services.

3. On May 5, 2023, the Company issued 390,550 common shares in the Company ("the Consideration Shares") to Hylife pursuant to the services agreement entered into on December 15, 2020 ("Hylife Service Agreement"). In accordance with the Hylife Service Agreement, the Consideration Shares are being issued at a price of US$1.53 ($1.94).

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Ondine Biomedical Inc. NPV (CDI) (OBI)

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