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VMS Rehab Systems Inc (VMS1)

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Monday 11 August, 2014

VMS Rehab Systems Inc

2013 Audited Financial Results


                            VMS REHAB SYSTEMS, INC
 
                            REPORT TO SHAREHOLDERS
 


To all our Shareholders

It gives me great pleasure to write to you on the release of our 2013 Audited
Financial Report and equally important, as an issuer on the First Quote Segment
of the GXG Markets. VMS Rehab Systems was admitted for trading on the GXG
markets in October, 2013.

Fiscal 2013 has been a watershed year for VMS in terms of a number of key
initiatives that will play a vital role in spurring the Company's expansion
over the medium to long term.

The Company continues to align its Canadian sales activities as a core vendor
to Shoppers Drug Mart, Canada's largest retail Drug and Home Healthcare retail
network which includes more than 1,200 retail drug stores and 55 home
healthcare stores coast to coast.. The Company views Shoppers as a strategic
partner in the Canadian market for the sales and marketing of its high
performance orthopedicseat cushion products. The company anticipates that the
recent acquisition of Shoppers by the country wide food chain, Loblaws, will
have a positive impact on cushion revenues going forward. The tie up of
Shoppers with Loblaws may well provide significantly more exposure for the
company's cushion products at retail as the integration between product lines
across Shoppers and Loblaws is implemented in fiscal 2014 and beyond.

On an international front, VMS is exploring initiatives to broaden its
penetration either directly and/or indirectly through strategic partners or
affiliates situated outside the Canadian marketplace. Management anticipates
further announcements in this regard by the end of Q3 2014.

Subsequent to the year end, VMS acquired BioPharmcorSpZ.o.o., an early stage
developer of generic pharmaceuticals for the male gender population.

The raisin d'être for making the Biopharmcor acquisition is to position the
Company with significantly higher valued assets over a 5-7 year horizon. While
growth in the home health sector will chart aging populations worldwide,
management believes that revenues and profitability will lag in comparison to
what may be achieved at its Biopharmcor unit over the same period of time,

With the addition of the BioPharmcor unit, Management is carefully evaluating
the addition of staff personnel, as required , to assist in operating the VMS
core business day to day and to develop the company's niche pipeline of generic
products and other ancillary activities to maximize the growth and
profitability of the Company.

While management maintains a positive outlook for revenues and profitability
keyed to growth in the home healthcare sector on a global scale and the
Company's entry into the generic drugs business initially in Europe, still , it
is mindful of the risks that lie ahead.  It will shepherd the cash resources
currently available to meet current working capital requirements over the year
ahead and take advantage of new funding opportunities to propel the company
forward in the future.

For the 2013 fiscal year ended December 31, 2013, VMS Rehab Systems Inc.
reported net revenue relating to the sale of branded orthopedic seat cushion
products of CDN$76,172 (47,275 Euros), an increase of 27.5% over the unaudited
net revenue of CDN$59,722(37,703 Euros) for the fiscal year ended December 31,
2012. During the fiscal year ended December 31, 2013, the Company recognized a
net gain of CDN$49,341 or $0.18 per share (30,623 Euros or 0.11 Eurocents per
share).The 2013 gain was mainly the result of the Company recording an gain on
extinguishment of debt of CDN$139,451. During the fiscal year ended December
31, 2012, the Company recorded an unaudited net loss of CDN$8,575 (5,414 Euros)
for fiscal 2012.

The management of VMS Rehab Systems Inc looks forward with commitment and
dedication of purpose in bringing into fruition the Company's goals and
objectives for Fiscal 2014 and beyond. We are grateful to our shareholders and
others who have supported our activities over the years, and we want to assure
you of our best efforts in building out our Company.

On behalf of the Board

Michael S. Wexler
President/Director

August 8, 2014





                            VMS REHAB SYSTEMS, INC.                            

                             Financial Statements                              

                    Years Ended December 31, 2013 and 2012                     

                        (Expressed in Canadian Dollars)                        





                         INDEPENDENT AUDITORS' REPORT                          

To the Shareholders of VMS Rehab Systems, Inc.

We have audited the accompanyingfinancial statements of VMS Rehab Systems,
Inc., which comprise the statement of financial position as at December 31,
2013, and thestatements of comprehensive loss, changes in equity, and cash
flows for the yearthen ended, and a summary of significant accounting policies
and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these
financial statements in accordance with International Financial Reporting
Standards, and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit in accordance with Canadian generally
accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also involves
evaluating the appropriateness of the accounting policies used and the
reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audit is sufficient
and appropriate to provide a basis for our qualified audit opinion.

Opinion

In our opinion, these financial statements present fairly, in all material
respects, the financial position of VMS Rehab Systems, Inc. as at December 31,
2013 and its financial performance and its cash flows for the year then ended,
in accordance with International Financial Reporting Standards.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 of the financial
statements which indicates the existence of a material uncertainty that may
cast significant doubt on the ability of VMS Rehab Systems Inc. to continue as
a going concern.

Other Matter

The comparative financial statements for the year ended December 31, 2012 are
unaudited.

/s/ SATURNA GROUP CHARTERED ACCOUNTANTS LLP

Saturna Group Chartered Accountants LLP

Vancouver, Canada

August 6, 2014





VMS REHAB SYSTEMS, INC.

Statements of financial position

(Expressed in Canadian dollars)

                                                        December 31, December 31,
                                                            2013         2012    
                                                                              
                                                             $            $      
                                                                              
                                                                     (unaudited) 
                                                                                
Assets                                                                        
                                                                              
Current assets                                                                 
                                                                              
Accounts receivable                                         3,317        5,267
                                                                              
Inventory                                                   1,413        8,339
                                                                              
Total current assets                                        4,730       13,606
                                                                              
Non-current assets                                                            
                                                                              
Property and equipment (Note 3)                                 -          118
                                                                              
Intangible asset(Note 4)                                        -       10,000
                                                                              
Total non-current assets                                        -       10,118
                                                                              
Total assets                                                4,730       23,724
                                                                              
Liabilities                                                                   
                                                                              
Currentliabilities                                                            
                                                                              
Bank indebtedness                                          28,755       28,073
                                                                              
Accounts payable and accrued liabilities (Note 5)          17,632       10,909
                                                                              
Due to related parties (Note 7)                            54,435      248,266
                                                                              
Total current liabilities                                 100,822      287,248
                                                                              
Non-current liabilities                                                       
                                                                              
Convertible debt, net of amortized discount of            113,091            -
$135,175 and $nil, respectively (Note 6)                                      
                                                                              
Total liabilities                                         213,913      287,248
                                                                              
Shareholders' deficit                                                         
                                                                              
Share capital                                              50,100          100
                                                                              
Contributed surplus                                      (45,000)            -
                                                                              
Deficit                                                 (214,283)    (263,624)
                                                                              
Total shareholders' deficit                             (209,183)    (263,524)
                                                                              
Total liabilities and shareholders' deficit                 4,730       23,724

Going concern (Note 1)

Commitment (Note 11)

Subsequent event (Note 13)

Approved and authorized for issuance by the Board of Directors on August 6,
2014:

/s/ "Michael Wexler"                                           
                                                               
Michael Wexler, Director                                       




VMS REHAB SYSTEMS, INC.

Statements of comprehensive loss

(Expressed in Canadian dollars)

                                                            Year         Year     
                                                           ended         ended    
                                                        December 31, December 31, 
                                                            2013         2012     
                                                                               
                                                             $             $      
                                                                               
                                                                     (unaudited) 
                                                                               
Revenue                                                    76,172        59,722
                                                                               
Cost of sales                                              87,260        41,175
                                                                               
Gross profit (loss)                                      (11,088)        18,547
                                                                               
Expenses                                                                       
                                                                               
Amortization                                                  118            50
                                                                               
Bad debts                                                  12,881             -
                                                                               
Impairment of intangible asset                             10,000             -
                                                                               
Office and miscellaneous                                   14,147        17,062
                                                                               
Professional fees                                          26,673         5,768
                                                                               
Vehicle                                                     8,036         4,242
                                                                               
Total expenses                                             71,855        27,122
                                                                               
Total loss before other income (expense)                 (82,943)       (8,575)
                                                                               
Other income(expense)                                                          
                                                                               
Interest expense (Note 6)                                 (7,167)             -
                                                                               
Gain on extinguishment of debt (Note 6)                   139,451             -
                                                                               
Total other income (expense)                              132,284       (8,575)
                                                                               
Net income (loss) and comprehensive income                 49,341       (8,575)
(loss)                                                                         
                                                                               
Net income (loss) per share, basic and diluted               0.18       (85.75)
                                                                               
Weighted average shares outstanding                       268,593           100




VMS REHAB SYSTEMS, INC.

Statements of changes in equity (deficit)

(Expressed in Canadian dollars)

                     Common Shares  Common Shares                    
                        Class A        Class B     
                                                   Contributed                  
                     Shares Amount  Shares  Amount   Surplus    Deficit    Total  
                                                                                  
                       #      $        #      $         $          $         $       
                                                                                  
Balance, December       100    100        -      -           - (255,049) (254,949)
31, 2011 (unaudited)                                                              
                                                                                  
Net loss for the          -      -        -      -           -   (8,575)   (8,575)
year                                                                              
                                                                                  
Balance, December       100    100        -      -           - (263,624) (263,524)
31, 2012 (unaudited)                                                              
                                                                                  
Shares issued for         -      -  500,000 50,000    (45,000)         -     5,000
consulting services                                                               
                                                                                  
Net income for the        -      -        -      -           -    49,341    49,341
year                                                                              
                                                                                  
Balance, December       100    100  500,000 50,000    (45,000) (214,283) (209,183)
31, 2013                                                                          




VMS REHAB SYSTEMS, INC.

Statements of cash flows

(Expressed in Canadian dollars)

                                                       Year ended    Year ended  
                                                      December 31,  December 31, 
                                                          2013          2012     

                                                            $             $      
                                                                               
                                                                     (unaudited) 
                                                                               
Operating activities                                                           
                                                                               
Net income (loss) for the year                             49,341       (8,575)
                                                                               
Items not involving cash:                                                      
                                                                               
Accretion of discount on convertible debt                   4,276             -
                                                                               
Amortization                                                  118            50
                                                                               
Bad debts                                                  12,881             -
                                                                               
Gain on extinguishment of debt                          (139,451)             -
                                                                               
Impairment of intangible asset                             10,000             -
                                                                               
Shares issued for consulting services                       5,000             -
                                                                               
Changes in operating assets and liabilities:                                   
                                                                               
Accounts receivable                                      (10,931)           339
                                                                               
Inventory                                                   6,926       (6,839)
                                                                               
Accounts payable and accrued liabilities                    6,723           226
                                                                               
Due to related parties                                     54,435        14,271
                                                                               
Net cash used in operating activities                       (682)         (528)
                                                                               
Financing activities                                                           
                                                                               
Bank indebtedness                                             682           528
                                                                               
Net cash provided by financing activities                     682           528
                                                                               
Increase in cash                                                -             -
                                                                               
Cash,beginning of year                                          -             -
                                                                               
Cash, end of year                                               -             -
                                                                               
Non-cash investing and financing activities:                                   
                                                                               
Convertible debt issued for related party debt            248,266             -
                                                                               
Supplemental disclosures:                                                      
                                                                               
Interest paid                                                   -             -
                                                                               
Income tax paid                                                 -             -

1. Nature of Operations and Continuance of Business

VMS Rehab Systems, Inc. (the Company") was incorporated on March 26, 1998 under
the laws of the province of Ontario, Canada. The Company specializes in the
manufacture and sale of productsfor the rehab segment of the health industry in
North America and has currently focused on the development and sale of a high
performance line of orthopedic seat cushions.The Company's registered office is
Suite 200,440 Laurier Avenue West, Ottawa, Ontario, Canada, K1R 7X6.

These financial statements have been prepared on the going concern basis, which
assumes that the Company will be able to realize its assets and discharge its
liabilities in the normal course of business. As at December 31, 2013, the
Company has a working capital deficit of $96,092 and has an accumulated deficit
of $214,283. The continued operations of the Company are dependent on its
ability to generate future cash flows or obtain additional financing.
Management is pursuing additional financing. Management is of the opinion that
sufficient working capital will be obtained from external financing to meet the
Company's liabilities and commitments as they become due, although there is a
risk that additional financing will not be available on a timely basis or on
terms acceptable to the Company. These factors indicate the existence of a
material uncertainty that may cast significant doubt on the Company's ability
to continue as a going concern. These financial statements do not reflect any
adjustments that may be necessary if the Company is unable to continue as a
going concern.

2. Significant Accounting Policies

 a. Statement of Compliance
   
These financial statements have been prepared in accordance with
InternationalFinancial Reporting Standards ("IFRS") as issued by the
International Accounting StandardsBoard ("IASB") on a going concern basis.

The financial statements have been prepared on a historical cost basis and are
presented in Canadian dollars, which is also the Company's functional currency.

 b. Use of Estimates and Judgments
   
The preparation of the financial statements in conformity with IFRS requires
the Company's management to make judgments, estimates and assumptions that
affect the application of accounting policies and reported amounts of assets,
liabilities, revenues and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which
the estimate is revised and in any future periods affected.

Significant areas requiring the use of estimates include allowance for doubtful
accounts, valuation of inventory,recoverability and estimated useful life of
property and equipment, recoverability of intangible assets, valuation of
convertible debt, fair value of share-based payments, and deferred income tax
asset valuation allowances. Actual results could differ from those estimates.

 c. Cash and Cash Equivalents
   
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance, are readily convertible to known
amounts of cash, and which are subject to insignificant risk of changes in
value to be cash equivalents.

 d. Inventory
   
Inventory is comprised of finished goods of orthopedic seat cushions and is
recorded at the lower of cost and net realizable value on a first-in first-out
basis. The Company establishes inventory reserves for estimated obsolete or
unsaleable inventory equal to the difference between the cost of inventory and
the estimated realizable value based upon assumptions about future and market
conditions.

2. Significant Accounting Policies(continued)

 e. Accounts Receivable
   
Accounts receivable represents amounts owed from customers for the sale of
orthopedic cushions. Amounts are presented net of the allowance for doubtful
accounts, which represents the Company's best estimate of the amount of
probable credit losses in the existing accounts receivable balance. The Company
determines allowance for doubtful accounts based upon historical experience and
current economic conditions. The Company reviews the adequacy of its allowance
for doubtful accounts on a regular basis. As of December 31, 2013, the Company
had recorded an allowance for doubtful accounts of $12,881 (2012 - $nil).

 f. Property and Equipment
   
Property and equipment is recorded at cost. The Company amortizes the cost of
property and equipment over their estimated useful lives at the following
annual rates using the declining balance method:

Computer hardware 30%

Residual values and useful economic lives are reviewed at least annually, and
adjusted if appropriate, at each reporting date. Subsequent expenditure
relating to an item of property and equipment is capitalized when it is
probable that future economic benefits from the use of the assets will be
increased. All other subsequent expenditures are recognized as repair and
maintenance expenses during the period in which they are incurred. Gains and
losses on disposal of equipment are determined by comparing the proceeds from
disposal with the carrying amount of the asset and are recognized net within
other income in the statement of comprehensive loss.

 g. Impairment of Non-Financial Assets
   
At each reporting date, the Company assesses whether there are indicators of
impairment for its non-financial assets. If indicators exist, the Company
determines if the recoverable amount of the asset or cash generating unit
("CGU") is greater than its carrying amount. A CGU is defined as the smallest
identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows of other assets or groups of assets. The
Company has used geographical proximity, geological similarities, analysis of
shared infrastructure, commodity type, assessment of exposure to market risks
and materiality to define its CGUs.

If the carrying amount exceeds the recoverable amount, the asset or CGU is
recorded at its recoverable amount with the reduction recognized in the
statement of comprehensive loss. The recoverable amount is the greater of the
value in use or fair value less costs to sell. Fair value is the amount the
asset could be sold for in an arm's length transaction. The value in use is the
present value of the estimated future cash flows of the asset from its
continued use. The fair value less costs to sell considers the continued
development of a property and market transactions in a valuation model.

Impairments are reversed in subsequent periods when there has been an increase
in the recoverable amount of a previously impaired asset or CGU and these
reversals are recognized in the statement of comprehensive loss. The recovery
is limited to the original carrying amount less depreciation, if any, that
would have been recorded had the asset not been impaired.

 h. Financial Instruments
   
 i. Non-derivative financial assets
   
The Company initially recognizes loans and receivables and deposits on the date
that they are originated. All other financial assets (including assets
designated at fair value through profit or loss) are recognized initially on
the trade date at which the Company becomes a party to the contractual
provisions of the instrument.

2. Significant Accounting Policies(continued)

 h. Financial Instruments(continued)
   
 i. Non-derivative financial assets (continued)
   
Financial assets at fair value through profit or loss

The Company derecognizes a financial asset when the contractual rights to the
cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows on the financial asset in a transaction in which
substantially all the risk and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that is created or
retained by the Company is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal
right to offset the amounts and intends either to settle on a net basis or to
realize the asset and settle the liability simultaneously.

Financial assets are classified as fair value through profit or loss when the
financial asset is held for trading or it is designated as fair value through
profit or loss. A financial asset is classified as held for trading if: (i) it
has been acquired principally for the purpose of selling in the near future;
(ii) it is a part of an identified portfolio of financial instruments that the
Company manages and has an actual pattern of short-term profit taking; or (iii)
it is a derivative that is not designated and effective as a hedging
instrument.

Financial assets classified as fair value through profit or loss are stated at
fair value with any gain or loss recognized in the statement of comprehensive
loss. The net gain or loss recognized incorporates any dividend or interest
earned on the financial asset. The Company's cash is classified as fair value
through profit or loss.

Held-to-maturity investments

Held-to-maturity investments are recognized on a trade-date basis and are
initially measured at fair value, including transaction costs. The Company does
not have any assets classified as held-to-maturity investments.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that
are designated as available-for-sale and that are not classified in any of the
previous categories. Subsequent to initial recognition, they are measured at
fair value and changes therein, other than impairment losses and foreign
currency differences on available-for-sale equity instruments, are recognized
in other comprehensive income and presented within equity in the fair value
reserve. When an investment is derecognized, the cumulative gain or loss in
other comprehensive income is transferred to the statement of comprehensive
loss. The Company does not have any assets classified as available-for-sale
financial assets.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments
that are not quoted in an active market are classified as loans and
receivables. Such assets are initially recognized at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition
loans and receivables are measured at amortized cost using the effective
interest method, less any impairment losses. Loans and receivables are
comprised of accounts receivable.

2. Significant Accounting Policies(continued)

 h. Financial Instruments(continued)
   
 i. Non-derivative financial assets (continued)
   
Impairment of financial assets

When an available-for-sale financial asset is considered to be impaired,
cumulative gains or losses previously recognized in other comprehensive income
or loss are reclassified to the statement of comprehensive loss in the period.
Financial assets are assessed for indicators of impairment at the end of each
reporting period. Financial assets are impaired when there is objective
evidence that, as a result of one or more events that occurred after the
initial recognition of the financial assets, the estimated future cash flows of
the investments have been impacted. For marketable securities classified as
available-for-sale, a significant or prolonged decline in the fair value of the
securities below their cost is considered to be objective evidence of
impairment.

For all other financial assets objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial
re-organization

For certain categories of financial assets, such as amounts receivable, assets
that are assessed not to be impaired individually are subsequently assessed for
impairment on a collective basis. The carrying amount of financial assets is
reduced by the impairment loss directly for all financial assets with the
exception of amounts receivable, where the carrying amount is reduced through
the use of an allowance account. When an amount receivable is considered
uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognized
in the statement of comprehensive loss.

With the exception of available-for-sale equity instruments, if, in a
subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed through the
statement of comprehensive loss to the extent that the carrying amount of the
investment at the date the impairment is reversed does not exceed what the
amortized cost would have been had the impairment not been recognized. In
respect of available-for-sale equity securities, impairment losses previously
recognized through the statement of comprehensive loss are not reversed through
the statement of comprehensive loss. Any increase in fair value subsequent to
an impairment loss is recognized directly in equity.

ii. Non-derivative financial liabilities
   
The Company initially recognizes debt securities issued and subordinated
liabilities on the date that they are originated. All other financial
liabilities (including liabilities designated at fair value through profit or
loss) are recognized initially on the trade at which the Company becomes a
party to the contractual provisions of the instrument. The Company derecognizes
a financial liability when its contractual obligations are discharged,
cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal
right to offset the amounts and intends either to settle on a net basis or to
realize the asset and settle the liability simultaneously.

The Company has the following non-derivative financial liabilities: accounts
payable and accrued liabilities, due to related parties, and convertible
debentures. Such financial liabilities are recognized initially at fair value
plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortized cost using
the effective interest method.

2. Significant Accounting Policies(continued)

 h. Financial Instruments(continued)
   
iii. Share capital
   
Common shares are classified as equity. Transaction costs directly attributable
to the issue of common shares and stock options are recognized as a deduction
from equity, net of any tax effects.

 i. Revenue Recognition
   
The Company recognizes revenue from sales in accordance with IAS 18,Revenue.
The Company accounts for revenue as a principal using the guidance in IAS 18.
Revenue consists of orthopedic seat cushions and is recognized only when the
amount of revenue can be measured reliably, it is probable that the economic
benefits associated with the transaction will flow to the entity, and the cost
incurred for the transaction and the cost to complete the transaction can be
measured reliably. As the orthopedic seat cushions are non-refundable, the
Company is not subject to any returns from revenue.

 j. Share-based Payments
   
The grant date fair value of share-based payment awards granted to employees is
recognized as stock-based compensation expense, with a corresponding increase
in equity, over the period that the employees unconditionally become entitled
to the awards. The amount recognized as an expense is adjusted to reflect the
number of awards for which the related service and non-market vesting
conditions are expected to be met, such that the amount ultimately recognized
as an expense is based on the number of awards that do meet the related service
and non-market performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant date fair value of the
share-based payment is measured to reflect such conditions and there is no
true-up for differences between expected and actual outcomes.

Where equity instruments are granted to parties other than employees, they are
recorded by reference to the fair value of the services received. If the fair
value of the services received cannot be reliably estimated, the Company
measures the services received by reference to the fair value of the equity
instruments granted, measured at the date the counterparty renders service.

All equity-settled share-based payments are reflected in share-based payment
reserve, unless exercised. Upon exercise, shares are issued from treasury and
the amount reflected in share-based payment reserve is credited to share
capital, adjusted for any consideration paid.

 k. Foreign Currency Translation
   
The functional and reporting currency is the Canadian dollar. Transactions
denominated in foreign currencies are translated using the exchange rate in
effect on thetransaction date or at an average rate. Monetary assets and
liabilities denominated in foreign currencies are translated at the rate of
exchange in effect at the statement of financial position date. Non-monetary
items are translated using the historical rate on the date of the transaction.
Foreign exchange gains and losses are included in the statement of operations.

 l. Income Taxes
   
Current income tax

Current income tax assets and liabilities for the current period are measured
at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date. Current
income tax relating to items recognized directly in other comprehensive income
or equity is recognized in other comprehensive income or equity and not in the
statement of comprehensive loss. Management periodically evaluates positions
taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where
appropriate.

2. Significant Accounting Policies(continued)

 m. Income Taxes (continued)
   
Deferred income tax

Deferred income tax is provided using the statement of financial position
method on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes. The carrying amount of deferred income tax assets is reviewed at the
end of each reporting period and recognized only to the extent that it is
probable that sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilized. Deferred income tax assets and
liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realized or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the end of
the reporting period. Deferred income tax assets and deferred income tax
liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current income tax liabilities and the deferred
income taxes relate to the same taxable entity and the same taxation authority.

 n. Loss Per Share
   
Basic loss per share is computed using the weighted average number of common
shares outstanding during the period. The treasury stock method is used for the
calculation of diluted loss per share, whereby all "in the money" stock options
and share purchase warrants are assumed to have been exercised at the beginning
of the period and the proceeds from their exercise are assumed to have been
used to purchase common shares at the average market price during the period.
When a loss is incurred during the period, basic and diluted loss per share are
the same as the exercise of stock options and share purchase warrants is
considered to be anti-dilutive. As at December 31, 2013 and 2012, the Company
had no potentially dilutive shares outstanding.

 o. Comprehensive Loss
   
Comprehensive loss is the change in the Company's net assets that results from
transactions, events and circumstances from sources other than the Company's
shareholders and includes items that are not included in the statement of
operations.

 p. Accounting Standards Issued But Not Yet Effective
   
A number of new standards, and amendments to standards and interpretations, are
not yet effective for the year ended December 31, 2013, and have not been
applied in preparing these financial statements.

IFRS 9, Financial Instruments (New)

IFRS 10, Consolidated Financial Statements (Amended)

IFRS 11, Joint Arrangements (New)

IFRS 12, Disclosure of Interests in Other Entities (New)

IAS 27, Separate Financial Statements (Amended)

IAS 32, Financial Instruments: Presentation (Amended)

The Company has not early adopted these revised standards and is currently
assessing the impact that these standards will have on the financial
statements.

Other accounting standards or amendments to existing accounting standards that
have been issued but have future effective dates are either not applicable or
are not expected to have a significant impact on the Company's financial
statements.

3. Property and Equipment

                                                                    Computer  
                                                                    Hardware  
                                                                           
                                                                        $     
                                                                           
Cost:                                                                      
                                                                           
Balance, December 31, 2011 and 2012 (unaudited)                       3,423
                                                                           
Additions                                                                 -
                                                                           
Balance, December 31, 2013                                            3,423
                                                                           
Accumulated amortization:                                                  
                                                                           
Balance, December 31, 2011 (unaudited)                                3,255
                                                                           
Additions                                                                50
                                                                           
Balance, December 31, 2012 (unaudited)                                3,305
                                                                           
Additions                                                               118
                                                                           
Balance, December 31, 2013                                            3,423
                                                                           
Carrying amounts:                                                           
                                                                           
Balance, December 31, 2012 (unaudited)                                  118
                                                                           
Balance, December 31, 2013                                                -

4. Intangible Asset

During the year ended December 31, 2013, the Company's recognized an impairment

of $10,000 of its patent costs due to the uncertainty of future of cash flows.

5. Accounts Payable and Accrued Liabilities

                                                          2013        2012    
                                                                            
                                                            $           $     
                                                                           
                                                                  (unaudited)
                                                                           
Trade accounts payable                                    9,633       4,716
                                                                           
Accrued liabilities                                           -       3,000
                                                                           
Accrued interest payable                                  2,891           -
                                                                           
Sales tax payable                                         5,108       3,193
                                                                           
                                                         17,632      10,909

6. Convertible Debt

 a. On October 7, 2013, the Company issued a$118,986 convertible debenture for
    the amount owing to the President of the Company (refer to Note 7(a)).The
    debenture is unsecured, due interest at 5% per annum payable in semi-annual
    payments commencing June 30, 2014, and matures on September 30, 2018.The
    debenture becomes convertible on April 7, 2014 at which time the holder can
    convert the principal and any unpaid accrued interest as follows: i) if the
    Company is not listed on a public trading platform at the time of
    conversion, then the parties will negotiate a formula for conversion or ii)
    if the Company is publically listed on a trading platform, the conversion
    price will be equal to a 25% discount to the prior 30 day trading average
    of the Class B common shares.
   
6. Convertible Debt (continued)

The modification was analyzed under IAS 39, "Financial Instruments: Recognition
and Measurement" to see if the modification was deemed to be an extinguishment
of debt. The Company determined that the present value of the cash flows of the
new debt instrument differs by 10% or more from the present value of the
remaining cash flows under the original debt. As a result, the debt instruments
have substantially different terms and the original debt is considered
extinguished. The Company recorded a gain on extinguishment of debt of $66,835.
During the year ended December 31, 2013, the Company recorded accretion expense
of $2,049, increasing the carrying value to $54,201 as at December 31, 2013.

In accordance with IAS 39, "Financial Instruments: Recognition and
Measurement", the Company will recognize the fair value of the embedded
beneficial conversion feature of the portion of the note on the date it becomes
convertible.

 b. On October 7, 2013, the Company issued a $129,280 convertible debenture for
    the amount owing to a company controlled by the President of the Company
    (refer to Note 7(b)).The debenture is unsecured, due interest at 5% per
    annum payable in semi-annual payments commencing June 30, 2014, and matures
    on September 30, 2018. The debenture becomes convertible on April 7, 2014
    at which time the holder can convert the principal and any unpaid accrued
    interest as follows: i) if the Company is not listed on a public trading
    platform at the time of conversion, then the parties will negotiate a
    formula for conversion or ii) if the Company is publically listed on a
    trading platform, the conversion price will be equal to a 25% discount to
    the prior 30 day trading average of the Class B common shares.
   
The modification was analyzed under IAS 39, "Financial Instruments: Recognition
and Measurement" to see if the modification was deemed to be an extinguishment
of debt. The Company determined that the present value of the cash flows of the
new debt instrument differs by 10% or more from the present value of the
remaining cash flows under the original debt. As a result, the debt instruments
have substantially different terms and the original debt is considered
extinguished. The Company recorded a gain on extinguishment of debt of $72,616.
During the year ended December 31, 2013, the Company recorded accretion expense
of $2,227, increasing the carrying value to $58,890as at December 31, 2013.

In accordance with IAS 39, "Financial Instruments: Recognition and
Measurement", the Company will recognize the fair value of the embedded
beneficial conversion feature of the portion of the note on the date it becomes
convertible.

7. Related Party Transactions
 a. As at December 31, 2013, the Company owed $45,200 (2012 - $118,986) to the
    President of the Company which is non-interest bearing, unsecured, and due
    on demand. On October 7, 2013, the Company issued a convertible note for
    $118,986, representing the amount due to the President of the Company as at
    December 31, 2012. Refer to Note 6(a).
   
 b. As at December 31, 2013, the Company owed $9,235 (2012 - $129,280) to
    companies controlled by the President of the Company which is non-interest
    bearing, unsecured, and due on demand.On October 7, 2013, the Company
    issued a convertible note for $129,280, representing the amount due to a
    company controlled by the President of the Company as at December 31, 2012.
    Refer to Note 6(b).
   
8. Share Capital

Authorized: 100 Class A Common Shares, no par value

UnlimitedClass B Common Shares, par value of $0.10 per share

On June 18, 2013, the Company issued 500,000Class B Common Shares for services
provided by a company controlled by the President of the Company. The fair
value of the shares issued was $5,000 based on the fair value of the services
received.

9. Capital Management

The Company manages its capital to maintain its ability to continue as a going
concern and to provide returns to shareholders and benefits to other
stakeholders. The capital structure of the Company consists of equity comprised
of issued share capital.

The Company manages its capital structure and makes adjustments to it in light
of economic conditions. The Company, upon approval from its Board of Directors,
will balance its overall capital structure through new share issuances or by
undertaking other activities as deemed appropriate under the specific
circumstances.

The Company is not subject to externally imposed capital requirements and the
Company's overall strategy with respect to capital risk management remains
unchanged from the year ended December 31, 2012.

10. Financial Instruments

 a. Fair Values
   
Assets and liabilities measured at fair value on a recurring basis were
presented on the Company's statement of financial position as at December 31,
2013, as follows:

                            Fair Value Measurements Using               
                                                                        
                           Quoted    Significant Significant   Balance, 
                         prices in      other    unobservable           
                           active    observable     inputs     December 
                        markets for    inputs                    31,    
                         identical                (Level 3)             
                        instruments   (Level 2)                  2013   
                                                      $                 
                         (Level 1)        $                       $     
                                                                        
                             $                                          
                                                                        
Bank indebtedness             28,755           -            -     28,755

The fair values of other financial instruments, which include accounts
receivable, accounts payable andaccrued liabilities,and amounts due to related
parties, approximate their carrying values due to the relatively short-term
maturity of these instruments. The fair value of the convertible debt is
estimated to approximate its carrying value based on borrowing rates currently
available to the Company for a loan with similar terms.

 b. Credit Risk
   
Financial instruments that potentially subject the Company to a concentration
of credit risk consist primarily of cash and accounts receivable. The Company
limits its exposure to credit loss by placing its cash with high credit quality
financial institutionsThe Company performs ongoing credit evaluations, does not
require collateral and establishes an allowance for doubtful accounts based on
the age of the receivable and the specific identification of receivables the
Company considers at risk.The carrying amount of financial assets represents
the maximum credit exposure.

 c. Concentrations
   
During the year ended December 31, 2013, the Company derived 100% (2012 - 100%)
of its revenue from one customer and as at December 31, 2013, 100% (2012 -
100%) of accounts receivable was from one customer.

 d. Foreign Exchange Rate Risk
   
The Company is not exposed to any significant foreign exchange rate risk.

 e. Interest Rate Risk
   
The Company is not exposed to any significant interest rate risk.

10. Financial Instruments(continued)

 f. Liquidity Risk
   
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. The Company currently settles its
financial obligations out of cash. The ability to do this relies on the Company
raising debt or equity financing in a timely manner and by maintaining
sufficient cash in excess of anticipated needs.

11. Commitment

On June 21, 2013, the Company agreed to issue 500,000 Class B common shares to
a company controlled of the President of the Company if this company invests an
amount in excess of $50,000 into the Companywithin a three year period.

12. Income Taxes

The tax effect (computed by applying the Canadian federal and provincial
statutory rate) of the significant temporary differences, which comprise
deferredincome tax assets and liabilities, are as follows:

                                                         2013         2012    
                                                                           
                                                          $            $      
                                                                           
Statutory rate                                           26.5%        26.5%
                                                                           
Income tax expense(recovery) at statutory rate          13,097      (2,272)
                                                                           
Permanent differences and other                       (34,415)           30
                                                                           
Change in valuation allowance                           21,318        2,242
                                                                           
Provision for income taxes                                   -            -

The significant components of deferred income tax assets and liabilities are:

                                                        2013         2012    
                                                                          
                                                         $            $      
                                                                          
Non-capital losses carry forwards                      37,574       18,907
                                                                          
Intangible asset                                        1,988        (663)
                                                                          
Total gross income tax assets                          39,562       18,244
                                                                          
Valuation allowance                                  (39,562)     (18,244)
                                                                          
Net deferred incometax asset                                -            -

As of December 31, 2013, the Company has available non-capital losses carried
forward of $141,788 that may be offset against future Canadian taxable income.
These losses expire as follows:

                                                                       $      
                                                                           
2026                                                                 15,119
                                                                           
2027                                                                 14,411
                                                                           
2029                                                                 15,592
                                                                           
2030                                                                 17,768
                                                                           
2032                                                                  8,456
                                                                           
2033                                                                 70,442
                                                                           
                                                                    141,788

13. Subsequent Event

On January 21, 2014, the Company entered into a share purchase agreement with a
company controlled by the President of the Company to acquire 100% of the
issued and outstanding shares of BioPharmcorsp. zo.o, an early stage developer,
manufacturer, and marketer of generic drugs. Pursuant to the agreement, the
Company paid €1,250 and issued 5,312,500 Class B common shares to acquire the
shares. In addition, the Company has issued stock options to acquire a further
6,500,000 Class B common shares with an exercise price of €0.15 per share for a
term of three years.On April 24, 2014, the Company issued 500 Class B common
shares to a company controlled by the President of the Company for the exercise
of stock options pursuant to the agreement.



For More Information Contact:

Michael Wexler
IR/VMS Rehab Systems
Tel: 1 613 292-2307/+48-787-668-861
E-mail: [email protected]

a d v e r t i s e m e n t