UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended February 28, 2017


or


[  ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.


Commission File Number: 000-54500


Cell MedX Corp.

(Exact name of registrant as specified in its charter)


Nevada

 

38-3939625

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)


123 W. Nye Ln, Suite 446

Carson City, NV

 

89706

(Address of principal executive offices)

 

(Zip code)


(844) 238-2692

(Registrant’s telephone number, including area code)


N/A

(Former name, former address and former fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).  Yes [X]  No [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer  [  ]

 

Accelerated filer  [  ]

 

 

 

Non-accelerated filer  [  ]

 

Smaller Reporting Company [X]


Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act.)  Yes [  ]  No [X]


The number of shares of the Registrant’s common stock, par value $.001 per share, outstanding as of April 14, 2017 was 40,244,605.





CONTENTS



PART I - FINANCIAL INFORMATION

1

Item 1. Financial Statements

1

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

2

Item 3. Quantitative and Qualitative Disclosure about Market Risk

8

Item 4. Controls and Procedures

8

PART II - OTHER INFORMATION

9

Item 1. Legal Proceedings

9

Item 1A. Risk Factors

9

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

12

Item 3. Defaults upon Senior Securities

13

Item 4. Mine Safety Disclosures

13

Item 5. Other Information

13

Item 6. Exhibits

13

SIGNATURES

16

































ii




PART I - FINANCIAL INFORMATION


Item 1. Financial Statements


The accompanying unaudited consolidated interim financial statements of Cell MedX Corp. as at February 28, 2017, have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America and in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' deficit in conformity with generally accepted accounting principles.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.


Operating results for the three and nine-month periods ended February 28, 2017, are not necessarily indicative of the results that can be expected for the year ending May 31, 2017.


As used in this Quarterly Report, the terms “we,” “us,” “our,” “Cell MedX,” and the “Company” mean Cell MedX Corp. and its subsidiaries, Avyonce Cosmedics Inc., and Cell MedX (Canada) Corp., unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars.






































1




CELL MEDX CORP.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN US DOLLARS)



 

February 28, 2017

 

May 31, 2016

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

    Cash

$

9,140

 

$

27,561

    Inventory

 

2,884

 

 

4,599

    Other current assets

 

66,885

 

 

29,684

Total current assets

 

78,909

 

 

61,844

 

 

 

 

 

 

    Equipment

 

256,081

 

 

207,083

Total assets

$

334,990

 

$

268,927

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

    Accounts payable

$

453,337

 

$

384,147

    Accrued liabilities

 

9,334

 

 

37,966

    Due to related parties

 

329,874

 

 

307,650

    Notes and advances payable

 

282,869

 

 

951,716

    Unearned revenue

 

31,322

 

 

-

Total liabilities

 

1,106,736

 

 

1,681,479

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

  Common stock, $0.001 par value, 300,000,000 shares authorized;

    40,244,605 and 31,000,000 shares issued and outstanding at

    February 28, 2017 and  May 31, 2016, respectively

 

40,245

 

 

31,000

  Additional paid-in capital

 

4,086,055

 

 

1,734,498

  Obligation to issue shares

 

-

 

 

75,000

  Accumulated deficit

 

(4,898,094)

 

 

(3,254,597)

  Accumulated other comprehensive income

 

48

 

 

1,547

Total stockholders' deficit

 

(771,746)

 

 

(1,412,552)

Total liabilities and stockholders’ deficit

$

334,990

 

$

268,927














The accompanying notes are an integral part of these unaudited interim consolidated financial statements.



F-1




CELL MEDX CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(EXPRESSED IN US DOLLARS)



 

Three Months Ended

 

Nine Months Ended

 

February 28,

2017

February 29,

2016

 

February 28,

2017

February 29,

2016

 

 

 

 

 

 

Revenue

 

 

 

 

 

   Sales

$

516

$

2,602

 

$

6,220

$

8,251

   Cost of goods sold

 

460

 

1,335

 

 

4,051

 

5,437

Gross margin

 

56

 

1,267

 

 

2,169

 

2,814

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

   Amortization

 

24,014

 

3,420

 

 

60,535

 

9,920

   Consulting fees

 

73,263

 

72,592

 

 

224,010

 

262,302

   General and administrative expenses

 

121,379

 

32,737

 

 

216,842

 

153,420

   Research and development costs

 

52,782

 

15,643

 

 

192,807

 

594,367

   Stock-based compensation

 

22,453

 

164,022

 

 

100,656

 

770,888

Total operating expenses

 

293,891

 

288,414

 

 

794,850

 

1,790,897

 

 

 

 

 

 

 

 

 

 

Other items

 

 

 

 

 

 

 

 

 

   Accretion expense

 

(8,906)

 

-

 

 

(22,636)

 

-

   Gain on sale of equipment

 

-

 

-

 

 

-

 

2,979

   Interest

 

(1,836)

 

(8,868)

 

 

(22,827)

 

(19,953)

   Loss on settlement of debt

 

-

 

-

 

 

(805,353)

 

-

Net loss

 

(304,577)

 

(296,015)

 

 

(1,643,497)

 

(1,805,057)

 

 

 

 

 

 

 

 

 

 

   Unrealized foreign exchange translation (loss) gain

 

(3,411)

 

(1,583)

 

 

(1,499)

 

872

Comprehensive loss

$

(307,988)

$

(297,598)

 

$

(1,644,996)

$

(1,804,185)

 

 

 

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 

 

 

   Basic and diluted

$

(0.01)

$

(0.01)

 

$

(0.05)

$

(0.06)

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

40,244,605

 

31,000,000

 

 

35,719,048

 

31,000,000














The accompanying notes are an integral part of these unaudited interim consolidated financial statements.



F-2




CELL MEDX CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

(UNAUDITED)

(EXPRESSED IN US DOLLARS)



 

 

Obligation

Additional

 

Accumulated Other

 

 

Common Stock

to Issue

Paid-in

Deficit

Comprehensive

 

 

Shares

Amount

Shares

Capital

Accumulated

Income

Total

 

 

 

 

 

 

 

 

Balance - May 31, 2015

31,000,000

$

31,000

$

75,000

$

324,629

$

(1,115,460)

$

765

$

(684,066)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options issued for technology

-

 

-

 

-

 

496,345

 

-

 

-

 

496,345

Options issued for consulting fees

-

 

-

 

-

 

20,364

 

-

 

-

 

20,364

Stock-based compensation

-

 

-

 

-

 

770,888

 

-

 

-

 

770,888

Net loss for the nine months ended

February 29, 2016

-

 

-

 

-

 

-

 

(1,805,057)

 

-

 

(1,805,057)

Translation to reporting currency

-

 

-

 

-

 

-

 

-

 

872

 

872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - February 29, 2016

31,000,000

 

31,000

 

75,000

 

1,612,226

 

(2,920,517)

 

1,637

 

(1,200,654)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

-

 

-

 

-

 

97,272

 

-

 

-

 

97,272

Warrants issued for term loan

-

 

-

 

-

 

25,000

 

-

 

-

 

25,000

Net loss for the three months ended

May 31, 2016

-

 

-

 

-

 

-

 

(334,080)

 

-

 

(334,080)

Translation to reporting currency

-

 

-

 

-

 

-

 

-

 

(90)

 

(90)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - May 31, 2016

31,000,000

 

31,000

 

75,000

 

1,734,498

 

(3,254,597)

 

1,547

 

(1,412,552)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

-

 

-

 

-

 

100,656

 

-

 

-

 

100,656

Shares issued for cash

2,383,333

 

2,383

 

-

 

355,117

 

-

 

-

 

357,500

Shares issued for debt

6,711,272

 

6,712

 

-

 

999,979

 

-

 

-

 

1,006,691

Loss on debt settlement

-

 

-

 

-

 

805,353

 

-

 

-

 

805,353

Issuance of shares subscribed

150,000

 

150

 

(75,000)

 

74,850

 

-

 

-

 

-

Gain on divesting of subsidiary

-

 

-

 

-

 

15,602

 

-

 

-

 

15,602

Net loss for the nine months ended

February 28, 2017

-

 

-

 

-

 

-

 

(1,643,497)

 

-

 

(1,643,497)

Translation to reporting currency

-

 

-

 

-

 

-

 

-

 

(1,499)

 

(1,499)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - February 28, 2017

40,244,605

$

40,245

$

-

$

4,086,055

$

(4,898,094)

$

48

$

(771,746)
















The accompanying notes are an integral part of these unaudited interim consolidated financial statements.



F-3



CELL MEDX CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(EXPRESSED IN US DOLLARS)



 

Nine Months Ended

 

February 28,

2017

February 29,

2016

 

 

 

Cash flows used in operating activities:

 

 

  Net loss

$

(1,643,497)

$

(1,805,057)

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

  Accretion expense

 

22,636

 

-

  Accrued interest on notes payable

 

22,827

 

19,953

  Amortization

 

60,535

 

9,920

  Consulting fees - non-cash

 

-

 

20,364

  Foreign exchange loss (gain)

 

2,244

 

(10,386)

  Gain on sale of equipment

 

-

 

(2,979)

  Loss on settlement of debt

 

805,353

 

-

  Research and development costs - non-cash

 

-

 

496,345

  Stock-based compensation

 

100,656

 

770,888

Changes in operating assets and liabilities:

 

 

 

 

  Inventory

 

959

 

(601)

  Other current assets

 

(38,344)

 

(101,358)

  Accounts payable

 

69,472

 

101,008

  Accrued liabilities

 

(28,630)

 

(19,134)

  Unearned revenue

 

31,471

 

29,315

  Due to related parties

 

34,188

 

153,959

Net cash flows used in operating activities

 

(560,130)

 

(337,763)

 

 

 

 

 

Cash flows used in investing activities:

 

 

 

 

  Acquisition of equipment

 

(110,234)

 

(33,548)

Net cash used in investing activities

 

(110,234)

 

(33,548)

 

 

 

 

 

Cash flows provided by financing activities:

 

 

 

 

  Advances payable

 

2,684

 

(60,212)

  Proceeds from notes payable

 

290,465

 

442,000

  Proceeds from subscription for shares

 

357,500

 

-

Net cash provided by financing activities

 

650,649

 

381,788

 

 

 

 

 

Effects of foreign currency exchange on cash

 

1,294

 

3,060

Increase (decrease) in cash

 

(18,421)

 

13,537

Cash, beginning

 

27,561

 

1,258

Cash, ending

$

9,140

$

14,795

 

 

 

 

 

Non-cash investing transactions:

 

 

 

 

  Sale of equipment recorded as settlement of due to related parties

$

-

$

19,301






The accompanying notes are an integral part of these unaudited interim consolidated financial statements.



F-4



CELL MEDX CORP.

NOTES TO THE UNAUDITED INTERIM

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FEBRUARY 28, 2017



NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS


Cell MedX Corp. (the “Company”) was incorporated under the laws of the State of Nevada. On November 26, 2014, the Company formed a subsidiary, Avyonce Cosmedics Inc., (“Avyonce”) and on April 26, 2016, the Company formed an additional subsidiary, Cell MedX (Canada) Corp. (“Cell MedX Canada”). Both subsidiaries were formed under the laws of British Columbia.


On January 23, 2017, the Company divested of Avyonce in order to allow the Company to better concentrate on its core business. The divestiture was made effective as of December 31, 2016, at which date the Company forgave all intercompany debts outstanding (Note 8).


The Company is a development stage company focused on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general wellness and alleviate complications associated with medical conditions including, but not limited to, diabetes, Parkinson’s disease, and high blood pressure.


Unaudited Interim Financial Statements

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended May 31, 2016, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited consolidated financial statements should be read in conjunction with those audited consolidated financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine month periods ended February 28, 2017, are not necessarily indicative of the results that may be expected for the year ending May 31, 2017.


Reclassifications

Certain prior period amounts in the accompanying unaudited consolidated interim financial statements have been reclassified to conform to the current period’s presentation. These reclassifications had no net effect on the consolidated results of operations or financial position for any period presented.


Going Concern

The accompanying unaudited consolidated interim financial statements have been prepared assuming the Company will continue as a going concern. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations.  The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that the Company will be able to continue as a going concern. These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock.







F-5




NOTE 2 - RELATED PARTY TRANSACTIONS


Amounts due to related parties, other than notes payable to related parties (Notes 6 and 7) at February 28, 2017 and May 31, 2016:


 

February 28, 2017

 

May 31, 2016

Due to the Chief Executive Officer (“CEO”) and President

$

98,654

 

$

66,254

Due to the Chief Financial Officer (“CFO”)

 

7,434

 

 

6,419

Due to the Vice President (“VP”), Technology and Operations

 

56,278

 

 

56,596

Due to the Chief Medical Officer

 

81,059

 

 

81,059

Due to a company owned by the VP Technology and Operations and former VP, Corporate Strategy

 

--

 

 

1,747

Due to the former VP, Corporate Strategy

 

86,449

 

 

95,575

Due to related parties

$

329,874

 

$

307,650

Amounts are unsecured, due on demand and bear no interest.


During the nine months ended February 28, 2017 and February 29, 2016, the Company had the following transactions with related parties:


 

February 28, 2017

 

February 29, 2016

Management fees incurred to the CEO and President

$

32,400

 

$

32,400

Stock-based compensation incurred to the CEO and President (Note 9)

 

11,600

 

 

554,376

Management fees incurred to the CFO

 

9,000

 

 

9,000

Consulting fees incurred to the former VP, Corporate Strategy

 

32,649

 

 

70,669

Consulting fees incurred to the VP, Technology and Operations

 

36,469

 

 

58,768

Net payments (or prepayments) made for equipment acquired (or to be acquired) from the VP, Technology and Operations and former VP, Corporate Strategy

 

--

 

 

(29,691)

Value of options issued and vested for Technology acquired from the VP, Technology and Operations and former VP, Corporate Strategy, and recorded as part of research and development costs (Note 9)

 

--

 

 

496,345

Consulting fees incurred to the Chief Medical Officer recorded as part of research and development costs

 

--

 

 

50,000

Stock-based compensation incurred to the Chief Medical Officer (Note 9)

 

89,056

 

 

216,512

Research and development costs incurred to a company controlled by the Chief Medical Officer

 

--

 

 

26,700

Accrued interest expense incurred to a significant shareholder, included in general and administrative expense (Note 6)

 

6,186

 

 

4,953

Accretion expense associated with a term loan entered into with significant shareholder (Note 7)

 

22,636

 

 

--

Total transactions with related parties

$

239,996

 

$

1,490,032


On September 26, 2016, the Company entered into a letter agreement (the “Letter Agreement”) with Jean Arnett and Brad Hargreaves to cancel the unvested portion of the options granted to Ms. Arnett and Mr. Hargreaves by the Company (Note 9). In addition, the Company renegotiated its consulting arrangements with Ms. Arnett and Mr. Hargreaves. Based on the Letter Agreement, the Company has agreed to pay each of Ms. Arnett and Mr. Hargreaves CAD$5,000 per month, beginning effective August 1, 2016, for duration of six months.








F-6




NOTE 3 - EQUIPMENT


During the quarter ended February 28, 2017, the Company received 20 eBalance Pro wellness devices. The Company paid the developer $96,217 (Euro 89,040) for the devices.


Amortization schedule for the equipment at February 28, 2017, and May 31, 2016:


 

February 28, 2017

 

May 31, 2016

Book value, beginning of the period

$

207,083

 

$

25,846

Changes during the period

 

109,533

 

 

201,840

Amortization

 

 (60,535)

 

 

 (20,603)

Book value, end of the period

$

256,081

 

$

207,083


NOTE 4 - INVENTORY


As at February 28, 2017, the inventory consisted of supplies held for resale, and was valued at $2,884 (May 31, 2016 - $4,599). The Company uses lower of cost or net realizable value to determine the book value of the inventory at reporting date.


NOTE 5 - UNEARNED REVENUE


As at February 28, 2017, the Company had accepted $31,322 in deposits from its customers.


NOTE 6 - NOTES AND ADVANCES PAYABLE


The tables below summarize the short-term loans and advances outstanding as at February 28, 2017, and May 31, 2016:


As at February 28, 2017

Principal

Outstanding

Interest Rate

per Annum

 

Accrued

Interest/Accretion

Total

Book Value

$  160,473

6%

Non-convertible

$     2,229

$  162,702

62,922

6%

Related Party (Note 2)

1,308

64,230

50,000

6%

Term Loan- Related Party (Notes 2 and 7)

22,636

52,665

3,272

0%

Advances

--

3,272

$  276,668

 

 

$  26,173

$  282,869

 

As at May 31, 2016

Principal

Outstanding

Interest Rate

per Annum

 

Accrued

Interest/Accretion

Total

Book Value

$  195,000

6%

Convertible

$  18,588

$  213,588

490,000

6%

Non-convertible

12,842

502,842

197,000

6%

Related Party (Note 2)

7,620

204,620

50,000

6%

Term Loan- Related Party (Notes 2 and 7)

5,028

30,028

638

0%

Advances

--

638

$  932,638

 

 

$  44,078

$  951,716


During the nine-month period ended February 28, 2017, the Company entered into a number of loan agreements for $186,336 (May 31, 2016 - $480,000). These loans bear interest at 6% per annum, are unsecured and due on demand. During the same period, the Company entered into a number of loan agreements with Mr. Richard Jeffs (“Mr. Jeffs”), a major shareholder, for a total of $104,129 (CAD$136,500) (May 31, 2016 - $247,000) (the “Jeffs Loans”). The Jeffs Loans bear interest at 6% per annum, are unsecured and are payable on demand.


As of February 28, 2017, the Company recorded $22,827 (2016 - $19,953) in interest expense associated with above loans.




F-7




NOTE 7 - TERM LOAN


On March 3, 2016, the Company entered into a loan agreement (the “Term Loan Agreement”) with Mr. Jeffs for a loan in the principal amount of $50,000 maturing March 3, 2017, with interest payable at a rate of 6% per annum (the “Term Loan”).  As additional consideration for the Term Loan, the Company issued to Mr. Jeffs share purchase warrants (the “Warrants”) for the purchase of up to 2,000,000 shares of the Company’s common stock, exercisable for a period of five years at a price of $0.15 per share if exercised during the first year, $0.25 per share if exercised during the second year, $0.40 per share if exercised during the third year, $0.60 per share if exercised during the fourth year and $0.75 per share during the fifth year. The Warrants were determined to be detachable from the debt instrument, as the debt instrument does not have to be surrendered to exercise the warrant. Under the guidance provided by ASC 470-20-25-2, proceeds from the sale of debt instrument with stock purchase warrants must be allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds allocated to the warrants was $25,000 and was recorded to additional paid-in capital.


The Term Loan has effective interest rate of 77.51%, which was due primarily to the recording of non-cash accretion interest. During the nine-month period ended February 28, 2017, the Company recognized accretion expense of $22,636 (2015 - $Nil).


At March 3, 2016, the fair value of Warrants was valued using the Black-Scholes Option pricing model using the following assumptions:


 

At March 3, 2016

Expected Warrant Life

5 years

Risk-Free Interest Rate

1.33%

Expected Dividend Yield

Nil

Expected Stock Price Volatility

16%


As of the date of the filing of these financial statements, Term Loan is in default, however, the Company has not been served with a default notice by Mr. Jeffs.


NOTE 8 - DIVESTITURE OF AVYONCE


On January 23, 2017, the Company divested of Avyonce to a former director in order to allow the Company to better concentrate on its core business. The divestiture was made effective as of December 31, 2016.


As part of the transaction, the Company forgave a total of $63,503 in intercompany advances, and recorded a gain on divestiture of $15,602, which was recorded through additional paid-in capital.


NOTE 9 - SHARE CAPITAL


On October 12, 2016, the Company closed its Offering at a price of $0.15 per unit, by issuing 2,383,333 units for cash proceeds of $357,500 and 6,711,272 units to the holders of the Company’s notes payable (Note 6) for debt settlement of $1,006,691. Each unit sold under the Offering consisted of one common share of the Company and one share purchase warrant expiring on October 12, 2021, and entitling the holder to purchase one additional common share for a period of five years after closing at an exercise price of $0.50 per share if exercised during the first year, $0.75 per share if exercised during the second year, $1.00 per share if exercised during the third year, $1.25 per share if exercised during the fourth year, and at $1.50 per share if exercised during the fifth year.







F-8




Options


The changes in the number of stock options outstanding during the nine-month period ended February 28, 2017, and for the year ended May 31, 2016, are as follows:


 

Nine months ended

February 28, 2017

 

Year ended

May 31, 2016

 

Number of

options

Weighted

average

exercise

price

 

Number of

options

Weighted

average

exercise

price

Options outstanding, beginning

25,050,000

$

0.14

 

22,400,000

$

0.12

Options granted

--

 

n/a

 

2,650,000

 

0.34

Options cancelled

(17,500,000)

 

0.05

 

--

 

n/a

Options outstanding, ending

7,550,000

 

0.35

 

25,050,000

 

0.14

Options exercisable, ending

6,750,000

$

0.31

 

5,650,000

$

0.27


Details of options outstanding and exercisable as at February 28, 2017, are as follows:


Exercise price

Grant date

Number of options

granted

Number of options

exercisable

$0.05

November 25, 2014

2,500,000

2,500,000

$0.67

January 13, 2015

2,400,000

1,600,000

$0.35

August 5, 2015

2,500,000

2,500,000

$0.20

September 23, 2015

150,000

150,000

 

 

7,550,000

6,750,000


At February 28, 2017, the weighted average remaining contractual life of the stock options outstanding and exercisable was 3.67 years.


During the nine-month period ended February 28, 2017, the Company recognized $100,656 as share-based compensation expense (2016 - $770,888) (Note 2).


Warrants


On March 3, 2016, the Company issued non-transferrable share purchase warrants to acquire up to 2,000,000 shares of the Company’s common stock expiring on March 3, 2021, to Mr. Jeffs as additional consideration for the Term Loan (Note 7). The exercise price of these warrants is as follows:


Period expiring on:

Exercise Price

March 3, 2017

$0.15

March 3, 2018

$0.25

March 3, 2019

$0.40

March 3, 2020

$0.60

March 3, 2021

$0.75


On October 12, 2016, as part of the Offering, the Company issued warrants to acquire up to 9,094,605 of the Company’s common stock expiring on October 12, 2021. The exercise price of these warrants is as follows:


Period expiring on:

Exercise Price

October 12, 2017

$0.50

October 12, 2018

$0.75

October 12, 2019

$1.00

October 12, 2020

$1.25

October 12, 2021

$1.50




F-9




The changes in the number of warrants outstanding during the nine-month period ended February 28, 2017, and for the year ended May 31, 2016, are as follows:


 

Nine months ended

February 28, 2017

Year ended

May 31, 2016

Warrants outstanding, beginning

2,000,000

--

Warrants issued

9,094,605

2,000,000

Warrants outstanding, ending

11,094,605

2,000,000


Details of warrants outstanding as at February 28, 2017, are as follows:


Exercise price

Expiry Date

Number of warrants

exercisable

$0.15 1st year;  $0.25 2nd year;  $0.40 3rd year;

$0.60 4th year;  $0.75 5th year

March 3, 2021

2,000,000

$0.50 1st year;  $0.75 2nd year;  $1.00 3rd year

$1.25 4th year;  $1.50 5th year

October 12, 2021

9,094,605

 

 

11,094,605


At February 28, 2017, the weighted average remaining contractual life of the share purchase warrants was 4.51 years.


NOTE 10 - SUBSEQUENT EVENTS


Subsequent to February 28, 2017, the Company received CAD$45,000 under loan agreements with non-related parties. The loans bear interest at 6% per annum, are unsecured and payable on demand (Note 6).

































F-10




Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements, the notes to those financial statements and other financial information appearing elsewhere in this document. In addition to historical information, the following discussion and other parts of this document contain forward-looking statements that reflect plans, estimates, intentions, expectations and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the "Risk Factors" in Part II, Item 1A of this Quarterly Report.


The discussion provided in this Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2016, filed with the United States Securities and Exchange Commission (the “SEC”) on September 13, 2016.


Overview


We were incorporated as Plandel Resources, Inc. under the laws of the State of Nevada on March 19, 2010. On March 24, 2014, we changed our name to Sports Asylum, Inc. and on September 30, 2014, we changed our name to Cell MedX Corp. to reflect our current business direction.


On November 25, 2014, we completed the acquisition of a proprietary method for the application of bioelectric signaling to treat diabetes and related ailments (the “eBalance Technology”).  With our acquisition of the eBalance Technology, we have shifted our business direction to the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general wellness and alleviate complications associated with medical conditions including, but not limited to, diabetes, Parkinson’s disease, and high blood pressure.


On November 26, 2014, we formed a subsidiary, Avyonce Cosmedics Inc., (“Avyonce”) under the laws of the Province of British Columbia. Avyonce’s main business activity was channelled towards the resale and marketing of spa technology and equipment to the worldwide beauty and wellness industry. We divested of Avyonce in January of 2017, to allow us to concentrate our efforts on our core business.


On April 26, 2016, we formed a subsidiary, Cell MedX (Canada) Corp., (“Cell MedX Canada”) under the laws of the Province of British Columbia, in anticipation of increased business activity in Canada.


Update on Observational Clinical Study


During the period ended February 28, 2017, the Company, with the assistance of Nutrasource Diagnostics Inc., has secured the main research facility in Hamilton, Ontario, completed an investigational protocol as well as Informed Consent and Ethics Board submission documentation, in an anticipation to enter regulated clinical trials (the “Study”). The Company received Health Canada’s approval to commence the Study on January 12, 2017. The approval from the Ethics Review Board was received on January 30, 2017.


With all required approvals in place, Dr. Richard Tytus, the Lead Investigator on the Study, and his team at Hamilton Medical Research Group commenced screening for qualified subjects in late February of 2017. As of the day of this Quarterly Report on Form 10-Q, the group of study participants had been increased to 37, with 29 subjects having started their three-month eBalance therapy.


The intent of the Study is to assess the impact of three months of eBalance therapy as an adjunct treatment, on HbA1c in Type 1 and Type 2 diabetics. The secondary endpoints of the Study will observe changes from baseline and medical history in the following;

·

Insulin sensitivity

·

Diabetic neuropathy

·

Diabetic foot pain and numbness

·

Wound healing

·

Blood pressure

·

Kidney function

·

Any other changes reported by patients



2



Recent Corporate Developments


The following corporate developments occurred during the quarter ended February 28, 2017, and up to the date of the filing of this report:


Change in Management


On January 23, 2017, Ms. Jean Arnett resigned as our Vice President, Corporate Strategy and as our director. Ms. Arnett’s resignation was not caused by any disagreement with the Company, whether related to our operations, policies, practices or otherwise. To fill the vacancy the board of directors appointed Bradley Hargreaves, our current VP, Technology and Operaitons, as a director.


Divestiture of Avyonce Cosmedics Inc.


On January 23, 2017, our board of directors approved the divestiture of Avyonce.  To complete the divestiture, the Company has orally agreed to transfer Avyonce to Ms. Jean Arnett for nominal consideration. For accounting purposes, the divestiture was made effective as of December 31, 2016. Upon transferring Avyonce to Ms. Arnett, the Company and Avyonce agreed to forgive all intercompany debt outstanding at December 31, 2016, which translated into USD$63,503 (CAD$85,265). The decision to divest Avyonce was made in order to allow the Company to better concentrate on upcoming observational clinical studies of its eBalance Technology, while simultaneously continuing the development of therapeutic and non-therapeutic devices based on the eBalance Technology.


Loan Agreements


During the quarter ended February 28, 2017, we entered into a number of loan agreements for a total of $141,697, of which CAD$40,000 were lent to us by Mr. Richard Jeffs, our major shareholder. The loans bear interest at 6% per annum, compounded monthly, are unsecured and payable on demand.


eBalance Pro Wellness Devices


During the quarter ended February 28, 2017, we received additional 20 eBalance Pro wellness devices. The Company plans to use several of these devices in its observations and in the Study as well as to obtain all  required regulatory approvals.


Results of Operations for the Three and Nine Months Ended February 28, 2017 and February 29, 2016


Our operating results for the three and nine-month periods ended February 28, 2017 and February 29, 2016, and the changes in the operating results between those periods are summarized in the table below.


 

Three Months Ended

 

Nine Months Ended

 

 

February 28,

2017

February 29,

2016

Percentage

Change

February 28,

2017

February 29,

2016

Percentage

Change

Sales

$

516

$

2,602

(80.2)%

$

6,220

$

8,251

(24.6)%

Cost of goods sold

 

460

 

1,335

(65.5)%

 

4,051

 

5,437

(25.5)%

Gross margin

 

56

 

1,267

(95.6)%

 

2,169

 

2,814

(22.9)%

Operating expenses

 

 

 

 

 

 

 

 

 

 

Amortization

 

24,014

 

3,420

602.2%

 

60,535

 

9,920

510.2%

Consulting fees

 

73,263

 

72,592

0.9%

 

224,010

 

262,302

(14.6)%

General and administrative expenses

 

121,379

 

32,737

270.8%

 

216,842

 

153,420

41.3%

Research and development costs

 

52,782

 

15,643

237.4%

 

192,807

 

594,367

(67.6)%

Stock-based compensation

 

22,453

 

164,022

(86.3)%

 

100,656

 

770,888

(86.9)%

Total operating expenses

 

293,891

 

288,414

1.9%

 

794,850

 

1,790,897

(55.6)%

 

 

 

 

 

 

 

 

 

 

 

Accretion expense

 

(8,906)

 

-

n/a

 

(22,636)

 

-

n/a

Gain on sale of equipment

 

-

 

-

n/a

 

-

 

2,979

(100.0)%

Interest

 

(1,836)

 

(8,868)

(79.3)%

 

(22,827)

 

(19,953)

14.4%

Loss on settlement of debt

 

-

 

-

n/a

 

(805,353)

 

-

n/a

Net loss

$

(304,577)

$

(296,015)

2.9%

$

(1,643,497)

$

(1,805,057)

(9.0)%



3




Revenues


Our revenue during the three and nine-month periods ended February 28, 2017, and during the comparative period ended February 29, 2016, consisted of sales of consumables for the spa industry. Due to the current concentration on research and development of our eBalance Technology and devices based on this technology, as well as divestiture of Avyonce, we do not expect to have significant operating revenue in the foreseeable future.


Operating Expenses


During the three-month period ended February 28, 2017, our operating expenses increased by 1.9% from $288,414 incurred during the three months ended February 29, 2016, to $293,891 incurred during the three months ended February 28, 2017. Relatively comparable results were affected by $141,569 reduction in stock-based compensation, mainly due to the vesting terms of the options granted during our Fiscal 2015 and 2016, which was offset by increases in general and administrative expenses of $88,642, which increased from $32,737 incurred during the nine-month period ended February 29, 2016, to $121,379 we incurred during the nine-month period ended February 28, 2017; $37,139 increase in research and development fees associated with our Clinical Study; and $20,594 increase in amortization expense we recorded on equipment that we are using for our research and further development of our Technology.


During the nine-month period ended February 28, 2017, our operating expenses decreased by 55.6% from $1,790,897 incurred during the nine months ended February 29, 2016, to $794,850 incurred during the nine months ended February 28, 2017. The most significant year-to-date changes were as follows:


·

Our research and development fees for the nine-month period ended February 28, 2017, decreased by $401,560, from $594,367 we incurred during the nine months ended February 29, 2016 to $192,807 we incurred during the nine months ended February 28, 2017. The higher research and development fees during the comparative period were directly attributed to $496,345 we recorded as fair value of options to acquire up to 2,500,000 shares of our common stock which we granted to Ms. Arnett and Mr. Hargreaves in connection with our acquisition from them of the eBalance Technology pursuant to our Technology Purchase Agreement, as amended.


·

Our stock-based compensation for the nine-month period ended February 28, 2017, decreased by $670,232, from $770,888 we incurred during the nine months ended February 29, 2016 to $100,656 we incurred during the nine months ended February 28, 2017. The stock-based compensation included $89,056 (2015 - $216,512) in fair market value of the options we granted to Dr. Sanderson pursuant to his consulting agreement with us, and $11,600 (2015 - $554,376) in fair market value of the options we granted to Mr. McEnulty pursuant to his option agreement with us.


·

During the nine-month period ended February 28, 2017, our consulting fees decreased by $38,292, from $262,302 we incurred during the nine months ended February 29, 2016, to $224,010 we incurred during the nine months ended February 28, 2017. The decrease was mainly associated with a change in consulting arrangements with Ms. Arnett and Mr. Hargreaves - the vendors of our eBalance Technology.


·

Our general and administrative fees for the nine-month period ended February 28, 2017, increased by $63,422, or 41.3%, from $153,420 we incurred during the nine months ended February 29, 2016 to $216,842 we incurred during the nine months ended February 28, 2017. The largest factors that contributed to this increase were associated with an increase in our corporate communication fees of $65,750, travel fees of $25,888, loss on foreign exchange of $7,259 and filing and regulatory fees of $1,585. These increases were in part offset by decreases in rent fees of $19,635 accounting and audit fees of $6,282, salaries and wages of $6,992, and professional fees of $2,321.


·

During the nine-month period ended February 28, 2017, we recorded $60,535 in amortization on our equipment used in observations and research and development. During the comparative period ended February 29, 2016, our amortization expense was $9,920.




4



Other Items


·

During the nine-month period ended February 28, 2017, we accrued $22,827 (2016 - $19,953) in interest associated with the outstanding notes payable. Of this interest, $6,186 (2016 - $4,953) was accrued on notes payable we issued to Mr. Jeffs, our major shareholder.


·

During the nine-month period ended February 29, 2016, we recorded $2,979 in a gain on sale of equipment which we sold to Mr. Hargreaves for total proceeds of $19,301. We did not have similar transactions during the nine-month period ended February 28, 2017.


·

During the nine-month period ended February 28, 2017, we recorded $22,636 (2016 - $Nil) in accretion expense which resulted from the difference between the 6% stated interest rate and the 77.51% implied interest rate we used to determine the fair value of the proceeds we received pursuant to the $50,000 term loan with Mr. Jeffs.


·

During the nine-month period ended February 28, 2017, we recorded $805,353 (2016 - $Nil) in loss on settlement of debt when our debt holders chose to convert $1,006,691 owed to them into units of our common stock as part of the non-brokered private placement financing we closed on October 12, 2016 (the “Offering”). The loss resulted from the difference between the conversion price, being $0.15 per unit, and the fair market value of our common stock on the closing of the Offering, being $0.27 per share.


Liquidity and Capital Resources


Working Capital

 

As at

As at

 

 

February 28,

2017

February 29,

2016

Percentage

Change

Current assets

$

78,909

$

61,844

27.6%

Current liabilities

 

1,106,736

 

1,681,479

(34.2)%

Working capital deficit

$

(1,027,827)

$

(1,619,635)

(36.5)%


As of February 28, 2017, we had a cash balance of $9,140, a working capital deficit of $1,027,827 and cash flows used in operations of $560,130 for the period then ended. During the nine-month period ended February 28, 2017, we funded our operations with $357,500 we received from subscriptions to the units of our common stock, we issued as part of our Offering, $104,129 (CAD$136,500) we received from Mr. Jeffs, our major shareholder, and with $186,336 we received from non-related parties. See “Net Cash Provided By Financing Activities”.


We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the period ended February 28, 2017. The amount of cash that we have generated from our operations to date is significantly less than our current debt obligations, including our debt obligations under our remaining notes payable. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under these notes and advances payable, or to service our other debt obligations.  If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that we will be able to continue as a going concern.


Cash Flows

 

Nine months ended

 

February 28,

2017

February 29,

2016

Cash flows used in operating activities

$

(560,130)

$

(337,763)

Cash flows used in investing activities

 

(110,234)

 

(33,548)

Cash flows provided by financing activities

 

650,649

 

381,788

Effects of foreign currency exchange on cash

 

1,294

 

3,060

Net increase (decrease) in cash during the period

$

(18,421)

$

13,537




5



Net Cash Used in Operating Activities


Net cash used in operating activities during the nine months ended February 28, 2017, was $560,130. This cash was primarily used to cover our cash operating expenses of $629,246, to increase our current assets by $38,344, and to reduce our accrued liabilities by $28,630. These uses of cash were offset by decrease in our inventory of $959, and by increases in our accounts payable and amounts due to related parties of $69,472 and $34,188, respectively. In addition, we recorded $31,471 in unearned revenue associated with the deposits we received on the eBalance Pro Wellness devices.


Net cash used in operating activities during the nine months ended February 29, 2016, was $337,763. This cash was primarily used to cover our cash operating expenses of $500,952, and to increase our other current assets associated mainly with deposits we made for the manufacture of 25 eBalance devices by $101,358. In addition, we used cash to increase our inventory by $601 and decrease the accrued liabilities by $19,134. These uses of cash were offset by increases in our accounts payable of $101,008, as well as increases in the amounts due to related parties of $153,959. In addition, we received $29,315 as payments for the spa equipment, which we recorded as unearned revenue pending delivery of the equipment to our customers.


Non-cash transactions


During the nine-month period ended February 28, 2017, our net loss was affected by the following expenses that did not have any impact on cash used in operations:


·

$805,353 in loss on settlement of debt we recorded when our debt holders chose to convert $1,006,691 owed to them into units of our common stock as part of the Offering. The loss resulted from the difference between the conversion price, being $0.15 per unit, and the fair market value of our common stock on the closing of the Offering, being $0.27 per share.


·

$100,656 in stock-based compensation, of which $89,056 was associated with the fair value of the options to purchase up to 2,400,000 shares of our common stock we granted to Dr. Sanderson as compensation for his appointment as our Chief Medical Officer; and $11,600 was associated with the fair value of the options to purchase up to 2,500,000 shares of our common stock we granted to Mr. Frank McEnulty, our CEO and President;


·

$22,827 in interest we accrued on the outstanding notes payable. Of this interest, $6,186 was accrued on the notes payable we issued to Mr. Jeffs, our major shareholder;


·

$22,636 in accretion expense which resulted from the difference between the 6%  stated interest rate and the 77.51% implied interest rate we used to determine the fair value of the proceeds we received pursuant to the $50,000 term loan with Mr. Jeffs;


·

$60,535 in amortization expense we recorded on the equipment we use in our research of the eBalance Technology; and


·

$2,244 increase in the loss on foreign exchange, which resulted from fluctuations of Canadian dollar and European Euro denominated transactions


During the nine-month period ended February 29, 2016, our net loss was affected by the following expenses that did not have any impact on cash used in operations:


·

$9,920 in amortization expense we recorded on the equipment that is being used in our research of the eBalance Technology;


·

$770,888 in stock-based compensation, of which $216,512 was associated with the fair value of the options to purchase up to 2,400,000 shares of our common stock we issued to Dr. Sanderson as compensation for his appointment as our Chief Medical Officer; and $554,376 was associated with the fair value of the options to purchase up to 2,500,000 shares of our common stock we issued to Mr. Frank McEnulty, our CEO and President;



6




·

$496,345 in stock-based compensation associated with the fair value of the options to purchase up to 2,500,000 shares of our common stock, which we issued to Ms. Arnett and Mr. Hargreaves as part of the options to purchase up to 20,000,000 shares of our common stock pursuant to our Technology Purchase Agreement, dated for reference November 25, 2014, and which vested on August 26, 2015;


·

$19,953 in interest we accrued on the outstanding notes payable. Of this interest, $4,953 was accrued on the notes payable we issued to Mr. Jeffs, our major shareholder; and


·

$20,364 in stock-based compensation associated with the fair value of the options to purchase up to 150,000 shares of our common stock, which we issued to Mr. Bulwa, as a part of his Consulting Agreement with us.


The above expenses were in part offset by the following non-cash transactions:


·

$10,386 gain that resulted from foreign exchange fluctuations on Canadian dollar denominated transactions; and


·

$2,979 gain we recorded on the sale of our equipment to Ms. Arnett and Mr. Hargreaves; $19,301 in proceeds from the sale were used to reduce amounts owed to Mr. Hargreaves and Ms. Arnett for services they provided to the Company.


Net Cash Provided by Financing Activities


During the nine-month period ended February 28, 2017, we borrowed a total of $186,336 from unrelated parties and $104,129 (CAD$136,500) from our major shareholder. These loans are unsecured, payable on demand and bear interest at 6% per annum, compounded monthly. In addition to the loans, we received $2,684 in non-interest bearing advances from an unrelated party. During the same period we received $357,500 from subscriptions to the units of our common stock under the Offering, which we closed on October 12, 2016.


During the nine months ended February 29, 2016, we borrowed a total of $300,000 from unrelated parties and $142,000 from our major shareholder. The loans are unsecured, payable on demand and bear interest at 6% per annum, compounded monthly. During the same period we repaid $60,212 in non-interest bearing advances, net of any additions, to a non-related party.


Net Cash Used in Investing Activities


During the nine-month period ended February 28, 2017, we paid $110,234 for the equipment which is being used in our observational studies, of this amount $96,217(Euro 89,040) was associated with the manufacturing of  our eBalance Pro second generation wellness devices.


During the nine month period ended February 29, 2016, we paid $33,548 for equipment being used for our ongoing research and development of the eBalance Technology and devices.


Going Concern


The notes to our unaudited interim consolidated financial statements at February 28, 2017, disclose our uncertain ability to continue as a going concern. We are development stage company with limited operations. To date we have been able to generate only minimal revenue from the operations of our wholly owned subsidiary, Avyonce, which we divested in January 2017. Our research and development plans for the near future will require large capital expenditures, which we are planning to mitigate through equity or debt financing.





7




We have accumulated a deficit of $4,898,094 since inception and increased financing will be required to fund and support our operations. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. Our unaudited interim consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern and therefore be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.


Off-Balance Sheet Arrangements


None.


Critical Accounting Policies


An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. We have applied our critical accounting policies and estimation methods consistently.


Changes in and Disagreements with Accountants on Accounting Procedures and Financial Disclosure


None.


Item 3. Quantitative and Qualitative Disclosure about Market Risk


None


Item 4. Controls and Procedures


Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2017. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed within the time periods specified in Securities and Exchange Commission’s rules and forms due to lack of segregation of duties.


During the quarter ended February 28, 2017, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.








8




PART II - OTHER INFORMATION


Item 1. Legal Proceedings


None.


Item 1A. Risk Factors


There is a high degree of risk associated with investing in our securities.  Prospective investors should carefully read this Quarterly Report on Form 10-Q and consider the following risk factors when deciding whether to purchase our securities.


The risk factors outlined below are some of the known, substantial, material and potential risks that could adversely affect our business, financial condition, operating results and common share value. We cannot assure that we will successfully address these or any unknown risks and a failure to do so can have a negative impact on your investment.  We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.


Risks Associated with our Company and our Industry


We operate in a highly competitive market. We face competition from large, well established medical device manufacturers and pharmaceutical companies in the market for treating and managing diabetes and related ailments.  Many of these companies are very well accepted by health practitioners and have significant resources, and we may not be able to compete effectively.


The market for devices and therapies for treating and managing diabetes and related ailments is intensely competitive, subject to rapid change and significantly affected by new product introductions. We compete indirectly with large pharmaceutical and medical device companies, such as Bayer Corp., Becton Dickinson Corp., LifeScan Inc., a division of Johnson & Johnson, MediSense Inc. and TheraSense Inc. These competitors’ products are based on traditional healthcare model and are well accepted by health practitioners and patients. If these companies decide to penetrate our target market they could threaten our position in the market.


We are subject to numerous governmental regulations which can increase our costs of developing our eBalance Technology and products based on this technology.


Our products may be subject to rigorous regulation by the FDA, Health Canada and numerous international, supranational, federal, and state authorities. The process of obtaining regulatory approvals to market a medical device can be costly and time-consuming, and approvals might not be granted for future products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for, our products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues, and in substantial additional costs. In addition, no assurance can be given that we will remain in compliance with applicable FDA, Health Canada and other regulatory requirements once approval or marketing authorization has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, and advertising and post-marketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns.


Changes in the health care regulatory environment may adversely affect our business.


A number of the provisions of the U.S. Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and its amendments changed access to health care products and services and established new fees for the medical device industry. Future rulemaking could increase rebates, reduce prices or the rate of price increases for health care products and services, or require additional reporting and disclosure. We cannot predict the timing or impact of any future rulemaking.




9



Competitors' intellectual property may prevent us from selling our products or have a material adverse effect on our future profitability and financial condition.


Competitors may claim that our Technology infringes upon their intellectual property. Resolving an intellectual property infringement claim can be costly and time consuming and may require us to enter into license agreements. We cannot guarantee that we would be able to obtain license agreements on commercially reasonable terms. A successful claim of patent or other intellectual property infringement could subject us to significant damages or an injunction preventing the manufacture, sale or use of our product. Any of these events could have a material adverse effect on our profitability and financial condition.


Our research and development efforts may not result in the development of commercially successful products based on our eBalance Technology, which may hinder our profitability and future growth.


Our eBalance Technology is currently in the research and development stage as are our planned products incorporating this technology.  In order to develop commercially marketable products, we will be required to commit substantial efforts, funds, and other resources to research and development. A high rate of failure is inherent in the research and development of new products and technologies. We must make ongoing substantial expenditures without any assurance that our efforts will be commercially successful. Failure can occur at any point in the process, including after significant funds have been invested. Planned products may fail to reach the market or may only have limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or infringement of the intellectual property rights of others.


Even if we successfully develop marketable products or commercially develop our current technology, we may be quickly rendered obsolete by changing customer preferences, changing industry standards, or competitors' innovations.


Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursement. We cannot state with certainty when or whether our products under development will be launched, whether we will be able to develop, license, or otherwise acquire new products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause our products to become obsolete, causing our revenues and operating results to suffer.


New products and technological advances by our competitors may negatively affect our results of operations.


Our products face intense competition from our competitors. Competitors' products may be safer, more effective, more effectively marketed or sold, or have lower prices or superior performance features than our products. We cannot predict with certainty the timing or impact of the introduction of competitors' products.


Significant safety concerns could arise for our products, which could have a material adverse effect on our revenues and financial condition.


Healthcare products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If new safety issues are reported, we may be required to amend the conditions of use for a product. For example, we may be required to provide additional warnings on a product's label or narrow its approved intended use, either of which could reduce the product's market acceptance. If serious safety issues arise with our product, sales of the product could be halted by us or by regulatory authorities. Safety issues affecting suppliers' or competitors' products also may reduce the market acceptance of our products.





10




Inability to attract and maintain key personnel may cause our business to fail.


Success depends on the acquisition of key personnel.  We will have to compete with other companies both within and outside the healthcare industry to recruit and retain competent employees and consultants.  If we cannot maintain qualified personnel to meet the needs of our anticipated growth, we could face material adverse effects on our business and financial condition.


We are recently formed, lack an operating history and to date have generated only minimal revenues.  If we cannot increase our revenues to start generating profits, our investors may lose their entire investment.


We are a recently formed company and to date have generated only minimal revenues through sales of Spa equipment and services through our wholly owned subsidiary, Avyonce, which we divested of in January of 2017. No profits have been made to date and if we fail to make any then we may fail as a business and an investment in our common stock will be worth nothing.  We have a very limited operating history and thus our progress as well as potential future success cannot be reasonably estimated.  Success has yet to be proven. We have yet to prove our eBalance Technology through clinical trials and we have yet to develop any products through which we would be able to start generating revenue. Financial losses should be expected to continue in the near future and at least until such time that we enter commercial production of devices based on the eBalance Technology, of which there is no assurance.  As a new business we face all the risks of a ‘start-up’ venture including unforeseen costs, expenses, problems, and management limitations and difficulties.  Since inception, we have accumulated deficit of $4,898,094 and there is no guarantee, that we may ever be able to turn a profit or locate additional opportunities, hire additional management and other personnel.


We need to acquire additional financing or our business will fail.


We must obtain additional capital or our business will fail. In order to continue development of our eBalance Technology and to successfully complete clinical trials, we must secure more funds. Currently, we have very limited resources and have already accumulated a net loss. Financing may be subject to numerous factors including investor sentiment, acceptance of our technology and so on.  We currently have no arrangements for additional financing.  We may also have to borrow large sums of money that require substantial capital and interest payments.


Risks related to our stock


We expect to raise additional capital through the offering of more shares, which will result in dilution to our current shareholders.


Raising additional capital through future offerings of common stock is expected to be necessary for our Company to continue.  However there is no guarantee that we will be successful in raising additional capital. Issuance of additional stock will increase the total number of shares issued and outstanding resulting in decrease of the percentage interest held by each of our shareholders.


There is a limited market for our common stock meaning that our shareholders may not be able to resell their shares.


Our common stock currently has a limited market which may restrict shareholders’ ability to resell their stock or use their stock as collateral. Thus, the shareholders may have to sell their shares privately which may prove very difficult. Private sales are more difficult and often give lower than anticipated prices.


Should a larger public market develop for our stock, future sales of shares may negatively affect their market price.


Even if a larger market develops, the shares may be sparsely traded and have wide share price fluctuations.  Liquidity may be low despite there being a market, making it difficult to get a return on the investment.  The price also depends on potential investor’s feelings regarding the results of our operations, the competition of other companies’ shares, our ability to generate future revenues, and market perception about future of microcurrent technologies.




11




Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.


The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.


Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:


·

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

·

contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

·

contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

·

contains a toll-free telephone number for inquiries on disciplinary actions;

·

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

·

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.


The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.


We have not paid nor anticipate paying cash dividends on our common stock.


We have not declared any dividends on our common stock during the past two fiscal years or at any time in our history.  The Nevada Revised Statutes (the “NRS”), provide certain limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:


(a)

we would not be able to pay our debts as they become due in the usual course of business; or

(b)

except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution.


We do not expect to declare any dividends in the foreseeable future as we expect to spend any funds legally available for the payment of dividends on the development of our business.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


None.





12




Item 3. Defaults upon Senior Securities


None.


Item 4. Mine Safety Disclosures


None.


Item 5. Other Information


None.


Item 6. Exhibits


Exhibit

Number

 

Description of Document

3.1

 

Articles of Incorporation (2)

3.2

 

Articles of Merger - Sports Asylum, Inc. and Plandel Resources, Inc.(5)

3.3

 

Articles of Merger - Cell MedX Corp. and Sports Asylum, Inc.(5)

3.4

 

Bylaws (1)

4.1

 

Specimen Stock Certificate (1)

10.1

 

Letter Agreement dated August 29, 2014 among Sports Asylum, Inc., Jean Arnett, Brad Hargreaves and XC Velle Institute Inc. (4)

10.2

 

Consulting Agreement dated September 1, 2014 among Sports Asylum, Inc. and Jean Arnett.

10.3

 

Consulting Agreement dated September 1, 2014 among Sports Asylum, Inc. and Brad Hargreaves.

10.4

 

Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(6)

10.5

 

First Amendment Agreement dated October 28, 2014 to that Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(7)

10.6

 

Convertible Loan Agreement and Note Payable dated November 12, 2014 among Cell MedX Corp., and City Group LLC. (12)

10.7

 

Second Amendment Agreement dated November 13, 2014 to that Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(8)

10.8

 

Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Jean Arnett.(9)

10.9

 

Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Brad Hargreaves.(9)

10.10

 

First Amendment to Stock-Option Agreement dated February 28, 2014 to that Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Jean Arnett.(9)

10.11

 

First Amendment to Stock-Option Agreement dated February 28, 2014 to that Non-Qualified Stock Option Agreement dated November 25, 2014 among Cell MedX Corp. and Brad Hargreaves. (9)

10.12

 

Convertible Loan Agreement and Note Payable dated December 12, 2014 among Cell MedX Corp., and City Group LLC.(10)

10.13

 

Management Consulting Agreement dated January 13, 2015 among Cell MedX Corp., and Dr. John Sanderson, MD.(10)

10.14

 

Stock Option Agreement dated December 12, 2014 among Cell MedX Corp. and Dr. John Sanderson, MD. (10)

10.15

 

Loan Agreement and Note Payable dated April 20, 2015 among Cell MedX Corp., and City Group LLC. (13)

10.16

 

Loan Agreement and Note Payable dated June 17, 2015 among Cell MedX Corp., and City Group LLC. (13)

10.17

 

Loan Agreement and Note Payable dated June 29, 2015 among Cell MedX Corp., and Richard N. Jeffs. (13)

10.18

 

Loan Agreement and Note Payable dated July 7, 2015 among Cell MedX Corp., and City Group LLC. (13)




13




Exhibit

Number

 

Description of Document

10.19

 

Loan Agreement and Note Payable dated July 9, 2015 among Cell MedX Corp., and Richard N. Jeffs. (13)

10.20

 

Loan Agreement and Note Payable dated July 15, 2015 among Cell MedX Corp., and Richard N. Jeffs. (13)

10.21

 

Stock Option Agreement dated August 5, 2015 among Cell MedX Corp. and Frank E. McEnulty.(11)

10.22

 

Loan Agreement and Note Payable dated August 12, 2015 among Cell MedX Corp., and Richard N. Jeffs. (13)

10.23

 

Loan Agreement and Note Payable dated September 3, 2015 among Cell MedX Corp., and Richard N. Jeffs. (14)

10.24

 

Consulting Agreement dated September 1, 2015 and effective as of September 23, 2015 among Cell MedX Corp., and Steven H. Bulwa. (14)

10.25

 

Stock Option Agreement dated September 23, 2015 among Cell MedX Corp. and Steven H. Bulwa.(14)

10.26

 

Loan Agreement and Note Payable dated September 24, 2015 among Cell MedX Corp., and City Group LLC. (14)

10.27

 

Loan Agreement and Note Payable dated September 28, 2015 among Cell MedX Corp., and Richard N. Jeffs. (14)

10.28

 

eBalance Prototype Development Agreement dated October 1, 2015 among Cell MedX Corp., and Claudio Tassi. (14)

10.29

 

Non-binding Letter of Intent dated December 4, 2015 to Enter into Development Agreement and License Agreement among Cell MedX Corp., Claudio Tassi, and Bioformed Aesthetic S.L.(15)

10.30

 

Loan Agreement and Note Payable dated November 5, 2015, among Cell MedX Corp., and Tradex Capital Corp.

10.31

 

Loan Agreement and Note Payable dated December 23, 2015, among Cell MedX Corp., and Coventry Capital LLC.(15)

10.32

 

Loan Agreement and Note Payable dated February 4, 2016, among Cell MedX Corp., and Tradex Capital Corp.

10.33

 

Loan Agreement and Note Payable dated March 2, 2016, among Cell MedX Corp., and Tradex Capital Corp.

10.34

 

Loan Agreement dated March 3, 2016 between Richard Norman Jeffs and Cell MedX Corp. (16)

10.35

 

Loan Agreement and Note Payable dated March 10, 2016, among Cell MedX Corp., and Tradex Capital Corp. (17)

10.36

 

Loan Agreement and Note Payable dated March 30, 2016, among Cell MedX Corp., and Tradex Capital Corp. (18)

10.37

 

Loan Agreement and Note Payable dated March 31, 2016 among Cell MedX Corp., and Richard N. Jeffs. (18)

10.38

 

Loan Agreement and Note Payable dated April 29, 2016, among Cell MedX Corp., and Richard N. Jeffs. (18)

10.39

 

Loan Agreement and Note Payable dated June 1, 2016, among Cell MedX Corp., and Tradex Capital Corp. (18)

10.40

 

Loan Agreement and Note Payable dated June 2, 2016, among Cell MedX Corp., and Richard N. Jeffs. (18)

10.41

 

Loan Agreement and Note Payable dated June 29, 2016, among Cell MedX Corp., and Tradex Capital Corp. (18)

10.42

 

Loan Agreement and Note Payable dated June 30, 2016, among Cell MedX Corp., and Richard N. Jeffs. (18)

10.43

 

Loan Agreement and Note Payable dated August 8, 2016, among Cell MedX Corp., and Richard N. Jeffs. (18)

10.44

 

Loan Agreement and Note Payable dated August 22, 2016, among Cell MedX Corp., and Tradex Capital Corp. (18)

10.45

 

Letter Agreement dated September 26, 2016, between Jean Arnett, Brad Hargreaves and Cell MedX Corp. (19)

10.46

 

Loan Agreement and Note Payable dated January 6, 2017, among Cell MedX Corp., and Richard N. Jeffs.




14




Exhibit

Number

 

Description of Document

10.47

 

Loan Agreement and Note Payable dated February 7, 2017, among Cell MedX Corp., and Richard N. Jeffs.

10.48

 

Loan Agreement and Note Payable dated February 27, 2017, among Cell MedX Corp., and Richard N. Jeffs.

14.1

 

Code of Ethics (3)

 

 

 

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

 

Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

 

The following materials from this Quarterly Report on Form 10-Q for the three and nine month periods ended February 28, 2017 and February 29, 2016 formatted in XBRL (extensible Business Reporting Language):

 

 

(1) Consolidated Balance Sheets at February 28, 2017 (unaudited), and May 31, 2016.

 

 

(2) Unaudited Condensed Interim Consolidated Statements of Operations for the Three and Nine Months Ended February 28, 2017 and February 29, 2016.

 

 

(3) Unaudited Condensed Interim Consolidated Statement of Stockholders’ Deficit for the Nine-month period ended February 28, 2017.

 

 

(3) Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Nine months ended February 28, 2017 and February 29, 2016.


(1)

 

Filed as an exhibit to the Company’s Registration Statement on Form S-1 filed with SEC  on July 13, 2010

(2)

 

Filed as an exhibit to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed with SEC on October 13, 2010

(3)

 

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with SEC on August 26, 2014

(4)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on September 5, 2014

(5)

 

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 9, 2014

(6)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on October 17, 2014

(7)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 3, 2014

(8)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 18 , 2014

(9)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 3, 2014

(10)

 

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 13, 2015

(11)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2015

(12)

 

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2015

(13)

 

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 3, 2015

(14)

 

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2016

(15)

 

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 15, 2015

(16)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 9, 2016

(17)

 

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2016

(18)

 

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 13, 2016

(19)

 

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2016




15




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



  

Cell MedX Corp.

  

  

Date: April 14, 2017

By:

/s/ Frank E. McEnulty

  

  

Frank E. McEnulty

  

  

President, Chief Executive Officer and Director

  

  

(Principal Executive Officer)

  

  

 

Date: April 14, 2017

By:

/s/Yanika Silina

  

  

Yanika Silina

  

  

Chief Financial Officer

  

  

(Principal Accounting Officer)

 





































16



LOAN AGREEMENT

January 6, 2017



Richard N. Jeffs (the “Lender”) of 11750 Fairtide Road, Ladysmith, BC  V9G 1K5, advanced CDN$15,000 (the “Principal Sum”) to Cell MedX Corp. (the “Borrower”) of 2857 Sumter Valley Circle, Henderson, NV 89052.  The Lender advanced the funds on January 6, 2017.


The Borrower agrees to repay the Principal Sum on demand, together with interest calculated and compounded monthly at the rate of 6% per year (the “Interest”) from January 6, 2017. The Borrower is liable for repayment for the Principal Sum and accrued Interest and any costs that the Lender incurs in trying to collect the Principal Sum and the Interest.


The Borrower will evidence the debt and its repayment of the Principal Sum and the Interest with a promissory note in the attached form.


LENDER

BORROWER

Richard N. Jeffs

Cell MedX Corp.

 

 

Per:

Per:

 

 

 

 

/s/ Richard N. Jeffs

/s/ Yanika Silina

Richard N. Jeffs

Yanika Silina, CFO























PROMISSORY NOTE


Principal Amount:   CDN$15,000

January 6, 2017



FOR VALUE RECEIVED Cell MedX Corp., (the “Borrower”) promises to pay on demand to the order of Richard N. Jeffs (the “Lender”) the sum of $15,000 lawful money of Canada (the “Principal Sum”) together with interest on the Principal Sum from January 6, 2017 (“Effective Date”) both before and after maturity, default and judgment at the Interest Rate as defined below.


For the purposes of this promissory note, Interest Rate means 6 per cent per year.  Interest at the Interest Rate must be calculated and compounded monthly not in advance from and including the Effective Date (for an effective rate of 6.2% per annum calculated monthly), and is payable together with the Principal Sum when the Principal Sum is repaid.


The Borrower may repay the Principal Sum and the Interest in whole or in part at any time.


The Borrower waives presentment, protest, notice of protest and notice of dishonour of this promissory note.



BORROWER

Cell MedX Corp.


Per:



/s/ Yanika Silina


Yanika Silina, CFO


















LOAN AGREEMENT

February 7, 2017



Richard N. Jeffs (the “Lender”) of 11750 Fairtide Road, Ladysmith, BC  V9G 1K5, advanced CDN$15,000 (the “Principal Sum”) to Cell MedX Corp. (the “Borrower”) of 123 W. Nye Ln, Suite 446, Carson City NV 89706. The Lender advanced the funds on February 7, 2017.


The Borrower agrees to repay the Principal Sum on demand, together with interest calculated and compounded monthly at the rate of 6% per year (the “Interest”) from February 7, 2017.  The Borrower is liable for repayment for the Principal Sum and accrued Interest and any costs that the Lender incurs in trying to collect the Principal Sum and the Interest.


The Borrower will evidence the debt and its repayment of the Principal Sum and the Interest with a promissory note in the attached form.


LENDER

BORROWER

Richard N. Jeffs

Cell MedX Corp.

 

 

Per:

Per:

 

 

 

 

/s/ Richard N. Jeffs

/s/ Yanika Silina

Richard N. Jeffs

Yanika Silina, CFO























PROMISSORY NOTE


Principal Amount:   CDN$15,000

February 7, 2017



FOR VALUE RECEIVED Cell MedX Corp., (the “Borrower”) promises to pay on demand to the order of Richard N. Jeffs (the “Lender”) the sum of $15,000 lawful money of Canada (the “Principal Sum”) together with interest on the Principal Sum from February 7, 2017 (“Effective Date”) both before and after maturity, default and judgment at the Interest Rate as defined below.


For the purposes of this promissory note, Interest Rate means 6 per cent per year.  Interest at the Interest Rate must be calculated and compounded monthly not in advance from and including the Effective Date (for an effective rate of 6.2% per annum calculated monthly), and is payable together with the Principal Sum when the Principal Sum is repaid.


The Borrower may repay the Principal Sum and the Interest in whole or in part at any time.


The Borrower waives presentment, protest, notice of protest and notice of dishonour of this promissory note.



BORROWER

Cell MedX Corp.


Per:



/s/ Yanika Silina


Yanika Silina, CFO


















LOAN AGREEMENT

February 27, 2017



Richard N. Jeffs (the “Lender”) of 11750 Fairtide Road, Ladysmith, BC  V9G 1K5, advanced CDN$10,000 (the “Principal Sum”) to Cell MedX Corp. (the “Borrower”) of 123 W. Nye Ln, Suite 446, Carson City NV 89706. The Lender advanced the funds on February 27, 2017.


The Borrower agrees to repay the Principal Sum on demand, together with interest calculated and compounded monthly at the rate of 6% per year (the “Interest”) from February 27, 2017.  The Borrower is liable for repayment for the Principal Sum and accrued Interest and any costs that the Lender incurs in trying to collect the Principal Sum and the Interest.


The Borrower will evidence the debt and its repayment of the Principal Sum and the Interest with a promissory note in the attached form.


LENDER

BORROWER

Richard N. Jeffs

Cell MedX Corp.

 

 

Per:

Per:

 

 

 

 

/s/ Richard N. Jeffs

/s/ Yanika Silina

Richard N. Jeffs

Yanika Silina, CFO























PROMISSORY NOTE


Principal Amount:   CDN$10,000

February 27, 2017



FOR VALUE RECEIVED Cell MedX Corp., (the “Borrower”) promises to pay on demand to the order of Richard N. Jeffs (the “Lender”) the sum of $10,000 lawful money of Canada (the “Principal Sum”) together with interest on the Principal Sum from February 27, 2017 (“Effective Date”) both before and after maturity, default and judgment at the Interest Rate as defined below.


For the purposes of this promissory note, Interest Rate means 6 per cent per year.  Interest at the Interest Rate must be calculated and compounded monthly not in advance from and including the Effective Date (for an effective rate of 6.2% per annum calculated monthly), and is payable together with the Principal Sum when the Principal Sum is repaid.


The Borrower may repay the Principal Sum and the Interest in whole or in part at any time.


The Borrower waives presentment, protest, notice of protest and notice of dishonour of this promissory note.



BORROWER

Cell MedX Corp.


Per:



/s/ Yanika Silina


Yanika Silina, CFO

















CELL MEDX CORP.

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Frank E. McEnulty, certify that:

 

1.  I have reviewed this Quarterly Report on Form 10-Q for the period ending February 28, 2017, of Cell MedX Corp.;

 

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:  April 14, 2017


/s/ Frank E. McEnulty

Frank E. McEnulty

Chief Executive Officer and President

(Principal Executive Officer)



CELL MEDX CORP.

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Yanika Silina, certify that:

 

1.  I have reviewed this Quarterly Report on Form 10-Q for the period ending February 28, 2017, of Cell MedX Corp.;

 

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 14, 2017


/s/Yanika Silina

Yanika Silina

Chief Financial Officer

(Principal Accounting Officer)




CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Cell MedX Corp. (the “Company”) on Form 10-Q for the period ending February 28, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:


(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated: April 14, 2017


/s/ Frank E. McEnulty

Frank E. McEnulty

Chief Executive Officer and President

(Principal Executive Officer)


























CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Cell MedX Corp. (the “Company”) on Form 10-Q for the period ending February 28, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:


(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated: April 14, 2017


/s/Yanika Silina

Yanika Silina

Chief Financial Officer

(Principal Accounting Officer)