united
states

Securities
and Exchange Commission

Washington,
D.C. 20549



FORM 20-F



| |  ̈ | REGISTRATION
                                         STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

or

| | x | ANNUAL
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -----------------------------------------------------------------------------------------------------------------------------

For the fiscal year ended: December 31, 2014

or

| |  ̈ | TRANSITION
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------

or

| |  ̈ | SHELL
                                         COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------------------------------------------------------



Commission file
number: 0-31092



|MEDICURE INC.                                                                              
|-------------------------------------------------------------------------------------------
|                                                                                           
|(Exact name of registrant as specified in its
    charter)                                 
|                                                                                           
|Canada                                                                                     
|                                                                                           
|(Jurisdiction of incorporation or organization)                                            
|                                                                                           
|2 - 1250 Waverley Street, Winnipeg, Manitoba,
    Canada R3T 6C6                           
|                                                                                           
|(Address of principal executive offices)                                                   
|                                                                                           
|Dr. Albert D. Friesen, Tel: (204) 487-7412,
    Fax: (204) 488-9823                        
|2 - 1250 Waverley Street, Winnipeg, Manitoba,
    Canada R3T 6C6                           
|                                                                                           
|(Name, Telephone, E-mail and/or Facsimile number
    and Address of Company Contact Person)



|Securities registered or to be registered pursuant to
    Section 12(b) of the Act: | None
|----------------------------------------------------------------------------------- | ----



Securities registered or to be registered pursuant to Section
12(g) of the Act:



|Common Shares, without par value
|--------------------------------
|                                
|(Title of Class)                



|Securities for which there is a reporting obligation
    pursuant to Section 15(d) of the Act: | None
|---------------------------------------------------------------------------------------------- | ----



Indicate the number of outstanding shares
of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:



At December 31, 2014 the
registrant had 12,209,907 common shares issued and outstanding



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



|Yes  ̈ | No þ
|----- | ----



If this report is an annual or transition
report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.



|Yes  ̈ | No þ
|----- | ----



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 þ | No  ̈
|----- | ----



Indicate by check mark whether the registrant
has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).



|Yes  ̈ | No  ̈
|----- | ----



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and
large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer  ̈   Accelerated Filer  ̈   Non-Accelerated Filer þ



Indicate by check mark which basis of
accounting the registrant has used to prepare the financial statements included in this filing:



|US GAAP  ̈ | International Financial Reporting        | Other  ̈
|--------- | ---------------------------------------- | -------
|          | Standards as issued by the International |        
|          | Accounting Standards Board þ             |        



If “Other” has been checked
in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:



|Item 17  ̈ | Item 18  ̈
|--------- | ---------



If this is an annual report, indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



|Yes  ̈ | No þ
|----- | ----











TABLE OF CONTENTS



|GENERAL                                                       | 4 
|------------------------------------------------------------- | --
|                                                              |   
|GLOSSARY OF TERMS                                             | 4 
|                                                              |   
|FORWARD LOOKING STATEMENTS                                    | 4 
|                                                              |   
|PART I                                                        | 7 
|                                                              |   
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 7 
|A. Directors and Senior Management                            | 7 
|B. Advisers                                                   | 7 
|C. Auditors                                                   | 7 
|                                                              |   
|ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE               | 7 
|                                                              |   
|ITEM 3. KEY INFORMATION                                       | 7 
|A. Selected Financial Data                                    | 7 
|B. Capitalization and Indebtedness                            | 9 
|C. Reasons for the Offer and Use of Proceeds                  | 9 
|D. Risk Factors                                               | 10
|                                                              |   
|ITEM 4. INFORMATION ON THE COMPANY                            | 25
|A. History and Development of the Company                     | 25
|B. Business Overview                                          | 27
|C. Organizational Structure                                   | 36
|D. Property, Plant and Equipment                              | 36
|                                                              |   
|ITEM 4A. UNRESOLVED STAFF COMMENTS                            | 36
|                                                              |   
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS          | 36
|A. Operating Results                                          | 41
|B. Liquidity and Capital Resources                            | 49
|C. Research and Development, Patents and Licenses, Etc.       | 50
|D. Trend Information                                          | 53
|E. Off-balance Sheet Arrangements                             | 53
|F. Contractual Obligations                                    | 54
|                                                              |   
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            | 56
|A. Directors and Senior Management                            | 56
|B. Compensation                                               | 58
|C. Board Practices                                            | 59
|D. Employees                                                  | 70
|E. Share Ownership                                            | 70
|                                                              |   
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     | 72
|A. Major Shareholders                                         | 72
|B. Related Party Transactions                                 | 74
|C. Interests of Experts and Counsel                           | 76
|                                                              |   
|ITEM 8. FINANCIAL INFORMATION                                 | 76
|A. Consolidated Statements or Other Financial Information     | 76
|B. Significant Changes                                        | 76
|                                                              |   
|ITEM 9. THE OFFERING AND LISTING                              | 77
|A. Listing Details                                            | 77
|B. Plan of Distribution                                       | 78
|C. Markets                                                    | 78
|D. Selling Shareholders                                       | 78



2







|E. Dilution                                                                           | 78 
|------------------------------------------------------------------------------------- | ---
|F. Expenses of the Issue                                                              | 78 
|                                                                                      |    
|ITEM 10. ADDITIONAL INFORMATION                                                       | 78 
|A. Share Capital                                                                      | 78 
|B. Memorandum and Articles of Association                                             | 78 
|C. Material Contracts                                                                 | 82 
|D. Exchange Controls                                                                  | 82 
|E. Taxation                                                                           | 84 
|F. Dividends and Paying Agents                                                        | 92 
|G. Statement by Experts                                                               | 92 
|H. Documents on Display                                                               | 92 
|I. Subsidiary Information                                                             | 93 
|                                                                                      |    
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 93 
|                                                                                      |    
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 93 
|                                                                                      |    
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 93 
|                                                                                      |    
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 94 
|                                                                                      |    
|ITEM 15. CONTROLS AND PROCEDURES                                                      | 94 
|                                                                                      |    
|ITEM 16. RESERVED                                                                     | 95 
|                                                                                      |    
|ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT                                            | 95 
|                                                                                      |    
|ITEM 16B. CODE OF ETHICS                                                              | 96 
|                                                                                      |    
|ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES                                     | 96 
|                                                                                      |    
|ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                  | 96 
|                                                                                      |    
|ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      | 97 
|                                                                                      |    
|ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT                                | 97 
|                                                                                      |    
|ITEM 16G. CORPORATE GOVERNANCE                                                        | 97 
|                                                                                      |    
|ITEM 16H.MINE SAFETY DISCLOSURE                                                       | 97 
|                                                                                      |    
|PART III                                                                              | 98 
|                                                                                      |    
|ITEM 17. FINANCIAL STATEMENTS                                                         | 98 
|                                                                                      |    
|ITEM 18. FINANCIAL STATEMENTS                                                         | 98 
|                                                                                      |    
|ITEM 19. EXHIBITS                                                                     | 139



3







GENERAL



As used in this Annual Report, the “Corporation”
or “Company” refers to “Medicure Inc.”, the company resulting from the amalgamation of Medicure Inc. and
Lariat Capital Inc., and “Medicure” refers to “Medicure Inc.” prior to its amalgamation with Lariat Capital
Inc.



The Company uses the Canadian dollar as
its reporting currency. Unless otherwise indicated, all references to dollar amounts in this Annual Report are to Canadian dollars.
As of December 31, 2014, the rate for Canadian dollars was US $1.1601 for CND $1.00. See
also Item 3 – Key Information for more detailed currency and conversion information.



Except as noted, the information set forth
in this Annual Report is as of April 10, 2015 and all information included in this document should only be considered correct
as of such date.



GLOSSARY OF TERMS



The following words and phrases shall
have the meanings set forth below:

“angioplasty”means
an operation to repair a damaged blood vessel or unblock an artery;



“Apicore”means any one or more ofApicore
LLC, Apicore US LLC, Apicore Inc., Apigen Investments Limited, and Apicore Pharmaceuticals PVT Ltd., including any of their affiliates
and subsidiaries;



“Apicore Transaction”
means the transaction occurring on July 3, 2014 whereby the Company acquired a minority interest in a pharmaceutical manufacturing
business known as Apicore.



“FDA”means the United
States Food and Drug Administration;

“myocardial infarction”means destruction of heart tissue resulting from obstruction of the blood supply to the heart muscle;



“TSX-V”means the TSX
Venture Exchange.



FORWARD LOOKING STATEMENTS



Medicure Inc. cautions readers that certain
important factors (including without limitation those set forth in this Form 20-F) may affect the Company’s actual results
in the future and could cause such results to differ materially from any forward-looking statements that may be deemed to have
been made in this Form 20-F annual report, or that are otherwise made by or on behalf of the Company. This Annual Report contains
forward-looking statements and information which may not be based on historical fact, which may be identified by the words “believes,”
“may,” “plan,” “will,” “estimate,” “continue,” “anticipates,”
“intends,” “expects,” and similar expressions and the negative of such expressions.  Such forward
looking statements include, without limitation, statements regarding:



| | · | intention
                                         to sell and market its acute care cardiovascular drug, AGGRASTAT® (tirofiban hydrochloride)
                                         in the United States and its territories through the Company's U.S. subsidiary, Medicure
                                         Pharma, Inc.;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to develop and implement clinical, regulatory and other plans to generate an increase
                                         in the value of AGGRASTAT®;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to expand or otherwise improve the approved indications and/or dosing information contained
                                         within AGGRASTAT®’s approved prescribing information;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to increase sales of AGGRASTAT®;
| | - | -----------------------------------------------------------------------------------



4







| | · | intention
                                         to develop TARDOXALTM for neurological disorders;
| | - | ----------------------------------------------------------------------------------------------------



| | · | intention
                                         to investigate and advance certain other product opportunities, including but not limited
                                         to transdermal formulations of tirofiban or other pharmaceuticals;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to obtain regulatory approval for the Company's products;
| | - | ------------------------------------------------------------------------------------------------------------



| | · | expectations
                                         with respect to the cost of the testing and commercialization of the Company's products;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | · | sales
                                         and marketing strategy;
| | - | ----------------------------------------------------------------------



| | · | anticipated
                                         sources of revenue;
| | - | ------------------------------------------------------------------------



| | · | intentions
                                         regarding the protection of the Company's intellectual property;
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to identify, negotiate and complete business development transactions (eg. The sale,
                                         purchase, or license of pharmaceutical products or services);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | expectations
                                         with respect to acquiring additional ownership of Apicore, and/or deriving any material
                                         benefit from the Company’s ownership of Apicore;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | business
                                         strategy; and
| | - | ---------------------------------------------------------------



| | · | intention
                                         with respect to dividends.
| | - | -----------------------------------------------------------------------------



Such forward-looking statements and information
involve a number of assumptions as well as known and unknown risks, uncertainties and other factors that may cause the actual
results, events or developments to be materially different from any future results, events or developments expressed or implied
by such forward-looking statements and information including, without limitation:



| | · | general
                                         business and economic conditions;
| | - | ----------------------------------------------------------------------------------



| | · | the
                                         impact of changes in Canadian-US dollar and other foreign exchange rates on the Company's
                                         revenues, costs and results;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the
                                         timing of the receipt of regulatory and governmental approvals for the Company's research
                                         and development projects;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the
                                         ability of the Company to continue as a going concern;
| | - | ---------------------------------------------------------------------------------------------------



| | · | the
                                         availability of financing for the Company's commercial operations and/or research and
                                         development projects, or the availability of financing on reasonable terms;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | results
                                         of current and future clinical trials;
| | - | ---------------------------------------------------------------------------------------



| | · | the
                                         uncertainties associated with the acceptance and demand for new products;
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | clinical
                                         trials not being unreasonably delayed and expenses not increasing substantially;
| | - | ----------------------------------------------------------------------------------------------------------------------------------



5







| | · | government
                                         regulation not imposing requirements that significantly increase expenses or that delay
                                         or impede the Company's ability to bring new products to market;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the
                                         Company's ability to attract and retain skilled staff;
| | - | ---------------------------------------------------------------------------------------------------



| | · | inaccuracies
                                         and deficiencies in the scientific understanding of the interaction and effects of pharmaceutical
                                         treatments when administered to humans;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | market
                                         competition;
| | - | ------------------------------------------------------------



| | · | the
                                         ability of Apicore to successfully operate and/or increase its value;
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | tax
                                         benefits and tax rates; and
| | - | ------------------------------------------------------------------------



| | · | the
                                         Company's ongoing relations with its employees and with its business partners.
| | - | ---------------------------------------------------------------------------------------------------------------------------



These factors should be considered carefully
and readers are cautioned not to place undue reliance on such forward-looking statements and information.  The Company disclaims
any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements
and information contained herein to reflect future results, events or developments, except as otherwise required by applicable
law. Additional risks and uncertainties relating to the Company and its business can be found in the “Risk Factors”
section of this Annual Report.



6







PART I



ITEM 1. IDENTITY OF DIRECTORS, SENIOR
MANAGEMENT AND ADVISERS



A. Directors and Senior Management



Not applicable



B. Advisers



Not applicable



C. Auditors



Not applicable



ITEM 2. OFFER STATISTICS AND EXPECTED
TIMETABLE



Not applicable



ITEM 3. KEY INFORMATION



A. Selected Financial Data



The selected financial data of the Company
as at December 31, 2014, May 31, 2014 and 2013 and for the fiscal years ended December 31, 2014, May 31, 2014, 2013 and 2012 was
extracted from the audited consolidated financial statements of the Company included in this Annual Report on Form 20-F. The information
contained in the selected financial data is qualified in its entirety by reference to the more detailed consolidated financial
statements and related notes included in Item 18 - Financial Statements, and should be read in conjunction with such financial
statements and with the information appearing in Item 5 - Operating and Financial Review and Prospects. The selected financial
data as at May 31, 2012, 2011 and 2010 and for the fiscal years ended May 31, 2011 and 2010 was extracted from the audited financial
statements of the Company not included in this Annual Report.



The information
provided in the audited consolidated financial statements included in this Annual Report on Form 20-F is prepared in accordance
with International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB).



During the preparation of the Company’s
consolidated financial statements for the seven months ended December 31, 2014, the Company determined that the accounting for
stock-based compensation pertaining to a consulting agreement signed during the year ended May 31, 2014 was interpreted incorrectly
in accordance with IFRS 2 Share-Based Payments for the year ended May 31, 2014. As a result the May 31, 2014 information provided
has been restated to include stock-based compensation expense relating to this consulting agreement.



On November 1, 2012, the Company completed
a consolidation of its outstanding share capital on the basis of one post-consolidation share for every fifteen pre-consolidation
shares. All comparative figures have been adjusted retrospectively.



7







Under International Financial Reporting Standards (in Canadian
dollars):



|Statement of Financial Position Data                          |  | December 31, 2014 |              |   | May 31, 2014 Restated |  |              | May 31, 2013 |  |  | May 31, 2012 |   |  | May 31, 2011 |             
|------------------------------------------------------------- |  | ----------------- | ------------ | - | --------------------- |  | ------------ | ------------ |  |  | ------------ | - |  | ------------ | ------------
|(as at period end)                                            |  | $                 |              |   | $                     |  |              | $            |  |  | $            |   |  | $            |             
|Current Assets                                                |  |                   | 3,874,097    |   |                       |  | 2,153,740    |              |  |  | 1,491,485    |   |  |              | 2,211,951   
|Property and                                                  |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Equipment                                                     |  |                   | 33,161       |   |                       |  | 20,681       |              |  |  | 22,235       |   |  |              | 30,745      
|Intangible Assets                                             |  |                   | 1,096,946    |   |                       |  | 1,433,158    |              |  |  | 1,910,069    |   |  |              | 2,500,928   
|Other Assets                                                  |  |                   | 1,556,315    |   |                       |  | -            |              |  |  | -            |   |  |              | -           
|Total Assets                                                  |  |                   | 6,560,519    |   |                       |  | 3,607,579    |              |  |  | 3,423,789    |   |  |              | 4,723,624   
|Current Liabilities                                           |  |                   | 4,377,498    |   |                       |  | 3,022,904    |              |  |  | 3,557,024    |   |  |              | 1,378,288   
|Non-current Liabilities                                       |  |                   | 6,094,037    |   |                       |  | 6,461,629    |              |  |  | 4,193,446    |   |  |              | 5,186,009   
|Total Liabilities                                             |  |                   | 10,471,535   |   |                       |  | 9,484,533    |              |  |  | 7,750,470    |   |  |              | 6,564,297   
|Net Assets /                                                  |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|(Deficiency)                                                  |  |                   | (3,911,016   | ) |                       |  | (5,876,954   | )            |  |  | (4,326,681   | ) |  |              | (1,820,673  
|Capital Stock and                                             |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Contributed Surplus                                           |  |                   | 122,406,511  |   |                       |  | 121,779,707  |              |  |  | 121,482,563  |   |  |              | 121,379,570 
|Accumulated Other Comprehensive                               |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Income (Loss)                                                 |  |                   | 298,329      |   |                       |  | 154,791      |              |  |  | 68,112       |   |  |              | 102,809     
|Deficit                                                       |  |                   | (126,615,856 | ) |                       |  | (127,811,452 | )            |  |  | (125,877,356 | ) |  |              | (123,303,052
|Statement of Net Income (Loss) (for the fiscal year ended on) |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Product Sales                                                 |  |                   | 5,264,395    |   |                       |  | 5,050,761    |              |  |  | 2,602,700    |   |  |              | 4,796,811   
|Interest and Other                                            |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Income                                                        |  |                   | 38           |   |                       |  | 41           |              |  |  | 152          |   |  |              | 775         
|Gain on Settlement                                            |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|of Debt                                                       |  |                   | -            |   |                       |  | -            |              |  |  | -            |   |  |              | 23,931,807  
|Net Income (Loss) for                                         |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|the Period                                                    |  |                   | 1,195,596    |   |                       |  | (1,934,096   | )            |  |  | (2,574,304   | ) |  |              | 23,385,779  
|Comprehensive Income (Loss) for the                           |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Period                                                        |  |                   | 1,339,134    |   |                       |  | (1,647,417   | )            |  |  | (2,609,001   | ) |  |              | 23,865,218  
|Income (Loss)                                                 |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Per Share                                                     |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Basic                                                         |  |                   | 0.10         |   |                       |  | (0.16        | )            |  |  | (0.21        | ) |  |              | 1.99        
|Diluted                                                       |  |                   | 0.09         |   |                       |  | (0.16        | )            |  |  | (0.21        | ) |  |              | 1.99        
|Weighted-Average Number of                                    |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Common Shares                                                 |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Outstanding                                                   |  |                   |              |   |                       |  |              |              |  |  |              |   |  |              |             
|Basic                                                         |  |                   | 12,204,827   |   |                       |  | 12,196,745   |              |  |  | 12,196,508   |   |  |              | 11,745,854  
|Diluted                                                       |  |                   | 13,843,126   |   |                       |  | 12,196,745   |              |  |  | 12,196,508   |   |  |              | 11,752,521  



8







Dividends



No cash dividends have been declared nor
are any intended to be declared. The Company is not subject to legal restrictions respecting the payment of dividends except that
they may not be paid if the Company is, or would after the payment be, insolvent. Dividend policy will be based on the Company's
cash resources and needs and it is anticipated that all available cash will be required to further the Company’s research
and development activities for the foreseeable future.



Exchange Rates



Unless otherwise indicated, all reference
to dollar amounts are to Canadian dollars. On April 9, 2015, the rate of exchange of the Canadian dollar, based on the daily noon
rate in Canada as published by the Bank of Canada, was US$1.00 = Canadian $1.2580. The exchange rates published by the Bank of
Canada and made available on its website, www.bankofcanada.ca, are nominal quotations — not buying or selling rates
— and are intended for statistical or analytical purposes.



The following tables set out the exchange
rates, based on the daily noon rates in Canada as published by the Bank of Canada for the conversion of Canadian Dollars into
U.S. Dollars.



|                        |  | December 31, 2014 |        |  | May 31, 2014 |  |        | May 31, 2013 |  |  | May 31, 2012 |  |  | May 31, 2011 |       
|----------------------- |  | ----------------- | ------ |  | ------------ |  | ------ | ------------ |  |  | ------------ |  |  | ------------ | ------
|                        |  |                   |        |  |              |  |        |              |  |  |              |  |  |              |       
|Period End              |  |                   | 1.1601 |  |              |  | 1.0842 |              |  |  | 1.0368       |  |  |              | 1.0349
|Average for the Period* |  |                   | 1.1083 |  |              |  | 1.0638 |              |  |  | 1.0043       |  |  |              | 0.9983
|High for the Period     |  |                   | 1.1536 |  |              |  | 1.1279 |              |  |  | 1.0275       |  |  |              | 1.0604
|Low for the Period      |  |                   | 1.0740 |  |              |  | 1.0137 |              |  |  | 0.9785       |  |  |              | 0.9449



| | * | The average rate for each period is the average of the daily noon
                                         rates on the last day of each month during the period.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|Monthly High and Low Exchange Rate (Canadian Dollar per U.S.
    Dollar)
|------------------------------------------------------------------------
|                                                                        
|March 2015                                                              
|February 2015                                                           
|January 2015                                                            
|December 2014                                                           
|November 2014                                                           
|October 2014                                                            
|September 2014                                                          
|August 2014                                                             
|July 2014                                                               
|June 2014                                                               



B. Capitalization and Indebtedness



Not applicable



C. Reasons for the Offer and Use of
Proceeds



Not applicable



9







D. Risk Factors



An investment
in the Company's common shares is highly speculative and subject to a number of risks. Only those persons who can bear the risk
of the entire loss of their investment should participate. An investor should carefully consider the risks described below and
the other information that the Company furnishes to, or files with, the Securities and Exchange Commission and with Canadian securities
regulators before investing in the Company's common shares. The risks described below are not the only ones faced by the Company.
Additional risks that management is unaware of or that the Company currently believes are immaterial may indeed become important
factors that affect the Company's business. If any of the following risks occur, or if others occur, the Company's business, operating
results and financial condition could be seriously harmed and the investor may lose all of his or her investment.



Going concern



The Company’s consolidated financial
statements have been prepared on a going concern basis in accordance with IFRS. The going concern basis of presentation assumes
that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities
and commitments in the normal course of business. There is substantial doubt about the appropriateness of the use of the going
concern assumption because the Company has accumulated a deficit of $126,615,856 as at December 31, 2014 and, until the seven
months ended December 31, 2014, had experienced operating losses since incorporation. Additionally, the Company has a working
capital deficiency of $503,401. The Company’s future operations are dependent upon its ability to maintain growth in sales
of AGGRASTAT®, to develop and/or acquire new products, and/or secure additional capital, which may not be available
under favourable terms or at all, and/or renegotiate the terms of its contractual commitments. If the Company is unable to maintain
growth in sales, develop and/or acquire new products, raise additional capital or renegotiate the terms of its contractual commitments,
management intends to consider other strategies including further cost curtailments, delays of research and development activities,
asset divestures and/or monetization of certain intangible assets. Effective August 1, 2013, the Company renegotiated its long-term
debt and received an additional two-year deferral of principal repayments. Under the renegotiated terms, the loan continues to
be interest only with principal repayments now beginning on August 1, 2015 and the loan maturing on July 1, 2018.



The ability of the Company to continue
as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on many
factors, including, but not limited to, the actions taken or planned, some of which are described above, which are intended to
mitigate the adverse conditions and events that raise doubt about the validity of the going concern assumption used in preparing
these consolidated financial statements. There is no certainty that the Company’s working capital and net cash flows will
be sufficient through fiscal 2015 or that the above described and other strategies will be sufficient to permit the Company to
continue as a going concern.



The consolidated financial statements
do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern
basis was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value
of assets and liabilities, the reported revenue and expenses, and the consolidated statement of financial position classifications
used.



Prior to the acquisition of AGGRASTAT®,
the Company had no products in commercial production or use. As such, the Company was considered to be a development-stage enterprise
for accounting purposes prior to the acquisition. Although the Company has improved, and is working to further improve, profitability,
the Company may incur losses and may never achieve sustained profitability, which in turn may harm its future operating performance
and may cause the market price of its stock to decline.



10










With the exception of AGGRASTAT®,
the Company’s products are in the development stage and accordingly, its business operations are subject to all of the risks
inherent in the establishment and maintenance of a developing business enterprise, such as those related to competition and viable
operations management.



The Company has incurred net losses since
inception to May 31, 2014, excluding the year ended May 31, 2012 where the Company recorded net income of $23,385,779, primarily
as a result of a gain on the settlement of the Company’s long-term debt. The Company incurred a net loss of $1,638,952 for
the year ended May 31, 2014, $2,574,304 for the year ended May 31, 2013 and $1,634,774 for the year ended May 31, 2011. Additionally,
as reported under previous Canadian GAAP, the Company incurred a net loss of $5,532,506 for the year ended May 31, 2010.



The long-term profitability of the Company’s
operations is uncertain, and any profitability may not be sustained. The Company’s long-term profitability will be directly
related to its ability to develop a commercially viable drug product or products. This in turn depends on numerous factors, including
the following:



| | a) | the success of the Company’s
                                         research and development activities;
| | -- | ----------------------------------------------------------------------------------------------------------

| | b) | obtaining Canadian and United
                                         States regulatory approvals to market any of its development products;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | c) | the ability to contract for the
                                         manufacture of the Company’s products according to schedule and within budget,
                                         given that it has no experience in large scale manufacturing;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) | the ability to develop, implement
                                         and maintain appropriate systems and structures to market and operate within applicable
                                         regulatory, industry and legal guidelines;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e) | the ability to identify, negotiate
                                         and complete business development transactions (eg. the sale, purchase, or license of
                                         pharmaceutical products or services) with third parties;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f) | the ability to maintain current
                                         or higher pricing and margins for the Company’s products;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------

| | g) | deriving material value from the
                                         Company’s interests in Apicore, which were acquired subsequent to May 31, 2014;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | h) | the ability to successfully prosecute
                                         and defend its patents and other intellectual property; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

| | i) | the ability to successfully market
                                         the Company’s products including AGGRASTAT® given that it has limited resources.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



If the Company does achieve sustained
profitability, it may not be able to increase profitability in the future.



The Company may be exposed to short-term
liquidity risk.



To a certain extent the Company relies
on trade credit, as well as cash from operations, term debt and equity issues to provide the necessary short-term financing to
conduct the Company’s research and development activities, as well as its commercial operations. Should suppliers and other
creditors decline to extend short-term credit to the Company in the future, it may have a material adverse effect on the Company’s
business prospects, financial results and financial condition.



Under current
indebtedness levels the Company must meet its debt repayment obligations. Additionally, the Company may still be able to incur
substantially more debt. This could further exacerbate the risks associated with the Company’s substantial leverage.



On July 18,2011, the Company
borrowed $5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities Program, to assist with settling
the Company’s long-term debt at that time. The loan bears interest annually at the crown corporation borrowing rate plus
two percent and matures on July 1, 2016. The loan is payable interest only for the first 24 months, with blended principal and
interest payments made monthly thereafter until maturity. The loan is secured by the Company’s assets and guaranteed by
the Chief Executive Officer of the Company and entities controlled by the Chief Executive Officer. The Company must meet its debt
repayment obligations and failure to do so could cause the lender to demand on its security on the Company's long-term debt. The
Company has made all payments to date in relation to this indebtedness, however there is no certainty that the Company will be
able to continue servicing the debt once principal repayments are required. Effective August 1, 2013, the Company renegotiated
its long-term debt and received an additional two year deferral of principal repayments. Under the renegotiated terms, the loan
continues to be interest only with principal repayments now beginning on August 1, 2015 and the loan maturing on July 1, 2018.



11







Despite current indebtedness levels, the
Company may still be able to incur substantial additional indebtedness in the future.



The Company
may never receive regulatory approval in Canada, the United States or abroad for any of its products in development. Therefore,
the Company may not be able to sell any therapeutic products currently under development.



The Company’s failure to maintain
or obtain necessary regulatory approvals to fully market its current and future development stage products in one or more significant
markets may adversely affect its business, financial condition and results of operations. The process involved in obtaining regulatory
approval from the competent authorities to market therapeutic products is long and costly and may delay product development. The
approval to market a product may be applicable to a limited extent only or it may be refused entirely.



With the exception of AGGRASTAT®,
all of the Company’s products are currently in the research and development stages. The Company may never have another commercially
viable drug product approved for marketing. To obtain regulatory approvals for its products and to achieve commercial success,
human clinical trials must demonstrate that the products are safe for human use and that they show efficacy. Unsatisfactory results
obtained from a particular study or clinical trial relating to one or more of the Company’s products may cause the Company
to reduce or abandon its commitment to that program.



If the Company fails to successfully complete
its clinical trials, it will not obtain approval from the U.S. Food and Drug Administration (“FDA”) and other international
regulatory agencies, to market its leading products. Regulatory approvals also may be subject to conditions that could limit the
market its products can be sold in or make either products more difficult or expensive to sell than anticipated. Also, regulatory
approvals may be revoked at any time for various reasons, including for failure to comply with regulatory requirements or poor
performance of its products in terms of safety and effectiveness.



The Company’s business, financial
condition and results of operations are likely to be adversely affected if it fails to maintain or obtain regulatory approvals
in Canada, the United States and abroad to market and sell its current or future drug products, including any limitations imposed
on the marketing of such products.



If the Company fails to acquire and
develop additional product candidates or approved products, it will impair the Company’s ability to grow its business and
to increase value for shareholders.



The Company generates product revenue
only from AGGRASTAT®.  A component of the Company’s plan to generate additional revenue is its intention to develop
and/or to acquire or license, and then develop and market, additional product candidates or approved products. The success of
this growth strategy depends upon the Company’s ability to identify, select and acquire or license pharmaceutical products
that meet the criteria it has established.  Due to the fact the Company has limited financial capacity, significant indebtedness,
and limited value in its equity, relative to other companies in the industry, it has a limited number of product opportunities
to choose from.  Moreover, the Company’s ability to research and develop its own, or other acquired/licensed products,
is limited by the extent of its internal scientific research capabilities. In addition, proposing, negotiating and implementing
an economically viable acquisition or license is a lengthy and complex process. Other companies, including those with substantially
greater financial, marketing and sales resources, may compete with the Company for the acquisition or license of product candidates
and approved products. The Company may not be able to acquire or license the rights to additional product candidates and approved
products on terms that it finds acceptable, or at all.



12







The Company may not receive regulatory
approval in the United States to further expand or otherwise improve the approved indications and/or dosing information contained
within AGGRASTAT®’s prescribing information. Therefore, the Company may not be able to materially increase the sales
of AGGRASTAT®.



In fiscal 2014 the Company was able to
obtain revisions to AGGRASTAT®’s prescribing information and these revisions have had a positive, material impact on
sales of AGGRASTAT®. The Company believes that further expanded indications and dosing regimens will put the Company in a
better position to maximize the revenue potential for AGGRASTAT®. To make such changes, the Company may need to conduct appropriate
clinical trials, obtain positive results from those trials, or otherwise provide support in order to obtain regulatory approval
for such proposed indications and dosing regimens. The Company’s failure to obtain additional regulatory approvals from
the FDA to expand or otherwise improve the approved indications and/or dosing information contained within AGGRASTAT®’s
prescribing information may adversely affect its business, financial condition and results of operations. The process involved
in obtaining such regulatory approval is long and costly and may require additional investments that may not be reasonably achievable
by the Company. The regulatory authorities have substantial discretion in the approval process and may refuse to accept any application.
Varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval
of a new indication for a product. Furthermore, the approval to modify the prescribing information may be applicable to a limited
extent only or it may be refused entirely.



The current approved
prescribing information for AGGRASTAT® does not include all of the therapeutic indications provided for in the prescribing
information of its competitors. Moreover, the prescribing information does not include all of the dosing information and therapeutic
indications for which a physician may wish to use the product. Although health care professionals may utilize a product at doses
and for indications outside of the approved prescribing information, the Company is prohibited from promoting such uses.



To obtain regulatory approvals to modify
the prescribing information, the Company must supply sufficient information supporting the safety and efficacy of such uses to
the FDA, which in turn must review and deem this information to be sufficient to modify the label in the agreed upon fashion.
Unsatisfactory or insufficient results obtained from any particular study or clinical trial relating to the Company’s products
may cause the Company to reduce or abandon its efforts to expand or otherwise improve the approved indications and/or dosing information
contained within AGGRASTAT®’s prescribing information.



If the Company does not comply with
federal, state and foreign laws and regulations relating to the health care business, it could face substantial penalties.



The Company and its customers are subject
to extensive regulation by the United States federal government, and the governments of the states in which the business is conducted.
In the United States, the laws that directly or indirectly affect the Company’s ability to operate its business include
the following:



| | · | the
                                         Federal Anti-Kickback Law, which prohibits persons from knowingly and willfully soliciting,
                                         offering, receiving or providing remuneration, directly or indirectly, in cash or in
                                         kind, to induce either the referral of an individual or furnishing or arranging for a
                                         good or service for which payment may be made under federal health care programs such
                                         as Medicare and Medicaid;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | other
                                         Medicare laws and regulations that prescribe the requirements for coverage and payment
                                         for services performed by the Company’s customers, including the amount of such
                                         payment;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         Federal False Claims Act, which imposes civil and criminal liability on individuals and
                                         entities who submit, or cause to be submitted, false or fraudulent claims for payment
                                         to the government;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         Federal False Statements Act, which prohibits knowingly and willfully falsifying, concealing
                                         or covering up a material fact or making any materially false statement in connection
                                         with delivery of or payment for health care benefits, items or services; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | various
                                         state laws that impose similar requirements and liability with respect to state healthcare
                                         reimbursement and other programs.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




13







If the Company’s operations are
found to be in violation of any of the laws and regulations described above or any other law or governmental regulation to which
the Company or its customers are or will be subject, the Company may be subject to civil and criminal penalties, damages, fines,
exclusion from the Medicare and Medicaid programs and the curtailment or restructuring of its operations. Similarly, if the Company’s
customers are found to be non-compliant with applicable laws, they may be subject to sanctions, which could also have a negative
impact on the Company. Any penalties, damages, fines, curtailment or restructuring of the Company’s operations would adversely
affect its ability to operate its business and financial results. Any action against the Company for violation of these laws,
even if the Company is able to successfully defend against it, could cause it to incur significant legal expenses, divert management’s
attention from the operation of the business and damage the Company’s reputation.



Due to the fact that a material amount
of the use of AGGRASTAT® is outside of the FDA approved indications contained within AGGRASTAT®’s prescribing information,
the Company may be at a greater risk than would be the case if the product was almost exclusively used within the approved prescribing
information.



AGGRASTAST competes with a variety
of existing drugs and may compete against other new drugs, which may limit the use of AGGRASTAT® and adversely affect the
Company’s revenue.



Due to the incidence and severity of cardiovascular
diseases, the market for anticoagulant and antiplatelet therapies is large and competition is intense. There are a number of anticoagulant
and antiplatelet drugs currently on the market, awaiting regulatory approval or in development, including other intravenously
administered antiplatelet agents. AGGRASTAT® competes with, or may compete with in the future, these drugs to the extent AGGRASTAT®
and any of these drugs are approved for the same or similar indications.



AGGRASTAT® competes primarily with
other platelet inhibitors, in particular the other GP IIb/IIIa inhibitors, ReoPro (abciximab) (sold by Eli Lilly and Company)
and Integrilin (eptifibatide) (sold by Merck & Co., Inc.). It also competes with a number of oral platelet inhibitors,
which can be used alone or in conjunction with anticoagulants, most notably with heparin (sold generically by a number of companies),
and it is anticipated that new injectable platelet inhibitors (eg. cangrelor, being developed by The Medicines Company, Inc.)
may become available during fiscal 2015 that would also compete directly with AGGRASTAT®. In addition, some alternative methods
of treatment, such as the use of Angiomax (bivalirudin) (sold by The Medicines Company, Inc.), also compete with AGGRASTAT®.
These competitors are all marketed by large pharmaceutical companies with significantly more resources and experience than the
Company.



In the majority of hospitals in the United
States AGGRASTAT® is not available on the hospital formulary and it can be very difficult and time consuming to have AGGRASTAT®
added to formulary for use by health care professionals. In many cases, the other treatment approaches may have FDA approval for
dosing regimens and/or therapeutic indications that are outside of AGGRASTAT®’s approved prescribing information. The
risk of bleeding associated with AGGRASTAT® may cause physicians to choose an alternative therapy. In some circumstances,
AGGRASTAT® competes with other drugs for the use of hospital financial resources. Although AGGRASTAT® is positioned as
a relatively low cost therapy, in certain circumstances, other treatment approaches are lower cost and may for this reason be
preferred by health care professionals, in particular where oral antiplatelet agents are deemed suitable.



The availability of generic treatment options may affect
cost advantage of AGGRASTAT relative to the generic products.



AGGRASTAT is a branded pharmaceutical
product for which there is currently no generic alternative available in the Company’s market.  AGGRASTAT’s reduced
cost relative to other products is one of the advantages being used by the Company to promote and increase sales of AGGRASTAT.
 Distributors of generic products typically price products significantly below the branded alternative, and these distributors
are always seeking to introduce these generic alternatives of pharmaceuticals.  There is a risk that new generic products
will be introduced that compete with AGGRASTAT and that their low pricing would reduce AGGRASTAT’s relative cost advantage,
and therefore negatively impact the maintenance and growth of sales by the Company.




14







The Company may not be able to hire
or retain the qualified scientific, technical and management personnel it requires.



The Company’s business prospects
and operations depend on the continued contributions of certain of the Company’s executive officers and other key management
and technical personnel, certain of whom would be difficult to replace.



The Company’s subsidiary, Medicure
International, Inc., has a contract with CanAm Bioresearch Inc. (“CanAm”) to perform for it a significant amount of
its research and development activities. Because of the specialized scientific nature of the Company’s business, the loss
of services of CanAm may require the Company to attract and retain replacement qualified scientific, technical and management
personnel. Competition in the biotechnology industry for such personnel is intense and the Company may not be able to hire or
retain a sufficient number of qualified personnel, which may compromise the pace and success of its research and development activities.



Also, certain of the Company’s management
personnel are officers and/or directors of other companies, some publicly-traded, and will only devote part of their time to the
Company. Although the Company has key person insurance for Dr. Albert Friesen, Chief Executive Officer, the Company does not have
key person insurance in effect in the event of a loss of any other management, scientific or other key personnel. The loss of
the services of one or more of the Company’s current executive officers or key personnel or the inability to continue to
attract qualified personnel could have a material adverse effect on the Company’s business prospects, financial results
and financial condition.



The Company faces substantial technological
competition from many biotechnology and pharmaceutical companies with much greater resources, and it may not be able to effectively
compete.



Technological and scientific competition
in the pharmaceutical and biotechnology industry is intense. The Company competes with other companies in Canada, the United States
and abroad to develop products designed to treat similar conditions. Many of these other companies have substantially greater
financial, technical and scientific research and development resources, manufacturing and production and sales and marketing capabilities
than the Company. Small companies may also prove to be significant competitors, whether acting independently or through collaborative
arrangements with large pharmaceutical and biotechnology companies. Developments by other companies may adversely affect the competitiveness
of the Company’s products or technologies or the commitment of its research and marketing collaborators to its programs
or even render its products obsolete.



The pharmaceutical
and biotechnology industry is characterized by extensive drug discovery and drug research efforts and rapid technological and
scientific change. Competition can be expected to increase as technological advances are made and commercial applications for
biopharmaceutical products increase. The Company’s competitors may use different technologies or approaches to develop products
similar to the products which it is developing, or may develop new or enhanced products or processes that may be more effective,
less expensive, safer or more readily available before or after the Company obtains approval of its products. The Company may
not be able to successfully compete with its competitors or their products and, if it is unable to do so, the Company’s
business, financial condition and results of operations may suffer.



The Company may be unable to establish collaborative and
commercial relationships with third parties.



The Company’s success may depend
to some extent on its ability to enter into and to maintain various arrangements with corporate partners, licensors, licensees
and others for the research, development, clinical trials, manufacturing, marketing, sales and commercialization of its products.
These relationships are crucial to the Company’s intention to license to or contract with other pharmaceutical companies
for the manufacturing, marketing, sales and/or distribution of any its current or future products. There can be no assurance that
any licensing or other agreements will be established on favourable terms, if at all. The failure to establish successful collaborative
arrangements may negatively impact the Company’s ability to develop and commercialize its products, and may adversely affect
its business, financial condition and results of operations.



15







The Company is currently dependent
on its remaining inventory of its sole commercial product, AGGRASTAT®and does not have regulatory approvals in place for a new supplier of raw material used in the manufacture of
AGGRASTAT®. In addition, the Company needs to extend its manufacturing agreement with its final product manufacturer, or find
a new finished product manufacturer.



During fiscal 2012, the Company’s
subsidiary, Medicure International, Inc., acquired a significant quantity of the raw material used in the manufacture of AGGRASTAT®
and terminated its supply contract with its sole supplier of the raw material for AGGRASTAT®. In addition, Medicure International,
Inc. sold drug substance from inventory on hand to a third party. Also during fiscal 2012, Medicure International engaged and
initiated work with a contract manufacturing organization to establish a new source of the raw material for AGGRASTAT®. This
work with the new contract manufacturing organization is still ongoing as part of efforts to establish the supplier as a new,
approved source of the raw material for AGGRASTAT®.



The Company’s subsidiary, Medicure
Pharma, Inc., has a third party manufacturer of the final product AGGRASTAT®and that supply arrangement will expire on July 1, 2015. Although the Company is working to obtain an extension to
this arrangement and the third party manufacturer has expressed a desire to provide such extension, there is risk that no such
extension will be obtained or that it will be obtained under terms acceptable to the Company. In such an event, or if the Company
so chooses, the Company may move to a new manufacturer of final product. Although the Company believes that the inventory of final
product made by this manufacturer in calendar years 2014 and 2015 will be sufficient to fulfill commercial demand needs until
a new final product manufacturer is established, this cannot be guaranteed.



If either the supply of raw material or
the final product manufacturing agreement for AGGRASTAT® is terminated or interrupted, or if the Company and its subsidiaries
are unable to establish new or maintain existing third party manufacturers, or to obtain regulatory approval for commercial use
of product made by the new raw material manufacturer, or if the inventories of AGGRASTAT®currently held are contaminated
or otherwise lost, and the Company is unable to obtain a replacement supplier or manufacturer, it could have a material adverse
effect on the Company’s business prospects, financial results and financial condition.



If Apicore
encounters unanticipated challenges during the next two years, the Company may be obligated to help fund the resolution of these
matters through the purchase of shares of Apicore.



One aspect of the Apicore Transaction
announced on July 3, 2014, is that Medicure has a contractual obligation to help fund the resolution of certain specified damages
if they are encountered before July 3, 2016. The specified mechanism for Medicure to fulfill this obligation is through the purchase
of a portion of the equity of Apicore at a specified price per share, with such price being a discount to the price paid by Signet
Healthcare for its investment in Apicore pursuant to the Apicore Transaction. This equity purchase obligation is capped, not to
exceed US $5 million, and if such an equity purchase is made, it would result in a pro-rata reduction in the cost of Medicure
acquiring full ownership of Apicore, should Medicure so desire to proceed as contemplated in the Apicore Transaction.



Although the occurrence of any of the
specified damages that would precipitate such a purchase is not anticipated by the Company, there is a risk that it will be required,
and that the specified purchase price would be above the then relevant valuation of Apicore. Moreover, Medicure may not have the
available cash resources to fulfill such an obligation, and may be required to conduct its own equity financing, redirect finances
away from other Company activities, or conduct some other financing activity that would otherwise not have been necessary. In
these and other ways, the equity purchase obligation may have a material negative impact on the Company.



16







The Company’s ownership in Apicore,
which was acquired under the Apicore Transaction announced on July 3, 2014, may never bring material benefit to the Company.



The business of Apicore is that of a manufacturer
of active pharmaceutical ingredients and the development of abbreviated new drug applications. Although it is part of the same,
overall pharmaceutical industry in which the Company is engaged, Apicore’s specific sector and field of business faces its
own unique set of risks and uncertainties, which include, but are not limited to, an intensely competitive environment, strict
and changing government and FDA regulations on drug manufacturers, litigation risks associated with the manufacture of drugs for
human use, high fixed costs of operations, and many of the other risks outlined in more detail herein. Because the Company is
only a minority (<10%) owner of Apicore and the value such ownership interest is not a primary asset of the Company, this Form
20F does not attempt to identify all of the risks and uncertainties of Apicore. However, it is important for the Company’s
investors and shareholders to understand that (i) the value of the Company’s ownership in Apicore and, (ii) the value of
the Company’s option to purchase full ownership of Apicore, are each subject to, and could be materially impaired by, a
number of other risks and uncertainties not described in this Form 20F.



The Company may fail to obtain acceptable
prices or appropriate reimbursement for its products and its ability to successfully commercialize its products may be impaired
as a result.



Government and insurance reimbursements
for healthcare expenditures play an important role for all healthcare providers, including physicians, medical device companies,
pharmaceutical companies, medical supply companies, and companies, such as the Company, that offer or plan to offer various products
in the United States and other countries. The Company’s ability to earn sufficient returns on its products will depend in
part on the extent to which reimbursement for the costs of such products, related therapies and related treatments will be available
from government health administration authorities, private health coverage insurers, managed care organizations, and other organizations.
In the United States, the Company’s ability to have its products and related treatments and therapies eligible for Medicare
or private insurance reimbursement is and will remain an important factor in determining the ultimate success of its products.
If, for any reason, Medicare or the insurance companies decline to provide reimbursement for the Company’s products and
related treatments, the Company’s ability to commercialize its products would be adversely affected. There can be no assurance
that the Company’s products and related treatments will be eligible for reimbursement.



There has
been a trend toward declining government and private insurance expenditures for many healthcare items. Third-party payers are
increasingly challenging the price of medical products and services.



If purchasers or users of the Company’s
products and related treatments are not able to obtain appropriate reimbursement for the cost of using such products and related
treatments, they may forgo or reduce such use. Even if the Company’s products and related treatments are approved for reimbursement
by Medicare and private insurers, as is the case with AGGRASTAT®, the amount of reimbursement may be reduced at times, or
even eliminated. This would have a material adverse effect on the Company’s business, financial condition, and results of
operations.



Significant uncertainty exists as to the
reimbursement status of newly approved healthcare products, and there can be no assurance that adequate third-party coverage will
be available.



The Company
does not have significant manufacturing experience and has limited marketing resources and may never be able to successfully manufacture
or market certain of its products.



The Company has limited experience in
commercial manufacturing and has limited resources for marketing or selling its products.The Company may never be able to successfully manufacture and market certain of its products. If any other of its development
products are approved for sale, the Company intends to contract with and rely on third parties to manufacture, and possibly also
to market and sell its products. Accordingly, the quality, timing and ultimately the commercial success of such products may be
outside of the Company’s control. Failure of or delay by a third party manufacturer of the Company’s products to comply
with good manufacturing practices or similar quality control regulations or satisfy regulatory inspections may have a material
adverse effect on its future prospects. Failure of or delay by a third party in the marketing or selling of the Company’s
products or failure of the Company to successfully market and sell
such productslikewise may have a material adverse effect on its future prospects.



17







The Company has limited product liability
insurance and may not be able to obtain adequate product liability insurance in the future.



The sale and use of the Company’s
commercial and development products, and the conduct of clinical studies involving human subjects, entails product and professional
liability risks that are inherent in the testing, production, marketing and sale of new drugs to humans. While the Company has
taken, and intends to continue to take, what it believes are appropriate precautions, there can be no assurance that it will avoid
significant liability exposure. Although the Company currently carries product liability insurance for clinical trials, there
can be no assurance that it has sufficient coverage, or can in the future obtain sufficient coverage at a reasonable cost. An
inability to obtain insurance on economically feasible terms or to otherwise protect against potential product liability claims
could inhibit or prevent the commercialization of products developed by the Company. The obligation to pay any product liability
claim or recall for a product may have a material adverse effect on its business, financial condition and future prospects. In
addition, even if a product liability claim is not successful, adverse publicity and the time and expense of defending such a
claim may significantly interfere with the Company’s business.



If the Company
is unable to successfully protect its proprietary rights, its competitive position will be adversely affected.



The patent positions of pharmaceutical
companies are generally uncertain and involve complex legal, scientific and factual issues. The Company’s success depends
significantly on its ability to:



| | · | obtain
                                         and maintain U.S. and foreign patents, including defending those patents against
                                         adverse claims;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | secure
                                         patent term extensions for the patents covering its approved products;
| | - | ----------------------------------------------------------------------------------------------------------------------

| | · | protect
                                         trade secrets;
| | - | ---------------------------------------------------------------

| | · | operate
                                         without infringing the proprietary rights of others; and
| | - | ---------------------------------------------------------------------------------------------------------

| | · | prevent
                                         others from infringing its proprietary rights.
| | - | -----------------------------------------------------------------------------------------------



The Company’s success will depend
to a significant degree on its ability to obtain and protect its patents and protect its proprietary rights in unpatented trade
secrets.



The Company owns or jointly owns numerous
patents from the United States Patent Office and other jurisdictions. The Company has additional pending United States patent
applications along with applications pending in other jurisdictions. The Company’s pending and any future patent applications
may not be accepted by the United States Patent and Trademark Office or any other jurisdiction in which applications may be filed.
Also, processes or products that may be developed by the Company in the future may not be patentable. Errors or ill-advised decisions
by Company staff and/or contracted patent agents may also affect the Company’s ability to obtain or maintain valid patent
protection.



The patent protection
afforded to biotechnology and pharmaceutical companies is uncertain and involves many complex legal, scientific and factual questions.
There is no clear law or policy involving the degree of protection afforded under patents. As a result, the scope of patents issued
to the Company may not successfully prevent third parties from developing similar or competitive products. Competitors may develop
similar or competitive products that do not conflict with the Company’s patents. Litigation may be commenced by the Company
to prevent infringement of its patents. Litigation may also commence against the Company to challenge its patents that, if successful,
may result in the narrowing or invalidating of such patents. It is not possible to predict how any patent litigation will affect
the Company’s efforts to develop, manufacture or market its products. However, the cost of litigation to prevent infringement
or uphold the validity of any patents issued to the Company may be significant, in which case its business, financial condition
and results of operations may suffer. Patents provide protection for only a limited period of time, and much of such time can
occur well before commercialization commences.



18







The U.S. Congress is considering
patent reform legislation. In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either
narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain
situations. This combination of events has created uncertainty with respect to the value of patents, once obtained, and the Company’s
ability to obtain patents in the future. Depending on decisions by the U.S. Congress, the federal courts, and the United
States Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways that would weaken
the Company’s ability to obtain new patents or to enforce its existing patents and patents that it might obtain in the future.



Disclosure and use of the Company’s
proprietary rights in unpatented trade secrets not otherwise protected by patents are generally controlled by written agreements.
However, such agreements will not provide the Company with adequate protection if they are not honoured, others independently
develop an equivalent technology, disputes arise concerning the ownership of intellectual property, or its trade secrets are disclosed
improperly. To the extent that consultants or other research collaborators use intellectual property owned by others in their
work with the Company, disputes may also arise as to the rights to related or resulting know-how or inventions.



Others could claim that the Company
infringes on their proprietary rights, which may result in costly, complex and time consuming litigation.



The Company’s success will depend
partly on its ability to operate without infringing upon the patents and other proprietary rights of third parties. The Company
is not currently aware that any of its products or processes infringes the proprietary rights of third parties. However, despite
its best efforts, the Company may be sued for infringing on the patent or other proprietary rights of third parties at any time
in the future.



Such litigation,
with or without merit, is time-consuming and costly and may significantly impact the Company’s financial condition and results
of operations, even if it prevails. If the Company does not prevail, it may be required to stop the infringing activity or enter
into a royalty or licensing agreement, in addition to any damages it may have to pay. The Company may not be able to obtain such
a license or the terms of the royalty or license may be burdensome for it, which may significantly impair the Company’s
ability to market its products and adversely affect its business, financial condition and results of operations.



The Company is subject to stringent
governmental regulation, in the future may become subject to additional regulations and if it is unable to comply, its business
may be materially harmed.



Biotechnology, medical device, and pharmaceutical
companies operate in a high-risk regulatory environment. The FDA and other national health agencies can be very slow to approve
a product and can also withhold product approvals. In addition, these health agencies also oversee many other medical product
operations, such as research and development, manufacturing, and testing and safety regulation of medical products. As a result,
regulatory risk is normally higher than in other industry sectors.



The Company is or may become subject to
various federal, provincial, state and local laws, regulations and recommendations. The Company is subject to various laws and
regulations in Canada, relating to product emissions, use and disposal of hazardous or toxic chemicals or potentially hazardous
substances, infectious disease agents and other materials, and laboratory and manufacturing practices used in connection with
its research and development activities. If the Company fails to comply with these regulations, it may be fined or suffer other
consequences that could materially affect its business, financial condition or results of operations.



19







The pharmaceutical sales and marketing
industry within which the Company operates is a complex legal and regulatory environment. The failure to comply with applicable
laws, rules and regulations may result in civil and criminal legal proceedings. As those rules and regulations change or as governmental
interpretation of those rules and regulations evolve, prior conduct may be called into question. The Company may become subject
of federal and/or state governmental investigations into pricing, marketing, and reimbursement of its prescription drug product.
Any such investigation could result in related restitution or civil litigation on behalf of the federal or state governments,
as well as related proceedings initiated against the Company by or on behalf of consumers and private payers. Such proceedings
may result in trebling of damages awarded or fines in respect of each violation of law. Criminal proceedings may also be initiated
against the Company. Any of these consequences could materially and adversely affect the Company’s financial results.



The Company is unable to predict the extent
of future government regulations or industry standards. However, it should be assumed that government regulations or standards
will increase in the future. New regulations or standards may result in increased costs, including costs for obtaining permits,
delays or fines resulting from loss of permits or failure to comply with regulations.



The Company’s products may not
gain market acceptance, and as a result it may be unable to generate significant revenues.



Except
with respect to AGGRASTAT®, the Company does not currently have the required manufacturing capabilities, clinical data
and regulatory approvals necessary to successfully market its products under development in any jurisdiction; future clinical
or preclinical results may be negative or insufficient to allow it to successfully market any of its products under development;
and obtaining needed data and results may take longer than planned, and may not be obtained at all.



Even if the Company’s products under
development are approved for sale, they may not be successful in the marketplace. Market acceptance of any of the Company’s
products will depend on a number of factors, including demonstration of clinical effectiveness and safety; the potential advantages
of its products over alternative treatments; the availability of acceptable pricing and adequate third-party reimbursement; and
the effectiveness of marketing and distribution methods for the products. Providers, payors or patients may not accept the Company’s
products, even if they prove to be safe and effective and are approved for marketing by the FDA and other national regulatory
authorities. The Company anticipates that it will take many years before its initial products may be sold commercially. If the
Company’s products do not gain market acceptance among physicians, patients, and others in the medical community, its ability
to generate significant revenues from its products would be limited.



The Company may not achieve its projected
development and commercial goals in the time frames it announces and expects.



The Company sets goals for and may from
time to time make public statements regarding timing of the accomplishment of objectives related to AGGRASTAT® and/or its
products under development, that are material to the Company’s success, such as the commencement and completion of clinical
trials, anticipated regulatory approval dates, and timing of product launch. The actual timing of these events can vary dramatically
due to factors such as delays or failures in the Company’s clinical trials, the uncertainties inherent in the regulatory
approval process, and delays in achieving product development, manufacturing or marketing milestones necessary to commercialize
its products. There can be no assurance that the Company’s clinical trials will be completed, that it will make regulatory
submissions or receive regulatory approvals as planned, or that it will be able to adhere to its current schedule for the scale-up
of manufacturing and launch of any of its products. If the Company fails to achieve one or more of these milestones as planned,
that could materially affect its business, financial condition or results of operations and the price of its common shares could
decline.



20







The Company’s business involves
the use of hazardous material, which requires it to comply with environmental regulations.



The Company’s research and development
processes and commercial activities may involve the controlled storage, use, and disposal of hazardous materials and hazardous
biological materials. The Company is subject to laws and regulations governing the use, manufacture, storage, handling, and disposal
of such materials and certain waste products. Although the Company believes that its safety procedures for handling and disposing
of such materials comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury
from these materials cannot be completely eliminated. In the event of such an accident, the Company could be held liable for any
damages that result, and any such liability could exceed its resources. There can be no assurance that the Company will not be
required to incur significant costs to comply with current or future environmental laws and regulations, or that its business,
financial condition, and results of operations will not be materially or adversely affected by current or future environmental
laws or regulations.



The Company’s insurance may not
provide adequate coverage with respect to environmental matters.



Environmental regulations could have
a material adverse effect on the results of the Company’s operations and its financial position.



The Company is subject to a broad range
of environmental regulations imposed by federal, state, provincial, and local governmental authorities. Such environmental regulation
relates to, among other things, the handling and storage of hazardous materials, the disposal of waste, and the discharge of contaminants
into the environment. Although the Company believes that it is in material compliance with applicable environmental regulation,
as a result of the potential existence of unknown environmental issues and frequent changes to environmental regulation and the
interpretation and enforcement thereof, there can be no assurance that compliance with environmental regulation or obligations
imposed thereunder will not have a material adverse effect on the Company in the future.



The Company operates in an industry
that is more susceptible to legal proceedings. The Company may become involved in litigation.



The Company operates in an industry consisting
of firms that are more susceptible to legal proceedings than firms in other industries, due to the uncertainty and complex regulatory
environment involved in the development and sale of pharmaceuticals. The Company intends to vigorously defend such actions if
and when they arise. Defense and prosecution of legal claims can be expensive and time consuming, may adversely affect the Company
regardless of the outcome due to the diversion of financial, management and other resources away from the Company’s primary
operations, and could impact the Company’s ability to continue as a going concern in the longer term. In addition, a negative
judgment against the Company, even if the Company is planning to appeal such a decision, or even a settlement in a case, could
negatively affect the cash reserves of the Company, and could have a material negative effect on the development and sale of its
products.



Indemnification obligations to the
Company’s directors and senior management may adversely affect its financial condition.



The Company has entered into agreements
pursuant to which it will indemnify the directors and senior management in respect of certain claims made against them while acting
in their capacity as such. If the Company is called upon to perform its indemnity obligations, the Company’s financial condition
will be adversely affected. The Company is not currently aware of any matters pending or under consideration that may result in
indemnification payments to any of its present or former directors or senior management.



The Company is exposed to foreign exchange
movements since the majority of its commercial sales operations are denominated in U.S. currency.



The majority of the Company’s sales
revenues and a substantial portion of its selling, general and administrative expenses are denominated in U.S. dollars. The Company
does not utilize derivatives, such as foreign currency forward contracts and futures contracts, to manage its exposure to currency
risk and as a result a change in the value of the Canadian dollar against the U.S. dollar could have a negative impact on the
Company’s business prospects, financial results and financial condition.





21







The Company may need to raise additional
capital through the sale of its securities, resulting in dilution to its existing shareholders. Such funds may not be available,
or may not be available on reasonable terms, adversely affecting the Company’s operations.



The Company has limited financial resources
and has historically financed much of its operations through the sale of securities, primarily common shares. The Company has
significant on-going cash expenses and limited ability to generate cash from operations. To meet its on-going cash needs the Company
may need to rely on the taking on of additional debt and/or the sale of such securities for future financing, resulting in dilution
to its existing shareholders. The Company’s long-term capital requirements may be significant and will depend on many factors,
including continued scientific progress in its product discovery and development program, revenue, progress in the maintenance
and expansion of its sales and marketing capabilities, progress in its pre-clinical and clinical evaluation of products and product
candidates, time and expense associated with filing, prosecuting and enforcing its patent claims and costs associated with obtaining
regulatory approvals. In order to meet such capital requirements, the Company will consider contract fees, collaborative research
and development arrangements, debt financing, public financing or additional private financing (including the issuance of additional
equity securities) to fund all or a part of particular programs.



The Company’s business, financial
condition and results of operations will depend on its ability to obtain additional financing which may not be available under
favourable terms, if at all. The Company’s ability to arrange such financing in the future will depend in part upon the
prevailing capital market conditions as well as its business performance. Where additional financing is available, the Company
may be required to obtain approval from the Company’s shareholders. Such approval may not be provided. The Company has not
completed a financing through sale of its securities since calendar year 2007.



The Company is exposed to risks given
its significant dependence on revenue from the sale of its sole commercial product, AGGRASTAT®.



The Company has limited financial resources
and is largely dependent upon revenue from the sale of its sole commercial product, AGGRASTAT®. The Company has significant
on-going cash expenses, including commitments to advance research and development programs; however, the Company has limited ability
to generate cash from other sources, such as financing through the sale of equity.



If revenue from the sale of AGGRASTAT®
is not maintained or increased, the Company may have to reduce substantially or eliminate expenditures for research and development,
testing, production and marketing of its proposed products, or obtain funds through arrangements with corporate partners that
require it to relinquish rights to certain of its technologies, assets or products.



Future issuance of the Company’s
common shares will result in dilution to its existing shareholders. Additionally, future sales of the Company’s common shares
into the public market may lower the market price which may result in losses to its shareholders.



As of December 31, 2014, the Company had
12,209,907 common shares issued and outstanding. A further 1,720,253 common shares are issuable upon exercise of outstanding stock
options and another 66,667 common shares are issuable upon exercise of share purchase warrants, all of which may be exercised
in the future resulting in dilution to the Company’s shareholders. The Company’s stock option plan allows for the
issuance of stock options to purchase up to a maximum of 20% of the outstanding common shares at any time.



22







By Articles of Amendment filed by the
Company under the Canada Business Corporations Act on November 1, 2012, a consolidation of shares was completed to reduce
the total number of outstanding shares. However, as described above, the Company has limited financial resources and may from
time to time be required to finance its operations through the sale of equity securities. In addition, it may be required to issue
equity securities as consideration for services or asset acquisition transactions. Sales of substantial amounts of the Company’s
common shares into the public market, or even the perception by the market that such sales may occur, may lower the market price
of its common shares.



The Company’s common shares may
experience extreme price and volume volatility which may result in losses to its shareholders.



The Company’s common shares historically
have been subject to extreme price and volume volatility. For example, during the period from June 1, 2014 to December 31, 2014,
the high and low closing trading prices of the Company’s common shares were CDN$2.97 and CDN$1.62, respectively, with a
total trading volume of 1,324,815 shares. Daily trading volume on the TSX of the Company’s common shares for the period
from June 1, 2014 to December 31, 2014 has fluctuated, with a high of 52,849 shares and a low of nilshares, averaging
approximately 9,264 shares per trading day.



The Company expects that the trading price
of its common shares will continue to be subject to wide fluctuations in response to a variety of factors including announcement
of material events by the Company, such as the status of required regulatory approvals for its products, competition by new products
or new innovations, fluctuations in its operating results, general and industry-specific economic conditions and developments
pertaining to patent and proprietary rights. The trading price of the Company’s common shares may be subject to wide fluctuations
in response to a variety of factors and/or announcements concerning such factors, including:



| | · | actual
                                         or anticipated period-to-period fluctuations in financial results;
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | litigation
                                         or threat of litigation;
| | - | ----------------------------------------------------------------------------



| | · | failure
                                         to achieve, or changes in, financial estimates of individual investors and/or by securities
                                         analysts;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | new
                                         or existing products or generic equivalents to products or services or technological
                                         innovations by the Company or its competitors;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | comments
                                         or opinions by securities analysts or major shareholders;
| | - | -----------------------------------------------------------------------------------------------------------



| | · | conditions
                                         or trends in the pharmaceutical, biotechnology and life science industries;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | significant
                                         acquisitions, strategic partnerships, joint ventures or capital commitments;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | · | results
                                         of, and developments in, the Company’s research and development efforts, including
                                         results and adequacy of, and developments in, its clinical trials and applications for
                                         regulatory approval;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | additions
                                         or departures of key personnel;
| | - | ----------------------------------------------------------------------------------



| | · | sales
                                         of the Company’s common shares, including by holders of the notes on conversion
                                         or repayment by the Company in common shares;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | economic
                                         and other external factors or disasters or crises;
| | - | ----------------------------------------------------------------------------------------------------



| | · | limited
                                         daily trading volume; and
| | - | --------------------------------------------------------------------------



| | · | developments
                                         regarding the Company’s patents or other intellectual property or that of its competitors.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------





23







In addition, the securities markets in
the United States and Canada have recently experienced a high level of price and volume volatility, and the market price of securities
of biotechnology companies have experienced wide fluctuations in price which have not necessarily been related to the operating
performance, underlying asset values or prospects of such companies.



There may not be an active, liquid
market for the Company’s common shares.



On March 26, 2010, the Company’s
common shares were delisted from the TSX due to the Company’s inability to meet continued listing requirements. On March
29, 2010, the Company’s common shares commenced trading on the NEX board of the TSX-V under the symbol “MPH.H”.
The shares continued trading on the NEX until October 21, 2011, at which time the trading of the Company’s shares was transferred
to the TSX-V under the symbol “MPH”.



The Company’s shares ceased trading
on the American Stock Exchange (later called NYSE Amex and now called NYSE MKT) effective July 3, 2008.



There is no guarantee that an active trading
market for the Company’s common shares will be maintained on the TSX-V. Investors may not be able to sell their shares quickly
or at the latest market price if trading in its common shares is not active.



If there are substantial sales of the
Company’s common shares, the market price of its common shares could decline.



Sales of substantial numbers of the Company’s
common shares could cause a decline in the market price of its common shares. Any sales by existing shareholders or holders of
options or warrants may have an adverse effect on the Company’s ability to raise capital and may adversely affect the market
price of its common shares.



The Company has no history of paying
dividends, does not intend to pay dividends in the foreseeable future and may never pay dividends.



Since incorporation, the Company has not
paid any cash or other dividends on its common shares and does not expect to pay such dividends in the foreseeable future as all
available funds will be invested to finance the growth of its business. The Company will need to achieve profitability prior to
any dividends being declared, which may never happen.



If the Company is classified as a “passive
foreign investment Company” for United States income tax purposes, it could have significant and adverse tax consequences
to United States holders of its common shares.



Company does not believe that it was a
“passive foreign investment Company” for the taxable year ended December 31, 2014, and does not expect that it will
be a “passive foreign investment Company” (PFIC) for the taxable year ending December 31, 2015. (See more detailed
discussion in Item 10E – Taxation) However, there can be no assurance that the IRS will not challenge the determination
made by the Company concerning its “passive foreign investment Company” status or that the Company will not be a “passive
foreign investment Company” for the current taxable year or any subsequent taxable year. Accordingly, although the Company
expects that it may be a “Qualified Foreign Corporation” (QFC) for the taxable year ending December 31, 2015, there
can be no assurances that the IRS will not challenge the determination made by the Company concerning its QFC status, that the
Company will be a QFC for the taxable year ending December 31, 2015 or any subsequent taxable year, or that the Company will be
able to certify that it is a QFC in accordance with the certification procedures issued by the Treasury and the IRS.



The Company’s classification as
a PFIC could have significant and adverse tax consequences for United States holders of its common shares.



24







The Company no longer has a shareholder
rights plan



During fiscal 2012, the Company allowed
its shareholder rights plan to expire. The provisions of such plan were intended to strengthen the ability of the Board of Directors
to protect the Company's shareholders, and help ensure that the shareholders were treated fairly by limiting the ability of any
person or group to seize control of the Company without appropriately compensating all of the Company’s shareholders.



Penny stock classification could affect
the marketability of the Company's common shares and shareholders could find it difficult to sell their shares.



The penny stock rules in the United States
require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny
stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information,
must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation.



Further, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from such 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 agreement to
the transaction. These additional broker-dealer practices and disclosure requirements may have the effect of reducing the level
of trading activity in the secondary market for the Company's common shares in the United States, and shareholders may find it
more difficult to sell their shares.



Risks associated with material weaknesses
within the Company’s financial reporting and review process



In connection with its review of the Company’s
Internal Control over Financial Reporting, the Company has identified material weaknesses with the Company’s financial reporting
and review process, involving the accounting and reporting for complex transactions, due to limited staff not allowing for appropriate
reviews of such transactions. Any failure to remediate the material weaknesses, to implement the required new or improved control,
or difficulties encountered in the implementation, could cause the Company to fail to meet its reporting obligations on a timely
basis or result in material misstatements in the annual or interim financial statements. Inadequate internal control over financial
reporting could also cause investors to lose confidence in the Company’s reported financial information, which could cause
the Company’s stock price to decline.



ITEM 4. INFORMATION ON THE COMPANY



A. History and Development of the Company



On December 22, 1999, the Company was
formed by the amalgamation of Medicure Inc. with Lariat Capital Inc. pursuant to the provisions of the Business Corporations
Act (Alberta). The Company was continued from Alberta to the federal jurisdiction by Certificate of Continuance issued pursuant
to the provisions of the Canada Business Corporations Acton February 23, 2000.



The Company’s current legal and
commercial name is Medicure Inc. and its current registered office is 30th Floor, 360 Main Street, Winnipeg, Manitoba,
Canada, R3C 4G1, Phone (204) 487-7412. The Company’s head office is located at 2-1250 Waverley Street, Winnipeg, Manitoba,
Canada, R3T 6C6.



25







In August 2006, the Company acquired the
U.S. rights to its first commercial product, AGGRASTAT®Injection (tirofiban hydrochloride) in the United States
and its territories (Puerto Rico, Virgin Islands and Guam) for US$19,000,000.



In September 2007, the Company monetized
a percentage of its current and potential future commercial revenues by entering into a debt financing agreement with Birmingham
Associates Ltd. (Birmingham), an affiliate of Elliott Associates, L.P. (Elliott) for proceeds of US$25 million.



In February 2008, the Company announced
that its pivotal Phase III MEND-CABG II clinical trials with MC-1 did not meet the primary endpoint and as a result was not sufficient
to support the filings. As a result, the Company announced a restructuring plan that resulted in the organization reducing its
head count by approximately 50 employees and full-time consultants. The restructuring and downsizing in March 2008 conserved capital
for ongoing operations.



Since March 2008, the Company has continued
to focus on the sale and marketing of AGGRASTAT®. The Company has also explored and implemented a number of cost savings measures
and has further downsized its operations. All these initiatives were initiated due to the restructuring plan announced towards
the end of fiscal 2008. These activities assisted in further reducing the Company’s use of capital, in particular its investment
in research and development programs, but have moved forward certain programs on a limited and focused fashion such as the development
and implementation of a new clinical, product and regulatory strategy for AGGRASTAT® and the ongoing Phase II clinical study
of TARDOXALTM.



In calendar year 2014, as a part of its
effort to expand sales of AGGRASTAT®, the Company began to significantly increase the number of employees and otherwise increase
expenses related to sales and marketing of AGGRASTAT®, and related to General and Administrative costs of the Company. In
2015, the Company plans to further expand total employment and otherwise increase expenses.



The Company’s
future operations are dependent upon its ability to maintain sales of AGGRASTAT®, to develop and/or acquire new products,
and/or secure additional capital, which may not be available under favourable terms or at all, and/or renegotiate the terms of
its contractual commitments and long-term debt.



If the Company is unable to maintain sales
of AGGRASTAT®, develop and/or acquire new products, and/or raise additional capital and/or renegotiate the terms of its contractual
commitments, management will consider other strategies including cost curtailments, delays of research and development activities,
asset divestures and/or monetization of certain intangible assets.



During fiscal 2012, the Company’s
subsidiary, Medicure International, Inc., acquired a significant quantity of the raw material used in the manufacture of AGGRASTAT®
and terminated its supply contract with its sole supplier of the raw material for AGGRASTAT®. Also during fiscal 2012, Medicure
International engaged and initiated work with a contract manufacturing organization to establish a new source of the raw material
for AGGRASTAT®. This work with the new contract manufacturing organization is still ongoing as part of efforts to establish
the supplier as a new, approved source of the raw material for AGGRASTAT®.



The Company’s subsidiary, Medicure
Pharma, Inc., has a third party manufacturer of the final product AGGRASTAT® and that supply arrangement will expire on July
1, 2015. Although the Company is working to obtain an extension to this arrangement and the third party manufacturer has expressed
a desire to provide such extension, there is risk that no such extension will be obtained or that it will be obtained under terms
acceptable to the Company. Accordingly, the Company may be required to find a new manufacturer of final product. Although the
Company believes that the inventory of final product made by its existing manufacturer in calendar years 2014 and 2015 will be
sufficient to fulfill commercial demand needs until a new final product manufacturer is established, this cannot be guaranteed.



26







Effective August 1, 2013, the Company
renegotiated its long-term debt and received an additional two year deferral of principal repayments. Under the renegotiated terms,
the loan continues to be interest only and principal repayments will begin on August 1, 2015 and the loan matures on July 1, 2018.



On July 3, 2014, the Company and its newly
formed and wholly owned subsidiary, Medicure U.S.A. Inc. ("Medicure USA"), entered into an arrangement whereby they
have acquired a minority interest in a pharmaceutical manufacturing business known as Apicore, along with an option to acquire
all of the remaining issued shares within the next three years. Specifically, Medicure and Medicure USA acquired a 6.09% equity
interest (5.33% on a fully-diluted basis) in two newly formed holding companies of which Apicore LLC and Apicore US LLC will be
wholly owned operating subsidiaries. The Company's equity interest and certain other rights, including the option rights were
obtained by the Company for services provided in its lead role in structuring a US$22.5 million majority interest purchase and
financing of Apicore. There was no cash outflow in connection with the acquisition of the minority interest in Apicore. The business
and operations of Apicore are distinct from the Company, and the Company’s primary operating focus remains on the sale and
marketing of AGGRASTAT®. The Company intends to seek opportunities to increase the value of its minority position in Apicore,
and believes that the potential realization of value through the exercise of its option to acquire all of the remaining issued
shares of Apicore could benefit the Company’s shareholders. As such, a modest amount of the Company’s energies and
resources are being directed towards assisting and assessing Apicore’s ongoing operations.



B. Business Overview



Plan of Operation



Medicure is a specialty pharmaceutical
company engaged in the research, clinical development and commercialization of human therapeutics. The Company’s primary
operating focus is on the sale and marketing of its acute care cardiovascular drug, AGGRASTAT® (tirofiban hydrochloride) owned
by its subsidiary, Medicure International, Inc. and distributed in the United States and its territories through the Company’s
U.S. subsidiary, Medicure Pharma, Inc.



The Company’s research and development
program is primarily focused on developing and implementing new regulatory, brand and life cycle management strategy for AGGRASTAT®
and, secondly, on the clinical development of TARDOXALTM for neurological disorders. The Company also continues to
explore certain other product development opportunities and is actively seeking to acquire and/or license additional approved
products.



Strategic changes made over recent years,
coupled with increased sales of AGGRASTAT® focused capital conservation efforts, have assisted the Company in reducing its
use of capital. The Company's ability to continue in operation for the foreseeable future remains dependent upon the maintenance
of AGGRASTAT® sales and upon the effective execution of its business development and strategic plans.



The ongoing focus of the Company and its
primary asset of interest is AGGRASTAT®. In parallel with the Company’s ongoing commitment to support the product, its
valued customers and the continuing efforts of the commercial organization, the Company is in the process of developing and further
implementing a new regulatory, brand and life cycle management strategy for AGGRASTAT®. The objective of this effort is to
further expand AGGRASTAT®’s share of the estimated US $280 million (2014) glycoprotein IIb/IIIa (GP IIb/IIIa) inhibitor
market. GP IIb/IIIa inhibitors are injectable platelet inhibitors used to treat acute coronary syndromes and related conditions
and procedures.



The Company has
financed its operations principally through the net revenue received from the sale of AGGRASTAT®, sale of its equity securities,
the issue of warrants and stock options, interest on excess funds held, a build up in accounts payable associated with a reliance
on trade debt, and the issuance of debt. During fiscal 2012, on July 18, 2011, the Company’s previously existing long-term
debt was settled as described in note 9 to the accompanying financial statements.



27







The Company’s future operations
are dependent upon its ability to maintain sales of AGGRASTAT®, to develop and/or acquire new products, and/or secure additional
capital, which may not be available under favourable terms or at all, and/or renegotiate the terms of its contractual commitments.
If the Company is unable to maintain sales, develop and/or acquire new products, and/or raise additional capital and/or renegotiate
the terms of its contractual commitments, management will consider other strategies including further cost curtailments, delays
of research and development activities, asset divestures and/or monetization of certain intangible assets.



Effective August 1, 2013, the Company
renegotiated its long-term debt and received an additional two year deferral of principal repayments. Under the renegotiated terms,
the loan continues to be interest only with principal repayments now beginning on August 1, 2015 and the loan matures on July
1, 2018.



On July 3, 2014, the Company acquired
a minority interest in Apicore along with an option to acquire all of the remaining issued shares of Apicore within the next three
years at a predetermined price. The business and operations of Apicore are distinct from the Company, and the Company’s
primary operating focus remains on the sale and marketing of AGGRASTAT®. The Company intends to seek opportunities to increase
the value of its minority position in Apicore, and believes that the potential realization of value through the exercise of its
option to acquire all of the remaining issued shares of Apicore could benefit the Company’s shareholders. As such, a modest
amount of the Company’s energies and resources are being directed towards assisting and assessing Apicore’s ongoing
operations.



Recent Developments



| | · | Acquisition
                                         of Minority Interest in Pharmaceutical Manufacturer, Apicore
| | - | -----------------------------------------------------------------------------------------------------------------



On July 3, 2014, the Company
and its newly formed and wholly owned subsidiary, Medicure U.S.A. Inc. ("Medicure USA"), entered into an arrangement
whereby they have acquired a minority interest in a pharmaceutical manufacturing business known as Apicore, along with an option
to acquire all of the remaining issued shares within the next three years. Specifically, Medicure and Medicure USA have acquired
a 6.09% equity interest (5.33% on a fully-diluted basis) in two newly formed holding companies of which Apicore LLC and Apicore
US LLC will be wholly owned operating subsidiaries. The Company's equity interest and certain other rights, including the option
rights were obtained by the Company for services provided in its lead role in structuring a US$22.5 million majority interest
purchase and financing of Apicore. There was no cash outflow in connection with the acquisition of the minority interest in Apicore.



| | · | Grant
                                         of Stock Options
| | - | ---------------------------------------------------------------



On July 7, 2014 the Company
granted an aggregate of 332,300 options to certain directors, officers, employees, management company employees and consultants
of the Company. Of these options, 92,300 are set to expire on the tenth anniversary of the date of grant, and 240,000 are set
to expire on the fifth anniversary of the date of grant. All 332,300 options were issued at an exercise price of $1.90 per share.



| | · | Shares
                                         for Debt Settlement
| | - | -------------------------------------------------------------------



On
July 11, 2014, the Company announced that, subject to all necessary regulatory approvals,
it has entered into shares for debt agreements with its Chief Executive Officer, Dr. Albert Friesen and certain members of the
Board of Directors, pursuant to which the Company will issue 205,867 of its common shares at a deemed price of $1.98 per common
share to satisfy $407,617 of outstanding amounts owing to CEO and members of the Company’s Board of Directors. The shares
were issued subsequent to December 31, 2014 on January 9, 2015.



28







| | · | Up-date
                                         on TARDOXALTMand TEND-TD Study
| | - | -------------------------------------------------------------------------------



On August
13, 2014, the Company announced that the preliminary results of its Phase IIa Clinical Trial,
TARDOXALlTM for the Treatment of Tardive Dyskinesia (TEND-TD) showed
a non-statistically significant improvement in the primary efficacy endpoint in patients treated with TARDOXALTM.
The Company views these preliminary results as supportive of continuing the program and developing a modified formulation as a
prelude to a larger, confirmatory Phase II study.



| | · | Change
                                         in Fiscal Year End
| | - | ------------------------------------------------------------------



On December 18, 2014, the Company
announcedthat the Board of Directors had approved a change in the Company's fiscal year
end to December 31. The change will result in a stub period from June 1, 2014, to December 31, 2014, and as a result of the change,
the first full fiscal year will end on December 31, 2015. This change in year end from May 31 to December 31 is being made by
the Company to better align the Company’s financial reporting calendar with its industry peers and with most other companies
trading on the TSX.V.



| | · | Shares
                                         for Debt Settlement
| | - | -------------------------------------------------------------------



Subsequent
to December 31, 2014, on January 27, 2015, the Company announced that, subject to all necessary
regulatory approvals, it has entered into shares for debt agreements with certain members of the Board of Directors and a consultant,
pursuant to which the Company will issue 108,206 of its common shares at a deemed price of $1.44 per common share to satisfy $155,817
of outstanding amounts owing to these individuals. The shares were issued subsequent to December 31, 2014 on March 20, 2015.



| | · | Issuance
                                         of Stock Options
| | - | ------------------------------------------------------------------



Subsequent to December 31,
2014, on March 27, 2015, the Companygranted an aggregate of 236,070 options to certain directors, officers, employees, management
company employees and consultants of the Company pursuant to the Company's Stock Option Plan. Of these options, 181,070 are set
to expire on the tenth anniversary of the date of grant, 5,000 are set to expire on the third anniversary of the date of grant
and 50,000 are set to expire on the first anniversary of the date of grant. All of the options were issued at an exercise price
of $1.90 per share.



Commercial:



In fiscal 2007, the Company’s subsidiary,
Medicure International, Inc., acquired the U.S. rights to its first commercial product, AGGRASTAT®, in the United States and
its territories (Puerto Rico, Virgin Islands, and Guam). AGGRASTAT®, a glycoprotein GP IIb/IIIa receptor antagonist, is used
for the treatment of acute coronary syndrome (ACS), including unstable angina (chest pain) (UA), which is characterized by chest
pain when one is at rest, and non-Q-wave myocardial infarction (MI). AGGRASTAT® is indicated to reduce the rate of thrombotic
cardiovascular events (combined endpoint of death, myocardial infarction, or refractory ischemia/repeat cardiac procedure) in
patients with non-ST elevation acute coronary syndrome (NSTE-ACS). Under a contract with Medicure International, Inc., the Company’s
subsidiary, Medicure Pharma, Inc., continues to support, market and distribute the product. Through a services agreement with
Medicure Inc., work related to AGGRASTAT® is primarily conducted by staff based in Winnipeg, Canada, with support from a small
number of third party contractors.



Net revenue from the sale of finished
AGGRASTAT® products for the seven months ended December 31, 2014 increased by 143% over the net revenue for the seven months
ended December 31, 2013. All of the Company’s sales are denominated in U.S. dollars. Hospital demand for AGGRASTAT®
increased significantly compared to the comparable period in the priior year. The increase in revenue is primarily attributable
to an increase in the number of new hospital customers using AGGRASTAT®. The number of new customers reviewing and implementing
AGGRASTAT® has increased sharply as a result of FDA approval of the new dosing regimen for AGGRASTAT® as announced on
October 11, 2013.  Additionally, favourable fluctuations in the U.S. dollar exchange rate contributed to the increase in
revenue.



29







Going forward and contingent on sufficient
finances being available, the Company intends to further expand revenue through strategic investments related to AGGRASTAT®
and the acquisition of other niche products that fit the commercial organization.



Research and Development:



The Company’s research and development
activities are predominantly conducted by its subsidiary, Medicure International, Inc.



The primary ongoing research and development
activity is the development and further implementation of a new regulatory, brand and life cycle management strategy for AGGRASTAT®.
The extent to which the Company is able to invest in this plan is dependent upon the availability of sufficient finances.



An important aspect of the AGGRASTAT®
strategy is the revision of its approved prescribing information. On October 11, 2013, the Company announced that the United States
Food and Drug Administration (FDA) has approved the AGGRASTAT® (tirofiban HCl) high-dose bolus (HDB) regimen, as requested
under Medicure's supplemental New Drug Application (sNDA). The AGGRASTAT® HDB regimen (25 mcg/kg over 3 minutes, followed
by 0.15 mcg/kg/min) now becomes the recommended dosing for the reduction of thrombotic cardiovascular events in patients with
non-ST elevated acute coronary syndrome (NSTE-ACS).



The Company believes that further expanded
indications and dosing regimens may put the Company in a better position to further maximize the revenue potential for AGGRASTAT®.
The Company is currently exploring the potential to make such changes, and the Company may need to conduct appropriate clinical
trials, obtain positive results from those trials, or otherwise provide support in order to obtain regulatory approval for such
proposed indications and dosing regimens.



Another aspect of the AGGRASTAT® strategy
is to advance studies related to the contemporary use and future regulatory positioning of the product. On May 10, 2012 the Company
announced the commencement of enrollment in a new clinical trial of AGGRASTAT® entitled “Shortened AGGRASTAT® Versus
Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI).
SAVI-PCI is a randomized, open-label study enrolling patients undergoing percutaneous coronary intervention (PCI) at sites across
the United States.  In June 2013, the target number of patients to be enrolled in the study was increased from 600 to 675.
The study is designed to evaluate whether patients receiving the investigational, High-Dose Bolus (HDB) regimen of AGGRASTAT®
(25 mcg/kg bolus over 3 minutes) followed by an infusion of 0.15 mcg/kg/min for either a shortened duration of 1 to 2 hours or
a lengthened infusion of 12 to 18 hours will have outcomes that are similar, or “non-inferior,” to patients receiving
a 12 to 18 hour infusion of Integrilin® (eptifibatide) (Merck & Co., Inc.) at its FDA approved dosing regimen.  The
study arm investigating AGGRASTAT® HDB followed by a 12 to 18 hour infusion was added subsequent to enrollment commencing.



The primary objective of SAVI-PCI is to
demonstrate AGGRASTAT® is non-inferior to Integrilin with respect to the composite endpoint of death, PCI-related myocardial
infarction, urgent target vessel revascularization, or major bleeding within 48 hours following PCI or hospital discharge. 
The secondary objectives of this study include the assessment of safety as measured by the incidence of major bleeding.



The first patient was enrolled in
June 2012. As of April 10, 2015 the study was approximately two-thirds (67%) through to completion of enrollment. The
Principal Investigator for the study is Steven V. Manoukian, MD (Nashville, TN).  The AGGRASTAT® dosing regimen and
the treatment setting studied in the SAVI-PCI study have not been approved by the FDA.



Both AGGRASTAT® and Integrilin are
reversible, small molecule GP IIb/IIIa inhibitors that have been shown in clinical trials to reduce the combined incidence of
death and myocardial infarction in patients with unstable angina (chest pain) (UA) or non-ST elevation myocardial infarction (NSTEMI)
undergoing cardiac catheterization when compared to heparin. These agents work by preventing the ability of platelets to aggregate
together. These platelet aggregates (commonly referred to as blood clots) can result in a partial or complete blockage of the
coronary artery if left untreated.



30







Bleeding is a common adverse reaction
associated with the use of GP IIb/IIIa inhibitors due to their unique ability to prevent and disaggregate blood clots. A patient’s
risk of bleeding is an important factor when determining an optimal treatment approach and, in some cases, complicates or limits
the use of these agents. With the SAVI-PCI study, the investigators will explore whether AGGRASTAT® HDB plus a shortened infusion
can reduce the risk of bleeding while maintaining comparable ischemic protection relative to the currently approved 18 hour infusion
of Integrilin. Other studies have indicated that shortening the infusion duration of GP IIb/IIIa inhibitors can potentially lead
to a reduction in bleeding complications for patients undergoing PCI. It is important to note that bleeding complications have
been linked to increased rates of other major complications and mortality, as well as increased overall cost of care. A goal of
the SAVI-PCI study is to further optimize the safety, efficacy and efficiency of treatment used in the setting of PCI. With the
addition of a third study arm, the SAVI-PCI study will also assess whether AGGRASTAT® HDB followed by a 12 to 18 hour infusion
provides efficacy and safety that is non-inferior to either AGGRASTAT® HDB plus a shortened infusion or the currently approved
18 hour infusion of Integrilin.



Yet another aspect of the AGGRASTAT®
strategy is to explore and develop new uses and dosing approaches related to the product. On September 26, 2012, the Company announced
the development of a transdermal delivery formulation of AGGRASTAT®. The ability to administer a drug transdermally (i.e.
through the skin) provides a convenient way to deliver a stable, therapeutic level of medication to the patient. AGGRASTAT®
and other antiplatelet drugs of its class (known as glycoprotein IIb/IIIa inhibitors or GPIs) are currently only administered
by intravenous infusion. In vivo proof of principle for the transdermal delivery of therapeutic levels of AGGRASTAT®'s active
ingredient, tirofiban, was recently established in animal studies conducted in collaboration with 4P Therapeutics, Inc. (Alpharetta,
GA). 4P Therapeutics, a world leader in the research and development of novel transdermal products, has entered into an agreement
with the Company's subsidiary, Medicure International, Inc., to further develop transdermal tirofiban. The delivery of tirofiban
by a novel, transdermal method has potential to provide significant advantages over the current treatments used in this setting,
including the potential for increased use prior to hospitalization.



The transdermal tirofiban development
program is now focusing on refining the delivery approach in preparation for initial human studies. Medicure International, Inc.
holds worldwide rights to transdermal tirofiban. Limitations in the amount of available resources have caused the Company to slow
the advancement of the transdermal tirofiban development program in an effort to conserve resources and focus on other areas of
investment.



The Company is also continuing to explore
other experimental uses and dosing approaches related to AGGRASTAT®.



Through a modest but ongoing research
and development investment, the Company is also exploring other new product opportunities.



Although other
new product opportunities exist, the Company’s primary, non-AGGRASTAT®research and development activity
is TARDOXALTMfor the treatment of Tardive Dyskinesia (“TD”). This program
evolved from the Company’s extensive clinical experience with MC-1, a naturally occurring small molecule, for cardiovascular
conditions. The Company has completed the first phase of enrolment in a Phase II clinical study of TARDOXALTM,
entitledTARDOXALTM for the Treatment of Tardive Dyskinesia (TEND-TD). On August 13, 2014 the Company announced
that the preliminary results of its Phase IIa Clinical Trial, TARDOXALlTM for
the Treatment of Tardive Dyskinesia (TEND-TD) showed a non-statistically significant improvement in the primary efficacy endpoint
in patients treated with TARDOXALTM. Medicure views these preliminary results as
supportive of continuing the program and developing a modified formulation as a prelude to a larger, confirmatory Phase II study.



31







The following table summarizes the Company’s
research and development programs, their therapeutic focus and their stage of development.



|Product Candidate      |  | Therapeutic focus           |  | Stage of Development                                          
|---------------------- |  | --------------------------- |  | --------------------------------------------------------------
|                       |  |                             |  |                                                               
|AGGRASTAT®®            |  | Acute Cardiology            |  | Approved – Additional studies underway                        
|                       |  |                             |  |                                                               
|TARDOXALTM             |  | TD/Neurological indications |  | Phase IIa – enrollment complete, preliminary analysis complete
|                       |  |                             |  |                                                               
|Transdermal AGGRASTAT® |  | Acute Cardiology            |  | Preclinical– formulation development underway                 



The Company intends to further develop
TARDOXALTM, either independently or through a license or development partnership agreement with a larger pharmaceutical
company. Such a partnership may provide funding and other resources for further clinical trials and commercialization. No such
formal agreement, or letter of intent, has been entered into by the Company as of the date hereof.



The Company has
evaluated and continues to evaluate the acquisition or license of other approved commercial products with the objective of further
broadening its product portfolio and generating additional revenue. No binding term sheet or formal agreement has been entered
into by the Company as of the date hereof.



Potential New Products in Development Stage



Transdermal AGGRASTAT®:The
Company has invested a modest amount of capital on the development of a new, transdermal formulation of AGGRASTAT®. On
September 26, 2012, the Company announced the development of a transdermal delivery formulation of AGGRASTAT®. The ability
to administer a drug transdermally (i.e. through the skin) provides a convenient way to deliver a stable, therapeutic level of
medication to the patient. AGGRASTAT® and other antiplatelet drugs of its class (known as glycoprotein IIb/IIIa inhibitors
or GPIs) are currently only administered by intravenous infusion. In vivo proof of principle for the transdermal delivery of therapeutic
levels of AGGRASTAT®'s active ingredient, tirofiban, was recently established in animal studies conducted in collaboration
with 4P Therapeutics, Inc. (Alpharetta, GA). 4P Therapeutics, a world leader in the research and development of novel transdermal
products, has entered into an agreement with the Company's subsidiary, Medicure International, Inc., to further develop transdermal
tirofiban. The delivery of tirofiban by a novel, transdermal method has potential to provide significant advantages over the current
treatments used in this setting, including the potential for increased use prior to hospitalization.



The transdermal
tirofiban development program is now focusing on refining the delivery approach in preparation for initial human studies. Medicure
International, Inc. holds worldwide rights to transdermal tirofiban. Limitations in the amount
of available resources have caused the Company to slow the advancement of the transdermal tirofiban development program in an
effort to conserve resources and focus on other areas of investment.



The Company is also exploring other experimental
uses and dosing approaches related to AGGRASTAT®. This work may lead to other new product formats and formulations of AGGRASTAT®,
any of which would require substantial additional research and development investment by the Company.



TARDOXALTM: One
of the Company’s ongoing investments is the clinical development and commercialization of its lead research product, TARDOXALTM(pyridoxal 5-phosphate) for TD. TD is a serious movement disorder which results from long-term treatment with antipsychotic
medications. At present there is no treatment available for TD in the US. TARDOXALTM’s potential for treatment
of TD is supported by its biological mechanism of action and by preliminary clinical studies which indicated efficacy of a related
compound in treatment of TD.



32







On August 13, 2014 the Company announced
that the preliminary results of its Phase IIa Clinical Trial, TARDOXALTM for
the Treatment of Tardive Dyskinesia (TEND-TD) showed a non-statistically significant improvement in the primary efficacy endpoint
in patients treated with TARDOXALTM. Medicure views these preliminary results as
supportive of continuing the program and developing a modified formulation as a prelude to a larger, confirmatory Phase II study.



TEND-TD was
planned as a 140 patient Phase II clinical trial to evaluate the efficacy and safety of TARDOXALTMfor the treatment of Tardive Dyskinesia (TD), with a pre-planned interim analysis after approximately 40 patients were enrolled.
The primary efficacy endpoint for the study was a decrease in involuntary movements as measured by the Abnormal Involuntary Movement
Scale (AIMS), a standardized test used to detect and monitor TD and other movement disorders. The results from all 37 patients
(17 randomized to TARDOXALTMand 20 to matching placebo) who completed the 12 week
treatment period showed a trend to greater improvement in AIMS score from baseline to completion of study in the TARDOXALTMgroup versus placebo. The study was not adequately powered to assess efficacy and the improvement
noted was not statistically significant. No significant differences between the study groups were seen in safety endpoints, however,
there was a trend to increased nausea reported in the treatment group. This side effect was anticipated and has been seen in the
Company’s previous clinical studies with the product. As it was not feasible to complete an adequately powered study prior
to expiry of the product and due to the Company’s limited financial resources at that time, enrollment was stopped after
attainment of the target number for the pre-planned interim analysis.



The Company
plans to maintain a modest investment in the research and development of TARDOXALTMover the next several months and is currently exploring modified formulations to reduce nausea that may be associated with use
of the product. A larger, confirmatory Phase II study will be required to evaluate and confirm the safety and efficacy of TARDOXALTMin treatment of TD.TARDOXALTM is an experimental drug and has not been approved
for commercial use by regulatory bodies such as the U.S. Food and Drug Administration (FDA) or Health Canada.



TARDOXALTMcontinues to have Fast Track designation from the FDA for the treatment of moderate to severe
TD. Fast Track designation is designed to facilitate the development and expedite the review
of new drugs that are intended to treat serious or life-threatening conditions and that demonstrate the potential
to address unmet medical needs.



Other Products:Through a modest but ongoing research and development investment, the Company is also exploring other new product development
opportunities. The Company is also exploring opportunities to grow the business through acquisition. The Company has evaluated
and continues to evaluate the acquisition or license of other approved commercial products with the objective of further broadening
its product portfolio and generating additional revenue. No binding term sheet or formal agreement has been entered into by the
Company as of the date hereof.



As at December 31, 2014, the Company had
numerous issued United States patents (see Item 5 – Operating and Financial Review and Prospects – C. Research and
Development, Patents and Licenses, Etc. below).



Competitors’ Current Products



The Company’s only commercial product
AGGRASTAT®, is owned by the Company’s subsidiary, Medicure International, Inc., and is sold in the United States of
America through the Company’s subsidiary, Medicure Pharma, Inc. AGGRASTAT® is indicated to reduce the rate of thrombotic
cardiovascular events (combined endpoint of death, myocardial infarction, or refractory ischemia/repeat cardiac procedure) in
patients with non-ST elevation acute coronary syndrome (NSTE-ACS).



33







AGGRASTAT®
competes in a market segment commonly referred to as the anti-thrombotic market (treatments to remove or prevent formation of
blood clots). More specifically, AGGRASTAT® is an antiplatelet drug which affects thrombus (blood clot) formation by preventing
the aggregation of platelets in the blood stream. Of the different classes of antiplatelet drugs, AGGRASTAT®is
a representative of the glycoprotein IIB/IIIA inhibitors drug class. There are three of these agents approved for use, including
abciximab(ReoPro®),eptifibatide(Integrilin®),
and tirofiban (AGGRASTAT®). All three are proprietary drugs that do not have generic equivalents, however generic eptifibatide
is expected to be introduced in June or July 2015. Of the two directly competing agents, AGGRASTAT® is most closely comparable
to eptifibatide (Integrilin)as they are both highly potent, small molecule drugs that have reversible antiplatelet
effects.



Competitors’ Products in Development



At present the Company is not aware of
any other glycoprotein IIb/IIIa inhibitors in mid to late stage clinical development. However, the choice and use of AGGRASTAT®
may be affected by the continued advancement of new antithrombotic and antiplatelet agents, including the recently approved oral
antiplatelet agents, ticagrelor (Brilinta®) and prasugrel (Effient®). The potential launch of the
injectable antiplatelet agent, cangrelor, by The Medicines Company, in 2015 would be expected to have some impact on the use and
sale of glycoprotein IIb/IIIa inhibitors, including AGGRASTAT®. The potential launch of generic versions of eptifibatide (Integrilin)
in 2015 may impact the utilization of AGGRASTAT®.Any future launch of generic version of AGGRASTAT® nd/or
of other competitive drugs may also be expected to impact utilization of the Company’s drug. Many companies, including large
pharmaceutical and biotechnology companies, are conducting development of products that are intended to address the same or a
similar medical need. Many of these companies have much larger financial and other resources than the Company does, including
those related to research and development, manufacturing, and sales and marketing. The Company also faces competition in recruiting
scientific personnel from colleges, universities, agencies, and research organizations who seek patent protection and licensing
agreements for the technologies they develop.



Competitive Strategy and Position



The Company is primarily focusing on:



| | · | Maintaining
                                         and growing AGGRASTAT® sales in the United States.
| | - | -------------------------------------------------------------------------------------------------------



The
Company is working to expand sales of AGGRASTAT® in the United States. The present market for GP IIb/IIIa inhibitors, of which
AGGRASTAT® is one of three agents, is approximately $280 million per year (2014). The use of AGGRASTAT® is recommended
by the AHA and ACC Guidelines for the treatment of ACS. AGGRASTAT® has been shown, to reduce the rate of thrombotic cardiovascular
events (combined endpoint of death, myocardial infarction, or refractory ischemia/repeat cardiac procedure) in patients with non-ST
elevation acute coronary syndrome (NSTE-ACS).



| | · | The
                                         development and implementation of a new regulatory, brand and clinical strategy for AGGRASTAT®.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



As
stated previously, the Company’s primary ongoing Research and Development activity is the development and further implementation
of a new regulatory, brand and life cycle management strategy for AGGRASTAT®.



An
important aspect of the AGGRASTAT® strategy is the revision of its approved prescribing information. On October 11, 2013,
the Company announced that the FDA has approved the AGGRASTAT® (tirofiban HCl) high-dose bolus (HDB) regimen, as requested
under Medicure's supplemental New Drug Application (sNDA). The AGGRASTAT® HDB regimen (25 mcg/kg over 3 minutes, followed
by 0.15 mcg/kg/min) now becomes the recommended dosing for the reduction of thrombotic cardiovascular events in patients with
non-ST elevated acute coronary syndrome (NSTE-ACS).



34







The
Company believes that further expanded indications and dosing regimens may put the Company in a better position to further maximize
the revenue potential for AGGRASTAT®. The Company is currently exploring the potential to make such changes, and the Company
may need to conduct appropriate clinical trials, obtain positive results from those trials, or otherwise provide support in order
to obtain regulatory approval for such proposed indications and dosing regimens.



The
recently initiated SAVI-PCI trial is intended to generate additional clinical data related to use of AGGRASTAT® which may
in the future help support future investments in the Product. The SAVI-PCI study is not expected nor intended to support further
changes to AGGRASTAT®’s prescribing information.



While
the Company believes that it will be able to implement a relatively low cost clinical, product and regulatory strategy, the Company’s
limited financial resources may limit the Company’s ability to fully realize the Product’s revenue potential. The
Company is working to advance this program with the modest capital investment that it can make from its available cash resources.



| | · | The
                                         development of a transdermal formulation of AGGRASTAT®.
| | - | ----------------------------------------------------------------------------------------------------



The
Company is investing a modest amount of capital on the development of a new, transdermal formulation of AGGRASTAT®. On September
26, 2012, the Company announced the development of a transdermal delivery formulation of AGGRASTAT®. The ability to administer
a drug transdermally (i.e. through the skin) provides a convenient way to deliver a stable, therapeutic level of medication to
the patient.



The
delivery of tirofiban by a novel, transdermal method has potential to provide significant advantages over the current treatments
used in this setting, including the potential for increased use prior to hospitalization.



The
transdermal tirofiban development program is now focusing on refining the delivery approach in preparation for initial human studies.
Medicure International, Inc. holds worldwide rights to transdermal tirofiban. Limitations in the amount of available resources
have caused the Company to slow the advancement of the transdermal tirofiban development program in an effort to conserve resources
and focus on other investments.



| | · | The
                                         development of TARDOXALTM for Tardive Dyskinesia and other neurological indications.
| | - | ---------------------------------------------------------------------------------------------------------------------------------



The
Company is focusing initially on these markets because of preclinical and clinical evidence supporting the product’s safety
and potential efficacy in these applications.



It
is the Company’s intention to develop TARDOXALTMindependently and/or
in conjunction with a larger pharmaceutical company for commercialization of TARDOXALTM.
Similar partnerships may be required forother products that the Company may from time to time seek to develop. Such a partnership
would provide funding for clinical development, add experience to the product development process and provide market positioning
expertise. No formal agreement or letter of intent for such a commercial partnership has been entered into by the Company as of
the date hereof.



| | · | Generating
                                         material value for the Company from the minority ownership position in Apicore and, potentially,
                                         from the Company’s option to acquire additional shares of Apicore
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On
July 3, 2014, the Company acquired a minority interest in Apicore along with an option to acquire all of the remaining issued
shares of Apicore within the next three years at a predetermined price. The business and operations of Apicore are distinct from
the Company, and the Company’s primary operating focus remains on the sale and marketing of AGGRASTAT®. The Company
intends to seek opportunities to increase the value of its minority position in Apicore, and believes that the potential realization
of value through the exercise of its option to acquire all of the remaining issued shares of Apicore could benefit the Company’s
shareholders. As such,a modest amountof the Company’s energies and resources are
being directed towards assisting and assessing Apicore’s ongoing operations.



35







C. Organizational
Structure



Medicure International, Inc., a wholly
owned subsidiary of the Company, was incorporated pursuant to the laws of Barbados, West Indies, on May 23, 2000. Medicure International,
Inc.’s registered office is located at Whitepark House, White Park Road, Bridgetown, Barbados. Medicure International Inc.’s
head office is located at 2nd Street, Holetown, St. James, Barbados.



Medicure Pharma, Inc., a wholly owned
subsidiary of the Company, was incorporated pursuant to the laws of the State of Delaware, United States of America, on September
30, 2005. Medicure Pharma Inc.’s registered office is 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808. Subsequent
to May 31, 2014, Medicure Pharma, Inc.’s head office was moved from 500 Atrium Drive, Somerset, NJ, 08873 to 49 Napoleon
Court, Suite 2, Somerset, NJ, 08873.



Medicure U.S.A., Inc., a wholly owned
subsidiary of the Company, was incorporated pursuant to the laws of the State of Delaware, United States of America, on June 23,
2014. Medicure U.S.A. Inc.’s registered office is 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808.



American Cardio Therapeutics Inc., a Company
that is 49% owned by Medicure Pharma Inc., was incorporated pursuant to the laws of the State of Delaware, United States of America,
on September 30, 2005. American Cardio Therapeutics Inc.’s registered office is 2711 Centerville Road, Suite 400, Wilmington,
Delaware, 19808. As at May 31, 2014, American Cardio Therapeutics Inc. had no activity and it is the Company’s intention
that American Cardio Therapeutics Inc. will be wound up.



D. Property, Plant and Equipment



Office Space



Included within the business and administration
services agreemententered into with Genesys Venture Inc. (see Item 5F - Contractual Obligations), is the use of office
space at Genesys Venture Inc.’s head office located at 1250 Waverley Street in Winnipeg, Manitoba, Canada. As at December
31, 2014, the Company had use of 11 offices.



ITEM 4A. UNRESOLVED STAFF COMMENTS



Not applicable



ITEM 5. OPERATING AND FINANCIAL
REVIEW AND PROSPECTS



This section contains forward-looking
statements involving risks and uncertainties. The Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set forth under part Item 3D - Risk Factors. The following
discussion of the financial condition, changes in financial conditions and results of operations of the Company for the years
ended May 31, 2014 and May 31, 2013 should be read in conjunction with the consolidated financial statements of the Company. The
Company’s consolidated financial statements are presented in Canadian dollars and have been prepared in accordance with
IFRS included under Item 18 to this Annual Report.



36







Critical Accounting Policies and Estimates



Going concern



The Company’s consolidated financial
statements have been prepared on a going concern basis in accordance with IFRS. The going concern basis of presentation assumes
that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities
and commitments in the normal course of business. There is substantial doubt about the appropriateness of the use of the going
concern assumption because the Company has accumulated a deficit of $126,615,856 as at December 31, 2014 and, until the seven
months ended December 31, 2014, had experienced operating losses since incorporation. Additionally, the Company has a working
capital deficiency of $503,401. The Company’s future operations are dependent upon its ability to maintain growth in sales
of AGGRASTAT®, to develop and/or acquire new products, and/or secure additional capital, which may not be available
under favourable terms or at all, and/or renegotiate the terms of its contractual commitments. If the Company is unable to maintain
growth in sales, develop and/or acquire new products, raise additional capital or renegotiate the terms of its contractual commitments,
management intends to consider other strategies including further cost curtailments, delays of research and development activities,
asset divestures and/or monetization of certain intangible assets. Effective August 1, 2013, the Company renegotiated its long-term
debt and received an additional two-year deferral of principal repayments. Under the renegotiated terms, the loan continues to
be interest only with principal repayments now beginning on August 1, 2015 and the loan maturing on July 1, 2018.



The ability of the Company to continue
as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on many
factors, including, but not limited to, the actions taken or planned, some of which are described above, which are intended to
mitigate the adverse conditions and events that raise doubt about the validity of the going concern assumption used in preparing
these consolidated financial statements. There is no certainty that the Company’s working capital and net cash flows will
be sufficient through fiscal 2015 or that the above described and other strategies will be sufficient to permit the Company to
continue as a going concern.



The consolidated financial statements
do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern
basis was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value
of assets and liabilities, the reported revenue and expenses, and the consolidated statement of financial position classifications
used.



Estimates



The Company’s consolidated financial
statements are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB). IFRS requires management to make estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.



Estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



Areas where management has made critical
judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized in
the consolidated financial statements include the determination of the Company and its subsidiaries, functional currency and the
determination of the Company's cash generating units ("CGU") for the purposes of impairment testing.



Information about key assumptions and
estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and
liabilities within the next financial year are included in the notes the financial statements. Areas of significant estimates
include; valuation of the royalty obligation, valuation of the warrant liability, valuation of the other long-term liability,
provisions for returns, chargebacks and discounts, the estimation of accruals for research and development costs, the measurement
and period of useful life of intangible assets, valuation of investment in Apicore, valuation of long-term derivative, the assumptions
and model used to estimate the value of share-based payment transactions and the measurement of the amount and assessment of the
recoverability of income tax assets.



37







Valuation of the royalty obligation,
warrant liability and other long-term liability



The Company has the following non-derivative
financial liabilities which are classified as other financial liabilities: accounts payable and accrued liabilities, accrued interest
on long-term debt and long-term debt.



All other financial liabilities are recognized
initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. Such financial
liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
these financial liabilities are measured at amortized cost using the effective interest method. Costs incurred to obtain financing
are deferred and amortized over the term of the associated debt using the effective interest method. Amortization is a non-cash
charge to interest expense.



The Company derecognizes a financial liability
when its contractual obligations are discharged or cancelled or expire.



The royalty obligation is recorded at
its fair value at the date at which the liability was incurred and subsequently revalued using the effective interest method at
each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation model which
is dependent on its underlying terms and conditions. This estimate also requires determining expected revenue from AGGRASTAT®
sales and an appropriate discount rate and making assumptions about them.



The other long-term liability is recorded
at its fair value at the date at which the liability was incurred and subsequently revalued using the effective interest method
at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation model which
is dependent on its underlying terms and conditions. This estimate also requires determining the time frame when certain sales
targets are expected to be met and an appropriate discount rate and making assumptions about them.



Warrants with an exercise price denominated
in a foreign currency are recorded as a warrant liability and classified as fair value through profit and loss. The warrant liability
is included within accounts payable and accrued liabilities and the change in the fair value of the warrants is recorded as a
gain or loss in the consolidated statement of net (loss) income and comprehensive (loss) income within finance expense. These
warrants have not been listed on an exchange and therefore do not trade on an active market.



The warrant liability is recorded at the
fair value of the warrants at the date at which they were granted and subsequently revalued at each reporting date. Estimating
fair value for these warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions
of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected
life of the warrants, volatility and dividend yield and making assumptions about them.



The accounting guidance for fair value
measurements prioritizes the inputs used in measuring fair value into the following hierarchy:



Level 1 – Quoted prices
(unadjusted) in active markets for identical assets or liabilities;



Level 2 – Inputs other
than quoted prices included within Level 1 that are either directly or indirectly observable; and



Level 3 - Unobservable inputs
in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions
that market participants would use in pricing.



The fair value of the warrant liability
is based on level 2 (significant observable inputs) and the fair value of the royalty obligation and other long-term liability
are based on level 3 (unobservable inputs).



38







Provision for returns and discounts



Revenue from the sale of goods, comprising
finished and unfinished products, in the course of ordinary activities is measured at the fair value of the consideration received
or receivable, net of estimated returns, chargebacks, trade discounts and volume rebates. Revenue is recognized when persuasive
evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have
been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can
be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured
reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized
as a reduction of revenue as the sales are recognized.



Net sales reflect a reduction of gross
sales at the time of initial sales recognition for estimated wholesaler chargebacks, discounts, allowances for product returns,
and other rebates (product sales allowances). Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT®
may result in sales of AGGRASTAT® to wholesalers that do not track directly with demand for the product at hospitals. In determining
the amounts for these allowances and accruals, the Company uses estimates. Through reports provided by the Company’s wholesalers
and other third party external information, management estimates customer and wholesaler inventory levels, sales trends and hospital
demand. Management uses this information along with such factors as: historical experience and average contractual chargeback
rates to estimate product sales allowances. Third-party data is subject to inherent limitations of estimates due to the reliance
on information from external sources, as this information may itself rely on certain estimates.



Estimation of accruals for research
and development costs



Expenditure on research activities, undertaken
with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.



Development activities involve a plan
or design for the production of new or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the
asset. No development costs have been capitalized to date.



Research and development expenses include
all direct and indirect operating expenses supporting the products in development.



Clinical trial expenses are a component
of the Company’s research and development costs. These expenses include fees paid to contract research organizations, clinical
sites, and other organizations who conduct development activities on the Company’s behalf. The amount of clinical trial
expenses recognized in a period related to clinical agreements are based on estimates of the work performed using an accrual basis
of accounting. These estimates incorporate factors such as patient enrolment, services provided, contractual terms, and prior
experience with similar contracts.



Measurement and period of use of intangible
assets



Intangible assets that are acquired separately
and have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Subsequent
expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates.
All other expenditures are recognized in profit or loss as incurred.



39







Costs incurred in obtaining a patent are
capitalized and amortized on a straight-line basis over the legal life of the respective patent, ranging from five to twenty years,
or its economic life, if shorter. Costs incurred in obtaining a trademark are capitalized and amortized on a straight-line basis
over the legal life of the respective trademark, being ten years, or its economic life, if shorter. Costs incurred in obtaining
a customer list are capitalized and amortized on a straight-line basis over approximately ten years, or its economic life, if
shorter.



Costs incurred in successfully obtaining
a patent, trademark or customer list are measured at cost less accumulated amortization and accumulated impairment losses. The
cost of servicing the Company's patents and trademarks are expensed as incurred.



Subsequent expenditure is capitalized
only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures
are recognized in profit or loss as incurred.



The Company assesses at each reporting
period whether there is an indication that a non-financial asset may be impaired. An impairment loss is recognized when the carrying
amount of an asset, or its CGU, exceeds its recoverable amount. Impairment losses are recognized in net (loss) income and comprehensive
(loss) income and included in research and development expense if they relate to patents. A CGU is the smallest identifiable group
of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
The recoverable amount is the greater of the asset's or CGU's fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less cost
to sell, an appropriate valuation model is used. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the CGU to which the asset belongs.



Impairment losses recognized in prior
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of
amortization, if no impairment loss had been recognized.



Assumptions and model used to estimate
the value of share-based payment transactions



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



Share-based payment arrangements in which
the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based
payment transactions. In situations where equity instruments are issued and some or all of the goods or services received by the
entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment.



For share-based payment arrangements with
non-employees, the expense is taken over the service period until the options vest. Once the options vest, services are deemed
to have been received.



For the seven months ended December 31,
2014, the Company recorded $620,705 related to stock-based compensation (year ended May 31, 2014 - $295,144 (restated)).



40







Measurement of the amount and assessment
of the recoverability of income tax assets



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



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



Deferred taxes are recognized in respect
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. Deferred taxes are not recognized for the following temporary differences: the initial recognition
of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit
or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future. In addition, deferred taxes are not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realized simultaneously.



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



A. Operating Results



General



Although the Company is currently focused
on Medicure International’s sole commercial product, AGGRASTAT®, this product has not been able to generate enough revenue
for the Company to reach sustained profitability.



Historically, the Company concentrated
primarily on research and development and continues to invest a significant amount of funds in research and development activities.
To date, the Company has yet to and may never derive any revenues from its research and development products.



The Company has a limited operating history
and its prospects must be considered in light of the risks, expenses and difficulties frequently encountered with the establishment
of a business in a highly competitive industry, characterized by frequent new product introductions.



Seven Months Ended December 31, 2014
Compared to the Seven Months Ended December 31, 2013



On December 18, 2014, the Company announced
that the Board of Directors had approved a change in the Company's fiscal year end to December
31. The change will result in a stub period from June 1, 2014, to December 31, 2014, and as a result of the change, the first
full fiscal year will end on December 31, 2015. This change in year end from May 31 to December 31 is being made by the Company
to better align the Company’s financial reporting calendar with its industry peers and with most other companies trading
on the TSX.V. As a result of this change in year end, it is important to note that the comparable period, being the seven months
ended December 31, 2014 is unaudited.



41







Net product sales for seven months ended
December 31, 2014 were $5,264,000, compared to $2,165,000 in the comparable period in 2013. The Company currently sells finished
AGGRASTAT® to drug wholesalers. These wholesalers subsequently sell AGGRASTAT®to the hospitals where health
care providers administer the drug to patients. Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT®
may result in sales of AGGRASTAT®to wholesalers that do not track directly with demand for the product at hospitals.
All of the Company’s sales are denominated in US dollars.



Net revenue from the sale of finished
AGGRASTAT® products for the seven months ended December 31, 2014 increased by 143% over the net revenue for the seven months
ended December 31, 2013. Hospital demand for AGGRASTAT® increased significantly compared to the comparable period in the prior
year. The increase in revenue is primarily attributable to an increase in the number of new hospital customers using AGGRASTAT®.
The number of new customers reviewing and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the
new dosing regimen for AGGRASTAT® as announced on October 11, 2013.  Additionally, favourable fluctuations in the U.S.
dollar exchange rate contributed to the increase in revenue.



Cost of goods sold represents direct product
costs associated with AGGRASTAT®including and write-downs for obsolete inventory and amortization of the related
acquired AGGRASTAT®intangible assets.



Cost of goods sold, excluding amortization,
for the seven months ended December 31, 2014 were $269,000 compared to $148,000 for the comparable period in the prior year. For
the seven months ended December 31, 2014, increases to cost of goods sold are the result of increases in net sales of AGGRASTAT®
during the period when compared to the same period in 2013.



Amortization
of AGGRASTAT® intangible assets increased for the seven months ended December 31, 2014 to $332,000, when compared to $299,000for the comparable period in the prior year.The increase is as a result of fluctuations
in foreign exchange rates causing the amortization expense to be higher during the seven months ended December 31, 2014 as the
asset is owned by a subsidiary whose functional currency is the US dollar.



Total selling, general, and administrative
expenditures for the seven months ended December 31, 2014 were $3,231,000, compared to $1,807,000 for the comparable period in
the prior year. Selling, general, and administrative expenditures related to AGGRASTAT®were $1,711,000 for the
seven months ended December 31, 2014, compared to $1,031,000 for the comparable period in the prior year. Selling, general, and
administrative expenditures – Other were $1520,000 for the seven months ended December 31, 2014, compared to $776,000 the
comparable period in the prior year. Selling, general and administrative expenses include salaries and related costs for those
employees not directly involved in research and development. The expenditures are required to support sales and marketing efforts
of AGGRASTAT®and ongoing business development and corporate stewardship activities. The balance also includes
professional fees such as legal, audit, investor and public relations.



Selling, general and administrative expenditures
– AGGRASTAT®increased during the seven months ended December 31, 2014 as compared to same period in the
prior year mainly due to:



| | · | Additional
                                         payroll costs associated with the sale of AGGRASTAT® due to additional head office
                                         employees providing support for AGGRASTAT®; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Increased
                                         travel costs associated with the sale of AGGRASTAT®.
| | - | -------------------------------------------------------------------------------------------------------



Selling, general and administrative expenditures
– Other increased during the seven months ended December 31, 2014 as compared to same period in the prior year mainly due
to:



| | · | Increased
                                         business development costs, some of which were associated with the Apicore transaction
                                         that closed on July 3, 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



42







| | · | Higher
                                         stock-based compensation expenses, which totaled $620,705 during the seven months ended
                                         December 31, 2014 as a result of stock options issued during the period, which were granted
                                         on July 7, 2014. No stock options were issued and no stock-based compensation expense
                                         was recorded during the seven months ended December 31, 2013.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net research and development expenditures
for the seven months ended December 2014 were $783,000, compared to $473,000 for the comparable period in the prior year. Research
and development expenditures include costs associated with the Company’s clinical development and preclinical programs including
salaries, research centred costs and monitoring costs. The Company expenses research costs and has not had any development costs
that meet the criteria for capitalization under IFRS. The increase in research and development expenditures, for the seven months
ended December 31, 2014 as compared to the same period in the prior year is due to increased costs from the Company’s clinical
trial of AGGRASTAT® (tirofiban HCl) entitled “Shortened AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention”
(SAVI-PCI), in addition to an increase in the Company’s transdermal research program.



Generally, included in research and development
expenses are charges related to impairment of the Company’s intangibles assets, however there were no impairments recorded
in either period. Intangible assets are reviewed for impairment on an ongoing basis whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Based on this review certain patents were deemed not significant to
the Company’s commercial and research operations and a decision was made to no longer pursue these patents and as a result
the carrying value of these patents was written off.



It is important to note that historical
patterns of impairment charges cannot be taken as an indication of future impairments. The amount and timing of impairments and
write-downs may vary substantially from period to period depending on the business and research activities being undertaken at
any one time and changes in the Company's commercial strategy.



During the seven months ended December
31, 2014, the Company recognized $1,385,000 of income pertaining to investment structuring services resulting from its acquisition
of a minority interest in a pharmaceutical manufacturing business known as Apicore. The Company’s equity interest and certain
other rights, including the option rights, were obtained by the Company for services provided in its lead role in structuring
a US$22.5 million majority purchase and financing of Apicore. There was no cash outflow in connection with the acquisition of
the minority interest in Apicore, with the exception of costs incurred by the Company in relation to the transaction which totalled
$167,672.



Finance expense for seven months ended
December 31, 2014 was $730,000, compared to $394,000 in the comparable period in the prior year. The increase in finance expense
for the seven ended December 31, 2014 as compared to the prior fiscal year is due to higher accretion on the Company’s royalty
obligation resulting from higher revenue estimates as a result of the October 2013 label change. The royalty obligation arose
out of the previous debt settlement.



The net foreign exchange loss for the
seven months ended December 31, 2014 was $28,000, compared to a net foreign exchange loss of $5,000 for the comparable period
in the prior year. The change is due to higher fluctuations in the Canadian dollar versus the US dollar experienced during the
seven months ended December 31, 2014 compared to the seven months ended December 31, 2013.



For
the seven months ended December 31, 2014, the Company recorded consolidated net income of $1,196,000 or $0.10 per share compared
to a loss of $960,000 or $0.08 per share for the seven months ended December 31, 2013. As discussed above the main factors contributing
to the increase in the net income were the income resulting from investment structuring services relating to the acquisition of
a minority interest in Apicore and the increased revenues experienced during the seven months ended December 31, 2014 when compared
to the comparable period in the prior year. These were partially offset by increases in selling, general and administration expenses
and finance expense.



43







For
the seven months ended December 31, 2014, the Company recorded total comprehensive income of $1,339,000 compared to a total comprehensive
loss of $887,000 for the seven months ended December 31, 2013. The change in comprehensive income results from the factors described
above.



The weighted average number of common
shares outstanding used to calculate basic loss per share was 12,204,827 for the seven months ended December 31, 2014 and 12,196,508
for the seven months ended December 31, 2013.



The weighted average number of common
shares outstanding used to calculate diluted loss per share was 13,843,126 for the seven months ended December 31, 2014 and 12,196,508
for the seven months ended December 31, 2013.



Year Ended May 31, 2014 Compared to
the Year Ended May 31, 2013



During the preparation of the Company’s
consolidated financial statements for the seven months ended December 31, 2014, the Company determined that the accounting for
stock-based compensation pertaining to a consulting agreement signed during the year ended May 31, 2014 was interpreted incorrectly
in accordance with IFRS 2 Share-Based Payments for the year ended May 31, 2014. As a result the May 31, 2014 information provided
has been restated to include stock-based compensation expense relating to this consulting agreement.



Net product sales for fiscal 2014 were
$5,051,000, compared to $2,603,000 in fiscal 2013. The Company currently sells finished AGGRASTAT® to drug wholesalers. These
wholesalers subsequently sell AGGRASTAT®to the hospitals where health care providers administer the drug to patients.
Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT®may result in sales of AGGRASTAT®
to wholesalers that do not track directly with demand for the product at hospitals. All of the Company’s sales are denominated
in US dollars.



Net revenue from the sale of finished
AGGRASTAT® products for the year ended May 31, 2014 increased by 94% over the net revenue for the year ended May 31, 2013.
Hospital demand for AGGRASTAT® increased significantly compared to the previous fiscal year. The increase in revenue is primarily
attributable to an increase in the number of new hospital customers using AGGRASTAT®. The number of new customers reviewing
and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the new dosing regimen for AGGRASTAT®
as announced on October 11, 2013. Additionally, favourable fluctuations in the U.S. dollar exchange rate contributed to the
increase in revenue as all sales are denominated in U.S. dollars.



Cost of goods sold represents direct product
costs associated with AGGRASTAT®including and write-downs for obsolete inventory and amortization of the related
acquired AGGRASTAT®intangible assets.



Cost of goods sold, excluding amortization,
for fiscal 2014 were $323,000 compared to $131,000 in fiscal 2013. For the year ended May 31, 2014, increases to cost of goods
sold are the result of increases in net sales of AGGRASTAT® during fiscal 2014 when compared to fiscal 2013.



Amortization
of AGGRASTAT® intangible assets increased for the year ended May 31, 2014 to $546,000, when compared to $515,000 in fiscal
2013.The increase is as a result of fluctuations in foreign exchange rates causing the amortization expense to be higher
during fiscal 2014 as the asset is owned by a subsidiary whose functional currency is the US dollar.



Total selling, general, and administrative
expenditures for fiscal 2014 were $3,625,000, compared to $2,323,000 in fiscal 2013. Selling, general, and administrative expenditures
related to AGGRASTAT®were $1,626,000 in fiscal 2014, compared to $1,331,000 in fiscal 2013. Selling, general,
and administrative expenditures – Other were $1,999,000 in fiscal 2014, compared to $992,000 in fiscal 2013. Selling, general
and administrative expenses include salaries and related costs for those employees not directly involved in research and development.
The expenditures are required to support sales and marketing efforts of AGGRASTAT®and ongoing business development
and corporate stewardship activities. The balance also includes professional fees such as legal, audit, investor and public relations.



44







Selling, general and administrative expenditures
– AGGRASTAT®increased during the year ended May 31, 2014 as compared to same period in the prior year mainly
due to:



| | · | Additional
                                         payroll costs associated with the sale of AGGRASTAT® due to additional head office
                                         employees providing support for AGGRASTAT®; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Increased
                                         travel costs associated with the sale of AGGRASTAT®.
| | - | -------------------------------------------------------------------------------------------------------



Selling, general and administrative expenditures
– Other increased during the year ended May 31, 2014 as compared to same period in the prior year mainly due to:



| | · | Increased
                                         business development costs, some of which were associated with the Apicore transaction
                                         that closed on July 3, 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Higher
                                         salaries and benefits due to $286,849 of bonuses declared to the Company’s Chief
                                         Executive Officer. The Chief Executive Officer agreed on July 11, 2014 to receive these
                                         bonuses in the form of common shares when the Company and Chief Executive Officer entered
                                         into a shares for debt agreement. To date, the shares have not been issued as the Company
                                         is in the process of obtaining the necessary regulatory approval for issuance of the
                                         shares.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Stock-based
                                         compensation of $295,144 pertaining to stock-based compensation for a consultant whom
                                         the Company signed a consulting agreement with during the year ended May 31, 2014
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net research and development expenditures
for fiscal 2014 were $689,000, compared to $1,700,000 in fiscal 2013. Research and development expenditures include costs associated
with the Company’s clinical development and preclinical programs including salaries, research centred costs and monitoring
costs. The Company expenses research costs and has not had any development costs that meet the criteria for capitalization under
IFRS. The decrease in research and development expenditures, for the year ended May 31, 2014 as compared to the same period in
fiscal 2013 is due to reduced costs from the Company’s clinical trial of AGGRASTAT® (tirofiban HCl) entitled “Shortened
AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI) as well as a renal dosing study that
was completed as a part of the Company’s sNDA filing during fiscal 2013.



Included in research and development expenses
are charges related to impairment of the Company’s intangibles assets. Impairments of intangible assets for fiscal 2014
were nil, compared to $62,000 in fiscal 2013. Intangible assets are reviewed for impairment on an ongoing basis whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. Based on this review certain patents were
deemed not significant to the Company’s commercial and research operations and a decision was made to no longer pursue these
patents and as a result the carrying value of these patents was written off.



It is important to note that historical
patterns of impairment charges cannot be taken as an indication of future impairments. The amount and timing of impairments and
write-downs may vary substantially from period to period depending on the business and research activities being undertaken at
any one time and changes in the Company's commercial strategy.



Finance expense for fiscal 2014 was $1,809,000,
compared to $466,000 in fiscal 2013. The increase in finance expense for the year ended May 31, 2014 as compared to the prior
fiscal year is due to higher accretion on the Company’s royalty obligation resulting from higher revenue estimates as a
result of the October 2013 label change. The royalty obligation arose out of the previous debt settlement.



45







The net foreign exchange gain for the
year ended May 31, 2014 was $6,000, compared to a net foreign exchange loss of $22,000 in fiscal 2013. The change is due to higher
fluctuations in the Canadian dollar versus the US dollar experienced during the year-ended May 31, 2014 compared to the year ended
May 31, 2013.



For
the year ended May 31, 2014, the Company recorded a consolidated net loss of $1,934,000 or $0.16 per share compared to $2,574,000
or $0.21 per share for the year ended May 31, 2013. As discussed above the main factors contributing to the decrease in net loss
were the increased revenues and decreased research and development expenses experienced during the year ended May 31, 2014 when
compared to the previous year. These were partially offset by increases in selling, general and administration expenses and finance
expense.



For
the year ended May 31, 2014, the Company recorded a total comprehensive loss of $1,847,000 compared to $2,609,000 for the year
ended May 31, 2013. The change in comprehensive loss results from the factors described above.



The weighted average number of common
shares outstanding used to calculate basic loss per share was 12,196,745 for the year ended May 31, 2014 and 12,196,508 for the
year ended May 31, 2013.



The weighted average number of common
shares outstanding used to calculate diluted loss per share was 12,196,745 for the year ended May 31, 2014 and 12,196,508 for
the year ended May 31, 2013.



Year Ended May 31, 2013 Compared to
the Year Ended May 31, 2012



Net product sales for fiscal 2013 were
$2,603,000, compared to $4,797,000 in fiscal 2012. The Company currently sells finished AGGRASTAT® to drug wholesalers. These
wholesalers subsequently sell AGGRASTAT®to the hospitals where health care providers administer the drug to patients.
Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT®may result in sales of AGGRASTAT®
to wholesalers that do not track directly with demand for the product at hospitals. All of the Company’s sales are denominated
in US dollars. Additionally in fiscal 2012, the Company sold unfinished product used in the manufacture of AGGRASTAT® to a
European Pharmaceutical company. There were no similar sales of unfinished product during fiscal 2013.



The decrease in revenues compared to the
previous fiscal year primarily reflects fluctuations in wholesale purchasing patterns. Although wholesale purchasing is related
to hospital demand, it is also subject to wholesaler inventory adjustments, including an observed trend to reduce wholesale inventory
levels (days-on-hand) as compared to previous years resulting in a downward adjustment to wholesale revenue. The decrease in revenue
is also attributable to increases in discounts to new customers and corresponds with an overall decline in use of injectable antiplatelet
drugs.



Hospital demand for AGGRASTAT® remained
steady compared to the previous fiscal year and compared to the same quarter for the previous year. Growth in sales attributed
to the addition of new hospitals is partially offsetting the sales decline among historical customers. Much of this decline is
attributed to the overall decline for this drug class. The number of new hospital customers has increased over the year and the
Company's commercial team continues to work on further expanding its customer base.



Net revenues from unfinished products
were $1.9 million due to a sale during the year ended May 31, 2012 of unfinished product to a European pharmaceutical company.
There were no similar sales of unfinished products during fiscal 2013.



Cost of goods sold represents direct product
costs associated with AGGRASTAT®including and write-downs for obsolete inventory and amortization of the related
acquired AGGRASTAT®intangible assets.



46







Cost of goods sold, excluding amortization,
for fiscal 2013 were $131,000 compared to $223,000 in fiscal 2012. For the year ended May 31, 2013, decreases to cost of goods
sold are the result of decreases in net sales of AGGRASTAT® and the lower write-offs of expired inventory during fiscal 2013
when compared to fiscal 2012. Additionally, during 2012 the Company sold unfinished to a European pharmaceutical company, which
increased cost of goods sold during fiscal 2012. There were no similar sales of unfinished products during fiscal 2013 and as
a result no additional cost of goods sold.



Amortization of AGGRASTAT® intangible
assets decreased for the year ended May 31, 2013 to $515,000, when compared to $846,000 in fiscal 2012.The decrease is
as a result of certain of the Company's AGGRASTAT® intangible assets becoming fully amortized during the 2012 fiscal year
resulting in decreased amortization for the year ended May 31, 2013.



Total Selling, general, and administrative
expenditures for fiscal 2013 were $2,323,000, compared to $2,674,000 in fiscal 2012. Selling, general, and administrative expenditures
related to AGGRASTAT®were $1,331,000 in fiscal 2013, compared to $1,159,000 in fiscal 2012. Selling, general,
and administrative expenditures – Other were $992,000 in fiscal 2013, compared to $1,515,000 in fiscal 2012. Selling, general
and administrative expenses include salaries and related costs for those employees not directly involved in research and development.
The expenditures are required to support sales and marketing efforts of AGGRASTAT®and ongoing business development
and corporate stewardship activities. The balance also includes professional fees such as legal, audit, investor and public relations.



Selling, general and administrative expenditures
– AGGRASTAT®increased during the year ended May 31, 2013 as compared to same period in the prior year mainly
due to:



| | · | Additional
                                         payroll costs associated with the sale of AGGRASTAT® due to additional head office
                                         employees providing support for AGGRASTAT®; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Increased
                                         travel costs associated with the sale of AGGRASTAT®.
| | - | -------------------------------------------------------------------------------------------------------



Selling, general and administrative expenditures
– Other decreased during the year ended May 31, 2013 as compared to same period in the prior year mainly due to:



| | · | $0.1
                                         million decrease due to a reduction in stock compensation recorded during the year ended
                                         May 31, 2013, compared to the previous year. $0.1 million of non-cash stock-based compensation
                                         was recorded during the year ended May 31, 2013 relating to stock options that were granted
                                         on May 10, 2012 as compared to $0.2 million during the year ended May 31, 2012 relating
                                         to stock options granted on July 18, 2011. These options vested immediately.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Lower
                                         professional fees during year ended May 31, 2013. During the year ended May 31, 2012
                                         there were several professional fee expenditures relating to the one-time sale of inventory
                                         discussed previously, the graduation of the Common Shares from the NEX board of the TSX
                                         Venture Exchange, the transition from Canadian GAAP to IFRS and other professional fees.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net research and development expenditures
for fiscal 2013 were $1,700,000, compared to $1,044,000 in fiscal 2012. Research and development expenditures include costs associated
with the Company’s clinical development and preclinical programs including salaries, research centred costs and monitoring
costs. The Company expenses research costs and has not had any development costs that meet the criteria for capitalization under
IFRS. The increase in research and development expenditures, for the year ended May 31, 2013 as compared to the same period in
fiscal 2012 is due to the increased enrolment and ramp up of the Company’s clinical trial of AGGRASTAT® (tirofiban HCl)
entitled “Shortened AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI) and the renal
dosing study that is being completed as a part of the Company’s sNDA filing; however this increase was partially offset
by higher write-offs of patents during the year ended May 31, 2012.



47







Included in research and development expenses
are charges related to impairment of the Company’s intangibles assets. Impairments of intangible assets for fiscal 2013
were $62,000, compared to $216,000 in fiscal 2012. Intangible assets are reviewed for impairment on an ongoing basis whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. Based on this review certain patents
were deemed not significant to the Company’s commercial and research operations and a decision was made to no longer pursue
these patents and as a result the carrying value of these patents was written off.



It is important to note that historical
patterns of impairment charges cannot be taken as an indication of future impairments. The amount and timing of impairments and
write-downs may vary substantially from period to period depending on the business and research activities being undertaken at
any one time and changes in the Company's commercial strategy.



During the year ended May 31, 2012, the
Company recorded a non cash gain in the amount of $23,932,000 related to the settlement of its previously existing long-term debt.
In September 2007, the Company entered into a debt financing agreement with Birmingham Associates Ltd. (Birmingham), an affiliate
of Elliott Associates, L.P. (Elliott), for proceeds of US$25 million. Under the terms of the agreement, Birmingham was to receive
payments based on a percentage of AGGRASTAT® net sales. Birmingham was entitled to a return of 20 percent on the first US$15
million in AGGRASTAT® revenues, 17.5 percent on the next US$10 million, 15 percent on the next US$5 million and 5 percent
thereafter, subject to an escalating minimum annual return, until May 31, 2020. The minimum annual payments started at US$2.5
million in 2008 and were to escalate to US$6.9 million in 2017. The total minimum payments over the life of the agreement in aggregate
were US$49.7 million. The annual minimum payments were reflected in the effective interest rate calculation of the debt.



As at May 31, 2011, the Company was in
default of the terms of its debt financing obligations. The portion of the minimum payments that were past due included in the
accrued interest on long-term debt at May 31, 2011 was $4,804,788, or US$4,933,471. The debt agreement contained no express provisions
to accelerate debt payments in an event of default, however under the agreement the lender could have exercised its security rights
at any time while in default.



On July 18, 2011, the Company settled
the Birmingham long-term debt in exchange for: (i) $4,750,000 in cash; (ii) 2,176,003 common shares (32,640,043 pre-consolidation
common shares) of the Company; and (iii) a royalty on future AGGRASTAT® sales until May 1, 2023. The royalty is based on four
percent of the first $2,000,000 of quarterly AGGRASTAT® sales, six percent of quarterly sales between $2,000,000 and $4,000,000
and eight percent of quarterly sales exceeding $4,000,000 payable within 60 days of the end of the preceding quarter. The previous
lender has a one-time option to switch the royalty payment from AGGRASTAT® to a royalty on MC-1 sales. Management has determined
there is no value to the option to switch the royalty.



In accordance with the terms of the agreement,
if the Company were to dispose of its AGGRASTAT® rights, the acquirer would be required to assume the obligations under the
royalty agreement.



The difference between the carrying amount
of the long-term debt extinguished and the consideration paid, comprising cash, equity instruments and the royalty obligation
assumed, has been recognized as a gain on the settlement of debt in the statement of net income for the year ended May 31, 2012.
In accordance with International Financial Reporting Interpretations Committee (IFRIC) 19 Extinguishing financial liabilities
with equity instruments, the shares issued in partial consideration for the settlement of the debt have been included in consideration
paid and measured at their fair value at the date of the settlement of $652,801.



As at July 18, 2011 the Company had total
Canadian dollar book value of long-term debt of $22,254,966, net of unamortized deferred financing fees of $941,454. The Company
also had accrued interest payable of $8,145,865 for a total carrying value of the debt settled on July 18, 2011 of $30,400,831.



48







The gain on the settlement of debt totals
$23,931,807 and consideration paid comprised $4,750,000 cash paid, common shares with a value of $652,801 and a royalty obligation
valued at $901,915, in addition to legal costs associated with the debt settlement transaction of $164,308. This was a one-time
transaction and no similar gains were experienced during fiscal 2013.



Finance expense for fiscal 2013 was $466,000,
compared to $554,000 in fiscal 2012. The decrease in finance expense for the year ended May 31, 2013 as compared to the prior
fiscal year is due to the settlement of the Company’s long-term debt on July 18, 2011 as described above and in Note 8 of
the audited consolidated financial statements for the year ended May 31, 2013. Finance expense in the prior fiscal year includes
interest on the Birmingham long-term debt from June 1, 2011 to its settlement on July 18, 2011, as well as interest associated
with the Company’s long-term debt obtained on July 18, 2011 which had an effective interest rate of seven percent during
the year ended May 31, 2012. The decrease as a result of the debt settlement is partially offset by higher accretion on the Company’s
royalty obligation, which arose out of this debt settlement and higher interest on the Company’s current long-term debt
as it was outstanding for the entire fiscal year ended May 31, 2013.



The net foreign exchange loss for the
year ended May 31, 2013 was $22,000, compared to a net foreign exchange gain of $2,000 in fiscal 2012. The change is due to higher
fluctuations in the Canadian dollar versus the US dollar experienced during the year-ended May 31, 2013 compared to the year ended
May 31, 2012.



For
the year ended May 31, 2013, the Company recorded a consolidated net loss of $2,574,000 or $0.21 per share compared to consolidated
net income of $23,386,000 or $1.99 per share for the year ended May 31, 2012. As discussed above the main factors contributing
to the net income in fiscal 2012 when compared to the loss during the 2013 fiscal year were the non-cash gain on the settlement
of the Birmingham long-term debt and increased sales resulting from the $1.9 million of revenue recognized on the sale of unfinished
product, partially offset by higher research and development expenses during the year ended May 31, 2013 due to the increased
enrolment and ramp up of the Company’s clinical trial of AGGRASTAT® (tirofiban HCl) entitled “Shortened AGGRASTAT®
Versus Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI) and the renal dosing study that is being completed as
a part of the Company’s sNDA filing.



For
the year ended May 31, 2013, the Company recorded a total comprehensive loss of $2,609,000 compared to comprehensive income of
$23,865,000 for the year ended May 31, 2012. The change in comprehensive income (loss) results from the factors described above,
plus the change in the translation adjustment relating to the foreign currency translation of the Company's subsidiaries.



The weighted average number of common
shares outstanding used to calculate basic (loss) income per share was 12,196,508 for the year ended May 31, 2013 and 11,745,854
for the year ended May 31, 2012.



The weighted average number of common
shares outstanding used to calculate diluted (loss) income per share was 12,196,508 for the year ended May 31, 2013 and 11,752,521
for the year ended May 31, 2012.



B. Liquidity and Capital Resources



Since the Company’s inception, it
has financed operations primarily from net revenue received from the sale of AGGRASTAT®, sale of its equity securities, the
issue and exercise of warrants and stock options, interest on excess funds held and the issuance of debt as well as a build up
in accounts payable associated with a reliance on trade debt.



The Company’s
future operations are dependent upon its ability to maintain sales of AGGRASTAT®, to develop and/or acquire new products,
and/or secure additional capital, which may not be available under favourable terms or at all, and/or renegotiate the terms of
its contractual commitments and long-term debt. If the Company is unable to maintain sales or raise additional capital, management
intends to consider other strategies including further cost curtailments, delays of research and development activities, asset
divestures and/or monetization of certain intangibles.



49







Effective August 1, 2013, the Company
renegotiated its long-term debt and received an additional two year deferral of principal repayments. Under the renegotiated terms,
the loan continues to be interest only with principal repayments now beginning on August 1, 2015 and the loan matures on July
1, 2018.



Cash from operating activities for the
seven months ended December 31, 2014 increased $382,000 to $276,000 compared to cash used in operating activities of $106,000
for the comparable period in the prior year primarily due to higher net income, primarily from increased revenues, partially offset
by higher accounts receivable balances as at December 31, 2014.



Investing activities for the seven months
ended December 31, 2014 were cash used totaling $23,000 relating to the acquisition of patents and property and equipment compared
to $6,000 relating to the acquisition of property and equipment for the seven months ended December 31, 2013.



Financing activities for the seven ended
December 31, 2014 included $6,000 received upon the exercise of stock options during fiscal this period. There was no cash from
or used in financing activities during the seven ended December 31, 2013.



As at December
31, 2014, the Company had cash totaling $493,869 compared to $234,297 as of May 31, 2014. As at December 31, 2014, the Company
had a working capital deficit of $503,000 compared to $739,000 at May 31, 2014. The decrease in the working capital deficit between
the two periods is as a result of a lower net loss resulting from increased revenues and inventory purchasing during the seven
months ended December 31, 2014, partially offset Company’s long-term debt becoming due starting in August of 2015 resulting
in a current portion of the debt recorded on the Statement of Financial Position as at December 31, 2014.



The Company has long-term debt at December
31, 2014 of $5.0 million recorded in its financial statements relating to the Government of Manitoba loan described in Note 9
of the Company's consolidated financial statements for the seven months ended December 31, 2014. Interest is accrued based on
an annual effective interest rate of seven percent. The minimum annual debt obligations are disclosed under Contractual Obligations.



C. Research and Development, Patents
and Licenses, Etc.



Research and Development



The Company’s research and development
activities are predominantly conducted by its subsidiary, Medicure International, Inc.



The primary ongoing research and development
activity is the development and further implementation of a new regulatory, brand and life cycle management strategy for AGGRASTAT®.
This strategy includes, but is not limited to, the sNDA submission to the FDA for a revised label as approved by the FDA on October
22, 2013, the potential for an additional sNDA submission to the FDA for further revisions to the product label, the ongoing SAVI-PCI
study and the transdermal tirofiban program. The extent to which the Company is able to invest in this plan is dependent upon
the availability of sufficient finances.



The Company’s
primary, non-AGGRASTAT®research and development activity is TARDOXALTMfor the treatment of Tardive Dyskinesia (“TD”). A modest amount of capital is expected to be used in 2015 as the Company
advances development, based in part on preliminary results from the Phase II clinical study of TARDOXALTM,
entitledTARDOXALTM for the Treatment of Tardive Dyskinesia (TEND-TD).



50







On July
3, 2014, the Company acquired a minority interest in Apicore along with an option to acquire all of the remaining issued shares
of Apicore within the next 3 years. The business and operations of Apicore are distinct from the Company, and the Company’s
primary operating focus is on the sale and marketing of its acute care cardiovascular drug, AGGRASTAT® That being said, the
Company is also seeking to derive material benefit for shareholders through the increase in value of the Company’s minority
position in Apicore and through the potential realization of value through the exercise of the Company’s option to acquire
all of the remaining issued shares of Apicore within the next 3 years at a predetermined price. As such,a modest amount
of the Company’s energies and resources are being directed towards assisting and assessing
Apicore’s ongoing operations.



For further information on the Company’s
research and development activity see Item 4B – Business Overview.



The Company intends to develop TARDOXALTMindependently and/or through a license or development partnership for with a larger pharmaceutical company. Such a partnership
may provide funding and other resources for further clinical trials and commercialization. While the Company has had informal
discussions with potential partners, no formal agreement, or letter of intent, has been entered into by the Company as of the
date hereof.





The Company has evaluated and continues
to evaluate the acquisition or license of other approved, commercial products with the objective of further broadening its product
portfolio and generating additional revenue.



Company-sponsored research
and development net expenditures for seven months ended  December 31, 2014 were $783,000 (year ended May 31, 2014 -
$689,000, year ended May 31, 2013 - $1,700,000 and year ended May 31, 2012 - $1,044,000).



Patents and Licenses



In addition to a number of pending patent
applications, the Company has 17 issued patents from the United States Patent Office providing protection for AGGRASTAT®and related its current and historic development compounds. The Company will continue to file patents related to its research
and development activities. The United States patents currently issued to the Company are as follows:



|Patent Number |  | Issue Date         |  | Title                                                                                                              
|------------- |  | ------------------ |  | -------------------------------------------------------------------------------------------------------------------
|5,733,919     |  | March 31, 1998     |  | Compositions for Inhibiting Platelet Aggregation                                                                   
|5,965,581     |  | October 12, 1999   |  | Compositions for Inhibiting Platelet Aggregation                                                                   
|5,972,967     |  | October 26, 1999   |  | Compositions for Inhibiting Platelet Aggregation                                                                   
|5,978,698     |  | November 2, 1999   |  | Angioplasty Procedure Using Nonionic Contrast
    Media                                                            
|6,136,794     |  | October 24, 2000   |  | Platelet Aggregation Inhibition Using Low
    Molecular Weight Heparin in Combination with a GP IIb/IIIa Antagonist
|6,417,204     |  | July 9, 2002       |  | Pyridoxine and Pyridoxal analogues- Cardiovascular
    Therapeutics                                                
|6,538,112     |  | March 25, 2003     |  | Hybridomas and monoclonal antibodies for
    an anti-coagulant test                                                
|6,770,660     |  | August 3, 2004     |  | Method for Inhibiting Platelet Aggregation                                                                         
|6,861,439     |  | March 1, 2005      |  | Treatment of Cerebrovascular Disease                                                                               
|7,105,673     |  | September 12, 2006 |  | Cardioprotective Phosphonates and Malonates                                                                        
|7,132,430     |  | November 7, 2006   |  | Treatment of Cardiovascular and Related
    Pathologies                                                            
|7,148,233     |  | December 12, 2006  |  | Treatment of Cardiovascular and Related
    Pathologies                                                            
|7,375,112     |  | May 20, 2008       |  | Compounds and Methods for Reducing Triglyceride
    Levels                                                         
|7,812,037     |  | October 12, 2010   |  | Dual antiplatelet/anticoagulant pyridoxine
    analogs                                                             



51







Patents 5,733,919, 5,965,581, 5,972,967,
5,978,698, 6,136,794, 6,538,112 and 6,770,660 were purchased by the Company from MGI GP, INC. (a Delaware corporation doing business
as MGI PHARMA and its Affiliate, Artery, LLC). Pursuant to an Asset Purchase Agreement dated August 8, 2006, MGI GP, INC. sold
the exclusive use of the patents to the Company in the specified territory (the United States of America including the Commonwealth
of Puerto Rico; Guam; and the United States Virgin Islands). Pursuant to the Asset Purchase Agreement the Company agreed to pay
MGI GP, INC. a one-time fee for the procurement of the acquired assets. The Asset Purchase Agreement was executed August 8, 2006.



Much of the work, including some of the
research methods, that is important to the success of the Company’s business is germane to the industry and may not be patentable.
For this reason all employees, contracted researchers and consultants are bound by non-disclosure agreements.



Given that the patent applications for
these technologies involve complex legal, scientific and factual questions, there can be no assurance that patent applications
relating to the technology used by the Company will result in patents being issued, or that, if issued, the patents will provide
a competitive advantage or will afford protection against competitors with similar technology, or will not be challenged successfully
or circumvented by competitors.



The Company has filed patents in accordance
with the Patent Cooperation Treaty (the ‘‘PCT’’). The PCT is a multilateral treaty that was concluded
in Washington in 1970 and entered into force in 1978. It is administered by the International Bureau of the World Intellectual
Property Organization (the ‘‘WIPO’’), headquartered in Geneva, Switzerland. The PCT facilitates the obtaining
of protection for inventions where such protection is sought in any or all of the PCT contracting states (total of 104 at July
1999). It provides for the filing of one patent application (the ‘‘international application’’), with
effect in several contracting states, instead of filing several separate national and/or regional patent applications. At the
present time, an international application may include designation for regional patents in respect of contracting states party
to any of the following regional patent treaties: The Protocol on Patents and Industrial Designs within the framework of the African
Regional Industrial Property Organization, the Eurasian Patent Convention, the European Patent Convention, and the Agreement Establishing
the African Intellectual Property Organization. The PCT does not eliminate the necessity of prosecuting the international application
in the national phase of processing before the national or regional offices, but it does facilitate such prosecution in several
important respects by virtue of the procedures carried out first on all international applications during the international phase
of processing under the PCT. The formalities check, the international search and (optionally) the international preliminary examination
carried out during the international phase, as well as the automatic deferral of national processing which is entailed; give the
applicant more time and a better basis for deciding whether and in what countries to further pursue the application. Further information
may be obtained from the official WIPO internet website (http://www.wipo.int).



Although the Company is no longer developing
MC-1, the Company does have a royalty bearing agreement with its subsidiary in regards to this discontinued development program.
On June 1, 2000 the Company entered into the Medicure International Licensing Agreement whereby it licensed the world-wide development
and marketing rights for MC-1, except for Canada, to its wholly owned subsidiary, Medicure International, Inc. As consideration
for the grant of the license, Medicure International, Inc. agreed to pay the Company a fee of $1.00 upon the completion of specified
milestones in the development process, together with a variable royalty of 7% to 9% of net sales of MC-1 (if any sales are ever
in fact made). The term of the Medicure International Licensing Agreement will expire on the date of expiration of the last to
expire patent on MC-1, or in the absence of any such patent, on the 10th anniversary of the date of the first commercial sale
of MC-1 in the country where it was last introduced (if it is ever so introduced). The Medicure International Licensing Agreement
may be terminated under a number of circumstances and, in any event, by either party at any time by providing the other with at
least 90 days prior written notice of its intention to terminate the Medicure International Licensing Agreement.



52







Medicure International, Inc. subsequently
entered into a development agreement with CanAm on June 1, 2000 to perform research and development of MC-1 and other compounds
at cost, plus a reasonable mark-up not to exceed ten percent of any amount invoiced. The parties to the development agreements
have agreed that the aggregate amount of all invoiced expenditures shall not exceed $30,000,000 over the term of each agreement.
The term of the CanAm development agreement is to expire on the completion of all research and development activities by CanAm
and the written acknowledgment by CanAm and Medicure International, Inc. that no further research projects will be undertaken.
CanAm continues to perform work on AGGRASTAT®, TARDOXALTM and other projects under this agreement, however there
is no ongoing research activity related to MC-1.



The development agreements may be terminated
under a number of circumstances and, in any event, by Medicure International, Inc. at any time by providing CanAm with at least
30 days prior written notice of its intention to terminate, or by CanAm at any time by providing Medicure International, Inc.,
with at least 90 days prior written notice of its intention to terminate the development agreement.



The agreements provide that all confidential
information developed or made known during the course of the relationship with the Company is to be kept confidential except in
specific circumstances.



D. Trend Information



Net product sales for seven months ended
December 31, 2014 were $5,264,000, compared to $2,165,000 in the comparable period in 2013. The Company currently sells finished
AGGRASTAT® to drug wholesalers. These wholesalers subsequently sell AGGRASTAT®to the hospitals where health
care providers administer the drug to patients. Wholesaler management decisions to increase or decrease their inventory of AGGRASTAT®
may result in sales of AGGRASTAT®to wholesalers that do not track directly with demand for the product at hospitals.
All of the Company’s sales are denominated in US dollars.



Net revenue from the sale of finished
AGGRASTAT® products for the seven months ended December 31, 2014 increased by 143% over the net revenue for the seven months
ended December 31, 2013. Hospital demand for AGGRASTAT® increased significantly compared to the comparable period in the prior
year. The increase in revenue is primarily attributable to an increase in the number of new hospital customers using AGGRASTAT®.
The number of new customers reviewing and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the
new dosing regimen for AGGRASTAT® as announced on October 11, 2013.  Additionally, favourable fluctuations in the U.S.
dollar exchange rate contributed to the increase in revenue.



The Company is not aware of any other
trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon the Company’s
net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported
financial information not necessarily to be indicative of future operating results or financial condition.



E. Off-balance Sheet Arrangements



As of December 31, 2014 the Company does
not have any off-balance sheet arrangements, other than those disclosed below.



53







F. Contractual Obligations



The following tables set forth the Company’s
contractual obligations as of December 31, 2014:



|                                                |  | Contractual Obligations Payment Due By
    Period |       
|----------------------------------------------- |  | ------------------------------------------------- | ------
|(in thousands of CDN$)                          |  | Total                                             |       
|Accounts Payable and Accrued Liabilities        |  | $                                                 | 3,700 
|Long-term debt obligations 1                    |  |                                                   | 5,558 
|Purchase Agreement commitments 2                |  |                                                   | 1,513 
|Management services agreement commitments
    3 |  |                                                   | 215   
|Total                                           |  | $                                                 | 10,986



| | 1. | Long-term debt obligations reflect
                                         the principal and interest payments under the debt financing agreement. The Company borrowed
                                         $5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities
                                         Program. The loan bears interest annually at the crown company borrowing rate and originally
                                         matured on July 1, 2016. The loan repayment schedule is interest only for the first 24
                                         months, with blended principal and interest payments made monthly thereafter until maturity.
                                         The loan is secured by the Company's assets and guaranteed by the Company’s Chief
                                         Executive Officer, and entities controlled by the Chief Executive Officer. The Company
                                         issued 1,333,333 common shares (20,000,000 pre-consolidation common shares) of the Company
                                         in consideration for this guarantee to the Company’s Chief Executive Officer and
                                         entities controlled by the Chief Executive Officer. The Company relied on the financial
                                         hardship exemption from the minority approval requirement of Multilateral Instrument
                                         (MI) 61-101. Specifically, pursuant to MI 61-101, minority approval is not required for
                                         a related party transaction in the event of financial hardship in specified circumstances.
                                         Effective August 1, 2013, the Company renegotiated its long-term debt and received an
                                         additional two-year deferral of principal repayments. Under the renegotiated terms, the
                                         loan continues to be interest only with principal repayments now beginning on August
                                         1, 2015 and the loan maturing on July 1, 2018.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The Company has entered into manufacturing
                                         and supply agreements, as amended, to purchase a minimum quantity of AGGRASTAT®from a third party with remaining minimum purchases totaling $1,513,000 or US$1,305,000
                                         (based on current pricing) over the term of the agreement, which expires in fiscal 2015.
                                         Effective January 1, 2014, the agreement was amended and the amounts previously due during
                                         fiscal 2014 were deferred throughout calendar 2014 and now bear interest at 3.25% per
                                         annum, with monthly payments being made against this balance owing of US$45,000. These
                                         payments will be applied to future inventory purchases expected to be made during fiscal
                                         2015 and $549,297 is currently recorded within prepaid expenses in regards to this agreement.
                                         For the seven months ended December 31, 2014, interest of $18,738 (year ended May 31,
                                         2014 - $17,009, year ended May 31, 2013 - nil and year ended May 31, 2012 - nil) is recorded
                                         within finance expense relating to this agreement.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Effective October 1, 2009, the Company
                                         entered into a business and administration services agreement with Genesys Venture Inc.
                                         (GVI), a company controlled by the Chief Executive Officer, under which the Company was
                                         committed to pay $25,000 per month or $300,000 per annum. On October 1, 2010, an amendment
                                         was made to the agreement thereby reducing the fees to $15,000 per month, or $180,000
                                         per year effective November 1, 2010. Effective January 1, 2012, the Company entered into
                                         a new business and administration services agreement with GVI under which the Company
                                         is committed to pay $15,833.33 per month or $190,000 per annum along with a flexible
                                         lease of an additional $500 per month for each office space it requests and is given
                                         access to by GVI. The agreement is for a one year term and shall be automatically renewed
                                         for a succeeding term of one year if not terminated by the Company at least 90 days prior
                                         to expiry. Either party may terminate the agreement at any time after June 30, 2012,
                                         upon 90 days written notice to the other party. The agreement was renewed for calendar
                                         2013 and 2014. Effective November 1, 2014, the business and administration services agreement
                                         was renegotiated for a further 14 month term ending December 31, 2015 at a rate of $17,917
                                         per month, or $215,000 per year.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



54







Debt obligations reflect
the minimum annual payments under the debt financing agreement. In addition to the contractual obligations disclosed above, the
Company and its wholly-owned subsidiaries, have ongoing research and development agreements with third parties in the ordinary
course of business. These agreements include research and development related to AGGRASTAT® and TARDOXALTM as well
as other product opportunities.



On July 18, 2011, the
Company renewed its consulting agreement with its Chief Executive Officer for a term of five years, at a rate of $180,000 annually.
The Company may terminate this agreement at any time upon 120 days written notice.



Contracts with contract
research organizations (CROs) are payable over the terms of the trials and timing of payments is largely dependent on various
milestones being met, such as the number of patients recruited, number of monitoring visits conducted, the completion of certain
data management activities, trial completion, and other trial-related activities.



The Company periodically
enters into research agreements with third parties that include indemnification provisions customary in the industry. These guarantees
generally require the Company to compensate the other party for certain damages and costs incurred as a result of claims arising
from research and development activities undertaken on behalf of the Company. In some cases, the maximum potential amount of future
payments that could be required under these indemnification provisions could be unlimited. These indemnification provisions generally
survive termination of the underlying agreement. The nature of the indemnification obligations prevents the Company from making
a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company has not made any
indemnification payments under such agreements and no amount has been accrued in the accompanying financial statements with respect
to these indemnification obligations.



As a part of the Birmingham
debt settlement described above and in note 8 to the consolidated financial statements, beginning on July 18, 2011, the Company
is obligated to pay a royalty to the previous lender based on future commercial AGGRASTAT® sales until 2023. The royalty is
based on four percent of the first $2,000,000 of quarterly AGGRASTAT® sales, six percent of quarterly sales between $2,000,000
and $4,000,000 and eight percent of quarterly sales exceeding $4,000,000 payable within 60 days of the end of the preceding quarter.
The previous lender has a one-time option to switch the royalty payment from AGGRASTAT® to a royalty on MC-1 sales. Management
has determined there is no value to the option to switch the royalty as the product is not commercially available for sale and
development of the product is on hold.



As part of the sale
of unfinished product as described in note 14 to the consolidated financial statements, if the Company exercised its option to
obtain AGGRASTAT® data and was successful in getting changes to the approved use of AGGRASTAT® in the United States, the
Company would be obligated to pay a three percent royalty of up to US$3,500,000 on future AGGRASTAT® sales. The option to
obtain the data expired without the Company exercising its rights thereunder. As a result the Company has no ongoing or potential
royalty obligation in connection with this agreement.



The Company is obligated
to pay royalties to the University of Manitoba based on any future commercial sales of MC-1, aggregating up to 3.9 percent on
net sales. To date, no royalties are due and/or payable and, given the fact that these development programs have been placed on
hold, the Company does not anticipate any such royalties to be paid. Such royalty does not apply to the sale of TARDOXALTM.



55







The Company received
$200,000 of funding from the Province of Manitoba’s Commercialization Support for Business program to assist the Company
with the completion of a study evaluating AGGRASTAT® in patients with impaired kidney function. The study was completed and
the funds received during the year ended May 31, 2013. The funding is repayable when certain sales targets are met and the repayable
requirement will remain in effect for a period not less than eight fiscal years.



In the normal course
of business the Company may from time to time be subject to various claims or possible claims. Although management currently believes
there are no claims or possible claims that if resolved would either individually or collectively result in a material adverse
impact on the Company’s financial position, results of operations, or cash flows, these matters are inherently uncertain
and management’s view of these matters may change in the future.



ITEM 6. DIRECTORS, SENIOR MANAGEMENT
AND EMPLOYEES



A. Directors and Senior Management



Directors and Senior Management



The members of the board of directors
and senior officers of the Company including a brief biography of each are as follows:



Dr. Albert D. Friesen, Winnipeg, Manitoba,
Canada - Director, Chairman and Chief Executive Officer



The founder of Medicure Inc., Dr. Friesen
holds a Ph.D. in protein chemistry from the University of Manitoba. Dr. Friesen played a key role in founding several health industry
companies including Rh Pharmaceuticals (acquired by Cangene Inc.), ABI Biotechnology (acquired by Apotex Inc.), Viventia Biotech
Inc., Genesys Pharma Inc. and KAM Scientific Inc. Dr. Friesen has experience in the establishment of pharmaceutical production
facilities and has also managed and initiated the research and clinical development of several pharmaceutical candidates. Dr.
Friesen is a founder of the Industrial Biotechnology Association of Canada (IBAC) and past Chairman of its board of directors
and former member of the Industrial Advisory Committee to the Biotechnology Research Institute in Montreal. In addition to his
role with the Company, Dr. Friesen is currently the President and Chairman of Genesys Venture Inc., a biotech incubator, based
in Winnipeg. Dr. Friesen provides his services to the Company through A.D. Friesen Enterprises Ltd., his private consulting corporation.
He also served as President until July 25, 2011 at which point that position was filled by Mr. Dawson Reimer. Date of birth is
May 19, 1947



Dr. Arnold Naimark, Winnipeg, Manitoba,
Canada - Director



Dr. Arnold Naimark, O.C., O.M., M.D.,
L.L.D., F.R.C.P.(C), F.R.S.C, FCAHS,. has had a distinguished career in biomedical research, medicine and higher education. 
He is President Emeritus and Dean of Medicine Emeritus and Professor of Medicine and Physiology at the University of Manitoba. 
He is currently Director of the Centre for the Advancement of Medicine, Chair of Genome Prairie and Chair of CancerCare Manitoba.
Dr. Naimark serves on the Research Council of the Canadian Institute for Advanced Research, the National Statistics Council of
Canada and is Vice-Chair of the Statistics Canada Audit Committee. He was formerly: Chair of Health Canada’s Ministerial
Science Advisory Board , Member of the International Advisory Committee on Research of the Alberta Cancer Board, Research Institute,
Vice-Chair of the Manitoba Health Research Council and Director of the Robarts Research Institute. He is the founding Chairman
of the North Portage Development Corporation, the Canadian Health Services Research Foundation and the Canadian Biotechnology
Advisory Committee. He has served as President of several academic bodies including, the Canadian Physiological Society, the Canadian
Society for Clinical Investigation, the Association of Canadian Medical Colleges, the Association of Universities and Colleges
of Canada and as Chairman of the Association of Commonwealth Universities.  Dr. Naimark is an Officer of the Order of Canada,
a Member of the Order of Manitoba and a Fellow of the Royal College of Physicians and Surgeons of Canada, the Royal Society of
Canada, and the Canadian Academy of Health Sciences.  He is recipient of the G. Malcolm Brown Award of the Royal College
of Physicians and Surgeons and Medical Research Council of Canada, the Osler Award, the Distinguished Service Award of Ben Gurion
University, the Symons Award of the Association of Commonwealth Universities; and of honorary doctorates from Mount Allison University
and the University of Toronto, and of several other awards and distinctions related to his professional, academic and civic activities.
Date of birth is August 24, 1933.



56







Gerald P. McDole, Mississauga, Ontario,
Canada, MBA – Director



Mr. McDole is currently a director of
several Canadian healthcare companies. Mr. McDole is Past President of AstraZeneca Canada Inc. He was named President and CEO
of AstraZeneca Canada Inc.'s pharmaceutical operations in 1999 and immediately led the merger of Astra Pharma and Zeneca Pharma
Inc. Prior to this, Mr. McDole was president and CEO of Astra Pharma Inc., a position he assumed in 1985 after having served as
Executive Vice-President. Mr. McDole is a member of the Canadian Healthcare Marketing Hall of Fame, and has been recognized by
Canadian Healthcare Manager Magazine with the Who's Who in Healthcare Award in the pharmaceutical category. In recognition of
Mr. McDole's outstanding contributions to the biotech and pharmaceutical industries, the University of Manitoba recently established
The Gerry McDole Fellowship in Health Policy and Economic Growth. Mr. McDole holds a Bachelor of Science and a Certificate of
Business Management from the University of Manitoba, an MBA from Simon Fraser University, and a Business Administration diploma
from the University of Toronto. Date of birth is January 25, 1940.



Peter Quick, Mill Neck, New York, USA
- Director



Mr. Quick currently serves on the Board
of Directors for Fund for the Poor, the Board of Governors of St. Francis Hospital on Long Island, and the National Selection
Committee for the Jefferson Scholars Program of the University of Virginia. Mr. Quick is past President and CEO of Quick &
Reilly, Inc. and a former President of the American Stock Exchange. Mr. Quick has also served on the Board of Governors of the
Chicago Stock Exchange and as Chairman of the Midwest Securities Trust Company. Mr. Quick received a bachelor's degree in engineering
from the University of Virginia and attended Stanford University's Graduate School of Petroleum Engineering. He was a lieutenant
in the United States Navy, and served four years active duty. Date of birth is February 11, 1956.



Brent Fawkes, Winnipeg, Manitoba, Canada
- Director



Mr.
Fawkes is a Chartered Accountant with over 20 years of experience in accounting and finance. Mr. Fawkes is currently the Vice
President of Finance with Standard Aero Limited, one of the world’s largest independent providers of a variety of aerospace
services serving a diverse array of customers in business and general aviation, airline, military, helicopter, components, energy
and VIP completions markets. In his current role, Mr. Fawkes is responsible for the oversight of the finance department including
external reporting, budgeting and planning and treasury management. Date of birth isDecember 21, 1969.



Dawson Reimer, MAES – President
and Chief Operating Officer



Dawson
Reimer proceeded from a Master's Degree in Economic Development, University of Waterloo to be employed as a full-time consultant
to the Federal Department of Western Diversification. Beginning in 1996, he served as Business Development/Investor Relations
with Genesys Pharma Inc. In 1997, he transitioned to Genesys Venture Inc., a biotech business incubator, where he assisted numerous
biotechnology ventures in developing business plans, obtaining financing, and developing intellectual property protection. In
this capacity, Mr. Reimer became actively involved in the Company at its inception and has been directly employed by the Company
since 2001. He was appointed President and Chief Operating Officer of the Company effective July 25, 2011. Before that date he
served as Vice President, Operations. Mr. Reimer is a son-in-law of Dr. Albert D. Friesen, Director, Chairman and Chief Executive
Officer. Date of birth is May 7, 1971.



57







James Kinley, CA – Chief Financial
Officer



Effective
September 21, 2011 Mr. James Kinley was appointed as CFO of the Company, replacing Dawson Reimer, who has served as Chief Financial
Officer in an interim capacity since July 15, 2011 until Mr. Kinley’s appointment. Mr. Kinley’s services are provided
to the Company through a Management Services Agreement with Genesys Venture Inc. (“GVI”). Previous to his time at
GVI and the Company, he was Manager, Financial Reporting at Manitoba Telecom Services Inc. and was involved in all aspects of
financial reporting, including publicly filed documents such as their financial statements. James is a Chartered Accountant and
holds a Bachelor of Commerce (Hons.) degree from the University of Manitoba. Date of birth is July 9, 1978.



Management



Dr. Albert D. Friesen - Chairman, Chief
Executive Officer and Director: Dr. Friesen directs the overall business management of the Company (see “Directors and
Senior Management” under this item).



Dawson Reimer - President and Chief
Operating Officer: Subject to the direction of the Chief Executive Officer, Mr. Reimer has general charge of the Corporation’s
day to day business activities with a primary focus on its commercial direction, including the advancement and management of new
and existing pharmaceutical products. (See “Directors and Senior Management” under this item)



James Kinley, CA - Chief Financial
Officer: Mr. Kinley is responsible for the Company’s financial management and accounting practices (see “Directors
and Senior Management” under this item).



B. Compensation



Compensation paid to the directors, and
executive officers of the Company during the seven months ended December 31, 2014, is described below and stock-based compensation
described in Item 6(E) below:



The Company recorded $23,535 in fees paid
or payable to Board members for attendance at meetings between June 1, 2014 and December 31, 2014 and the chairs of the Audit
and Finance Committee and executive compensation, nominating and corporate governance committee were paid $2,917 each for services
are committee chairs.



On October 1, 2001, a compensation agreement
was entered into between the Company and A.D. Friesen Enterprises Ltd., a corporation owned by Dr. Friesen and subsequently amended
on October 1, 2003, October 1, 2005, October 1, 2006, October 1, 2007 and July 18, 2011. For the seven months ended December 31,
2014, the Company recorded A.D. Friesen Enterprises Ltd., $108,500 in consulting compensation, including taxable benefits. Dr.
Friesen is eligible for an annual bonus, if certain objectives of the Company are met, as determined by the Board of Directors.
During the seven months ended December 31, 2014, a bonus of $58,904 was accrued to Dr. Friesen.



Dawson Reimer serves the Company as President
and Chief Operating Officer and received a salary of $102,500 payable in equal semi-monthly instalments for the seven months ended
December 31, 2014.



During the year ended May 31, 2014, the
Company paid directors a total of Nil (Year ended May 31, 2013: Nil; Year ended May 31, 2012: Nil; Year ended May 31, 2011: Nil;
Year ended May 31, 2010: Nil) for consulting fees.



The Company has agreed to provide its
independent directors $2,000 for each quarterly board meeting they personally attend ($1,000 via telephone), and $1,500 for each
quarterly executive compensation, nominating and corporate governance committee meeting or audit and finance committee meeting
they attend that is not held in conjunction with a regular Board meeting.



58







For fiscal 2011 and prior, due to the
Company’s financial position, the board had offered and committed not to request, and has therefore not received, any compensation
for their services as independent directors. Subsequent to the debt settlement that occurred on July 18, 2011, the Company began
paying the Board members this amount owing and had paid $54,000 during fiscal 2013 relating to these accrued amounts. During fiscal
2013, the members of the Board of Directors agreed to further defer payments on amounts owing. Beginning on February 22, 2013,
these amounts began to bear interest at a rate of 5.5% per annum. For the seven months ended December 31, 2014, $10,127 (year
ended December 31, 2014 - $14,918) was recorded within finance expense in relation to these amounts payable to the members of
the Company’s Board of Directors. As at December 31, 2014, the Company has $336,766 of accrued compensation owing to the
independent members of the Board of Directors relating to Directors fees.



On July
11, 2014, the Company announced that, subject to all necessary regulatory approvals, it has
entered into shares for debt agreements with certain members of the Board of Directors, pursuant to which the Company will issue
106,490 of its common shares at a deemed price of $1.98 per common share to satisfy $210,850 of outstanding amounts owing to the
Company’s Board of Directors. The shares were issued subsequent to December 31, 2014 on January 9, 2015.



Subsequent
to December 31, 2014, on January 27, 2015, the Company announced that, subject to all necessary
regulatory approvals, it has entered into shares for debt agreements with certain members of the Board of Directors, pursuant
to which the Company will issue 75,472 of its common shares at a deemed price of $1.44 per common share to satisfy $108,680 of
outstanding amounts owing to these individuals. The shares were issued subsequent to December 31, 2014 on March 20, 2015.



The Company does not provide any cash
compensation for its directors who are also officers of the Company for their services as directors.



No pension, retirement fund and other
similar benefits have been set aside for the officers and directors of the Company.



C. Board Practices



The Board of Directors presently consists
of five directors, four of whom were elected at the Company’s annual general meeting of the shareholders held on November
4, 2014. Each director holds office until the next annual general meeting of the Company or until his successor is elected or
appointed, unless his office is earlier vacated in accordance with the By-Laws of the Company, or with the provisions of the Canada
Business Corporations Act.



Dr. Albert D. Friesen has served as a
director of the Company since September 1997. Dr. Arnold Naimark has served as a director of the Company since March 2000. Gerald
McDole has served as a director of the Company since January 2004. Peter Quick has served as a director of the Company since November
2005. Brent Fawkes has served as a director of the Company since January 2013.



As discussed in more detail below, the
Board of Directors maintains an Audit and Finance Committee and an Executive Compensation, Nominating and Corporate Governance
Committee.



Corporate Governance



The Canadian Securities Administrators
(the "CSA") have adopted National Policy 58-201 Corporate Governance Guidelines, which provides non-prescriptive
guidelines on corporate governance practices for reporting issuers such as the Company. In addition, the CSA have implemented
National Instrument NI 58-101 Disclosure of Corporate Governance Practices, which prescribes certain disclosure by the
Company of its corporate governance practices. The Company's approach to corporate governance is set forth below.



The Board believes that a clearly defined
system of corporate governance is essential to the effective and efficient operation of the Company. The system of corporate governance
should reflect the Company’s particular circumstances, having always as its ultimate objective, the best long-term interests
of the Company and the enhancement of value for all shareholders.



59







Directors are considered to be independent
if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship
which could, in the view of the Company's board of directors, be reasonably expected to interfere with the exercise of a director's
independent judgment.



The Executive Compensation, Nominating
and Corporate Governance Committee has reviewed the independence of each director on the basis of the definition in section 1.4
of National Instrument 52-110 – Audit Committees ("NI 52-110"). The Board has determined, after reviewing
the roles and relationships of each of the directors, that Dr. Arnold Naimark, Brent Fawkes, Gerald McDole and Peter Quick are
independent from the Company. Only Dr. Albert Friesen is deemed to not be independent from the Company. As part of every regularly
scheduled Board and committee meeting, the independent directors are given the opportunity to meet separately from management
and the non-independent director. Board committees are entirely composed of independent directors who meet without management
when required.



Gerald McDole is presently a director
of Cipher Pharmaceuticals Inc. No other director of the Company is currently a director of any other “reporting issuers”
(as such term is defined in Canadian provincial securities legislation).



The Board has an orientation program in
place for new directors which the Board feels is appropriate having regard to the current makeup of the Board. Each director receives
relevant corporate and business information on the Company, the Board, and its committees. The directors regularly meet with Management
and are given periodic presentations on relevant business issues and developments.



Presentations are made to the Board from
time to time to educate and keep it informed of changes within the Company and of regulatory and industry requirements and standards.



The Company’s Board has adopted
a Code of Ethics applicable to directors, officers and employees, copies of which are available on the Company’s website
(www.medicure.com). A copy may also be obtained upon request to the Secretary of the Company at its head office, 2-1250 Waverley
Street, Winnipeg, Manitoba, R3T 6C6. The ECNCG Committee regularly monitors compliance with the Code of Ethics and also ensures
that Management encourages and promotes a culture of ethical business conduct.



Audit and Finance Committee



Pursuant to Section 171 of the Canada
Business Corporations Act (the “Act”), the Company is required to have an Audit Committee. Section 171(1)
of the Act requires the directors of a reporting corporation to elect from among their number a committee composed of not fewer
than three directors, of whom a majority must not be officers or employees of the corporation or an affiliate of the corporation.
Section 171(3) of the Act provides that, before financial statements are approved by the directors, they must be submitted to
the audit committee for review. Section 171(4) of the Act provides that the auditor must be given notice of, and has the right
to appear before and to be heard at, every meeting of the audit committee, and must appear before the audit committee when requested
to do so by the committee. Finally, section 171(5) of the Act provides that on the request of the auditor, the audit committee
must convene a meeting of the audit committee to consider any matters the auditor believes should be brought to the attention
of the directors or members.



Pursuant to section 6.1 of NI 52-110,
the Company is exempt from the requirements of Parts 3 and 5 of NI 52-110 for the seven months ended December 31, 2014, by virtue
of the Company being a "venture issuer" (as defined in NI 52-110).



Part 3 of NI 52-110 prescribes certain
requirements for the composition of audit committees of non-exempt companies that are reporting issuers under Canadian provincial
securities legislation. Part 3 of NI 52-110 requires, among other things that an audit committee be comprised of at three directors,
each of whom, is, subject to certain exceptions, independent and financially literate in accordance with the standards set forth
in NI 52-110.



60







Part 5 of NI 52-110 requires an annual
information form that is filed by a non-exempt reporting issuer under National Instrument 51-102 – Continuous Disclosure
Obligations, as adopted the CSA, to include certain disclosure about the issuer's audit committee, including, among other
things: the text of the audit committee's charter; the name of each audit committee member and whether or not the member is independent
and financially literate; whether a recommendation of the audit committee to nominate or compensate an external auditor was not
adopted by the issuer's board of directors, and the reasons for the board's decision; a description of any policies and procedures
adopted by the audit committee for the engagement of non-audit services; and disclosure of the fees billed by the issuer's external
auditor in each of the last two fiscal years for audit, tax and other services.



Notwithstanding the exemption available
under section 6.1 of NI 52-110, as at the date hereof, the Audit and Finance Committee is comprised of four independent directors:
Brent Fawkes (Chair), Gerald McDole, Dr. Arnold Naimark, and Peter Quick. The relevant experience of each member is described
above. (See “Item 6 - Directors, Senior Management and Employees”.)



As a result of their education and experience,
each member of the audit committee has familiarity with, an understanding of, or experience in:



| | · | the
                                         accounting principles used by the Company to prepare its financial statements, and the
                                         ability to assess the general application of those principles in connection with estimates,
                                         accruals and reserves;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | reviewing
                                         or evaluating financial statements that present a breadth and level of complexity of
                                         accounting issues that are generally comparable to the breadth and complexity of issues
                                         that can reasonably be expected to be raised by the Company's financial statements, and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | an
                                         understanding of internal controls and procedures for financial reporting.
| | - | ----------------------------------------------------------------------------------------------------------------------



Under the Sarbanes-Oxley Act of 2002,
the independent auditor of a public Company is prohibited from performing certain non-audit services. The Audit and Finance Committee
has adopted procedures and policies for the pre-approval of non-audit services, as described in the Audit and Finance Committee
Charter reproduced below.



61











AUDIT AND FINANCE COMMITTEE CHARTER  GENERAL FUNCTIONS, AUTHORITY, AND ROLE  The purpose of the Audit and Finance Committee
(the “Committee”) is to oversee the accounting, financial reporting and disclosure processes of the Company and the
audits of its financial statements, and thereby assist the Board of Directors of the Company (the “Board”) in monitoring
the following:  (1) the integrity of the financial statements
of the Company;  (2) compliance by the Company with ethical
policies and legal and regulatory requirements related to financial reporting and disclosure;  (3) the appointment, compensation, qualifications,
independence and performance of the Company’s internal and external auditors;  (4) the performance of the Company's independent
auditors;  (5) performance of the Company's internal
controls and financial reporting and disclosure processes; and  (6) that management of the Company has assessed
areas of potential significant financial risk to the Company and taken appropriate measures.  The Committee has the power to conduct or
authorize investigations into any matters within its scope of responsibilities, with full access to all books, records, facilities
and personnel of the Company, its auditors and its legal advisors. In connection with such investigations or otherwise in the
course of fulfilling its responsibilities under this charter, the Committee has the authority to independently retain, and set
and pay compensation to, special legal, accounting, or other consultants to advise it, and may request any officer or employee
of the Company, its independent legal counsel or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee. The Committee has the power to create specific sub-committees with all of the power
to conduct or authorize investigations into any matters within the scope of the mandate of the sub-committee, with full access
to all books, records, facilities and personnel of the Company, its auditors and its legal advisors.  In the course of fulfilling its specific responsibilities
hereunder, the Committee has authority to, and must, maintain free and open communication between the Company's independent auditor,
Board and Company management. The responsibilities of a member of the Committee are in addition to such member's duties as a member
of the Board.  While the Committee has the responsibilities
and powers set forth in this charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's
financial statements are complete, accurate, and in accordance with International Financial Reporting Standards (“IFRS”).
This is the responsibility of management and the independent auditor. Nor is it the duty of the Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent auditor or to assure compliance with laws and regulations
and the Company’s Code of Ethics. Any responsibilities that the Committee has the power to act upon, may be recommended
to the Board to act upon.  MEMBERSHIP  The membership of the Committee will be as
follows:  The Committee shall consist of a minimum of
three members of the Board, appointed from time to time, each of whom is affirmatively confirmed as independent by the Board in
accordance with the definition of independence for audit committee members set out in Appendix I hereto, with such affirmation
disclosed in the Company's Management Information Circular for its annual meeting of shareholders. All members of the Committee
should be “financially literate”, as defined in Appendix I, and at least one of the members shall be an “audit
committee financial expert” as defined in as defined in Appendix I.




62







The Board will elect, by a majority vote,
one member as chairperson. In the absence of the Chair of the Committee, the members shall appoint an acting Chair.  The members of the Committee shall meet all
independence and financial literacy requirements of The TSX Venture Exchange, and the requirements of such other securities exchange
or quotations system or regulatory agency as may from time to time apply to the Company.  Any member of the Committee may be removed
and replaced at any time by the Board and will automatically cease to be a member of the Committee as soon as such member ceases
to be a Director. The Board may fill vacancies in the Committee by election from among the members of the Board. If and whenever
a vacancy exists on the Committee, the remaining members may exercise all its powers so long as a quorum remains in office.  A quorum shall be a majority of the members
provided that if the number of members is an even number, one half of the number plus one shall constitute a quorum.  A member of the Committee may not, other than
in his or her capacity as a member of the Committee, the Board, or any other Board committee, accept any consulting, advisory,
or other compensatory fee from the Company, and may not be an affiliated person of the Company or any subsidiary thereof.  RESPONSIBILITIES  The responsibilities of the Committee shall
be as follows:  Frequency of Meetings  Meet quarterly or more often as may be deemed
necessary or appropriate in its judgment, either in person or telephonically.  The Committee will meet with the independent
auditor at least annually, either in person or telephonically.  Reporting Responsibilities  Provide to the Board proper Committee minutes.  Report Committee actions to the Board with
such recommendations as the Committee may deem appropriate.  Committee and Charter Evaluation  The Committee shall annually review, discuss
and assess its own performance. In addition, the Committee shall periodically review its role and responsibilities.  Annually review and reassess the adequacy
of this Charter and recommend any proposed changes to the Board for approval.  Whistleblower Mechanism  Adopt and review annually a procedure through
which employees and others can confidentially and anonymously inform the Committee regarding any concerns about the Company's
accounting, internal accounting controls or auditing matters. The procedure shall include responding to and the retention of,
any such complaints.  Legal Responsibilities  Perform such functions as may be assigned
by law, by the Company's certificate of incorporation, memorandum, articles or similar documents, or by the Board.




63







INDEPENDENT AUDITOR  Nomination, Compensation and Evaluation  The Company’s independent auditor is
ultimately accountable to the Committee and the Board and shall report directly to the Committee. The Committee shall review the
independence and performance of the auditor and annually recommend to the Board the appointment and compensation of the independent
auditor or approve any discharge of auditor when circumstances warrant.  Review of Work  The Committee is directly responsibility for
overseeing the work of the independent auditor engaged to prepare or issue an audit report or perform other audit, review or attest
services for the Company, including the resolution of disagreements between management and the independent auditor regarding financial
reporting.  Approval in Advance of Related Party Transactions  Pre-approval of all “related party transactions,”
which are transactions or loans between the Company and a related party involving goods, services, or tangible or intangible assets
that are:  (1) material to the Company or the related
party; or  (2) unusual in their nature or conditions.  A related party includes an affiliate, major
shareholder, officer, other key management personnel or director of the Company, a company controlled by any of those parties
or a family member of any of those parties.  Engagement Procedures for Audit and Non-Audit
Services  Approve in advance all audit services to be
provided by the independent auditor. Establish policies and procedures that establish a requirement for approval in advance of
the engagement of the independent auditor to provide permitted non-audit services provided to the Company or its subsidiary entities
and to prohibit the engagement of the independent auditor for any activities or services not permitted by any of the Canadian
provincial securities commissions, the Securities Exchange Commission (“SEC”) or any securities exchange on which
the Company's shares are traded including any of the following non-audit services:  ·Bookkeeping
                                         or other services related to accounting records or financial statements of the Company;  ·Financial
                                         information systems design and implementation consulting services;  ·Appraisal
                                         or valuation services, fairness opinions, or contributions-in-kind reports;  ·Actuarial
                                         services;  ·Internal
                                         audit outsourcing services;  ·Any
                                         management or human resources function;  ·Broker,
                                         dealer, investment advisor, or investment banking services;  ·Legal
                                         services;


64







·Expert
                                         services related to the auditing service; and  ·Any
                                         other service the Board determines is not permitted.  Hiring Practices  Review and approve the Company’s hiring
policy regarding the partners, employees and former partners and employees of the present and former independent auditor of the
Company. Ensure that no individual who is, or in the past three years has been, affiliated with or employed by a present or former
auditor of the Company or an affiliate, is hired by the Company as a senior officer until at least three years after the end of
either the affiliation or the auditing relationship.  Independence Test  Take reasonable steps to confirm the independence
of the independent auditor, which shall annually include:  ·Ensuring
                                         receipt from the independent auditor of a formal written statement delineating all relationships
                                         between the independent auditor and the Company, consistent with the Independence Standards
                                         Board Standard No. 1 and related Canadian regulatory body standards;  ·Considering
                                         and discussing with the independent auditor any relationships or services provided to
                                         the Company, including non-audit services, that may impact the objectivity and independence
                                         of the independent auditor; and  ·As
                                         necessary, taking, or recommending that the Board take, appropriate action to oversee
                                         the independence of the independent auditor and evaluate whether it is appropriate to
                                         rotate the independent auditor on a regular basis.  Audit and Finance Committee Meetings  Notify the independent auditor of every Committee
meeting and permit the independent auditor to appear and speak at those meetings.  At the request of the independent auditor,
convene a meeting of the Committee to consider matters the auditor believes should be brought to the attention of the directors
or shareholders.  Keep minutes of its meetings and report to
the Board for approval of any actions taken or recommendations made.  Restrictions  Confirm with management and the independent
auditor that no restrictions are placed on the scope of the auditors' review and examination of the Company's accounts.  OTHER PROFESSIONAL CONSULTING SERVICES  Engagement Review  As necessary, consider with management the
rationale and selection criteria for engaging professional consulting services firms.




65







Ultimate authority and responsibility to select,
evaluate and approve professional consulting services engagements.  AUDIT AND REVIEW PROCESS AND RESULTS  Scope  Consider, in consultation with the independent
auditor, the audit scope, staffing and planning of the independent auditor.  Review Process and Results  Consider and review with the independent auditor
the matters required to be discussed by such auditing standards as may be applicable.  Review and discuss with management and the
independent auditor at the completion of annual and quarterly examinations, if any:  ·The
                                         Company's audited and unaudited financial statements and related notes;  ·The
                                         Company's Management Discussion & Analysis (“MD&A”) and news releases
                                         related to financial results;  ·The
                                         Company’s management certifications of the financial statements and accompanying
                                         MD&A as required under applicable securities laws;  ·The
                                         Company’s annual information form (“AIF”), if one is prepared and filed.  ·The
                                         independent auditor's audit of the financial statements and its report thereon;  ·Any
                                         significant changes required in the independent auditor's audit plan;  ·The
                                         appropriateness of the presentation of any non-IFRS related financial information;  ·Any
                                         serious difficulties or disputes with management encountered during the course of the
                                         audit; and  ·Other
                                         matters related to the conduct of the audit, which are to be communicated to the Committee
                                         under generally accepted auditing standards.  Review the management letter, if any, delivered
by the independent auditor in connection with the audit.  Following such review and discussion, if so
determined by the Committee, recommend to the Board that the annual financial statements be included in the Company's annual report.  Review and discuss with management and the
independent auditor the adequacy of the Company's internal accounting and financial controls that management and the Board have
established and the effectiveness of those systems, and inquire of management and the independent auditor about significant financial
risks or exposures and the steps management has taken to minimize such risks to the Company.  Meet separately with the independent auditor
and management, as necessary or appropriate, to discuss any matters that the Committee or any of these groups believe should be
discussed privately with the Committee.  Review and discuss with management and the
independent auditor the accounting policies which may be viewed as critical, including all alternative treatments for financial
information within IFRS that have been discussed with management, and review and discuss any significant changes in the accounting
policies of the Company and industry accounting and regulatory financial reporting proposals that may have a significant impact
on the Company's financial reports.




66







Review with management and the independent
auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures, if any, on the Company's
financial statements.  Review with management and the independent
auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise
material issues regarding the Company's financial statements or accounting policies.  Review with the Company's legal counsel legal
matters that may have a material impact on the financial statements, the Company's financial compliance policies and any material
reports or inquiries received from regulators or governmental agencies related to financial matters.  SECURITIES REGULATORY FILINGS  Review filings with the Canadian provincial
securities commissions and the SEC and other published documents containing the Company's financial statements.  Review, with management, prior to public disclosure,
the Company’s financial statements and MD&A and related press releases. The chairperson of the Committee may represent
the entire Committee for purposes of this review.  Ensure that adequate procedures are in place
for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s
financial statements, other than the disclosure stated above, and periodically assess the adequacy of those procedures.  RISK ASSESSMENT  Meet periodically with management to review
the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures.  Assess risk areas and policies to manage risk
including, without limitation, environmental risk, insurance coverage and other areas as determined by the Board from time to
time.  Review and discuss with management, and approve
changes to, the Company's Corporate Investment Policy.  LIMITATION ON DUTIES OF AUDIT AND FINANCE
COMMITTEE  In contributing to the Committee’s discharging
of its duties under this charter, each member of the Committee shall be obliged only to exercise the care, diligence and skill
that a reasonably prudent person would exercise in comparable circumstances. Nothing in this charter is intended, or may be construed,
to impose on any member of the Committee a standard of care or diligence that is in any way more onerous or extensive than the
standard to which all Board members are subject.  ADOPTION OF CHARTER  This charter was originally adopted by the
Board on August 23, 2004 and revised on January 17, 2012.  APPENDIX I  GLOSSARY OF TERMS  “Independent”means a director
who has no direct or indirect material relationship with the Company or its subsidiaries.




67







A “material relationship”is
a relationship which could, in the view of the Board of the Company, be reasonably expected to interfere with the exercise of
the person’s independent judgment.  For greater certainty, certain individuals
will be deemed not to be independent:  a)an individual who is, or has been
                                         within the last three years, an employee or executive officer of the Company;  b)an individual whose immediate
                                         family member is, or has been within the last three years, an executive officer of the
                                         Company;  c)an individual who is a partner
                                         of, or employed by the Company’s internal or external auditor or who was, within
                                         the last three years, a partner or employee of that audit firm and personally worked
                                         on the Company’s audit within that time. For this purpose, “partner”
                                         does not include a fixed income partner;  d)an individual whose child or stepchild
                                         shares a home with the individual or whose spouse, is a partner of the Company’s
                                         internal or external auditor, or is an employee of the audit firm and participates in
                                         its audit, assurance or tax compliance practice or who was within the last three years
                                         a partner or employee of the audit firm and personally worked on the Company’s
                                         audit within that time. For this purpose, “partner” does not include a fixed
                                         income partner;  e)an individual who, or whose immediate
                                         family member, is or has been within the last three years, an executive officer of an
                                         entity if any of the Company’s current executive officers serve or served at the
                                         same time on the entity’s compensation committee; and  f)an individual who received, or
                                         whose immediate family member who is employed as an executive officer of the Company
                                         received, more than $75,000 in direct compensation from the Company during any 12 month
                                         period within the last three years. For purposes hereof, direct compensation does not
                                         include remuneration for acting as a member of the Board or of any Board committee or
                                         remuneration consisting of fixed amounts of compensation under a retirement plan for
                                         prior service provided that such compensation is not contingent on any way on continued
                                         service.  For purposes hereof, “Company”includes Medicure Inc. and any subsidiaries thereof.  Notwithstanding the foregoing, a person will
not be considered to have a material relationship with the Company solely because he or she:  a)has previously acted as an interim
                                         chief executive officer of the issuer, or  b)acts, or has previously acted,
                                         as a chair or vice-chair of the Board or any Board committee, on a part-time basis.  Meaning Of “Independence” For
Audit Committees  In addition to the requirement of being an
Independent Director as described above, members of the Audit Committee will not be considered “independent” for that
purpose where the individual:  a)accepts, directly or indirectly,
                                         any consulting, advisory or other compensatory fee from the Company or subsidiary of
                                         the Company, other than as remuneration for acting in his or her capacity as a member
                                         of the Board or any Board committee, or as a part-time or vice-chair of the Board or
                                         any Board Committee; or  b)is an affiliated entity (as defined
                                         in National Instrument 52-110 Audit Committees) of the Company or any of its subsidiaries.


68







For purposes hereof, indirect acceptance by
an individual of any consulting, advisory or other compensatory fee includes acceptance of a fee by (i) an individual’s
spouse, minor child or stepchild, or child or stepchild who shares the individual’s home, or (ii) an entity in which such
individual is a partner, member, executive officer or managing director (or comparable position) and which provides accounting,
consulting, legal, investment banking or financial advisory services to the Company or any subsidiary of the Company. Notwithstanding
the foregoing, compensatory fees do not include receipt of fixed amounts of compensation under a retirement plan (including deferred
compensation) for prior service with the issuer if the compensation is not contingent in any way on continued service.  Meaning of “financially literate”  For purposes hereof, an individual is financially
literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably
be expected to be raised by the Company’s financial statements.  Meaning of “audit committee financial
expert”  An “audit committee financial expert”
means a person who has the following attributes:  (1) An understanding of generally accepted
accounting principles and financial statements;  (2) The ability to assess the general application
of such principles in connection with the accounting for estimates, accruals and reserves;  (3) Experience preparing, auditing, analyzing
or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements,
or experience actively supervising one or more persons engaged in such activities;  (4) An understanding of internal controls
over financial reporting;  (5) An understanding of audit committee functions.  A person shall have acquired such attributes
through:  (1) Education and experience as a principal
financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions
that involve the performance of similar functions;  (2) Experience actively supervising a principal
financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions;  (3) Experience overseeing or assessing the
performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements;
or  (4) Other relevant experience.




Executive Compensation, Nominating and
Corporate Governance Committee



The Executive Compensation, Nominating and
Corporate Governance Committee is responsible for determining the compensation of executive officers of the Company. The current
members of the Committee are Dr. Arnold Naimark (Chair), Gerald McDole, Peter Quick and Brent Fawkes, none of whom is a current
or former executive officer of the Company. The Committee meets at least once a year.



69







The Committee has developed a policy to govern
the Company's approach to corporate governance issues and provides a forum for concerns of individual directors about matters
not easily or readily discussed in a full board meeting, e.g., the performance of management. The Committee ensures there is a
clear definition and separation of the responsibilities of the Board, the Committees of the Board, the Chief Executive Officer
and other management employees. It also ensures there is a process in place for the orientation and education of new directors
and for continuing education of the Board. The Committee also assesses the effectiveness of the Board and its committees on an
ongoing ad hoc basis. It also reviews at least annually the Company's responsiveness to environmental impact, health and safety
and other regulatory standards.



The Committee reviews the objectives, performance
and compensation of the Chief Executive Officer at least annually and makes recommendations to the Board for change. The Committee
makes recommendations based upon the Chief Executive Officer’s suggestions regarding the salaries and incentive compensation
for senior officers of the Company. The Committee also reviews significant changes to compensation, benefits and human resources
policies and compliance with current human resource management practices, such as pay equity, performance review and staff development.
The Committee is responsible for reviewing and recommending changes to the compensation of directors as necessary.



The charter of the Executive Compensation,
Nominating and Corporate Governance Committee can be found on the Company’s website at www.medicure.com.



D. Employees



In addition to the individuals disclosed in
Section A. Directors and Senior Management of this item, the Company has 18 employees. During the seven months ended December
31, 2014, the Company has increased its total employment and plans to continue to increase total employment during 2015.



E. Share Ownership



The following table discloses the number of
shares (each share possessing identical voting rights), stock options and percent of the shares outstanding held by the directors
and officers of the Company, and their respective affiliates, directly and indirectly, at December 31, 2014.



|Title of Class |  | Identity of Person or Group  |  | Amount Owned |           |     | Percentage of Class | 
|-------------- |  | ---------------------------- |  | ------------ | --------- | --- | ------------------- | 
|               |  |                              |  |              |           |     |                     | 
|Common shares  |  | Dr. Albert D. Friesen(1) (2) |  |              | 2,303,547 | (1) |                     | 
|Common shares  |  | Dr. Arnold Naimark (3)       |  |              | Nil       |     |                     | 
|Common shares  |  | Gerald P. McDole (2)         |  |              | 667       |     |                     | 
|Common shares  |  | Peter Quick (3)              |  |              | Nil       |     |                     | 
|Common shares  |  | Brent Fawkes (2)             |  |              | 1,200     |     |                     | 
|Common shares  |  | James Kinley                 |  |              | 2,100     |     |                     | 
|Common shares  |  | Dawson Reimer                |  |              | 23,315    |     |                     | 



| | (1) | Dr. Albert D. Friesen holds 834,867
                                         shares personally or in an RRSP, a Canadian individual retirement plan. The rest of the
                                         shares are held by ADF Family Holding Corp., his wife Mrs. Leona M. Friesen, and CentreStone
                                         Ventures Limited Partnership Fund (the “Fund”). Dr. Friesen is the General
                                         Partner of the Fund.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | On
                                         July 11, 2014, the Company announced that, subject
                                         to all necessary regulatory approvals, it has entered into shares for debt agreements
                                         with its Chief Executive Officer, Dr. Albert Friesen and certain members of the Board
                                         of Directors, pursuant to which the Company will issue 205,867 of its common shares at
                                         a deemed price of $1.98 per common share to satisfy $407,617 of outstanding amounts owing
                                         to CEO and members of the Company’s Board of Directors. The shares were issued
                                         subsequent to December 31, 2014 on January 9, 2015.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



70







| | (3) | Subsequent
                                         to December 31, 2014, on January 27, 2015, the Company
                                         announced that, subject to all necessary regulatory approvals, it has entered into shares
                                         for debt agreements with certain members of the Board of Directors and a consultant,
                                         pursuant to which the Company will issue 108,206 of its common shares at a deemed price
                                         of $1.44 per common share to satisfy $155,817 of outstanding amounts owing to these individuals.
                                         The shares were issued subsequent to December 31, 2014 on March 20, 2015.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Incentive Stock Options



The Company has established an Incentive Stock
Option Plan (the ‘‘Plan’’) for its directors, key officers, employees and consultants. Options granted
pursuant to the Plan will not exceed a term of ten years and are granted at an option price and on other terms which the directors
determine is necessary to achieve the goal of the Plan and in accordance with regulatory requirements, including those of the
TSX Venture Exchange. Each option entitles the holder thereof to purchase one (1) Common Share of the Company on the terms set
forth in the Plan and in such purchaser’s specific stock option agreement. The option price may be at a discount to market
price, which discount will not, in any event, exceed that permitted by any stock exchange on which the Company’s Common
Shares are listed for trading.



The number of Common Shares allocated to the
Plan, the exercise period for the options, and the vesting provisions for the options will be determined by the board of directors
of the Company from time to time. The aggregate number of shares reserved for issuance under the Plan, together with any stock
options outstanding, will not exceed 20% of the issued and outstanding Common Shares at the date of adoption of the Plan. The
Plan was adopted by the shareholders of the Company on November 4, 2014.



The Common Shares issued pursuant to the exercise
of options, when fully paid for by a participant, are not included in the calculation of Common Shares allocated to or within
the Plan. Should a participant cease to be eligible due to the loss of corporate office (being that of an officer or director)
or employment, the option shall cease for varying periods not exceeding 90 days. Loss of eligibility for consultants is regulated
by specific rules imposed by the directors when the option is granted to the appropriate consultant. The Plan also provides that
estates of deceased participants can exercise their options for a period not exceeding one year following death.



The following table discloses the stock options
beneficially held by the directors and officers of the Company, and their respective affiliates, directly and indirectly, as of
December 31, 2014. The stock options are subject to the Plan and are for shares of Common Stock of the Company.



|Name of Person        |  | Number of Shares Subject to Issuance |         |  | Exercise Price per Share |   |       | Expiry Date
|--------------------- |  | ------------------------------------ | ------- |  | ------------------------ | - | ----- | -----------
|Dr. Albert D. Friesen |  |                                      | 10,000  |  |                          | $ | 24.75 |            
|                      |  |                                      | 10,000  |  |                          | $ | 24.45 |            
|                      |  |                                      | 414,000 |  |                          | $ | 1.50  |            
|                      |  |                                      | 75,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 7,500   |  |                          | $ | 1.90  |            
|Dr. Arnold Naimark    |  |                                      | 2,333   |  |                          | $ | 24.75 |            
|                      |  |                                      | 7,333   |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 667     |  |                          | $ | 0.60  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|Gerald P. McDole      |  |                                      | 5,000   |  |                          | $ | 24.75 |            
|                      |  |                                      | 667     |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 667     |  |                          | $ | 0.60  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|Peter Quick           |  |                                      | 6,667   |  |                          | $ | 24.75 |            
|                      |  |                                      | 3,333   |  |                          | $ | 23.10 |            
|                      |  |                                      | 667     |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 667     |  |                          | $ | 0.60  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|Brent Fawkes          |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|James Kinley          |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 7,500   |  |                          | $ | 1.90  |            
|Dawson Reimer         |  |                                      | 4,333   |  |                          | $ | 24.75 |            
|                      |  |                                      | 6,667   |  |                          | $ | 24.45 |            
|                      |  |                                      | 6,667   |  |                          | $ | 0.45  |            
|                      |  |                                      | 266,667 |  |                          | $ | 1.50  |            
|                      |  |                                      | 56,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 5,600   |  |                          | $ | 1.90  |            



71







On July 7, 2014 the Company granted an aggregate
of 332,300 options pursuant to the Plan to certain directors, officers, employees, management company employees and consultants
of the Company. Of these options, 92,300 are set to expire on the tenth anniversary of the date of grant, and 240,000 are set
to expire on the fifth anniversary of the date of grant. All 332,300 options were issued at an exercise price of $1.90 per share.



Subsequent to December 31, 2014, on March
27, 2015, the Company granted an aggregate of 236,070 options to certain directors, officers, employees, management company employees
and consultants of the Company pursuant to the Company’s Stock Option Plan. Of these options, 181,070 are set to expire
on the tenth anniversary of the date of grant, 5,000 are set to expire on the third anniversary of the date of grant and 50,000
are set to expire on the first anniversary of the date of grant. All of the options were issued at an exercise price of $1.90
per share.



ITEM 7. MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS



A. Major Shareholders



As of December 31, 2014, the following table
sets forth the beneficial ownership of the Company's common shares by each person known by the Company to own beneficially more
than 5% of the issued and outstanding common shares of the Company. Information as to shares beneficially owned, directly or indirectly,
by each nominee or over which each nominee exercises control or direction, not being within the knowledge of the Company, has
been furnished by the respective nominees individually. The Company does not know the majority of the ultimate beneficial owners
of these common shares.



|Title of Class |  | Identity of Person or Group           |  | Amount Owned |                 |  | Percentage of Class | 
|-------------- |  | ------------------------------------- |  | ------------ | --------------- |  | ------------------- | 
|               |  |                                       |  |              |                 |  |                     | 
|Common shares  |  | Dr. Albert D. Friesen                 |  |              | 2,303,547(1)(2) |  |                     | 
|               |  | Winnipeg, Manitoba                    |  |              |                 |  |                     | 
|Common shares  |  | Elliot International Capital Advisors |  |              | 2,176,003       |  |                     | 
|Common shares  |  | Dr. Lars Hoie                         |  |              | 1,334,549       |  |                     | 
|               |  | London, England                       |  |              |                 |  |                     | 



72







Notes:

| | (1) | Dr. Albert Friesen holds
                                         834,867 shares personally or in an RRSP. The rest of the shares are held by ADF Family
                                         Holding Corp., his wife Mrs. Leona M. Friesen, and the Fund.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | On
                                         July 11, 2014, the Company announced that, subject
                                         to all necessary regulatory approvals, it has entered into shares for debt agreements
                                         with its Chief Executive Officer, Dr. Albert Friesen and certain members of the Board
                                         of Directors, pursuant to which the Company will issue 205,867 of its common shares at
                                         a deemed price of $1.98 per common share to satisfy $407,617 of outstanding amounts owing
                                         to CEO and members of the Company’s Board of Directors. The shares were issued
                                         subsequent to December 31, 2014 on January 9, 2015.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2014 there were approximately
6,500 shareholders of record worldwide. As of this date there were approximately 1,600 shareholders of record in the United States
holding a total of 3,450,000 common shares of the Company.



To the best of the Company's knowledge, it
is not owned or controlled, directly or indirectly, by another Company, by any foreign government or by any other natural or legal
person severally or jointly.



As of December 31, 2014, the total number
of issued and outstanding common shares of the Company beneficially owned by the directors and executive officers of the Company
as a group was 2,330,829 (or 19.09% of common shares).



To the best of the Company's knowledge, there
are no arrangements, the operation of which at a subsequent date will result in a change in control of the Company.



The major shareholders do not have any special
voting rights.



Insider Reports under Canadian Securities
Legislation



Since the Company a reporting issuer under
the Securities Acts of each of the provinces of Canada, certain "insiders" of the Company (including its directors,
certain executive officers, and persons who directly or indirectly beneficially own, control or direct more than 10% of its common
shares) are generally required to file insider reports of changes in their ownership of the Company's common shares five days
following the trade under National Instrument 55-104 – Insider Reporting Requirements and Exemptions, as adopted
by the Canadian Securities Administrators. Insider reports must be filed electronically five days following the date of the trade
at www.sedi.ca. The public is able to access these reports at www.sedi.ca.



The U.S. rules governing the ownership threshold
above which shareholder ownership must be disclosed are more stringent than those discussed above. Section 13 of the Exchange
Act imposes reporting requirements on persons who acquire beneficial ownership (as such term is defined in the Rule 13d-3 under
the Exchange Act) of more than 5 per cent of a class of an equity security registered under Section 12 of the Exchange Act. In
general, such persons must file, within 10 days after such acquisition, a report of beneficial ownership with the Securities and
Exchange Commission containing the information prescribed by the regulations under Section 13 of the Exchange Act. This information
is also required to be sent to the issuer of the securities and to each exchange where the securities are traded.



73







B. Related Party Transactions



Except as disclosed below, the Company has
not, since June 1, 2013, and does not at this time propose to:



| | (1) | enter into any transactions which are
                                         material to the Company or a related party or any transactions unusual in their nature
                                         or conditions involving goods, services or tangible or intangible assets to which the
                                         Company or any of its former subsidiaries was a party;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | make any loans or guarantees directly
                                         or through any of its former subsidiaries to or for the benefit of any of the following
                                         persons:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) | enterprises directly or indirectly
                                         through one or more intermediaries, controlling or controlled by or under common control
                                         with the Company;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | associates of the Company (unconsolidated
                                         enterprises in which the Company has significant influence or which has significant influence
                                         over the Company) including shareholders beneficially owning 10% or more of the outstanding
                                         shares of the Company;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | individuals owning, directly or
                                         indirectly, shares of the Company that gives them significant influence over the Company
                                         and close members of such individuals families;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | key management personnel (persons
                                         having authority in responsibility for planning, directing and controlling the activities
                                         of the Company including directors and senior management and close members of such directors
                                         and senior management); or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | enterprises in which a substantial
                                         voting interest is owned, directly or indirectly, by any person described in (c) or (d)
                                         or over which such a person is able to exercise significant influence.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On July 18, 2011, the Company entered into
a consulting agreement with A.D. Friesen Enterprises Ltd. pursuant to which Dr. Albert Friesen serves the Company as its Chief
Executive Officer. The agreement is for a term of five years, at a rate of $180,000 annually. Dr. Friesen is also eligible for
a yearly merit/performance bonus, if any, that the Company’s board of directors, in its sole discretion, may authorize.



During the seven months ended December 31,
2014, the Company recorded a bonus of $58,904 to its Chief Executive Officer which is recorded within selling, general and administrative
expenses.



On July 11,
2014, the Company announced that, subject to all necessary regulatory approvals, it has entered
into shares for debt agreements with its Chief Executive Officer, Dr. Albert Friesen and certain members of the Board of Directors,
pursuant to which the Company will issue 205,867 of its common shares at a deemed price of $1.98 per common share to satisfy $407,617
of outstanding amounts owing to CEO and members of the Company’s Board of Directors. The shares were issued subsequent to
December 31, 2014 on January 9, 2015.



The Company may terminate the consulting agreement
with the CEO for any reason and at any time upon 120 days written notice. During the year ended May 31, 2013, the Company recorded
a total of $186,000 to A.D. Friesen Enterprises Ltd. During the year ended May 31, 2012, the Company paid a total of $186,000
to A.D. Friesen Enterprises Ltd. During the year ended May 31, 2011 the Company paid a total of $201,000 to A.D. Friesen Enterprises
Ltd.



Dr. Friesen, a director, the Chairman and
the Chief Executive Officer of the Company is also the majority shareholder in a management services company, Genesys Venture
Inc. (“GVI”) which entered into a management services agreement with the Company as of October 1, 2010. Effective
January 1, 2012, the Company entered into a new business and administration services agreement with GVI under which the Company
is committed to pay $15,833.33 per month or $190,000 per annum along with an additional $500 per month for each office space it
requests and is given access to by GVI. The agreement was for an initial term of one year and shall be automatically renewed for
succeeding terms of one year. Either party may terminate the agreement at any time after June 30, 2012, upon 90 days written notice
to the other party. The Chief Financial Officer's services, accounting, payroll, human resources, and information technology are
provided pursuant to this agreement. The agreement was renewed for the 2013 and 2014 calendar years. Effective November 1, 2014,
the business and administration services agreement was renegotiated for a further 14 month term ending December 31, 2015 at a
rate of $17,917 per month, or $215,000 per year.



74







During the seven months ended December 31,
2014, the Company paid GVI, a company controlled by the Chief Executive Officer, a total of $115,000 (year ended May 31, 2014
- $190,000, year ended May 31, 2013 - $190,000 and year ended May 31, 2012 - $184,167) for business administration services, $36,500
(year ended May 31, 2014 - $30,500, year ended May 31, 2013 - $32,500 and year ended May 31, 2012 - $19,563) in rental costs and
$25,115 (year ended May 31, 2014 - $33,735, year ended May 31, 2013 - $26,125 and year ended May 31, 2012 - $46,275) for commercial
support services. As described in note 16, the Chief Financial Officer's services are provided through a consulting agreement
with GVI. In addition, accounting, payroll, human resources and information technology services are provided to the Company through
the GVI agreement.



Dr. Friesen, a director, the Chairman and
the Chief Executive Officer of the Company also owns a clinical research organization, GVI Clinical Development Solutions Inc.
(“GVI CDS”) which entered into the following clinical research contracts with the Company;



|Nature of Agreement                           |  | Effective Date  |  | Terms                                                                                                                                   
|--------------------------------------------- |  | --------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|                                              |  |                 |  |                                                                                                                                         
|Regulatory affairs support                    |  | June 22, 2009   |  | Services provided as needed on an hourly basis.                                                                                         
|                                              |  |                 |  |                                                                                                                                         
|Pharmacovigilance and medical affairs support |  | August 1, 2009  |  | Monthly retainer of $3,800, plus hourly charges for pharmacovigilance services outside base
    services. (terminated December 31, 2013)
|                                              |  |                 |  |                                                                                                                                         
|Pharmacovigilance and medical affairs support |  | January 1, 2014 |  | Monthly retainer of $1,250, plus hourly charges for pharmacovigilance services outside base
    services.                               
|                                              |  |                 |  |                                                                                                                                         
|Quality assurance support                     |  | June 1, 2010    |  | Services provided as needed on an hourly basis.                                                                                         
|                                              |  |                 |  |                                                                                                                                         
|AGGRASTAT®clinical trial management           |  | May 1, 2010     |  | Services provided as needed on an hourly basis.                                                                                         



During the seven months ended December 31,
2014, the Company paid GVI CDS $56,904 (year ended May 31, 2014 - $125,583, year ended May 31, 2013 - $134,696 and year ended
May 31, 2012 - $146,154) for clinical research services.



The Company also has a consulting agreement
with CanAm Bioresearch Inc. (CanAm), a company controlled by a close family member of Dr. Friesen’s to provide contract
research services. During the seven months ended December 31, 2014, the Company paid CanAm $233,938 (year ended May 31, 2014 -
$229,732, year ended May 31, 2013 - $467,763 and year ended May 31, 2012 - $254,493) for research and development services.



These transactions were in the normal course
of business and have been measured at the exchange amount, which is the amount of consideration established and agreed to by the
related parties. Beginning on February 22, 2013, these amounts began to bear interest at a rate of 5.5% per annum. For the seven
months ended December 31, 2014, $18,082 (year ended May 31, 2014 - $36,904, year ended May 31, 2013 - $7,366 and year ended May
31, 2012 - nil) was recorded within finance expense in relation to these amounts payable to related parties.



As at December 31, 2014, included in accounts
payable and accrued liabilities is $120,962 (May 31, 2014 - $90,262 and May 31, 2013 - $106,216) payable to GVI, $145,100 (May
31, 2014 - $148,461 and May 31, 2013 - $89,545) payable to GVI CDS and $247,752 (May 31, 2014 - $373,956 and May 31, 2013 - $351,297)
payable to CanAm, which are unsecured, payable on demand and bear interest as described above.



75







On July 18, 2011, the Company renewed its
consulting agreement with its Chief Executive Officer for a term of five years, at a rate of $180,000 annually. The Company may
terminate this agreement at any time upon 120 days written notice. During the seven months ended December 31, 2014, the Company
recorded a bonus of $58,904 (year ended May 31, 2014 - $286,849, year ended May 31, 2013 - nil and year ended May 31, 2012 - nil)
to its Chief Executive Officer which is recorded within selling, general and administrative expenses. As at December 31, 2014,
included in accounts payable and accrued liabilities is $345,753 (May 31, 2014 - $286,849 and May 31, 2013 - $37,750) payable
to the Chief Executive Officer as a result of this consulting agreement, which is unsecured, payable on demand and non-interest
bearing.



On July 11, 2014 and as described in note
12(b), the Company announced that, subject to all necessary regulatory approvals, it had entered into a shares for debt agreement
with its Chief Executive Officer, pursuant to which the Company will issue common shares at a deemed price of $1.98 per common
share to satisfy outstanding amounts owing to the Chief Executive Officer. Of the amount payable to the Chief Executive Officer
as at December 31, 2014, $297,808 was included in this shares for debt agreement. The shares were issued subsequent to December
31, 2014 on January 9, 2015..



C. Interests of Experts and Counsel



Not applicable



ITEM 8. FINANCIAL INFORMATION



A. Consolidated Statements or Other Financial
Information



financial
Statements



The consolidated financial statements of the
Company for the seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012 have been prepared in accordance
with IFRS, as issued by the IASB, and are included under Item 18 of this Annual Report. The consolidated financial statements
including related notes are accompanied by the report of the Company’s independent registered public accounting firm, Ernst
& Young LLP.



Legal Proceedings



There are no legal or arbitration proceedings,
including those relating to bankruptcy, receivership or similar proceedings and those involving any third party, which may have,
or have had in the recent past, significant effects on the Company’s financial position or profitability. There are no significant
legal proceedings to which the Company is a party, nor to the best of the knowledge of the Company’s management are any
legal proceedings contemplated.



Dividend Policy



The Company has not paid dividends in the
past and it has no present intention of paying dividends on its shares as it anticipates that all available funds will be invested
to finance the growth of its business. The directors of the Company will determine if and when dividends should be declared and
paid in the future based upon the Company’s financial position at the relevant time. All of the Company’s Shares are
entitled to an equal share of any dividends declared and paid.



B. Significant Changes



There have been no significant changes to
the accompanying financial statements since May 31, 2014, except as disclosed in this Annual Report on Form 20-F.



76







ITEM 9. THE OFFERING AND LISTING



A. Listing Details



The Company’s shares were delisted from
NYSE Amex (now NYSE MKT) on July 3, 2008 and from the TSX on March 26, 2010. From March 26, 2010 until October 21, 2011, shares
of the Company traded on the NEX board of the TSX-V under the symbol “MPH.H”. On October 24, 2011 shares of the Company
commenced trading on the TSX-V under the symbol “MPH”. The historical trading data for the common shares of the Company
on the above-mentioned exchanges is set out below.



|                     |  | TSX/NEX/ |       |  | TSX/NEX/ | 
|-------------------- |  | -------- | ----- |  | -------- | 
|                     |  | TSX-V    |       |  | TSX-V    | 
|                     |  | High ($) |       |  | Low ($)  | 
|Fiscal Quarter Ended |  |          |       |  |          | 
|                     |  |          |       |  |          | 
|Period from          |  |          |       |  |          | 
|December 1, 2014 to  |  |          | 2.51  |  |          | 
|December 31, 2014    |  |          |       |  |          | 
|November 30, 2014    |  |          | 2.91  |  |          | 
|August 31, 2014      |  |          | 2.97  |  |          | 
|May 31, 2014         |  |          | 3.15  |  |          | 
|February 28, 2014    |  |          | 0.70  |  |          | 
|November 1, 2013     |  |          | 0.53  |  |          | 
|August 31, 2013      |  |          | 0.28  |  |          | 
|May 31, 2013         |  |          | 0.45  |  |          | 
|February 29, 2013    |  |          | 0.67  |  |          | 
|Period from          |  |          |       |  |          | 
|November 2, 2012 to  |  |          |       |  |          | 
|November 30, 2012    |  |          | 0.64  |  |          | 
|Period from          |  |          |       |  |          | 
|September 1, 2012 to |  |          |       |  |          | 
|November 1, 2012     |  |          | 0.045 |  |          | 
|August 31, 2012      |  |          | 0.04  |  |          | 
|May 31, 2012         |  |          | 0.045 |  |          | 
|February 29, 2012    |  |          | 0.045 |  |          | 
|November 30, 2011    |  |          | 0.035 |  |          | 
|August 31, 2011      |  |          | 0.06  |  |          | 



* By Articles of Amendment filed
by the Company under the Canada Business Corporations Act on November 1, 2012, the Company’s issued and outstanding
common shares were consolidated on the basis of one post-consolidation common share for every fifteen pre-consolidation common
shares. The Company's name and trading symbol did not change as a result of the consolidation. The Company’s common shares
were reduced from 182,947,595 to 12,196,508 issued and outstanding as a result of the consolidation.



77







B. Plan of Distribution



Not applicable.



C. Markets



The Company's common shares commenced trading
on the Toronto Stock Exchange on March 15, 2002 and on the American Stock Exchange (later called NYSE Amex and now called NYSE
MKT) on February 17, 2004. The Company’s shares ceased trading on NYSE Amex effective July 3, 2008 and transferred from
the Toronto Stock Exchange to the NEX board of the TSX Venture Exchange on March 26, 2010. From March 26, 2010 until October 21,
2011, shares of the Company traded on the NEX board of the TSX-V under the symbol “MPH.H”. On October 24, 2011 shares
of the Company commenced trading on the TSX-V under the symbol “MPH”.



D. Selling Shareholders



Not applicable.



E. Dilution



Not applicable.



F. Expenses of the Issue



Not applicable.



ITEM 10. ADDITIONAL INFORMATION



A. Share Capital



Not applicable



B. Memorandum and Articles of Association



1. Objects and Purposes of the Company



The Articles of Continuance (as amended, the
“Articles”) and the By-Laws of the Company place no restrictions upon the Company’s objects and purposes.



2. Directors



Under applicable Canadian law, the directors
and officers of the Company, in exercising their powers and discharging their duties, must act honestly and in good faith with
a view to the best interests of the Company. The directors and officers must also exercise the care, diligence and skill that
a reasonably prudent person would exercise in comparable circumstances.



78







Section 4.18 of By-Law No.1A of the Company
(the “By-Law”) provides that a director shall not be disqualified by reason of his office from contracting with the
Company or a subsidiary thereof. Subject to the provisions of the Canada Business Corporations Act(the “Act”),
a director shall not by reason only of his office be accountable to the Company or its shareholders for any profit or gain realized
from a contract or transaction in which he has an interest. Such contract or transaction shall not be voidable by reason only
of such interest, or by reason only of the presence of a director so interested at a meeting, or by reason only of his presence
being counted in determining a quorum at a meeting of the directors at which such a contract or transaction is approved, provided
that a declaration and disclosure of such interest shall have been made at the time and in the manner prescribed by section 120
of the Act, and the director so interested shall have refrained from voting as a director on the resolution approving the contract
or transaction (except as permitted by the Act) and such contract shall have been reasonable and fair to the Company and shall
have been approved by the directors or shareholders of the Company as required by section 120 of the Act.



The Company’s Articles provide that
the Company’s board shall consist of a minimum of one and a maximum of 15 directors. The exact number of directors to form
the board, between the minimum and maximum number of directors prescribed by the Articles, is determined from time to time by
the board. Section 4.01 of the By-Law states that the quorum of the board shall be a majority of the board, or such other number
of directors as the board may from time to time determine. No business shall be transacted at a meeting unless a quorum is present.



Section 3.01 of the By-Law states that the
board may, without the authorization of the shareholders:



| | i) | borrow money upon the credit of the Company;
| | -- | --------------------------------------------

| | ii) | issue, reissue, sell or pledge debt
                                         obligations of the Company, including bonds, debentures, notes or other evidences of
                                         indebtedness or guarantees, whether secured or unsecured;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii) | subject to section 44 of the Act,
                                         give a guarantee on behalf of the Company to secure performance of any present or future
                                         indebtedness, liability or obligation of any person; and
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv) | mortgage, hypothecate, pledge or otherwise
                                         create a security interest in all or any property of the Company, owned or subsequently
                                         acquired, to secure any obligation of the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The borrowing powers of the directors can
be varied by amending the By-Law of the Company.



There is no provision in the By-Law imposing
a requirement for retirement or non-retirement of directors under an age limit requirement.



Section 4.02 of the By-law states that a director
need not be a shareholder to be qualified as a director. However, section 4.02 also provides that at least 25% of the directors
shall be resident Canadians unless the Company has less than four directors, in which case at least one director must be a resident
Canadian.



Under section 4.03 of the By-law, directors
are to be elected yearly by ordinary resolution to hold office until the close of the next annual meeting of shareholder. If directors
fail to be elected at any such meeting of shareholders, then the incumbent directors continue in office until their successors
are elected.



3. Shares



The Articles of the Company provide that the
Company is authorized to issue an unlimited number of shares designated as Common Shares, Class A Common Shares and Preferred
Shares. Except for meetings at which only holders of another specified class or series of shares of the Company are entitled to
vote separately as a class or series, each holder of the Common and Class A shares is entitled to receive notice of, to attend
and to vote at all meetings of the shareholders of the Company. Subject to the rights, privileges, restrictions and conditions
attached to any other class of shares of the Company, the holders of the Common and Class A shares are also entitled to receive
dividends if, as and when declared by the directors of the Company and are entitled to share equally in the remaining property
of the Company upon liquidation, dissolution or winding-up of the Company.



79







The Preferred Shares may from time to time
be issued in one or more series and, subject to the following provisions, and subject to the sending of articles of amendment
in respect thereof, the directors may fix from time to time and before issue a series of Preferred Shares, the number of shares
which are to comprise that series and the designation, rights, privileges, restrictions and conditions to be attached to that
series of Preferred Shares including, without limiting the generality of the foregoing, the rate or amount of dividends or the
method of calculating dividends, the dates of payment of dividends, the redemption, purchase and/or conversion, and any sinking
fund or other provisions.



The Preferred Shares of each series shall,
with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution
or winding-up of the Company, whether voluntary or involuntary, or any other return of capital or distribution of the assets of
the Company among its shareholders for the purpose of winding-up its affairs, rank on a parity with the Preferred Shares of every
other series and be entitled to preference over the Common and Class A Common Shares and over any other shares of the Company
ranking junior to the Preferred Shares. The Preferred Shares of any series may also be given other preferences, not inconsistent
with these articles, over the Common Shares and Class A Common Shares and any other shares of the Company ranking junior to the
Preferred Shares of a series as may be fixed in accordance with terms outlined above.



If any cumulative dividends or amounts payable
on the return of capital in respect of a series of Preferred Shares are not paid in full, all series of Preferred Shares shall
participate rateably in respect of accumulated dividends and return of capital.



Unless the directors otherwise determine in
the articles of amendment designating a series of Preferred Shares, the holder of each share or a series of Preferred Shares shall
not, as such, be entitled to receive notice of or vote at any meeting of shareholders, except as otherwise specifically provided
in the Act.



4. Rights of Shareholders



Under the Act, shareholders of the Company
are entitled to examine, during its usual business hours, the Company’s articles and by-laws, notices of directors and change
of directors, any unanimous shareholder agreements, the minutes of meetings and resolutions of shareholders and the list of shareholders.



Shareholders of the Company may obtain a list
of shareholders upon payment of a reasonable fee and sending an affidavit to the Company or its transfer agent stating, among
other things, that the list of shareholders will not be used by any person except in connection with an effort to influence the
voting of shareholders of the Company, an offer to acquire shares of the Company or any other matter relating to the affairs of
the Company.



Under the Act, shareholders of the Company
may apply to a court having jurisdiction directing an investigation to be made of the Company. If it appears to the court that
the formation, business or affairs of the Company were conducted for fraudulent or unlawful purposes, or that the powers of the
directors were exercised in a manner that is oppressive or unfairly disregards the interests of the shareholders, the court may
order an investigation to be made of the Company.



80







To change the rights of holders of stock,
where such rights are attached to an issued class or series of shares, requires the consent by a separate resolution of the holders
of the class or series of shares, as the case may be, requiring a majority of two-thirds of the votes cast.



The Company is organized under the laws of
Canada. The majority of the Company’s directors, officers, and affiliates of the Company, as well as the experts named in
this registration statement, are residents of Canada and, to the best of the Company’s knowledge, all or a substantial portion
of their assets and all of the Company’s assets are located outside of the United States. As a result, it may be difficult
for shareholders of the Company in the United States to effect service of process on the Company or these persons above within
the United States, or to realize in the United States upon judgments rendered against the Company or such persons. Additionally,
a shareholder of the Company should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in
actions against the Company or such persons predicated upon the civil liability provisions of the U.S. federal securities laws
or other laws of the United States, or (ii) would enforce, in original actions, liabilities against the Company or such persons
predicated upon the U.S. federal securities laws or other laws of the United States.



Laws in the United States and judgments of
U.S. courts would generally be enforced by a court of Canada unless such laws or judgments are contrary to public policy in Canada,
are or arise from foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and are
not in compliance with applicable laws in Canada regarding the limitation of actions. Further, a judgment obtained in a U.S. court
would generally be recognized by a court of Canada, except under the following examples:



| | i) | the judgment was rendered in a U.S.
                                         court that had no jurisdiction according to applicable laws in Canada;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | ii) | the judgment was subject to ordinary
                                         remedy (appeal, judicial review and any other judicial proceeding which renders the judgment
                                         not final, conclusive or enforceable under the laws of the applicable state) or not final,
                                         conclusive or enforceable under the laws of the applicable state;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii) | the judgment was obtained by fraud
                                         or in any manner contrary to natural justice or rendered in contravention of fundamental
                                         principles of procedure; and
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv) | a dispute between the same parties,
                                         based on the same subject matter has given rise to a judgment rendered in a court of
                                         Canada or has been decided in a third country and the judgment meets the necessary conditions
                                         for recognition in a court of Canada.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



5. Meetings



Subject to the provisions of the Act, the
annual general meeting of the shareholders shall be on such date in each year as the board of directors may determine, and a special
meeting of the shareholders may be convened at any time by order of the President or by the board on their own motion or on the
requisition of shareholders as provided for in the Act. Notice of the time and place of each meeting of shareholders shall be
given not less than 21 days nor more than 60 days before the date of the meeting to each director and shareholder. A meeting of
shareholders may be held without notice at any time and at any place provided a waiver of notice is obtained in accordance with
section 136 of the Act. The quorum for the transaction of business at meetings of the shareholders shall consist of not less than
two shareholders present or represented by proxy and holding in all not less than 10% percent of the outstanding shares entitled
to vote at the meeting. At any meeting of shareholders, every person shall be entitled to vote who, at the time of the taking
of a vote (or, if there is a record date for voting, at the close of business on such record date) is entered in the register
of shareholders as the holder of one or more shares carrying the right to vote at such meeting, subject to the provisions of the
Act.



81







6. Ownership of Securities



There are no limitations on the right to own
securities, imposed by foreign law or by the Articles or By-Law or other constituent document of the Company.



7. Change in Control of Company



No provision of the Company’s Articles
or By-Law would have the effect of delaying, deferring, or preventing a change in control of the Company, and operate only with
respect to a merger, acquisition or corporate restructuring of the Company or any of its subsidiaries. The Company no longer has
a shareholder rights plan.



C. Material Contracts



The following are the material contracts of
the Company, other than those mentioned elsewhere in this Form, to which the Company or any member of the group is a party, for
the two years immediately preceding publication of this registration statement.



None



D. Exchange Controls



There is no law or governmental decree or
regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other
payments to a non-resident holder of Common Shares, other than withholding tax requirements. Any such remittances to United States
residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. (See "Item
10E - Taxation", below.)



There is no limitation imposed by Canadian
law or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote Common Shares
of the Company. However, the Investment Canada Act (Canada) (the "Investment Act") has rules regarding certain acquisitions
of shares by non-Canadians, along with other requirements under that legislation.



The following discussion summarizes the principal
features of the Investment Act for a non-Canadian who proposes to acquire Common Shares of the Company. The discussion is general
only; it is not a substitute for independent legal advice from an investor's own adviser; and, except where expressly noted, it
does not anticipate statutory or regulatory amendments.



The Investment Act is a federal statute of
broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals,
governments or agencies thereof, corporations, partnerships, trusts or joint ventures, Investments by non-Canadians to acquire
control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Act.
If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Act,
the Investment Act generally prohibits implementation of the investment unless, after review, the Minister of Industry (or the
Minister of Canadian Heritage and Official Languages for investments in a Canadian business engaged in any of the activities of
a “cultural business”), is satisfied that the investment is likely to be of net benefit to Canada.



A non-Canadian would acquire control of the
Company for the purposes of the Investment Act through the acquisition of Common Shares if the non-Canadian acquired a majority
of the Common Shares of the Company.



82







Further, the acquisition of less than a majority
but one-third or more of the Common Shares of the Company would be presumed to be an acquisition of control of the Company unless
it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer through the ownership
of Common Shares.



To determine whether an investment is reviewable
under the Investment Act it is necessary to consider whether the investor (or the vendor) is a ‘WTO investor’ (ie,
controlled by persons who are citizens of countries that are members of the World Trade Organization ("WTO"); there
are currently 160 WTO members); the book value of the assets of the Canadian business being acquired; and whether the Canadian
business being acquired engages in cultural activities.



Where a WTO investor is involved, and if the
Canadian business is being acquired directly and is not engaged in cultural activities, an investment will be reviewable only
if the Canadian operating business being acquired has assets with a book value in excess of CAD$354 million for 2014. (Note: the
threshold is typically increased in January of each year, and would be expected to increase in January 2015, unless pending amendments
to the Investment Act increase this threshold before then. Such amendments are expected to both increase the threshold, and to
change it from an ‘assets’ test to an ‘enterprise value’ test. Once the amendments come into force the
initial threshold will be an enterprise value of CAD$600 million, increasing two years later to CAD$800 million, and after a further
two years to CAD$1 billion. The new threshold will come into force on a date to be determined by regulation once the definition
of enterprise value has been finalised.)



If the acquisition by a WTO investor is indirect
(i.e., the acquisition of shares of a foreign corporation that controls a Canadian business) the transaction is not reviewable.
Where the Canadian business engages in any of the activities of a ‘cultural business’, or if neither the investor
nor the vendor are WTO investors, the applicable thresholds for direct and indirect investments are assets with a book value of
CAD$5 million or CAD$50 million, respectively. (The acquisition of a Canadian business that is a "cultural business"
is subject to lower review thresholds under the Investment Act because of the perceived sensitivity of the cultural sector.)



An acquisition of control of a Canadian business
by a non-Canadian that falls below the thresholds for review under the Investment Act does not require the filing of an application
for review. However, even where an investment falls below the thresholds, it must still be notified by way of a two-page form
to the Investment Review Division of the Department of Industry (or the Department of Canadian Heritage for cultural cases). Notifications
may be submitted by the investor any time before or up to 30 days after implementation of the investment.



In 2009, amendments were enacted to the Investment
Act concerning investments that may be considered injurious to national security. If the Minister of Industry has reasonable grounds
to believe that an investment by a non-Canadian "could be injurious to national security," the Minister of Industry
may send the non-Canadian a notice indicating that an order for review of the investment may be made. The review of an investment
on the grounds of national security may occur whether or not an investment is otherwise subject to review on the basis of net
benefit to Canada or otherwise subject to notification under the Investment Canada Act. To date, there is neither legislation
nor guidelines published, or anticipated to be published, on the meaning of "injurious to national security." Discussions
with government officials suggest that very few investment proposals will cause a review under these new sections.



Certain transactions, except those to which
the national security provisions of the Investment Act may apply, relating to Common Shares of the Company are exempt from the
Investment Act, including



83







| | (a) | acquisition of Common Shares of the
                                         Company by a person in the ordinary course of that person's business as a trader or dealer
                                         in securities,
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | acquisition of control of the Company
                                         in connection with the realization of security granted for a loan or other financial
                                         assistance and not for a purpose related to the provisions on the Investment Act, and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | acquisition of control of the Company
                                         by reason of an amalgamation, merger, consolidation or corporate reorganization following
                                         which the ultimate direct or indirect control in fact of the Company, through the ownership
                                         of Common Shares, remained unchanged.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



E. Taxation



U.S. Federal Income Tax Consequences



The following is a summary of the anticipated
material U.S. federal income tax consequences to a U.S. Holder (as defined below) arising from and relating to the acquisition,
ownership, and disposition of common shares of (“Common Shares”).



This summary is for general information purposes
only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may
apply to a U.S. Holder as a result of the acquisition, ownership, and disposition of Common Shares. In addition, this summary
does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences of the acquisition, ownership, and disposition of Common Shares. Accordingly, this summary is not intended
to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. Each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding the U.S. federal income, U.S. state and local,
and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.



Scope of this Summary



Authorities



This summary is based on the Internal Revenue
Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings
of the Internal Revenue Service (the “IRS”), published administrative positions of the IRS, the Convention Between
Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended
(the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and
available, as of the date of this Annual Report. Any of the authorities on which this summary is based could be changed in a material
and adverse manner at any time, and any such change could be applied on a retroactive basis. This summary does not discuss the
potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive
basis.



U.S. Holders



For purposes of this summary, a “U.S.
Holder” is a beneficial owner of Common Shares that, for U.S. federal income tax purposes, is (a) an individual who
is a citizen or resident of the U.S., (b) a corporation, or any other entity classified as a corporation for U.S. federal
income tax purposes, that is created or organized in or under the laws of the U.S. or any state in the U.S., including the District
of Columbia, (c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of
such income, or (d) a trust if (i) such trust has validly elected to be treated as a U.S. person for U.S. federal income
tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or
more U.S. persons have the authority to control all substantial decisions of such trust.



84







Non-U.S. Holders



For purposes of this summary, a “non-U.S.
Holder” is a beneficial owner of Common Shares other than a U.S. Holder. This summary does not address the U.S. federal
income tax consequences of the acquisition, ownership, and disposition of Common Shares to non-U.S. Holders. Accordingly, a non-U.S.
Holder should consult its own financial advisor, legal counsel, or accountant regarding the U.S. federal income, U.S. state and
local, and foreign tax consequences (including the potential application of and operation of any tax treaties) of the acquisition,
ownership, and disposition of Common Shares.



U.S. Holders Subject to Special U.S. Federal
Income Tax Rules Not Addressed



This summary does not address the U.S. federal
income tax consequences of the acquisition, ownership, and disposition of Common Shares to U.S. Holders that are subject to special
provisions under the Code, including the following U.S. Holders: (a) U.S. Holders that are tax-exempt organizations, qualified
retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions,
insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are dealers
in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method;
(d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that are
liable for the alternative minimum tax under the Code; (f) U.S. Holders that own Common Shares as part of a straddle, hedging
transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (g) U.S. Holders
that acquired Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services;
(h) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221 of the Code;
(i) U.S. Holders who are U.S. expatriates or former long-term residents of the United States.; or (j) U.S. Holders that own
(directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company.
U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should
consult their own financial advisor, legal counsel or accountant regarding the U.S. federal income, U.S. state and local, and
foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.



If an entity that is classified as a partnership
(or “pass-through” entity) for U.S. federal income tax purposes holds Common Shares, the U.S. federal income tax consequences
to such partnership (or “pass-through” entity) and the partners of such partnership (or owners of such “pass-through”
entity) generally will depend on the activities of the partnership (or “pass-through” entity) and the status of such
partners (or owners). Partners of entities that are classified as partnerships (or owners of “pass-through” entities)
for U.S. federal income tax purposes should consult their own financial advisor, legal counsel or accountant regarding the U.S.
federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.



Tax Consequences Other than U.S. Federal
Income Tax Consequences Not Addressed



This summary does not address the U.S. state
and local, U.S. federal estate and gift, or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition
of Common Shares. Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the U.S. state
and local, U.S. federal estate and gift, and foreign tax consequences of the acquisition, ownership, and disposition of Common
Shares. (See “Taxation—Canadian Federal Income Tax Consequences” above).



85







U.S. Federal Income Tax Consequences of
the Acquisition, Ownership, and Disposition of Common Shares



Distributions on Common Shares



General Taxation of
Distributions



A U.S. Holder that receives a distribution,
including a constructive distribution, with respect to the Common Shares will be required to include the amount of such distribution
in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of
the current or accumulated “earnings and profits” of the Company. To the extent that a distribution exceeds the current
and accumulated “earnings and profits” of the Company, such distribution will be treated (a) first, as a tax-free
return of capital to the extent of a U.S. Holder’s tax basis in the Common Shares and, (b) thereafter, as gain from
the sale or exchange of such Common Shares. (See more detailed discussion at “Disposition of Common Shares” below).



Reduced Tax Rates for
Certain Dividends



For taxable years beginning before January
1, 2011, a dividend paid by the Company generally will be taxed at the preferential tax rates applicable to long-term capital
gains if (a) the Company is a “qualified foreign corporation” (as defined below), (b) the U.S. Holder receiving
such dividend is an individual, estate, or trust, and (c) such dividend is paid on Common Shares that have been held by such
U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the “ex-dividend date.” The Company
generally will be a “qualified foreign corporation” under Section 1(h)(11) of the Code (a “QFC”)
if (a) the Company is eligible for the benefits of the Canada-U.S. Tax Convention, or (b) the Common Shares are readily tradable
on an established securities market in the U.S. However, even if the Company satisfies one or more of such requirements, the Company
will not be treated as a QFC if the Company is a “passive foreign investment Company” (as defined below) for the taxable
year during which the Company pays a dividend or for the preceding taxable year.



As discussed below, the
Company does not believe that it was a “passive foreign investment Company” for the taxable year ended May 31, 2014,
and does not expect that it will be a “passive foreign investment Company” for the taxable year ending December 31,
2014. (See more detailed discussion at “Additional Rules that May Apply to U.S. Holders” below). However, there can
be no assurance that the IRS will not challenge the determination made by the Company concerning its “passive foreign investment
Company” status or that the Company will not be a “passive foreign investment Company” for the current taxable
year or any subsequent taxable year. Accordingly, although the Company expects that it may be a QFC for the taxable year ending
May 31, 2014, there can be no assurances that the IRS will not challenge the determination made by the Company concerning its
QFC status, that the Company will be a QFC for the taxable year ending May 31, 2014 or any subsequent taxable year, or that the
Company will be able to certify that it is a QFC in accordance with the certification procedures issued by the Treasury and the
IRS.



If the Company is not a QFC, a dividend paid
by the Company to a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at ordinary
income tax rates (and not at the preferential tax rates applicable to long-term capital gains). The dividend rules are complex,
and each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the dividend rules.



86







Distributions Paid
in Foreign Currency



The amount of a distribution paid to a U.S.
Holder in foreign currency generally will be equal to the U.S. dollar value of such distribution based on the exchange rate applicable
on the date of receipt. A U.S. Holder that does not convert foreign currency received as a distribution into U.S. dollars on the
date of receipt generally will have a tax basis in such foreign currency equal to the U.S. dollar value of such foreign currency
on the date of receipt. Such a U.S. Holder generally will recognize ordinary income or loss on the subsequent sale or other taxable
disposition of such foreign currency (including an exchange for U.S. dollars).



Dividends Received
Deduction



Dividends paid on the Common Shares generally
will not be eligible for the “dividends received deduction.” The availability of the dividends received deduction
is subject to complex limitations that are beyond the scope of this discussion, and a U.S. Holder that is a corporation should
consult its own financial advisor, legal counsel, or accountant regarding the dividends received deduction.



Disposition of Common Shares



A U.S. Holder will recognize gain or loss
on the sale or other taxable disposition of Common Shares in an amount equal to the difference, if any, between (a) the amount
of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in the Common Shares
sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain
or loss if the Common Shares are held for more than one year. Gain or loss recognized by a U.S. Holder on the sale or other taxable
disposition of Common Shares generally will be treated as “U.S. source” for purposes of applying the U.S. foreign
tax credit rules unless the gain is subject to tax in Canada and resourced as “foreign source” under the U.S.-Canada
Tax Convention and the U.S. Holder elects to treat such gain as “foreign source”.



Preferential tax rates apply to long-term
capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term
capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under
the Code.



The amount
realized on a sale or other disposition of Common Shares for an amount in foreign currency will generally be the U.S. dollar value
of this amount on the date of sale or disposition. On the settlement date, the U.S. Holder will recognize U.S. source foreign
currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the U.S. dollar value of the
amount received based on the exchange rates in effect on the date of sale or other disposition and the settlement date.



Foreign Tax Credit



A U.S. Holder that pays (whether directly
or through withholding) Canadian income tax with respect to dividends paid on the Common Shares generally will be entitled, at
the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit
will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce
a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to
all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.



87







Complex limitations apply to the foreign tax
credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal
income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s
worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified,
under complex rules, as either “foreign source” or “U.S. source.” In addition, this limitation is calculated
separately with respect to specific categories of income. Dividends paid by the Company generally will constitute “foreign
source” income and generally will be categorized as “passive income.” The foreign tax credit rules are complex,
and each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the foreign tax credit rules.



Information Reporting; Backup Withholding
Tax



Payments made within the U.S., or by a U.S.
payor or U.S. middleman, of dividends on, or proceeds arising from the sale or other taxable disposition of, Common Shares generally
will be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish
such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect
U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report
items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished
its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup
withholding tax. However, U.S. Holders that are corporations generally are excluded from these information reporting and backup
withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a
U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information
to the IRS. Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the information
reporting and backup withholding tax rules.



Additional Rules that May Apply to U.S.
Holders



If the Company is a “passive foreign
investment Company” (as defined below), the preceding sections of this summary may not describe the U.S. federal income
tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Common Shares.



Passive Foreign Investment Company



The Company generally will be a “passive
foreign investment Company” under Section 1297 of the Code (a “PFIC”) if, for a taxable year, (a) 75%
or more of the gross income of the Company for such taxable year is passive income or (b) 50% or more of the assets held
by the Company either produce passive income or are held for the production of passive income, based on the fair market value
of such assets (or on the adjusted tax basis of such assets, if the Company is not publicly traded and either is a “controlled
foreign corporation” or makes an election). “Passive income” includes, for example, dividends, interest, certain
rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.



For purposes of the PFIC income test and asset
test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of
another foreign corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other
foreign corporation and (b) received directly a proportionate share of the income of such other foreign corporation. In addition,
for purposes of the PFIC income test and asset test described above, “passive income” does not include any interest,
dividends, rents, or royalties that are received or accrued by the Company from a “related person” (as defined in
Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that
is not passive income.



88







In addition, if the Company is a PFIC and
owns shares of another foreign corporation that also is a PFIC, under certain indirect ownership rules, a disposition of the shares
of such other foreign corporation or a distribution received from such other foreign corporation generally will be treated as
an indirect disposition by a U.S. Holder or an indirect distribution received by a U.S. Holder, subject to the rules of Section
1291 of the Code discussed below. To the extent that gain recognized on the actual disposition by a U.S. Holder of Common shares
or income recognized by a U.S. Holder on an actual distribution received on Common Shares was previously subject to U.S. federal
income tax under these indirect ownership rules, such amount generally should not be subject to U.S. federal income tax.



If the Company is a PFIC, the U.S. federal
income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares will depend on whether
such U.S. Holder makes an election to treat the Company as a “qualified electing fund” or “QEF” under
Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code
(a “Mark-to-Market Election”). A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election
will be referred to in this summary as a “Non-Electing U.S. Holder.”



Under Section 1291 of the Code, any gain
recognized on the sale or other taxable disposition of Common Shares, and any “excess distribution” (as defined in
Section 1291(b) of the Code) paid on the Common Shares, must be ratably allocated to each day in a Non-Electing U.S. Holder’s
holding period for the Common Shares. The amount of any such gain or excess distribution allocated to prior years of such Non-Electing
U.S. Holder’s holding period for the Common Shares generally will be subject to U.S. federal income tax at the highest tax
applicable to ordinary income in each such prior year. A Non-Electing U.S. Holder will be required to pay interest on the resulting
tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year.



A U.S. Holder that makes a QEF Election generally
will not be subject to the rules of Section 1291 of the Code discussed above. However, a U.S. Holder that makes a QEF Election
generally will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share of (a) the “net capital
gain” of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) and the “ordinary
earnings” of the Company, which will be taxed as ordinary income to such U.S. Holder. A U.S. Holder that makes a QEF Election
will be subject to U.S. federal income tax on such amounts for each taxable year in which the Company is a PFIC, regardless of
whether such amounts are actually distributed to such U.S. Holder by the Company.



A U.S. Holder that makes a Mark-to-Market
Election generally will not be subject to the rules of Section 1291 of the Code discussed above. A U.S. Holder may make a
Mark-to-Market Election only if the Common Shares are “marketable stock” (as defined in Section 1296(e) of the
Code). A U.S. Holder that makes a Mark-to-Market Election will include in gross income, for each taxable year in which the Company
is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares as of the close of such
taxable year over (b) such U.S. Holder’s tax basis in such Common Shares. A U.S. Holder that makes a Mark-to-Market
Election will, subject to certain limitations, be allowed a deduction in an amount equal to the excess, if any, of (a) such
U.S. Holder’s adjusted tax basis in the Common Shares over (b) the fair market value of such Common Shares as of the
close of such taxable year.



89







The Company does not believe that it was a
PFIC for the taxable year ended May 31, 2014, and, based on current operations and financial projections, does not expect that
it will be a PFIC for the taxable year ending May 31, 2015. The determination of whether the Company was, or will be, a PFIC for
a taxable year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations.
In addition, whether the Company will be a PFIC for the taxable year ending May 31, 2014 and each subsequent taxable year depends
on the assets and income of the Company over the course of each such taxable year and, as a result, cannot be predicted with certainty
as of the date of this Annual Report. Accordingly, there can be no assurance that the IRS will not challenge the determination
made by the Company concerning its PFIC status or that the Company was not, or will not be, a PFIC for any taxable year.



The PFIC rules are complex, and each U.S.
Holder should consult its own financial advisor, legal counsel, or accountant regarding the PFIC rules and how the PFIC rules
may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.



Canadian Federal Income Tax Considerations for United States
Residents



The following, as of the date hereof, is a
summary of the principal Canadian federal income tax considerations generally applicable to the holding and disposition of Common
Shares by a holder, (a) who for the purposes of the Income Tax Act (Canada) (the “Tax Act”) at all relevant times,
is not resident, or deemed to be resident in Canada, deals at arm’s length and is not affiliated with the Company for the
purpose of the Tax Act, holds the Common Shares as capital property and does not use or hold, and is not deemed to use or hold,
the Common Shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) who, for the purposes
of the Canada - United States Income Tax Convention(the “Convention”) at all relevant times, is a resident
of the United States, has never been a resident of Canada, has not held or used (and does not hold or use) Common Shares in connection
with a permanent establishment or fixed base in Canada, and who otherwise qualifies for the full benefits of the Convention. Common
Shares will generally be considered to be capital property to a holder unless such shares are held in the course of carrying on
a business, or in an adventure or concern in the nature of trade. Holders who meet all the criteria in clauses (a) and (b) are
referred to herein as a “U.S. Holder” or “U.S. Holders” and this summary only addresses the tax considerations
to such U.S. Holders. The summary does not deal with special situations, such as the particular circumstances of traders or dealers,
limited liability companies, tax exempt entities, insurers or financial institutions. Such holders should consult their own tax
advisors.



This summary is based upon the current provisions
of the Tax Act, the regulations thereunder in force at the date hereof (“Regulations”), all specific proposals to
amend the Tax Act and Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof
and the current provisions of the Convention and the current administrative practices of the Canada Revenue Agency published in
writing prior to the date hereof. This summary does not otherwise take into account or anticipate any changes in law or administrative
practices whether by legislative, governmental or judicial decision or action, nor does it take into account tax laws of any province
or territory of Canada or of the United States or of any other jurisdiction outside Canada.



For the purposes of the Tax Act, all amounts
relating to the acquisition, holding or disposition of the Common Shares must be converted into Canadian dollars based on the
relevant exchange rate applicable thereto.



This summary is of a general nature only
and is not intended to be, nor should it be construed to be, legal or tax advice to any particular U.S. Holder and no representation
with respect to the federal income tax consequences to any particular U.S. Holder or prospective U.S. Holder is made. The tax
liability of a U.S. Holder will depend on the holder’s particular circumstances. Accordingly, U.S. Holders should consult
with their own tax advisors for advice with respect to their own particular circumstances.



90







Dividends



Amounts paid or credited or deemed to be paid
or credited to a U.S. Holder as, on account or in lieu of payment, or in satisfaction of, dividends on Common Shares will be subject
to Canadian withholding tax on the gross amount of the dividends. Under the Convention, the rate of Canadian withholding tax on
dividends paid or credited by the Company to a U.S. Holder that beneficially owns such dividends is generally 15% unless the beneficial
owner is a Company which owns at least 10% of the voting stock of the Company at that time in which case the rate of Canadian
withholding tax is reduced to 5%.



Dispositions



A U.S. Holder will generally not be subject
to tax under the Tax Act on any capital gain realized on a disposition of Common Shares, unless the shares constitute “taxable
Canadian property” to the U.S. Holder at the time of disposition and the U.S. Holder is not entitled to relief under the
Convention. Generally, Common Shares will not constitute taxable Canadian property to a U.S. Holder provided that such shares
are listed on a designated stock exchange (which currently includes the NEX at the time of the disposition and, during the 60-month
period immediately preceding the disposition, the U.S. Holder, persons with whom the U.S. Holder does not deal at arm’s
length, or the U.S. Holder together with such persons has not owned 25% or more of the issued shares of any series or class of
the Company’s capital stock.



If the Common Shares constitute taxable Canadian
property to a particular U.S. Holder, any capital gain arising on their disposition may be exempt from Canadian tax under the
Convention if at the time of disposition the Common Shares do not derive their value principally from real property situated in
Canada.



Canadian Federal Income Tax Consequences



The following is a summary of the principal
Canadian federal income tax considerations, as of the date hereof, generally applicable to Security holders who deal at arm's
length with the Company, who, for purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”) and any applicable
tax treaty or convention, have not been and will not be resident or deemed to be resident in Canada at any time while they have
held shares of the Company, to whom such shares are capital property, and to whom such shares are not “taxable Canadian
property” (as defined in the Canadian Tax Act). This summary does not apply to a non-resident insurer.



Generally, shares of the Company will be considered
to be capital property to a holder thereof provided that the holder does not use such shares in the course of carrying on a business
or has not acquired them in one or more transactions considered to be an adventure in the nature of trade. All security holders
should consult their own tax advisors as to whether, as a matter of fact, they hold shares of the Company as capital property
for the purposes of the Canadian Tax Act.



Under the current provisions of the Canadian
Tax Act, as modified by the Proposed Amendments (see below), one-half of capital gains (‘‘taxable capital gains’’)
must be included in computing the income of a holder in the year of disposition. One-half of capital losses (‘‘allowable
capital losses’’) may generally be deducted against taxable capital gains for the year of disposition subject to and
in accordance with the provisions of the Canadian Tax Act.



91







Allowable capital losses in excess of a holder’s
taxable capital gains of a taxation year may generally be carried back three years and carried forward indefinitely for deduction
against taxable capital gains realized in those years, to the extent and under circumstances permitted under the Canadian Tax
Act.



This discussion takes into account specific
proposals to amend the Canadian Tax Act and the regulations thereunder publicly announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof (the “Proposed Amendments”) and assumes that all such Proposed Amendments will be
enacted in their present form. No assurances can be given that the Proposed Amendments will be enacted in the form proposed, if
at all; however the Canadian federal income tax considerations generally applicable to security holders described herein will
not be different in a material adverse way if the Proposed Amendments are not enacted.



Except for the foregoing, this discussion
does not take into account or anticipate any changes in law, whether by legislative, administrative or judicial decision or action,
nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from
the Canadian federal income tax considerations described herein.



Generally, shares of the Company will not
be taxable Canadian property at a particular time provided that such shares are listed on a prescribed stock exchange (which exchanges
currently include the Toronto Stock Exchange), the holder does not use or hold, and is not deemed to use or hold, the shares of
the Company in connection with carrying on a business in Canada and the holder, persons with whom such holder does not deal at
arm's length, or the holder and such persons, have not owned (or had under option) 25% or more of the issued shares of any class
or series of the capital stock of the Company at any time within five years preceding the particular time.



A holder of shares of the Company that are
not taxable Canadian property will not be subject to tax under the Canadian Tax Act on the sale or other disposition of shares.



While intended to address all material
Canadian Federal Income Tax considerations, this summary is for general information purposes only, and is not intended to be,
nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares. No opinion was requested
by the Company, or is provided by its legal counsel and/or auditors. Additionally, this summary does not consider the effects
of United States federal, state, local or foreign income tax consequences.



Accordingly, holders and prospective holders
of common shares should consult their own tax advisors about the consequences of purchasing, owning, and disposing of common shares
of the Company.



F. Dividends and Paying Agents



Not applicable



G. Statement by Experts



Not applicable



H. Documents on Display



Exhibits attached to this Annual Report are
available for viewing on EDGAR, or may be inspected at the head office of Company at 2 – 1250 Waverley Street, Winnipeg,
Manitoba, Canada R3T 6C6, during normal business hours. Copies of the Company’s financial statements and other continuous
disclosure documents required under Canadian securities legislation are available for viewing on the internet at www.sedar.com.



92







I. Subsidiary Information



Not applicable



ITEM 11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK



INTEREST RATE RISK



The primary objective of the Company’s
investment activities is to preserve principal by maximizing the income the Company receives from such activities without significantly
increasing risk. Securities that the Company invests in are generally highly liquid short-term investments such as term deposits
with terms to maturity of less than one year.



Interest rate risk is the risk that the future
cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest
rate risk arising primarily from fluctuations in interest rates on its cash and cash equivalents, long-term debt and other long-term
liability.



An increase or decrease in interest rates
of one percent during the seven months ended December 31, 2014, with all other variables held constant, would result in a corresponding
increase or decrease on the Company's net income (loss) of approximately $4,000 (year ended May 31, 2014 - $2,000 and year ended
May 31, 2013 - $6,000). An increase in the crown company borrowing rate of one percent during the seven months ended December
31, 2014, with all other variables held constant, would result in a corresponding increase or decrease on the Company's net income
(loss) of approximately $52,000 (year ended May 31, 2014 - $52,000 and year ended May 31, 2013 - $51,000).



FOREIGN EXCHANGE RISK



The parent of the Company’s primary
currency of operations is the Canadian dollar. Its wholly-owned operating subsidiaries primary currency of operations is the US
dollar. The Company has expenditures and holds investments denominated in US dollars.  During the seven months ended December
31, 2014, it is estimated that approximately 85% of the Company’s expenditures were denominated in a foreign currency, primarily
being the US dollar and 100% of the Company’s product revenues were denominated in the US dollar. To date the Company has
not entered into any future or forward contracts, or other derivative instruments, for either hedging or speculative purposes,
to mitigate the impact of foreign exchange fluctuations on these costs, revenues or on U.S. dollar denominated debt. A 10% change
in foreign exchange rates for the seven months ended December 31, 2014 would have impacted loss for the year by 10%.



ITEM 12. DESCRIPTION OF SECURITIES OTHER
THAN EQUITY SECURITIES



Not applicable



PART II



ITEM 13. DEFAULTS, DIVIDEND ARREARAGES
AND DELINQUENCIES



93







Not applicable



ITEM 14. MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



Not applicable



ITEM 15. CONTROLS AND PROCEDURES



Disclosure Controls and Procedures



The Company’s disclosure controls and
procedures, as such term is defined in Rules 13(a)-13(e) and 15(d)-15(e) of the Exchange Act are designed to provide reasonable
assurance that all relevant information is communicated to senior management, including the Chief Executive Officer (“CEO”)
and the Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. We carried out an
evaluation, under the supervision and with the participation of our management, including our CEO and CFO. Based on this evaluation
these officers concluded that as of the end of the period covered by this Annual Report on Form 20-F, our disclosure controls
and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the Securities and Exchange Commission. These disclosure controls and procedures include controls and procedures
designed to ensure that such information is accumulated and communicated to the Company’s management, including our company’s
principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion
that the disclosure controls and procedures were not effective was due to the presence of a material weakness in internal control
over financial reporting as identified below under the heading “Internal Controls over Financial Reporting Procedures”.
Management anticipates that such disclosure controls and procedures will not be effective until the material weakness is remediated.



Management’s Annual Report on
Internal Control over Financial Reporting



The management of the Company, including the
CEO and CFO, is responsible for establishing and maintaining adequate internal controls over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act). The Company’s internal control system was designed to provide reasonable assurance
to the Company’s management and the board of directors regarding the reliability of financial reporting and preparation
and fair presentation of published financial statements for external purposes in accordance with IFRS. Internal control over financial
reporting includes those policies and procedures that:



| | 1. | pertain to the maintenance of
                                         records that in reasonable detail accurately and fairly reflect the transactions and
                                         dispositions of the assets of the Company;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | provide reasonable assurance that
                                         transactions are recorded as necessary to permit preparation of financial statements
                                         in accordance with IFRS, and that receipts and expenditures of the Company are being
                                         made only in accordance with authorizations of management and directors of the Company;
                                         and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | provide reasonable assurance regarding
                                         prevention or timely detection of unauthorized acquisition, use or disposition of the
                                         Company’s assets that could have a material effect on the financial statements.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



94







All internal control systems, no matter how
well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.



Under the supervision and with the participation
of our management, including our CEO and CFO, we conducted an evaluation of the design and operation of internal control over
financial reporting as of December 31, 2014, based on the framework set forth in Internal Control – Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded
that the Company’s ICFR was not effective as at December 31, 2014 due to the following material weaknesses:



Due to the limited number of staff with an
appropriate level of technical accounting knowledge, experience and training and the inability to attract outside expert advice
on a cost effective basis, there is a risk of material misstatements related to the accounting and reporting for complex transactions.
This control deficiency creates a reasonable possibility that a material misstatement of the annual financial statements would
not have been prevented or detected in a timely manner.



Attestation Report of the Registered
Public Accounting Firm



This Annual Report does not include an attestation
report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report
is not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange
Commission that permit the Company to provide only management's report in this Annual Report.



Changes in Internal Control over Financial
Reporting and Planned Remediation Activities



There have been no changes in the Company's
internal controls identified in connection with the evaluation described in the preceding paragraph that occurred during the period
covered by this Annual Report on Form 20-F which have materially affected, or are reasonably likely to materially affect,
the Company's internal controls over financial reporting.



No remediation activities have been undertaken
to date in fiscal 2015. Due to resource constraints and the present stage of the Company’s development the Company does
not have sufficient size and scale to warrant the hiring of additional staff to correct this material weakness at this time.



ITEM 16. RESERVED



Not applicable



ITEM 16A. AUDIT COMMITTEE FINANCIAL
EXPERT



As of December 31, 2014, Mr. Brent Fawkes
CA, a non-employee director, was a member of the audit committee of the Company. The board of directors of the Company has determined
that Mr. Fawkes (i) qualifies as an audit committee financial expert pursuant to Items 16A(b) and (c) of Form 20-F and (ii) is
independent as defined in section 803 of the NYSE MKT Company Guide and Rule 10A-3 of the Exchange Act. In addition, all members
of the audit committee are considered financially literate under applicable Canadian laws.



95







ITEM 16B. CODE OF ETHICS



On August
23, 2004, the Company adopted a written Code of Business Conduct and Ethics (“Code of Ethics”) that applies to the
Company’s principal executive officer, principal financial officer and to all its other employees. These standards are a
guide to help ensure that all of the Company’s employees live up to high ethical standards. A copy of the Code of Ethics
is maintained on the Company’s website at www.medicure.com.



During the most recently completed fiscal
year, the Company has neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including any implicit waiver) form
any provision of its Code of Ethics.



ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.



In accordance
with the requirements of the Sarbanes-Oxley Act of 2002 and the Audit Committee’s charter, all audit and audit-related work
and all non-audit work performed by the chartered accountants, Ernst & Young LLP, is approved in advance by the Audit Committee,
including the proposed fees for such work. The Audit Committee is informed of each service actually rendered that was approved
through its pre-approval process.



The Company
incurred the following fees to Ernst & Young LLP for the previous two fiscal years. As at December 31, 2014, the Company had
accrued $82,600 relating to Ernst & Young LLP audit fees.



|(a)  Audit fees |  | 2014 |        |  | May 31, 2014 |  
|--------------- |  | ---- | ------ |  | ------------ | -
|                |  | $    | 86,400 |  |              | $



Audit fees
consist of fees billed for the audit of the Company’s annual financial statements.



|(b)  Audit-related fees |  | 2014 |   |  | May 31, 2014 |  
|----------------------- |  | ---- | - |  | ------------ | -
|                        |  | $    | - |  |              | $



Audit-related
fees consist of fees billed for accounting consultations.



|(c)  Tax fees |  | 2014 |   |  | May 31, 2014 |  
|------------- |  | ---- | - |  | ------------ | -
|              |  | $    | - |  |              | $



|(d)  All other fees |  | 2014 |   |  | May 31, 2014 |  
|------------------- |  | ---- | - |  | ------------ | -
|                    |  | $    | - |  |              | $



All other fees include due diligence work
performed by Ernst & Young LLP.



(e) Audit Committee’s Pre-approval Policies



All Ernst & Young LLP services and fees are approved by the
Audit Committee.



ITEM 16D. EXEMPTIONS FROM THE LISTING
STANDARDS FOR AUDIT COMMITTEES



Not applicable





96







ITEM 16E. PURCHASES OF EQUITY SECURITIES
BY THE ISSUER AND AFFILIATED PURCHASERS



In the seven months ended December 31, 2014,
the Company did not purchase any of its issued and outstanding Common Shares pursuant to any repurchase program or otherwise.



ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING
ACCOUNTANT



Not applicable.



ITEM 16G. CORPORATE GOVERNANCE



Not applicable.



ITEM 16H.MINE SAFETY DISCLOSURE



Not applicable.



97







PART III



ITEM 17. FINANCIAL STATEMENTS



Not applicable. See “Item 18 –
Financial Statements”.



ITEM 18. FINANCIAL STATEMENTS



The consolidated financial statements were
prepared in accordance with IFRS, as issued by the IASB, and are presented in Canadian dollars.



The consolidated financial statements are
in the following order:



| | 1. | Report of Independent Registered
                                         Public Accounting Firm;
| | -- | -------------------------------------------------------------------------------------------------

| | 2. | Consolidated Statements of Financial
                                         Position;
| | -- | ---------------------------------------------------------------------------------------

| | 3. | Consolidated Statements of Net Income
                                         (Loss) and Comprehensive Income (Loss);
| | -- | ----------------------------------------------------------------------------------------------------------------------

| | 4. | Consolidated Statements of Changes
                                         in Deficiency
| | -- | -----------------------------------------------------------------------------------------

| | 5. | Consolidated Statements of Cash
                                         Flows; and
| | -- | -----------------------------------------------------------------------------------

| | 6. | Notes to Consolidated Financial
                                         Statements.
| | -- | ------------------------------------------------------------------------------------



98







Consolidated Financial Statements

(Expressed in Canadian Dollars)



MEDICURE INC.



Seven months ended December 31, 2014



99







MANAGEMENT REPORT



The accompanying financial statements have
been prepared by management and approved by the Board of Directors of Medicure Inc. (the “Company”). Management is
responsible for the information and representations contained in these financial statements.



These financial statements have been prepared
in accordance with International Financial Reporting Standards. The significant accounting policies, which management believes
are appropriate for the Company, are described in note 3 to these financial statements. The Company maintains a system of internal
control and processes intended to provide reasonable assurance that assets are safeguarded and to ensure that relevant and reliable
financial information is produced.



The Board of Directors is responsible for
reviewing and approving these financial statements and overseeing management’s performance of its financial reporting responsibilities.
An Audit Committee of non-management Directors is appointed by the Board. The Audit Committee reviews the financial statements,
audit process and financial reporting with management and with the external auditors and reports to the Board of Directors prior
to the approval of the audited consolidated financial statements for publication.



Ernst & Young LLP, the Company’s
external auditors, audited the financial statements in accordance with Canadian generally accepted auditing standards and the standards
of the Public Company Accounting Oversight Board (United States) to enable them to express to the shareholders their opinion on
these financial statements. Their report follows.



|/s/ Albert Friesen      |  | /s/ James Kinley       
|----------------------- |  | -----------------------
|Dr. Albert D. Friesen   |  | Mr. James F. Kinley CA 
|Chief Executive Officer |  | Chief Financial Officer
|                        |  |                        
|April 10, 2015          |  |                        



100









INDEPENDENT
AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders of

Medicure Inc.



We
have audited the accompanying consolidated financial statements of Medicure Inc., which comprise the consolidated statements
of financial position as at December 31, 2014, May 31, 2014 and May 31, 2013, and the consolidated statements of net income
(loss) and comprehensive income (loss), changes in deficiency and cash flows for the seven-month period ended December 31, 2014
and each of the years in the two-year period ended May 31, 2014,
and a summary of significant accounting policies and other explanatory information.



Management’s responsibility for the
consolidated financial statements



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



Auditors’ responsibility



Our
responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material misstatement. We
were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.



An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



- 2 -







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



Opinion



In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of Medicure Inc. as at December 31, 2014, May
31, 2014 and May 31, 2013, and its financial performance and its cash flows for the seven-month period ended December 31,
2014 and each of the years in the two-year period ended May 31, 2014 in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board.



Emphasis of matters



The accompanying consolidated financial statements
have been prepared assuming that Medicure Inc. will continue as a going concern. As discussed in note 2(c) to the consolidated
financial statements, Medicure Inc. has experienced losses and has accumulated a deficit of $126,615,856 since incorporation
and has a working capital deficiency of $503,401 as at December 31, 2014. These conditions raise substantial doubt about its ability
to continue as a going concern. Management’s plans in regard to this matter are also described in note 2(c). The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Without modifying our opinion, we draw attention
to note 22 to the consolidated financial statements, which explains that certain comparative information for the year ended May
31, 2014 has been restated.



Other matters



The consolidated financial statements of Medicure
Inc. for the year ended May 31, 2012 were audited by KPMG LLP who expressed an unqualified audit opinion on those consolidated
financial statements on September 14, 2012.



|Winnipeg, Canada |                      
|---------------- | ---------------------
|April 10, 2015   | Chartered Accountants













INDEPENDENT
AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders of Medicure Inc.



We have audited the accompanying comparative
information of Medicure Inc. which comprise the consolidated statements of net income and comprehensive income, changes in deficiency
and cash flows for the year ended May 31, 2012, and notes, comprising a summary of significant accounting policies and other explanatory
information.



Management’s Responsibility for the
Consolidated Financial Statements



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



Auditors’ Responsibility



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



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



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











Opinion



In our opinion, the comparative information
in these consolidated financial statements present fairly, in all material respects, the consolidated financial performance and
consolidated cash flows of Medicure Inc. for the year ended May 31, 2012 in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board.



Emphasis of Matter



The accompanying consolidated financial statements
have been prepared assuming that Medicure Inc. will continue as a going concern. As discussed in note 2(c) to the consolidated
financial statements, Medicure Inc. has experienced operating losses and has accumulated a deficit since incorporation that raises
substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also
described in note 2(c). The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.



Other
matter



The consolidated statements of financial position
as at December 31, 2014, May 31, 2014 and May 31, 2013, the consolidated statements of net income (loss) and comprehensive
income (loss), changes in deficiency and cash flows for the seven-month period ended December 31, 2014 and the years ended May
31, 2014 and 2013 and notes, comprising a summary of significant accounting policies and other explanatory information, are audited
by another auditor who expressed an unmodified opinion on April 10, 2015.



|KPMG LLP              | 
|--------------------- | 
|                      | 
|Chartered Accountants | 
|                      | 
|September 14, 2012    | 
|                      | 
|Winnipeg, Canada      | 













MEDICURE INC.

Consolidated Statements of Financial Position

(expressed in Canadian dollars)

December 31, 2014, May 31, 2014
and 2013



|                                         |  | Note    |  | December 31, 2014 |              |   | May 31, 2014 Restated (note 22) |   |              | May 31, 2013 | 
|---------------------------------------- |  | ------- |  | ----------------- | ------------ | - | ------------------------------- | - | ------------ | ------------ | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Assets                                   |  |         |  |                   |              |   |                                 |   |              |              | 
|Current assets:                          |  |         |  |                   |              |   |                                 |   |              |              | 
|Cash                                     |  |         |  | $                 | 493,869      |   |                                 | $ | 234,297      |              | 
|Accounts receivable                      |  | 4       |  |                   | 1,637,676    |   |                                 |   | 947,602      |              | 
|Inventories                              |  | 5       |  |                   | 1,099,576    |   |                                 |   | 765,653      |              | 
|Prepaid expenses                         |  |         |  |                   | 642,976      |   |                                 |   | 206,188      |              | 
|Total current assets                     |  |         |  |                   | 3,874,097    |   |                                 |   | 2,153,740    |              | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Non-current assets:                      |  |         |  |                   |              |   |                                 |   |              |              | 
|Property and equipment                   |  | 6       |  |                   | 33,161       |   |                                 |   | 20,681       |              | 
|Intangible assets                        |  | 7       |  |                   | 1,096,946    |   |                                 |   | 1,433,158    |              | 
|Investment in Apicore                    |  | 8       |  |                   | 1,361,824    |   |                                 |   | -            |              | 
|Long-term derivative                     |  | 8       |  |                   | 194,491      |   |                                 |   | -            |              | 
|Total non-current assets                 |  |         |  |                   | 2,686,422    |   |                                 |   | 1,453,839    |              | 
|Total assets                             |  |         |  | $                 | 6,560,519    |   |                                 | $ | 3,607,579    |              | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Liabilities and Deficiency               |  |         |  |                   |              |   |                                 |   |              |              | 
|Current liabilities:                     |  |         |  |                   |              |   |                                 |   |              |              | 
|Accounts payable and accrued liabilities |  |         |  | $                 | 3,700,326    |   |                                 | $ | 3,000,609    |              | 
|Accrued interest on long-term debt       |  | 9       |  |                   | 22,295       |   |                                 |   | 22,295       |              | 
|Current portion of long-term debt        |  | 9       |  |                   | 654,877      |   |                                 |   | -            |              | 
|Total current liabilities                |  |         |  |                   | 4,377,498    |   |                                 |   | 3,022,904    |              | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Non-current liabilities                  |  |         |  |                   |              |   |                                 |   |              |              | 
|Long-term debt                           |  | 9       |  |                   | 4,225,949    |   |                                 |   | 4,847,279    |              | 
|Royalty obligation                       |  | 10      |  |                   | 1,715,310    |   |                                 |   | 1,461,572    |              | 
|Other long-term liability                |  | 11      |  |                   | 152,778      |   |                                 |   | 152,778      |              | 
|Total non-current liabilities            |  |         |  |                   | 6,094,037    |   |                                 |   | 6,461,629    |              | 
|Total liabilities                        |  |         |  |                   | 10,471,535   |   |                                 |   | 9,484,533    |              | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Deficiency:                              |  |         |  |                   |              |   |                                 |   |              |              | 
|Share capital                            |  | 12      |  |                   | 117,045,763  |   |                                 |   | 117,036,672  |              | 
|Contributed surplus                      |  |         |  |                   | 5,360,748    |   |                                 |   | 4,743,035    |              | 
|Accumulated other comprehensive income   |  |         |  |                   | 298,329      |   |                                 |   | 154,791      |              | 
|Deficit                                  |  |         |  |                   | (126,615,856 | ) |                                 |   | (127,811,452 | )            | 
|Total deficiency                         |  |         |  |                   | (3,911,016   | ) |                                 |   | (5,876,954   | )            | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Going concern                            |  | 2(c)    |  |                   |              |   |                                 |   |              |              | 
|Commitments and contingencies            |  | 16      |  |                   |              |   |                                 |   |              |              | 
|Subsequent events                        |  | 12 & 17 |  |                   |              |   |                                 |   |              |              | 
|                                         |  |         |  |                   |              |   |                                 |   |              |              | 
|Total liabilities and deficiency         |  |         |  | $                 | 6,560,519    |   |                                 | $ | 3,607,579    |              | 



|On behalf of the Board: |                      | 
|----------------------- | -------------------- | 
|                        | "Dr. Albert Friesen" | 
|                        | Director             | 



See accompanying notes to the consolidated
financial statements.



101







MEDICURE INC.

Consolidated Statements of Net Income (Loss) and Comprehensive
Income (Loss)

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012



|                                                                                                     |  | Note  |  | December
    31, 2014 |            |   | May
    31, 2014 Restated (note 22) |   |            | May
    31, 2013 |  |   | May
    31, 2012 |  
|---------------------------------------------------------------------------------------------------- |  | ----- |  | --------------------- | ---------- | - | ----------------------------------- | - | ---------- | ---------------- |  | - | ---------------- | -
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Revenue                                                                                              |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Product sales, net                                                                                   |  | 14    |  | $                     | 5,264,395  |   |                                     | $ | 5,050,761  |                  |  | $ | 2,602,700        |  
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Cost of goods sold                                                                                   |  | 5 & 7 |  |                       | 600,574    |   |                                     |   | 868,122    |                  |  |   | 665,896          |  
|Gross Profit                                                                                         |  |       |  |                       | 4,663,821  |   |                                     |   | 4,182,639  |                  |  |   | 1,936,804        |  
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Expenses                                                                                             |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Selling, general and administrative                                                                  |  |       |  |                       | 3,231,392  |   |                                     |   | 3,624,695  |                  |  |   | 2,322,840        |  
|Research and development                                                                             |  |       |  |                       | 783,130    |   |                                     |   | 688,671    |                  |  |   | 1,700,479        |  
|                                                                                                     |  |       |  |                       | 4,014,522  |   |                                     |   | 4,313,366  |                  |  |   | 4,023,319        |  
|Income (loss) before the
    undernoted                                                              |  |       |  |                       | 649,299    |   |                                     |   | (130,727   | )                |  |   | (2,086,515       | )
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Other income:                                                                                        |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Investment structuring services                                                                      |  | 8     |  |                       | (1,385,099 | ) |                                     |   | -          |                  |  |   | -                |  
|Revaluation of Apicore purchase option                                                               |  | 8     |  |                       | 81,431     |   |                                     |   | -          |                  |  |   | -                |  
|Gain on settlement of debt                                                                           |  | 10    |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Finance costs (income):                                                                              |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Finance income                                                                                       |  |       |  |                       | (38        | ) |                                     |   | (41        | )                |  |   | (152             | )
|Finance expense                                                                                      |  | 15    |  |                       | 729,695    |   |                                     |   | 1,809,028  |                  |  |   | 466,425          |  
|Foreign exchange loss (gain),
    net                                                                |  |       |  |                       | 27,714     |   |                                     |   | (5,618     | )                |  |   | 21,516           |  
|                                                                                                     |  |       |  |                       | 757,371    |   |                                     |   | 1,803,369  |                  |  |   | 487,789          |  
|Net income (loss)                                                                                    |  |       |  | $                     | 1,195,596  |   |                                     | $ | (1,934,096 | )                |  | $ | (2,574,304       | )
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Translation adjustment                                                                               |  |       |  |                       | 143,538    |   |                                     |   | 86,679     |                  |  |   | (34,697          | )
|Comprehensive income (loss)                                                                          |  |       |  | $                     | 1,339,134  |   |                                     | $ | (1,847,417 | )                |  | $ | (2,609,001       | )
|                                                                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Basic income (loss) per share                                                                        |  |       |  | $                     | 0.10       |   |                                     | $ | (0.16      | )                |  | $ | (0.21            | )
|Diluted income (loss) per share                                                                      |  |       |  | $                     | 0.09       |   |                                     | $ | (0.16      | )                |  | $ | (0.21            | )
|Weighted average number of common shares used in computing basic
    income (loss) per share         |  |       |  |                       | 12,204,827 |   |                                     |   | 12,196,745 |                  |  |   | 12,196,508       |  
|Weighted average number of common shares used
    in computing fully diluted income (loss) per share |  |       |  |                       | 13,843,126 |   |                                     |   | 12,196,745 |                  |  |   | 12,196,508       |  



See accompanying notes to the consolidated
financial statements.



102







MEDICURE INC.

Consolidated Statements of Changes in Deficiency

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012



|                                                                            |  |       |  |         |             |  |             |   |           | Cumulative  |  |   |          |   |  |       |             
|--------------------------------------------------------------------------- |  | ----- |  | ------- | ----------- |  | ----------- | - | --------- | ----------- |  | - | -------- | - |  | ----- | ------------
|                                                                            |  |       |  | Share   |             |  | Contributed |   |           | Translation |  |   |          |   |  |       |             
|                                                                            |  | Note  |  | Capital |             |  | Surplus     |   |           | Account     |  |   | Deficit  |   |  | Total |             
|Balance, May 31, 2011                                                       |  |       |  | $       | 116,014,623 |  |             | $ | 4,121,867 |             |  | $ | (376,630 | ) |  | $     | (146,688,831
|Net income for the year ended May 31, 2012                                  |  |       |  |         | -           |  |             |   | -         |             |  |   | -        |   |  |       | 23,385,779  
|Other comprehensive income
    for the year ended May 31, 2012              |  |       |  |         | -           |  |             |   | -         |             |  |   | 479,439  |   |  |       | -           
|Transactions with owners, recorded directly in equity                       |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Issuance of common shares                                                   |  | 12(b) |  |         | 1,018,635   |  |             |   | -         |             |  |   | -        |   |  |       | -           
|Share-based payments                                                        |  | 12(c) |  |         | -           |  |             |   | 224,445   |             |  |   | -        |   |  |       | -           
|Total transactions with
    owners                                          |  |       |  |         | 1,018,635   |  |             |   | 224,445   |             |  |   | -        |   |  |       | -           
|Balance, May 31, 2012                                                       |  |       |  |         | 117,033,258 |  |             |   | 4,346,312 |             |  |   | 102,809  |   |  |       | (123,303,052
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Net loss for the year
    ended May 31, 2013                                |  |       |  |         | -           |  |             |   | -         |             |  |   | -        |   |  |       | (2,574,304  
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Other comprehensive loss
    for the year ended May 31, 2013                |  |       |  |         | -           |  |             |   | -         |             |  |   | (34,697  | ) |  |       | -           
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Share-based payments                                                        |  | 12(c) |  |         | -           |  |             |   | 102,993   |             |  |   | -        |   |  |       | -           
|Total transactions with
    owners                                          |  |       |  |         | -           |  |             |   | 102,993   |             |  |   | -        |   |  |       | -           
|Balance, May 31, 2013                                                       |  |       |  |         | 117,033,258 |  |             |   | 4,449,305 |             |  |   | 68,112   |   |  |       | (125,877,356
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Restated
    (note 22)                                                      |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Net loss for the year
    ended May 31, 2014                                |  |       |  |         | -           |  |             |   | -         |             |  |   | -        |   |  |       | (1,934,096  
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Other comprehensive income
    for the year ended May 31, 2014              |  |       |  |         | -           |  |             |   | -         |             |  |   | 86,679   |   |  |       | -           
|                                                                            |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Stock options exercised                                                     |  | 12(b) |  |         | 3,414       |  |             |   | (1,414    | )           |  |   | -        |   |  |       | -           
|Share-based payments                                                        |  | 12(c) |  |         | -           |  |             |   | 295,144   |             |  |   | -        |   |  |       | -           
|Total transactions with
    owners                                          |  |       |  |         | 3,414       |  |             |   | 293,730   |             |  |   | -        |   |  |       | -           
|Balance, May 31, 2014                                                       |  |       |  |         | 117,036,672 |  |             |   | 4,743,035 |             |  |   | 154,791  |   |  |       | (127,811,452
|Net income for the seven months ended December
    31, 2014                 |  |       |  |         | -           |  |             |   | -         |             |  |   | -        |   |  |       | 1,195,596   
|Other comprehensive income
    for the seven months ended December 31, 2014 |  |       |  |         | -           |  |             |   | -         |             |  |   | 143,538  |   |  |       | -           
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |             |   |           |             |  |   |          |   |  |       |             
|Stock options exercised                                                     |  | 12(b) |  |         | 9,091       |  |             |   | (2,992    | )           |  |   | -        |   |  |       | -           
|Share-based payments                                                        |  | 12(c) |  |         | -           |  |             |   | 620,705   |             |  |   | -        |   |  |       | -           
|Total transactions with
    owners                                          |  |       |  |         | 9,091       |  |             |   | 617,713   |             |  |   | -        |   |  |       | -           
|Balance, December 31,
    2014                                              |  |       |  | $       | 117,045,763 |  |             | $ | 5,360,748 |             |  | $ | 298,329  |   |  | $     | (126,615,856



See accompanying notes to the consolidated
financial statements.



103







MEDICURE INC.

Consolidated Statements of Cash Flows

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012





|                                                                                    |  | Note  |  | December
    31, 2014 |            |   | May
    31, 2014 Restated (note 22) |   |            | May
    31, 2013 |  |   | May
    31, 2012 |  
|----------------------------------------------------------------------------------- |  | ----- |  | --------------------- | ---------- | - | ----------------------------------- | - | ---------- | ---------------- |  | - | ---------------- | -
|Cash provided by (used
    in):                                                     |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Operating activities:                                                               |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Net income (loss) for the year                                                      |  |       |  | $                     | 1,195,596  |   |                                     | $ | (1,934,096 | )                |  | $ | (2,574,304       | )
|Adjustments for:                                                                    |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Investment structuring
    services                                                 |  | 8     |  |                       | (1,552,771 | ) |                                     |   | -          |                  |  |   | -                |  
|Revaluation of long-term derivative                                                 |  | 8     |  |                       | 81,431     |   |                                     |   | -          |                  |  |   | -                |  
|Gain on settlement of
    debt                                                      |  | 10    |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|Amortization of property
    and equipment                                          |  | 6     |  |                       | 5,033      |   |                                     |   | 7,727      |                  |  |   | 11,500           |  
|Amortization of intangible
    assets                                               |  | 7     |  |                       | 428,116    |   |                                     |   | 553,542    |                  |  |   | 525,482          |  
|Stock-based compensation                                                            |  | 12(c) |  |                       | 620,705    |   |                                     |   | 295,144    |                  |  |   | 102,993          |  
|(Write-up) down of inventory                                                        |  | 5     |  |                       | (80,874    | ) |                                     |   | 22,209     |                  |  |   | 19,639           |  
|Write-down of intangible assets                                                     |  | 7     |  |                       | -          |   |                                     |   | -          |                  |  |   | 62,133           |  
|Finance expense                                                                     |  | 15    |  |                       | 729,695    |   |                                     |   | 1,809,028  |                  |  |   | 466,425          |  
|Difference between fair
    value of other long-term liability and funding received |  | 11    |  |                       | -          |   |                                     |   | (14,483    | )                |  |   | (32,739          | )
|Unrealized foreign exchange
    loss (gain)                                         |  |       |  |                       | (27,892    | ) |                                     |   | 5,303      |                  |  |   | (3,011           | )
|Change in the following:                                                            |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Accounts receivable                                                                 |  |       |  |                       | (690,074   | ) |                                     |   | (514,986   | )                |  |   | (12,419          | )
|Inventories                                                                         |  |       |  |                       | (253,049   | ) |                                     |   | 114,937    |                  |  |   | (380,113         | )
|Prepaid expenses                                                                    |  |       |  |                       | (436,788   | ) |                                     |   | (176,733   | )                |  |   | 95,629           |  
|Accounts payable and accrued liabilities                                            |  |       |  |                       | 639,535    |   |                                     |   | 407,925    |                  |  |   | 889,829          |  
|Other long-term liability                                                           |  | 11    |  |                       | -          |   |                                     |   | -          |                  |  |   | 200,000          |  
|Interest paid                                                                       |  | 15    |  |                       | (225,459   | ) |                                     |   | (299,346   | )                |  |   | (273,417         | )
|Debt issuance costs                                                                 |  | 9     |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|Royalties paid                                                                      |  | 10    |  |                       | (156,722   | ) |                                     |   | (165,291   | )                |  |   | (88,105          | )
|Cash
    flows from (used in) operating activities                                  |  |       |  |                       | 276,482    |   |                                     |   | 110,880    |                  |  |   | (990,478         | )
|Investing activities:                                                               |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Acquisition of property and equipment                                               |  | 6     |  |                       | (16,713    | ) |                                     |   | (5,513     | )                |  |   | (3,108           | )
|Acquisition of intangible
    assets                                                |  | 7     |  |                       | (7,206     | ) |                                     |   | -          |                  |  |   | (4,289           | )
|Cash
    flows used in investing activities                                         |  |       |  |                       | (23,919    | ) |                                     |   | (5,513     | )                |  |   | (7,397           | )
|Financing activities:                                                               |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Exercise of stock options                                                           |  | 12(c) |  |                       | 6,099      |   |                                     |   | 2,000      |                  |  |   | -                |  
|Share issuance costs                                                                |  | 12(b) |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|Proceeds from long-term
    debt                                                    |  | 9     |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|Repayments of long-term debt                                                        |  | 9     |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|Debt
    settlement costs                                                           |  | 9     |  |                       | -          |   |                                     |   | -          |                  |  |   | -                |  
|Cash
    flows from financing activities                                            |  |       |  |                       | 6,099      |   |                                     |   | 2,000      |                  |  |   | -                |  
|Foreign
    exchange gain on cash held in foreign currency                          |  |       |  |                       | 910        |   |                                     |   | 315        |                  |  |   | 145              |  
|Increase (decrease) in
    cash                                                     |  |       |  |                       | 259,572    |   |                                     |   | 107,682    |                  |  |   | (997,730         | )
|Cash,
    beginning of year                                                         |  |       |  |                       | 234,297    |   |                                     |   | 126,615    |                  |  |   | 1,124,345        |  
|Cash,
    end of year                                                               |  |       |  | $                     | 493,869    |   |                                     | $ | 234,297    |                  |  | $ | 126,615          |  
|                                                                                    |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Supplementary
    information:                                                      |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Non-cash Investing activities:                                                      |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Investment structuring
    services                                                 |  | 8     |  | $                     | 1,552,771  |   |                                     | $ | -          |                  |  | $ | -                |  
|Non-cash financing activities:                                                      |  |       |  |                       |            |   |                                     |   |            |                  |  |   |                  |  
|Shares issued on debt
    settlement                                                |  | 10    |  | $                     | -          |   |                                     | $ | -          |                  |  | $ | -                |  
|Shares
    issued for guarantee on long-term debt                                   |  | 10    |  | $                     | -          |   |                                     | $ | -          |                  |  | $ | -                |  







See accompanying notes to the consolidated
financial statements.



104







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 1. | Reporting entity:
| | -- | -----------------



Medicure Inc. (the "Company")
is a company domiciled and incorporated in Canada and as of October 24, 2011, its Common Shares are listed on the TSX Venture Exchange.
Prior to October 24, 2011 and beginning on March 29, 2010, the Company's Common Shares were listed on the NEX board of the TSX
Venture Exchange. Prior to March 29, 2010, the Company's Common Shares were listed on the Toronto Stock Exchange. Additionally,
the Company's shares were listed on the American Stock Exchange (later called NYSE Amex and now called NYSE MKT) on February 17,
2004 and the shares ceased trading on the NYSE Amex effective July 3, 2008. The Company remains a U.S. Securities and Exchange
Commission registrant. The address of the Company's registered office is 2-1250 Waverley Street, Winnipeg, Manitoba, Canada. The
Company is a biopharmaceutical company engaged in the research, development and commercialization of human therapeutics. Through
its subsidiary Medicure International, Inc., the Company has rights to the commercial product AGGRASTAT® Injection
(tirofiban hydrochloride) in the United States and its territories (Puerto Rico, U.S. Virgin Islands, and Guam). AGGRASTAT®,
a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome including unstable angina,
which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction. The Company’s primary ongoing
research and development activity is the development and implementation of a new regulatory, brand and life cycle management strategy
for AGGRASTAT®.



| | 2. | Basis of preparation of financial statements:
| | -- | ---------------------------------------------



| | (a) | Statement of compliance
| | --- | -----------------------



These consolidated financial
statements of the Company and its subsidiaries were prepared in accordance with International Financial Reporting Standards ("IFRS")
as issued by the International Accounting Standards Board ("IASB").



The Company adopted International
Financial Reporting Interpretations Committee ("IFRIC") 21 and the Amendments to International Accounting Standard ("IAS")
32 and 39 on June 1, 2014. There was no material impact as a result of the adoption of these standards and amendments.



The consolidated financial statements
were authorized for issue by the Board of Directors on April 10, 2015.



| | (b) | Basis of presentation
| | --- | ---------------------



The consolidated financial statements
have been prepared on the historical cost basis except for the following items:



| | · | Derivative financial instruments are measured at fair value.
| | - | ------------------------------------------------------------



| | · | Financial instruments at fair value through profit and loss are measured at fair value.
| | - | ---------------------------------------------------------------------------------------



In December 2014, the Company
received approval from securities regulators to change its financial year end from May 31 to December 31. The change of year end
enabled the Company to align its year end with industry peers and with most other companies trading on the TSX Venture Exchange.
The change in year end results in the current period reflecting only seven months of operations and the comparative periods on
these financial statements being for the twelve months ended May 31, 2014, 2013 and 2012.



105







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 2. | Basis of preparation of financial statements (continued):
| | -- | ---------------------------------------------------------



| | (c) | Going concern
| | --- | -------------



These consolidated financial
statements have been prepared on a going concern basis in accordance with IFRS. The going concern basis of presentation assumes
that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities
and commitments in the normal course of business. There is substantial doubt about the appropriateness of the use of the going
concern assumption because the Company has accumulated a deficit of $126,615,856 as at December 31, 2014 and until the seven months
ended December 31, 2014, had experienced operating losses since incorporation. Additionally, the Company has a working capital
deficiency of $503,401. The Company’s future operations are dependent upon its ability to maintain growth in sales of AGGRASTAT®,
to develop and/or acquire new products, and/or secure additional capital, which may not be available under favourable terms or
at all, and/or renegotiate the terms of its contractual commitments. If the Company is unable to maintain growth in sales, develop
and/or acquire new products, raise additional capital or renegotiate the terms of its contractual commitments, management intends
to consider other strategies including further cost curtailments, delays of research and development activities, asset divestures
and/or monetization of certain intangible assets. Effective August 1, 2013, the Company renegotiated its long-term debt and received
an additional two-year deferral of principal repayments. Under the renegotiated terms, the loan continues to be interest only with
principal repayments now beginning on August 1, 2015 and the loan maturing on July 1, 2018.



The ability of the Company to
continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent
on many factors, including, but not limited to, the actions taken or planned, some of which are described above, which are intended
to mitigate the adverse conditions and events that raise doubt about the validity of the going concern assumption used in preparing
these consolidated financial statements. There is no certainty that the Company’s working capital and net cash flows will
be sufficient through fiscal 2015 or that the above described and other strategies will be sufficient to permit the Company to
continue as a going concern.



The consolidated financial statements
do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern basis
was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value of assets
and liabilities, the reported revenue and expenses, and the consolidated statement of financial position classifications used.



| | (d) | Functional and presentation currency
| | --- | ------------------------------------



The consolidated financial statements
are presented in Canadian dollars, which is the Company's functional currency. All financial information presented has been rounded
to the nearest dollar except where indicated otherwise.



| | (e) | Use of estimates and judgments
| | --- | ------------------------------



The preparation of these consolidated
financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.



Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



Areas where management has made
critical judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized
in the consolidated financial statements include the determination of the Company and its subsidiaries functional currency and
the determination of the Company's cash generating units ("CGU") for the purposes of impairment testing.



106







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 2. | Basis of preparation of financial statements (continued):
| | -- | ---------------------------------------------------------



| | (e) | Use of estimates and judgments (continued):
| | --- | -------------------------------------------



Information about key assumptions
and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets
and liabilities within the next financial year are included in the following notes:



| | · | Note 3(c)(ii): Valuation of the royalty obligation
| | - | --------------------------------------------------



| | · | Note 3(c)(ii): Valuation of the warrant liability
| | - | -------------------------------------------------



| | · | Note 3(c)(ii): Valuation of the other long-term liability
| | - | ---------------------------------------------------------



| | · | Note 3(d): Provisions for returns, chargebacks and discounts
| | - | ------------------------------------------------------------



| | · | Note 3(g)(iv): The estimation of accruals for research and development costs
| | - | ----------------------------------------------------------------------------



| | · | Note 3(g)(ii): The measurement and period of use of intangible assets
| | - | ---------------------------------------------------------------------



| | · | Note 3(h): Valuation of investment in Apicore
| | - | ---------------------------------------------



| | · | Note 3(h): Valuation of long-term derivative
| | - | --------------------------------------------



| | · | Note 20(c): The assumptions and model used to estimate the value of share-based payment transactions
| | - | ----------------------------------------------------------------------------------------------------



| | · | Note 3(m): The measurement of the amount and assessment of the recoverability of income tax assets
| | - | --------------------------------------------------------------------------------------------------



| | 3. | Significant accounting policies:
| | -- | --------------------------------



The accounting policies set out
below have been applied consistently to all periods presented in these consolidated financial statements, unless otherwise indicated.



| | (a) | Basis of consolidation
| | --- | ----------------------



These consolidated financial
statements include the accounts of the Company and its wholly owned subsidiaries, Medicure International Inc., Medicure Pharma
Inc., and Medicure U.S.A. Inc. The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. All significant inter-company transactions and balances have been eliminated.



| | (b) | Foreign currency
| | --- | ----------------



Items included in the financial
statements of each of the Company's consolidated subsidiaries are measured using the currency of the primary economic environment
in which the subsidiary operates (the functional currency). The consolidated financial statements are presented in Canadian dollars,
which is the Company's functional and presentation currency. The U.S. dollar is the functional currency of Medicure Pharma, Inc
and Medicure U.S.A. Inc. In the three months ended August 31, 2011, as a result of the long-term debt settlement (note 10) and
other factors, the focus of Medicure International Inc.'s operations changed and, accordingly, its functional currency was changed
from the Canadian dollar to the U.S. dollar, effective June 1, 2011. In accordance with IAS 21, The Effects of Changes in Foreign
Exchange Rates, this change has been accounted for prospectively.



Foreign currency transactions
are translated into the respective functional currencies of the Company and its subsidiaries using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized
in profit and loss. The results and financial position of the Company's consolidated subsidiaries that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:



107







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December
31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(b) Foreign currency (continued):



(i) assets and liabilities
for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated
statement of financial position;



(ii) income and expenses
for each year are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);
and



(iii) all resulting exchange
differences are recognized in other comprehensive income (loss) in the cumulative translation account.



When a foreign operation is disposed
of, a proportionate share of the cumulative exchange differences previously recognized in equity is recognized in the consolidated
statements of net income (loss) and comprehensive income (loss), as part of the gain or loss on sale where applicable.



(c) Financial instruments



(i) Financial assets



The Company initially recognizes
loans and receivables and deposits on the date that they are originated. All other financial assets are recognized initially on
the trade date at which the Company becomes a party to the contractual provisions of the instrument.



The Company derecognizes a financial
asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial
asset are transferred.



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



The Company classifies non-derivative
financial assets into the following category: loans and receivables. The Company has not classified any assets or liabilities as
held-to-maturity or as available-for-sale.



Loans and receivables



Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially
at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured
at amortized cost. Loans and receivables are comprised of cash and accounts receivable.



(ii) Financial liabilities



The Company has the following
non-derivative financial liabilities which are classified as other financial liabilities: accounts payable and accrued liabilities,
accrued interest on long-term debt and long-term debt.



All other financial liabilities
are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Costs incurred
to obtain financing are deferred and amortized over the term of the associated debt using the effective interest method. Amortization
is a non-cash charge to finance expense.



The Company derecognizes a financial
liability when its contractual obligations are discharged or cancelled or expire.



108









MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(c) Financial instruments (continued):



(ii) Financial liabilities (continued):



The royalty obligation is recorded
at its fair value at the date at which the liability was incurred and subsequently revalued using the effective interest method
at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation model which
is dependent on its underlying terms and conditions. This estimate also requires determining expected revenue from AGGRASTAT®
sales and an appropriate discount rate and making assumptions about them.



The other long-term liability is
recorded at its fair value at the date at which the liability was incurred and subsequently revalued using the effective interest
method at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation model
which is dependent on its underlying terms and conditions. This estimate also requires determining the time frame when certain
sales targets are expected to be met and an appropriate discount rate and making assumptions about them.



Warrants with an exercise price denominated
in a foreign currency are recorded as a warrant liability and classified as fair value through profit and loss. The warrant liability
is included within accounts payable and accrued liabilities and the change in the fair value of the warrants is recorded as a gain
or loss in the consolidated statement of net income (loss) and comprehensive income (loss) within finance expense. These warrants
have not been listed on an exchange and therefore do not trade on an active market.



The warrant liability is recorded
at the fair value of the warrants at the date at which they were granted and subsequently revalued at each reporting date. Estimating
fair value for these warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions
of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected
life of the warrants, volatility and dividend yield and making assumptions about them.



(d) Revenue recognition



Revenue from the sale of goods, comprising
finished and unfinished products, in the course of ordinary activities is measured at the fair value of the consideration received
or receivable, net of estimated returns, chargebacks, trade discounts and volume rebates. Revenue is recognized when persuasive
evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been
transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated
reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If
it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction
of revenue as the sales are recognized.



(e) Inventories



Inventories consist of unfinished
product (raw materials) and packaging materials, as well as finished products and are measured at the lower of cost and net realizable
value. The cost of inventories is based on the first-in first-out principle, and includes expenditures incurred in acquiring the
inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition.



Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.



109







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(f) Property and equipment



(i) Recognition and measurement



Items of property and equipment are
measured at cost less accumulated amortization and accumulated impairment losses. When parts of an item of property and equipment
have different useful lives, they are accounted for as separate items (major components) of property and equipment. The costs of
the day-to-day servicing of property and equipment are recognized in the consolidated statements of net income (loss) and comprehensive
income (loss) in the period in which they are incurred.



(ii) Amortization



Amortization is recognized in profit
or loss over the estimated useful lives of each part of an item of property and equipment in a manner which most closely reflects
the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives for the current
and comparative periods are as follows:



|Asset                             |  | Basis               |  | Rate |          
|--------------------------------- |  | ------------------- |  | ---- | ---------
|                                  |  |                     |  |      |          
|Computer and office equipment     |  | Straight-line       |  |      | 25       
|Furniture, fixtures and equipment |  | Diminishing balance |  |      | 20%
to 25



Amortization methods, useful lives
and residual values are reviewed at each financial year end and adjusted if appropriate.



(g) Intangible assets



(i) Research and development



Expenditure on research activities,
undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss
as incurred.



Development activities involve a
plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.
No development costs have been capitalized to date.



Research and development expenses
include all direct and indirect operating expenses supporting the products in development.



(ii) Intangible assets



Intangible assets that are acquired
separately and have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Subsequent
expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates.
All other expenditures are recognized in profit or loss as incurred.



Costs incurred in obtaining a patent
are capitalized and amortized on a straight-line basis over the legal life of the respective patent, ranging from five to twenty
years, or its economic life, if shorter. Costs incurred in obtaining a trademark are capitalized and amortized on a straight-line
basis over the legal life of the respective trademark, being ten years, or its economic life, if shorter. Costs incurred in obtaining
a customer list are capitalized and amortized on a straight-line basis over approximately ten years, or its economic life, if shorter.



110







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(g) Intangible assets (continued):



(ii) Intangible assets
(continued):



Costs incurred in successfully obtaining
a patent, trademark or customer list are measured at cost less accumulated amortization and accumulated impairment losses. The
cost of servicing the Company's patents and trademarks are expensed as incurred.



(iii) Subsequent expenditure



Subsequent expenditures are capitalized
only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures
are recognized in profit or loss as incurred.



(iv) Clinical trial expenses



Clinical trial expenses are a component
of the Company’s research and development costs. These expenses include fees paid to contract research organizations, clinical
sites, and other organizations who conduct development activities on the Company’s behalf. The amount of clinical trial expenses
recognized in a period related to clinical agreements are based on estimates of the work performed using an accrual basis of accounting.
These estimates incorporate factors such as patient enrolment, services provided, contractual terms, and prior experience with
similar contracts.



(v) Government assistance
and investment tax credits



Government assistance toward current
expenses is recorded as a reduction of the related expenses in the period the expenses are incurred. Government assistance towards
property and equipment is deducted from the cost of the related property and equipment. The benefits of investment tax credits
for scientific research and experimental development expenditures ("SR&ED") incurred directly by the Company are
recognized in the period the qualifying expenditure is made, providing there is reasonable assurance of recoverability. SR&ED
investment tax credits receivable are recorded at their net realizable value.



(h) Investment in Apicore and
long-term derivative



The investment in Apicore represents
the acquisition of a 6.09% (5.33% on a fully diluted basis) interest in a pharmaceutical manufacturing business as described in
note 8. The acquisition was completed by Medicure Inc. and a wholly owned subsidiary, Medicure U.S.A. Inc. and was initially recorded
at fair value and subsequently at amortized cost.



The long-term derivative is the value
associated to the options rights received by the Company and is classified as fair value through profit and loss. The change in
the long-term derivative is recorded as a revaluation of long-term derivative in the consolidated statement of net income (loss)
and comprehensive income (loss). The long-term derivative is non-transferable and is recorded at fair value at the date at which
it was acquired and subsequently revalued at each reporting date. Estimating fair value for this derivative requires determining
the most appropriate valuation model which is dependent on the terms and conditions of the derivative. This estimate also requires
determining the most appropriate inputs to the valuation model including the expected life of the derivative, volatility, dividend
yield and probabilities pertaining to its exercise and making assumptions about them.



(i) Impairment of financial
assets



At each reporting date, the Company
assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Company recognizes
an impairment loss for financial assets carried at amortized cost. The loss is the difference between the amortized cost of the
loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective
interest rate. The carrying amount of the asset is reduced by this amount through the use of an allowance account.



Impairment losses on financial assets
carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized.



111







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(j) Impairment of non-financial
assets:



The Company assesses at each reporting
period whether there is an indication that a non-financial asset may be impaired. An impairment loss is recognized when the carrying
amount of an asset, or its CGU, exceeds its recoverable amount. Impairment losses are recognized in net income (loss) and comprehensive
income (loss) and included in research and development expense if they relate to patents. A CGU is the smallest identifiable group
of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The
recoverable amount is the greater of the asset's or CGU's fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less cost to
sell, an appropriate valuation model is used. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the CGU to which the asset belongs.



Impairment losses recognized in prior
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of
amortization, if no impairment loss had been recognized.



(k) Employee benefits



(i) Short-term employee benefits



Short-term employee benefit obligations
are measured on an undiscounted basis and are expensed as the related service is provided.



(ii) Share-based payment transactions



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



Share-based payment arrangements
in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled
share-based payment transactions. In situations where equity instruments are issued and some or all of the goods or services received
by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment.



For share-based payment arrangements
with non-employees, the expense is taken over the service period until the options vest. Once the options vest, services are deemed
to have been received.



(l) Finance income and finance
costs



Finance income comprises interest
income on funds invested which is recognized as it accrues in profit or loss, using the effective interest method.



Finance costs comprise interest expense
on borrowings which are recognized in profit or loss using the effective interest method, changes in the fair value of the warrant
liability, accretion on the royalty obligation and amortization of deferred debt issue costs using the effective interest method.



Foreign currency gains and losses
are reported on a net basis.



112







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(m) Income taxes



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



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



Deferred taxes are recognized in
respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred taxes are not recognized for the following temporary differences: the initial recognition
of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit
or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future. In addition, deferred taxes are not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realized simultaneously.



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



(n) Earnings (loss) per share



The Company presents basic earnings
per share ("EPS") data for its common voting shares. Basic EPS is calculated by dividing the profit or loss attributable
to common voting shareholders of the Company by the weighted average number of common voting shares outstanding during the period,
adjusted for own shares held. Diluted EPS is computed similar to basic EPS except that the weighted average shares outstanding
are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional
shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercise
were used to acquire common shares at the average market price during the reporting periods.



(o) New standards and interpretations
not yet adopted



Certain new standards, interpretations
and amendments to existing standards issued by the IASB or the IFRIC that are not yet effective up to the date of issuance of the
Company’s financial statements are listed below. The Company is assessing the impact of these pronouncements on its consolidated
results and financial position. The Company intends to adopt those standards when they become effective.



IFRS 9, Financial Instruments:
Classification and Measurement



IFRS 9 replaces the guidance in IAS
39, Financial Instruments: Recognition and Measurement, on the classification and measurement of financial assets. The Standard
eliminates the existing IAS 39 categories of held-to-maturity, available-for-sale and loans and receivables.



Financial assets will be classified into one of two categories
on initial recognition:



| | · | financial assets measured at amortized cost; or
| | - | -----------------------------------------------



| | · | financial assets measured at fair value.
| | - | ----------------------------------------



113







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



(o) New standards and interpretations
not yet adopted (continued):



IFRS 9, Financial Instruments:
Classification and Measurement (continued):



Under IFRS 9, for financial liabilities
measured at fair value under the fair value option, changes in fair value attributable to changes in credit risk will be recognized
in other comprehensive (loss) income, with the remainder of the change recognized in profit and loss. IFRS 9 is effective for annual
periods beginning on or after January 1, 2018 and is to be applied retrospectively with some exemptions. The Company is currently
evaluating the impact of the above standard on its financial statements.



IFRS 15, Revenue from Contracts
with Customers



IFRS 15, Revenue from Contracts
with Customers, issued by the IASB in May 2014, is applicable to all revenue contracts and provides a model for the recognition
and measurement of gains or losses from sales of some non-financial assets. The core principle is that revenue is recognized to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The standard will also result in enhanced disclosures about revenue,
provide guidance for transactions that were not previously addressed comprehensively [for example, service revenue and contract
modifications] and improve guidance for multiple-element arrangements. IFRS 15 is effective for annual periods beginning on or
after January 1, 2017 and is to be applied retrospectively, with earlier adoption permitted. Entities will transition following
either a full or modified retrospective approach. The Company is currently evaluating the impact of the above standard on its financial
statements.



Amendments to IAS 1, Presentation
of Financial Statements



On December 18, 2014 the IASB issued
amendments to IAS 1 as part of its major initiative to improve presentation and disclosure in financial reports (the "Disclosure
Initiative"). The amendments are effective for annual periods beginning on or after January 1, 2016. Early adoption is permitted.
These amendments will not require any significant change to current practice, but should facilitate improved financial statements
disclosures. The Company intends to adopt these amendments in its financial statements for the annual period beginning on January
1, 2016. The Company is currently evaluating the impact of the above amendments on its financial statements.



114







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 4. | Accounts receivable:
| | -- | --------------------



|                          |  | December 31, 2014 |           |  | May 31, 2014 |   |         | May 31, 2013 | 
|------------------------- |  | ----------------- | --------- |  | ------------ | - | ------- | ------------ | 
|                          |  |                   |           |  |              |   |         |              | 
|Trade accounts receivable |  | $                 | 1,606,473 |  |              | $ | 928,852 |              | 
|Other accounts receivable |  |                   | 31,203    |  |              |   | 18,750  |              | 
|                          |  | $                 | 1,637,676 |  |              | $ | 947,602 |              | 



As
at December 31, 2014, the trade accounts receivable consist of amounts owing from five customers which represent approximately
99% (May 31, 2014 - four customers and 98% and May 31, 2013 - four customers and 99%) of trade accounts receivable.



| | 5. | Inventories:
| | -- | ------------



|                                           |  | December 31, 2014 |           |  | May 31, 2014 |   |         | May 31, 2013 | 
|------------------------------------------ |  | ----------------- | --------- |  | ------------ | - | ------- | ------------ | 
|                                           |  |                   |           |  |              |   |         |              | 
|Unfinished product and packaging materials |  | $                 | 163,163   |  |              | $ | 152,488 |              | 
|Finished product                           |  |                   | 936,413   |  |              |   | 613,165 |              | 
|                                           |  | $                 | 1,099,576 |  |              | $ | 765,653 |              | 



During
the seven months ended December 31, 2014, the Company recorded a recovery of $80,874 relating to inventories that were previously
written off. During the years ended May 31, 2014, 2013 and 2012, the Company wrote off inventories that had expired or were otherwise
unusable of $22,209, $19,639 and $109,194, respectively. Inventories expensed as part of cost of goods sold during the seven months
ended December 31, 2014 amounted to $349,901 (year ended May 31, 2014 - $300,378, year ended May 31, 2013 - $131,355 and year ended
May 31, 2012 - $227,517).



115







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 6. | Property and equipment:
| | -- | -----------------------



|                                      |  | Computer   |        |  | Furniture,   |   |         |       | 
|------------------------------------- |  | ---------- | ------ |  | ------------ | - | ------- | ----- | 
|                                      |  | and office |        |  | fixtures and |   |         |       | 
|Cost                                  |  | equipment  |        |  | equipment    |   |         | Total | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, May 31, 2012                 |  | $          | 24,631 |  |              | $ | 132,006 |       | 
|Additions                             |  |            | 3,108  |  |              |   | -       |       | 
|Effect of movements in exchange rates |  |            | -      |  |              |   | 430     |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, May 31, 2013                 |  |            | 27,739 |  |              |   | 132,436 |       | 
|Additions                             |  |            | 5,513  |  |              |   | -       |       | 
|Effect of movements in exchange rates |  |            | -      |  |              |   | 5,218   |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, May 31, 2014                 |  |            | 33,252 |  |              |   | 137,654 |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Additions                             |  |            | 13,607 |  |              |   | 3,106   |       | 
|Effect of movements in exchange rates |  |            | -      |  |              |   | 8,357   |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, December 31, 2014            |  | $          | 46,859 |  |              | $ | 149,117 |       | 



|                                      |  | Computer   |        |  | Furniture,   |   |         |       | 
|------------------------------------- |  | ---------- | ------ |  | ------------ | - | ------- | ----- | 
|                                      |  | and office |        |  | fixtures and |   |         |       | 
|Accumulated amortization              |  | equipment  |        |  | equipment    |   |         | Total | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, May 31, 2012                 |  | $          | 15,508 |  |              | $ | 110,384 |       | 
|Amortization for the year             |  |            | 6,174  |  |              |   | 5,326   |       | 
|Effect of movements in exchange rates |  |            | -      |  |              |   | 548     |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, May 31, 2013                 |  |            | 21,682 |  |              |   | 116,258 |       | 
|Amortization for the year             |  |            | 3,577  |  |              |   | 4,150   |       | 
|Effect of movements in exchange rates |  |            | -      |  |              |   | 4,558   |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, May 31, 2014                 |  |            | 25,259 |  |              |   | 124,966 |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Amortization for the year             |  |            | 2,882  |  |              |   | 2,151   |       | 
|Effect of movements in exchange rates |  |            | -      |  |              |   | 7,557   |       | 
|                                      |  |            |        |  |              |   |         |       | 
|Balance, December 31, 2014            |  | $          | 28,141 |  |              | $ | 134,674 |       | 



|                           |  | Computer   |        |  | Furniture,   |   |        |       | 
|-------------------------- |  | ---------- | ------ |  | ------------ | - | ------ | ----- | 
|                           |  | and office |        |  | fixtures and |   |        |       | 
|Carrying amounts           |  | equipment  |        |  | equipment    |   |        | Total | 
|                           |  |            |        |  |              |   |        |       | 
|Balance, May 31, 2013      |  | $          | 6,057  |  |              | $ | 16,178 |       | 
|Balance, May 31, 2014      |  | $          | 7,993  |  |              | $ | 12,688 |       | 
|Balance, December 31, 2014 |  | $          | 18,718 |  |              | $ | 14,443 |       | 



116







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 7. | Intangible assets
| | -- | -----------------



|                                      |  |         |           |   |            |   |           | Customer |  |   |         | 
|------------------------------------- |  | ------- | --------- | - | ---------- | - | --------- | -------- |  | - | ------- | 
|Cost                                  |  | Patents |           |   | Trademarks |   |           | List     |  |   | Total   | 
|                                      |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, May 31, 2012                 |  | $       | 8,858,770 |   |            | $ | 1,635,965 |          |  | $ | 288,700 | 
|Additions                             |  |         | 4,289     |   |            |   | -         |          |  |   | -       | 
|Change due to impairment              |  |         | (62,282   | ) |            |   | -         |          |  |   | -       | 
|Effect of movements in exchange rates |  |         | 33,521    |   |            |   | 6,177     |          |  |   | 1,090   | 
|                                      |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, May 31, 2013                 |  |         | 8,834,298 |   |            |   | 1,642,142 |          |  |   | 289,790 | 
|Effect of movements in exchange rates |  |         | 403,853   |   |            |   | 75,074    |          |  |   | 13,248  | 
|                                      |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, May 31, 2014                 |  |         | 9,238,151 |   |            |   | 1,717,216 |          |  |   | 303,038 | 
|                                      |  |         |           |   |            |   |           |          |  |   |         | 
|Additions                             |  |         | 7,206     |   |            |   | -         |          |  |   | -       | 
|Effect of movements in exchange rates |  |         | 647,266   |   |            |   | 120,215   |          |  |   | 21,215  | 
|                                      |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, December 31, 2014            |  | $       | 9,892,623 |   |            | $ | 1,837,431 |          |  | $ | 324,253 | 



|                                               |  |         |           |   |            |   |           | Customer |  |   |         | 
|---------------------------------------------- |  | ------- | --------- | - | ---------- | - | --------- | -------- |  | - | ------- | 
|Accumulated amortization and impairment losses |  | Patents |           |   | Trademarks |   |           | List     |  |   | Total   | 
|                                               |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, May 31, 2012                          |  | $       | 6,979,051 |   |            | $ | 1,107,938 |          |  | $ | 195,518 | 
|Amortization                                   |  |         | 388,753   |   |            |   | 116,220   |          |  |   | 20,509  | 
|Change due to impairment                       |  |         | (149      | ) |            |   | -         |          |  |   | -       | 
|Effect of movements in exchange rates          |  |         | 38,945    |   |            |   | 7,968     |          |  |   | 1,408   | 
|                                               |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, May 31, 2013                          |  |         | 7,406,600 |   |            |   | 1,232,126 |          |  |   | 217,435 | 
|Amortization                                   |  |         | 408,679   |   |            |   | 123,134   |          |  |   | 21,729  | 
|Effect of movements in exchange rates          |  |         | 346,531   |   |            |   | 58,657    |          |  |   | 10,356  | 
|                                               |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, May 31, 2014                          |  |         | 8,161,810 |   |            |   | 1,413,917 |          |  |   | 249,520 | 
|                                               |  |         |           |   |            |   |           |          |  |   |         | 
|Amortization                                   |  |         | 340,076   |   |            |   | 74,834    |          |  |   | 13,206  | 
|Effect of movements in exchange rates          |  |         | 583,406   |   |            |   | 102,508   |          |  |   | 18,084  | 
|                                               |  |         |           |   |            |   |           |          |  |   |         | 
|Balance, December 31, 2014                     |  | $       | 9,085,292 |   |            | $ | 1,591,259 |          |  | $ | 280,810 | 



|                           |  |         |           |  |            |   |         | Customer |  |   |        | 
|-------------------------- |  | ------- | --------- |  | ---------- | - | ------- | -------- |  | - | ------ | 
|Carrying amounts           |  | Patents |           |  | Trademarks |   |         | List     |  |   | Total  | 
|Balance, May 31, 2013      |  | $       | 1,427,698 |  |            | $ | 410,016 |          |  | $ | 72,355 | 
|Balance, May 31, 2014      |  | $       | 1,076,341 |  |            | $ | 303,299 |          |  | $ | 53,518 | 
|Balance, December 31, 2014 |  | $       | 807,331   |  |            | $ | 246,172 |          |  | $ | 43,443 | 



117







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31, 2014,
2013 and 2012



| | 7. | Intangible assets (continued):
| | -- | ------------------------------



The Company has considered indicators
of impairment as at December 31, 2014, May 31, 2014 and May 31, 2013. To December 31, 2014, the Company has recorded an aggregate
impairment loss of $16,136,325 primarily resulting from a previous write-down of AGGRASTAT® intangible assets and
from patent applications no longer being pursued or patents being abandoned. The Company did not record a write-down of intangible
assets during the seven months ended December 31, 2014 (year ended May 31, 2014 - nil, year ended May 31, 2013 - $62,133 and year
ended May 31, 2012 - $216,011) relating to patent applications no longer being pursued and patents being abandoned. The average
remaining amortization period of the Company's intangible assets is approximately 1.8 years.



For the seven months ended December
31, 2014, amortization of intangible assets relating to AGGRASTAT® totaling $331,547 (year ended May 31, 2014 -
545,535, year ended May 31, 2013 - $514,902 and year ended May 31, 2012 - $845,869) is recognized in cost of goods sold and amortization
of other intangible assets totaling $96,569 (year ended May 31, 2014 - $8,007, year ended May 31, 2013 - $10,580 and year ended
May 31, 2012 - $12,018) is recognized in research and development expenses. The Company did not record a write-down of intangible
assets during the seven months ended December 31, 2014 (year ended May 31, 2014 - nil, year ended May 31, 2013 - $62,133 and year
ended May 31, 2012 - $216,011). In the years ended May 31, 2013 and 2012, write-downs of intangible assets were recognized in research
and development expense.



As described in note 9, certain intangible
assets were pledged as security against long-term debt.



| | 8. | Investment in Apicore:
| | -- | ----------------------



On July 3, 2014, the Company and
its newly formed and wholly owned subsidiary, Medicure U.S.A. Inc. ("Medicure USA"), entered into an arrangement whereby
it acquired a minority interest in a pharmaceutical manufacturing business known as Apicore, along with an option to acquire all
of the remaining issued shares prior to July 3, 2017. Specifically, the Company and Medicure USA have acquired a 6.09% equity interest
(5.33% on a fully-diluted basis) in two newly formed holding companies of which Apicore LLC. and Apicore US LLC. will be wholly-owned
operating subsidiaries. The Company's equity interest and certain other rights, including the option rights, were obtained by the
Company for services provided in its lead role in structuring a US$22.5 million majority interest purchase and financing of Apicore.
There was no cash consideration in connection with the acquisition of the minority interest in Apicore, with the exception of costs
incurred by the Company in relation to the transaction which totaled $167,672.



The Company has a contractual obligation
to help fund the resolution of certain specified damages if they are encountered before July 3, 2016, not to exceed US$5 million.
The specified mechanism for the Company to fulfill this obligation is through the purchase of a portion of the equity of Apicore
at a specified, discounted price per share. The occurrence of any of the specified damages that would precipitate such a purchase
is not anticipated by the Company, therefore no amount has been recorded in the consolidated financial statements.



As at July 3, 2014, the Investment
in Apicore was initially valued at $1,276,849 and the option rights received were recorded at a value of $275,922.



As at December 31, 2014, the Investment
in Apicore was recorded at $1,361,824. The increase in value is as a result of the translation of the foreign currency subsidiary
for the portion of the investment in Apicore held by Medicure U.S.A. Inc. The difference of $84,975 is recorded as a translation
adjustment through other comprehensive income in the Statement of Income (Loss) and Comprehensive Income (Loss) for the seven months
ended December 31, 2014.



The long-term derivative is the value
associated to the option rights, which is revalued at every reporting period. As at December 31, 2014, the option rights have a
value of $194,491. The change in the value of the option rights is recorded in the Statement of Income (Loss) and Comprehensive
Income (Loss) for the seven months ended December 31, 2014 as a revaluation of the Apicore purchase option.



As there was no cash consideration
for the Investment in Apicore, the Company recorded the initial value of holdings acquired, including the option rights, net of
transaction costs which totaled $167,672 as investment structuring services in the Statement of Income (Loss) and Comprehensive
Income (Loss) for the seven months ended December 31, 2014.



118













MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012












9.	Long-term debt:





|                                               |  | December 31, 2014 |           |   | May 31, 2014 |   |           | May 31, 2013 | 
|---------------------------------------------- |  | ----------------- | --------- | - | ------------ | - | --------- | ------------ | 
|                                               |  |                   |           |   |              |   |           |              | 
|Manitoba Industrial Opportunities Program loan |  | $                 | 4,880,826 |   |              | $ | 4,847,279 |              | 
|Current portion of long-term debt              |  |                   | (654,877  | ) |              |   | -         |              | 
|                                               |  | $                 | 4,225,949 |   |              | $ | 4,847,279 |              | 





Principal repayments to maturity
by fiscal year are as follows:





|2015                                                                            |  | $ | 694,444   | 
|------------------------------------------------------------------------------- |  | - | --------- | 
|2016                                                                            |  |   | 1,666,667 | 
|2017                                                                            |  |   | 1,666,667 | 
|2018                                                                            |  |   | 972,222   | 
|                                                                                |  |   | 5,000,000 | 
|Less deferred debt issue expenses (net of accumulated amortization of $351,067) |  |   | 119,174   | 
|                                                                                |  | $ | 4,880,826 | 





The Company borrowed $5,000,000
from the Government of Manitoba, under the Manitoba Industrial Opportunities Program ("MIOP"), to assist in the settlement
of its existing long-term debt as described in note 10. The loan bears interest annually at 5.25% and originally matured on July
1, 2016. The loan was payable interest-only for the first 24 months, with blended principal and interest payments made monthly
thereafter until maturity. Effective August 1, 2013, the Company renegotiated its long-term debt and received an additional two-year
deferral of principal repayments. Under the renegotiated terms, the loan continues to be interest-only with principal repayments
now beginning on August 1, 2015 and the loan matures on July 1, 2018. The loan is secured by the Company's assets and guaranteed
by the Chief Executive Officer of the Company and entities controlled by the Chief Executive Officer. The Company issued 1,333,333
common shares (20,000,000 pre-consolidated common shares (note 11)) of the Company with a fair value of $371,834, net of share
issue costs of $28,166, in consideration for the guarantee to the Company's Chief Executive Officer and entities controlled by
the Chief Executive Officer. In connection with the guarantee, the Company entered into an indemnification agreement with the Chief
Executive Officer under which the Company shall pay the Guarantor on demand all amounts paid by the Guarantor pursuant to the guarantee.
In addition, under the indemnity agreement, the Company agreed to provide certain compensation upon a change in control of the
Company. The Company relied on the financial hardship exemption from the minority approval requirement of Multilateral Instrument
("MI") 61-101. Specifically, pursuant to MI 61-101, minority approval is not required for a related party transaction
in the event of financial hardship in specified circumstances.



The Company is required to maintain
certain non-financial covenants under the terms of the MIOP loan. As at December 31, 2014, management believes it is in compliance
with the terms of the loan.



The effective interest rate on
the MIOP loan for the seven months ended December 31, 2014 was seven percent (year ended May 31, 2014 - seven percent, year ended
May 31, 2013 - eight percent and year ended May 31, 2012 - seven percent).



119







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012












10.	Royalty obligation



On July 18, 2011, the Company
settled its existing long-term debt with Birmingham Associates Ltd. ("Birmingham"), an affiliate of Elliott Associates
L.P., in exchange for i) $4,750,000 in cash; ii) 2,176,003 common shares (32,640,043 pre-consolidation common shares (note 12))
of the Company; and iii) a royalty on future AGGRASTAT® sales until May 1, 2023. The royalty is based on four percent
of the first $2,000,000 of quarterly AGGRASTAT® sales, six percent of quarterly sales between $2,000,000 and $4,000,000
and eight percent of quarterly sales exceeding $4,000,000 payable within 60 days of the end of the preceding quarter. The previous
lender has a one-time option to switch the royalty payment from AGGRASTAT® to a royalty on MC-1 sales. Management
has determined there is no value to the option to switch the royalty as the product is not commercially available for sale and
development of the product is on hold.



In accordance with the terms
of the agreement, if the Company were to dispose of its AGGRASTAT® rights, the acquirer would be required to assume
the obligations under the royalty agreement.



The difference between the carrying
amount of the long-term debt extinguished and the consideration paid, comprising cash, equity instruments and the royalty obligation
assumed, has been recognized as a gain on the settlement of debt in the consolidated statements of net income and comprehensive
income for the year ended May 31, 2012. In accordance with IFRIC 19, Extinguishing financial liabilities with equity instruments,
the shares issued in partial consideration for the settlement of the debt have been included in consideration paid and measured
at their fair value at the date of the settlement of $652,801.



As at July 18, 2011, the Company
had total Canadian dollar book value of long-term debt of $22,254,966, net of unamortized deferred financing fees of $941,454.
The Company also had accrued interest payable of $8,145,865 for a total carrying value of the debt settled on July 18, 2011 of
$30,400,831.



The gain on the settlement of
debt totals $23,931,807 and consideration paid comprised $4,750,000 cash paid, common shares with a value of $652,801 and a royalty
obligation valued at $901,915, in addition to legal costs associated with the debt settlement transaction of $164,308.



The initial value assigned to
the royalty obligation, based on an expected value approach, was estimated to be $901,915. The royalty obligation is recorded at
amortized cost using the effective interest method, with the associated cash flows being revised each period resulting in a carrying
value at December 31, 2014 of $2,189,054 (May 31, 2014 - $1,778,578 and May 31, 2013 - $649,959). The change in the royalty obligation
for the seven months ended December 31, 2014 of $492,722 (year ended May 31, 2014 - $1,349,372, year ended May 31, 2013 - $72,689
and year ended May 31, 2012 - ($217,973)) is recorded within finance expense on the consolidated statements of net income (loss)
and comprehensive income (loss). Royalties for the seven months ended December 31, 2014 total $210,576 in regards to the royalty
obligation (year ended May 31, 2014 - $201,131, year ended May 31, 2013 - $104,979 and year ended May 31, 2012 - $99,965), with
payments made during the seven months ended December 31, 2014 of $156,722 (year ended May 31, 2014 - $165,291, year ended May 31,
2013 - $88,105 and year ended May 31, 2012 - $84,784).



11.	Other long-term liability



The Company received $200,000
of funding from the Province of Manitoba's Commercialization Support for Business program to assist the Company with the completion
of a study evaluating AGGRASTAT® in patients with impaired kidney function. The study was completed and the funds
were received during the year ended May 31, 2013. The funding is repayable when certain sales targets are met and the repayable
requirement will remain in effect for a period not less than eight fiscal years and it is expected that this funding will be repaid
during fiscal 2016 and 2017.



The other long-term liability
was initially recorded at a fair value of $167,261 with the difference between the fair value of the liability and the funding
received being recorded as a reduction in research and development expenses. The other long-term liability is recorded at amortized
cost using the effective interest method, with the associated cash flows being revised each period resulting in a carrying value
at December 31, 2014 of $152,778 (May 31, 2014 - $152,778 and May 31, 2013 - $167,261). The net change in the other long-term liability
for the seven months ended December 31, 2014 of nil (year ended May 31, 2014 - $14,483, year ended May 31, 2013 - nil and year
ended May 31, 2012 - nil) is recorded as a reduction to research and development expense on the consolidated statements of net
income (loss) and comprehensive income (loss).



120







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










12.	Capital stock:



(a)	Authorized:



The Company has authorized share
capital of an unlimited number of common voting shares, an unlimited number of class A common shares and an unlimited number of
preferred shares. The preferred shares may be issued in one or more series, and the directors may fix prior to each series issued,
the designation, rights, privileges, restrictions and conditions attached to each series of preferred shares.



On November 1, 2012, the Company
completed a consolidation of its outstanding share capital on the basis of one post-consolidation share for every fifteen pre-consolidation
shares. All comparative figures have been adjusted retrospectively.



(b)	Shares issued and
outstanding:



Shares issued and outstanding
are as follows:





|                                                   |  | Number of Common Shares |            |  | Amount |  
|-------------------------------------------------- |  | ----------------------- | ---------- |  | ------ | -
|                                                   |  |                         |            |  |        |  
|Balance, May 31, 2011                              |  |                         | 8,687,172  |  |        | $
|Shares issued on July 18, 2011                     |  |                         | 3,509,336  |  |        |  
|Balance, May 31, 2012                              |  |                         | 12,196,508 |  |        | $
|Balance, May 31, 2013                              |  |                         | 12,196,508 |  |        | $
|Shares issued upon exercise of stock options (12c) |  |                         | 3,333      |  |        |  
|Balance, May 31, 2014                              |  |                         | 12,199,841 |  |        | $
|Shares issued upon exercise of stock options (12c) |  |                         | 10,066     |  |        |  
|Balance, December 31, 2014                         |  |                         | 12,209,907 |  |        | $





On July 18, 2011, the Company
issued 2,176,003 common shares (32,640,043 pre-consolidation common shares) as part of the consideration of the settlement of the
Company's existing debt. These shares had a value of $646,801, net of share issue costs of $6,000 (note 10).



On July 18, 2011, the Company
issued 1,333,333 common shares (20,000,000 pre-consolidation common shares) of the Company in consideration for the guarantee of
long-term debt by the Company's Chief Executive Officer and entities controlled by the Chief Executive Officer. These shares had
a value of $371,834, net of share issue costs of $28,166 and have been recorded as deferred debt issue costs and are being amortized
using the effective interest method (note 9).



On July 11, 2014, the Company
announced that, subject to all necessary regulatory approvals, it has entered into shares for debt agreements with its Chief Executive
Officer, Dr. Albert Friesen and certain members of the Board of Directors, pursuant to which the Company will issue 205,867 of
its common shares with a fair value of $1.98 per common share to satisfy $407,617 of outstanding amounts owing to Chief Executive
Officer and members of the Company’s Board of Directors. The shares were issued subsequent to December 31, 2014 on January
9, 2015..



Subsequent to December 31, 2014,
on January 27, 2015, the Company announced that, subject to all necessary regulatory approvals, it has entered into shares for
debt agreements with certain members of the Board of Directors and a consultant, pursuant to which the Company will issue 108,206
of its common shares with a fair value of $1.44 per common share to satisfy $155,817 of outstanding amounts owing to the these
individuals. The shares were issued subsequent to December 31, 2014 on March 20, 2015.



121







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










12.	Capital stock (continued):



(c)	Stock option plan:



The Company has a stock option
plan which is administered by the Board of Directors of the Company with stock options granted to directors, management, employees
and consultants as a form of compensation. During the seven months ended December 31, 2014, the number of common shares reserved
for issuance of stock options increased and is now limited to a maximum of 2,441,981 common shares of the Company at any time.
The stock options generally have a maximum term of ten years.



On May 6, 2014, 3,333 stock
options, with a value of $3,414, were exercised at a price of $0.60 for proceeds to the Company of $2,000.



On September 17, 2014, 10,066
stock options, with a value of $9,091 were exercised at prices of $0.60 per share (3,333 stock options), $1.50 per share (1,733
stock options) and $0.30 per share (5,000 stock options) for proceeds to the Company of $6,099.



On May 10, 2013, the Company
issued 463,000 stock options to certain directors, officers, employees, management company employees and consultants of the Company,
including the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, at an exercise price of $0.30 per common
share. The options vested immediately and expire after ten years.



On July 7, 2014, the Company
granted an aggregate of 332,300 options to certain directors, officers, employees, management company employees and consultants
of the Company. Of these options, 92,300 are set to expire on the tenth anniversary of the date of grant, and 240,000 are set to
expire on the fifth anniversary of the date of grant. All 332,300 options were issued at an exercise price of $1.90 per share and
vested immediately.



Changes in the number of options
outstanding during the seven months ended December 31, 2014 and the years ended May 31, 2014, 2013 and 2012 are as follows:





|                                 |  | December 31, 2014 |           |   |                |   |       | May 31, 2014 | 
|-------------------------------- |  | ----------------- | --------- | - | -------------- | - | ----- | ------------ | 
|                                 |  |                   |           |   | Weighted       |   |       |              | 
|                                 |  |                   |           |   | average        |   |       |              | 
|                                 |  | Shares            |           |   | exercise price |   |       | Shares       | 
|                                 |  |                   |           |   |                |   |       |              | 
|Balance, beginning of year       |  |                   | 1,418,019 |   |                | $ | 2.15  |              | 
|Granted                          |  |                   | 332,300   |   |                |   | 1.90  |              | 
|Exercised                        |  |                   | (10,066   | ) |                |   | (0.61 | )            | 
|Forfeited, cancelled or expired  |  |                   | (20,000   | ) |                |   | (1.05 | )            | 
|Balance, end of year             |  |                   | 1,720,253 |   |                | $ | 2.12  |              | 
|Options exercisable, end of year |  |                   | 1,720,253 |   |                | $ | 2.12  |              | 



122







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










12.	Capital stock (continued):



(c)	Stock option plan
(continued):





|                                 |  |        |           |   | May 31, 2013   |   |       |        |  |  | May 31, 2012   |  
|-------------------------------- |  | ------ | --------- | - | -------------- | - | ----- | ------ |  |  | -------------- | -
|                                 |  |        |           |   | Weighted       |   |       |        |  |  | Weighted       |  
|                                 |  |        |           |   | average        |   |       |        |  |  | average        |  
|                                 |  | Shares |           |   | exercise price |   |       | Shares |  |  | exercise price |  
|                                 |  |        |           |   |                |   |       |        |  |  |                |  
|Balance, beginning of year       |  |        | 962,610   |   |                | $ | 3.04  |        |  |  | 154,810        |  
|Granted                          |  |        | 463,000   |   |                |   | 0.30  |        |  |  | 836,133        |  
|Forfeited, cancelled or expired  |  |        | (4,258    | ) |                |   | (4.68 | )      |  |  | (28,333        | )
|Balance, end of year             |  |        | 1,421,352 |   |                | $ | 2.14  |        |  |  | 962,610        |  
|Options exercisable, end of year |  |        | 1,421,352 |   |                | $ | 2.14  |        |  |  | 962,610        |  





Options outstanding at December
31, 2014 consist of the following:





|                |  |             |           |  | Weighted average |            | Options outstanding |   |       |             | 
|--------------- |  | ----------- | --------- |  | ---------------- | ---------- | ------------------- | - | ----- | ----------- | 
|Range of        |  | Number      |           |  | remaining        |            | weighted average    |   |       | Number      | 
|exercise prices |  | outstanding |           |  | contractual life |            | exercise price      |   |       | exercisable | 
|                |  |             |           |  |                  |            |                     |   |       |             | 
|$0.30 - $1.00   |  |             | 498,332   |  |                  | 7.94 years |                     | $ | 0.33  |             | 
|$1.01 - $5.00   |  |             | 1,139,967 |  |                  | 6.36 years |                     | $ | 1.62  |             | 
|$10.01 - $20.00 |  |             | 31,587    |  |                  | 2.88 years |                     | $ | 12.84 |             | 
|$20.01 - $25.20 |  |             | 50,367    |  |                  | 1.32 years |                     | $ | 24.56 |             | 
|$0.30 - $25.20  |  |             | 1,720,253 |  |                  | 6.61 years |                     | $ | 2.12  |             | 





Compensation expense related
to stock options granted during the year or from previous periods under the stock option plan for the seven months ended December
31, 2014 is $620,705 (year ended May 31, 2014 - $295,144 (restated - note 22), year ended May 31, 2013 - $102,993 and year ended
May 31, 2012 - $224,445). The compensation expense was determined based on the fair value of the options at the date of measurement
using the Black-Scholes option pricing model.





|                        |  | December 31, 2014
|----------------------- |  | -----------------
|                        |  |                  
|Expected option life    |  | 5.0 - 5.4 years  
|Risk-free interest rate |  | 1.01% - 1.66%    
|Dividend yield          |  | nil              
|Expected volatility     |  | 142.68% - 166.39%





Subsequent to December 31, 2014,
on March 27, 2015, the Company granted an aggregate of 236,070 options to certain directors, officers, employees, management company
employees and consultants of the Company pursuant to the Company’s Stock Option Plan. Of these options, 181,070 are set to
expire on the tenth anniversary of the date of grant, 5,000 are set to expire on the third anniversary of the date of grant and
50,000 are set to expire on the first anniversary of the date of grant. All of the options were issued at an exercise price of
$1.90 per share.



123







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










12.	Capital stock (continued):



(d)	Warrants:



Changes in the number of warrants
outstanding during the seven months ended December 31, 2014 and the years ended May 31, 2014 and 2013 are as follows:





|                    |  |          |        |  | Exercise  |       |         |  |        |           |  |  |         |  |  |                      |        |  |      | 
|------------------- |  | -------- | ------ |  | --------- | ----- | ------- |  | ------ | --------- |  |  | ------- |  |  | -------------------- | ------ |  | ---- | 
|Issue               |  | Original |        |  | price     |       | May 31, |  |        | Granted   |  |  | May 31, |  |  | Granted December 31, |       
|(Expiry date)       |  | granted  |        |  | per share |       | 2013    |  |        | (Expired) |  |  | 2014    |  |  | (Expired)            |        |  | 2014 | 
|                    |  |          |        |  |           |       |         |  |        |           |  |  |         |  |  |                      |        |  |      | 
|66,667 units        |  |          |        |  |           |       |         |  |        |           |  |  |         |  |  |                      |        |  |      | 
|(December 31, 2016) |  |          | 66,667 |  | USD $     | 18.90 |         |  | 66,667 |           |  |  | -       |  |  |                      | 66,667 |  |      | 





IFRS require warrants with an
exercise price denominated in a currency other the entity's functional currency to be treated as a liability measured at fair value.
The warrants, all with U.S. dollar exercise prices, are recorded at fair value within accounts payable and accrued liabilities
as at December 31, 2014 and total $36,259 (May 31, 2014 - $54,344 and May 31, 2013 - $10,524). Changes in fair value of the warrants
for the seven months ended December 31, 2014 of ($18,085) (year ended May 31, 2014 - $43,820, year ended May 31, 2013 - ($24,459)
and year ended May 31, 2012 - $24,490) are recorded within finance expense.



The warrants were issued with
a debt financing agreement in September 2007 and may be exercised, upon certain conditions being met, on a cashless basis based
on a formula described in the warrant agreements.



(e)	Per share amounts



The weighted average number
of common voting shares outstanding for the seven months ended December 31, 2014 and the years ended May 31, 2014, 2013 and 2012
was 12,204,827, 12,196,745, 12,196,508 and 11,745,854, respectively. For the seven months ended December 31, 2014, the dilution
created by options and warrants has been reflected in the per share amounts. For the years ended May 31, 2014 and 2013, the dilution
created by options and warrants has not been reflected in the per share amounts as the effect would be anti-dilutive. For the year
ended May 31, 2012, the dilution created by options and warrants has been reflected in the per share amounts.



13.	Income taxes:



The Company recognized no income
taxes in the consolidated statements of net income (loss) and comprehensive income (loss), as at the seven months ended December
31, 2014 as it is not probable that future taxable profits will be available against which the accumulated tax assets can be utilized.



As at December 31, 2014, May
31, 2014 and 2013, deferred tax assets have not been recognized with respect to the following items:





|                                                 |  | December 31, 2014 |            |   | May 31, 2014 |   |            | May 31, 2013 | 
|------------------------------------------------ |  | ----------------- | ---------- | - | ------------ | - | ---------- | ------------ | 
|                                                 |  |                   |            |   |              |   |            |              | 
|Deferred tax assets                              |  |                   |            |   |              |   |            |              | 
|Non-capital loss carryforwards                   |  | $                 | 6,920,000  |   |              | $ | 7,239,000  |              | 
|Scientific Research and experimental development |  |                   | 3,793,000  |   |              |   | 3,793,000  |              | 
|Other                                            |  |                   | 1,009,000  |   |              |   | 733,000    |              | 
|Deferred tax liability                           |  |                   |            |   |              |   |            |              | 
|Investment in Apicore                            |  |                   | (66,000    | ) |              |   | -          |              | 
|                                                 |  |                   | 11,656,000 |   |              |   | 11,765,000 |              | 



124









MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










13.	Income taxes (continued):



The deferred tax liability as
at December 31, 2014 was not recorded as there are sufficient temporary differences which are available to reverse in the same
periods as the taxable temporary differences.



The reconciliation of the Canadian
statutory rate to the income tax rate applied to the net income (loss) for the seven months ended December 31, 2014 and the years
ended May 31, 2014, 2013 and 2012 to the income tax recovery is as follows:





|                                                                                      |  |                   |           |   | May 31, 2014 |   |            |              |  |   |              |  
|------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ------------ | - | ---------- | ------------ |  | - | ------------ | -
|                                                                                      |  |                   |           |   | Restated     |   |            |              |  |   |              |  
|                                                                                      |  | December 31, 2014 |           |   | (note 22)    |   |            | May 31, 2013 |  |   | May 31, 2012 |  
|                                                                                      |  |                   |           |   |              |   |            |              |  |   |              |  
|Income (loss) for the year:                                                           |  |                   |           |   |              |   |            |              |  |   |              |  
|Canadian                                                                              |  | $                 | (283,456  | ) |              | $ | (2,037,987 | )            |  | $ | (1,196,746   | )
|Foreign                                                                               |  |                   | 1,479,052 |   |              |   | 103,891    |              |  |   | (1,377,558   | )
|                                                                                      |  |                   | 1,195,596 |   |              |   | (1,934,096 | )            |  |   | (2,574,304   | )
|                                                                                      |  |                   |           |   |              |   |            |              |  |   |              |  
|Canadian federal and provincial income taxes at 27.00% (2014, 2013 and 2012 - 27.00%) |  |                   | (323,000  | ) |              |   | 522,000    |              |  |   | 695,000      |  
|Permanent differences and other items                                                 |  |                   | (170,000  | ) |              |   | (256,000   | )            |  |   | (268,000     | )
|Gain on settlement of debt                                                            |  |                   | -         |   |              |   | -          |              |  |   | -            |  
|Foreign tax rate in foreign jurisdiction                                              |  |                   | 252,000   |   |              |   | (9,000     | )            |  |   | (355,000     | )
|Change in unrecognized deferred tax assets                                            |  |                   | 241,000   |   |              |   | (257,000   | )            |  |   | (72,000      | )
|                                                                                      |  | $                 | -         |   |              | $ | -          |              |  | $ | -            |  



The foreign tax rate differential
is the difference between the Canadian federal and provincial statutory income tax rate and the tax rates in Barbados (2.5%) and
the United States (38%) that are applicable to losses incurred by the Company's wholly-owned subsidiaries, Medicure International
Inc., Medicure Pharma Inc. and Medicure U.S.A. Inc.



At December 31, 2014, the Company
has the following Canadian non-capital losses available for application in future years:





|Expires in: |  |   |           
|----------- |  | - | ----------
|2026        |  | $ | 939,620   
|2027        |  |   | 1,111,169 
|2029        |  |   | 5,288,028 
|2030        |  |   | 2,711,408 
|2031        |  |   | 1,893,976 
|2032        |  |   | 1,485,583 
|2033        |  |   | 928,119   
|2034        |  |   | 1,477,854 
|            |  | $ | 15,835,757





Scientific research and development
tax credits of $3,826,000 (May 31, 2014 - $3,826,000, May 31, 2013 - $3,826,000 and May 31, 2012 - $3,826,000), which can be applied
against Canadian income taxes otherwise payable, with expiry by 2028.



125







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










13.	Income taxes (continued):



At December 31, 2014, the Company
has the following United States net operating losses available for application in future years:





|Expires in: |  |   |          
|----------- |  | - | ---------
|2029        |  | $ | 471,466  
|2030        |  |   | 485,266  
|2032        |  |   | 122,635  
|2034        |  |   | 8,645    
|            |  | $ | 1,088,012





At December 31, 2014, the Company
has the following Barbados losses available for application in future years:





|Expires in: |  |   |           
|----------- |  | - | ----------
|2016        |  |   | 8,404,282 
|2017        |  |   | 27,038,913
|2018        |  |   | 41,858,363
|2019        |  |   | 7,736,962 
|2020        |  |   | 2,106,888 
|2021        |  |   | 1,080,659 
|2023        |  |   | 1,138,475 
|            |  | $ | 89,364,542





14. Revenue:



During the seven months ended
December 31, 2014 and the years ended May 31, 2014, 2013 and 2012, the Company earned revenues as follows:





|                                       |  | December 31, 2014 |           |  | May 31, 2014 |   |           | May 31, 2013 |  |   | May 31, 2012 | 
|-------------------------------------- |  | ----------------- | --------- |  | ------------ | - | --------- | ------------ |  | - | ------------ | 
|                                       |  |                   |           |  |              |   |           |              |  |   |              | 
|Sale of finished products - AGGRASTAT® |  | $                 | 5,264,395 |  |              | $ | 5,050,761 |              |  | $ | 2,602,700    | 
|Sale of unfinished products            |  |                   | -         |  |              |   | -         |              |  |   | -            | 
|                                       |  | $                 | 5,264,395 |  |              | $ | 5,050,761 |              |  | $ | 2,602,700    | 





On July 6, 2011, the Company
entered into an agreement with Iroko Cardio, LLC ("Iroko") to advance AGGRASTAT® in each of the Company's
and Iroko's respective territories. Iroko owned the rights to AGGRASTAT® outside of the Company's territory. Under
the terms of the agreement, the Company transferred to Iroko, AGGRASTAT® unfinished product from inventory on hand
and the rights to purchase additional quantities from a third party. In turn, Iroko paid Medicure International Inc. US$1,059,000
on July 6, 2011 and agreed to pay an additional US$850,000 on or before November 1, 2011, subject to certain conditions, which
were satisfied prior to November 1, 2011 and full payment was received. The Company recognized $1,915,433 of revenue during the
year ended May 31, 2012 in relation to this sale.





In addition, Iroko made available
to the Company certain analytical methods for testing of AGGRASTAT® drug product and provided the Company the option,
exercisable by the Company within one year, to obtain certain data used by Iroko to obtain changes to the approved use of AGGRASTAT®
in Europe. If the Company exercised its option to obtain the data and was successful in getting changes to the approved use of
AGGRASTAT® in the United States, Iroko would have been entitled to receive a royalty of up to US$3,500,000 on future
AGGRASTAT® sales based on three percent of sales per year. Management has determined the value of the option received
to obtain such data used by Iroko was not significant. On July 6, 2012, the option to obtain the data expired without the Company
exercising its rights thereunder. As a result, the Company has no ongoing or potential royalty obligation in connection with this
agreement.



126







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012












15. Finance expense:



During the seven months ended
December 31. 2014 and the years ended May 31, 2014, 2013 and 2012, the Company incurred finance expense as follows:





|                                           |  | December 31, 2014 |         |   | May 31, 2014 |   |           | May 31, 2013 |  |   | May 31, 2012 |  
|------------------------------------------ |  | ----------------- | ------- | - | ------------ | - | --------- | ------------ |  | - | ------------ | -
|                                           |  |                   |         |   |              |   |           |              |  |   |              |  
|Interest on MIOP loan                      |  | $                 | 187,451 |   |              | $ | 327,167   |              |  | $ | 396,653      |  
|Interest on Birmingham long-term debt      |  |                   | -       |   |              |   | -         |              |  |   | -            |  
|Change in fair value of royalty obligation |  |                   | 492,722 |   |              |   | 1,349,372 |              |  |   | 72,889       |  
|Change in fair value of warrant liability  |  |                   | (18,085 | ) |              |   | 43,821    |              |  |   | (24,529      | )
|Other interest and banking fees            |  |                   | 67,607  |   |              |   | 88,668    |              |  |   | 21,412       |  
|                                           |  | $                 | 729,695 |   |              | $ | 1,809,028 |              |  | $ | 466,425      |  





During the seven months ended
December 31, 2014 and the years ended May 31, 2014, 2013 and 2012, the Company paid finance expense as follows:





|                                     |  | December 31, 2014 |         |  | May 31, 2014 |   |         | May 31, 2013 |  |   | May 31, 2012 | 
|------------------------------------ |  | ----------------- | ------- |  | ------------ | - | ------- | ------------ |  | - | ------------ | 
|                                     |  |                   |         |  |              |   |         |              |  |   |              | 
|Interest paid on MIOP loan           |  | $                 | 153,904 |  |              | $ | 262,500 |              |  | $ | 262,500      | 
|Other interest and banking fees paid |  |                   | 71,555  |  |              |   | 36,846  |              |  |   | 10,917       | 
|                                     |  | $                 | 225,459 |  |              | $ | 299,346 |              |  | $ | 273,417      | 





16. Commitments and contingencies:



(a)	Commitments:



As at December 31, 2014 and
in the normal course of business, the Company has obligations to make future payments representing contracts and other commitments
that are known and committed.



The aggregate manufacturing
and supply agreement and business and administrations services agreement which is payable during fiscal 2015 is $1,728,000 and
there are no contractual commitments beyond December 31, 2015.



The Company has entered into
manufacturing and supply agreements, as amended, to purchase a minimum quantity of AGGRASTAT® from a third party
with remaining minimum purchases totaling $1,513,000 or US$1,305,000 (based on current pricing) over the term of the agreement,
which expires in fiscal 2015. Effective January 1, 2014, the agreement was amended and the amounts previously due during fiscal
2014 were deferred throughout calendar 2014 and now bear interest at 3.25% per annum, with monthly payments being made against
this balance owing of US$45,000. These payments will be applied to future inventory purchases expected to be made during fiscal
2015 and $549,297 is currently recorded within prepaid expenses in regards to this agreement. For the seven months ended December
31, 2014, interest of $18,738 (year ended May 31, 2014 - $17,009, year ended May 31, 2013 - nil and year ended May 31, 2012 - nil)
is recorded within finance expense relating to this agreement.



On January 1, 2012, the Company
entered into a business and administration services agreement with Genesys Venture Inc. ("GVI"), a company controlled
by the Chief Executive Officer (note 17), under which the Company committed to pay $15,833 per month, or $190,000 per year effective
January 1, 2012. The agreement was automatically renewed on January 1, 2013 and 2014 for additional one year periods. Either party
may terminate this agreement at any time after June 30, 2012 upon 90 days written notice. Effective November 1, 2014, the business
and administration services agreement was renegotiated for a further 14 month term ending December 31, 2015 at a rate of $17,917
per month, or $215,000 per year.



127







MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Seven months ended December 31, 2014 and years ended May 31,
2014, 2013 and 2012










16. Commitments and contingencies (continued):



(a)	Commitments (continued):



Contracts with contract research
organizations are payable over the terms of the associated clinical trials and timing of payments is largely dependent on various
milestones being met, such as the number of patients recruited, number of monitoring visits conducted, the completion of certain
data management activities, trial completion, and other trial-related activities.



(b)	Guarantees:



The Company periodically enters
into research agreements with third parties that include indemnification provisions customary in the industry. These guarantees
generally require the Company to compensate the other party for certain damages and costs incurred as a result of claims arising
from research and development activities undertaken on behalf of the Company. In some cases, the maximum potential amount of future
payments that could be required under these indemnification provisions could be unlimited. These indemnification provisions generally
survive termination of the underlying agreement. The nature of the indemnification obligations prevents the Company from making
a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company has not made any indemnification
payments under such agreements and no amount has been accrued in the accompanying financial statements with respect to these indemnification
obligations.



(c)	Royalties:



As a part of the Birmingham
debt settlement described in note 10, beginning on July 18, 2011, the Company is obligated to pay a royalty to the previous lender
based on future commercial AGGRASTAT® sales until 2023. The royalty is based on four percent of the first $2,000,000
of quarterly AGGRASTAT® sales, six percent of quarterly sales between $2,000,000 and $4,000,000 and eight percent
of quarterly sales exceeding $4,000,000 payable within 60 days of the end of the preceding quarter. The previous lender has a one-time
option to switch the royalty payment from AGGRASTAT® to a royalty on MC-1 sales. Management has determined there
is no value to the option to switch the royalty as the product is not commercially available for sale and development of the product
is on hold. Royalties for the seven months ended December 31, 2014 total $210,576 in regards to the royalty obligation (year ended
May 31, 2014 - $201,131, year ended May 31, 2013 - $104,979 and year ended May 31, 2012 - $99,965), with payments made during the
seven months ended December 31, 2014 of $156,722 (year ended May 31, 2014 - $165,291, year ended May 31, 2013 - $88,105 and year
ended May 31, 2012 - $84,784).



As part of the sale of unfinished
product as described in note 14, if the Company exercised its option to obtain AGGRASTAT® data and was successful
in getting changes to the approved use of AGGRASTAT® in the United States, the Company would have been obligated
to pay a three percent royalty of up to US$3,500,000 on future AGGRASTAT® sales. On July 6, 2012, the option to
obtain the data expired without the Company exercising its rights thereunder. As a result the Company has no ongoing or potential
royalty obligation in connection with this agreement.



The Company is obligated to
pay royalties to third parties based on any future commercial sales of MC-1, aggregating up to 3.9 percent on net sales. To date,
no royalties are due and/or payable.



(d)	Contingencies:



In the normal course of business,
the Company may from time to time be subject to various claims or possible claims. Although management currently believes there
are no claims or possible claims that if resolved would either individually or collectively result in a material adverse impact
on the Company’s financial position, results of operations, or cash flows, these matters are inherently uncertain and management’s
view of these matters may change in the future.



128









|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 17. | Related party transactions:
| | --- | ---------------------------



| | (a) | Key management personnel compensation
| | --- | -------------------------------------



Key management personnel are
those persons having authority and responsibility for planning, directing and controlling the activities of the Company. The Board
of Directors, Chief Executive Officer, President and Chief Operating Officer and, beginning during the year ended May 31, 2013,
the Chief Financial Officer are key management personnel.



In addition to their salaries,
the Company also provides non-cash benefits and participation in the Stock Option Plan. The following table details the compensation
paid to key management personnel:



|                                       |  | December 31, 2014 |         |  | May 31, 2014 |   |         | May 31, 2013 |  |   | May 31, 2012 | 
|-------------------------------------- |  | ----------------- | ------- |  | ------------ | - | ------- | ------------ |  | - | ------------ | 
|Salaries, fees and short-term benefits |  | $                 | 366,015 |  |              | $ | 781,484 |              |  | $ | 472,623      | 
|Share-based payments                   |  |                   | 73,424  |  |              |   | -       |              |  |   | 79,190       | 
|                                       |  | $                 | 439,439 |  |              | $ | 781,484 |              |  | $ | 551,813      | 



The Company has $336,766 (May
31, 2014 - $289,869 and May 31, 2013 - $213,569) recorded within accounts payable and accrued liabilities relating to amounts payable
to the members of the Company's Board of Directors for services provided. Beginning on February 22, 2013, these amounts began to
bear interest at a rate of 5.5% per annum. For the seven months ended December 31, 2014, $10,127 (year ended May 31, 2014 - $14,918,
year ended May 31, 2013 - $3,107 and year ended May 31, 2012 - nil) was recorded within finance expense in relation to these amounts
payable to the members of the Company's Board of Directors.



On July 11, 2014 and as described
in note 12(b), the Company announced that, subject to all necessary regulatory approvals, it had entered into shares for debt agreements
with certain members of the Board of Directors, pursuant to which the Company will issue common shares at with a fair value of
$1.98 per common share to satisfy outstanding amounts owing to the Company’s Board of Directors. Of the amounts payable to
the Company's Board of Directors as at December 31, 2014, $109,809 was included in these shares for debt agreements. The shares
were issued subsequent to December 31, 2014 on January 9, 2015.



Subsequent to December 31, 2014,
on January 27, 2015, the Company announced that, subject to all necessary regulatory approvals, it has entered into shares for
debt agreements with certain members of the Board of Directors, pursuant to which the Company will issue 75,472 of its common shares
with a fair value of $1.44 per common share to satisfy $108,680 of outstanding amounts owing to the these individuals. The shares
were issued subsequent to December 31, 2014 on March 20, 2015.



| | (b) | Transactions with related parties
| | --- | ---------------------------------



Directors and key management
personnel control 19% of the voting shares of the Company as at December 31, 2014 (May 31, 2014 - 19% and May 31, 2013 - 19%).



During the seven months ended
December 31, 2014, the Company paid GVI, a company controlled by the Chief Executive Officer, a total of $115,000 (year ended May
31, 2014 - $190,000, year ended May 31, 2013 - $190,000 and year ended May 31, 2012 - $184,167) for business administration services,
$36,500 (year ended May 31, 2014 - $30,500, year ended May 31, 2013 - $32,500 and year ended May 31, 2012 - $19,563) in rental
costs and $25,115 (year ended May 31, 2014 - $33,735, year ended May 31, 2013 - $26,125 and year ended May 31, 2012 - $46,275)
for commercial support services. As described in note 16, the Chief Financial Officer's services are provided through a consulting
agreement with GVI. In addition, accounting, payroll, human resources and information technology services are provided to the Company
through the GVI agreement.



129







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 17. | Related party transactions (continued):
| | --- | ---------------------------------------



| | (b) | Transactions with related parties (continued):
| | --- | ----------------------------------------------



Clinical research services are
provided through a consulting agreement with GVI Clinical Development Solutions ("GVI CDS"), a company controlled by
the Chief Executive Officer. Pharmacovigilance and safety, regulatory support, quality control and clinical support are provided
to the Company through the GVI CDS agreement. During the seven months ended December 31, 2014, the Company paid GVI CDS $56,904
(year ended May 31, 2014 - $125,583, year ended May 31, 2013 - $134,696 and year ended May 31, 2012 - $146,154) for clinical research
services.



Research and development services
are provided through a consulting agreement with CanAm Bioresearch Inc. ("CanAm"), a company controlled by a close family
member of the Chief Executive Officer. During the seven months ended December 31, 2014, the Company paid CanAm $233,938 (year ended
May 31, 2014 - $229,732, year ended May 31, 2013 - $467,763 and year ended May 31, 2012 - $254,493) for research and development
services.



These transactions were in the
normal course of business and have been measured at the exchange amount, which is the amount of consideration established and agreed
to by the related parties. Beginning on February 22, 2013, these amounts began to bear interest at a rate of 5.5% per annum. For
the seven months ended December 31, 2014, $18,082 (year ended May 31, 2014 - $36,904, year ended May 31, 2013 - $7,366 and year
ended May 31, 2012 - nil) was recorded within finance expense in relation to these amounts payable to related parties.



As at December 31, 2014, included
in accounts payable and accrued liabilities is $120,962 (May 31, 2014 - $90,262 and May 31, 2013 - $106,216) payable to GVI, $145,100
(May 31, 2014 - $148,461 and May 31, 2013 - $89,545) payable to GVI CDS and $247,752 (May 31, 2014 - $373,956 and May 31, 2013
- $351,297) payable to CanAm, which are unsecured, payable on demand and bear interest as described above.



On July 18, 2011, the Company
renewed its consulting agreement with its Chief Executive Officer for a term of five years, at a rate of $180,000 annually. The
Company may terminate this agreement at any time upon 120 days written notice. During the seven months ended December 31, 2014,
the Company recorded a bonus of $58,904 (year ended May 31, 2014 - $286,849, year ended May 31, 2013 - nil and year ended May 31,
2012 - nil) to its Chief Executive Officer which is recorded within selling, general and administrative expenses. As at December
31, 2014, included in accounts payable and accrued liabilities is $345,753 (May 31, 2014 - $286,849 and May 31, 2013 - $37,750)
payable to the Chief Executive Officer as a result of this consulting agreement, which is unsecured, payable on demand and non-interest
bearing.



On July 11, 2014 and as described
in note 12(b), the Company announced that, subject to all necessary regulatory approvals, it had entered into a shares for debt
agreement with its Chief Executive Officer, pursuant to which the Company will issue common shares with a fair value of $1.98 per
common share to satisfy outstanding amounts owing to the Chief Executive Officer. Of the amount payable to the Chief Executive
Officer as at December 31, 2014, $297,808 was included in this shares for debt agreement. The shares were issued subsequent to
December 31, 2014 on January 9, 2015.



130







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 18. | Expenses by nature:
| | --- | -------------------



Expenses incurred for the seven
months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012 are as follows:



|                                       |  |                   |           |   | May 31, 2014 |  |           |              |  |  |              | 
|-------------------------------------- |  | ----------------- | --------- | - | ------------ |  | --------- | ------------ |  |  | ------------ | 
|                                       |  |                   |           |   | Restated     |  |           |              |  |  |              | 
|                                       |  | December 31, 2014 |           |   | (note 22)    |  |           | May 31, 2013 |  |  | May 31, 2012 | 
|Personnel expenses                     |  |                   |           |   |              |  |           |              |  |  |              | 
|Salaries, fees and short-term benefits |  |                   | 1,079,085 |   |              |  | 1,584,724 |              |  |  | 1,194,861    | 
|Share-based payments                   |  |                   | 620,705   |   |              |  | 295,144   |              |  |  | 102,993      | 
|Salaries, fees and short-term benefits |  |                   | 1,699,790 |   |              |  | 1,879,868 |              |  |  | 1,297,854    | 
|Amortization and derecognition         |  |                   | 433,149   |   |              |  | 561,269   |              |  |  | 599,115      | 
|Research and development               |  |                   | 584,991   |   |              |  | 401,311   |              |  |  | 1,374,391    | 
|Manufacturing                          |  |                   | -         |   |              |  | 127,953   |              |  |  | 117,071      | 
|Inventory material costs               |  |                   | 349,901   |   |              |  | 300,378   |              |  |  | 131,355      | 
|(Write-up) down of inventory           |  |                   | (80,874   | ) |              |  | 22,209    |              |  |  | 19,639       | 
|Medical affairs                        |  |                   | 260,861   |   |              |  | 136,996   |              |  |  | 60,831       | 
|Administration                         |  |                   | 362,483   |   |              |  | 618,022   |              |  |  | 302,723      | 
|Selling and logistics                  |  |                   | 854,664   |   |              |  | 780,748   |              |  |  | 619,211      | 
|Professional fees                      |  |                   | 150,131   |   |              |  | 352,734   |              |  |  | 167,025      | 
|                                       |  |                   | 4,615,096 |   |              |  | 5,181,488 |              |  |  | 4,689,215    | 



| | 19. | Financial instruments:
| | --- | ----------------------



| | (a) | Financial assets and liabilities:
| | --- | ---------------------------------



Set
out below is a comparison by class of the carrying amounts and fair value of the Company's financial instruments that are carried
in the consolidated financial statements as at December 31, 2014:



|                                         |  | Carrying |           |  |            |  
|---------------------------------------- |  | -------- | --------- |  | ---------- | -
|                                         |  | Amount   |           |  | Fair Value |  
|                                         |  |          |           |  |            |  
|Financial Assets                         |  |          |           |  |            |  
|                                         |  |          |           |  |            |  
|Loans and receivables                    |  |          |           |  |            |  
|Cash                                     |  | $        | 493,869   |  |            | $
|Accounts receivable                      |  |          | 1,637,676 |  |            |  
|Long-term derivative                     |  |          | 194,491   |  |            |  
|                                         |  |          |           |  |            |  
|Financial Liabilities                    |  |          |           |  |            |  
|                                         |  |          |           |  |            |  
|Other financial liabilities              |  |          |           |  |            |  
|Accounts payable and accrued liabilities |  | $        | 3,700,326 |  |            | $
|Current portion of long-term debt        |  |          | 654,877   |  |            |  
|Long-term debt                           |  |          | 4,225,949 |  |            |  
|Royalty obligation                       |  |          | 1,715,310 |  |            |  
|Other long-term liability                |  |          | 152,778   |  |            |  



Included in accounts payable
and accrued liabilities at December 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $36,259
and the current portion of the royalty obligation (Level 3) of $473,744.



131







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 19. | Financial instruments (continued):
| | --- | ----------------------------------



| | (a) | Financial assets and liabilities (continued):
| | --- | ---------------------------------------------



Set
out below is a comparison by class of the carrying amounts and fair value of the Company's financial instruments that are carried
in the consolidated financial statements as at May 31, 2014 and 2013:



|                                         |  | Carrying     |           |  |              |   |           | Carrying     |  |   |              | 
|---------------------------------------- |  | ------------ | --------- |  | ------------ | - | --------- | ------------ |  | - | ------------ | 
|                                         |  | Amount       |           |  | Fair Value   |   |           | Amount       |  |   | Fair Value   | 
|                                         |  | May 31, 2014 |           |  | May 31, 2014 |   |           | May 31, 2013 |  |   | May 31, 2013 | 
|                                         |  |              |           |  |              |   |           |              |  |   |              | 
|Financial Assets                         |  |              |           |  |              |   |           |              |  |   |              | 
|                                         |  |              |           |  |              |   |           |              |  |   |              | 
|Loans and receivables                    |  |              |           |  |              |   |           |              |  |   |              | 
|Cash                                     |  | $            | 234,297   |  |              | $ | 234,297   |              |  | $ | 126,615      | 
|Accounts receivable                      |  |              | 947,602   |  |              |   | 947,602   |              |  |   | 432,616      | 
|                                         |  |              |           |  |              |   |           |              |  |   |              | 
|Financial Liabilities                    |  |              |           |  |              |   |           |              |  |   |              | 
|                                         |  |              |           |  |              |   |           |              |  |   |              | 
|Other financial liabilities              |  |              |           |  |              |   |           |              |  |   |              | 
|Accounts payable and accrued liabilities |  | $            | 3,000,609 |  |              | $ | 3,000,609 |              |  | $ | 2,262,954    | 
|Current portion of long-term debt        |  |              | -         |  |              |   | -         |              |  |   | 1,271,775    | 
|Long-term debt                           |  |              | 4,847,279 |  |              |   | 4,847,279 |              |  |   | 3,510,119    | 
|Royalty obligation                       |  |              | 1,461,572 |  |              |   | 1,461,572 |              |  |   | 516,066      | 
|Other long-term liability                |  |              | 152,778   |  |              |   | 152,778   |              |  |   | 167,261      | 



Included in accounts payable
and accrued liabilities at May 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $54,344 (May
31, 2013 - $10,524) and the current portion of the royalty obligation (Level 3) of $317,006 (May 31, 2013 - $133,893).



The Company has determined the
estimated fair values of its financial instruments based on appropriate valuation methodologies. The carrying values of current
monetary assets and liabilities approximate their fair values due to their relatively short periods to maturity. The fair value
of the Company's long-term debt is estimated to approximate its carrying value based on the terms of the long-term debt. The royalty
obligation and other long-term liability are carried at amortized cost (level 3).



IFRS 13 Fair Value Measurement,
establishes a fair value hierarchy that reflects the significance of the inputs used in measuring fair value. The fair value hierarchy
has the following levels:



| | · | Level 1 – Quoted prices (unadjusted) in active markets
for identical assets or liabilities;
| | - | -------------------------------------------------------------------------------------------



| | · | Level 2 – Inputs other than quoted prices included within
Level 1 that are either directly or indirectly observable;
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | Level 3 - Unobservable inputs in which little or no market activity
exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in
pricing.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



132







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 19. | Financial instruments (continued):
| | --- | ----------------------------------



| | (a) | Financial assets and liabilities (continued):
| | --- | ---------------------------------------------



The fair value hierarchy of financial
instruments measured at fair value on the consolidated statements of financial position as at December 31, 2014 is as follows:



|                                         |  | Level 1 |   |  | Level 2 |   |           | Level 3 | 
|---------------------------------------- |  | ------- | - |  | ------- | - | --------- | ------- | 
|Financial Assets                         |  |         |   |  |         |   |           |         | 
|Long-term derivative                     |  | $       | - |  |         | $ | -         |         | 
|                                         |  |         |   |  |         |   |           |         | 
|Financial Liabilities                    |  |         |   |  |         |   |           |         | 
|Accounts payable and accrued liabilities |  | $       | - |  |         | $ | 36,259    |         | 
|Current portion of long-term debt        |  |         | - |  |         |   | 654,677   |         | 
|Long-term debt                           |  |         | - |  |         |   | 4,225,949 |         | 
|Royalty obligation                       |  |         | - |  |         |   | -         |         | 
|Other long-term liability                |  |         | - |  |         |   | -         |         | 



Included in accounts payable
and accrued liabilities at December 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $36,259
and the current portion of the royalty obligation (Level 3) of $473,744.



The fair value hierarchy of financial
instruments measured at fair value on the consolidated statements of financial position as at May 31, 2014 is as follows:



|                                         |  | Level 1 |   |  | Level 2 |   |           | Level 3 | 
|---------------------------------------- |  | ------- | - |  | ------- | - | --------- | ------- | 
|Financial Liabilities                    |  |         |   |  |         |   |           |         | 
|Accounts payable and accrued liabilities |  | $       | - |  |         | $ | 54,344    |         | 
|Long-term debt                           |  |         | - |  |         |   | 4,847,279 |         | 
|Royalty obligation                       |  |         | - |  |         |   | -         |         | 
|Other long-term liability                |  |         | - |  |         |   | -         |         | 



Included in accounts payable
and accrued liabilities at May 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $54,344 and
the current portion of the royalty obligation (Level 3) of $317,006.



The fair value hierarchy of financial
instruments measured at fair value on the consolidated statements of financial position as at May 31, 2013 is as follows:



|                                         |  | Level 1 |   |  | Level 2 |   |           | Level 3 | 
|---------------------------------------- |  | ------- | - |  | ------- | - | --------- | ------- | 
|Financial Liabilities                    |  |         |   |  |         |   |           |         | 
|Accounts payable and accrued liabilities |  | $       | - |  |         | $ | 10,524    |         | 
|Current portion of long-term debt        |  |         | - |  |         |   | 1,271,775 |         | 
|Long-term debt                           |  |         | - |  |         |   | 3,510,119 |         | 
|Royalty obligation                       |  |         | - |  |         |   | -         |         | 
|Other long-term liability                |  |         | - |  |         |   | -         |         | 



133







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 19. | Financial instruments (continued):
| | --- | ----------------------------------



| | (a) | Financial assets and liabilities (continued):
| | --- | ---------------------------------------------



Included in accounts payable
and accrued liabilities at May 31, 2013 is the fair value of warrants denominated in a foreign currency (Level 2) of $10,524 and
the current portion of the royalty obligation (Level 3) of $133,893.



Royalty obligation: Estimating
fair value requires determining the most appropriate valuation model which is dependent on its underlying terms and conditions.
This estimate also requires determining expected revenue from AGGRASTAT® sales and an appropriate discount rate
and making assumptions about them. If the expected revenue from AGGRASTAT® sales were to change by 10%, then the
royalty obligation liability recorded at December 31, 2014 would change by approximately $250,000. If the discount rate used in
calculating the fair value of the royalty obligation of 20% were to change by one percent, the royalty obligation liability recorded
at December 31, 2014 would change by approximately $50,000.



Other long-term liability:
Estimating fair value requires determining the most appropriate valuation model which is dependent on its underlying terms and
conditions. This estimate also requires determining the time frame when certain AGGRASTAT® sales targets are expected
to be met and an appropriate discount rate and making assumptions about them. If the time frame when certain AGGRASTAT®
sales targets are expected to be met were to be extended by one year, the other long-term liability recorded at December 31, 2014
would change by approximately $25,000. If the discount rate used in calculating the fair value of the other long-term liability
of 20% were to change by one percent, the other long-term liability recorded at December 31, 2014 would change by approximately
$2,000.



For assets and liabilities that
are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between
levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement
as a whole) at the end of each reporting period. During the seven months ended December 31, 2014 and the years ended May 31, 2014
and 2013, there were no transfers between Level 1 and Level 2 fair value measurements.



| | (b) | Risks arising from financial instruments and risk management:
| | --- | -------------------------------------------------------------



The Company's activities expose
it to a variety of financial risks; market risk (including foreign exchange and interest rate risks), credit risk and liquidity
risk. Risk management is the responsibility of the Company, which identifies, evaluates and, where appropriate, mitigates financial
risks.



| | (i) | Market risk:
| | --- | ------------



(a) Foreign exchange risk
is the risk that the fair value of future cash flows for financial instruments will fluctuate because of changes in foreign exchange
rates. The Company is exposed to currency risks primarily due to its U.S dollar denominated cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities and royalty obligation. The Company has not entered into any foreign exchange
hedging contracts.



The Company is exposed to U.S.
dollar currency risk through the following U.S. denominated financial assets and liabilities:



|(Expressed in USD)                       |  | December 31, 2014 |            |   | May 31, 2014 |   |            | May 31, 2013 | 
|---------------------------------------- |  | ----------------- | ---------- | - | ------------ | - | ---------- | ------------ | 
|Cash and cash equivalents                |  | $                 | 397,692    |   |              | $ | 177,548    |              | 
|Accounts receivable                      |  |                   | 1,384,772  |   |              |   | 856,716    |              | 
|Long-term derivative                     |  |                   | 167,650    |   |              |   | -          |              | 
|Accounts payable and accrued liabilities |  |                   | (1,839,250 | ) |              |   | (1,357,685 | )            | 
|Royalty obligation                       |  |                   | (1,478,588 | ) |              |   | (1,348,065 | )            | 
|                                         |  | $                 | (1,367,724 | ) |              | $ | (1,671,486 | )            | 



134







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



19.	Financial instruments (continued):



| | (b) | Risks arising from financial instruments and risk management
(continued):
| | --- | -------------------------------------------------------------------------



| | (i) | Market risk (continued):
| | --- | ------------------------



Based on the above net exposures
as at December 31, 2014, assuming that all other variables remain constant, a five percent appreciation or deterioration of the
Canadian dollar against the U.S. dollar would result in a corresponding increase or decrease on the Company's net income (loss)
of approximately $68,000 (May 31, 2014 - $84,000 and May 31, 2013 - $58,000).



(b) Interest rate risk
is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The
Company is exposed to interest rate risk arising primarily from fluctuations in interest rates on its cash and cash equivalents,
long-term debt and other long-term liability.



An increase or decrease in interest
rates of one percent during the seven months ended December 31, 2014, with all other variables held constant, would result in a
corresponding increase or decrease on the Company's net income (loss) of approximately $4,000 (year ended May 31, 2014 - $2,000
and year ended May 31, 2013 - $6,000). An increase in the crown company borrowing rate of one percent during the seven months ended
December 31, 2014, with all other variables held constant, would result in a corresponding increase or decrease on the Company's
net income (loss) of approximately $52,000 (year ended May 31, 2014 - $52,000 and year ended May 31, 2013 - $51,000).



| | (ii) | Credit risk:
| | ---- | ------------



Credit risk is the risk of financial
loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligation and arises
principally from the Company’s cash and cash equivalents, and accounts receivable. The carrying amounts of the financial
assets represents the maximum credit exposure.



The Company limits its exposure
to credit risk on cash and cash equivalents by placing these financial instruments with high-credit quality financial institutions.



The Company is subject to a
concentration of credit risk related to its accounts receivable as amounts are owing primarily from four customers. The Company
has historically had low impairment in regards to its accounts receivable. At December 31, 2014, $4,142 of the outstanding accounts
receivable were outside of the normal payment terms and were written off to bad debt expense during the seven months ended December
31, 2014.



| | (iii) | Liquidity risk:
| | ----- | ---------------



Liquidity risk is the risk that
the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously
monitoring forecasted and actual cash flows, as well as anticipated investing and financing activities and to ensure, as far as
possible, that it will have sufficient liquidity to meet its liabilities when due and to fund future operations.



The majority of the Company’s
accounts payable and accrued liabilities are due within the current operating period. For long-term debt repayments see note 9.



| | (c) | Capital management:
| | --- | -------------------



The Company manages its capital
structure and makes adjustments to it, based on the funds available to the Company, in order to continue the business of the Company.
The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share and warrant
issuances, granting of stock options, the issuance of debt or by undertaking other activities as deemed appropriate under the specific
circumstance. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies
on the expertise of the Company's management to sustain future development of the business.



135







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 19. | Financial instruments (continued):
| | --- | ----------------------------------



| | (c) | Capital management (continued):
| | --- | -------------------------------



The Company’s objectives
when managing capital are to safeguard the Company’s ability to continue as a going concern (note 2(c)) and to provide capital
to pursue the development and commercialization of its products. In the management of capital, the Company includes cash and cash
equivalents, long-term debt, capital stock, stock options, warrants and contributed surplus. The Company manages the capital structure
and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To
maintain or adjust the capital structure, the Company may attempt to issue new shares or new debt.



At this stage of the Company's
development, in order to maximize its current business activities, the Company does not pay out dividends. Management reviews its
capital management approach on an on-going basis and believes that this approach, given the relative size of the Company, is reasonable.



The Company’s overall strategy
with respect to capital risk management remains unchanged for the seven months ended December 31, 2014.



| | 20. | Determination of fair values:
| | --- | -----------------------------



A number of the Company's accounting
policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.
Fair values have been determined for measurement and/or disclosure purposes based on the following models. When applicable, further
information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.



| | (a) | Intangible assets
| | --- | -----------------



The fair value of intangible
assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.



| | (b) | Long-term derivative
| | --- | --------------------



The
long-term derivative is the value associated to the options rights received by the Company and is classified as fair value through
profit and loss. The change in the long-term derivative is recorded as a revaluation of long-term derivative in the consolidated
statement of net income (loss) and comprehensive income (loss). The long-term derivative is non-transferable and is recorded at
fair value at the date at which it was acquired and subsequently revalued at each reporting date. Estimating fair value for this
derivative requires determining the most appropriate valuation model which is dependent on the terms and conditions of the derivative.
This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the derivative,
volatility, dividend yield and probabilities pertaining to its exercise and making assumptions about them.



| | (c) | Share-based payment transactions
| | --- | --------------------------------



The
fair value of the employee share options is measured using the Black-Scholes formula. Measurement inputs include share price on
measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted
for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical
experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds).
Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.



| | (d) | Warrant liability
| | --- | -----------------



The warrant liability is recorded
at the fair value of the warrants at the date at which they were granted and is subsequently revalued at each reporting date. Estimating
fair value for these warrants required determining the most appropriate valuation model which is dependent on the terms and conditions
of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected
life of the warrants, volatility and dividend yield and making assumptions about them.



136







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 20. | Determination of fair values (continued):
| | --- | -----------------------------------------



| | (e) | Royalty obligation
| | --- | ------------------



The royalty obligation is recorded
at its fair value at the date at which the liability was incurred and subsequently revalued at amortized cost using the effective
interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation
model which is dependent on its underlying terms and conditions. This estimate also requires determining expected revenue from
AGGRASTAT® sales and an appropriate discount rate and making assumptions about them.



| | (f) | Other long-term liability
| | --- | -------------------------



The other long-term liability
is recorded at its fair value at the date at which the liability was incurred and subsequently revalued at amortized cost using
the effective interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate
valuation model which is dependent on its underlying terms and conditions. This estimate also requires determining the time frame
when certain AGGRASTAT® sales targets are expected to be met and an appropriate discount rate and making assumptions
about them.



| | 21. | Segmented information:
| | --- | ----------------------



The Company operates in one business
segment, the biopharmaceutical industry. Substantially all of the Company’s assets and operations are located in Canada,
the United States and Barbados. During the seven months ended December 31, 2014, 100 percent of revenue from the sale of finished
product was generated from sales of AGGRASTAT® in the United States, which was to seven customers. Customer A accounted
for 36%, Customer B accounted for 30%, Customer C accounted for 24%, Customer D accounted for seven percent and the remaining three
customers accounted for three percent of revenue. Additionally during fiscal 2012, the Company recorded a sale of unfinished product
to a European pharmaceutical company as described in note 14.



Property
and equipment and intangible assets are located in the following countries:



|              |  | December 31, 2014 |           |  | May 31, 2014 |   |           | May 31, 2013 | 
|------------- |  | ----------------- | --------- |  | ------------ | - | --------- | ------------ | 
|Canada        |  | $                 | 21,565    |  |              | $ | 7,993     |              | 
|Barbados      |  |                   | 1,096,946 |  |              |   | 1,433,158 |              | 
|United States |  |                   | 11,596    |  |              |   | 12,688    |              | 
|              |  | $                 | 1,130,107 |  |              | $ | 1,453,839 |              | 



| | 22. | Restatement of previously issued financial statements:
| | --- | ------------------------------------------------------



During the preparation of the
consolidated financial statements for the seven months ended December 31, 2014, the Company determined that the accounting for
stock-based compensation pertaining to a consulting agreement signed during the year ended May 31, 2014 was interpreted incorrectly
in accordance with IFRS 2 Share-Based Payments for the year ended May 31, 2014. As a result the May 31, 2014 consolidated
financial statements have been restated to include stock-based compensation expense relating to this consulting agreement.



The effect of the restatement
on the Statement of Financial Position and Statement of Deficiency is as follows:



|                    |  | May 31, 2014  |              |   |            |   |          |              | 
|------------------- |  | ------------- | ------------ | - | ---------- | - | -------- | ------------ | 
|                    |  | As Previously |              |   |            |   |          | May 31, 2014 | 
|                    |  | Reported      |              |   | Correction |   |          | Restated     | 
|Contributed surplus |  | $             | 4,447,891    |   |            | $ | 295,144  |              | 
|Deficit             |  |               | (127,516,308 | ) |            |   | (295,144 | )            | 



137







|MEDICURE INC.                                                                   
|--------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                  
|(expressed in Canadian dollars)                                                 
|Seven months ended December 31, 2014 and years ended May 31, 2014, 2013 and 2012



| | 22. | Restatement of previously issued financial statements
(continued):
| | --- | ------------------------------------------------------------------



The effect of the restatement
on the Statement of Loss and Comprehensive Loss is as follows:



|                                    |  | May 31, 2014  |            |   |            |   |          |              | 
|----------------------------------- |  | ------------- | ---------- | - | ---------- | - | -------- | ------------ | 
|                                    |  | As Previously |            |   |            |   |          | May 31, 2014 | 
|                                    |  | Reported      |            |   | Correction |   |          | Restated     | 
|Expenses                            |  |               |            |   |            |   |          |              | 
|Selling, general and administrative |  | $             | 3,329,551  |   |            | $ | 295,144  |              | 
|                                    |  |               |            |   |            |   |          |              | 
|Net Loss                            |  |               | (1,638,952 | ) |            |   | (295,144 | )            | 
|Comprehensive Loss                  |  |               | (1,552,273 | ) |            |   | (295,144 | )            | 
|Basic and Diluted Loss per Share    |  |               | (0.13      | ) |            |   | (0.03    | )            | 



There was no material effect
on the Statement of Cash Flows for the year ended May 31, 2014 as a result of the restatement.



138









ITEM 19. EXHIBITS



|Number |  | Exhibit                                                                                                                                                                                                                                        
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                                                                
|1.     |  | Articles of Incorporation and Bylaws:                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                
|1.1    |  | Medicure’s Articles of Incorporation dated September 15, 1997 [1];                                                                                                                                                                             
|1.2    |  | Lariat’s Articles of Incorporation dated June 3, 1997 [1];                                                                                                                                                                                     
|1.3    |  | Medicure’s Certificate of Continuance from Manitoba to Alberta dated December 3, 1999
    [1];                                                                                                                                                 
|1.4    |  | Certificate of Amalgamation for Medicure and Lariat dated December 22, 1999 [1];                                                                                                                                                               
|1.5    |  | Medicure’s Certificate of Continuance from Alberta to Canada dated February 23, 2000
    [1];                                                                                                                                                  
|1.6    |  | Amended Certificate of Continuance and Articles of Continuance dated February 20, 2003 [3];                                                                                                                                                    
|1.7    |  | Certificate of Amendment dated November 1, 2012                                                                                                                                                                                                
|1.8    |  | Bylaw No. 1A                                                                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                
|4.     |  | Material Contracts and Agreements:                                                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                
|4.1    |  | Transfer Agency Agreement between Montreal Trust Company of Canada and the Company dated
    as of January 26, 2000, whereby Montreal Trust Company of Canada agreed to act as transfer agent and registrar with respect
    to the Shares [1];
|       |  |                                                                                                                                                                                                                                                
|4.2    |  | Medicure International Licensing Agreement between the Company and Medicure International
    Inc. dated June 1, 2000, wherein the Company granted Medicure International, Inc. a license with regard to certain intellectual
    property [1];
|       |  |                                                                                                                                                                                                                                                
|4.3    |  | Development Agreement between Medicure International, Inc. and CanAm Bioresearch Inc. dated
    June 1, 2000, wherein CanAm Bioresearch Inc. agreed to conduct research and development activities for Medicure International,
    Inc. [1];   
|       |  |                                                                                                                                                                                                                                                
|4.4    |  | Amendment to the Consulting Services Agreement dated February 1, 2002 between A.D. Friesen
    Enterprises Ltd. and the Company whereby consulting services will be provided to the Company by Dr. Albert D. Friesen [2];                      
|       |  |                                                                                                                                                                                                                                                
|4.5    |  | Stock Option Plan approved February 4, 2002 [3];                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                
|4.5    |  | Amendment dated March 1, 2002 to the Development Agreement between Medicure International,
    Inc. and CanAm Bioresearch Inc. [5];                                                                                                            
|       |  |                                                                                                                                                                                                                                                
|4.7    |  | Amendment dated August 7, 2003 to the Development Agreement between Medicure International,
    Inc. and CanAm Bioresearch Inc. [3];                                                                                                           
|       |  |                                                                                                                                                                                                                                                
|4.8    |  | Amendment to the Consulting Services Agreement dated October 1, 2003 between A.D. Friesen
    Enterprises Ltd. and the Company whereby consulting services will be provided to the Company by Dr. Albert D. Friesen [4];                       
|       |  |                                                                                                                                                                                                                                                
|4.9    |  | Employment Agreement with Dawson Reimer dated October 1, 2001 [4];                                                                                                                                                                             



139







|4.10 |  | Amendment to Employment Agreement dated April 5, 2005 between A.D. Friesen
    Enterprises Ltd. and the Company [5];                                                                                                                                                                                         
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                                                                                                              
|4.11 |  | Amendment to Employment Agreement dated April 5, 2005 between Dawson Reimer and the Company
    [5];                                                                                                                                                                                                         
|     |  |                                                                                                                                                                                                                                                                                                              
|4.12 |  | Amendment to Employment Agreement dated April 5, 2005 between Derek Reimer and the Company
    [5];                                                                                                                                                                                                          
|     |  |                                                                                                                                                                                                                                                                                                              
|4.13 |  | Amendment dated July 8, 2005 to the Development Agreement between Medicure International,
    Inc. and CanAm Bioresearch Inc. [5];                                                                                                                                                                           
|     |  |                                                                                                                                                                                                                                                                                                              
|4.14 |  | Amendment to Employment Agreement dated October 1, 2005 between A.D. Friesen Enterprises
    Ltd. and the Company [6];                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                              
|4.15 |  | Amendment to Development Agreement dated June 1, 2000 between CanAm Bioresearch Inc. and
    Medicure International, Inc. dated July 4, 2006 [6];                                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                              
|4.16 |  | Amended Stock Option Plan approved October 25, 2005 [6];                                                                                                                                                                                                                                                     
|     |  |                                                                                                                                                                                                                                                                                                              
|4.17 |  | Amendment to Employment Agreement dated October 1, 2006 between A.D. Friesen Enterprises
    Ltd. and the Company [7];                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                              
|4.18 |  | Amended License Agreement between Medicure and the University of Manitoba dated November
    24, 2006, originally dated August 30, 1999, wherein the University of Manitoba granted to Medicure an exclusive license with
    regard to certain intellectual property (the “U of M Licensing Agreement”) [7];
|     |  |                                                                                                                                                                                                                                                                                                              
|4.19 |  | Amendment to Employment Agreement dated October 1, 2007 between A.D. Friesen Enterprises
    Ltd. and the Company [8];                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                              
|4.20 |  | Amended Stock Option Plan approved October 2, 2007 as filed on October 9, 2007 Form S-8
    #333-146574                                                                                                                                                                                                      
|     |  |                                                                                                                                                                                                                                                                                                              
|4.21 |  | Employment Agreement with Dwayne Henley June 10, 2008 [8]                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                              
|4.22 |  | Debt financing agreement between Birmingham Associates Ltd. and the Company dated September
    17, 2007 [8].                                                                                                                                                                                                
|     |  |                                                                                                                                                                                                                                                                                                              
|4.23 |  | Business and administration services agreement between Genesys Venture Inc. and the Company
    dated October 1, 2010.                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                              
|4.24 |  | Master services agreement between GVI Clinical Development Solutions Inc. and the Company
    dated June 9, 2009.                                                                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                              
|4.25 |  | Debt settlement agreement between Birmingham Associates Ltd. And the Company dated July
    18, 2011.                                                                                                                                                                                                        
|     |  |                                                                                                                                                                                                                                                                                                              
|4.26 |  | Royalty and guarantee agreement between Birmingham Associates Ltd. And the Company dated
    July 18, 2011.                                                                                                                                                                                                  



140







|4.27 |  | Business and administration services agreement between Genesys Venture
    Inc. and the Company dated January 1, 2012.                       
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                              
|4.28 |  | Stock Option Plan approved November 30, 2012                                                                                                 
|     |  |                                                                                                                                              
|4.29 |  | Stock Option Plan approved November 4, 2014 **                                                                                               
|     |  |                                                                                                                                              
|11.  |  | Code of Ethics [4].                                                                                                                          
|     |  |                                                                                                                                              
|12.1 |  | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **.                                                           
|     |  |                                                                                                                                              
|12.2 |  | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **.                                                           
|     |  |                                                                                                                                              
|13.1 |  | Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 **.
|     |  |                                                                                                                                              
|     |  | [1] Herein incorporated by reference as previously included in the Company’s Form
    20-F registration statement filed on January 30, 2001. 
|     |  |                                                                                                                                              
|     |  | [2] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on December 31, 2002.         
|     |  |                                                                                                                                              
|     |  | [3] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on October 20, 2003.          
|     |  |                                                                                                                                              
|     |  | [4] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 15, 2004.        
|     |  |                                                                                                                                              
|     |  | [5] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on August 19, 2005.           
|     |  |                                                                                                                                              
|     |  | [6] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on August 10, 2006.           
|     |  |                                                                                                                                              
|     |  | [7] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on August 22, 2007.           
|     |  |                                                                                                                                              
|     |  | [8] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on August 27, 2008.           
|     |  |                                                                                                                                              
|     |  | [9] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 2, 2009.         
|     |  |                                                                                                                                              
|     |  | [10] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 28, 2010.       
|     |  |                                                                                                                                              
|     |  | [11] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 28, 2011.       



141







|     |  | [12] Herein incorporated by reference as previously included in the Company’s
    Form 20-F annual report filed on September 19, 2012.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                       
|     |  | [13] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 27, 2013.
|     |  |                                                                                                                                       
|     |  | [14] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 12, 2014.
|     |  |                                                                                                                                       
|23.1 |  | Consent of Independent Registered Pubic Accounting Firm **                                                                            



** Filed Herewith



142







SIGNATURE PAGE



Pursuant to the requirements of Section 12
of the Securities Exchange Act of 1934, the Company certifies that it meets all of the requirements for filing on Form
20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.



Dated: April 14, 2015



|ON BEHALF OF THE CORPORATION, | 
|----------------------------- | 
|MEDICURE INC.                 | 
|                              | 
|per:                          | 
|                              | 
|/s/ Albert Friesen            | 
|Albert D. Friesen, Ph.D.      | 
|Chairman, & CEO               | 



143