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



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



For
the fiscal year ended August 31, 2018



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



Date
of event requiring this shell company report ____________________________

For
the transition period from_________________to______________

Commission
File Number: 000-53646



GROWN
ROGUE INTERNATIONAL INC.

(formerly
NOVICIUS CORP.)

(Exact
name of Registrant as specified in its charter)



Ontario,
Canada

(Jurisdiction
of incorporation or organization)



340
Richmond Street West, Toronto, Ontario, Canada,

M5V
1X2

(Address
of principal executive offices)



Obie
Strickler, Telephone (416) 364-4039, Fax (416) 364-8244

340
Richmond Street West, Toronto, Ontario, Canada, M5V 1X2

(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 Stock, no par value

(Title
of Class)

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

(Title
of Class)

The
number of outstanding shares of the issuer’s common stock as of August 31, 2018, was 5,283,164 shares.



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No
☒



If
this report is an annual or a 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 ☒



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 ☒    No ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or 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 ☒
|----------------------------- | ----------------------- | ---------------------------



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



|U.S.
    GAAP ☐ | International
    Financial Reporting Standards by the International Accounting Standards Board ☒ | Other
    ☐
|--------------- | ------------------------------------------------------------------------------------------------- | -----------



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 ☒











Table
of Contents





|PART
    I  |                                                             | 2 
|----------- | ----------------------------------------------------------- | --
|ITEM
    1  | IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS   | 2 
|A.          | DIRECTORS
    AND SENIOR MANAGEMENT                         | 2 
|B.          | ADVISERS                                                    | 2 
|C.          | AUDITORS                                                    | 2 
|ITEM
    2  | OFFER
    STATISTICS AND EXPECTED TIMETABLE                 | 2 
|A.          | OFFER
    STATISTICS                                        | 2 
|B.          | METHOD
    AND EXPECTED TIMETABLE                           | 2 
|ITEM
    3  | KEY
    INFORMATION                                         | 2 
|A.          | SELECTED
    FINANCIAL DATA                                 | 2 
|B.          | CAPITALIZATION
    AND INDEBTEDNESS                         | 4 
|C.          | REASONS
    FOR THE OFFER AND USE OF PROCEEDS               | 4 
|D.          | RISK
    FACTORS                                            | 4 
|ITEM
    4  | INFORMATION
    ON THE COMPANY                              | 16
|A.          | HISTORY
    AND DEVELOPMENT OF THE COMPANY                  | 17
|B.          | BUSINESS
    OVERVIEW                                       | 19
|C.          | ORGANIZATIONAL
    STRUCTURE                                | 28
|D.          | PROPERTY,
    PLANTS AND EQUIPMENT                          | 29
|ITEM
    4A | UNRESOLVED
    STAFF COMMENTS                               | 29
|ITEM
    5  | OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS            | 29
|A.          | LIQUIDITY
    AND CAPITAL RESOURCES                         | 47
|B.          | RESEARCH
    AND DEVELOPMENT, PATENTS AND LICENSES          | 48
|C.          | TREND
    INFORMATION                                       | 48
|D.          | OFF-BALANCE
    SHEET ARRANGEMENTS                          | 48
|E.          | TABULAR
    DISCLOSURE OF CONTRACTUAL OBLIGATIONS           | 48
|F.          | SAFE
    HARBOR                                             | 50
|ITEM
    6  | DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES              | 51
|A.          | DIRECTORS
    AND SENIOR MANAGEMENT                         | 51
|B.          | COMPENSATION                                                | 52
|C.          | BOARD
    PRACTICES                                         | 55
|D.          | EMPLOYEES                                                   | 60
|E.          | SHARE
    OWNERSHIP                                         | 60
|ITEM
    7  | MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS       | 61
|A.          | MAJOR
    SHAREHOLDERS                                      | 61
|B.          | RELATED
    PARTY TRANSACTIONS                              | 62
|C.          | INTERESTS
    OF EXPERTS AND COUNSEL                        | 63
|ITEM
    8  | FINANCIAL
    INFORMATION                                   | 64
|A.          | CONSOLIDATED
    STATEMENTS AND OTHER FINANCIAL INFORMATION | 64
|B.          | SIGNIFICANT
    CHANGES                                     | 64
|ITEM
    9  | THE
    OFFER AND LISTING                                   | 64













|A.           | OFFER
    AND LISTING DETAILS                                                    | 64
|------------ | -------------------------------------------------------------------------------- | --
|B.           | PLAN
    OF DISTRIBUTION                                                         | 65
|C.           | MARKETS                                                                          | 65
|D.           | SELLING
    SHAREHOLDERS                                                         | 65
|E.           | DILUTION                                                                         | 65
|F.           | EXPENSES
    OF THE ISSUE                                                        | 65
|ITEM
    10  | ADDITIONAL
    INFORMATION                                                       | 66
|A.           | SHARE
    CAPITAL                                                                | 66
|B.           | MEMORANDUM
    AND ARTICLES OF ASSOCIATION                                       | 66
|C.           | MATERIAL
    CONTRACTS                                                           | 72
|D.           | EXCHANGE
    CONTROLS                                                            | 72
|E.           | TAXATION                                                                         | 73
|F.           | DIVIDENDS
    AND PAYING AGENTS                                                  | 76
|G.           | STATEMENT
    BY EXPERTS                                                         | 76
|H.           | DOCUMENTS
    ON DISPLAY                                                         | 76
|I.           | SUBSIDIARY
    INFORMATION                                                       | 76
|ITEM
    11  | QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                    | 76
|ITEM
    12  | DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 79
|A.           | DEBT
    SECURITIES                                                              | 79
|B.           | WARRANTS
    AND RIGHTS                                                          | 79
|C.           | OTHER
    SECURITIES                                                             | 79
|D.           | AMERICAN
    DEPOSITORY SHARES                                                   | 79
|PART
    II  |                                                                                  | 79
|ITEM
    13  | DEFAULTS,
    DIVIDENDS ARREARAGES AND DELINQUENCIES                             | 79
|ITEM
    14  | MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 79
|ITEM
    15  | CONTROLS
    AND PROCEDURES                                                      | 79
|ITEM
    16  | [RESERVED]                                                                       | 80
|A.           | AUDIT
    COMMITTEE FINANCIAL EXPERT                                             | 80
|B.           | CODE
    OF ETHICS                                                               | 80
|C.           | PRINCIPAL
    ACCOUNTANT FEES AND SERVICES                                       | 81
|D.           | EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   | 81
|E.           | PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       | 81
|F.           | CHANGE
    IN REGISTRANT’S CERTIFYING ACCOUNTANT                                 | 82
|G.           | CORPORATE
    GOVERNANCE                                                         | 82
|H.           | MINE
    SAFETY DISCLOSURE                                                       | 82
|PART
    III |                                                                                  | 82
|ITEM
    17  | FINANCIAL
    STATEMENTS                                                         | 82
|ITEM
    18  | FINANCIAL
    STATEMENTS                                                         | 82
|ITEM
    19  | EXHIBITS                                                                         | 83





ii







GENERAL



In
this Annual Report, references to “we”, “us”, “our”, the “Company”, and “Grown
Rogue” means Grown Rogue International Inc. (Formerly: Novicius Corp), and its subsidiaries, unless the context requires
otherwise.



We
use the Canadian dollar as our reporting and presentation currency and our consolidated financial statements are prepared in accordance
with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board
(“IASB”). All monetary references in this document are to Canadian dollars, unless otherwise indicated. All references
in this document to “dollars” or “$” or “CDN$” mean Canadian dollars, unless otherwise indicated,
and references to “US$” mean United States dollars.



NOTE
REGARDING MATERIAL CHANGE IN BUSINESS



Subsequent
to the year ended August 31, 2018, the Company executed a Definitive Transaction Agreement, dated October 31, 2018 (the “Definitive
Agreement”), with Grown Rogue Canada, Inc. (“Grown Rogue Canada”), Novicius Acquisition Corp., and Grown Rogue
Unlimited, LLC, an Oregon limited liability company (“GRUS”). Pursuant to the Definitive Agreement, the Company combined
its business operations with GRUS (the “Transaction”) resulting in a reverse take-over of the Company by GRUS (See
Item 4.A “History and Development of the Company”). A copy of the Definitive Agreement is attached to this Form 20-F
as Exhibit 1.21. The Transaction was consummated on November 15, 2018, and the Company changed its name from Novicius Corp. to
Grown Rogue International Inc. and began conducting the principal business of GRUS.



Immediately
prior to the Transaction, the Company had ceased its previous business operations as an emerging media and internet company with
a focus on user experience and engagement. Following the Transaction, GRUS and its subsidiaries became the Company’s only
operating assets.



NOTE
REGARDING FORWARD-LOOKING STATEMENTS



Much
of the information included in this Annual Report is based upon estimates, projections or other “forward-looking statements”.
Such forward-looking statements include any projections or estimates made by us and our management in connection with our business
operations. These statements relate to future events or our future financial performance. In some cases you can identify forward-looking
statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”,
“believes”, “estimates”, “predicts”, “potential” or “continue” or
the negative of those terms or other comparable terminology. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual
results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future
performance suggested herein. Such estimates, projections or other forward-looking statements involve various risks and uncertainties
and other factors, including the risks in the section titled “Risk Factors” below, which may cause our actual results,
levels of activities, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking statements. We caution the reader that important factors in some
cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from
the results expressed in any such estimates, projections or other forward-looking statements. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to
update any of the forward-looking statements to conform those statements to actual results.



Please
see “Item 3. Key Information — Risk Factors” for a further discussion of certain factors that may cause actual
results to differ materially from those indicated by our forward-looking statements. The statements contained in Item 4 –
“Information on the Company”, Item 5 – “Operating and Financial Review and Prospects” and Item 11
– “Quantitative and Qualitative Disclosures about Market Risk” are inherently subject to a variety of risks
and uncertainties that could cause actual results, performance or achievements to differ significantly. “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.













PART
I



| | ITEM
                                         1 | IDENTITY
                                       OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
| | ----------------------------------------------- | --------------------------------------------------------------------------------------------



A.       DIRECTORS
AND SENIOR MANAGEMENT



Not
applicable.



B.       ADVISERS



Not
applicable.



C.       AUDITORS



Not
applicable.



| | ITEM
                                         2 | OFFER
                                       STATISTICS AND EXPECTED TIMETABLE
| | ----------------------------------------------- | ------------------------------------------------------------------------------



A.       OFFER
STATISTICS



Not
applicable.



B.       METHOD
AND EXPECTED TIMETABLE



Not
applicable.



| | ITEM
                                         3 | KEY
                                       INFORMATION
| | ----------------------------------------------- | ------------------------------------------------------



A.       SELECTED
FINANCIAL DATA



The
following table presents selected financial data derived from our Audited Consolidated Financial Statements for the fiscal years
ended August 31, 2018, 2017, 2016, 2015, and 2014. You should read this information in conjunction with our Audited Consolidated
Financial Statements, including the Audit Report which is dated December 31, 2018 and related notes, for the years ended August
31, 2018, 2017, and 2016 (See Item 18: “Financial Statements”), as well as Items 4 and 5 of this Annual Report (“Information
on the Company” and “Operating and Financial Review and Prospects,” respectively).



Our
consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”),
as issued by the International Accounting Standards Board (“IASB”). The selected consolidated statement of operations
data set forth below for the years ended August 31, 2018 and August 31, 2017 and the selected consolidated statement of financial
position information set forth below as of August 31, 2018 and 2017 is derived from our consolidated financial statements, which
have been audited by MNP LLP, Chartered Accountants, Toronto, Canada. The selected consolidated statement of operations data set
forth below for the years ended August 31, 2016, 2015 and 2014 and the selected consolidated statement of financial position information
set forth below as of August 31, 2016, 2015 and 2014 is derived from our consolidated financial statements, which have been audited
by Schwartz Levitsky Feldman LLP, Chartered Accountants, Toronto, Canada. Consolidated financial statements for fiscal years 2018,
2017, and 2016 are attached to and form a part of this Annual Report under Item 18 – Financial Statements. Our historical
results are not necessarily indicative of the results to be expected in any future period and should be read in conjunction with
Item 5: “Operating and Financial Review and Prospects,” and our consolidated financial statements and related notes
included elsewhere in this Annual Report.



GROWN
ROGUE INTERNATIONAL INC.

Prepared
in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting
Standards Board (“IASB”)

(STATED
IN CANADIAN DOLLARS)

Except
share and per share data

|                                        |  |                                                                     |         
|--------------------------------------- |  | ------------------------------------------------------------------- | --------
|                                        |  | CONSOLIDATED STATEMENT OF FINANCIAL POSITION YEARS ENDED AUGUST 31, |         
|                                        |  | 2018                                                                |         
|Cash                                    |  | $                                                                   | 28,906  
|Total assets                            |  | $                                                                   | 33,043  
|Total liabilities                       |  | $                                                                   | 832,631 
|Total shareholders’ equity (deficiency) |  | $                                                                   | (799,588





2







|                                                          |  |   | 2018      |   |  |   | 2017       |   |  |   | 2016        |   |  |    | 2015       |   |  |   | 2014       |  
|--------------------------------------------------------- |  | - | --------- | - |  | - | ---------- | - |  | - | ----------- | - |  | -- | ---------- | - |  | - | ---------- | -
|Revenue                                                   |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Advertising revenue                                       |  | $ | —         |   |  | $ | 20,788     |   |  | $ | —           |   |  | $  | —          |   |  | $ | —          |  
|Natural
    gas sales                                     |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | 53,055     |   |  |   | 65,024     |  
|Total revenue                                             |  |   |           |   |  |   | 20,788     |   |  | $ | —           |   |  |    | 53,055     |   |  |   | 65,024     |  
|Expenses                                                  |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Operating costs                                           |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | 24,910     |   |  |   | 17,138     |  
|Depletion and accretion                                   |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | —          |   |  |   | 1,536      |  
|Research, content development and technology support      |  |   | —         |   |  |   | 313,106    |   |  |   | 160,519     |   |  |    | —          |   |  |   | —          |  
|Hosting, advertising and technology services              |  |   | 2,864     |   |  |   | 71,423     |   |  |   | 45,272      |   |  |    | —          |   |  |   | —          |  
|General and administrative                                |  |   | 304,880   |   |  |   | 508,241    |   |  |   | 418,206     |   |  |    | 89,007     |   |  |   | 403,425    |  
|Loss on foreign exchange                                  |  |   | 4,068     |   |  |   | 1,433      |   |  |   | 21,890      |   |  |    | 415,345    |   |  |   | 101,427    |  
|Stock based compensation                                  |  |   | 204,511   |   |  |   | 1,614,605  |   |  |   | 615,924     |   |  |    | 84,520     |   |  |   | —          |  
|Stock based compensation-non employees                    |  |   | —         |   |  |   | 235,393    |   |  |   | —           |   |  |    | 28,173     |   |  |   | —          |  
|Anti-dilution fees                                        |  |   | —         |   |  |   | 186,832    |   |  |   | —           |   |  |    | —          |   |  |   | —          |  
|Gain on de-recognition of financial liabilities           |  |   | —         |   |  |   | (893,990   | ) |  |   | —           |   |  |    | —          |   |  |   | —          |  
|Impairment loss on secured note receivable                |  |   | —         |   |  |   | 81,483     |   |  |   | —           |   |  |    | —          |   |  |   | —          |  
|Gain on disposal of subsidiary                            |  |   | —         |   |  |   | —          |   |  |   | (68,489     | ) |  |    | (615,881   | ) |  |   | —          |  
|Gain on extinguishment of derivative liabilities          |  |   | —         |   |  |   | —          |   |  |   | (281,210    | ) |  |    | (1,258,206 | ) |  |   | (709,299   | )
|Interest expense                                          |  |   | —         |   |  |   | —          |   |  |   | 12,812      |   |  |    | 280,299    |   |  |   | 284,038    |  
|Loss on settlement of debt                                |  |   | —         |   |  |   | —          |   |  |   | 12,489,249  |   |  |    | —          |   |  |   | 1,335,935  |  
|Impairment loss on marketable securities                  |  |   | —         |   |  |   | —          |   |  |   | 120,125     |   |  |    | —          |   |  |   | —          |  
|(Gain) loss on derivative liabilities                     |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | (2,653,591 | ) |  |   | 2,735,476  |  
|Marketing and public relations                            |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | (22,800    | ) |  |   | (14,250    | )
|Accretion of secured convertible note                     |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | 475,755    |   |  |   | —          |  
|Gain on settlement of litigation                          |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | (120,125   | ) |  |   | —          |  
|Impairment loss on property and equipment                 |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | —          |   |  |   | —          |  
|Impairment loss on exploration and evaluation             |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | —          |   |  |   | 1,315,276  |  
|Compensation expense on re-pricing of units               |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | —          |   |  |   | —          |  
|                                                          |  |   | 516,323   |   |  |   | 2,118,526  |   |  |   | 13,534,298  |   |  |    | (3,272,594 | ) |  |   | 5,470,702  |  
|                                                          |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Net income (loss) from continuing operations              |  |   | (516,323  | ) |  |   | (2,097,738 | ) |  |   | (13,534,298 | ) |  |    | 3,325,649  |   |  |   | (5,405,678 | )
|Net income (loss) from discontinued operations net of tax |  |   |           |   |  |   | —          |   |  |   | 2,711       |   |  |    | (4,762,461 | ) |  |   | (608       | )
|Net loss                                                  |  |   | (516,323  | ) |  |   | (2,097,738 | ) |  |   | (13,531,587 | ) |  |    | (1,436,812 | ) |  |   | (5,406,286 | )
|                                                          |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Impairment loss on marketable securities                  |  |   | —         |   |  |   | —          |   |  |   | 110,525     |   |  |    | (110,525   | ) |  |   | —          |  
|Foreign currency translation                              |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | —          |   |  |   | —          |  
|Continuing operations                                     |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | —          |   |  |   | —          |  
|Discontinued operations                                   |  |   | —         |   |  |   | —          |   |  |   | —           |   |  |    | (4,692     | ) |  |   | (199,965   | )
|Total other comprehensive income (loss)                   |  |   |           |   |  |   | —          |   |  |   | 110,525     |   |  |    | (115,217   | ) |  |   | (199,965   | )
|                                                          |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Net loss from operations and comprehensive income (loss)  |  |   |           |   |  | $ | (2,097,738 | ) |  | $ | (13,421,062 | ) |  | $  | (1,552,029 | ) |  | $ | (5,606,251 | )
|Earnings (loss) per share, basic                          |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Continuing operations                                     |  | $ | (0.098    | ) |  | $ | (0.788     | ) |  | $ | (6.516      | ) |  | $  | 12.006     |   |  | $ | (42.657    | )
|Discontinued operations                                   |  | $ | 0.000     |   |  | $ | 0.000      |   |  | $ | 0.001       |   |  | ($ | 17.194     | ) |  | $ | (0.000     | )
|Total loss per share, basic                               |  | $ | (0.0098   | ) |  | $ | (0.788     | ) |  | $ | (6.515      | ) |  | $  | (5.187     | ) |  | $ | (42.657    | )
|Earnings (loss) per share, diluted                        |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Continuing operations                                     |  | $ | (0.098    | ) |  | $ | (0.788     | ) |  | $ | (6.516      | ) |  | $  | 8.855      |   |  | $ | (42.657    | )
|Discontinued operations                                   |  | $ | 0.000     |   |  | $ | 0.000      |   |  | $ | 0.001       |   |  | ($ | 17.194     | ) |  | $ | (0.000     | )
|Total loss per share, diluted                             |  | $ | (0.0098   | ) |  | $ | (0.788     | ) |  | $ | (6.515      | ) |  | ($ | 8.338      | ) |  | $ | (42.657    | )
|                                                          |  |   |           |   |  |   |            |   |  |   |             |   |  |    |            |   |  |   |            |  
|Weighted average shares outstanding, basic                |  |   | 5,283,164 |   |  |   | 2,663,614  |   |  |   | 2,077,096   |   |  |    | 276,989    |   |  |   | 126,753    |  
|Weighted average shares outstanding, diluted              |  |   | 5,283,164 |   |  |   | 2,663,614  |   |  |   | 2,077,096   |   |  |    | 375,551    |   |  |   | 126,753    |  





3







Exchange
Rate Information

On
November 30, 2018, being the last day of November 2018, the exchange rate, based on the daily buying rates, for the conversion
of Canadian Dollars into United States Dollars was $0.7518.



The
average exchange rates for the periods indicated below (based on the daily noon buying rate for cable transfers in New York City
certified for customs purposes by the Federal Reserve Bank of New York) are as follows:



|                                       |  |  | 2018 |        |  | 2017 |  |        | 2016 |  |  | 2015   |  |  | 2014 |       
|-------------------------------------- |  |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------
|Average exchange rate CDN$ per US$1.00 |  |  | $    | 0.7855 |  |      |  | 0.7564 |      |  |  | 0.7540 |  |  |      | 0.8466



The
high and low exchange rates between the Canadian dollar and the U.S. dollar for each of the six months ended November 30, 2018
are as follows:



|               |  |  |   | Exchange rate CDN$ per US$1.00 | 
|-------------- |  |  | - | ------------------------------ | 
|Month          |  |  |   | Low                            | 
|November 2018  |  |  | $ | 0.7518                         | 
|October 2018   |  |  | $ | 0.7609                         | 
|September 2018 |  |  | $ | 0.7583                         | 
|August 2018    |  |  | $ | 0.7603                         | 
|July 2018      |  |  | $ | 0.7544                         | 
|June 2018      |  |  | $ | 0.7513                         | 



B.       CAPITALIZATION
AND INDEBTEDNESS



Not
Applicable.



C.       REASONS
FOR THE OFFER AND USE OF PROCEEDS



Not
Applicable.



D.       RISK
FACTORS



Our
securities are highly speculative and subject to a number of risks. You should not consider an investment in our securities unless
you are capable of sustaining an economic loss of the entire investment. Furthermore, if other risks not presently known to
us, or that we do not currently believe to be significant, occur or become significant, our financial condition and results of
operations could suffer and the trading price of our common stock could decline. In addition to the other information presented
in this Annual Report, the following risk factors should be given special consideration when evaluating an investment in our securities.



INVESTING
IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW,
TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN OR REFERRED TO IN THIS ANNUAL REPORT, BEFORE PURCHASING SHARES OF OUR
SECURITIES. THERE ARE NUMEROUS AND VARIED RISKS, KNOWN AND UNKNOWN, THAT MAY PREVENT US FROM ACHIEVING OUR GOALS. THE RISKS
DESCRIBED BELOW ARE NOT THE ONLY ONES WE WILL FACE. IF ANY OF THESE RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION
OR RESULTS OF OPERATION MAY BE MATERIALLY ADVERSELY AFFECTED. IN SUCH CASE, THE TRADING PRICE OF OUR SECURITIES COULD DECLINE
AND INVESTORS IN OUR SECURITIES COULD LOSE ALL OR PART OF THEIR INVESTMENT. THE INFORMATION IN THIS ANNUAL REPORT IS COMPLETE
AND ACCURATE AS OF THE DATES REFERENCED HEREIN, BUT THE INFORMATION MAY CHANGE AFTER SUCH DATE.





4







SHOULD
ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS OF OUR BUSINESS PROVE INCORRECT,
ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.



Many
of the risk factors described in this Section relate to GRUS and are inapplicable to operations in existence during fiscal year
2018.



Risks
Factors Relating to Our Business



GRUS’s
Business is Illegal under U.S. Federal Law. The Company, through its subsidiaries, engages in the medical and adult-use
marijuana industry in the United States where local state law permits such activities. Producing, manufacturing, processing, possessing,
distributing, selling, and using marijuana is a federal crime in the United States. The United States federal government regulates
drugs through the Controlled Substances Act (the “Federal CSA”), which places controlled substances, including cannabis,
on one of five schedules. Cannabis is currently classified as a Schedule I controlled substance, which is viewed as having a high
potential for abuse and having no currently accepted medical use in treatment in the United States. No prescriptions may be written
for Schedule I substances, and such substances are subject to production quotas imposed by the United States Drug Enforcement
Administration (the “DEA”). Schedule I drugs are the most tightly restricted category of drugs under the Federal CSA.
State and territorial laws that allow the use of medical cannabis or legalize cannabis for adult recreational use are in conflict
with the Federal CSA, which makes cannabis use and possession illegal at the federal level. Because cannabis is a Schedule I controlled
substance, the development of a legal cannabis industry under the laws of these states is in conflict with the Federal CSA, which
makes cannabis use and possession illegal on a national level. Additionally, the Supremacy Clause of the United States Constitution
establishes that the Constitution, federal laws made pursuant to the Constitution, and treaties made under the Constitution’s
authority constitute the supreme law of the land. The Supremacy Clause provides that state courts are bound by the supreme law;
in case of conflict between federal and state law, including Oregon and other state law legalizing certain cannabis uses, the
federal law must be applied.



Until
Congress amends the Federal CSA with respect to marijuana use, there is a risk that federal authorities may enforce current federal
law against companies such as the Company for violation of federal law or they may seek to bring an action or actions against
the Company and/or its investors for violation of federal law or otherwise, including, but not limited to, a claim against investors
for aiding and abetting another’s criminal activities. The US federal aiding and abetting statute provides that anyone who
commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable
as a principal. Additionally, even if the U.S. federal government does not prove a violation of the Federal CSA, the U.S. federal
government may seize, through civil asset forfeiture proceedings, certain assets such as equipment, real estate, moneys and proceeds,
or your assets as an investor in the Company, if the U.S. federal government can prove a substantial connection between these
assets or your investment and marijuana distribution or cultivation.



Because
many states in the United States have approved certain medical or recreational uses of cannabis, the U.S. Department of Justice,
through a memorandum dated August 29, 2013 and titled “Guidance Regarding Marijuana Enforcement” (the “Cole
Memorandum”), had previously described a set of priorities for federal prosecutors operating in states that had legalized
the medical or other adult use of cannabis. The Cole Memorandum represented a significant shift in U.S. federal government priorities
away from strict enforcement of federal cannabis prohibition. However, the Cole Memorandum was merely a directive regarding enforcement
and did not overturn or invalidate the Federal CSA or any other federal law or regulation.



The
Cole Memorandum was rescinded by Jeff Sessions, the US Attorney General, in January 2018. The rescission of the Cole Memorandum,
and comments made publicly by Mr. Sessions and other members of the Trump Administration, signal a significant shift by the U.S.
federal government back to more strict enforcement of federal law, which is expected to have a material adverse effect, financially,
operational and otherwise, on state-approved cannabis businesses, including GRUS.



In
Oregon, Billy J. Williams is the United States Attorney for the District of Oregon. He is a former Multnomah County (Oregon) Deputy
District Attorney, who handled major violent crimes and later served as a Chief of the Violent Crimes Unit and as the Indian Country
AUSA/Tribal Liaison for the Department of Justice prior to being appointed the federal prosecutor for Oregon.





5







On
January 4, 2018, Mr. Williams provided the below statement on marijuana enforcement in the District of Oregon: “As noted
by Attorney General Sessions, today’s memo on marijuana enforcement directs all U.S. Attorneys to use the reasoned exercise
of discretion when pursuing prosecutions related to marijuana crimes. We will continue working with our federal, state, local
and tribal law enforcement partners to pursue shared public safety objectives, with an emphasis on stemming the overproduction
of marijuana and the diversion of marijuana out of state, dismantling criminal organizations and thwarting violent crime in our
communities.”



In
an editorial published on January 12, 2018, Mr. Williams wrote: “In sum, I have significant concerns about the state’s
current regulatory framework and the resources allocated to policing marijuana in Oregon.”



At
a meeting on February 2, 2018, Mr. Williams told Oregon’s top politicians and law enforcement officials that there’s
more cannabis being produced in the state than can legally be consumed. “And make no mistake about it, we’re going
to do something,” Williams told dozens of politicians, tribal leaders, sheriffs as well as representatives of the FBI and
the U.S. Drug Enforcement Administration. “Here’s what I know, in terms of the landscape here in Oregon: We have an
identifiable and formidable marijuana over-production and diversion problem,” Williams said. “That’s the fact.
My responsibly is to work with our state partners to do something about it.”



Because
marijuana is illegal under U.S. federal law, investing in a cannabis business could be found to violate the Federal CSA. As a
result, individuals involved with cannabis businesses, including but not limited to, investors and lenders, may be indicted under
U.S. federal law. Your investment in the Company may: (a) expose you personally to criminal liability under U.S. federal law,
resulting in monetary fines and jail time; and (b) expose any real and personal property used in connection with GRUS’ business
to seizure and forfeiture to the U.S. federal government.



Active
enforcement of the current federal law on cannabis may thus directly and adversely affect revenues and profits of GRUS. The risk
of strict enforcement of the Federal CSA remains uncertain.



Other
Laws and Regulations. The industry in which GRUS operates could subject the Company and/or GRUS to comply with a myriad
of other federal, state and local laws and regulations, which could include, among others, laws and regulations relating to cannabis,
personally identifiable information, wage and hour restrictions, health and safety matters, consumer protection and environmental
matters. Compliance with such laws and regulations may be costly and a failure to comply with such laws and regulations could
result in fines, penalties, litigation and other liability that could materially adversely affect the Company.



The
Company’s business and products are and will continue to be regulated by the Oregon Liquor Control Commission (the “OLCC”)
and other regulatory bodies as applicable laws continue to change and develop. Regulatory compliance with the OLCC and other regulatory
bodies, and the process of obtaining regulatory approvals, can be costly and time-consuming. Further, the Company cannot predict
what kind of regulatory requirements its business will be subject to in the future. Any delays in obtaining, or failure to obtain,
regulatory approvals would significantly delay the development of markets and products and could have a material adverse effect
on the Company.



Local,
state and U.S. federal laws and enforcement policies concerning marijuana-related conduct are changing rapidly and will continue
to do so for the foreseeable future. Changes in applicable law are unpredictable and could have a material adverse effect on the
Company. Changes in applicable laws or regulations could significantly diminish the Company’s prospects. The Company has
little or no control over potential changes to laws or regulations that may affect its business, including the business of GRUS.



Additionally,
governmental regulations affect taxes and levies, healthcare costs, energy usage and labor issues, all of which may have a direct
or indirect effect on the Company’s business and its customers or suppliers. Changes in these laws or regulations, or the
introduction of new laws or regulations, could increase the costs of doing business for the Company, or its customers or suppliers,
or restrict the Company’s actions, causing the Company to be materially adversely affected.



Current
and Future Consumer Protection Regulatory Requirements. The Company may manufacture and sell food and other products for
human consumption which involves the risk of injury to consumers. Such injuries may result from tampering by unauthorized third
parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or
residues introduced during the growing, storage, handling or transportation phases. Even though the Company intends to grow and
sell products that are safe, it has potential product liability risk from the consuming public. The Company could be party to
litigation based on consumer claims, product liability or otherwise that could result in significant liability for the Company
and adversely affect its financial condition and operations. Even if a product liability claim is unsuccessful or is not fully
pursued, the negative publicity surrounding any assertion that the Company’s products caused illness or injury could adversely
affect its reputation with existing and potential customers and its corporate and brand image.





6







The
US Food and Drug Administration (the “FDA”) may now or in the future regulate the material content of the
Company’s products pursuant to the Federal Food, Drug and Cosmetic Act and the Consumer Product Safety Commission (the
“CPSC”), and regulates certain aspects of certain products intended for human consumption pursuant to various
U.S. federal laws, including the Consumer Product Safety Act and the Poison Prevention Packaging Act. The FDA and the CPSC
can require the manufacturer of defective products to repurchase or recall these products and may also impose fines or
penalties on the manufacturer. Similar laws exist in some states, cities and other countries in which the Company sells or
intends to sell its products. In addition, certain state laws restrict the sale of packaging with certain levels of heavy
metals and impose fines and penalties for noncompliance. A recall of any of the Company’s products or any fines and
penalties imposed in connection with noncompliance could have a materially adverse effect on its business.



Operational
Risks. The Company will be affected by a number of operational risks and it may not be adequately insured for certain
risks, including: labor disputes; catastrophic accidents; fires; blockades or other acts of social activism; changes in the regulatory
environment; impact of non-compliance with laws and regulations; natural phenomena, such as inclement weather conditions, floods,
earthquakes and ground movements. There is no assurance that the foregoing risks and hazards will not result in damage to, or
destruction of, the Company’s properties, grow facilities and extraction facilities, personal injury or death, environmental
damage, adverse impacts on the Company’s operation, costs, monetary losses, potential legal liability and adverse governmental
action, any of which could have an adverse impact on the Company’s future cash flows, earnings and financial condition.
Also, the Company may be subject to or affected by liability or sustain loss for certain risks and hazards against which the Company
cannot insure or which it may elect not to insure because of the cost. This lack of insurance coverage could have a material adverse
effect on the Company.



No
Operating History. While the Company’s principals have operated other successful cannabis companies, GRUS is recently
formed and has a limited operating history and has no record of prior performance as a separate enterprise. GRUS faces the general
risks associated with any new business operating in a competitive industry, including the ability to fund operations from unpredictable
cash flow and capital-raising transactions. There can be no assurance that GRUS or the Company will achieve its anticipated investment
objectives or operate profitably. The Company’s business must be considered in light of the risks, expenses, and problems
frequently encountered by companies in their early stages of development. Specifically, such risks may include, among others:

| | ● | inability
                                         to fund operations from unpredictable cash flows;
| | - | ----------------------------------------------------------------------------------------------------

| | ● | failure
                                         to anticipate and adapt to developing markets;
| | - | -----------------------------------------------------------------------------------------------

| | ● | inability
                                         to attract, retain and motivate qualified personnel; and
| | - | -----------------------------------------------------------------------------------------------------------

| | ● | failure
                                         to operate profitably in a competitive industry.
| | - | -------------------------------------------------------------------------------------------------



There
can be no assurance that the Company will be successful in addressing these risks. To the extent it is unsuccessful in addressing
these risks, the Company may be materially and adversely affected. There can be no assurance that the Company will ever achieve
or sustain profitability.



The
Company will not be able to deduct many normal business expenses. Under Section 280E of the US Internal Revenue Code (“Section
280E”), many normal business expenses incurred in the trafficking of marijuana and its derivatives are not deductible in
calculating federal and Oregon income tax liability. A result of Section 280E is that an otherwise profitable business may in
fact operate at a loss, after taking into account its income tax expenses. Although the Company has accounted for Section 280E
in its financial projections and models, the application of Section 280E may have a material adverse effect on the Company.



External
Factors. The Company’s business strategy includes commercial scale production and sales of cannabis. The success
of this strategy is subject to numerous external factors, such as the availability of suitable land packages, the Company’s
ability to attract, train and retain qualified personnel, the ability to access capital, the ability to obtain required state
and local permits and licenses, the prevailing laws and regulatory environment of each jurisdiction in which the Company may operate,
which are subject to change at any time, the degree of competition within the industries and markets in which the Company operates
and its effect on the Company’s ability to retain existing and attract new customers. Some of these factors are beyond the
Company’s control.



Failure
to Manage Growth Effectively. The rapid execution necessary for the Company to successfully implement its business strategy
requires an effective planning and management process. The Company anticipates significant growth and will be required to continually
improve its financial and management controls, reporting systems and procedures on a timely basis, and to expand, train and manage
its personnel. There can be no assurance that the Company’s procedures or controls will be adequate to support operations.
If the Company is unable to manage growth effectively, it could suffer a material adverse effect.





7







Changes
in Industry Standards. The industry in which the Company operates could be subject to rapid changes, including, among
others, changes in consumer requirements and preferences. There can be no assurance that the demand for any products or services
offered by the Company will continue, or that the mix of the Company’s future product and service offerings will satisfy
evolving consumer preferences. The success of the Company will be dependent upon its ability to develop, introduce and market
products and services that respond to such changes in a timely fashion. Consumer preferences change from time to time and can
be affected by a number of different and unexpected trends. The Company’s failure to anticipate, identify or react quickly
to these changes and trends, and to introduce new and improved products on a timely basis, could result in reduced demand for
the Company’s products, which would in turn cause a material adverse impact to the Company.



Dependence
on Technology. The Company relies on information technology systems. All of these systems are dependent upon computer
and telecommunications equipment, software systems and Internet access. The temporary or permanent loss of any component of these
systems through hardware failures, software errors, the vulnerability of the Internet, operating malfunctions or otherwise could
interrupt the Company’s business operations and materially adversely affect the Company.



Failure
to Protect Intellectual Property. Because producing, manufacturing, processing, possessing, distributing, selling, and
using marijuana is a crime under the Federal CSA, the U.S. Patent and Trademark Office will not permit the registration of any
trademark that identifies marijuana products. As a result, the Company likely will be unable to protect the marijuana product
trademarks beyond the geographic areas in which the Company conducts business. The use of GRUS trademarks by one or more other
persons could have a material adverse effect on the Company.



Even
if the Company obtains federal, state or international trademark or copyright registrations for any products or services it develops,
such registrations may not provide adequate protection. The Company may also rely on federal, state and international trade secret,
trademark and copyright laws, as well as contractual obligations with employees and third parties, to protect intellectual property.
Such laws and contracts may not provide adequate protection. Despite the efforts to protect its intellectual property, unauthorized
parties may attempt to copy aspects of the Company’s products or services, or obtain and use information that the Company
regards as proprietary. The Company’s efforts to protect its intellectual property from third-party discovery and infringement
may be insufficient and third parties may independently develop products or services similar to the Company or duplicate their
products or services. In addition, third parties may assert that the Company’s products or services infringe their intellectual
property.



Vulnerability
to Rising Energy Costs. The Company’s marijuana growing operations will consume considerable energy, making the
Company vulnerable to rising energy costs. Rising or volatile energy costs may adversely impact the business of the Company and
its ability to operate profitably. Increased energy costs would result in higher transportation, freight and other operating costs,
including increases in the cost of ingredients and supplies. The Company’s future operating expenses and margins could be
dependent on its ability to manage the impact of such cost increases. If energy costs increase, there is no guarantee that such
costs can be fully passed along to consumers through increased prices.



Agricultural
Operations. Since the Company’s business revolves mainly around the cultivation of cannabis, an agricultural product,
the risks inherent with agricultural businesses will apply. Such risks may include plant and other diseases, insect pests, adverse
weather (including but not limited to drought, high winds, earthquakes and/or wildfire) and growing conditions, and new government
regulations regarding farming and the marketing of agricultural products, among others. There is a risk that these and other natural
elements will have a material adverse effect on the production of the Company’s products, which in turn could have a material
adverse effect on its results of operations.



Security
Risks. The business premises of GRUS are a target for theft. While the Company has implemented security measures and continues
to monitor and improve its security measures, its cultivation and processing facilities could be subject to break-ins, robberies
and other breaches in security. If there was a breach in security and the Company fell victim to a robbery or theft, the loss
of cash, cannabis plants, cannabis oils, cannabis flowers and cultivation and processing equipment could have a material adverse
impact on the business, financial condition and results of operation of the Company.



Liability,
Enforcement, Complaints, etc. The Company’s participation in the marijuana industry may lead to litigation, formal
or informal complaints, enforcement actions, and inquiries by various federal, state, or local governmental authorities. Litigation,
complaints, and enforcement actions could consume considerable amounts of financial and other corporate resources, which could
have an adverse effect on the Company’s future cash flows, earnings, results of operations and financial condition.





8







Licenses.The Company’s success depends on its ability to obtain and maintain marijuana licenses from state and local authorities
including the Oregon Liquor Control Commission (the “OLCC”). If the Company fails to obtain or maintain one or more
marijuana production licenses from the OLCC or other applicable state or local government authorities, its business will be limited
to Oregon’s medical marijuana market only, which may not be a viable long-term business model. The Company’s failure
to obtain and maintain a marijuana license from the OLCC or other applicable state or local governmental authorities would have
a material adverse effect on it.



Limited
Customer Base; Oregon Retail Price Decline. The customers of the Company’s cannabis production business will be
limited to other state-licensed marijuana businesses that the Company operates in, which currently is limited to Oregon. The Company
currently may not sell its products to any business or person located outside Oregon. Generally, the Company will not be able
to sell any of its products outside of the state of production. Consequently, the Company’s customer base is limited to
the jurisdictions it operates in for any cannabis based products, which currently is only Oregon. The retail and wholesale prices
in Oregon of cannabis products have declined substantially in recent months due to an imbalance between demand for the products
and the supply of the products. Such price declines, if sustained, will have a material adverse effect on the Company.



Local
Laws and Ordinances. Although legal under Oregon state law, local governments have the ability to limit, restrict, and
ban medical or recreational cannabis businesses from operating within their jurisdiction. Land use, zoning, local ordinances,
and similar laws could be adopted or changed, and have a material adverse effect on the Company.



The
Company’s contracts may be unenforceable and property may be subject to seizure. As the U.S. Federal CSA currently
prohibits the production, processing and use of marijuana, contracts with third parties (suppliers, vendors, landlords, etc.)
pertaining to the production, processing, or selling of marijuana-related products, including any leases for real property, may
be unenforceable. In addition, if the U.S. federal government begins strict enforcement of the Federal CSA, any property (personal
or real) used in connection with a marijuana-related business may be seized by and forfeited to the federal government. In this
case, the Company’s inability to enforce contracts or any loss of business property (whether the Company’s or its
vendors’) will have a material adverse effect on the Company.



Third
party service providers to the Company may withdraw or suspend their service. Because under U.S. federal law the possession,
use, cultivation, and transfer of cannabis and any related drug paraphernalia is illegal, and any such acts are criminal acts
under federal law, companies that provide goods and/or services to companies engaged in cannabis-related activities may, under
threat of federal civil and/or criminal prosecution, suspend or withdraw their services. Any suspension of service and inability
to procure goods or services from an alternative source, even on a temporary basis, that causes interruptions in the Company’s
operations could have a material adverse effect on the Company.



The
Company’s business is highly regulated and it may not be issued necessary licenses, permits, and cards. The Company’s
business and products are and will continue to be regulated as applicable laws continue to change and develop. Regulatory compliance
and the process of obtaining regulatory approvals can be costly and time-consuming. Even if the Company obtains one or more licenses
from the OLCC or other applicable state or local governmental authorities, no assurance can be given that it will receive all
of the other licenses and permits that will be required to operate. Further the Company cannot predict what kind of regulatory
requirements its business will be subject to in the future.



The
marijuana industry faces significant opposition in the United States. It is believed by many that large well-funded businesses
may have strong economic opposition to the marijuana industry. The pharmaceutical industry is well funded with a strong and experienced
lobby that eclipses the funding of the medical marijuana industry. Any inroads the pharmaceutical industry could make in halting
or impeding the marijuana industry could have a material adverse effect on the Company.



The
size of the target market is difficult to quantify. Because the cannabis industry is in an early stage with uncertain
boundaries, there is a lack of information about comparable companies and, few, if any, established companies whose business model
the Company can follow or upon whose success the Company can build. Accordingly, there can be no assurance that the Company’s
estimates are accurate or that the market size is sufficiently large for its business to grow as projected, which may negatively
impact its financial results.



The
Company has numerous competitors. Its marijuana production business is not, by itself, unique. The Company has numerous
competitors throughout Oregon and other states utilizing a substantially similar business model. Excessive competition may impact
sales and may cause the Company to reduce prices. Any material reduction in prices could have a material adverse effect on the
Company. We are operating in a highly competitive industry where we may compete with numerous other companies in the marijuana
industry, who may have far greater resources, more experience, and personnel perhaps more qualified than we do. There can be no
assurance that we will be able to successfully compete against these other entities. To remain competitive, we will require a
continued high level of investment in research and development, marketing, sales and client support. We may not have sufficient
resources to maintain research and development, marketing, sales and client support efforts on a competitive basis which could
materially and adversely affect our business, financial condition and results of operations.





9







The
Company may not be able to obtain or maintain a bank account. Because producing, manufacturing, processing, possessing,
distributing, selling, and using marijuana is a crime under the Federal CSA, most banks and other financial institutions are unwilling
to provide banking services to marijuana businesses due to concerns about criminal liability under the Federal CSA as well as
concerns related to federal money laundering rules under the U.S. Bank Secrecy Act. In February 2014, the Financial Crimes Enforcement
Network (“FinCEN”) bureau of the U.S. Treasury Department issued guidance (which is not law) with respect to financial
institutions providing banking services to cannabis business, including burdensome due diligence expectations and reporting requirements.
This guidance does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions
by the DOJ, FinCEN or other federal regulators. Thus, most banks and other financial institutions do not appear to be comfortable
providing banking services to cannabis-related businesses, or relying on this guidance, which can be amended or revoked at any
time by the Trump Administration. In addition to the foregoing, banks may refuse to process debit card payments and credit card
companies generally refuse to process credit card payments for cannabis-related businesses. As a result, many cannabis businesses
still operate on an all-cash basis. Operating on an all-cash or predominantly-cash basis would make it difficult for the Company
to manage its business, pay its employees and pay its taxes, and may create serious safety issues for the Company, its employees
and its service providers. Although the Company currently has several bank accounts, its inability to maintain those bank accounts,
or obtain and maintain other bank accounts, could have a material adverse effect on the Company.



The
protections of US bankruptcy law may be unavailable. As discussed above, the use of marijuana is illegal under U.S. federal
law. Therefore, it may be argued that the federal bankruptcy courts cannot provide relief for parties who engage in marijuana
or marijuana-related businesses. Recent bankruptcy court rulings have denied bankruptcies for dispensaries upon the justification
that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity. In addition,
some courts have reasoned that courts cannot ask a bankruptcy trustee to take possession of and distribute marijuana assets as
such action would violate the Federal CSA. Therefore, the Company may not be able to seek the protection of the bankruptcy courts
for the equal protection of creditors or debtor-in-possession financing or obtain credit from federal-charted financial institutions.



The
Company may have a difficult time obtaining insurance which may expose the Company to additional risk and financial liabilities.Insurance that is otherwise readily available, such as workers compensation, general liability, and directors and officers
insurance, is more difficult for the Company to find, and more expensive, because it is in the cannabis industry. There are no
guarantees that the Company will be able to find such insurance in the future, or that the cost will be affordable. If the Company
is forced to go without such insurance, it may prevent the Company from entering into certain business sectors, may inhibit its
growth, may expose the Company to additional risk and financial liabilities and could have a material adverse effect on the Company.



The
Company’s websites are accessible in jurisdictions where medicinal or recreational use of marijuana is not permitted and,
as a result the Company may be found to be violating the laws of those jurisdictions. The Company’s websites, which
advertise its products for use in connection with marijuana, are visible in jurisdictions where the medical and recreational use
of marijuana is unlawful. As a result, the Company may face legal action brought against it by such jurisdictions for engaging
in an activity illegal in that jurisdiction. Such an action could have a material adverse effect on the Company.



Currency
Fluctuations. Due to the Company’s operations in the United States, and its intention to continue future operations
outside Canada, the Company may be exposed to significant currency fluctuations. All or substantially all of the Company’s
financings will be raised in Canadian dollars, but a substantial portion of the Company’s operating expenses are incurred
in US dollars. There is no expectation that the Company will put any currency hedging arrangements in place. Fluctuations in the
exchange rate between the US dollar and the Canadian dollar may have a material adverse effect on the Company’s business,
financial condition and operating results. The Company may, in the future, establish a program to hedge a portion of its foreign
currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if
the Company develops a hedging program, there can be no assurance that it will effectively mitigate currency risks.





10







Risks
Associated with Acquisitions. As part of its overall business strategy, the Company may pursue select strategic acquisitions
after the completion of the Transaction, which could provide additional product offerings, vertical integrations, additional industry
expertise, and a stronger industry presence in both existing and new jurisdictions. Future acquisitions may expose it to potential
risks, including risks associated with: (a) the integration of new operations, services and personnel; (b) unforeseen or hidden
liabilities; (c) the diversion of resources from the existing business and technology; (d) potential inability to generate sufficient
revenue to offset new costs; (e) the expenses of acquisitions; or (f) the potential loss of or harm to relationships with both
employees and existing users resulting from its integration of new businesses. In addition, any proposed acquisitions may be subject
to regulatory approval.



Environmental
Risks. The Company’s operations are subject to environmental regulation in the various jurisdictions in which it
operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation.
They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental
legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their
officers, directors (or the equivalent thereof) and employees. There is no assurance that future changes in environmental regulation,
if any, will not materially adversely affect the Company.



Government
approvals and permits are currently, and may in the future, be required in connection with the Company’s operations. To
the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from its proposed production
of medical marijuana or from proceeding with the development of its operations as currently proposed.



Failure
to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional equipment, or remedial actions. The Company may be required to compensate
those suffering loss or damage by reason of its operations and may have civil or criminal fines or penalties imposed for violations
of applicable laws or regulations.



Amendments
to current laws, regulations and permits governing the production of marijuana, or more stringent implementation thereof, could
have a material adverse impact on the Company and cause increases in expenses, capital expenditures or production costs or reduction
in levels of production or require abandonment or delays in development.



Border
crossing for non-U.S. residents may create additional challenges. Although cannabis use and sale is legal and regulated
in numerous U.S. states, individuals who are not U.S. residents and employed or involved with licensed cannabis companies could
be denied entry or face lifetime bans from the U.S. for their involvement with such companies. There has been increasing anecdotal
evidence of non-U.S. residents who are involved in the cannabis industry being denied entry at the U.S. border or facing lifetime
bans from the U.S. after disclosing to U.S. border officials the nature of their work. The Company’s board is made up of
both U.S. and non-U.S. residents, so there is no guarantee that certain members of the Company’s board would not be subject
to such denials or bans. Should a director be prevented from entering the U.S., either in one instance or permanently, his or
her ability to serve the Company as a board member could be hindered. This could equally impact any other non-U.S. resident employees
employed by the Company.



The
Company may suffer reduced profitability if it loses foreign private issuer status in the United States. If, as of the
last business day of the Company’s second fiscal quarter for any year, more than 50% of the Company’s outstanding
voting securities are directly or indirectly held of record by residents of the United States, the Company will no longer meet
the definition of a “Foreign Private Issuer” under the rules of the U.S. Securities and Exchange Commission (the “SEC”).
If the Company fails to qualify for Foreign Private Issuer status, it will remain unqualified unless it meets the test as of the
last business day of its second fiscal quarter. This change in status could have a significant effect on the Company as it would
significantly complicate the raising of capital through the offer and sales of securities and reporting requirements, resulting
in increased audit, legal and administration costs. The loss of Foreign Private Issuer status could have a material adverse effect
on the Company.



United
States Tax Classification of the Company. The Company, which is and will continue to be a Canadian corporation as of the
date of this Annual Report, generally would be classified as a non-United States corporation under general rules of United States
federal income taxation. Section 7874 of the U.S. Tax Code, however, contains rules that can cause a non-United States corporation
to be taxed as a United States corporation for United States federal income tax purposes. Under section 7874 of the U.S. Tax Code,
a corporation created or organized outside the United States. (i.e., a non-United States corporation) will nevertheless be treated
as a United States corporation for United States federal income tax purposes (such treatment is referred to as an “Inversion”)
if each of the following three conditions are met (a) the non-United States corporation acquires, directly or indirectly, or is
treated as acquiring under applicable United States Treasury Regulations, substantially all of the assets held, directly or indirectly,
by a United States corporation, (b) after the acquisition, the former stockholders of the acquired United States corporation hold
at least 80% (by vote or value) of the shares of the non-United States corporation by reason of holding shares of the United States
acquired corporation, and (c) after the acquisition, the non-United States corporation’s expanded affiliated group does
not have substantial business activities in the non- United States corporation’s country of organization or incorporation
when compared to the expanded affiliated group’s total business activities (clauses (a) – (c), collectively, the “Inversion
Conditions”).





11







For
this purpose, “expanded affiliated group” means a group of corporations where (a) the non-United States corporation
owns stock representing more than 50% of the vote and value of at least one member of the expanded affiliated group, and (b) stock
representing more than 50% of the vote and value of each member is owned by other members of the group. The definition of an “expanded
affiliated group” includes partnerships where one or more members of the expanded affiliated group own more than 50% (by
vote and value) of the interests of the partnership.



The
Company intends to be treated as a United States corporation for United States federal income tax purposes under Section 7874
of the U.S. Tax Code and is expected to be subject to United States federal income tax on its worldwide income. However, for Canadian
tax purposes, the Company is expected, regardless of any application of Section 7874 of the U.S. Tax Code, to be treated as a
Canadian resident company (as defined in the Income Tax Act (Canada) (the “ITA”) for Canadian income tax purposes.
As a result, the Company will be subject to taxation both in Canada and the United States which could have a material adverse
effect on it.



General
Risk Factors



Market
Reaction. The market reaction to the Transaction and the future trading prices of our shares cannot be predicted. Following
the Transaction, the price of our shares fluctuated and it may continue to fluctuate significantly due to the market’s reaction
to the Transaction and general market and economic conditions. An active trading market for the shares of our common stock may
never develop or, if developed, it may not be sustained.



Holding
Company Status. As a result of the Transaction, the Company is currently a holding company and essentially all of its
operating assets are the capital stock of its subsidiaries. As a result, investors in the Company are subject to the risks attributable
to its subsidiaries. As a holding company, the Company conducts substantially all of its business through its subsidiaries, which
generate substantially all of its revenues. Consequently, the Company’s cash flows and ability to complete current or desirable
future enhancement opportunities are dependent on the earnings of its subsidiaries and the distribution of those earnings to the
Company. The ability of these entities to pay dividends and other distributions will depend on their operating results and will
be subject to applicable laws and regulations which require that solvency and capital standards be maintained by such companies
and contractual restrictions contained in the instruments governing their debt or other contracts, in each case, which could limit
the ability to pay such dividends or distributions, if at all. In the event of a bankruptcy, liquidation or reorganization of
any of the Company’s subsidiaries, holders of indebtedness and trade creditors will generally be entitled to payment of
their claims from the assets of those subsidiaries before any assets are made available for distribution to Grown Rogue.



Limited
Market for Securities. There can be no assurance that an active and liquid market for shares
of our securities will be maintained and an investor may find it difficult to resell any of our securities.



Asset
Location and Legal Proceedings. As a result of the Transaction, substantially all of the Company’s assets are located
outside of Canada and many of its officers and directors, and their assets, will be resident outside of Canada. Serving process
on the directors and officers may prove to be difficult or excessively time consuming. Additionally, it may be difficult to enforce
a judgment obtained in Canada against the Company, its subsidiaries, and any directors and officers residing outside of Canada.



We
require additional capital which may not be available to us on acceptable terms, or at all. We have accumulated significant
losses and negative cash flows from operations in recent years which raises doubt as to the validity of the going concern assumption.
As at August 31, 2018, we had a working capital deficit of $799,588 and an accumulated deficit of $32,201,307. We may not have
sufficient funds to meet our liabilities for the ensuing twelve months as they become due. In assessing whether the going concern
assumption is appropriate, we take into account all available information about the future, which is at least, but not limited
to, twelve months from August 31, 2018. Our ability to continue operations and fund our liabilities may become dependent on our
ability to secure additional financing and cash flow.





12







We
have significant trade and other payables which may make it difficult to service our debts and adversely affects our ability to
obtain additional financing. At August 31, 2018, we had trade and other payables in the amount of $703,306. If in the
future we are unable to service our debt obligations we may, among other things, need to refinance all or a portion of our debt
at an increased borrowing cost, obtain additional financing, delay capital expenditures, or sell material assets. If we are not
able to re-finance our debt as necessary, obtain additional financing, or sell assets on commercially acceptable terms or at all,
we may not be able to satisfy our debt obligations.



We
must continue to institute procedures designed to avoid potential conflicts involving our officers and directors. Some
of our directors and officers are or may serve on the board of directors of other companies from time to time. Pursuant to the
provisions of the Business Corporations Act (Ontario), our directors and senior officers must disclose material interests in any
contract or transaction (or proposed contract or transaction) material to us. To avoid the possibility of conflicts of interest
that may arise out of their fiduciary responsibilities to each of the boards, all such directors have agreed to abstain from voting
with respect to a conflict of interest between the applicable companies. In appropriate cases, we will establish a special committee
of independent directors to review a matter in which several directors, or members of management, may have a conflict.



We
rely on the expertise of certain persons and must ensure that these relationships are developed and maintained. We are
dependent on the advice and project management skills of various consultants and joint venture partners contracted by us from
time to time. Our failure to develop and maintain relationships with qualified consultants and joint venture partners will have
a material adverse effect on our business and operating results.



We
must indemnify our officers and directors against certain actions. Our articles contain provisions that state that we
must indemnify every director or officer, subject to the limitations of the Business Corporations Act (Ontario), against all losses
or liabilities that our directors or officers may sustain or incur in the execution of their duties and subject to other applicable
law. Our articles further state that no director or officer will be liable for any loss, damage, or misfortune that may happen
to, or be incurred by us in the execution of his duties if he acted honestly and in good faith with a view to our best interests.
Such limitations on liability may reduce the likelihood of litigation against our officers and directors and may discourage or
deter our shareholders from suing our officers and directors based upon breaches of their duties to us, though such an action,
if successful, might otherwise benefit us and our shareholders.



Risks
Factors Relating to Our Securities



Possible
volatility of price of shares of our securities. The market price for our securities may be volatile and is subject to
significant fluctuations in response to a variety of factors, including the liquidity of the market for our securities, variations
in our quarterly operating results, regulatory or other changes in the cannabis industry generally, announcements of business
developments by us or our competitors, litigation, changes in operating costs and variations in general market conditions. Because
we have a limited operating history in the cannabis industry, the market price for our securities may be more volatile than that
of a seasoned issuer. Changes in the market price of our securities may have no connection with our operating results. No predictions
or projections can be made as to what the prevailing market price for our securities will be at any time.



Our
investors may have difficulty selling our securities as there is a limited public trading market for such securities.
An investor in the Company may find it difficult to resell our securities. There is only a limited public market for our securities,
and no assurance can be given that a broad or active public trading market will develop in the future or, if developed, that it
will be sustained. Our common stock trades on the OTC Markets QB and the Canadian Securities Exchange. Our common stock has not
been qualified under any applicable U.S. state blue-sky laws, and we are under no obligation to so qualify or register our common
stock, or otherwise take action to improve the public market for such securities. Our common stock could have limited marketability
due to the following factors, each of which could impair the timing, value and market for such securities: (a) lack of profits;
(b) need for additional capital; (c) limited public market for such securities; (d) the applicability of certain resale requirements
under the Securities Act; and (e) applicable blue sky laws and the other factors discussed in this Risk Factors section.



We
do not anticipate paying dividends on shares of our common stock. We do not anticipate paying cash dividends on shares
of our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Even if funds are legally
available to pay dividends, we may nevertheless decide, in our sole discretion, not to pay dividends. The declaration, payment,
and amount of any future dividends will be made at the discretion of our Board of Directors, and will depend upon, among other
things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors
our Board of Directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends
are paid, there is no assurance with respect to the amount of any such dividend.





13







Our
shareholders may experience dilution of their ownership interests because of our future issuance of additional shares of common
stock. Our organizational and corporate documents authorize the issuance of an unlimited number of shares of common stock,
without par value. In the event that we are required to issue additional shares of common stock or securities exercisable for
or convertible into additional shares of common stock, enter into private placements to raise financing through the sale of equity
securities, the interests of our existing shareholders will be diluted and existing shareholders may suffer dilution in their
net book value per share depending on the price at which such securities are sold. If we do issue additional shares, it will cause
a reduction in the proportionate ownership and voting power of all existing shareholders. As of November 30, 2018, we had outstanding
the following common share purchase warrants: 21,253,089 warrants exercisable at $0.55 per share, 114,656 warrants exercisable
at $4.90 per share, 16,883 warrants exercisable at $17.50 per share, 17,183 warrants exercisable at $14.00 per share and 757,125
broker warrants exercisable at $0.55 per share. As of November 30, 2018, we had no share purchase options outstanding. (See
Item 5: “Operating and Financial Review and Prospects – Share Capital and Reserves and Derivative Liabilities”
and Item 4.A “History and Development of the Company”).



Applicable
SEC rules governing the trading of “penny stocks” will limit the trading and liquidity of our common stock and may
affect the trade price for our common stock. The SEC has adopted rules which generally define “penny stock”
to be any equity security that has a market price (as defined) of less than US$5.00 per share or an exercise price of less than
US$5.00 per share, subject to certain exceptions. Our securities will be covered by the penny stock rules, which impose additional
sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”.
The term “accredited investor” refers generally to institutions with assets in excess of US$5,000,000 or individuals
with a net worth in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 jointly with their spouse.



The
penny stock rules 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 in a form prepared by the SEC which 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.



In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these 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 disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for the shares that are subject to these penny stock rules. Consequently, these
penny stock rules may affect the ability of broker-dealers to trade our securities. We expect that the penny stock rules will
discourage investor interest in and limit the marketability of shares of our common stock.



In
addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other
information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. FINRA requirements will make it more difficult for broker-dealers
to recommend that their customers buy shares of our common stock, which may limit your ability to buy and sell our shares and
have an adverse effect on the market for our shares.



FINRA
sales practice requirements may limit a shareholder’s ability to buy and sell our securities. In addition to the
“penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a
client, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that client. Prior to recommending
speculative, low-priced securities to their non-institutional clients, broker-dealers must make reasonable efforts to obtain information
about the client’s financial status, tax status, investment objectives, and other information. Under interpretations of
these rules, FINRA believes that there is a high probability that speculative, low-priced securities will not be suitable for
at least some clients. FINRA requirements make it more difficult for broker-dealers to recommend that their clients buy our securities,
which may limit your ability to buy and sell our stock and have an adverse effect on the market for our securities.



As
a public company we are subject to complex legal and accounting requirements that will require us to incur significant expenses
and will expose us to risk of non-compliance. As a public company, we are subject to numerous legal and accounting requirements
in both Canada and the United States of America that do not apply to private companies. The cost of compliance with many of these
requirements is material, not only in absolute terms but, more importantly, in relation to the overall scope of the operations
of a small company. Our relative inexperience with these requirements may increase the cost of compliance and may also increase
the risk that we will fail to comply. Failure to comply with these requirements can have numerous adverse consequences including,
but not limited to, our inability to file required periodic reports on a timely basis, loss of market confidence, delisting of
our securities, and/or governmental or private actions against us. We cannot assure you that we will be able to comply with all
of these requirements or that the cost of such compliance will not prove to be a substantial competitive disadvantage compared
to privately held and larger public competitors.





14







Compliance
with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges
for our management. Changing laws, regulations, and standards relating to corporate governance and public disclosure,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder,
the Sarbanes-Oxley Act and SEC regulations, have created uncertainty for public companies and significantly increased the costs
and risks associated with accessing the U.S. public markets. Our management team needs to devote significant time and financial
resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative
expenses and a diversion of management time and attention from revenue generating activities to compliance activities.



Changes
in tax laws or tax rulings could materially affect our financial position and results of operations. Changes in tax laws
or tax rulings could materially affect our financial position and results of operations. Due to the large and expanding scale
of our international business activities, certain changes in the taxation of business activities may increase our worldwide effective
tax rate and harm our financial position and results of operations.



Because
we are quoted on the OTCQB instead of a national securities exchange in the United States, our U.S. investors may have more difficulty
selling their stock or experience negative volatility on the market price of our stock in the United States. In the United
States, shares of our common stock are quoted on the OTCQB. The OTCQB is marketed as an electronic exchange for high growth and
early stage U.S. companies and a prospective “final step toward a NASDAQ or NYSE listing” (although no assurances
can be provided that such change of market shall occur). Trades are settled and cleared in the U.S. similar to any NASDAQ or NYSE
stock and trade reports are disseminated through Yahoo, Bloomberg, Reuters, and most other financial data providers. The OTCQB
may be significantly illiquid, in part because it does not have a national quotation system by which potential investors can follow
the market price of shares except through information received and generated by a limited number of broker-dealers that make markets
in particular stocks. There is a greater chance of volatility for securities that trade on the OTCQB as compared to a national
securities exchange in the United States, such as the New York Stock Exchange, the NASDAQ Stock Market or the NYSE Amex. This
volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent
administrative supervision of bid and ask quotations, lower trading volume, and market conditions. U.S. investors in shares of
our common stock may experience high fluctuations in the market price and volume of the trading market for our securities. These
fluctuations, when they occur, have a negative effect on the market price for shares of our common stock. Accordingly, our U.S.
shareholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them
for a substantial period of time until the market for shares of our common stock improves.



Volatility
in our common share price may subject us to securities litigation, thereby diverting our resources that may have a material effect
on our profitability and results of operations. The market for shares of our common stock is characterized by significant
price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than
a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against
a company following periods of volatility in the market price of its securities. We may in the future be the target of similar
litigation. This type of litigation could result in substantial costs and could divert management’s attention and resources.



Rule
144 sales in the future may have a depressive effect on the price of shares of our common stock as an increase in supply of shares
for sale, with no corresponding increase in demand may cause prices to fall. All of the outstanding shares of common stock
held by the present officers, directors, and affiliate stockholders are “restricted securities” within the meaning
of Rule 144 under the U.S. Securities Act of 1933 (the “Securities Act of 1933”), as amended. As restricted shares,
these shares may be resold in the U.S. only pursuant to an effective registration statement or under the requirements of Rule
144 or other applicable exemptions from registration under the Securities Act of 1933 and as required under applicable state securities
laws. Rule 144 provides in essence that a person who is an affiliate or officer or director who has held restricted securities
for six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does
not exceed the greater of 1.0% of the Company’s issued and outstanding common stock or the average of the four-week trading
volume. There is no limit on the amount of restricted securities that may be sold by a non-affiliate after the owner has held
the restricted securities for a period of six months if the Company is a current reporting company under the Securities Exchange
Act of 1934. A sale under Rule 144 or under any other exemption from the Securities Act of 1933, if available, or pursuant to
subsequent registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the
common stock in any market that may develop. In addition, if we are deemed a shell company pursuant to Section 12(b)-2 of the
Act, our “restricted securities”, whether held by affiliates or non-affiliates, may not be re-sold for a period of
12 months following the filing of a Form 10 level disclosure or registration pursuant to the Securities Act of 1933.





15







Failure
to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”) could have a material adverse effect on our business and our operating results. If we fail to comply with
the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any
material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our
financial statements, cause investors to lose confidence in our reported financial information, and have a negative effect on
the trading price of our securities.



Pursuant
to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, we are required to prepare assessments regarding internal
controls over financial reporting. In connection with our on-going assessment of the effectiveness of our internal control over
financial reporting, we may discover “material weaknesses” in our internal controls as defined in standards established
by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination
of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. The PCAOB defines “significant deficiency” as a deficiency
that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential
will not be prevented or detected. In the event that a material weakness is identified, we will employ qualified personnel and
adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing
and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our
business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls
that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take
will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our
financial process and reporting in the future.



A
failure to remediate any material weaknesses that we may identify or to implement new controls, or difficulties encountered in
their implementation, could harm our operating results, cause us to fail to meet our reporting obligations, or result in material
misstatements in our financial statements. Any such failure could adversely affect the results of the management evaluations of
our internal controls. Inadequate internal controls could also cause investors to lose confidence in our reported financial information,
which could have a negative effect on the trading price of our securities.



| | ITEM
                                         4 | INFORMATION
                                       ON THE COMPANY
| | ----------------------------------------------- | -----------------------------------------------------------------



Prior
to the Transaction, we were an emerging media and internet company with a focus on user experience and engagement, creating brands,
products and destinations globally, regionally and by language that are value driven providing an informative, interactive, entertaining
and engaging look at content. Through our wholly owned subsidiary DoubleTap Daily Inc., (formerly: Digital Widget Factory Inc.),
the Company developed an online management and advertising platform that powers user and advertising engagement programs in real-time
to desktop, mobile and portable devices.



As
a result of the Transaction, we became a fully integrated, seed to experience cannabis brand with a focus on user experience.
The Company delivers cannabis related products to cannabis users in the state of Oregon and intends to expand into other markets.
GRUS manages indoor and outdoor growing facilities in the Rogue Valley of Southern Oregon to take advantage of the unique microclimates
inherent to each of the various farm locations that help create varied flavor and product profiles while retaining the unique
core characteristics that consumers desire.



Shares
of our common stock trade on OTCQB under the symbol NVSIF and on the Canadian Securities Exchange under the symbol GRIN. Our registered
office and management office is located at 340 Richmond Street West, Toronto, Ontario, M5V 1X2. Telephone (416) 364-4039, Facsimile
(416) 364-8244. Our books and financial records are located in the registered office and management office. Our Canadian public
filings can be accessed and viewed via the System for Electronic Data Analysis and Retrieval (“SEDAR”) at www.sedar.com.
Readers can also access and view our Canadian public insider trading reports via the System for Electronic Disclosure by Insiders
at www.sedi.ca.



Our
Registrar and Transfer Agent is TSX Trust Company located at Suite 400, 200 University Avenue, Toronto, Ontario, M5H 4H1. Our
Co-transfer Agent is Worldwide Stock Transfer, LLC located at One University Plaza, Suite 505, Hackensack, N.J. 07601.





16







Our
U.S. public filings are available at the public reference room of the U.S. Securities and Exchange Commission (“SEC”)
located at 100 F Street, N.E., Room 1580, Washington, DC 20549 and at the website maintained by the SEC at www.sec.gov.



A.       HISTORY
AND DEVELOPMENT OF THE COMPANY

We
were incorporated in Ontario, Canada on September 22, 1978, under the Business Corporations Act (Ontario), under the name Bonanza
Red Lake Explorations Inc. (“Bonanza Red Lake”). Between the time of our incorporation and fiscal year 2013, we operated
predominantly as a mining and energy company. During that time period, we underwent various share consolidations, exchanges, and
issuances of shares of our common stock. Our mining and energy operations took place in different parts of Canada and the United
States. The Company’s name was changed from Bonanza Red Lake Explorations Inc. to Eugenic Corp, and then from Eugenic Corp
to Eagleford Energy Inc.



During
fiscal 2014 and 2015, the Company’s principal activities consisted of exploration, development and production of petroleum
and natural gas properties.



Through
the Company’s former wholly owned Alberta subsidiary, 1354166 Alberta Ltd., the Company held a 5.1975% working interest
in a producing property located in the Botha area in the Province of Alberta, Canada.



The
Company’s exploration and evaluation assets were located in Zavala County, Texas, USA. The Company, through its former US
wholly owned subsidiary Eagleford Energy Zavala Inc. (“Zavala Inc.”), held an interest in a mineral lease, the 2,629
acre Matthews Lease.



During
fiscal 2014, the Company entered into a Joint Development Agreement (the “Stratex JDA”) with Stratex Oil and Gas Holdings,
Inc. (“Stratex”) to further develop the Matthews Lease. Under the terms of the Stratex JDA, Stratex acted as operator
and upon Stratex delivering (a) US$150,000 to the lessors of the Matthews Lease on behalf of Zavala Inc.; (b) delivering US $150,000
to the Company; and (c) commencing a hydraulic fracture of the Matthews #1H not later than March 31, 2014. Stratex earned a 66.67%
working interest before payout (50% working interest after payout) in the Matthews #1H well and a 50% working interest in the
2,629 acre Matthews Lease.



During
fiscal 2014, the Company entered into a further Joint Development Agreement (“JDA2”) with Stratex and Quadrant Resources
LLC, (“Quadrant”) for the development of the San Miguel formation on the Matthews Lease. Pursuant to the terms of
the JDA2, upon satisfaction of certain conditions including the Phase 1 Work Program (as defined below) and the cash consideration
described below, Quadrant could earn an undivided 66.67% before payout and a 50% working interest after payout to the base of
the San Miguel formation of the Matthews Lease by (a) drilling 3 new wells and reworking 5 wells at its sole cost and expense
by June 30, 2015 (the “Phase I Work Program”); (b) delivering US$100,000 to the Company upon execution of the JDA2
(paid); and (c) delivering US$65,000 to the Company on each of July 8, 2014, October 6, 2014, January 5, 2015 and April 6, 2015.
The Company recorded the cash payments and the payment of certain obligations under the Matthews Lease by Quadrant totaling US$303,712
as a reduction in exploration and evaluation assets. Under the terms of the JDA2 Quadrant was required to complete the Phase I
Work Program and pay the Company cash consideration totaling US$360,000 by June 30, 2015, which it did not and accordingly the
JDA2 expired without Quadrant earning any interest in the development area.



Effective
March 31, 2015, the Company entered into a settlement with Stratex and Quadrant pursuant to which Stratex assigned all of its
rights, title and interest in, to and under the Matthews Lease and the JDA to the Company and Quadrant, and issued to the Company
1,333,333 common shares of Stratex as repayment of the disputed minimum royalty of US$152,293 and a further payment of US$25,000
was to be paid to the Company under the settlement agreement.



On
July 2, 2015, the 2,629 acre Matthews Lease transitioned into its production unit phase. A total of 340 acres were held as production
units and the Company wrote down the lease to fair value of $1,212,996 and recorded an impairment of exploration and evaluation
assets at August 31, 2015 of $4,490,045.



At
August 31, 2014, the Company had issued a secured convertible promissory note to Benchmark Enterprises, LLC. (“Benchmark”
or the “Note Holder”) with a face value of $1,608,149 (the “Note”). The Note had an interest rate of 10%.
The Note was due on the earliest to occur of: (a) August 31, 2015; (b) the closing of any subsequent financing or series of financings
by the Company that results in gross proceeds of an aggregate amount equal to or greater than US$4,400,000, excluding conversion
of any existing debt into equity; (c) the date of a sale by the Issuer of all of the shares in the capital stock of Zavala Inc.
held by the Company from time to time; (d) the closing of a merger, reorganization, take-over or other business combination which
results in a change of control of the Company or Zavala Inc.; or (e) an event of default.





17







In
accordance with the terms of the Note and the General Security Agreement (the “Loan Agreements”) the Company had granted
and conveyed to the Note Holder a first priority security interest in the Company and Zavala Inc.



At
August 31, 2015, the Company was unable to pay the Note principal of $1,608,149 plus interest of $154,179, totaling $1,762,328
(US$1,337,793), which constituted an event of default pursuant to the terms of the Loan Agreements. The Note Holder made demand
for payment of all amounts owed to it under the Note and gave notice to the Company that it intended to exercise its security
on the Company’s assets. The Company and the Note Holder entered into a Settlement and Exercise of Security Agreement whereby
effective August 31, 2015, the Company assigned and conveyed to Benchmark all of its rights, title and interest in and to Zavala
Inc., and issued to Benchmark 100,000 shares of common stock the Company. As a result of the extinguishment of the Note, the Company’s
investment in Zavala Inc. has been deconsolidated from the Company’s Consolidated Financial Statements as at August 31,
2015 and presented as discontinued operations.



The
Company negotiated an Asset Purchase Agreement to be effective February 29, 2016, with an expectation to acquire the net assets
(the “Acquired Assets”) of Digital Widget Factory Inc., a Belize company (the “Vendor”), in an all-stock
transaction by issuing 12,500,000 shares of common stock and 5,750,000 Series A preferred shares (the “Proposed Purchase
Price Shares”).



The
essential components of the proposed Acquired Assets were an intelligent content platform technology developed by the Vendor
and a series of related websites under the url digiwdgy.com (the “DWF Technology”). The fair value of the
transaction with the Vendor was estimated at $9,530,250 and agreed to be paid by the Company through the issuance of the
Proposed Purchase Price Shares.



Subsequent
to February 29, 2016, management of the Company came to the conclusion that certain representations and warranties made under
the Asset Purchase Agreement were conceivably deficient and on November 24, 2016 the Company advanced a Notice of Claim. On December
22, 2016, it was agreed that all disputed matters contained in the Asset Purchase Agreement be resolved in a Settlement Agreement
whereby the Company agreed to return the Acquired Assets to the Vendor and the Vendor agreed to return the Proposed Purchase Price
Shares the Company.



The
Settlement Agreement closed effective January 20, 2017, when the Company returned the Acquired Assets to the Vendor and the Vendor
returned the Proposed Purchase Price Shares previously issued to the Vendor and a full and final release in respect of all obligations
under the purchase agreement with the Vendor was exchanged between the Vendor and the Company. The Proposed Purchase Price Shares
have been cancelled in the capital stock of the Company and the Company no longer has any interest in the DWF Technology.



Effective
February 29, 2016, the Company disposed of its investment in 1354166 Alberta Ltd., an Alberta company.



On
February 29, 2016, the Company entered into an asset purchase and debt settlement agreement and converted loans and interest in
the aggregate amount of $277,473 in exchange for the Company’s 0.03% net smelter return royalty on eight mining claim blocks
located in Red Lake, Ontario which were carried on the consolidated statement of financial position at $Nil.



During
January and February 2017, the Company developed a technology-based platform, through its wholly owned subsidiary DoubleTap Daily
Inc., (“DoubleTap”), creating a digital media asset designed to showcase content and deliver digital media to engage
social discourse while facilitating advertising and eCommerce with the intent to improve the overall user experience. The Company
launched the platform during March 2017 and also began implementing native advertising services and ad-overlay services on its
digital media asset for commercialization.



During
the summer of 2017, DoubleTap executed its strategy to drive revenues through technologies and services that deliver content,
social and digital media, eCommerce and advertising. Management continued developing the asset, by focusing activities to acquire
content creators, bloggers and influencers while building a sales pipeline to position growth. DoubleTap continued activities
to expand its social media reach, and web presence of its website. The digital media marketplace is crowded and competitive and
although DoubleTap’s web presence was growing, management was unable to sustain or build revenues that exceeded its expenditures.
In the month of September of 2017, the Company maintained its digital media and advertising platform while pursuing further ventures
of merit to enhance shareholder value. Such efforts resulted in a non-binding Letter of Intent to combine with GRUS as announced
on September 28, 2017. To date, the Company has maintained DoubleTap’s digital media and advertising platform although its
web presence has declined significantly due in part to management’s activities focused on performing due diligence and negotiations
with GRUS. The Company intends to divest of DoubleTap and its business.





18







Effective
November 15, 2018 and pursuant to the Definitive Agreement, the Company combined its business operations with GRUS, resulting
in a reverse take-over of the Company by GRUS.



Effective
November 1, 2018, we changed our name from Novicius Corp. to Grown Rogue International Inc.



The
Company anticipates further expenditures to be made on future opportunities evaluated by the Company. Any expenditure that exceeds
available cash will be required to be funded by additional share capital or debt issued by the Company, or by other means. The
Company’s long-term profitability will depend upon its ability to successfully implement its business plan. The Company’s
past primary source of liquidity and capital resources has been proceeds from the issuance of share capital, shareholders’
loans and cash flow from oil and gas operations.



Our
registered office and principal place of business in Ontario is located at 340 Richmond Street West, Toronto, Ontario, M5V 1X2.
Our telephone number at that address is (416) 364-4039.



B.       BUSINESS
OVERVIEW



General

Immediately
prior to the Transaction, the Company operated as an emerging media and internet company with a focus on user experience and engagement.



As
a result of the Transaction and through GRUS, we are a fully integrated, seed to experience cannabis brand with a focus on
user experience. The Company delivers cannabis related products to cannabis users in the state of Oregon and intends to
expand into other markets. GRUS, an Oregon cannabis company, has five wholly-owned subsidiaries: Grown Rogue Gardens, LLC, an
Oregon limited liability company (“GR Gardens”); Grown Rogue Distribution, LLC, an Oregon limited liability
company (“GR Distribution”); GRU Properties, LLC, an Oregon limited liability company (“GRUP”); GRIP,
LLC, an Oregon limited liability company (“GRIP”); and Grown Rogue Meds, LLC, an Oregon limited liability company
(“GR Meds”). Through GRUS, the Company also has partial ownership of Idalia, LLC, an Oregon limited liability
company (“Idalia”), and GRD Cali, LLC, a California limited liability company (“GRDC”); GRUS owns a
60% interest in each of Idalia and GRDC.



Through
GR Gardens, the Company operates three cultivation facilities that currently service the Oregon recreational marijuana market:
Manzanita Glen, Trail’s End, and the Medford Warehouse Project (the “Warehouse”). Grown Rogue is expanding its
facilities, adding retail locations, and plans to enter the California market as a fully integrated cannabis company. GRUS, through
its subsidiaries, GR Gardens and GR Distribution, currently holds four licenses (three producer licenses and one wholesale license)
to do business in the Oregon recreational marijuana market. Generally, there are four types of marijuana businesses regulated
by the Oregon Liquor Control Commission (the “OLCC”). “Marijuana producers” cultivate marijuana for wholesale.
“Marijuana processors” produce marijuana extracts and products. “Marijuana wholesalers” may purchase marijuana
and marijuana products to sell to marijuana retailers and other non-consumers. Lastly, “marijuana retailers” are allowed
to sell marijuana.



| | ● | Marijuana
                                         Producers can apply for two different license types under the OLLC regulatory structure.
                                         A Tier I license allows for up to a maximum of 5,000 square feet of indoor and 20,000
                                         square feet of outdoor flowering canopy. A Tier II license allows for a maximum of 10,000
                                         square feet of indoor and 40,000 square feet of outdoor flowering canopy. The differential
                                         between outdoor and indoor is if you use artificial lights during the flowering cycle
                                         it is considered indoor under the rules. Marijuana producers can sell their products
                                         directly to marijuana processors, Marijuana wholesalers or Marijuana retailers.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Marijuana
                                         Processors all operate under a single license. This license type includes both volatile
                                         and non-volatile extraction, mechanical (i.e. bubble hash or rosin press), and edible
                                         products. For each product contemplated by a processor, they must file for specific certificates
                                         in order to be legally allowed to produce the products. Marijuana processors can sell
                                         their products directly to marijuana wholesalers and marijuana retailers. Marijuana processors
                                         can also sell to other marijuana processor for additional processing but not for direct
                                         resale. Marijuana processors cannot sell their products to Marijuana Producers.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Marijuana
                                         Wholesalers are responsible for supply chain logistics and are generally responsible
                                         for taking the product from the manufacturer and getting it to a marijuana processor
                                         for extraction or marijuana retailer for direct sale to the customer. Marijuana wholesalers
                                         can sell products to other marijuana wholesalers, marijuana processors, or marijuana
                                         retailers. Marijuana wholesalers cannot sell their products to marijuana producers but
                                         are allowed to return marijuana to marijuana producers from which the marijuana wholesaler
                                         originally purchased the product from.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





19







| | ● | Marijuana
                                         retailers provide the storefront for retailer customers. Marijuana retailers are only
                                         allowed to sell to a customer who is over 21 with valid identification. Marijuana retailers
                                         cannot sell products to any other license type. Limited delivery options are available
                                         for marijuana retailers as long as they have license approval and stay within the jurisdiction
                                         of their license when doing the delivery and related items to individuals 21 years and
                                         older.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



GR
Gardens currently holds three producer licenses for the three properties described above (and has submitted an additional application
for a producer license to the OLCC that is pending), and GR Distribution holds one wholesaler license. GR Distribution and GR
Gardens jointly hold the producer license and the wholesale license at the Warehouse as the licenses are co-located in the same
facility. GR Distribution and GR Gardens have also applied for a processor license for the Warehouse. Grown Rogue, through one
or more of its subsidiaries, intends to acquire one or more Oregon retail licenses in the future.



Market
Trend

The
current trend of cannabis legalization in the United States has resulted in a significant opportunity. 54% of the U.S. population
now lives in a state where marijuana has been legalized. The U.S. cannabis industry is projected to reach US$20.8 billion by year
2021 in consumer spending which is expected to generate an overall economic impact (based primarily on purchases by consumers
and indirect revenue for growers and various subcontractors as well as money spent with businesses not affiliated with the sector,
such as supermarkets) of $39.6 billion, 414,000 jobs and US$4 billion in tax receipts [Source: Report from Arcview Market Research
and BDS Analytics, January 2018].



Production

GR
Gardens is responsible for production of recreational marijuana using outdoor, greenhouse, and indoor production methodologies.
GR Gardens holds three Tier II producer licenses from the OLCC. “Manzanita Glen”, an outdoor cultivation property
leased in Josephine County, Oregon from GR Gardens’ sister company, GRUP, has 40,000 square feet of canopy. “Trail’s
End”, an outdoor cultivation property leased from its sister company, GRU Properties in Jackson County, Oregon has 40,000
square feet of canopy. The Medford Warehouse project, an indoor cultivation property leased from its sister company, GRUP, is
designed to have 10,000 square feet of canopy when fully constructed. The Warehouse is also the location of GR Distribution, the
wholesale division of Grown Rogue and will also house the processing centre for all Grown Rogue Oregon products. The two outdoor
projects are anticipated to provide 3,000 lbs combined of cannabis annually and the Warehouse project is estimated to produce
2,500 lbs annually when fully completed.



GRUS
is located in the famed Emerald Triangle, which is well-known for the quality of its marijuana. With both indoor and outdoor operations,
Grown Rogue is able to produce the high quality indoor flower through controlled atmosphere environment (CAE) operations. By carefully
controlling temperature, humidity, C02 levels and other criteria, Grown Rogue is able to provide year-round supply of high quality
marijuana flower with multiple harvests per month.



With
its location in Southern Oregon, GRUS is also able to capitalize on an ideal outdoor growing environment where it can produce
high quality, low cost marijuana to serve as feed stock for the other products GRUS offers (vape cartridges, concentrates, pre-rolls,
and edibles). GRUS is able to produce this feed stock at 3 to 4 times cheaper than indoor production costs and is thus able to
establish competitive market prices.



As
part of GRUS’ plan to expand and diversify, GRUS is currently considering three different models for adding capacity. The
first option is to acquire and construct additional capacity on a separate property that has been identified in Jackson County,
Oregon that is the location of a currently operating pear orchard (“The Farm”).



The
Farm property is a 100+ acre pear orchard property with significant infrastructure and priority water rights, with a total licensable
canopy of approximately 280,000 sq feet. The Farm is anticipated to be acquired through an owner carry arrangement for GRUS to
purchase the property in five years. As of the date of filing this Annual Report, GRUS’ license for the Farm is pending
with the OLCC. GRUS, through its subsidiary GR Gardens, has already submitted a Tier II producer license application to the OLCC
for 40,000 sq feet of canopy and upon completion of the acquisition. GRUS would retrofit the existing warehouse facility on The
Farm for commercial indoor cultivation, construct outdoor cultivation, and begin construction of greenhouses in early 2019 using
light deprivation methodologies. GRUS believes The Farm would provide GRUS with significant additional cultivation capacity to
meet growing demand for GRUS products for the foreseeable future.



The
second option is to implement a contract management model with existing licensed cultivators where GRUS would provide specific
genetics and cultivation expertise to the licensed operator to ensure the quality of products. This option would be implemented
for the 2019 outdoor season but would likely be limited to only greenhouse or outdoor production as there is limited indoor production
where GRUS is located to provide proper management and oversight. This solution, while reducing the capital expense required under
The Farm option, would likely result in a higher price for end product from the farmer.





20







The
third option would be to source available product on the wholesale markets. This option results in limited capital or operational
expense risk but would likely result in less secure consistency in supply and higher purchasing costs then GRUS could achieve
with the other options described above.



GR
Gardens is securing a processing license, expected to be issued in the first quarter of 2019, which would allow it to produce
its own derivative products, with expected decreases in costs and greater assurance of consistency of production. The extraction
lab will be constructed at the Warehouse.



GRUS,
through one or more of its subsidiaries, also anticipates securing retail establishments in Oregon through strategic partnerships
or acquisitions to fulfill the vertical integration strategy of GRUS and to help ensure quality and consistency in the supply
chain.



Grown
Rogue executives and technical staff have significant cannabis cultivation experience that includes extensive knowledge of indoor,
outdoor, and greenhouse growing conditions required to optimize productivity; financial; sales; marketing; and branding. With
the necessary specialized skill sets of the management team coupled with the large agricultural work force present in Oregon,
the Company believes that all of the necessary skill and labor is available to execute upon its strategy in Oregon.



Product

The
products GRUS produces include a variety of flower products (indicas, sativas, and hybrids), both high CBD and THC strains, pre-rolls,
vape cartridges, and other derivative products to establish a more diverse and full service opportunity for its dispensary customers.
GRUS has a suite of “core” strains that represent the primary product line that consumers can rely upon every time
they arrive at their local dispensary. In addition to the “core” product offerings, GRUS also intends to provide seasonal
strains for both indoor and outdoor product. GRUS believes this variety will appeal to the consumer by offering a diverse product
with competitive market pricing.



The
Company believes that it is establishing a unique approach in the current cannabis industry market place by bringing a large variety
of unique strains. This variety allows GRUS to meet the various demands of the consumer as well as provide a complete suite of
strain specific products from the original seed to final derivative products. This allows each customer to select their own preferred
consumption method and still enjoy GRUS products.



GRUS
pre-rolls are produced only from flower (no trim) and are packaged in a patent pending nitrogen sealed glass tube to ensure fresh
products for the customer.



The
vape cartridges are a combination of both pure CO2 oil extraction, which provides the best in flavor, and distillate. The distillate
is carefully flavored with specific terpene ratios to enhance the flavors and experience for the customer. The Company believes
it uses only the best hardware from reputable suppliers to ensure limited malfunction of its products.



GRUS
produces a wide array of concentrate products, including shatter, wax, live resin, and snap and pull. The Company believes only
the best input material is utilized in their concentrates resulting in the highest quality products.



GRUS
sources all of its equipment and materials from vendors it believes to be reliable from both cannabis centric companies (i.e.
hydroponic grow stores) and conventional agriculture solutions. Pricing is generally lower than retail pricing as GRUS sources
the majority of their supplies directly from the manufacturer.



Genetics

GRUS
contracted with a geneticist to provide proprietary genetic lines into the GRUS portfolio. Through the implementation of this
robust breeding and phenotype selection program, GRUS is focused on identifying and capturing the specific genetic traits that
consumers are requesting. The end goal of this work is to have patented proprietary strains that GRUS can license as well as work
toward establishing stable seed that can be used in Grown Rogue production.



All
of GRUS genetics are rigorously tested to establish the genetic makeup of each strain in its portfolio.





21







Distribution
and Sales

GRUS
distributes product through its wholly owned subsidiary, GR Distribution, doing business as Rogue Distribution, which works directly
with Oregon dispensaries to provide quality, consistency, and product variety year-round. GRUS’ sales team works directly
with dispensary owners and intake managers to provide consistent product, competitive prices, and service using sales techniques
from other industries such as pharmaceutical and liquor. Rogue Distribution has also developed relationships with many existing
brands and provides exclusive services for those brands in the State of Oregon and first rights for distribution in other states
that GRUS enters as part of a broader product offering. This allows GRUS to rapidly expand its brand presence in new states by
providing the nexus for the best brands in the states GRUS works to enter. Currently, GRUS only intends to expand to California.
GRUS receives commissions for distributing these products ranging from 15% to 30%. This allows GRUS to increase its product offerings
for dispensaries and simplify their purchasing process by reducing the number of vendors that each dispensary needs to work with.



By
way of example, GRUS has developed end user product marketing collateral and other educational information regarding GRUS products
as part of all sales with dispensaries that include strain type, testing results, information on the product and specific company
and other necessary information to clearly articulate the product being provided. Each product is uniquely packaged all while
maintaining brand consistency across the product suite.



GRUS
works with dispensary owners to develop promotional opportunities for the retail customers and bud tenders. This is structured
in the form of providing select “rare” strains, clothing, or other items that are provided to certain customers based
on their loyalty and/or purchasing volume. GRUS provides detailed tutorials to the staff and owners of the dispensaries around
the product and how it is grown, processed, cured, packaged and other items so that they are intimately familiar with our process.
GRUS also provides expense paid trips for dispensary owners and operators to Grown Rogue’s operating facilities so they
can see first-hand the methods and processes used to create the product.



The
Company believes it is the first in the Oregon cannabis market to offer dedicated purchase plans that provide a fixed number of
guaranteed products over a three, six, or twelve-month timeline. These plans are intended to provide GRUS with established contractual
cash flow and the dispensary partners with guaranteed high-quality products.



GRUS’
wholly owned subsidiary, GR Distribution (dba Rogue Distribution), has partnered with 365 Cannabis, powered by Microsoft Dynamics,
which is the leading “seed to sale” enterprise resource planning (ERP) solution in the industry. This ERP system provides
sophistication, scalability, and security of a fully compliant cannabis business and Point-of-Sale (POS) systems to their dispensary
partners and customers. This system allows GRUS to provide real time inventory analysis both internally and with dispensaries
allowing for immediate re-ordering of GRUS products simplifying the supply chain logistics in the cannabis markets.



GRUS
has entered into a sales agreement with Zing, an established digital transaction company that has received approval from the necessary
banking regulations to provide digital money transfer services for cannabis transactions. GRUS receives a percentage of the fees
collected by Zing through the digital platform. The solution uses a mobile app that requires customers to download and dispensaries
to place the technology at their point of sale. This technology could eliminate the cash component of consumer purchases in dispensaries
which is a significant challenge for the cannabis industry both from a convenience and safety issue.



Branding

Building
a cannabis brand is by far one of the most critical aspects to a successful company in the sector. Currently, almost all cannabis
brands are focused on one of two aspects:

| | ● | The
                                         flower and/or quality of the flower.
| | - | ---------------------------------------------------------------------------------

| | ● | The
                                         effect, mostly focused on impact of the product.
| | - | ---------------------------------------------------------------------------------------------

The
above two components largely appeal to the current cannabis consumer, or legacy cannabis user, who uses cannabis mostly for the
experience it creates. This experienced user determines the best product based on the potency of the product.



While
GRUS prides itself on the highest quality flower, its brand aims to penetrate into broader, mainstream markets through a promise
of the “Right Experience.” The Grown Rogue brand is focused on “The Right Experience, Every Time”TM
that it believes accomplishes several key objectives:

1.       Addresses
the negative stigma attached to cannabis at both a cultural and regulatory level.

2.       Establishes
the company’s core values and purpose.

3.       Forecasts
the company’s trajectory and market positioning.





22







Everyday
experiences like running, reading a book, sharing a beverage with friends, or creative writing can be enhanced with the right
strain of cannabis properly ingested at the right dosage. GRUS is deeply focused on providing the “Right Experience”
and thus aims to provide intelligence and education around the various strains, genetic disposition, and the key product characteristics
from profile testing. The education GRUS provides through digital channels develops best practices and community as the company
strives to eliminate the “dark mystery” historically associated with cannabis. GRUS attempts to provide the market
with detailed knowledge on the plant. For the interested party who is less concerned with the science, GRUS offers a branding
strategy around experience based on an acronym on the letters in the word ROGUE. Each of the letters represents an experience
curation. Rather than simply state that X strain will create Y effect, the company’s visual and demonstrative marketing
assets showcase “experience” by category. The five GRUS categories of experience are:



RELAX

OPTIMIZE

GROOVE

UPLIFT

ENERGIZE



Within
these categories is a range of cannabis strains that help to enhance certain types of experiences.



The
brand strategy is to showcase the non-active cannabis user in everyday situations and present cannabis as an enhancement to activities
and experiences the individual already engages in. As cannabis becomes more mainstream, the early adopter will associate GRUS
with messaging and photography that resonates. The focus today is on the Oregon culture and GRUS will evolve the messaging based
on geographical lifestyle of areas where the Company expands. GRUS establishes visuals that are specific to each market they operate
in which results in different imagery for, for example, the Portland, Oregon market vs the Los Angeles, California market. By
doing this, the Company believes that its branding and visuals resonate with the consumers in each individual markets focused
on the primary activities for those areas.



The
defensibility for this approach is based on science and market research. The three primary influencers in the cannabis plant are
potency (THC and CBD level), genetic makeup (sativa vs indica), and terpenes. The DNA of the plant coupled with the test results
of the strain provides significant and compelling reason to position a specific strain in a specific category. GRUS takes a further
step by using an online mobile experience sampling tool that records well-being to capture key data points on how the strain affects
the individual both physically and mentally. GRUS’s future plan is to encourage use of this tool by offering discounts on
GRUS products and turn this data collection into a sales/marketing tool. The brand is based on experience and is delivering the
Right Experience with specific cannabis products.



The
Company believes it is developing scientifically defensible product classifications for all of its products around the ROGUE Study.
The ROGUE Study is a comprehensive consumer experience survey that queries select information from cannabis consumers regarding
the experiences they have when consuming cannabis products. This method employs both quantitative and qualitative analysis. Every
product GRUS produces is analyzed by third party labs to determine THC and CBD potency, ratios of CBD to THC, the total and individual
level of terpenes, and the genetic makeup of the input strain. This information is compiled and analyzed by the ROGUE science
team and proprietary algorithms are created that allow GRUS to place the products into the five different categories. In addition,
GRUS has created a consumer survey that allows GRUS customers to complete a simple survey both before and after consumption that
describes the experience the consumer had while consuming GRUS (or other company’s) products. This survey is being led by
a PhD psychologist to ensure all of the information collected is based on scientific defensibility. GRUS has already collected
thousands of surveys on its products and intends to continue focusing on this critical information to better understand the experience
consumers have while consuming GRUS products allowing the Company to more accurately place products into the correct categories.



In
June 2018, GRUS launched GRAM, its second brand into the Oregon market (after its first brand “Grown Rogue”). GRAM
is focused on providing the highest quality products at the most competitive prices. GRAM currently is focusing on pre-rolls and
shatter.



Marketing
and Advertising

GRUS’
marketing channels include a comprehensive, fully responsive (mobile) interactive website. The website has been search engine
optimized (SEO) and includes call to action (CTA) popup boxes that request contact information in exchange for promotional items,
such as hats, beanies, t-shirts, and other similar products.



23







GRUS
is focused on providing education to the large majority of new and existing consumers. This education will focus on providing
blogs and articles that highlight important topics and information to further enhance the public’s understanding of the
myriad of uses and benefits of cannabis.



Digital
advertising will be included, primarily on industry sites and alternative news sources if regulations loosen, on sites such as
Leafly, Oregon Cannabis Connection, Northwest Leaf, Oregon Leaf, Dope Magazine, Portland Mercury, and Willamette Weekly.



The
Company has established a social media presence that includes Facebook, Twitter, Instagram, and Snapchat. The Company’s
social identity will be defined by delivering fresh content and keeping interaction with followers/fans prompt and positive. The
Company intends to attract existing cannabis industry participants as well as people not familiar with the industry by creating
a positive, inclusive environment where dialogue is encouraged. The goal is to change existing stereotypes and overcome the stigmas
associated with the cannabis industry.



Trademarks
and Patents

The
Company actively seeks to protect its brand and intellectual property. GRUS currently has four different trademarks that have
been submitted.

| | ● | Jager
                                         was filed on September 29, 2017.
| | - | -------------------------------------------------------------------------------

| | ● | Grown
                                         Rogue was filed on September 22, 2017, with the Statement of Use filed on May 21, 2018
                                         and is awaiting the registration certificate.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The
                                         Right Experience Every Time was filed on September 29, 2017 with the Statement of Use
                                         filed on May 21, 2018 and is awaiting the registration certificate.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Sizzleberry
                                         was filed on September 29, 2017 with the Statement of use filed on May 21, 2018 and is
                                         awaiting the registration certificate.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



GRUS
filed a patent for its nitrogen sealed glass containers on February 15, 2018. This patent application, No: 15/897,906, is pending
review by the United States Patent Office.





Because producing, manufacturing, processing, possessing, distributing,
selling, and using marijuana is a crime under the Federal CSA, the U.S. Patent and Trademark Office will not permit the registration
of any trademark that identifies marijuana products. As a result, the Company likely will be unable to protect the marijuana product
trademarks beyond the geographic areas in which the Company conducts business. (see Failure to Protect Intellectual Property in
Item 3.D Key Information - Risk Factors.)



Oregon
Market and Competition

The
Oregon cannabis market is generally divided between the Oregon Medical Marijuana market (governed by the Oregon Health Authority)
and the Oregon recreational marijuana market (governed by the OLCC). GRUS does not sell to the Oregon medical marijuana market
(as it is anticipated this market will be subsumed by the recreational market in the future).



In
the first year of Oregon recreational sales, the Oregon Department of Revenue reported US$240 million in recreational sales to
end users (generating tax revenues for the State of Oregon of US$60.2 million) and posted US$520 million in sales in 2017 [Source:
Portland Business Journal, February 2018]. This amount is expected to triple by 2019, reaching $800 million, as estimates predict
that over 25% of Oregonians are marijuana consumers (one of the highest concentration in the United States). [Source: Brightfield
Group,https://www.brightfieldgroup.com/post/ranking-of-best-places-for-cannabis-investment-2-oregon].In addition, it is estimated
that Oregon consumers use marijuana at a quantity higher than most other states. [Source: Marijuana Report from the Oregon Health
Authority, January 2016].



The
State of Oregon does not cap the number of licenses that it will issue, so the competition in the state is varied. As of November
20, 2017, there were 3,115 applications filed with the OLCC. Of these, 1,626 were active licenses, including: 21 laboratories,
136 processors, 859 producers, 514 retailers, and 96 wholesalers. Although there are a wide variety of smaller competitors in
the Oregon recreational market, Grown Rogue attempts to differentiate itself by its significant focus on brand identity and product
diversity, proven cultivation expertise, quality of product produced, innovation in the integrated business platform, educational
opportunities and significant professional experience of its leadership team. In
June 2018, the OLCC stopped accepting new license applications to allow the state to finish processing the existing licenses already
submitted. This should reduce, at least temporarily, the amount of new licenses coming into the market which may help stabilize
the supply/demand metrics in Oregon.



Oregon
has seen significant price compression on cannabis product offerings since the legalization of cannabis. However, this price compression
has resulted in more consumers purchasing products as flower sales in Oregon are up 1,500% in 2018 as compared to 2017. (Source:
Frontier Financial Group, Inc., dba New Frontier Data)











24







Social
and Environmental Policies



The
Company employs sustainable business models in all of its operations. On the cultivation side, GRUS maintains the highest standards
of environmental stewardship. This includes sustainable water sources with reclamation and recapture as much as possible from
runoff and recycling of dehumidification water. GRUS uses only natural and organic products in all of their applications from
nutrients to integrated pest management. GRUS has obtained the “Clean Green” certification for its use of sustainable,
natural, and organically based practices, which is generally considered to be the highest level of sustainable cannabis practices
in the US. These are standard industry best practices that have little to no impact on capital expenditures.



GRUS
hires and pays living wage to all of its employees and is very involved in each of the communities where it operates, for example
recently donating a portion of profits to disaster relief as a result of hurricane devastation in the U.S.



Seasonality
and Uncertainties

The
Company’s operations are subject to seasonal fluctuations that can significantly impact quarter to quarter operating results.
For example, GRUS cultivates and harvests cannabis both indoors and outdoors, and outdoor cultivation of cannabis is not possible
during certain parts of the year. Consequently, the Company’s results may fluctuate materially from period to period and
the results of any one period are not necessarily indicative of results for future periods.



The
Company is exposed to a number of risks and uncertainties in the normal course of business that have the potential to affect operating
performance. The Company has operating and risk management strategies to help minimize these operating risks and uncertainties.
In addition, the Company has controls and governance procedures including a code of business ethics and whistle blowing procedures.



Other
Operations

GRUS’
wholly owned subsidiary, GRU Properties, is the leasing and project development arm of GRUS. GRU Properties currently leases three
separate facilities and was responsible for construction and development of all three. All three leases are at comparable market
rates and rent is paid in cash. J. Obie Strickler, President and CEO of the Company, is the landlord on one of the leases. The
lease with Mr. Strickler is a related party transaction given that Mr. Strickler is the landlord and a director and officer of
the Company. GRU Properties subleases all of its leased and developed properties back to its sister companies (GR Gardens and
GR Distribution). The real estate model in the cannabis industry is very attractive and GRU Properties has been constructed in
order to provide this type of service as a standalone business model if necessary. In the future, GRU Properties plans to utilize
its expertise in design and build of commercial cannabis facilities with the goal of leasing these fully constructed and operational
facilities to entities that are not associated with the Company.



GR
Distribution is responsible for all company sales of both internal products as well as purchase and white labeling of other industry
products. GR Distribution leases space in the Warehouse. GR Distribution currently services primarily GR Gardens as its exclusive
distributor. This relationship is critical to the overall success of the Company’s vertical integration as it provides the
opportunity to put all of the Company’s products under one roof. All cultivation flower from GR Gardens is transported from
two separately licensed facilities using refrigerated trucks to GR Distribution’s warehouse facility to allow for centralized
drying, curing, trimming, storage, and security. The Company believes that these economy of scale savings allows GRUS to be one
of the lowest cost cannabis operators in Oregon.



GRUS’
intellectual property subsidiary, GRIP, LLC (“GRIP”) has been in operation since late 2016. GRIP focuses on all branding
and marketing, genetic research, cultivation analytics, and intellectual property protection. GRIP’s brand (Grown Rogue)
is licensed to GRUS and its other subsidiaries. GRIP will continue developing new brands and ideas to be licensed to the Company
or other cannabis based companies in the territories that the Company targets for expansion.



GRIP
has also implemented a genetics program to continue the goal of providing the best possible products from the original seed selection.
GRUS brought numerous proprietary products to market in 2017 and is developing a more robust and comprehensive breeding program
to combine and stabilize certain genetic traits of interest for the product portfolio. GRUS has acquired the rights to a proprietary
analytics program that is focused on determining the specific environmental characteristics that are required to cultivate the
best cannabis. Similar to wine, each cannabis strain requires certain conditions to thrive. Evaluating and analyzing natural outdoor
conditions like temperature, humidity, elevation, soil type, light levels, and other site specific characteristics will allow
GRIP to identify specific strains that should be grown in certain regions.



GR
Gardens and GR Distribution have also recently submitted to the OLCC an application of a processor license that will facilitate
creating its own derivative products in house. This is the third step in the Company’s vertical integration model.



In
2018, Grown Rogue signed a letter of intent with Jeff Shepherd, international award-winning chocolatier, to bring its first
edible to the market. The terms of the joint venture include a 60% ownership of the joint venture entity by the Company which
will contract with Rogue Distribution to provide distribution services for all of the products. The joint venture was formed
through Idalia LLC, an Oregon limited liability company. In late 2018, GRUS launched the first chocolate bar under the GRAM
brand with the highest quality and lowest cost chocolate currently in the Oregon market. These chocolates became available in
a select number of Oregon dispensaries. GRUS plans to distribute chocolates throughout California in the first quarter of
2019.





25











GRUS
is also working to develop a luxury edible product line that will fall under the Grown Rogue brand that will include additional
products than just chocolate bars. These products are currently under R&D and market research with expected launch at end
of 2018 or early 2019.



GRUS
has signed a Letter of Intent with a group of companies in Oregon that include an OLCC licensed retailer, distribution company,
and seed farm as well as an existing hydroponic supply store. In addition, GRUS is in discussion with several other licensed cannabis
companies in Oregon across the supply chain. Grown Rogue intends to leverage its brand presence and relationships to rapidly increase
its presence in the Oregon market.



Operations
Prior to the Transaction

Prior
to the Transaction, and for all of fiscal year 2018, the Company was an emerging media and internet company with a focus on user
experience and engagement.



Through
our wholly owned subsidiary DoubleTap Daily Inc., the Company developed an online management and advertising platform that powered
user and advertising engagement programs in real-time to desktop, mobile and portable devices (http://doubletap.co).



DoubleTap
generated a total of $20,788 in advertising revenue in 2017, and $NIL in 2018.



During
the year ended August 31, 2016, we disposed of our investment in 1354166 Alberta and its operations including revenues and it
has been accounted for as discontinued operations in our consolidated statements of operations.



The
following table sets out our revenue for the years ended August 31, 2018, 2017 and 2016:



|Year                | Advertising
    Revenue $ | Natural
    Gas Sales $ | Total
Revenue $
|------------------- | ------------------------- | ----------------------- | ---------------
|August
    31, 2018 | —                         | —                       | —              
|August
    31, 2017 | 20,788                    | —                       | 20,788         
|August
    31, 2016 | —                         | —                       | —              



Our
future success depends largely on our ability to operate and expand within the cannabis industry. Numerous factors beyond our
control, which could affect our success and operating results could include:



| | - | Changes
                                         in regulations or laws regarding cannabis
| | - | ------------------------------------------------------------------------------------------

| | - | Changes
                                         in enforcement priorities regarding the Federal CSA
| | - | ----------------------------------------------------------------------------------------------------

| | - | Difficulties
                                         in obtaining cannabis licenses from the OLCC and other regulators
| | - | -----------------------------------------------------------------------------------------------------------------------

| | - | Fluctuations
                                         in foreign currency exchange rates
| | - | ----------------------------------------------------------------------------------------

| | - | Fluctuations
                                         in the price of cannabis and cannabis derivatives
| | - | -------------------------------------------------------------------------------------------------------

| | - | Legal
                                         liability associated with cannabis related products or services
| | - | --------------------------------------------------------------------------------------------------------------

| | - | Reliance
                                         on third parties to provide necessary products (including raw materials) and services
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| | - | Failure
                                         to manage expansion and changes to our business
| | - | ------------------------------------------------------------------------------------------------

| | - | Adverse
                                         macroeconomic conditions could cause decreases or delays in spending by our advertisers
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | - | Competition
                                         for, among other things, financings, acquisitions, technology licenses, and skilled personnel
                                         (See, Item 3.D Key Information - Risk Factors).
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We
caution that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on our forward-looking
statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. We
also caution readers not to place undue reliance on these forward-looking statements. Moreover, the forward-looking statements
may not be suitable for establishing strategic priorities and objectives, future strategies or actions, financial objectives and
projections other than those mentioned above.





26







For
fiscal years 2016, 2017, and 2018, we did not have a reliance on raw materials or any significant patents.



Following
the Transaction, we now rely on raw materials, including cannabis, other materials involved in cultivating cannabis, and materials
used in producing cannabis derivative products, e.g., cooking ingredients. We obtain our raw materials from various parties and
the prices of such raw materials can be volatile.



The
cannabis and technology industries are highly competitive in every phase. Many of our competitors have greater financial and technical
resources, and have established multi-state and multi-national operations, and have secured licenses, which we may not have or
be able to obtain. As a result, we may be prevented from participating in certain cannabis activities (See, Item 3.D Key Information
- Risk Factors).



Governmental
Regulation

Federal,
state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data
that we receive from and about our users. The use of consumer data by online service providers and advertising networks is a topic
of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many
states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s
Information Practices Act. We face similar risks in international markets where our products and services are offered. In addition,
the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly-evolving
industry in which we operate. There are also a number of legislative proposals pending before the U.S. Congress, various state
legislative bodies, and foreign governments concerning data protection which could affect us. For example, a revision to the 1995
European Union Data Protection Directive is currently being considered by legislative bodies that may include more stringent operational
requirements for data processors and significant penalties for non-compliance. Any failure, or perceived failure, by us to comply
with or make effective modifications to our policies, or to comply with any federal, state, or international privacy, data-retention
or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions
against us by governmental entities or others, a loss of user confidence, and a loss of users, advertising partners, any of which
could potentially have an adverse effect on our business (See, Item 3.D Key Information - Risk Factors).



The
Company plans to expand its business into California, currently the largest cannabis market in the United States with an anticipated
market of over US$7.7 billion by 2021 [Source: Report from Arcview Market Research and BDS Analytics, April 2018]. GRUS has signed
a letter of intent for a joint venture facility in northern California to position the Company in the largest production area
in the United States. The terms of the joint venture include a 60% ownership of the joint venture entity by Grown Rogue, free
rent of an existing 14,000 square foot former chip manufacturing and packaging plant for 24 months, with conditional approval
by the local municipality for a micro-tier business that includes distribution, production, and manufacturing. The Company intends
to use this facility as its sourcing center for production materials that it will then sell to other distribution companies and
for direct sale to retail dispensaries through an in-house sales team. The joint venture will be formed through GRD Cali, LLC,
a California company. The Company’s focus in California is to start with distribution, move into extraction (manufacturing),
and ultimately retail. The Company believes California will ultimately see similar price compression as other recreational states
and therefore does not anticipate constructing or operating cultivation facilities in California for several years. The Company
does not currently hold any licenses to operate its business in California, and intends to obtain such required licenses prior
to entering the California market.



In
June 2017 the California State Legislature passed Senate Bill No. 94 known as the Medicinal and Adult-Use Cannabis Regulation
and Safety Act (MAUCRSA) which combined the previous medical and adult use regulation in the state. There are four agencies that
regulate marijuana in the state the Bureau of Cannabis Control (BCC), California Department of Food and Agriculture, California
Department of Public Health, and California Department of Tax and Fee Administration. California state and local licenses are
renewed annually and require submittal of a renewal application to the BCC. There is no ultimate expiry of licenses in California
and if the requisite fees are paid, the renewal is submitted in a timely manner, and there are no material violations on record
against the license holder renewal would be approved in the ordinary course of business.



The
Company’s business and products is and will continue to be regulated by the OLCC and other regulatory bodies as applicable
laws continue to change and develop, and as the Company’s operations expand into new areas. Regulatory compliance with the
OLCC and other regulatory bodies, and the process of obtaining regulatory approvals, can be costly and time-consuming. Further,
the Company cannot predict what kind of regulatory requirements its business will be subject to in the future. Any delays in obtaining,
or failure to obtain regulatory approvals would significantly delay the development of markets and products and could have a material
adverse effect on the Company.





27







Local,
state and US federal laws and enforcement policies concerning marijuana-related conduct are changing rapidly and will continue
to do so for the foreseeable future. Changes in applicable law are unpredictable and could have a material adverse effect on the
Company. Changes in applicable laws or regulations could significantly diminish the Company’s prospects. The Company has
little or no control over potential changes to laws or regulations that may affect its business, including the business of GRUS.



Additionally,
governmental regulations affect taxes and levies, healthcare costs, energy usage and labor issues, all of which may have a direct
or indirect effect on the Company’s business and its customers or suppliers. Changes in these laws or regulations, or the
introduction of new laws or regulations, could increase the costs of doing business for the Company, or its customers or suppliers,
or restrict the Company’s actions, causing the Company to be materially adversely affected.

(See,
Item 3.D Key Information - Risk Factors).



C.       ORGANIZATIONAL
STRUCTURE



Prior
to the Transaction, the Company had three wholly-owned subsidiaries: DoubleTap Daily Inc., a company incorporated in the Province
of Ontario on February 29, 2016 (“DoubleTap”), Ice Studio Productions Inc., a company incorporated in the Province
of Ontario on June 16, 2016 (“ICE Studio”), and Novicius Acquisition Corp., a company incorporated in the Province
of Ontario on March 26, 2018. The Company owned ICE Studio indirectly, through its ownership of DoubleTap; Ice Studio is a wholly-owned
subsidiary of DoubleTap.



As
of November 15, 2018, and as a result of the Transaction, we have nine wholly-owned subsidiaries: Ice Studio, DoubleTap, Grown
Rogue Canada, GRUS, GR Gardens, GR Distribution, GRUP, GRIP, and GR Meds. The Company owns ICE Studio indirectly through its ownership
in DoubleTap; Ice Studio is a wholly-owned subsidiary of DoubleTap. The Company owns GR Gardens, GR Distribution, GRUP, GRIP,
and GR Meds indirectly through its ownership of GRUS; each of GR Gardens, GR Distribution, GRUP, GRIP, and GR Meds is a wholly
owned subsidiary of GRUS. Through GRUS, the Company also has an indirect ownership interest in Idalia, LLC, an Oregon limited
liability company (“Idalia”) and GRD Cali, LLC, a California limited liability company (“GRDC”); GRUS
owns a 60% interest in each of Idalia and GRDC.



All
intercompany balances and transactions have been eliminated on consolidation.



The
following tables include wholly owned subsidiaries of the Company following the Transaction:



|Grown
    Rogue International Inc.                                                                                
|------------------------------------------------------------------------------------------------------------------
|100%
    owned subsidiaries incorporated in the Province of Ontario                                               
|Grown
                                         Rogue Canada Corp.
        (incorporated
        November 15, 2018)



|Grown
    Rogue Unlimited, LLC                                                                                
|--------------------------------------------------------------------------------------------------------------
|100%
    owned subsidiaries of Grown Rogue Unlimited, LLC organized in Oregon*                                
|Grown
                                         Rogue Gardens, LLC
        (organized
        November 1, 2016)



*
Grown Rogue Unlimited, LLC also owns (i) a 60% interest in Idalia, LLC, an Oregon limited liability company that was organized
June 20, 2018; and (ii) a 60% interest in GRD Cali, LLC, a California limited liability company that was organized August 15,
2018.









28







The
corporate structure of the Company after closing the Transaction is as follows:









D.       PROPERTY,
PLANTS AND EQUIPMENT

We
signed a sublease agreement effective August 1, 2016 until December 31, 2017 for approximately 1,740 square feet of office space
located at 251 Consumers Road, Suite 240, Toronto, Ontario, Canada to commence commercial operations at a cost of approximately
$4,300 per month. During December 2016, we closed the office and returned the subleased space back to the lessee.



We
do not own any real property at this time. Our U.S. executive offices consist of approximately 3,000 square feet of office space
and are rented at $2,894 per month through a one-year lease that can be extended for two three-year options. The address of our
U.S. executive offices is 145 Bartlett, Medford, Oregon. Our Ontario executive offices are located at 340 Richmond Street West,
Toronto, Ontario, M5V 1X2, Canada. The Company pays nominal rent for its Toronto offices.



Through
GR Gardens, the Company operates three cultivation facilities that currently service the Oregon recreational marijuana market:
Manzanita Glen, Trail’s End, and the Warehouse.



The
Company leases five acres of real property commonly known as 1970 Lonnon Road, Grants Pass, Oregon 97527, through that certain
Commercial Lease Agreement, dated January 1, 2017, between Pamela Carmichael Waxlax and GRUP. This property is subleased by GRUP
to GR Gardens, pursuant to that certain Commercial Sublease Agreement, dated March 1, 2017, between GRUP and GR Gardens.



The
Company leases approximately 42 acres of real property in Jackson County, Oregon, commonly known as 741 West Fork Trail Creek
Road, Trail, Oregon 97541, through that certain Commercial Lease Agreement, dated March 1, 2017, between J. Obie (“Jesse”)
Strickler and GRUP. This property is subleased by GRUP to GR Gardens pursuant to that certain Commercial Sublease Agreement, dated
March 1, 2017, between GRUP and GR Gardens.



The
Company leases property located at 655 Rossanley Drive, Medford, Oregon, pursuant to that certain Commercial Lease Agreement,
dated January 31, 2017, between VWPP, LLC, and GRUP. This property is subleased by GRUP to GR Gardens pursuant to that certain
Commercial Sublease Agreement, dated January 31, 2017, between GRUP and GR Gardens.



| | ITEM
                                         4A | UNRESOLVED
                                         STAFF COMMENTS
| | ------------------------------------------------ | ------------------------------------------------------------------



Not
Applicable



| | ITEM
                                         5 | OPERATING
                                         AND FINANCIAL REVIEW AND PROSPECTS
| | ----------------------------------------------- | -------------------------------------------------------------------------------------



The
following discussion should be read in conjunction with our “Selected Financial Data” under Item 3 above, our Audited
Consolidated Financial Statements for the fiscal years ended August 31, 2017 and 2016 and notes thereto included under Item 18.



Certain
statements made in this Item are forward-looking statements under the Reform Act. Forward- looking statements are based on current
expectations that involve a numbers of risks and uncertainties, which could cause actual events or results to differ materially
from those reflected herein. See, Item 3.D Key Information - Risk Factors for discussion of important factors, which could cause
results to differ materially from the forward-looking statements below.





29







Overview

The
Company, (formerly: Novicius Corp.) was amalgamated under the Business Corporations Act (Ontario) on November 30, 2009. The Company
filed articles of amendment effective November 1, 2018, and changed its name from Novicius Corp. to Grown Rogue International
Inc. The Company had previously filed articles of amendment effective May 26, 2017, and changed its name from Intelligent Content
Enterprises Inc., to Novicius Corp., and consolidated its shares of common stock on the basis of one (1) new share for every ten
(10) old shares. The Company filed articles of amendment effective February 1, 2016, and changed its name from Eagleford Energy
Corp., to Intelligent Content Enterprises Inc., and consolidated its shares of common stock on the basis of one (1) new share
for every ten (10) old shares. Through the Company’s wholly owned Ontario subsidiary, DoubleTap Daily Inc., (formerly: Digital
Widget Factory Inc.) the Company developed an online content management and advertising platform that powers user and advertising
engagement programs in real-time to desktop, mobile and portable devices. DoubleTap operations ceased immediately prior to the
effectuation of the Transaction.



The
Company’s registered office is 340 Richmond Street West, Toronto, Ontario, M5V 1X2, Canada. Shares of our common stock trade
on OTCQB under the symbol NVSIF and on the Canadian Securities Exchange under the symbol GRIN.



The
consolidated financial statements include the accounts of Grown Rogue International Inc., the legal parent, together with its
wholly owned subsidiaries as at August 31, 2018: Ice Studio and DoubleTap and Novicius Acquisition Corp.



Effective
February 29, 2016, the Company disposed of its investment in 1354166 Alberta Ltd., a company operating in the province of Alberta
(“1354166 Alberta”). The Company’s former subsidiaries, Eagleford Energy, Zavala Inc., a Nevada company (“Zavala
Inc.”), and its wholly owned subsidiary EEZ Operating Inc., a Texas company (“EEZ Operating”), were disposed
of effective August 31, 2015 (see Note 15 to the Consolidated Financial Statements).



Capital
Management

The
Company’s objectives when managing capital are to ensure the Company will have sufficient financial capacity, liquidity
and flexibility to fund its operations, growth and ongoing development opportunities. The Company’s capital requirements
currently exceed its operational cash flow. As such, the Company is dependent upon future financings in order to maintain liquidity
and will be required to issue equity or issue debt.



The
Company manages the capital structure and makes adjustments to it in light of changes in economic conditions, availability of
capital and the risk characteristics of any underlying assets in order to meet current and upcoming obligations.



The
Company’s Board of Directors does not establish quantitative return on capital criteria for management, but rather relies
on the expertise of the Company’s management and favourable market conditions to sustain future development of the business.
As at August 31, 2018 and 2017, the Company considered its capital structure to be comprised of shareholders’ deficiency.



Going
Concern

These
consolidated financial statements (the “Consolidated Financial Statements”) have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) applicable to a going concern, which contemplates the realization
of assets and settlement of liabilities in the normal course of business, as they come due for the foreseeable future. The Company
is in the process of developing its advertising platform and has not yet realized profitable operations. The Company requires
additional financing for its working capital and for the costs of development, content creation and marketing of its platform.



Due
to continuing operating losses, the Company’s continuance as a going concern is dependent upon its ability to obtain adequate
financing and to reach profitable levels of operation. The Company will continue to seek additional forms of debt or equity financing,
or other means of funding its operations, however, there is no assurance that it will be successful in doing so or that funds
will be available on terms acceptable to the Company or at all. The ability of the Company to arrange such financing in the future
will depend in part upon the prevailing capital market conditions as well as the business performance of the Company.



The
Company has accumulated significant losses and negative cash flows from operations in recent years which raise doubt as to the
validity of the going concern assumption. As at August 31, 2018, the Company has working capital deficiency of $799,588 (2017:
working capital deficiency $487,776) and an accumulated deficit of $32,201,307, (2017: $31,684,984). These material uncertainties
may cast significant doubt upon the entity’s ability to continue as a going concern. The Consolidated Financial Statements
do not give effect to adjustments, if any that would be necessary should the Company be unable to continue as a going concern
and, therefore, be required to realize its assets and liquidate its liabilities in other than the normal course of business and
at amounts that may differ from those shown in the accompanying Consolidated Financial Statements.





30







BASIS
OF PREPARATION



Statement
of Compliance

These
Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International
Financial Reporting Interpretation Committee (“IFRIC”). The policies applied in these Consolidated Financial Statements
are based on IFRS issued and outstanding as of January 1, 2018. The Board of Directors approved the Consolidated Financial Statements
on December 31, 2018.



Basis
of Measurement

The
Consolidated Financial Statements have been prepared on a historical cost basis except for certain financial instruments measured
at fair value. The Company’s significant accounting policies are disclosed in Note 3 of the Consolidated Financial Statement
attached hereto.



Functional
and Presentation Currency

The
functional and presentation currency of the parent Grown Rogue and its wholly owned subsidiaries Ice Studio and DoubleTap is Canadian
dollars.



RECENT
ACCOUNTING PRONOUNCEMENTS AND RECENT ADOPTED ACCOUNTING STANDARDS



Recent
Issued Accounting Pronouncements

The
following standards, amendments and interpretations, which may be relevant to the Company have been introduced or revised by the
IASB:



(i)
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which supersedes IAS 11 Construction Contracts, IAS
18 Revenue, IFRIC 13 Customer Loyalty Programmes, and IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers
of Assets from Customers, and SIC 31 Revenue – Barter Transactions Involving Advertising Services. IFRS 15 establishes a
comprehensive five-step framework for the timing and measurement of revenue recognition. The Company intends to adopt IFRS 15,
effective September 1, 2018, and is currently assessing the impact of this new standard on the Consolidated Financial Statements.



(ii)
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments which reflects all phases of the financial instruments
project and replaces IAS 39, Financial Instruments – Recognition and Measurement and all previous versions of IFRS 9. The
standard introduces new requirements for classification and measurement, impairment and hedge accounting. IFRS 9 is effective
for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required,
but comparative information is not compulsory. The Company does not intend to adopt the new standard prior to its effective date
and has not yet determined the impact of this new standard on the Consolidated Financial Statements.



(iii)
On January 13, 2016, the IASB issued IFRS 16 Leases (“IFRS 16”) which will replace IAS 17, Leases. IFRS 16 will bring
leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor
accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 is
effective for annual reporting periods beginning on or after January 1, 2019. The Company is assessing the impact of this new
standard on the Consolidated Financial Statements.



SEGMENTED
INFORMATION



The
Company’s reportable and geographical segments are Canada and, previously, the United States. The accounting policies used
for the reportable segments are the same as the Company’s accounting policies. For the purposes of monitoring segment performance
and allocating resources between segments, the Company’s executive officer monitors the tangible, intangible and financial
assets attributable to each segment. All assets are allocated to reportable segments. Effective August 31, 2015, the Company discontinued
its reportable segment in the United States.





31







The
following tables show information regarding the Company’s reportable segments:



|For the year ended August 31, 2018 |  | Canada $ |          |   | United States $ |  |   | Total $ | 
|---------------------------------- |  | -------- | -------- | - | --------------- |  | - | ------- | 
|Revenue, continuing operations     |  |          | —        |   |                 |  | — |         | 
|Net loss, continuing operations    |  |          | (516,323 | ) |                 |  | — |         | 
|Net loss                           |  |          | (516,323 | ) |                 |  | — |         | 



|For the year ended August 31, 2017 |  | Canada $ |            |   | United States $ |  |   | Total $ | 
|---------------------------------- |  | -------- | ---------- | - | --------------- |  | - | ------- | 
|Revenue, continuing operations     |  |          | 20,788     |   |                 |  | — |         | 
|Net loss, continuing operations    |  |          | (2,097,738 | ) |                 |  | — |         | 
|Net loss                           |  |          | (2,097,738 | ) |                 |  | — |         | 



|For the year ended August 31, 2016         |  | Canada $ |             |   | United States $ |  |        | Total $ | 
|------------------------------------------ |  | -------- | ----------- | - | --------------- |  | ------ | ------- | 
|Net loss, continuing operations            |  |          | (13,534,298 | ) |                 |  | —      |         | 
|Net income (loss), discontinued operations |  |          | 8,731       |   |                 |  | (6,020 | )       | 
|Net loss                                   |  |          | (13,525,567 | ) |                 |  | (6,020 | )       | 



|As at August 31, 2018 |  | Canada $ |          |   | United States $ |  |   | Total $ | 
|--------------------- |  | -------- | -------- | - | --------------- |  | - | ------- | 
|Total Assets          |  |          | 33,043   |   |                 |  | — |         | 
|Total Liabilities     |  |          | (832,631 | ) |                 |  | — |         | 



|As at August 31, 2017 |  | Canada $ |          |   | United States $ |  |   | Total $ | 
|--------------------- |  | -------- | -------- | - | --------------- |  | - | ------- | 
|Total Assets          |  |          | 42,047   |   |                 |  | — |         | 
|Total Liabilities     |  |          | (529,823 | ) |                 |  | — |         | 



Other
Information

Additional
information relating to us may be obtained or viewed from the System for Electronic Data Analysis and Retrieval at www.sedar.com
and our future United States Securities and Exchange Commission filings can be viewed through the Electronic Data Gathering Analysis
and Retrieval System (EDGAR) at www.sec.gov.



SHARE
CAPITAL AND RESERVES



The
Company filed articles of amendment effective November 1, 2018 and changed its name from Novicius Corp. to Grown Rogue International
Inc. The Company filed articles of amendment effective May 26, 2017, and changed its name from Intelligent Content Enterprises
Inc., to Novicius Corp., and consolidated its shares of common stock on the basis of one (1) new share for every ten (10) old
shares. The Company filed articles of amendment effective February 1, 2016, and changed its name from Eagleford Energy Corp.,
to Intelligent Content Enterprises Inc., and consolidated its shares of common stock on the basis of one (1) new share for every
ten (10) old shares. The consolidated financial statements have been adjusted to reflect these consolidations accordingly.



a)       Share
Capital



Authorized:

Unlimited
number of shares of common stock at no par value

Unlimited
number of preferred shares issuable in series



Shares
of Common Stock Issued:

The
following table sets out the changes in shares of common stock during the respective periods:



|                                                           |  | Number |           |  | Amount $ | 
|---------------------------------------------------------- |  | ------ | --------- |  | -------- | 
|Balance August 31, 2016                                    |  |        | 2,650,627 |  |          | 
|Common shares issued as private placement                  |  |        | 7,692     |  |          | 
|Common shares issued as settlement of shareholder advances |  |        | 1,187,672 |  |          | 
|Common shares issued as anti-dilution provision            |  |        | 1,420,809 |  |          | 
|Common shares issued as anti-dilution provision            |  |        | 16,364    |  |          | 
|Balance August 31, 2017 and August 31, 2018                |  |        | 5,283,164 |  |          | 





32









Preferred
Shares Issued:

As
at August 31, 2018 and August 31, 2017, there were no preferred shares issued.



b)       Share
Purchase Warrants



The
following table sets out the changes in warrants during the respective periods:



|                                 |  | August 31, 2018    |         |  | August 31, 2017         |  
|-------------------------------- |  | ------------------ | ------- |  | ----------------------- | -
|Warrants                         |  | Number of Warrants |         |  | Weighted 
Average Price |  
|Outstanding, beginning of year   |  |                    | 208,211 |  |                         |  
|Warrants issued (Note 11 b (i))  |  |                    | —       |  |                         |  
|Warrants issued (Note 11 b (iv)) |  |                    | —       |  |                         |  
|Warrants expired (Note 11 b (v)) |  |                    | —       |  |                         |  
|Balance, end of year             |  |                    | 208,211 |  |                         | $



The
following tables summarize the outstanding warrants as at August 31, 2018, and August 31, 2017, respectively:



|Number of Warrants 2018 |  |  | Exercise Price |       |  | Expiry Date |                   | Weighted Average Remaining Life (Years) |      |  | Warrant Value ($) | 
|----------------------- |  |  | -------------- | ----- |  | ----------- | ----------------- | --------------------------------------- | ---- |  | ----------------- | 
|160,519                 |  |  | $              | 3.50  |  |             | March 1, 2019     |                                         | 0.50 |  |                   | 
|23,636                  |  |  | $              | 12.50 |  |             | August 31, 2019   |                                         | 1.00 |  |                   | 
|24,056                  |  |  | $              | 10.00 |  |             | November 30, 2019 |                                         | 1.25 |  |                   | 
|208,211                 |  |  |                |       |  |             |                   |                                         | 0.64 |  |                   | 





|Number of Warrants 2017 |  |  | Exercise Price |       |  | Expiry Date |                   | Weighted Average Remaining Life (Years) |      |  | Warrant Value ($) | 
|----------------------- |  |  | -------------- | ----- |  | ----------- | ----------------- | --------------------------------------- | ---- |  | ----------------- | 
|160,519                 |  |  | $              | 3.50  |  |             | March 1, 2019     |                                         | 1.50 |  |                   | 
|23,636                  |  |  | $              | 12.50 |  |             | August 31, 2019   |                                         | 2.00 |  |                   | 
|24,056                  |  |  | $              | 10.00 |  |             | November 30, 2019 |                                         | 2.25 |  |                   | 
|208,211                 |  |  |                |       |  |             |                   |                                         | 1.64 |  |                   | 



c)       Weighted
Average Shares Outstanding



The
following table summarizes the weighted average shares outstanding:



|                                             |  |  | August 31, |          
|-------------------------------------------- |  |  | ---------- | ---------
|                                             |  |  | 2018       |          
|Weighted Average Shares Outstanding, basic   |  |  |            | 5,283,164
|Weighted Average Shares Outstanding, diluted |  |  |            | 5,283,164



At
August 31, 2018, there were 208,211 common share purchase warrants that could be exercised, however they are anti-dilutive. At
August 31, 2017, there were 155,000 stock options and 208,211 common share purchase warrants that could be exercised, however
they are anti-dilutive. The effects of any potential dilutive instruments on loss per share are anti-dilutive and therefore have
been excluded from the calculation of diluted loss per share.



d)       Share
Purchase Options



The
Company has a stock option plan to provide incentives for directors, officers, employees and consultants of the Company. The maximum
number of shares, which may be set aside for issuance under the stock option plan, is 20% of the issued and outstanding shares
of our common stock on a rolling basis.





33







The
following table is a summary of the status of the Company’s stock options and changes during the period:



|                         |  |  | Number     |          |   | Weighted Average | 
|------------------------ |  |  | ---------- | -------- | - | ---------------- | 
|                         |  |  | of Options |          |   | Exercise Price $ | 
|Balance, August 31, 2016 |  |  |            | 38,300   |   |                  | 
|Granted                  |  |  |            | 200,000  |   |                  | 
|Expired                  |  |  |            | (83,300  | ) |                  | 
|Balance, August 31, 2017 |  |  |            | 155,000  |   |                  | 
|Cancelled                |  |  |            | (155,000 | ) |                  | 
|Balance, August 31, 2018 |  |  |            | —        |   |                  | 



The
following table is a summary of the Company’s stock options outstanding and exercisable as at August 31, 2017:



|Options
    Outstanding | Options
    Exercisable          
|----------------------- | ---------------------------------
|Exercise
        Price  | Number
        of
        Options
|$                       | 12.00                            
|$                       | 15.00                            
|$                       | 13.00                            
|                        | 155,000                          



As
at August 31, 2018, the Company had no options outstanding and exercisable.



e)       Stock
Based Compensation



Effective
May 1, 2018, all of the stock options issued by the Company were released and subsequently cancelled and $1,815,961 was recorded
as an increase to contributed surplus.



Employees

On
September 9, 2016, the Company granted 30,000 immediately vesting common share purchase options to shares to a director and 30,000
common share purchase options vesting February 6, 2017 to the President. These options are exercisable at $13.00 per share and
expire on September 8, 2021. As at August 31, 2017, the Company recorded non-cash stock-based compensation expense of $706,178.



On
September 9, 2016, the Company granted to the President 70,000 common share purchase options exercisable at $15.00 per share and
expiring on September 8, 2021. Of these options, 35,000 vested on September 8, 2017 and 35,000 vesting on September 8, 2018. As
at August 31, 2017, the Company recorded non-cash stock-based compensation expense of $613,532. As at August 31, 2018, the Company
recorded a further $204,511 in stock-based compensation.



On
November 1, 2016, the Company granted 50,000 common share purchase options vesting March 30, 2017 to the former Chief Financial
Officer. These options were exercisable at $6.40 per share and expired on April 25, 2017. As at August 31, 2017, the Company recorded
non-cash stock-based compensation expense of $294,895.



Non
Employees

On
September 9, 2016, the Company granted 20,000 immediately vesting common share purchase options to a consultant of the Company.
These options are exercisable at $13.00 per share and expire on September 8, 2021. As at August 31, 2017, the Company recorded
non-cash stock-based compensation expense of $235,393.



The
fair value of the stock options granted were estimated on the date of the grant using the Black Scholes option pricing model with
the following assumptions and inputs:



|                                         |  | November 1, 2016 |        |   | September 9, 2016 |  
|---------------------------------------- |  | ---------------- | ------ | - | ----------------- | -
|Weighted average fair value per option   |  | $                | 5.90   |   |                   | $
|Weighted average risk-free interest rate |  |                  | 0.68   | % |                   |  
|Forfeiture rate                          |  |                  | 0      | % |                   |  
|Weighted average expected volatility     |  |                  | 156.70 | % |                   |  
|Expected life (years)                    |  |                  | 5      |   |                   |  
|Dividend yield                           |  |                  | Nil    |   |                   |  
|Stock price on the date of grant         |  | $                | 6.40   |   |                   | $





34









OVERALL
PERFORMANCE

For
the year ended August 31, 2018, net loss from continuing operations was $516,323 compared to a net loss from continuing operations
of $2,097,738 for year ended August 31, 2017. The decrease in net loss during 2018, was primarily related to the Company decrease
in expenses of $1,602,2043 from $2,118,526 in 2017 to $516,323 in 2018. The main components of the net loss are as follows:

| | ● | During
                                         fiscal 2018, the Company experienced a decrease in employee stock-based compensation
                                         of $1,410,094 to $204,511 versus stock-based compensation expense of $1,614,605 during
                                         fiscal 2017. During 2017, the Company granted 150,000 stock options to officers and a
                                         director. As only 70,000 of the options continued to vest during fiscal 2018, stock-based
                                         compensation expense was reduced significantly in fiscal 2018 when compared to fiscal
                                         2017.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | In
                                         addition, share purchase options that were granted on September 9, 2016 to a consultant
                                         (non-employee) of the Company, were recorded as non-cash stock-based compensation expense
                                         of $235,393 on August 31, 2017. There were no other transactions of this nature in 2018
                                         as the options fully-vested in fiscal 2017.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | During
                                         fiscal 2017, prior obligations of the Company’s former defunct subsidiary Dyami
                                         Energy, LLC (“Dyami Energy”) expired and the Company recorded a gain on de-recognition
                                         of financial liabilities in the amount of $893,990.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The
                                         Company recorded $Nil for research, content development and technology support costs
                                         in 2018 compared to $313,106 for 2017. The Company had no such activities during fiscal
                                         2018.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | General
                                         and administrative expenses decreased by $203,361 from $508,241 in 2017 to $304,880 in
                                         2018 due to decreases primarily in legal and accounting fees, shareholder information,
                                         rent and transfer fees.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The
                                         Company incurred anti-dilution fees of $186,832 in 2017 ($NIL for 2018), with respect
                                         to the issuance of shares and warrants pursuant to anti-dilution provisions of private
                                         placements completed during the 2016 and 2017 fiscal years.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | During
                                         fiscal 2017, the Company recorded an impairment loss of $81,483 on a secured note receivable
                                         compared to $Nil in the current fiscal period of 2018. There were no such transactions
                                         during fiscal 2018.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Hosting,
                                         advertising and technology services decreased by $68,559 from $71,423 in 2017 to $2,864
                                         for the same period in 2018 as a result of a general scale-back of the Company’s
                                         operations.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During
2018, the Company received a non-interest bearing, due on demand shareholder loans of $79,910.



The
Company anticipates further expenditures to be made on future opportunities evaluated by the Company. Any expenditure which exceeds
available cash will be required to be funded by additional share capital or debt issued by the Company, or by other means. The
Company’s long-term profitability will depend upon its ability to successfully implement its business plan. The Company’s
past primary source of liquidity and capital resources has been proceeds from the issuance of share capital, shareholders’
loans and cash flow from oil and gas operations.



The
loss on settlement of debt during fiscal 2016 was primarily attributed to the issuance of 1,032,998 units in the capital of the
Company at fair value pursuant to the anti-dilution provisions of the August 30, 2014, debt conversion agreements and the issuance
of 954,311 shares of our common stock at fair value as settlement of loans and interest due in the amount of $1,262,453. In addition
during fiscal 2017, the Company experienced an increase in stock based compensation of $1,234,074 to $1,849,998 versus stock based
compensation expense of $615,924 during fiscal 2016. The increase in stock based compensation expenses is largely related to increase
in allotments, changes in share prices and assumptions used in the fair value calculation of stock options. During fiscal 2017,
prior obligations of the Company’s former defunct subsidiary Dyami Energy, LLC (“Dyami Energy”) expired and
the Company recorded a gain on de-recognition of financial liabilities in the amount of $893,990. Also in the current period the
Company recorded a loss on marketable securities of $Nil versus $120,125 for the same twelve month period in fiscal 2016. During
fiscal 2017, the Company recorded an impairment loss of $81,483 on a secured note receivable compared to $Nil in the prior fiscal
period in 2016.



On
November 30, 2016, the Company completed a private placement for gross proceeds of $50,000 and issued 7,692 units in the capital
of the Company at a purchase price of $6.50 per unit. Each unit was comprised of one (1) common share and one (1) common share
purchase warrant. Each full warrant entitles the holder to purchase one (1) common share at an exercise price of $10.00 until
November 30, 2019.



35









On
May 25, 2016, the Company entered into a Term Sheet to license to acquire all the technology, production and client operations
owned and operated by New York based Catch Star Studios LLC (“Catch Star”). On October 12, 2016, the Company advanced
US$65,000 ($81,483 at August 31, 2017) to Catch Star and entered into a Secured Promissory Note and General Security Agreement
with Catch Star (the “Secured Note”). The Secured Note is due on demand and is secured by all of the assets of Catch
Star. Subsequently, Catch Star and the Company could not reach a definitive agreement to memorialize the terms and conditions
of the Term Sheet and abandoned the prospective transaction. On February 1, 2017, the Company issued a letter of demand for the
repayment in full of the Secured Note from Catch Star. At August 31, 2017, the Company determined that the Secured Note was uncollectible
and recorded an impairment of the full amount.



Effective
August 31, 2017, the Company settled shareholder advances of $213,781 and issued 1,187,672 shares of our common stock at a purchase
price of $0.18 per share.



As
a result of the November 30, 2016, private placement of $50,000 and the August 31, 2017, settlement of shareholder advances of
$213,781, effective August 31, 2017, the Company issued 1,420,809 shares of our common stock and 16,364 Units in the capital of
the Company pursuant to the anti-dilution provisions of the August 31, 2016, private placement agreements.



On
August 31, 2017, 538,417 common share purchase warrants expired. The amount allocated to warrants based on the Binomial Lattice
model was $2,195,738 with a corresponding increase to contributed surplus.



The
Company anticipates further expenditures to be made on future opportunities evaluated by the Company. Any expenditure which exceeds
available cash will be required to be funded by additional share capital or debt issued by the Company, or by other means. The
Company’s long-term profitability will depend upon its ability to successfully implement its business plan. The Company’s
past primary source of liquidity and capital resources has been proceeds from the issuance of share capital, shareholders’
loans and cash flow from oil and gas operations.



RISK
AND UNCERTAINTIES



The
Company is subject to several risk factors that may have adverse effects on our business and which could harm our operating results
including, but not limited to: the ability to generate and aggregate compelling content to increase the number of users of our
services or users’ level of engagement with our services; the effect of technologies, tools, software, and applications
could block our advertisements, impair our ability to deliver interest-based advertising, or shift the location in which advertising
appears; changes in regulations or user concerns regarding privacy and protection of user data; continued and unimpeded access
to the internet by us and our users. Internet access providers may be able to block, degrade, or charge for access to certain
of our products and services, which could lead to additional expenses and the loss of users and advertisers and certain of our
metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation
and negatively affect our business.



As
the Company has not experienced any cash flow from operations to independently finance its growth and operations, it has been
reliant on access to capital in the form of both debt and equity to fund on-going operations and to fund capital investments.
Although periodic volatility of financial and capital markets may severely limit access to capital, the Company has been able
to attract the required investment capital in the past, however no assurances can be made that it will continue to do so in the
future.



The
Company cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the
Company’s forward-looking statements should carefully consider the above factors as well as the uncertainties they represent
and the risk they entail. The Company also cautions readers not to place undue reliance on these forward-looking statements. Moreover,
the forward-looking statements may not be suitable for establishing strategic priorities and objectives, future strategies or
actions, financial objectives and projections other than those mentioned above (See Item 3D: “Key Information, Risk Factors”).



36









SELECTED
ANNUAL INFORMATION-CONTINUING OPERATIONS



The
following table reflects the summary of results for the years set out.



|                                                            |  | For the Years Ended August 31 |         
|----------------------------------------------------------- |  | ----------------------------- | --------
|                                                            |  | 2018                          |         
|Revenue                                                     |  |                               | —       
|Net income (loss) from continuing operations                |  |                               | (516,323
|Income (loss) per share from continuing operations, basic   |  | $                             | (0.098  
|Income (loss) per share from continuing operations, diluted |  | $                             | (0.098  
|Assets                                                      |  |                               | 33,043  



August
31, 2018 – 2017

For
the year ended August 31, 2018, the net loss from continuing operations was $516,323, compared to a net loss from continuing operations
of $2,097,738 for year ended August 31, 2017. The decrease in the net loss during 2018 was primarily related to a decrease in
employee stock-based compensation of $1,410,094. During 2017, the Company granted 150,000 stock options to officers and a director.
As only 70,000 of the options continued to vest during fiscal 2018, stock-based compensation expense was reduced significantly
in fiscal 2018 when compared to fiscal 2017. There was a decrease in non-cash stock based compensation expense related to non-employee
share purchase options granted to a consultant from 2017 to 2018 of $235,393. No such options were granted during fiscal 2018.
A gain of $893,990 was recorded in fiscal 2017 on the de-recognition of financial liabilities, however there were no such charges
during fiscal 2018. This was related to the expiration of prior obligations of the Company’s former defunct subsidiary Dyami
Energy, LLC. There was a decrease in research, content development and technology support costs of $313,106 as these were costs
only incurred in fiscal 2017. General and administrative expenses also decreased by $203,361 from $508,241 in 2017 to $304,880
in 2018 because of reduced legal costs related to the settlement of debt, along with reduced expenses for shareholder information
and transfer fees. The Company incurred anti-dilution fees of $186,832 in 2017 ($NIL for 2018), with respect to the issuance of
shares and warrants pursuant to anti-dilution provisions of private placements completed during the 2016 and 2017 fiscal years.
In 2017, the Company incurred an impairment loss of $81,483 on a secured note receivable compared to impairment losses of $NIL
in the current fiscal period of 2018. The Company incurred less expense for hosting, advertising and technology services in 2018
creating a decrease in expenses of $68,559 from $71,423 in 2017, to $2,864 for 2018.



August
31, 2017 – 2016

For
the year ended August 31, 2017, net loss from continuing operations was $2,097,738 compared to a net loss from continuing operations
of $13,534,298 for year ended August 31, 2016. The decrease in net loss during 2017, was primarily related to a loss on settlement
of debt of $Nil compared to $12,489,249 in fiscal 2016. The loss on settlement of debt during fiscal 2016 was primarily attributed
to the issuance of 1,032,998 units in the capital of the Company at fair value pursuant to the anti-dilution provisions of the
August 30, 2014, debt conversion agreements and the issuance of 954,311 shares of our common stock at fair value as settlement
of loans and interest due in the amount of $1,262,453. In addition, during fiscal 2017, the Company experienced an increase in
stock-based compensation of $1,234,074 to $1,849,998 versus stock-based compensation expense of $615,924 during fiscal 2016. The
increase in stock-based compensation expenses is largely related to increase in allotments, changes in share prices and assumptions
used in the fair value calculation of stock options. During fiscal 2017, prior obligations of the Company’s former defunct
subsidiary Dyami Energy, LLC (“Dyami Energy”) expired and the Company recorded a gain on de-recognition of financial
liabilities in the amount of $893,990. Also, in the current period the Company recorded a loss on marketable securities of $Nil
versus $120,125 for the same twelve-month period in fiscal 2016. During fiscal 2017, the Company recorded an impairment loss of
$81,483 on a secured note receivable compared to $Nil in the prior fiscal period in 2016.



RESULTS
OF OPERATIONS-CONTINUING OPERATIONS



Revenue

Advertising
Revenue

For
the year ended August 31, 2018, no advertising revenue was earned, compared to $20,788 for the same twelve-month period ended
August 31, 2017. The decrease in advertising revenue for the current period is a result of the development of the Company’s
online management and advertising platform (http://doubletap.co) during fiscal 2017 that was not carried over to fiscal 2018.



Natural
Gas Sales

Natural
gas sales were $Nil for the years ended August 31, 2018 and 2017. Effective February 29, 2016, the Company disposed of its interest
in 1354166 Alberta and as a result, its operations were deconsolidated from the Company’s Consolidated Financial Statements
and presented as discontinued operations on the Consolidated Statements of Operations and Comprehensive Loss and the Consolidated
Statements of Cash Flows.



37









Research,
Content Development and Technology Support

For
the year ended August 31, 2018, the Company did not incur research, content development and technology support compared to $313,606
incurred in 2017 and $160,519 in 2016. The decrease in research, content development and technology support costs were related
to the development of the Company’s online management and advertising platform (http://doubletap.co) during fiscal 2016
and 2017.



Hosting,
Advertising and Technology Services

For
the year ended August 31, 2018, the Company incurred hosting and technology costs of $2,864 compared to $71,423 for the year ended
August 31, 2017 (2016: $45,272). The decrease in hosting and technology costs experienced in current fiscal year 2018, was a result
of the development of the Company’s online management and advertising platform (http://doubletap.co) during fiscal 2017.





|                             |  | For
the Years Ended August 31, |        
|---------------------------- |  | ------------------------------ | -------
|General and Administrative   |  | 2018                           |        
|Professional fees            |  | $                              | 102,480
|Head office costs            |  |                                | 24,000 
|Management fees              |  |                                | 60,000 
|Transfer and registrar costs |  |                                | 13,270 
|Shareholders information     |  |                                | 24,958 
|Office and general costs     |  |                                | 1,972  
|Directors fees               |  |                                | 200    
|Consulting fees and expenses |  |                                | 60,000 
|Travel                       |  |                                | —      
|Rent                         |  |                                | 18,000 
|Insurance                    |  |                                | —      
|Total                        |  | $                              | 304,880







For
the year ended August 31, 2018, the Company’s general and administrative costs of $304,880 were again significantly lower
by $203,361 compared to $508,241 for the year ended August 31, 2017. The decrease in expenses during fiscal 2018 was primarily
attributed to a decrease in professional fees of $77,427 to $102,480 compared to $179,907 in fiscal 2017; a decrease in consulting
fees of $30,000; and a decrease of $18,000 in head office costs for fiscal 2018. The decrease in professional fees can be attributed
to the prior year correction errors related to the DWF Settlement Agreement in fiscal August 31, 2017 that resulted in expenses
that were higher than normal. During the year, the Company also experienced a decrease of $47,515 in shareholders information
expenses; and a decrease of $7,715 in transfer and registrar costs related to the prior 2017 fiscal year, that were higher than
usual because of the name change of the Company from Intelligent Content Enterprises Inc., to Novicius Corp., as well as the consolidation
of shares of common stock that became effective on May 26, 2017. There were no expenses for travel and insurance in 2018.



For
the year ended August 31, 2017, the Company’s general and administrative costs increased by $90,035 to $508,241 versus $418,206
for the year ended August 31, 2016. The increase expenses during fiscal 2017 was primarily attributed to an increase in professional
fees of $31,245 to $179,907 compared to $148,662 in fiscal 2016, an increase in consulting fees of $30,000, and an increase of
$15,671 in rent versus $3,776 recorded in the comparable period in 2016. The increase in professional fees was mainly attributed
to the correction of prior period errors related to the DWF Settlement Agreement. The increase in rent during 2017 was a result
of the office space rented in relation to DWF operations. During fiscal 2017, the Company also experienced an increase of $9,098
in shareholders information and an increase of $8,143 in transfer and registrar costs related to the name change of the Company
from Intelligent Content Enterprises Inc., to Novicius Corp., and the consolidation of shares of common stock effective May 26,
2017. In addition, the Company has recorded increased fees related to its listing on the Canadian Securities Exchange.



Loss
on Foreign Exchange

For
the year ended August 31, 2018, the Company recorded a loss on foreign exchange of $4,068 compared to a loss of $1,433 for the
same twelve-month period ended August 31, 2017.



For
the year ended August 31, 2017, the Company recorded a loss on foreign exchange of $1,433 versus a loss on foreign exchange of
$21,890 for year ended August 31, 2016.



38









These
foreign exchange losses are attributed to the translation of monetary assets and liabilities not denominated in the functional
currency of the Company. The decrease in the loss on foreign exchange during fiscal 2018 and 2017 compared to fiscal 2016, is
largely attributed to the disposition of Zavala Inc., whose functional currency was US dollars and the general fluctuations with
the United States and Canadian dollar exchange rates.



Stock
Based Compensation

Employees

For
the year ended August 31, 2018, the Company recorded stock-based compensation of $204,511 compared to $1,614,605 for the same
period in 2017. During 2017, the Company granted 150,000 stock options to officers and a director. As only 70,000 of the options
continued to vest during fiscal 2018, stock-based compensation expense was reduced significantly in fiscal 2018 when compared
to fiscal 2017. On May 31, 2018, all of the 155,000 outstanding common share purchase options were released and cancelled.



During
fiscal 2018, the Company recorded the vesting of Ritwik Uban’s 70,000 common stock options to September 9, 2018 of $204,511
as stock-based employee compensation.



During
fiscal 2017, the Company granted the following common share purchase options:



| | - | On
                                         September 9, 2016, the Company granted 30,000 immediately vesting common share purchase
                                         options to a director and 30,000 common share purchase options vesting February 6, 2017
                                         to the President. These options are exercisable at $13.00 per share and expire on September
                                         8, 2021. The Company recorded non-cash stock-based compensation expense of $706,178 during
                                         fiscal 2017.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On
                                         September 9, 2016, the Company granted to the President 70,000 common share purchase
                                         options exercisable at $15.00 per share and expiring on September 8, 2021. Of these options
                                         35,000 vest on September 8, 2017 and 35,000 vest on September 8, 2018. The Company recorded
                                         non-cash stock-based compensation expense of $613,532 during fiscal 2017 and $204,511
                                         during fiscal 2018.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On
                                         November 1, 2016, the Company granted 50,000 common share purchase options vesting March
                                         30, 2017 to the former Chief Financial Officer. These options were exercisable at $6.40
                                         per share and expired on April 25, 2017. The Company recorded non-cash stock-based compensation
                                         expense of $294,895.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During
fiscal 2016, the Company granted the following common share purchase options:



| | - | On
                                         April 1, 2016, the Company granted options to purchase 30,000 shares of common stock
                                         to a director. The Company recorded non-cash stock-based compensation expense of $615,924.
                                         These options expired on December 8, 2016.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Non
Employees

For
the year ended August 31, 2018, the Company did not record any expenses for non-employee stock-based compensation.



For
the year ended August 31, 2017, the Company recorded stock-based compensation for non-employees of $235,393 compared to $Nil for
the same twelve-month period in 2016. On September 9, 2016, the Company granted 20,000 immediately vesting common share purchase
options to a consultant of the Company. These options were exercisable at $13.00 per share and expire on September 8, 2021.



For
the year ended August 31, 2016, the Company recorded stock-based compensation for non-employees of $Nil compared to $28,173 for
the year ended August 31, 2015. On November 12, 2014, the Company granted options to purchase 2,500 shares of common stock to
a consultant of the Company. These options are exercisable at $11.20 per share, vest immediately and expire on November 11, 2019.



Anti-Dilution
Fees

For
the year ended August 31, 2018, the Company did not record any expenses for anti-dilution fees compared to the same period in
the prior year.



For
the year ended August 31, 2017, the Company recorded anti-dilution fees of $186,832 compared to $Nil for the year ended August
31, 2016 and 2015.





39







On
August 31, 2016, the Company completed private placements for gross proceeds of $260,000 and issued 23,636 units in the capital
of the Company at a purchase price of $11.00 per unit. The subscription agreements contain an anti-dilution provision such that
if within 18 months of August 31, 2016, the Company issues additional shares of common stock for a consideration per share or
with an exercise or conversion price per share, less than $11.00 (the “Adjusted Price”) the holder shall be entitled
to receive from the Company (for no additional consideration) additional Units in an amount such that, when added to the number
of Units acquired by Holder under this agreement will equal the number of Units that the holder would otherwise be entitled to
receive had this transaction occurred at the Adjusted Price.



As
a result of the November 30, 2016, private placement of $50,000, the Company issued 16,364 Units in the capital of the Company
pursuant to the anti-dilution provisions of the August 31, 2016, private placement agreements. The fair value of the units $2,127
was allocated to shares of our common stock and anti-dilution fees in the consolidated statement of operations. No value was allocated
to warrants based on the Binomial Lattice model.



As
a result of the August 31, 2017, private placement of $213,781, the Company issued 1,420,809 shares of common stock in the capital
of the Company pursuant to the anti-dilution provisions of the August 31, 2016, private placement agreements. The fair value of
$184,705 was calculated on the previous day’s closing price of shares of the Company’s common stock and allocated
to shares of our common stock and anti-dilution fees in the consolidated statement of operations.



Gain
on De-recognition of Financial Liabilities

There
were no gains on de-recognition of financial liabilities during fiscal 2018.



During
fiscal 2017, prior obligations of the Company’s former defunct subsidiary Dyami Energy expired, and the Company recorded
a gain on de-recognition of Dyami Energy’s financial liabilities in the amount of $893,990 (2016: $Nil).



Impairment
loss on Secured Note Receivable

There
were no impaired losses on Secured Notes Receivable during the 2018 fiscal year.



During
fiscal 2017, the Company recorded an impairment loss of $81,483 on a secured note receivable compared to $Nil in the prior fiscal
period in 2016 and 2015.



On
May 25, 2016, the Company entered into a Term Sheet to license to acquire all the technology, production and client operations
owned and operated by New York based Catch Star Studios LLC (“Catch Star”). On October 12, 2016, the Company advanced
US$65,000 ($81,483 at August 31, 2017) to Catch Star and entered into a Secured Promissory Note and General Security Agreement
with Catch Star (the “Secured Note”). The Secured Note is due on demand and is secured by all of the assets of Catch
Star. Subsequently, Catch Star and the Company could not reach a definitive agreement to memorialize the terms and conditions
of the Term Sheet and abandoned the prospective transaction. At August 31, 2017, the Company determined that the Secured Note
was uncollectible and recorded an impairment of the full amount.



Gain
on Disposal of Subsidiary

For
the year ended August 31, 2018, the Company did not record any gains on disposal of a subsidiary.



For
the year ended August 31, 2017, the Company recorded a gain on disposal of subsidiary in the amount of $Nil compared to a gain
of $68,489 for the year ended August 31, 2016.



Effective
February 29, 2016, the Company entered into a Share Purchase and Debt Settlement Agreement with 1288131 Alberta Ltd. and disposed
of its interest in 1354166 Alberta for the settlement of debt owed to 1288131 Alberta Ltd., in the amount of $62,867. The net
assets and liabilities of 1354166 Alberta upon disposal were $(5,622) resulting in a gain of $68,489.



Gain
on Expiry of Derivative Liabilities

For
the year ended August 31, 2018, there were no gains on Expiry of Derivative Liabilities.



For
the year ended August 31, 2017, the Company recorded a gain on expiry of derivative liabilities in the amount of $Nil versus a
gain on expiry of derivative liabilities in the amount of $281,210 for the year ended August 31, 2016. During fiscal 2016, 1,305
warrants expired and the fair value of $281,210 was recorded as a gain on expiry of derivative liabilities in the consolidated
statement of operations.





40







Interest

For
the year ended August 31, 2018, the Company did not record any interest costs.



For
the year ended August 31, 2017, the Company recorded interest costs of $Nil compared to interest costs of $12,812 for the year
ended August 31, 2016.



Loss
on Settlement of Debt

For
the year ended August 31, 2018, the Company did not record any losses on Settlements of Debt.



For
the year ended August 31, 2017, the Company recorded a loss on settlement of debt in the amount of $Nil compared to a loss on
settlement of debt in the amount of $12,489,249 for the year ended August 31, 2016.



For
the year ended August 31, 2016, the Company recorded a loss on settlement of debt in the amount of $12,489,249 compared to loss
on settlement of debt of $Nil for the same twelve-month period in 2015. The primary factors contributing to the resulting net
loss on settlement of debt during the year ended August 31, 2016 was related to the issuance of 1,032,998 units in the capital
of the Company pursuant to the anti-dilution provision of the August 30, 2014, debt conversion agreements. The fair value of the
units $6,896,800 was recognized as a loss on settlement of debt in the consolidated statement of operations. In Addition, effective
November 18, 2015, the Company entered into shares for debt conversion agreements and converted loans and interest due in the
aggregate amount of $1,262,453 through the issuance of 954,311 shares of our common stock. The fair value of the common shares
$6,371,457 was allocated to shares of our common stock and $5,109,004 was recorded as a loss on settlement of debt in the consolidated
statement of operations.



Impairment
Loss on Marketable Securities

For
the year ended August 31, 2018, the Company did not record any impairment losses on marketable securities.



For
the year ended August 31, 2017, the Company recorded an impairment loss on marketable securities of $Nil compared to $120,125
for the year ended August 31, 2016.



For
the year ended August 31, 2016, the Company recorded an impairment loss on marketable securities of $120,125 (August 31, 2015:
$Nil). As at August 31, 2017 and 2016, the Company held 1,200,000 common shares in a quoted company security that had been acquired
as settlement of litigation. As at August 31, 2015, the Company recorded a change in the fair value of the securities in other
comprehensive loss in the amount of $110,525. For the year ended August 31, 2016, the Company re-classified the loss of $110,525
to the consolidated statement of operations and recorded a further impairment of $9,600.



At
each financial reporting period, the Company estimates the fair value of investments which are held-for-trading, based on quoted
closing bid prices at the consolidated statements of financial position date or the closing bid price on the last day the security
traded if there were no trades at the consolidated statements of financial position date and such valuations are reflected in
the consolidated financial statements.



Gain
(Loss) on Derivative Liabilities

For
the year ended August 31, 2018 the Company had no derivative liabilities.



For
the year ended August 31, 2017 the Company had no derivative liabilities. As at August 31, 2017, the Company recorded a gain on
expiry of derivative warrant liabilities of $Nil compared to $281,210 for the year ended August 31, 2016.



As
at August 31, 2016, the Company had 175,000 derivative warrant liabilities outstanding with a fair value of $Nil. On June 22,
2016, the Company entered into a consulting agreement and issued 175,000 common share purchase warrants exercisable at $15.00
with a cashless exercise option. At August 31, 2016, the Company determined that it would not continue with the agreement and
it was suspended and on January 15, 2017, the agreement was mutually terminated no warrants were exercised.



Net
Income (Loss) from Discontinued Operations Net of Tax

Net
income from discontinued operations net of tax for the year ended August 31, 2018, was $NIL.



Net
income from discontinued operations net of tax for the year ended August 31, 2017, was $Nil compared to a net income from discontinued
operations net of tax of $2,711, for the year ended August 31, 2016.





41







Net
income from discontinued operations net of tax for the year ended August 31, 2016, was $2,711 compared to a net loss from discontinued
operations net of tax of $4,762,461 for the year ended August 31, 2015. The income (loss) from discontinued operations is a result
of the discontinued operations of 1354166 Ontario and Zavala Inc. as follows:



1354166
Ontario

The
Company entered into a Share Purchase and Debt Settlement Agreement with 1288131 Alberta Ltd. effective February 29, 2016 and
disposed of its interest in 1354166 Alberta. As a result, the Company’s investment in 1354166 Alberta had been derecognized
from the Company’s Consolidated Financial Statements and presented as discontinued operations on the Consolidated Statements
of Operations. The following table presents the statements of operations of 1354166 Alberta for the period set out:



|                                                                   |  | August 31, 2016 |       
|------------------------------------------------------------------ |  | --------------- | ------
|Revenue                                                            |  |                 |       
|Natural gas sales                                                  |  | $               | 13,998
|Expenses                                                           |  |                 |       
|Operating costs                                                    |  |                 | 5,170 
|General and administrative                                         |  |                 | 97    
|                                                                   |  |                 | (5,267
|Net income from discontinued operations                            |  | $               | 8,731 
|Earnings per share from discontinued operations, basic and diluted |  | $               | 0.000 



Zavala
Inc.

At
August 31, 2015, the Company entered into a Settlement and Exercise of Security Agreement whereby effective August 31, 2015, the
Company assigned and conveyed all its rights, title and interest in and to Zavala Inc. Accordingly, the Company’s investment
in Zavala Inc. had been derecognized from the Company’s Consolidated Financial Statements as at August 31, 2015 and presented
as discontinued operations.



The
following table presents the consolidated statements of operations and comprehensive income (loss) of Zavala Inc., for the years
set out:



|                                                               |  | August 31, 2016 |       
|-------------------------------------------------------------- |  | --------------- | ------
|Expenses                                                       |  |                 |       
|Accretion                                                      |  | $               | —     
|General and administrative                                     |  |                 | 6,020 
|Bad debt expense                                               |  |                 | —     
|Impairment loss on marketable securities                       |  |                 | —     
|Impairment loss on exploration and evaluation assets           |  |                 | —     
|Loss from discontinued operations                              |  |                 | (6,020
|Foreign currency translation                                   |  |                 | —     
|Total loss from discontinued operations                        |  | $               | (6,020
|Loss per share from discontinued operations, basic and diluted |  | $               | (0.000



Net
Loss

Net
loss for the year ended August 31, 2018 was $516,323 compared to a net loss of $2,097,738 for the year ended August 31, 2017.
The decrease in net loss of $1,581,415was primarily related to a decrease in stock-based compensation for employees of $1,410,094,
stock-based compensation-non employees of $235,393, a decrease in research, content development and technology support of $313,106,
a decrease in general and administrative expenses of $203,361, a decrease in anti-dilution fees of $186,832, a decrease in impairment
loss on secured note receivable of $81,483, hosting, advertising and technology services of $68,559; and an offset gain on de-recognition
of financial liabilities of $893,990, and an increase in loss on foreign exchange of $2,635.



Net
loss for the year ended August 31, 2017, was $2,097,738 compared to a net loss of $13,531,587 the year ended August 31, 2016.
The decrease in net loss during 2017, was primarily related to an increase in loss on settlement of debt of $Nil compared to $12,489,249
in fiscal 2016. In addition, during fiscal 2017, the Company an increase in stock-based compensation of $1,234,074 to $1,849,998
versus stock-based compensation expense of $615,924 during fiscal 2016 and the Company recorded a gain on de-recognition of financial
liabilities in the amount of $893,990. In the current period the Company recorded a loss on marketable securities of $Nil versus
$120,125 for the same twelve-month period in fiscal 2016. During fiscal 2017, the Company recorded an impairment loss of $81,483
on a secured note receivable compared to $Nil in the prior fiscal period in 2016.



42









Other
Comprehensive Income (Loss) to be Re-Classified

Impairment
Loss on Marketable Securities

For
the year ended August 31, 2016, the Company reclassified an unrealized loss on marketable securities of $110,525 recorded in fiscal
2015 to an impairment loss on marketable securities on the consolidated statements of operations as a result of the Company’s
investment in Stratex Oil & Gas Holdings, Inc., common shares being fair valued at $Nil.



Total
Other Comprehensive Income (Loss)

Total
other comprehensive income for the year ended August 31, 2018 and August 31, 2017 were $Nil compared to a total comprehensive
income of $110,525 for the year ended August 31, 2016.



Net
Loss and Comprehensive Loss

Net
loss and comprehensive loss for the year ended August 31, 2018 was $516,323 compared with $2,097,738 for the year ended August
31, 2017. The decrease in net loss during 2018 was primarily related to a decrease in employee stock-based compensation of $1,410,094,
non-employee stock-based compensation of $235,393. In the 2018 fiscal year, there were decreases in a number of fiscal 2017 non-recurring
transactions such as research, content development and technology support of $313,106, anti-dilution fees of $186,832, impairment
loss on secured note receivable of $81,483, and an offsetting gain on de-recognition of financial liabilities of $893,990. There
were decreases from fiscal 2017 to 2018 related to general and administrative expenses of $203,361 and hosting, advertising and
technology services of $68,559.



Net
loss and comprehensive loss for the year ended August 31, 2017, was $2,097,738 compared to $13,421,062 for the year ended August
31, 2016. The decrease in net loss during 2017, was primarily related to an increase in loss on settlement of debt of $Nil compared
to $12,489,249 in fiscal 2016. In addition, during fiscal 2017, the Company experienced an increase in stock-based compensation
of $1,234,074 to $1,849,998 versus stock-based compensation expense of $615,924 during fiscal 2016 and the Company recorded a
gain on de-recognition of financial liabilities in the amount of $893,990. Also, in the current period the Company recorded a
loss on marketable securities of $Nil versus $120,125 for the same twelve-month period in fiscal 2016. During fiscal 2017, the
Company recorded an impairment loss of $81,483 on a secured note receivable compared to $Nil in the prior fiscal period in 2016.



Earnings
(Loss) per Share, Basic

Continuing
Operations

Basic
loss per share from continuing operations for the year ended August 31, 2018 was $0.098 compared to basic loss per share of $0.788
for the same twelve-month period in 2017.



Basic
loss per share from continuing operations for the year ended August 31, 2017, was $0.788 compared to basic loss per share of $6.516
for the same twelve-month period in 2016.



Discontinued
Operations

Basic
loss per share from discontinued operations for the year ended August 31, 2018 and for the year ended August 31, 2017 were both
$Nil.



Basic
loss per share from discontinued operations for the year ended August 31, 2017 was $Nil compared to a basic income of $0.001 for
fiscal 2016.



Total
Loss per Share, Basic

Total
basic loss per share for the year ended August 31, 2018, was $0.098 compared to total basic loss per share of $0.788 for the same
twelve-month period in 2017.



Total
basic loss per share for the year ended August 31, 2017, was $0.788 compared to total basic loss per share of $6.515 for the same
twelve-month period in 2016.



Earnings
(Loss) per Share, Diluted

Continuing
Operations

Diluted
loss per share from continuing operations for the year ended August 31, 2018 was $0.098 compared to diluted loss per share of
$0.788 for the same twelve-month period in 2017.



Diluted
loss per share from continuing operations for the year ended August 31, 2017, was $0.788 compared to diluted loss per share of
$6.516 for the same twelve-month period in 2016.



43







Discontinued
Operations

Diluted
loss per share from discontinued operations for the year ended August 31, 2018 and for the year ended August 31, 2017 were both
$Nil.



Diluted
loss per share from discontinued operations for the year ended August 31, 2017 was $Nil compared to diluted income per share of
$0.001 for the same twelve-month period in 2016.



Total
Loss per Share, Diluted

Total
diluted loss per share for the year ended August 31, 2018 was $0.098 compared to total diluted loss per share of $0.788 for the
same twelve-month period in 2017.



Total
diluted loss per share for the year ended August 31, 2017, was $0.788 compared to total diluted loss per share of $6.515 for the
same twelve-month period in 2016.



SUMMARY
OF QUARTERLY RESULTS-CONTINUING OPERATIONS



The
following tables reflect the summary of quarterly results from continuing operations for the periods set out.



|                                  |  | 2018      |         | 2018   |  | 2018        |          | 2017       
|--------------------------------- |  | --------- | ------- | ------ |  | ----------- | -------- | -----------
|For the quarter ending            |  | August 31 |         | May 31 |  | February 28 |          | November 30
|Net loss for the period           |  | ($        | 167,941 | )      |  | $           | (127,398 | )          
|Loss per share, basic and diluted |  | $         | (0.032  | )      |  | $           | (0.024   | )          



Fiscal
2018

During
the quarter ended August 31, 2018, the Company incurred stock-based compensation expenses of $68,170 and general and administrative
expenses of $97,895.



|                                  |  | 2017      |            | 2017   |  | 2017        |          | 2016       
|--------------------------------- |  | --------- | ---------- | ------ |  | ----------- | -------- | -----------
|For the quarter ending            |  | August 31 |            | May 31 |  | February 28 |          | November 30
|Net loss for the period           |  | $         | (1,199,755 | )      |  | $           | (198,521 | )          
|Loss per share, basic and diluted |  | $         | (0.447     | )      |  | $           | (0.08    | )          



Fiscal
2017

During
the quarter ended August 31, 2017, the Company recorded stock-based compensation expense of $1,698,901 a gain on de-recognition
of financial liabilities of $893,990 and anti-dilution fees of $178,650. During ended May 31, 2017, the Company incurred general
and administrative expenditures of $119,830. During the quarter ended February 28, 2017, the Company recorded research, content
development and technology support costs of $63,641. During the quarter ended November 30, 2016, the Company recorded anti-dilution
fees of $104,727.



FOURTH
QUARTER RESULTS-CONTINUING OPERATIONS



|For the quarter ending                     |  | August 31, 2018 |         |   | August 31, 2017 |    |            | August 31, 2016 | 
|------------------------------------------ |  | --------------- | ------- | - | --------------- | -- | ---------- | --------------- | 
|Revenue                                    |  | $               | —       |   |                 | $  | 16,280     |                 | 
|Net Income (loss) for the period           |  | ($              | 167,941 | ) |                 | $  | (1,199,755 | )               | 
|                                           |  |                 |         |   |                 |    |            |                 | 
|Income (loss) per share, basic and diluted |  | ($              | 0.032   | ) |                 | ($ | 0.19       | )               | 



Advertising
Revenue

For
the three months ended August 31, 2018, the Company recorded advertising revenue of $Nil compared to $16,280 for the same three-month
period ended in fiscal 2017. The advertising revenue for fiscal 2017 is a result of the development of the Company’s online
management and advertising platform (http://doubletap.co) during that year which was not carried over to fiscal 2018.



Research,
Content Development and Technology Support

For
the three months ended August 31, 2018, there were no research, content development and technology support costs compared to $20,378
for the same period three-month period ended August 31, the completion of the online management s and advertising platform during
fiscal 2017.



44









Hosting,
Advertising and Technology Services

For
the three months ended August 31, 2018, the Company incurred $Nil hosting and technology costs related to the maintenance of the
Company’s online management and advertising platform.



For
the three months ended August 31, 2017, the Company incurred hosting and technology costs of $20,144 related to the maintenance
of the Company’s online management and advertising platform.



|General and Administrative   |  | For the Three Months Ended August 31,
|---------------------------- |  | -------------------------------------
|                             |  | 2018                                 
|Professional fees            |  | $                                    
|Head office costs            |  |                                      
|Management fees              |  |                                      
|Transfer and registrar costs |  |                                      
|Shareholders information     |  |                                      
|Office and general costs     |  |                                      
|Directors fees               |  |                                      
|Consulting fees and expenses |  |                                      
|Travel                       |  |                                      
|Rent                         |  |                                      
|Insurance                    |  |                                      
|Total                        |  | $                                    



General
and administrative expenses for the three months ended August 31, 2018, decreased to $97,895 compared to $110,790 for the same
period ended August 31, 2017. For the three months ended August 31, 2018, head office costs decreased by $4,500, from $10,500
in the three-month period ended August 31, 2017 to $6,000 for the quarter ended August 31, 2018. Shareholder information decreased
by $9,046 from $12,457 for the three-month period ended August 31, 2017 to $3,411 for the same three-month period ended August
31, 2018. Office and general costs were reduced by $889 from $1,252 in the three-month period ended August 31, 2017 to $363 for
the same period in 2018. Although there were no director fees in 2018, there were fees of $900 for the three-month period ended
August 31, 2017. There was rent expense of $4,500 for the three-month period ended August 31, 2018, however, there were no rental
costs for the same three-month period ended August 31, 2017.



General
and administrative expenses for the three months ended August 31, 2017, decreased to $110,790 compared to $149,731 for the year
ended August 31, 2016. For the three months ended August 31, 2017 shareholders information costs increased by $10,642 to $12,457
compared to $1,815 for the three months ended August 31, 2016. The fiscal 2017 increase was primarily attributed to the costs
associated with the consolidation of the Company’s shares of common stock and the addition of fees related to the Company’s
listing on the Canadian Securities Exchange. For the three months ended August 31, 2017, professional fees decreased by $19,640
to $51,848 compared to $71,848 for the same three-month ended in 2016. In addition, during fiscal 2017, travel costs decreased
by $13,920, insurance costs decreased by $4,710 and rent decreased by $3,776. The reduction in costs were a result of the settlement
of the DWF Transaction.



Loss
on Foreign Exchange

For
the three months ended August 31, 2018, the Company recorded a loss of $1,876 compared to a gain of $321 for the three months
ended August 31, 2017. There difference in gains and losses on foreign exchange are attributed to the translation of monetary
assets and liabilities not denominated in the functional currency of the Company.



For
the three months ended August 31, 2017, the Company recorded a gain on foreign exchange of $321 versus a loss on foreign exchange
of $112 for the same three-month period in 2016.These foreign exchange gains and losses are attributed to the translation of monetary
assets and liabilities not denominated in the functional currency of the Company.



Stock
Based Compensation

Employees

For
the three months ended August 31, 2018, the Company recorded stock-based compensation of $68,170 compared to $1,478,314 for the
same three-month period in 2017. During the 2018 fiscal period, 35,000 common share purchase options vested from September 8,
2017 to May 1, 2018, when they were cancelled. As a result, the Company recorded an accelerated non-cash stock-based compensation
of $68,170 for partial vesting, reflecting a total amount for the 2018 year of $204,511. Effective May 1, 2018, all of the stock
options issued by the Company were released and subsequently cancelled and the balance was recorded as an increase to contributed
surplus.





45







For
the three months ended August 31, 2017, the Company recorded stock-based compensation of $1,478,314 compared to $Nil for the same
three-month period in 2016. During the three-month period in fiscal 2017, the Company revised the fair value of stock options
issued to directors and officers on September 9, 2016 and November 1, 2016.



Non
Employees

For
the three months ended August 31, 2018, the Company recorded stock-based compensation for non-employees of $Nil compared with
the three months ended August 31, 2018 of $220,588.



For
the three months ended August 31, 2017, the Company recorded stock-based compensation for non-employees of $220,588 compared to
$Nil for the same three-month period in 2016. During the three-month period in fiscal 2017, the Company revised the fair value
of stock options issued to a consultant on September 9, 2016.



Anti-Dilution
Fees

For
the three months ended August 31, 2018, the Company recorded anti-dilution fees of $Nil compared to $178,650 for the three months
ended August 31, 2017.



On
August 31, 2016, the Company completed private placements for gross proceeds of $260,000 and issued 23,636 units in the capital
of the Company at a purchase price of $11.00 per unit. The subscription agreements contain an anti-dilution provision such that
if within 18 months of August 31, 2016, the Company issues additional shares of our common stock for a consideration per share
or with an exercise or conversion price per share, less than $11.00 (the “Adjusted Price”) the Holder shall be entitled
to receive from the Company (for no additional consideration) additional Units in an amount such that, when added to the number
of Units acquired by Holder under this agreement will equal the number of Units that the Holder would otherwise be entitled to
receive had this transaction occurred at the Adjusted Price.



Gain
on de-recognition of financial liabilities

During
the three months ended August 31, 2018, the Company recorded $Nil for gain on de-recognition of financial liabilities compared
with the August 31, 2017 amount of $893,990 which was related to the expiry of prior obligations.



During
the three months ended August 31, 2017, the Company recorded a gain on de-recognition of financial liabilities in the amount of
$893,990 relating to the expiry of prior obligations of Dyami Energy.



Impairment
loss on Secured Note Receivable

During
the three months ended August 31, 2018, the Company did not record any impairment losses.



During
the three months ended August 31, 2017, the Company recorded an impairment loss of $81,483 on a secured note receivable compared
to $Nil in the same three-month prior period in 2016 and 2015.



On
May 25, 2016, the Company entered into a Term Sheet to license to acquire all the technology, production and client operations
owned and operated by New York based Catch Star Studios LLC (“Catch Star”). On October 12, 2016, the Company advanced
US$65,000 ($81,483 at August 31, 2017) to Catch Star and entered into a Secured Promissory Note and General Security Agreement
with Catch Star (the “Secured Note”). The Secured Note is due on demand and is secured by all of the assets of Catch
Star. Subsequently, Catch Star and the Company could not reach a definitive agreement to memorialize the terms and conditions
of the Term Sheet and abandoned the prospective transaction. At August 31, 2017, the Company determined that the Secured Note
was uncollectible and recorded an impairment of the full amount.



Net
Income (Loss) from Continuing Operations

Net
loss from continuing operations for the three months ended August 31, 2018 was $167,941 compared to the three months ended August
31, 2017 of $1,199,755. During the three months ended August 31, 2018, the Company recorded stock-based compensation of $68,170,
general and administrative expenses of $97,895, and foreign exchange losses of $1,876.



Net
loss from continuing operations for the three months ended August 31, 2017 was $1,199,755 versus a net income from continuing
operations of $153,579 for the three months ended August 31, 2016. During the three months ended August 31, 2017, the Company
recorded a gain on de-recognition of financial liabilities in the amount of $893,990 which gain was partially offset by an increase
in stock-based compensation expense of $1,698,901 compared to $Nil in the same three month prior period, anti-dilution fees of
$178,650 compared to $Nil for the three months ended August 31, 2016 and an impairment loss of $81,483 on a secured note receivable
compared to $Nil in the prior period in 2016.



46









Net
Income from Discontinued Operations

For
the three months ended August 31, 2018, net income from discontinued operations was $Nil versus net income from discontinued operations
of $Nil for the three months ended August 31, 2017.



For
the three months ended August 31, 2017, net income from discontinued operations was $Nil versus net income from discontinued operations
of $2,118 for the three months ended August 31, 2016.



Net
Income (Loss) and Comprehensive Income (Loss)

Net
loss for the three months ended August 31, 2018 was $167,941 compared to a net loss of $1,199,755 for the same three-months ended
August 31, 2017.



Net
loss for the three months ended August 31, 2017 was $1,199,755 compared to net income of $155,697 for three months ended August
31, 2016.During the three months ended August 31, 2017, the Company recorded a gain on de-recognition of financial liabilities
in the amount of $893,990 which gain was partially offset by anti-dilution fees of $178,650 compared to $Nil for the three months
ended August 31, 2016.



Earning
(Loss) per Share, Basic and diluted

Basic
and diluted loss per share from continuing operations for the three months ended August 31, 2018 was $0.032 compared to a basic
and diluted loss per share from continuing operations of $0.447 for the same three-month period in 2017.



Basic
and diluted loss per share from continuing operations for the three months ended August 31, 2017, was $0.447 compared to a basic
and diluted loss per share from continuing operations of $0.06 for the same three-month period in 2016.



CAPITAL
EXPENDITURES

There
were no capital expenditures for the 2017 and 2018 fiscal periods.



On
May 25, 2016, the Company entered into a Term Sheet to license to acquire all the technology, production and client operations
owned and operated by New York based Catch Star Studios LLC (“Catch Star Studios”). On October 12, 2016, the Company
advanced US$65,000 ($81,483 at August 31, 2017) to Catch Star and entered into a Secured Promissory Note and General Security
Agreement with Catch Star (the “Secured Note”). The Secured Note is due on demand and is secured by all of the assets
of Catch Star. Subsequently, Catch Star and the Company could not reach a definitive agreement to memorialize the terms and conditions
of the Term Sheet and abandoned the prospective transaction. On February 1, 2017, the Company issued a letter of demand for the
repayment in full of the Secured Note from Catch Star. At August 31, 2017, the Company determined that the Secured Note was uncollectible
and recorded an impairment of the full amount



The
Company expects that capital expenditures will increase in future reporting periods as the Company seeks further opportunities
and ventures of merit in an effort to increase shareholder value.



FINANCING
ACTIVITIES

During
the year ended August 31, 2018, the Company recorded shareholders’ loans payable of $79,910 compared to $Nil for the year
ended August 31, 2017.



During
the year ended August 31, 2017, the Company completed a private placement for gross proceeds of $50,000 and issued 7,692 units
in the capital of the Company at a price of $6.50 per unit. Each unit is comprised of one (1) common share and one (1) common
share purchase warrant. Each full warrant entitles the holder to purchase one (1) common share at an exercise price of $10.00
until November 30, 2019.



Effective
August 31, 2017, the Company settled shareholder advances of $213,781 and issued 1,187,672 shares of our common stock at a purchase
price of $0.18 per share.



A.       LIQUIDITY
AND CAPITAL RESOURCES



Cash
as of August 31, 2018 was $28,906 compared to cash of $1,040 as of August 31, 2017.





47







For
the year ended August 31, 2018, the primary use of funds was related to general administrative expenses. The Company’s working
capital deficiency at August 31, 2018 was $799,588.



For
the year ended August 31, 2017, the primary use of funds was related to general administrative expenses and the US $65,000 advance
to Catch Star. The Company’s working capital deficiency at August 31, 2017 was $487,776.



Current
assets of $33,043 as at August 31, 2018 include cash of $28,906 ($1,040 as at August 31, 2017) and $4,137 of other receivables
($41,007 as at August 31, 2017). Current liabilities as at August 31, 2018 of $832,631 include trade and other payables of $703,306
($529,823 as at August 31, 2017), short term advances from related party of $49,415 ($Nil as at August 31, 2017) and $79,910 of
shareholder loans ($Nil as at August 31, 2017).



Management
of the Company recognizes that cash flow from operations is not sufficient meet its working capital requirements or fund additional
opportunities or ventures of merit. The Company has liquidity risk which necessitates the Company to obtain debt financing or
raise additional equity. There is no assurance the Company will be able to obtain the necessary financing in a timely manner.



The
Company’s past primary source of liquidity and capital resources has been proceeds from the issuance of share capital, shareholders’
loans and cash flow from oil and gas operations. If the Company issued additional shares of our common stock from treasury it
would cause the current shareholders of the Company dilution.



Outlook
and Capital Requirements

We
anticipate further expenditures to expand our current business plan. Amounts expended on future opportunities and ventures of
merit is dependent on the nature of the opportunities evaluated by us. Any expenditure which exceeds available cash will be required
to be funded by additional share capital or debt issued by us, or by other means. Our long-term profitability will depend upon
its ability to successfully implement its business plan.



B.       RESEARCH
AND DEVELOPMENT, PATENTS AND LICENSES



We
do not engage in research and development activities.



C.       TREND
INFORMATION



The
current trend of cannabis legalization in the United States has resulted in a significant opportunity. 54% of the U.S. population
now lives in a state where marijuana has been legalized. The U.S. cannabis industry is projected to reach US$20.8 billion by year
2021 in consumer spending which is expected to generate an overall economic impact (based primarily on purchases by consumers
and indirect revenue for growers and various subcontractors as well as money spent with businesses not affiliated with the sector,
such as supermarkets) of $39.6 billion, 414,000 jobs and US$4 billion in tax receipts [Source: Report from Arcview Market Research
and BDS Analytics, January 2018].



Consumer
preferences change from time to time and can be affected by a number of different and unexpected trends. The Company’s failure
to anticipate, identify or react quickly to these changes and trends, and to introduce new and improved products on a timely basis,
could result in reduced demand for the Company’s products, which would in turn could result in a material adverse effect
on the Company.



D.       OFF-BALANCE
SHEET ARRANGEMENTS

The
Company has no off-balance sheet arrangements.



E.       TABULAR
DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The
following table illustrates the contractual maturities of financial liabilities:



|August 31, 2018             |  | Payments Due by Period $
|--------------------------- |  | ------------------------
|                            |  | Total                   
|Trade and other payables    |  |                         
|Shareholder loans           |  |                         
|Advances from related party |  |                         
|Total                       |  |                         





48







|August 31, 2017          |  | Payments Due by Period $ |        
|------------------------ |  | ------------------------ | -------
|                         |  | Total                    |        
|Trade and other payables |  |                          | 529,823
|Total                    |  |                          | 529,823



SECURED
NOTE PAYABLE, SHAREHOLDERS’ LOANS, NOTES PAYABLE AND DEBT CONVERSION



Shareholder
Loans

As
at August 31, 2018, the Company had shareholders’ loans payable of $79,910 (August 31, 2017: $Nil; August 31, 2016: $Nil).
The August 31, 2018 balance consisted of advances in two currencies: $53,800 payable in Canadian Dollars and $26,110 that includes
$20,000US with foreign exchange of $6,110.



Effective
August 30, 2014, the Company converted shareholders’ loans and interest due in the aggregate amount of $1,180,570 through
the issuance of a total of 147,571 units in the capital of the Company. The terms of the August 30, 2014, conversion agreements
contained an anti-dilution provision such that if within 18 months of the effective date, the Company issues additional shares
of our common stock for a consideration per share or with an exercise or conversion price per share, less than $8.00 (the “Adjusted
Price”) the Holder herein shall be entitled to receive from the Company (for no additional consideration) additional Units
in an amount such that, when added to the number of Units acquired by Holder under this agreement will equal the number of Units
that the Holder would otherwise be entitled to receive had this transaction occurred at the Adjusted Price. Effective November
18, 2015, the Company issued a total of 103,299 Units in the capital of the Company pursuant to the Adjusted Price. The warrant
component was valued using a Binomial Lattice model whereas the fair value of the common share component was based on the current
market value of the company’s stock. The fair value of the units of $6,896,800 was allocated to the common shares in the
amount of $5,034,157 and warrants in the amount of $1,862,643 based on their relative fair values and $6,896,800 was recognized
as a loss on settlement of debt in the statement of operations.



Significant
assumptions utilized in the Binomial Lattice process for the warrant component of the conversion were as follows:



|                                                           |  | November 18, 2015
|---------------------------------------------------------- |  | -----------------
|Market value on valuation date                             |  | $                
|Contractual exercise rate                                  |  | $                
|Term                                                       |  |                  
|Expected market volatility                                 |  |                  
|Risk free rate using zero coupon US Treasury Security rate |  |                  



Loans
Payable

As
at August 31, 2018, 2017 and 2016, the Company had loans payable of $Nil.



For
the year ended August 31, 2016, the Company recorded interest on loans payable of $4,945. Effective November 18, 2015, the Company
converted loans and interest due in the aggregate amount of $899,660 through the issuance of 680,068 shares of our common stock.
The fair value of the common shares of $4,540,474 was allocated to common shares and $3,640,814 was recorded as loss on settlement
of debt in the consolidated statement of operations.



On
February 29, 2016, the Company entered into asset purchase and debt settlement agreement and converted loans and interest in the
aggregate amount of $277,473 in exchange for the Company’s 0.03% net smelter return royalty on 8 mining claim blocks located
in Red Lake, Ontario which were carried on the consolidated statement of financial position at $Nil. Accordingly, the Company
recorded a gain on settlement of debt for the full amount.



49







Debt
Conversion

On
February 29, 2016, the Company converted debt in the aggregate amount of $451,557 through the issuance of 150,519 units in the
capital of the Company. Each unit was comprised of one (1) common share and one (1) common share purchase warrant. Each full warrant
entitles the holder to purchase one (1) common share at an exercise price of $3.50 until March 1, 2019. The fair value of the
units of $1,220,709 was allocated to common shares in the amount of $638,295 and warrants in the amount of $582,414 based on their
relative fair values and $769,152 was recognized as a loss on extinguishment of debt in the consolidated statement of operations.
Significant assumptions utilized in the Binomial Lattice process for the warrant component of the conversion were as follows:



|                                                               |  | February
    29, 2016 |                                                 
|-------------------------------------------------------------- |  | --------------------- | ------------------------------------------------
|Market
    value on valuation date                             |  | $                     | 8.10                                            
|Contractual exercise rate                                      |  | $                     | 3.50                                            
|Term                                                           |  |                       | 3
                                         years
|Expected market
    volatility                                 |  |                       | 169.73                                          
|Risk free rate
    using zero coupon US Treasury Security rate |  |                       | 0.91                                            



Effective
November 18, 2015, the Company entered into a shares for debt conversion agreement and converted a note and interest payable to
Core Energy Enterprises Inc. (“Core”) in the aggregate amount of $362,793 through the issuance of 274,243 shares of
our common stock. The fair value of the common shares of $1,830,983 was recorded as an increase to shares of our common stock
and $1,468,190 was recorded as a loss on settlement of debt in the consolidated statement of operations. The CFO of the Company
is a major shareholder, officer and a director of Core.



DERIVATIVE
LIABILITIES



As
at August 31, 2018 and August 31, 2017, the Company had no derivative warrant liabilities. As at August 31, 2016, the Company
had 175,000 derivative warrant liabilities outstanding with a fair value of $Nil. As at August 31, 2017, the Company recorded
a gain on expiry of derivative warrant liabilities of $Nil (August 31, 2016: $281,210). The Company had warrants issued with a
cashless exercise price and warrants issued with an exercise price in US dollars which was different from the functional currency
of the Company and accordingly the warrants were treated as financial liabilities. The fair value movement during the periods
were recognized in the profit or loss. The following table sets out the changes in derivative warrant liabilities during the respective
periods:



|                               |  | Number of Warrants |          |   | Fair Value Assigned $ |  |            | Average Exercise
 Price $ | 
|------------------------------ |  | ------------------ | -------- | - | --------------------- |  | ---------- | ------------------------- | 
|As at August 31, 2014          |  |                    | 7,439    |   |                       |  | 1,325,307  |                           | 
|Warrants expired               |  |                    | (6,134   | ) |                       |  | (1,258,206 | )                         | 
|Change in fair value estimates |  |                    | —        |   |                       |  | 214,109    |                           | 
|As at August 31, 2015          |  |                    | 1,305    |   |                       |  | 281,210    |                           | 
|Warrants expired               |  |                    | (1,305   | ) |                       |  | (281,210   | )                         | 
|Warrants issued                |  |                    | 175,000  |   |                       |  | —          |                           | 
|As at August 31, 2016          |  |                    | 175,000  |   |                       |  | —          |                           | 
|Warrants expired               |  |                    | (175,000 | ) |                       |  | —          |                           | 
|As at August 31, 2017 and 2018 |  |                    | —        |   |                       |  | —          |                           | 



On
September 25, 2015, 1,305 warrants expired, and the fair value measured using the Black-Scholes option pricing model of $281,210
was recorded as a gain on expiry of derivative liabilities on the consolidated statement of operations.



On
June 22, 2016, the Company entered into a consulting agreement and issued 175,000 common share purchase warrants exercisable at
$15.00 with a cashless exercise option. At August 31, 2016, the Company determined that it would not continue with the agreement
and it was suspended and on January 15, 2017, the agreement was mutually terminated no warrants were exercised.



As
at August 31, 2018 and August 31, 2017, no derivative warrants liabilities were outstanding.



F.       SAFE
HARBOR



Certain
statements in Item 5.E and 5.F of this Annual Report may constitute “forward looking statements” within the meaning
of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act
of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable
by the terminology used such as “plans”, “expects”, “estimates”, “budgets”, “intends”,
“anticipates”, “believes”, “projects”, “indicates”, “targets”, “objective”,
“could”, “may”, or other similar words. The forward-looking statements are subject to known and unknown
risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially
from those expressed or implied by such statements. Readers should not place undue reliance on any forward-looking statement and
should recognize that the statements are predictions of future results, which may not occur as anticipated.





50







| | ITEM
                                         6 | DIRECTORS,
                                         SENIOR MANAGEMENT AND EMPLOYEES
| | ----------------------------------------------- | -----------------------------------------------------------------------------------



A.       DIRECTORS
AND SENIOR MANAGEMENT



The
following table sets forth the names of all of our directors and executive officers as of the date of the filing of this Annual
Report, with each position and office held by them in our Company, and the period of their service as a director or as an officer.



|Name                  | Position
    with the Company                                                                            | Date
    First Elected or Appointed                       
|--------------------- | -------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------
|J.
    Obie Strickler | President,
                                         Chief Executive
        Officer
        and Director | November
                                         15, 2018
|Jacques
    Habra     | Chief
    Strategy Officer                                                                               | November
    15, 2018                                     
|Michael
    Johnston  | Chief
                                         Financial Officer and
        Corporate
        Secretary | November
    15, 2018                                     
|Abhilash
    Patel    | Director                                                                                                 | November
    15, 2018                                     
|Stephen
    Gledhill  | Director                                                                                                 | November
    15, 2018                                     



All
of our directors serve until our next Annual General Meeting or until a successor is duly elected, unless the office is vacated
in accordance with our Articles or Bylaws. Subject to the terms of their employment agreements, if any, executive officers are
appointed by the Board of Directors to serve until the earlier of their resignation or removal, with or without cause by the directors.
Mr. Strickler, our President, devotes 100% of his work time to his duties as an officer and director of the Company.



There
are no family relationships between any of our directors or executive officers. There are no arrangements or understandings between
any two or more directors or executive officers.



J.
Obie Strickler – President, Chief Executive Officer and Director. Mr. Strickler is the President, Chief Executive Officer
and Chairman of the Company. He is also CEO, President, and founder of GRUS. He founded Canopy Management, LLC in 2015 to consolidate
the three medical facilities he had operated since 2006 within one company. Mr. Strickler formed GRUS in 2016 and entered the
Oregon recreational cannabis market with a plan to build a multi-national cannabis brand. Mr. Strickler has been active in the
Oregon medical marijuana market since early 2000 where he organically scaled a single 15 plant property to four separate facilities
with approximately 200 outdoor plants and 30 lights operating indoors. Mr. Strickler has a BS in Geology from Southern Oregon
University and is also an Oregon Professional Geologist. During the time he was financing and overseeing Canopy’s growth
he was also the regional manager for a large multi-service environmental company where he oversaw a staff of 15 people before
starting his own business in 2011 to provide management services to large natural resource companies primarily in the mining sector.
In this role, he was responsible for building and integrating complex technical teams to advance large, world-class, multi-billion-dollar
mining projects from exploration through feasibility primarily in base and precious metals. In 2014, Mr. Strickler teamed with
aerospace engineers to form HyperSciences, Inc a platform technology company focused on commercializing hypervelocity technology
into a variety of industrial applications. Mr. Strickler helped secure a large contract with one of the world’s larger oil
and gas providers to solve deep drilling challenges and moved this project through proof of concept before departing to focus
on the opportunities in cannabis full time. Mr. Strickler will take his production experience in the cannabis industry and his
integration and execution experience from the natural resource industry to build GRUS into a premier cannabis company. Mr. Strickler
is 38 years old and is employed on a full time basis with the Company. Mr. Strickler has signed a non-competition and non-disclosure
agreement with the Company.



Jacques
Habra – Chief Strategy Officer. Mr. Habra is the Chief Strategy Officer of the Company responsible for branding, marketing,
communications, and Company strategy. Mr. Habra is an award-winning entrepreneur who has launched multiple companies with successful
exits in various sectors including technology, electronics, and real estate. Mr. Habra graduated from the University of Michigan
with a degree in English and Philosophy with Honors. National success stories include founding and sale of Web Elite, lead investor
and interim CEO of TrackR (recently awarded $50MM in Series B funding from Amazon), and founding and financing of SelfEcho. Mr.
Habra serves on several non-profit boards in the greater Santa Barbara community and in 2016 was named Entrepreneur of the Year
by the Santa Barbara Technology and Industry Association. Jacques’ leadership at GRUS has led to private equity investment,
an emphasis on “Experience” branding, and successful growth strategy. Mr. Habra is 44 years old and is an independent
contractor providing services on a full time basis to the Company. Mr. Habra has signed a non-competition and non-disclosure agreement
with the Company.





51







Michael
Johnston – Chief Financial Officer and Corporate Secretary. Mr. Johnston is a graduate of Western University, and joined
Forbes Andersen LLP, Chartered Professional Accountants in 2004 and became a partner in 2012. Mr. Johnston has over 10 years of
experience with both private and public companies in various capacities, including that of Chief Financial Officer. Mr. Johnston
is 37 years old and is an independent contractor providing services on a part time (30%) basis to the Company. Mr. Johnston has
signed a non-disclosure agreement with the Company but has not signed a non-competition agreement with the Company.



Abhilash
Patel – Director. Mr. Patel is a serial entrepreneur, venture investor, speaker, and philanthropist. He is currently Founder
& Principal at Lotus Capital, an early-stage investment fund in Santa Monica, CA. He is on the Board of Directors for several
non-profit organizations in Southern California, including the Los Angeles Food Bank, Junior Achievement of Southern California,
and 10,000 Beds. Previously, Mr. Patel was founder and CEO at Ranklab, a digital marketing agency listed in Inc. Magazine’s
fastest growing private companies in 2015, and Co-founder at Recovery Brands, a digital publishing company based in San Diego,
CA. In 2015 both companies were acquired by AAC, Holdings Inc. and Mr. Patel remained in an active leadership position at both
companies until his exit in late 2016. Mr. Patel holds a Bachelor of Arts in Economics and Philosophy from Columbia University,
and a Master of Business Administration from the University of California, Los Angeles’ Anderson School of Management. Mr.
Patel’s work has been featured in several major publications, including Inc., Huffington Post, Forbes, and Entrepreneur,
USA Today, among others. Dr. Drew., Inc. named Mr. Patel “One of 20 Inspiring Entrepreneurs Improving Health for All”
and Forbes highlights him in an interview entitled “How Web Publishing is Saving Lives”. Mr. Patel is 38 years old
and intends to devote the time necessary to serve as a director of the Company, which is estimated to be 10% of his time. Mr.
Patel has signed a non-disclosure agreement with the Company but has not signed a non-competition agreement with the Company.



Stephen
Gledhill – Director and Audit Committee Chairman. Mr. Gledhill is a founding member and Managing Director of RG Mining Investments
Inc. and RG Management Services Inc., both of which are accounting, administrative and corporate secretarial services companies.
In 1992, he formed Keshill Consulting Associates Inc., a boutique management consulting practice. Mr. Gledhill has over 25 years
of financial-control experience and acts as CFO and Corporate Secretary for multiple publicly-traded companies, several of which
he was instrumental in scaling-up and taking public. He currently serves as the CFO of Caracara Silver Inc. (TSXV:CSV) and CO2
Gro Inc. (TSXV:GROW). Prior to the inception of RGMI and RGMS, Mr. Gledhill served as the Senior Vice President and CFO of Borealis
Capital Corporation, a Toronto-based merchant bank as well as Vice President of Finance of OMERS Realty Corporation (ORC), the
real estate entity of the Ontario Municipal Employees Retirement System. Mr. Gledhill is a Chartered Public Accountant and Certified
Management Accountant and holds a Bachelor of Math Degree from the University of Waterloo. Mr. Gledhill is 57 years old and intends
to devote the time necessary to serve as a director of the Company, which is expected to be 10% of his time. Mr. Gledhill has
signed a non-disclosure agreement with the Company but has not signed a non-competition agreement with the Company.



B.       COMPENSATION



Executive
Compensation



The
following table presents a summary of all annual and long-term compensation paid or accrued by us including our subsidiaries,
for services rendered to us by our executive officers and directors in any capacity for the year ended August 31, 2018.



|Summary Compensation Table                               
|---------------------------------------------------------
|Name and Principal Position                              
|                                                         
|James Cassina, Chief Financial Officer and Director      
|Ritwik Uban, Chief Executive Officer, President, Director
|Dikshant Batra, Director                                 
|J. Obie Strickler                                        
|Jacques Habra                                            
|Michael Johnston                                         
|Abhilash Patel                                           
|Stephen Gledhill                                         





52







As
of November 15, 2018, Mr. Cassina, Mr. Uban, and Mr. Batra are no longer employed by the Company.



Outstanding
Option-Based Awards

As
at August 31, 2018, there are no outstanding stock options for the Company.



Compensation
Discussion and Analysis



Objective
of the Compensation Program



The
objectives of the Company’s compensation program are to attract, hold and inspire performance of its Named Executive Officers
(“NEOs”) of a quality and nature that will enhance the sustainable profitability and growth of the Company. The Company
views it as an important objective of the Company’s compensation program to ensure staff retention.



The
Compensation Review Process



To
determine compensation payable, the compensation committee of the Company (the “Compensation Committee”) determines
an appropriate compensation reflecting the need to provide incentive and compensation for the time and effort expended by the
NEOs of the Company while taking into account the financial and other resources of the Company.



The
Company’s Compensation Committee is comprised of J. Obie Strickler, Abhilash Patel and Stephen Gledhill. Compensation is
determined in the context of our strategic plan, our growth, shareholder returns and other achievements and considered in the
context of position descriptions, goals and the performance of each NEO. With respect to directors’ compensation, the Compensation
Committee reviews the level and form of compensation received by the directors, members of each committee, the board chair and
the chair of each board committee, considering the duties and responsibilities of each director, his or her past service and continuing
duties in service to us. The compensation of directors, the CEO and executive officers of competitors are considered, to the extent
publicly available, in determining compensation and the Compensation Committee has the power to engage a compensation consultant
or advisor to assist in determining appropriate compensation.



Elements
of Executive Compensation



The
Company’s NEO compensation program is based on the objectives of: (a) recruiting and retaining the executives critical to
the success of the Company; (b) providing fair and competitive compensation; (c) balancing the interests of management and shareholders
of the Company; and (d) rewarding performance, on the basis of both individual and corporate performance.



For
the financial year ended August 31, 2018, the Company’s NEO compensation program consisted of the following elements:



| | (a) | a
                                         management fee (the “Short-Term Incentive”).
| | --- | ---------------------------------------------------------------------------------------

| | (b) | a
                                         long-term equity compensation consisting of stock options granted under the Company’s
                                         stock incentive plan (“Long-Term Incentive”).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
specific rationale and design of each of these elements are outlined in detail below.



Short-Term
Incentive

Salaries
form an essential element of the Company’s compensation mix as they are the first base measure to compare and remain competitive
relative to peer groups. Base salaries are fixed and therefore not subject to uncertainty and are used as the base to determine
other elements of compensation and benefits. The base salary provides an immediate cash incentive for the Named Executive Officers.
The Compensation Committee and the Board review salaries at least annually.





53







Base
salary/management fees of the Named Executive Officers are set by the Compensation Committee on the basis of the applicable officer’s
responsibilities, experience and past performance. In determining the base salary to be paid to a particular Named Executive Officer,
the Compensation Committee considers the particular responsibilities related to the position, the experience level of the officer,
and his or her past performance at the Company and the current financial position of the Company.



Long-Term
Incentive

The
granting of stock options is a variable component of compensation intended to reward the Company’s Named Executive Officers
for their success in achieving sustained, long-term profitability and increases in stock value. Stock options may be provided
to enhance the Named Executive Officers motivation to achieve long-term growth of the Company and increases in shareholder value.
The Company provides long-term incentive compensation through its stock option plan. The Compensation Committee recommends the
granting of stock options from time to time based on its assessment of the appropriateness of doing so in light of the long-term
strategic objectives of the Company, its current stage of development, the need to retain or attract particular key personnel,
the number of stock options already outstanding and overall market conditions. The Compensation Committee views the granting of
stock options as a means of promoting the success of the Company and higher returns to its shareholders. The Board grants stock
options after reviewing recommendations made by the Compensation Committee.



Stock
Option Plan

The
Company’s Amended Stock Option Plan (the “Plan”) was adopted by the Board of Directors on January 20, 2012 and
approved by a majority of our shareholders voting at the Annual and Special Meeting held on February 24, 2012. The Plan was adopted
in order that we may be able to provide incentives for directors, officers, employees, consultants and other persons (an “Eligible
Individual”) to participate in our growth and development by providing us with the opportunity through share options to
acquire an ownership interest in us. Directors and officers currently are not remunerated for their services except as stated
in “Executive Compensation” above.



The
maximum number of shares of our common stock which may be set aside for issue under the Plan is an amount not to exceed 20% of
the total shares issued and outstanding of the Company as of the date of each Option grant provided that the board has the right,
from time to time, to increase such number subject to the approval of our shareholders and any relevant stock exchange or other
regulatory authority. Any shares of our common stock subject to an option, which are not exercised, will be available for subsequent
grant under the Plan. The option price of any shares of our common stock is to be determined by the Board in its sole discretion.



Options
granted under the Plan may be exercised during a period no exceeding five years, subject to earlier termination upon the optionee
ceasing to be an Eligible Individual, or, in accordance with the terms of the grant of the option. The options are non-transferable
and non-assignable except between an Eligible Individual and a related corporation controlled by such Eligible Individual upon
the consent of the Board of Directors. The Plan contains provisions for adjustment in the number of shares issuable there under
in the event of subdivision, consolidation, reclassification, reorganization or change in the number of shares of our common stock,
a merger or other relevant change in the Company’s capitalization. The Board of Directors may from time to time amend or
revise the terms of the Plan or may terminate the Plan at any time. The Company does not have any other long-term incentive plans,
including any supplemental executive retirement plans.



Overview
of How the Compensation Program Fits with Compensation Goals



The
compensation package is designed to meet the goal of attracting, holding and motivating key talent in a highly competitive oil
and gas exploration environment through salary and providing an opportunity to participate in the Company’s growth through
stock options. Through the grant of stock options, if the price of the Company shares increases over time, both the Named Executive
Officer and shareholders will benefit.



Incentive
Plan Awards

At
August 31, 2018, the Company has no outstanding stock options.



Pension
Plan Benefits

The
Company does not currently provide pension plan benefits to its Named Executive Officers.



54









Termination
and Change of Control Benefits

At
August 31, 2016, the Company did not have executive employment agreements in place with any of its Named Executive Officers that
include termination or change of control benefits; except that Ritwik Uban, subsequent to the year and, on September 9, 2016,
executed an employment agreement that provided for consideration in the event of termination or change of control.



The
Company has no compensatory plan, contract or arrangement where a named executive officer or director is entitled to receive compensation
in the event of resignation, retirement, termination, change of control or a change in responsibilities following a change in
control; except that Ritwik Uban, subsequent to the year and, on September 9, 2016, executed an employment agreement that provided
for consideration in the event of termination or change of control.



Director
Compensation

Each
director of the Company is entitled to receive the sum of $100 for each meeting of the directors, meeting of a committee of the
directors or meeting of the shareholders attended. During the fiscal year ended August 31, 2018, no amount was paid ($3,800 accrued)
by the Company with respect to such fees.



Retirement
Policy for Directors

The
Company does not have a retirement policy for its directors.



Directors’
and Officers’ Liability Insurance

The
Company does not maintain directors’ and officers’ liability insurance.



| | C. | BOARD
PRACTICES
| | -- | ---------------



Board
of Directors

The
mandate of our Board of Directors, prescribed by the Business Corporations Act (Ontario), is to manage or supervise the management
of our business and affairs and to act with a view to our best interests. In doing so, the board oversees the management of our
affairs directly and through its committees.



Mr.
Strickler, Mr. Patel, and Mr. Gledhill were appointed as directors on November 15, 2018. The terms of Mr. Uban and Mr. Batra as
directors began on September 9, 2016 and ended upon their resignations on November 14, 2018. The term of Mr. Cassina as director
began on February 9, 2010 and ended upon his resignation on November 14, 2018. The term of Mr. Klyman as a director began on August
10, 2000 and ended upon his resignation on September 9, 2016. Mr. Budden was appointed on December 22, 2015 and resigned on September
9, 2016. Our directors serve until our next Annual General Meeting or until a successor is duly elected, unless the office is
vacated in accordance with our Articles or Bylaws. Our chief executive officer, our president and our chief financial officer
were appointed by our Board of Directors to serve until the earlier of their resignation or removal, with or without cause by
the directors. There was no compensation paid by us to our directors during the fiscal year ended August 31, 2017 for their services
in their capacity as directors or any compensation paid to committee members.



As
of the date of this Annual Report our Board of Directors consists of three directors, two of which are considered “independent
directors” in that they are “independent from management and free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere with the directors ability to act with a view to our best
interests, other than interests and relationships arising from their shareholding”. It is our practice to attempt to maintain
a diversity of professional and personal experience among our directors.



The
Company holds meetings as required, at which the opinions of the directors are sought by management and duly acted upon for all
material matters relating to the Company.



Directorships



As
at August 31, 2018, none of the Company’s directors were directors of other Canadian or United States reporting issuers.



As
at November 30, 2018, the following director and officer of the Company also serves as directors and/or officers of other reporting
issuers, as follows:



|Stephen
    Gledhill | CFO
                           of Caracara Silver Inc. (TSXV)
        CFO
        of CO2 Gro Inc. (TSXV)
|-------------------- | --------------------------------------------------------------------------------------------------------





55







Board
and Committee Meetings

The
Board of Directors has met at least once annually or otherwise as circumstances warrant to review our business operations, corporate
governance and financial results. The table below reflects the attendance of each director of ours at each Board and committee
meeting of the Board during the fiscal year ended August 31, 2018.



|Name              | Board
                           of
        Directors
        Meetings | Audit
        Committee
        Meetings | Compensation
        Committee
        Meetings | Disclosure
        Committee
        Meetings
|----------------- | ---------------------------------------------------------------------- | ---------------------------------------- | ----------------------------------------------- | ---------------------------------------------
|James
    Cassina | 1                                                                      | 1                                        | Nil                                             | Nil                                          
|Ritwik Uban       | Nil                                                                    | 1                                        | Nil                                             | Nil                                          
|Dikshant Batra    | 1                                                                      | 1                                        | Nil                                             | Nil                                          



Board
Mandate

The
Board assumes responsibility for stewardship of the Company, including overseeing all of the operation of the business, supervising
management and setting milestones for the Company. The Board reviews the statements of responsibilities for the Company including,
but not limited to, the code of ethics and expectations for business conduct.



The
Board approves all significant decisions that affect the Company and its subsidiaries and sets specific milestones towards which
management directs their efforts.



The
Board ensures, at least annually, that there are long-term goals and a strategic planning process in place for the Company and
participates with management directly or through its committees in developing and approving the mission of the business of the
Company and the strategic plan by which it proposes to achieve its goals, which strategic plan takes into account, among other
things, the opportunities and risks of the Company’s business. The strategic planning process is carried out at each Board
meeting where there are regularly reviewed specific milestones for the Company.



The
strategic planning process incorporates identifying the main risks to the Company’s objectives and ensuring that mitigation
plans are in place to manage and minimize these risks. The Board also takes responsibility for identifying the principal risks
of the Company’s business and for ensuring these risks are effectively monitored and mitigated to the extent practicable.
The Board appoints senior management.



The
Company adheres to regulatory requirements with respect to the timeliness and content of its disclosure. The Board approves all
of the Company’s major communications, including annual and quarterly reports and press releases. The Chief Executive Officer
authorizes the issuance of news releases. The Chief Executive Officer is generally the only individual authorized to communicate
with analysts, the news media and investors about information concerning the Company.



The
Board and the audit committee of the Company (the “Audit Committee”) examines the effectiveness of the Company’s
internal control processes and information systems.



The
Board as a whole, given its small size, is involved in developing the Company’s approach to corporate governance. The number
of scheduled board meetings varies with circumstances. In addition, special meetings are called as necessary. The Chief Executive
Officer establishes the agenda at each Board meeting and submits a draft to each director for their review and recommendation
for items for inclusion on the agenda. Each director has the ability to raise subjects that are not on the agenda at any board
meeting. Meeting agendas and other materials to be reviewed and/or discussed for action by the Board are distributed to directors
in time for review prior to each meeting. Board members have full and free access to senior management and employees of the Company.



Position
Descriptions

The
Board has not developed written position descriptions for the Chairman of the Board, the Chief Executive Officer, Chief Financial
Officer or the President (the “Officers”). The Board is currently of the view that the respective corporate governance
roles of the Board and management, as represented by the Officers, are clear and that the limits to management’s responsibility
and authority are well-defined.



Each
of the Audit Committee, Compensation Committee and Disclosure Committee has a chair and a mandate.





56







Orientation
and Continuing Education

We
have developed an orientation program for new directors including a director’s manual (“Director’s Manual”)
which contains information regarding the roles and responsibilities of the board, each board committee, the board chair, the chair
of each board committee and our president. The Director’s Manual contains information regarding its organizational structure,
governance policies including the Board Mandate and each Board committee charter, and our code of business conduct and ethics.
The Director’s Manual is updated as our business, governance documents and policies change. We update and inform the board
regarding corporate developments and changes in legal, regulatory and industry requirements affecting us.



Ethical
Business Conduct

We
have adopted a written code of business conduct and ethics (the “Code”) for our directors, officers and employees.
The board encourages following the Code by making it widely available. It is distributed to directors in the Director’s
Manual and to officers, employees and consultants at the commencement of their employment or consultancy. The Code reminds those
engaged in service to us that they are required to report perceived or actual violations of the law, violations of our policies,
dangers to health, safety and the environment, risks to our property, and accounting or auditing irregularities to the chair of
the Audit Committee. In addition to requiring directors, officers and employees to abide by the Code, we encourage consultants,
service providers and all parties who engage in business with us to contact the chair of the Audit Committee regarding any perceived
and all actual breaches by our directors, officers and employees of the Code. The chair of our Audit Committee is responsible
for investigating complaints, presenting complaints to the applicable board committee or the board as a whole, and developing
a plan for promptly and fairly resolving complaints. Upon conclusion of the investigation and resolution of a complaint, the chair
of our Audit Committee will advise the complainant of the corrective action measures that have been taken or advise the complainant
that the complaint has not been substantiated. The Code prohibits retaliation by us, our directors and management, against complainants
who raise concerns in good faith and requires us to maintain the confidentiality of complainants to the greatest extent practical.
Complainants may also submit their concerns anonymously in writing. In addition to the Code, we have an Audit Committee Charter
and a Policy of Procedures for Disclosure Concerning Financial/Accounting Irregularities.



Since
the beginning of our most recently completed financial year, no material change reports have been filed that pertain to any conduct
of a director or executive officer that constitutes a departure from the Code. The board encourages and promotes a culture of
ethical business conduct by appointing directors who demonstrate integrity and high ethical standards in their business dealings
and personal affairs. Directors are required to abide by the Code and expected to make responsible and ethical decisions in discharging
their duties, thereby setting an example of the standard to which management and employees should adhere. The board is required
by the Board Mandate to satisfy our CEO and other executive officers are acting with integrity and fostering a culture of integrity
throughout the Company. The board is responsible for reviewing departures from the Code, reviewing and either providing or denying
waivers from the Code, and disclosing any waivers that are granted in accordance with applicable law. In addition, the board is
responsible for responding to potential conflict of interest situations, particularly with respect to considering existing or
proposed transactions and agreements in respect of which directors or executive officers advise they have a material interest.
The Board Mandate requires that directors and executive officers disclose any interest and the extent, no matter how small, of
their interest in any transaction or agreement with us, and that directors excuse themselves from both board deliberations and
voting in respect of transactions in which they have an interest. By taking these steps the board strives to ensure that directors
exercise independent judgment, unclouded by the relationships of the directors and executive officers to each other and us, in
considering transactions and agreements in respect of which directors and executive officers have an interest.



Nomination
of Directors

The
Board has not appointed a nominating committee and does not believe that such a committee is warranted at the present time. The
entire Board determines new nominees to the Board, although a formal process has not been adopted. The nominees are generally
the result of recruitment efforts by the Board members, including both formal and informal discussions among Board members and
officers. The Board generally looks for the nominee to have significant public company experience. The nominee must not have a
significant conflicting public company association.



Compensation

The
Board determines director and executive officer compensation by recommendation of the Compensation Committee. The Company’s
Compensation Committee reviews the amounts and effectiveness of compensation. The Board reviews the adequacy and form of compensation
and compares it to other companies of similar size and stage of development. There is no minimum share ownership requirement of
directors.



The
Compensation Committee generally convenes at least once annually to review director and officer compensation and status of stock
options. The Compensation Committee also responds to requests from management and the Board to review recommendations of management
for new senior employees and their compensation. The Compensation Committee has the power to approve and/or amend these recommendations.





57







The
Company has felt no need to retain any compensation consultants or advisors at any time since the beginning of the Company’s
most recently completed financial year.



Committees
of the Board

Our
Board of Directors discharges its responsibilities directly and through committees of the Board of Directors, currently consisting
of the Audit Committee, a compensation committee (the “Compensation Committee”), and a disclosure committee
(the “Disclosure Committee”).



Audit
Committee

The
mandate of the Audit Committee is formalized in a written charter. The members of the Audit Committee are J. Obie Strickler, Abhilash
Patel and Stephen Gledhill (Chair). Based on his professional experience, the board has determined that Stephen Gledhill is an
Audit Committee Financial Expert and that J. Obie Strickler and Abhilash Patel are financially literate. The Audit Committee’s
primary duties and responsibilities are to serve as an objective party to monitor our financial reporting process and control
systems, review and appraise the audit activities of our independent auditors, financial and senior management, and the lines
of communication among the independent auditors, financial and senior management, and the Board of Directors for financial reporting
and control matters including investigating fraud, illegal acts or conflicts of interest.



Compensation
Committee

The
mandate of the Compensation Committee is formalized in a written charter. The members of the Compensation Committee are J. Obie
Strickler, Abhilash Patel and Stephen Gledhill. Compensation is determined in the context of our strategic plan, our growth, shareholder
returns and other achievements and considered in the context of position descriptions, goals and the performance of each individual
director and officer. With respect to directors’ compensation, the Compensation Committee reviews the level and form of
compensation received by the directors, members of each committee, the board chair and the chair of each board committee, considering
the duties and responsibilities of each director, his or her past service and continuing duties in service to us. The compensation
of directors, the CEO, CFO and executive officers of competitors are considered, to the extent publicly available, in determining
compensation and the Compensation Committee has the power to engage a compensation consultant or advisor to assist in determining
appropriate compensation.



Disclosure
Committee

The
mandate of the Disclosure Committee is formalized in a written charter. The members of the Disclosure Committee are J. Obie Strickler,
Abhilash Patel and Stephen Gledhill. The Committee’s duties and responsibilities include, but are not limited to, review
and revise our controls and other procedures (“Disclosure and Controls Procedures”) to ensure that (i) information
required by us to be disclosed to the applicable regulatory authorities and other written information that we will disclose to
the public is reported accurately and on a timely basis, and (ii) such information is accumulated and communicated to management,
as appropriate to allow timely decisions regarding required disclosure; assist in documenting and monitoring the integrity and
evaluating the effectiveness of the Disclosure and Control Procedures; the identification and disclosure of material information
about us, the accuracy completeness and timeliness of our financial reports and all communications with the investing public are
timely, factual and accurate and are conducted in accordance with applicable legal and regulatory requirements.



Assessments

The
board assesses, on an annual basis, the contributions of the board as a whole, the Audit Committee and each of the individual
directors, in order to determine whether each is functioning effectively. The board monitors the adequacy of information given
to directors, communication between the board and management and the strategic direction and processes of the board and committees.
The Audit Committee will annually review the Audit Committee Charter and recommend, if any, revisions to the board as necessary.



Relevant
Education and Experience of Audit Committee Members



See
Item 6.A – Directors and Senior Management for biographies of Audit Committee members.



Audit
Committee Charter

| | ● | Our
                                         Audit Committee Charter (the “Charter”) has been adopted by our Board of
                                         Directors. The Audit Committee of the board (the “Committee”) will review
                                         and reassess this charter annually and recommend any proposed changes to the board for
                                         approval. The Audit Committee’s primary duties and responsibilities are to:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





58







| | ● | Oversee
                                         (i) the integrity of our financial statements; (ii) our compliance with legal and regulatory
                                         requirements; and (iii) the independent auditors’ qualifications and independence.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Serve
                                         as an independent and objective party to monitor our financial reporting processes and
                                         internal control systems.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Review
                                         and appraise the audit activities of our independent auditors and the internal auditing
                                         functions.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Provide
                                         open lines of communication among the independent auditors, financial and senior management,
                                         and the board for financial reporting and control matters.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Role
and Independence: Organization

The
Committee assists the board on fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing,
internal control and financial reporting practices. It may also have such other duties as may from time to time be assigned to
it by the board.



The
Audit Committee is to be comprised of at least three directors.

All
members shall, to the satisfaction of the board, be financially literate (i.e. will have the ability to read and understand a
balance sheet, an income statement, a cash flow statement and the notes attached thereto), and at least one member shall have
accounting or related financial management expertise to qualify as “financially sophisticated”. A person will qualify
as “financially sophisticated” if an individual who possesses the following attributes:



| | ● | an
                                         understanding of financial statements and generally accepted accounting principles;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | ● | an
                                         ability to assess the general application of such principles in connection with the accounting
                                         for estimates, accruals and reserves;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | 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 our financial
                                         statements, or experience actively supervising one or more persons engaged in such activities;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | an
                                         understanding of internal controls and procedures for financial reporting; and
| | - | --------------------------------------------------------------------------------------------------------------------------

| | ● | an
                                         understanding of audit committee functions.
| | - | ---------------------------------------------------------------------------------------



The
Committee members will be elected annually at the first meeting of the Board following the annual meeting of shareholders. Each
member of the Committee serves during the pleasure of the Board and, in any event, only so long as he or she is a director.



One
member of the Committee shall be appointed as chair. The chair shall be responsible for leadership of the Committee, including
scheduling and presiding over meetings and making regular reports to the Board. The chair will also maintain regular liaison with
the CEO, CFO, President and the lead independent audit partner.



Responsibilities
and Powers

Although
the Committee may wish to consider other duties from time to time, the general recurring activities of the Committee in carrying
out its oversight role are described below.

| | ● | Annual
                                         review and revision of the Charter as necessary with the approval of the board.
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | ● | Review
                                         and obtain from the independent auditors a formal written statement delineating all relationships
                                         between the auditor and us, consistent with Independence Standards Board Standard 1.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Recommending
                                         to the board the independent auditors to be retained (or nominated for shareholder approval)
                                         to audit our financial statements. Such auditors are ultimately accountable to the board
                                         and the Committee, as representatives of the shareholders.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Evaluating,
                                         together with the board and management, the performance of the independent auditors and,
                                         where appropriate, replacing such auditors.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Obtaining annually from the independent auditors a formal written statement describing all relationships between the auditors and us. The Committee shall actively engage in a dialogue with the independent auditors with respect to any relationship that may impact the objectivity and the independence of the auditors and shall take, or recommend that the board take, appropriate actions
                                                                                to oversee and satisfy itself as to the auditors’ independence.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





59







| | ● | Ensuring
                                         that the independent auditors are prohibited from providing the following non-audit services
                                         and determining which other non-audit services the independent auditors are prohibited
                                         from providing:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ○ | Bookkeeping
                                         or other services related to our accounting records or consolidated financial statements;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------

| | ○ | Financial
                                         information systems design and implementation;
| | - | -------------------------------------------------------------------------------------------------

| | ○ | Appraisal
                                         or valuation services, fairness opinions, or contribution-in-kind reports;
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | ○ | Actuarial
                                         services;
| | - | ------------------------------------------------------------

| | ○ | Internal
                                         audit outsourcing services;
| | - | -----------------------------------------------------------------------------

| | ○ | Management
                                         functions or human resources;
| | - | ---------------------------------------------------------------------------------

| | ○ | Broker
                                         or dealer, investment advisor or investment banking services;
| | - | -------------------------------------------------------------------------------------------------------------

| | ○ | Legal
                                         services and expert services unrelated to the audit; and
| | - | -------------------------------------------------------------------------------------------------------

| | ○ | Any
                                         other services which the Public Company Accounting Oversight Board determines to be impermissible.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Approving
                                         any permissible non-audit engagements of the independent auditors.
| | - | ---------------------------------------------------------------------------------------------------------------------

| | ● | Meeting
                                         with our auditors and management to review the scope of the proposed audit for the current
                                         year, and the audit procedures to be used, and to approve audit fees.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Reviewing
                                         the audited consolidated financial statements and discussing them with management and
                                         the independent auditors. Consideration of the quality our accounting principles as applied
                                         in its financial reporting. Based on such review, the Committee shall make its recommendation
                                         to the Board as to the inclusion of our audited consolidated financial statement in our
                                         Annual Report to Shareholders.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Discussing
                                         with management and the independent auditors the quality and adequacy of and compliance
                                         with our internal controls.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Establishing
                                         procedures: (i) for receiving, handling and retaining of complaints received by us regarding
                                         accounting, internal controls, or auditing matters, and (ii) for employees to submit
                                         confidential anonymous concerns regarding questionable accounting or auditing matters.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Review
                                         and discuss all related party transactions involving us.
| | - | --------------------------------------------------------------------------------------------------------

| | ● | Engaging
                                         independent counsel and other advisors if the Committee determines that such advisors
                                         are necessary to assist the Committee in carrying out its duties.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Publicly
                                         disclose the receipt of warning about any violations of corporate governance rules.
| | - | -------------------------------------------------------------------------------------------------------------------------------------



Authority

The
Committee will have the authority to retain special legal, accounting or other experts for advice, consultation or special investigation.
The Committee may request any officer or employee of ours, our outside legal counsel, or the independent auditor to attend a meeting
of the Committee, or to meet with any member of, or consultants to, the Committee. The Committee will have full access to our
books, records and facilities.



Meetings

The
Committee shall meet at least yearly, or more frequently as the Committee considers necessary. Opportunities should be afforded
periodically to the external auditor and to senior management to meet separately with the independent members of the Committee.
Meetings may be with representatives of the independent auditors, and appropriate members of management, all either individually
or collectively as may be required by the Chairman of the Committee.



The
independent auditors will have direct access to the Committee at their own initiative.



The
Chairman of the Committee will report periodically the Committee’s findings and recommendations to the Board of Directors.



|D. | EMPLOYEES
|-- | ---------



As
of August 31, 2018, we had 2 employees, our president and chief financial officer. As of November 30, 2018, we have 41 employees,
including our chief executive officer, chief strategy officer, and chief financial officer.



| | E. | SHARE
OWNERSHIP
| | -- | ---------------



Shares
of our common stock are owned by Canadian residents, United States residents and residents of other countries. The only class
of our securities, which is outstanding as of the date of the filing of this Annual Report, is common stock. All holders of shares
of our common stock have the same voting rights with respect to their ownership of shares of our common stock.





60







The
following table sets forth as of November 30, 2018, certain information with respect to the amount and nature of beneficial ownership
of shares of our common stock held by (i) each person who is a director or an executive officer of ours; and (ii) all directors
and executive officers of ours, as a group. Shares of our common stock subject to options, warrants, or convertible securities
currently exercisable or convertible or exercisable or convertible within 60 days of the date of filing of this Annual Report
are deemed outstanding for computing the share ownership and percentage of the person holding such options, warrants, or convertible
securities but are not deemed outstanding for computing the percentage of any other person.







|Name and Owner                                    |  | Identity                                        |  | Amount and Nature of
                                               Beneficial Ownership of Common Stock(1) |            | Percentage
|------------------------------------------------- |  | ----------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- | ---------- | ----------
|J. Obie Strickler(2)                              |  | President, Chief Executive Officer and Director |  |                                                                                                             | 29,346,201 |           
|Jacques Habra                                     |  | Chief Strategy Officer                          |  |                                                                                                             | 3,486,769  |           
|Michael Johnston                                  |  | Chief Financial Officer and Corporate Secretary |  |                                                                                                             | *          |           
|Abhilash Patel(3)                                 |  | Director                                        |  |                                                                                                             | 1,586,396  |           
|Stephen Gledhill                                  |  | Director                                        |  |                                                                                                             | *          |           
|All officers and directors as a group (5 persons) |  |                                                 |  |                                                                                                             | 34,419,366 |           



| | (1) | Unless otherwise indicated, the persons named have sole ownership, voting and investment power
with respect to their stock, subject to applicable laws relative to rights of spouses. Percentage ownership is based on 71,655,734
shares of common stock outstanding as of the date of filing of this Annual Report.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Includes 729,432 warrants to purchase common stock at $0.55 per share. Also includes 5,995,011
shares held jointly with his spouse.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------



| | (3) | Includes 896,811 warrants held by Gambit II, LLC to purchase common stock at $0.55 per shares.
Also includes 689,585 shares held by Gambit II, LLC.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------



* less than one percent.





The shares of common stock and warrants to purchase common stock
held by Messrs. Strickler and Habra were escrowed at the closing of the Transaction (the “Escrow Securities”). The
Escrow Securities were and will be released on the following schedule:





|November
    26, 2018, the date the Company’s common stock was  listed on the CSE (the "Listing Date") | 1/10
    of the Escrow Securities         
|------------------------------------------------------------------------------------------------------ | ------------------------------------------
|6
    months after the Listing Date                                                                    | 1/6
    of the remaining Escrow Securities
|12
    months after the Listing Date                                                                   | 1/5
    of the remaining Escrow Securities
|18
    months after the Listing Date                                                                   | 1/4
    of the remaining Escrow Securities
|24
    months after the Listing Date                                                                   | 1/3
    of the remaining Escrow Securities
|30
    months after the Listing Date                                                                   | 1/2
    of the remaining Escrow Securities
|36
    months after the Listing Date                                                                   | remaining
    Escrow Securities           





As
of the date of the filing of this Annual Report, to the knowledge of our management, there are no arrangements which, could at
a subsequent date result in a change in control of us. As of such date, and except as disclosed herein, our management has no
knowledge that we are owned or controlled directly or indirectly by another company or any foreign government.



| | ITEM
                                         7 | MAJOR
                                       SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| | ----------------------------------------------- | ----------------------------------------------------------------------------------------



| | A. | MAJOR
SHAREHOLDERS
| | -- | ------------------



There
are 71,655,734 issued and outstanding shares of our common stock as of November 30, 2018. As of November 30, 2018, to the best
of our knowledge, the following are the only persons who hold directly or indirectly or exercises
control or direction over, shares of our common stock carrying 5% or more of the voting rights attached to all issued and outstanding
shares of the common stock except as stated under Item 6.E above or set out in the table below. The shares of our common stock
owned by our major shareholders have identical voting rights as those owned by our other shareholders.





|Name                      |  | Amount and Nature of
Beneficial Ownership of Common Stock(1) |            | Percentage
|------------------------- |  | ------------------------------------------------------------ | ---------- | ----------
|J. Obie Strickler(2)      |  |                                                              | 29,346,201 |           
|Christopher Lancashire(3) |  |                                                              | 10,141,376 |           
|Edward Coppola(4)         |  |                                                              | 7,656,818  |           



| | (1) | Unless otherwise indicated, the persons named have sole ownership, voting and investment power
with respect to their stock, subject to applicable laws relative to rights of spouses. Percentage ownership is based on 71,655,734
shares of common stock outstanding as of the date of filing of this Annual Report.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Includes 3,527,728 warrants to purchase common stock at $0.55 per share.
| | --- | ------------------------------------------------------------------------



| | (3) | Includes 2,828,409 warrants to purchase common stock at $0.55 per shares.
| | --- | -------------------------------------------------------------------------





61







The
following table discloses the geographic distribution of the majority of the holders of record of our common stock as of date
of November 30, 2018.



|Country   |  | Number
                                                                                          of
        Shareholders |       |  | Number
                                                                                          of
        Shares |  |            | Percentage
                                                                                          of
        Shareholders |  | Percentage
                                                                                          of
        Shares
|--------- |  | ------------------------------------------------------------------------------------------------------------------------ | ----- |  | ------------------------------------------------------------------------------------------------------------------ |  | ---------- | ---------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|Canada    |  |                                                                                                                          | 1,116 |  |                                                                                                                    |  | 35,558,199 |                                                                                                                              |  |                                                                                                                       
|USA       |  |                                                                                                                          | 77    |  |                                                                                                                    |  | 33,785,749 |                                                                                                                              |  |                                                                                                                       
|All Other |  |                                                                                                                          | 23    |  |                                                                                                                    |  | 2,311,786  |                                                                                                                              |  |                                                                                                                       
|Total     |  |                                                                                                                          | 1,216 |  |                                                                                                                    |  | 71,655,734 |                                                                                                                              |  |                                                                                                                       



We
are not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or
legal person. There are no arrangements known to us, the operation of which may at a subsequent date result in a change in the
control of us.



| | B. | RELATED
PARTY TRANSACTIONS
| | -- | --------------------------



Except
as disclosed below, there are no existing or potential material conflicts of interest between the Company or a subsidiary of the
Company and a director or officer of the Company or a subsidiary of the Company.



Obie
Strickler currently owns the Trails End Property that is one of the facility properties leased to GRUP. Grown Rogue pays $5,000
per month in rent for this property and 2.5% of gross sales achieved at the property, all payable in cash. Although this lease
began January 1, 2017, Grown Rogue began paying this amount in October, 2017. As such, Grown Rogue has $45,000 of accrued liabilities
related to nine months’ rent that went unpaid. The rent owed by GRUP to Mr. Strickler is paid in cash at comparable market
rates.



Canopy
Management sold finished product inventory to GR Gardens on May 1, 2017 payable to Canopy Management in cash when such inventory
was processed and sold into the Oregon recreational market. The amount GR Gardens agreed to pay Canopy Management would be reflective
of market prices of the product to retail locations (without additional margin for GR Gardens). All inventory previously owned
by Canopy Management has been liquidated and the amount owed to Canopy Management was adjusted to reflect market price conditions
at the time of sale by GR Gardens in the recreational market. Accordingly, the current adjusted amount owed to Canopy Management
for the purchased inventory is US$180,799. This transaction with Canopy Management was a related party transaction given that,
at the time of the agreement, Mr. J. Obie Strickler was the majority owner and sole manager of Canopy Management and the sole
owner and manager of Grown Rogue.



The
following transactions with individuals related to the Company arose in the normal course of business have been accounted for
at the amount agreed to by the related parties.



Compensation
of Key Management Personnel

The
remuneration of directors and other members of key management personnel during the periods set out were as follows:



|                                     |  | August 31, 2018 |         |  | August 31, 2017 |   |           | August 31, 2016 | 
|------------------------------------ |  | --------------- | ------- |  | --------------- | - | --------- | --------------- | 
|Short term employee benefits (1) (2) |  | $               | 60,200  |  |                 | $ | 129,981   |                 | 
|Stock-based compensation (3)         |  | $               | 204,511 |  |                 |   | 1,614,605 |                 | 
|                                     |  | $               | 264,711 |  |                 | $ | 1,744,586 |                 | 



The
following balances owing to the President and Chief Financial Officer of the Company are included in trade and other payables
and are unsecured, non-interest bearing and due on demand:



|                                            |  | August 31, 2018 |        |  | August 31, 2017 |  
|------------------------------------------- |  | --------------- | ------ |  | --------------- | -
|Short term employee benefits payable (1)(2) |  | $               | 50,398 |  |                 | $
|                                            |  | $               | 50,398 |  |                 | $





62







| | (1) | The
                                         Company accrued management fees to the Chief Financial Officer of the Company at a rate
                                         of $5,000 per month during fiscal 2018, 2017 and 2016 ($12,500 per month during fiscal
                                         2015).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | On
                                         September 9, 2016, the Company entered into an employment agreement with the President
                                         of the Company under which the Company agreed to pay to the President, a base salary
                                         of $90,000 and grant one hundred thousand (100,000) common share purchase options (Note
                                         12 e). Effective May 21, 2017, the Company and the President agreed to amend the terms
                                         of the employment agreement, by reducing the President’s base salary to $10.00
                                         annually, allowing the President to contract his services to Torinit contemporaneous
                                         with his continued employment with the Company and providing a top up provision of up
                                         to $1,500 in a month from the Company if the gross compensation earned by the President
                                         from Torinit during June, July and August 2017 (the “Period”), reduces the
                                         overall compensation earned by the President below $7,500 in any such month during the
                                         Period.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | On
                                         November 12, 2014, the Company granted options to purchase 7,500 shares of our common
                                         stock to three directors. On April 1, 2016, the Company granted options to purchase 30,000
                                         shares of our common stock to a director. On September 9, 2016 and November 1, 2016,
                                         the Company granted options to purchase 130,000 and 50,000 shares of our common stock
                                         to officers and directors.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On
September 1, 2016, the Company entered into an agreement for a period of 12 months with Torinit Technologies
Inc., (“Torinit”) to provide dedicated resource augmentation to DoubleTap in an effort to optimize user
experience while navigating through the http://DoubleTap.co website and drive traffic growth by engaging users across all
demographics (the “Torinit Services”). As consideration for the Torinit Services, the Company agreed to
compensate Torinit the sum of $8,000 per month based on 320 hours per month for a 12 month period. Dikshant Batra, who was a
director of the Company until November 14, 2018, is also the President, a director and major shareholder of Torinit. As at
August 31, 2017, included in trade and other payables is $23,961 due to Torinit.



As
at August 31, 2018, the amount of directors’ fees included in trade and other payables was $40,400 (August 31, 2017: $10,200).



As
at August 31, 2017 and 2016, the Company had a promissory note payable to the former President of the Company of $Nil. For the
year ended August 31, 2016, the Company recorded interest on the promissory note of $496 (August 31, 2015: $838). On February
26, 2016, the former President assigned the promissory note of $10,000 and all accumulated interest due in the amount of $113,844
to an arms-length third party. The note was due on demand with interest at a rate of 10% per annum. Effective November 18, 2015,
the Company issued to the former President 114,009 Units in the capital of the Company pursuant to the anti-dilution provision
contained in the August 30, 2014, debt conversion agreements. On February 29, 2016, the former President converted $38,239 in
outstanding debt into 12,746 units in the capital of the Company.



Effective
November 18, 2015, the Company entered into a shares-for-debt conversion agreement and converted a note and interest payable to
Core Energy Enterprises Inc. (“Core”) in the aggregate amount of $362,793 through the issuance of 274,243 shares of
our common stock. The fair value of the shares of our common stock $1,830,983 was recorded as an increase to shares of our common
stock and $1,468,190 was recorded as a loss on settlement of debt in the statement of operations. The CFO of the Company is a
major shareholder, officer and a director of Core.



During
the Fiscal year 2018, the Company received advances from GRUS for working capital purposes in the amount of $49,415. The amount
was settled upon finalization of the Transaction.



Inter-Company
Balances



As
at August 31, 2018, the inter-company balance due from our wholly owned subsidiary DoubleTap was $309,520.



As
at August 31, 2018, the inter-company balance due from our wholly owned subsidiary ICE Studio was $177,186.



As
of November 30, 2018, the inter-company balance due from DoubleTap was $314,768 and the amount due from ICE Studio was $Nil.



| | C. | INTERESTS
OF EXPERTS AND COUNSEL
| | -- | --------------------------------



Not
Applicable.





63







| | ITEM
                                         8 | FINANCIAL
                                       INFORMATION
| | ----------------------------------------------- | ------------------------------------------------------------



| | A. | CONSOLIDATED
STATEMENTS AND OTHER FINANCIAL INFORMATION
| | -- | -------------------------------------------------------

The
Company’s Audited Consolidated Financial Statements for the fiscal years ended August 31, 2018, 2017, and 2016, and the
notes thereto required as part of this Annual Report are filed under Item 18 of this Annual Report.



Litigation

There
are no pending legal proceedings to which we or our subsidiaries are a party or of which any of our property or assets is the
subject. There are no legal proceedings to which any of the directors, officers or affiliates or any associate of any such directors,
officers or affiliates of either our company or our subsidiary is a party or has a material interest adverse to us.



Dividends

We
have not paid any dividends on our common stock during the past five years. We do not intend to pay dividends on shares of our
common stock in the foreseeable future as we anticipate that our cash resources will be used to finance growth.



| | B. | SIGNIFICANT
CHANGES
| | -- | -------------------

There
have been no significant changes that have occurred since the date of our annual financial statements included with this Annual
Report except as disclosed in this Annual Report.



| | ITEM
                                         9 | THE
                                       OFFER AND LISTING
| | ----------------------------------------------- | ------------------------------------------------------------



Common
Shares

Our
authorized capital consists of an unlimited number of shares of our common stock without par value, of which 71,655,734 were issued
and outstanding as of November 30, 2018. All shares are initially issued in registered form. There are no restrictions on the
transferability of shares of our common stock imposed by our Articles of Amalgamation. Holders of shares of our common stock are
entitled to one vote for each common share held of record on all matters to be acted upon by our shareholders. Holders of shares
of our common stock are entitled to receive such dividends as may be declared from time to time by our Board of Directors, in
their discretion. In addition we are authorized to issue an unlimited number of preferred shares, issuable in series with such
rights, preferences and privileges as may be determined from time to time by our Board of Directors and consistent with our Articles
of Amendment of which Nil preferred shares were issued and outstanding at November 30, 2017.



Shares
of our common stock entitle their holders to: (i) vote at all meetings of our shareholders except meetings at which only holders
of specified classes of shares are entitled to vote, having one vote per common share, (ii) receive dividends at the discretion
of our Board of Directors; and (iii) receive our remaining property on liquidation, dissolution or winding up.



| | A. | OFFER
AND LISTING DETAILS
| | -- | -------------------------



Our
common stock became eligible for trading on October 22, 2009 on the Over the Counter Bulletin Board (“OTCBB”) under
the symbol (“EGNKF”). Following the amalgamation on November 30, 2009 with our wholly owned subsidiary 1406768 Ontario,
we changed our name to Eagleford Energy Inc. and commenced trading under the symbol (“EFRDF”). Prior to our common
stock being included on the OTC Markets, our common stock had not publicly traded in the United States. We completed a 2-for-1
forward stock split, pursuant to which one (1) newly-issued share of the Company’s common stock was issued to each holder
of a share of common stock as of the close of business on March 16, 2012. On August 31, 2014 we completed a 1-for-10 stock consolidation
and following commenced trading under the symbol (“EGFDF”). On February 1, 2016, we changed our name to Intelligent
Content Enterprises Inc. and completed a 1-for-10 stock consolidation and following commenced trading on the OTCQB under the symbol
(“ICEIF”). On May 26, 2017, we changed our name from Intelligent Content Enterprises Inc., to Novicuis Corp., and
completed a 1-for-10 stock consolidation and following commenced trading on the OTCQB under the symbol (“NVSIF”)



On
November 18, 2016, shares of our common stock commenced trading on the Canadian Securities Exchange (“CSE”), under
the symbol “ISP”. On May 26, 2017, we changed our name from Intelligent Content Enterprises Inc., to Novicuis Corp.,
and completed a 1-for-10 stock consolidation and following commenced trading on the CSE under the symbol (“GRIN”).





64







The
following table set forth the reported high and low bid prices for shares of our common stock on the OTCQB in US dollars for the
periods indicated.



|                            |  | Period                          |  |  | High (2) |        |  | Low(2) |  
|--------------------------- |  | ------------------------------- |  |  | -------- | ------ |  | ------ | -
|Fiscal Year August 31, 2018 |  | Year Ended August 31, 2018      |  |  | $        | 0.26   |  |        | $
|Fiscal Year August 31, 2017 |  | Year Ended August 31, 2017      |  |  | $        | 10.90  |  |        | $
|Fiscal Year August 31, 2016 |  | Year Ended August 31, 2016      |  |  | $        | 24.70  |  |        | $
|Fiscal Year August 31, 2015 |  | Year Ended August 31, 2015      |  |  | $        | 40.00  |  |        | $
|Fiscal Year August 31, 2014 |  | Year Ended August 31, 2014      |  |  | $        | 100.00 |  |        | $
|                            |  |                                 |  |  |          |        |  |        |  
|Fiscal Year 2018 by Quarter |  | First Quarter ended 11/30/2017  |  |  | $        | 0.182  |  |        | $
|                            |  | Second Quarter Ended 02/29/2018 |  |  | $        | 0.21   |  |        | $
|                            |  | Third Quarter Ended 05/31/2018  |  |  | $        | 0.26   |  |        | $
|                            |  | Fourth Quarter Ended 08/31/2018 |  |  | $        | 0.26   |  |        |  
|                            |  |                                 |  |  |          |        |  |        |  
|Fiscal Year 2017 by Quarter |  | First Quarter ended 11/30/2016  |  |  | $        | 10.90  |  |        | $
|                            |  | Second Quarter Ended 02/29/2017 |  |  | $        | 4.90   |  |        | $
|                            |  | Third Quarter Ended 05/31/2017  |  |  | $        | 0.84   |  |        | $
|                            |  | Fourth Quarter Ended 08/31/2017 |  |  | $        | 0.25   |  |        | $
|                            |  |                                 |  |  |          |        |  |        |  
|Calendar Year 2018 by Month |  | July                            |  |  | $        | 0.26   |  |        | $
|                            |  | August                          |  |  | $        | 0.26   |  |        | $
|                            |  | September                       |  |  | $        | 0.26   |  |        | $
|                            |  | October                         |  |  | $        | 0.26   |  |        | $
|                            |  | November                        |  |  | $        | 0.34   |  |        | $
|                            |  | December                        |  |  | $        | 0.32   |  |        | $



Notes.

| | (1) | The
                                         closing price on the OTCQB for our common stock on November 30, 2018 was $0.30.
| | --- | ----------------------------------------------------------------------------------------------------------------------------



| | (2) | Adjusted
                                         for the 2-for-1 forward stock split on March 16, 2012, the 1-for-10 stock consolidation
                                         on August 25, 2014, the 1-for-10 stock consolidation on February 1, 2016 and the 1-for-10
                                         stock consolidation on May 26, 2017.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



There
is currently only a limited public market for the common stock in the United States. There can be no assurance that a more active
market will develop in the future.



| | B. | PLAN
OF DISTRIBUTION
| | -- | --------------------



Not
Applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.



| | C. | MARKETS
| | -- | -------



See
Item 9.A.



| | D. | SELLING
SHAREHOLDERS
| | -- | --------------------



Not
Applicable.



| | E. | DILUTION
| | -- | --------



Not
Applicable.



| | F. | EXPENSES
OF THE ISSUE
| | -- | ---------------------



Not
Applicable.





65







| | ITEM
                                         10 | ADDITIONAL
                                        INFORMATION
| | ------------------------------------------------ | --------------------------------------------------------------



| | A. | SHARE
CAPITAL
| | -- | -------------



Not
Applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.



| | B. | MEMORANDUM
AND ARTICLES OF ASSOCIATION
| | -- | --------------------------------------



Certificate
of Incorporation

We
were incorporated under the Business Corporations Act (Ontario) on September 22, 1978 under the name Bonanza Red Lake Explorations
Inc. The corporation number as assigned by Ontario is 396323.



Articles
of Amendment dated January 14, 1985

By
Articles of Amendment dated January 14, 1985, our Articles were amended as follows:



1.           The
minimum number of directors of the Company shall be 3 and the maximum number of directors of the Company shall be 10.



2.            (a)            Delete
the existing objects clauses and provide that there are no restrictions on the business we may carry on or on the powers that
we may exercise;



(b)            Delete
the term “head office” where it appears in the articles and substitute therefor the term “registered office”;



(c)            Delete
the existing special provisions contained in the articles and substitute therefor the following:



The
following special provisions shall be applicable to the Company:



Subject
to the provisions of the Business Corporations Act, as amended or re-enacted from time to time, the directors may, without authorization
of the shareholders:



(i)             borrow
money on the credit of the Company;



(ii)            issue,
re-issue, sell or pledge debt obligations of the Company;



(iii)           give
a guarantee on behalf of the Company to secure performance of an obligation of any person;



(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; and



(v)            by
resolution, delegate any or all such powers to a director, a committee of directors or an officer of the Company.



3.             (a)             Provide
that the Company is authorized to issue an unlimited number of shares;



(b)            Provide
that the Company is authorized to issue an unlimited number of preference shares.



Articles
of Amendment dated August 16, 2000

By
Articles of Amendment dated August 16, 2000, our articles were amended to consolidate our issued and outstanding shares of our
common stock on the basis on one common share for every three issued and outstanding shares of our common stock, and change our
name from Bonanza Red Lake Explorations Inc. to Eugenic Corp.



Our
Articles of Amendment state that there are no restrictions on the business that may carry on, but do not contain a stated purpose
or objective.



Articles
of Amalgamation dated November 30, 2009

By
Articles of Amalgamation dated November 30, 2009, we amalgamated with our wholly owned subsidiary Eagleford Energy Inc. (formerly:
1406768 Ontario Inc.), and changed the entity’s name to Eagleford Energy Inc.





66







Our
Articles of Amalgamation state that there are no restrictions on the business that may carry on or on the powers the Company may
exercise.



We
are authorized to issue an unlimited number of shares of our common stock and an unlimited number of preference shares of which
Nil were outstanding as of the date of this Annual Report (the “Preference Shares”).



A
description of the rights, preferences and privileges relating to the Company’s Preference Shares is as follows:



(a)           Our
Preference Shares have a par value of one-tenth of one cent (1/10) and are redeemable, voting, non-participating shares.



(b)           No
dividends at any time shall be declared, set aside or paid on our Preference Shares.



(c)           In
the event of a liquidation, dissolution or winding of the Company or other distribution of assets or property of the Company among
shareholders for the purpose of winding up its affairs, the holders of the Preference Shares shall be entitled to receive from
the assets and property of the Company a sum equivalent to the aggregate par value of the Preference Shares held by them respectively
before any amount shall be paid or any property or assets of the Company distributed to holders of any shares of our common stock
or shares of any other class ranking junior to the Preference Shares. After payment to the holders of the Preference Shares of
the amount so payable to them as above provided, they shall not be entitled to share in any further distribution of the assets
or property of the Company.



(d)           The
Company may not redeem the Preference Shares prior to the expiration of five years from the respective dates of issuance thereof,
without the prior consent of the holders of the Preference Shares to be redeemed. The Company shall redeem all of the then outstanding
Preference Shares five years from the respective dates of issue.



(e)           The
Company may at any time or times purchase for cancellation all or any part of the Preference Shares outstanding from time to time
from the holders thereof, at a price not exceeding the par value thereof, with the consent of the holders thereof.



(f)            The
holders of the Preference Shares shall be entitled to receive notice of and attend all meetings of shareholders of the Company
and shall have one (1) vote for each Preference Share held at all meetings of the shareholders of the Company.



Other
Provisions

The
following special provisions shall be applicable to the Company:



Subject
to the provisions of the Business Corporations Act, as amended or re-enacted from time to time, the directors may, without authorization
of the shareholders:



(i)            borrow
money on the credit of the Company;



(ii)           issue,
re-issue, sell or pledge debt obligations of the Company;



(iii)          give
a guarantee on behalf of the Company to secure performance of an obligation of any person;



(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; and



(v)           by
resolution, delegate any or all such powers to a director, a committee of directors or an officer of the Company.



Articles
of Amendment dated effective March 16, 2012

By
Articles of Amendment dated effective March 16, 2012, our articles were amended:



a)             To
change each issued and outstanding common share in the capital of the Company into two (2) common share of the Company (the “Stock
Split”) effective as of the close of business on March 16, 2012; and



b)            To
provide that no fractional shares shall be issued as a result of the Stock Split, and if any fractional share would otherwise
result from the Stock Split, such fractional share shall be rounded up to the nearest whole share and distributed to the holder
of the fractional interest as his or her interest appears.





67







Articles
of Amendment dated effective November 1, 2018

Effective
November 1, 2018, we changed our name from Novicius Corp. to Grown Rogue International Inc.



Bylaws

At
the Annual and Special Meeting of Shareholders held on February 24, 2012, shareholders approved a resolution to repeal and replace
the Company’s By-Law No. 1 and Special By-Law No. 1 (the “Old By-Laws”) with a new By-Law No. 1 (the
“New By-Laws”) in order to reflect the current circumstances and practices of the Company and certain amendments
to the Business Corporations Act (Ontario) (the “OBCA”), which came into force on August 1, 2007.



No
director of ours is permitted to vote on any resolution to approve a material contract or transaction in which such director has
a material interest (Bylaws, Article 3.17).



Neither
our Articles nor our Bylaws limit the directors’ power, in the absence of an independent quorum, to vote compensation to
themselves or any members of their body. The Bylaws provide that directors shall receive remuneration as the Board of Directors
shall determine from time to time (Bylaws, Article 3.19).



Under
our Articles and Bylaws, our Board of Directors may, without the authorization of our shareholders, (i) borrow money upon our
credit; (ii) issue, reissue, sell or pledge debt obligations of ours; whether secured or unsecured (iii) give a guarantee on behalf
of us to secure performance of obligations; and (iv) charge, mortgage, hypothecate, pledge or otherwise create a security interest
in all currently owned or subsequently acquired real or personal, movable or immovable, tangible or intangible, property of ours
to secure obligations(Bylaws, Article 13.1).



The
annual meeting of shareholders shall be held at such time in each year as the Board, the Chairman of the Board (if any), the Chief
Executive Officer, or the President may from time to time determine, for the purpose of considering the financial statements and
reports required by the OBCA to be placed before the annual meeting, electing directors, appointing an auditor and for the transaction
of such other business as may properly be brought before the meeting (Bylaws, Article 9.1).



The
Board of Directors, the Chairman of the Board (if any) or the President shall have power to call a special meeting of shareholders
at any time (Bylaws, Article 9.2).



Shareholders
of record must be given notice of any meeting not less than 21 days or more than 50 days before the date of the meeting or as
otherwise prescribed by applicable laws. Notice of a meeting of shareholders called for any purpose other than consideration of
the financial statements and auditors’ report, election of directors and reappointment of the incumbent auditor shall state
or be accompanied by a statement of the nature of such business in sufficient detail to permit the shareholder to form a reasoned
judgment thereon and the text of any special resolution or by-law to be submitted to the meeting (Bylaws, Article 9.4). Our Board
of Directors is permitted to fix a record date for any meeting of the shareholders that is between 30 and 60 days prior to such
meeting or as otherwise prescribed by applicable laws. (Bylaws, Article 9.6). The only persons entitled to be present at a meeting
of shareholders shall be those entitled to vote thereat, the directors and the auditor of the Company and others who, although
not entitled to vote are entitled or required under any provision of the OBCA or the articles or the by-laws to be present at
the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the
meeting (Bylaws, Article 9.9).



Neither
our Articles nor our Bylaws discuss limitations on the rights to own securities or exercise voting rights thereon, and there is
no provision of our Articles or Bylaws that would delay, defer or prevent a change in control of us, or that would operate only
with respect to a merger, acquisition, or corporate restructuring involving us or any of its subsidiaries. Our Bylaws do not contain
a provision indicating an ownership threshold above which shareholder ownership must be disclosed.



Articles
of Amendment dated effective August 25, 2014

By
Articles of Amendment dated effective August 25, 2014, our articles were amended to change our name from Eagleford Energy Inc.,
to Eagleford Energy Corp., and



a)             To
change every ten (10) issued and outstanding common share in the capital of the Company into one (1) common share of the Company
(the “Stock Consolidation”) effective as of the close of business on August 25, 2014; and



b)             To
provide that no fractional shares shall be issued as a result of the Stock Consolidation and if any fractional share would otherwise
result from the Stock Split, such fractional share shall be rounded up to the nearest whole share and distributed to the holder
of the fractional interest as his or her interest appears.





68







Articles
of Amendment dated effective February 1, 2016

By
Articles of Amendment dated effective February 1, 2016, our articles were amended to change our name from Eagleford Energy Corp.,
to Intelligent Content Enterprises Inc., and



a)             To
change every ten (10) issued and outstanding common share in the capital of the Company into one (1) common share of the Company
(the “Stock Consolidation”) effective as of the close of business on February 1, 2016; and



b)             To
provide that no fractional shares shall be issued as a result of the Stock Consolidation and if any fractional share would otherwise
result from the Stock Split, such fractional share shall be rounded up to the nearest whole share and distributed to the holder
of the fractional interest as his or her interest appears.



Articles
of Amendment dated effective February 29, 2016

By
Articles of Amendment dated effective February 29, 2016, our articles were amended to revise the attributes of the preferred shares.



The
Company is authorized to issue an unlimited number of shares of our common stock and an unlimited number of preference shares,
issuable in series with the following attributes:



Share
Provisions

(a)
The shares of our common stock shall have attached thereto the following rights, privileges, restrictions and conditions:



1.
DIVIDENDS



Subject
to the prior rights of the holders of the Preference Shares and to any other shares ranking senior to the shares of our common
stock with respect to priority in the payment of dividends, the holders of shares of our common stock shall be entitled to receive
dividends and the Company shall pay dividends thereon, as and when declared by the Board of Directors of the Company, out of moneys
properly applicable to the payment of dividends, in such amount and in such form as the Board of Directors may from time to time
determine and all dividends which the directors may declare on the shares of our common stock shall be declared and paid in equal
amounts per share on all shares of our common stock at the time outstanding.



2.
DISSOLUTION



In
the event of the dissolution, liquidation or winding-up of the Company, whether voluntary or involuntary, or any other distribution
of assets of the Company among its shareholders for the purpose of winding-up its affairs, subject to the prior rights of the
holders of the Preference Shares and to any other shares ranking senior to the shares of our common stock with respect to priority
in the distribution of assets upon dissolution, liquidation or winding-up, the holders of the shares of our common stock shall
be entitled to receive the remaining property and assets of the Company.



3.
VOTING RIGHTS



The
holders of the shares of our common stock shall be entitled to receive notice of and to attend all meetings of the shareholders
of the Company and shall have one (1) vote for each Common Share held at all meetings of the shareholders of the Company, 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.



(b)
The rights, privileges, restrictions and conditions attaching to the Preference Shares, as a class, are as follows:



1.
DIRECTORS’ AUTHORITY TO ISSUE ONE OR MORE SERIES



The
Board of Directors of the Company may issue the Preference Shares at any time and from time to time in one or more series. Before
the first shares of a particular series are issued, the Board of Directors of the Company shall fix the number of shares in such
series and shall determine, subject to the limitations set out in the articles, the designation, rights, privileges, restrictions
and conditions to attach to the shares of such series which may include, without limiting the generality of the foregoing, the
rate or rates, amount or method or methods of calculation of preferential dividends, whether cumulative or non-cumulative or partially
cumulative, and whether such rate(s), amount or method(s) of calculation shall be subject to change or adjustment in the future,
the currency or currencies of payment, the date or dates and place or places of payment thereof and the date or dates from which
such preferential dividends shall accrue, the redemption price and terms and conditions of redemption (if any), the rights of
retraction (if any), and the prices and other terms and conditions of any rights of retraction and whether any additional rights
of retraction may be vested in such holders in the future, voting rights and conversion or exchange rights (if any), and any sinking
fund, purchase fund or other provisions attaching thereto. Before the issue of the first shares of a series, the Board of Directors
of the Company shall send to the Director (as defined in the Business Corporations Act) articles of amendment in the prescribed
form containing a description of such series including the designation, rights, privileges, restrictions and conditions determined
by the directors.





69







2.
RANKING OF PREFERENCE SHARES



2.1
No rights, privileges, restrictions or conditions attaching to a series of Preference Shares shall confer upon a series a priority
in respect of dividends or return of capital in the event of liquidation, dissolution or winding-up of the Company over any other
series of Preference Shares. The Preference Shares of each series rank on a parity with the Preference Shares of every other series
with respect to priority in the payment of dividends and the return of capital and the distribution of assets of the Company in
the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution
of the assets of the Company among its shareholders for the purpose of winding-up its affairs.



2.2
The Preference Shares shall be entitled to priority over the shares of our common stock and over any other shares of any other
class of the Company ranking junior to the Preference Shares with respect to priority in the payment of dividends and the return
of capital and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary
or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding-up its
affairs.



2.3
If any amount of cumulative dividends, whether or not declared, or declared non-cumulative dividends or amount payable on a return
of capital in the event of the liquidation, dissolution or winding-up of the Company in respect of a series of Preference Shares
is not paid in full, the Preference Shares of all series shall participate ratably in respect of all accumulated dividends, whether
or not declared, and all declared non-cumulative dividends in accordance with the sums that would be payable on such shares if
all such dividends were declared and paid in full, and in respect of amounts payable on return of capital in the event of the
liquidation, dissolution or winding-up of the Company in accordance with the sums that would be payable on such repayment of capital
if all sums so payable were paid in full; provided, however, that in the event of there being insufficient assets to satisfy in
full all such claims as aforesaid, the claims of the holders of the Preference Shares with respect to amounts payable on return
of capital shall first be paid and satisfied and any assets remaining thereafter shall be applied towards the payment and satisfaction
of claims in respect of dividends.



2.4
The Preference Shares of any series may also be given such other preferences not inconsistent with the provisions hereof over
the shares of our common stock and over any other shares ranking junior to the Preference Shares as may be determined in the case
of such series of Preference Shares.



3.
RESTRICTIONS ON DIVIDENDS AND REDEMPTIONS, ETC.



Except
with the approval of all the holders of the Preference Shares, no dividends shall at any time be declared or paid or set apart
for payment on the Company or any other shares of the Company ranking junior to the Preference Shares unless all dividends which
have been declared by the Board of Directors up to and including the dividend payable for the last completed period for which
such dividends have been declared by the Board of Directors on each series of Preference Shares then issued and outstanding shall
have been paid or set apart for payment at the date of such declaration or payment or setting apart for payment on the Company
or such other shares of the Company ranking junior to the Preference Shares; nor shall the Company call for redemption, redeem,
purchase for cancellation, acquire for value or reduce or otherwise pay off any of the Preference Shares (less than the total
amount then outstanding) or any Company or any other shares of the Company ranking junior to the Preference Shares unless and
until all dividends up to and including the dividends payable for the last completed period for which such dividends have been
declared by the Board of Directors on each series of Preference Shares then issued and outstanding shall have been paid or set
apart for payment at the date of such call for redemption, purchase, acquisition, reduction or other payment.



4.
VOTING RIGHTS



Except
as hereinafter referred to or as otherwise provided by law or in accordance with any voting rights which may from time to time
be attached to any series of Preference Shares, the holders of the Preference Shares as a class shall not be entitled as such
to receive notice of, to attend to vote at any meeting of the shareholders of the Company.





70







5.
SPECIFIC MATTERS REQUIRING APPROVAL



5.1
The approval of the holders of the Preference Shares, given in the manner described in Section 6.1 below, shall be required for
the creation of any new shares ranking prior to or on a parity with the Preference Shares, and if, but only so long as, any cumulative
dividends are in arrears or any declared non-cumulative dividends are unpaid on any outstanding series of Preference Shares, for
the issuance of any additional series of Preference Shares or of any shares ranking prior to or on a parity with the Preference
Shares.



5.2
The provisions of Clauses 1 to 6 inclusive may be deleted, amended, modified or varied in whole or in part by a certificate of
amendment issued by the Director appointed under the Business Corporations Act, but only with the prior approval of the holders
of the Preference Shares given as hereinafter specified in addition to any other approval required by the Business Corporations
Act or any other statutory provisions of like or similar effect, from time to time in force.



6.
APPROVAL OF THE HOLDERS OF THE PREFERENCE SHARES



The
approval of the holders of the Preference Shares with respect to any and all matters hereinbefore referred to may be given by
at least two thirds of the votes cast at a meeting of the holders of the Preference Shares duly called for that purpose and held
upon at least 21 days’ notice at which the holders of a majority of the outstanding Preference Shares are present or represented
by proxy. If at any such meeting the holders of a majority of the outstanding Preference Shares are not present or represented
by proxy within one half-hour after the time appointed for such meeting, then the meeting shall be adjourned to such date being
not less than 30 days later and to such time and place as may be appointed by the chairman and not less than 21 days’ notice
shall be given of such adjourned meeting. At such adjourned meeting the holders of the Preference Shares present or represented
by proxy may transact the business for which the meeting was originally called and a resolution passed thereat by not less than
two-thirds of the votes cast at such adjourned meeting shall constitute the approval of the holders of the Preference Shares referred
to above. The formalities to be observed with respect to the giving of notice of any such meeting or adjourned meeting and the
conduct thereof shall be those from time to time prescribed by the Business Corporations Act and the by-laws of the Company with
respect to meetings of shareholders. On every poll taken at every such meeting or adjourned meeting every holder of Preference
Shares shall be entitled to one (1) vote in respect of each Preference Share held.



Articles
of Amendment dated effective May 26, 2017

By
Articles of Amendment dated effective May 26, 2017, our articles were amended to change our name from Intelligent Content Enterprises
Inc., to Novicius Corp., and



a)             To
change every ten (10) issued and outstanding common share in the capital of the Company into one (1) common share of the Company
(the “Stock Consolidation”) effective as of the close of business on May 26, 2017; and



b)             To
provide that no fractional shares shall be issued as a result of the Stock Consolidation and if any fractional share would otherwise
result from the Stock Split, such fractional share shall be rounded up to the nearest whole share and distributed to the holder
of the fractional interest as his or her interest appears.



Articles
of Amendment dated effective November 1, 2018

By
Articles of Amendment dated effective November 1, 2018, we changed our name to Grown Rogue International Inc.





Other
Provisions

Neither
our Articles nor our Bylaws discuss the retirement or non-retirement of directors under an age limit requirement or the number
of shares required for director qualification.



Neither
our Articles nor our Bylaws require that a director hold a share in the capital of the Company as qualification for his/her office.



Neither
our Articles nor our Bylaws contain sinking fund provisions, provisions allowing us to make further capital calls with respect
to any shareholder of ours, or provisions which discriminate against any holders of securities as a result of such shareholder
owning a substantial number of shares.





71







| | C. | MATERIAL
CONTRACTS
| | -- | ------------------



During
the two year period preceding the filing date of this Annual Report, we entered into no material contracts other than contracts
entered into in the ordinary course except for the following:



The
Company leases five acres of real property commonly known as 1970 Lonnon Road, Grants Pass, Oregon 97527, through that certain
Commercial Lease Agreement, dated January 1, 2017, between Pamela Carmichael Waxlax and GRUP. This property is subleased by GRUP
to GR Gardens, pursuant to that certain Commercial Sublease Agreement, dated March 1, 2017, between GRUP and GR Gardens.



The
Company leases approximately 42 acres of real property in Jackson County, Oregon, commonly known as 741 West Fork Trail Creek
Road, Trail, Oregon 97541, through that certain Commercial Lease Agreement, dated March 1, 2017, between J. Obie (“Jesse”)
Strickler and GRUP. This property is subleased by GRUP to GR Gardens pursuant to that certain Commercial Sublease Agreement, dated
March 1, 2017, between GRUP and GR Gardens.



The
Company leases property located at 655 Rossanley Drive, Medford, Oregon 97501, pursuant to that certain Commercial Lease Agreement,
dated January 31, 2017, between VWPP, LLC, and GRUP. This property is subleased by GRUP to GR Gardens pursuant to that certain
Commercial Sublease Agreement, dated January 31, 2017, between GRUP and GR Gardens.



On
June 22, 2016, the Company entered into a consulting agreement to assist with the development of new business programs, business
units, partnerships, revenues, concepts and ideas as well as technical, commercial and creative advisory services. As consideration
for the services, the Company agreed to provide to the consultant remuneration of $20,000 upon execution the agreement, $10,000
monthly commencing July 1, 2016, and issue 175,000 common share purchase warrants, valid for 5 years with cashless exercise provisions
issued at a price of $15.00 vesting 43,750 per quarter. On January 15, 2017, the consulting agreement was terminated and no warrants
vested.



On
May 25, 2016, the Company entered into a Term Sheet to license to acquire all the technology, production and client operations
owned and operated by New York based Catch Star Studios LLC (“Catch Star”). On October 12, 2016, the Company advanced
US$65,000 ($81,483 as at August 31, 2017) to Catch Star and entered into a Secured Promissory Note and General Security Agreement
(the “Note”) with Catch Star. The Note is due on demand and is secured by all of the assets of Catch Star. Subsequently,
Catch Star and the Company could not reach a definitive agreement to memorialize the terms and conditions of the Term Sheet and
abandoned the prospective transaction. On February 1, 2017, the Company issued a letter of demand for the repayment of the Note
in full. At August 31, 2017 the Company determined that the Secured Note was uncollectible and recorded an impairment of the full
amount.



The
Company negotiated an Asset Purchase Agreement to be effective February 29, 2016, with an expectation to acquire the net assets
(the “Acquired Assets”) of Digital Widget Factory Inc., a Belize company (the “Vendor”), in an all-stock
transaction by issuing 12,500,000 Company and 5,750,000 Series A preferred shares (the “Proposed Purchase Price Shares”).
The essential components of the proposed Acquired Assets were an intelligent content platform technology developed by Digital
Widget Factory Inc. and a series of related websites under the url digiwdgy.com. The fair value of the transaction was estimated
at $9,530,250 and was agreed to be paid by the Company through the issuance of the Proposed Purchase Price Shares.



Subsequent
to February 29, 2016, management of the Company came to the conclusion that certain representations and warranties made under
the Asset Purchase Agreement were conceivably deficient and on November 24, 2016, the Company advanced a Notice of Claim. On December
22, 2016, it was agreed that all disputed matters contained in the Asset Purchase Agreement, be resolved in a Settlement Agreement
whereby the Company agreed to return the Acquired Assets to the Vendor and the Vendor agreed to return the Proposed Purchase Price
Shares back to the Company.



The
Settlement Agreement closed effective January 20, 2017, when the Company returned the Acquired Assets to the Vendor and the Vendor
returned to the Company the Proposed Purchase Price Shares previously issued to the Vendor and a full and final release in respect
of all obligations under the DWF Agreement was exchanged between the Vendor and the Company. The Proposed Purchase Price Shares
have been cancelled in the capital stock of the Company and the Company no longer has any interest in the Acquired Assets.



| | D. | EXCHANGE
CONTROLS
| | -- | -----------------



There
are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital, or affect the remittance
of dividends, interest or other payments to a non-resident holder of shares of our common stock, other than withholding tax requirements
(See “Taxation” below).



Except
as provided in the Investment Canada Act, there are no limitations imposed under the laws of Canada, the Province of Ontario,
or by our constituent documents on the right of a non-resident to hold or vote shares of our common stock.





72







The
Investment Canada Act (the “ICA”), which became effective on June 30, 1985, regulates the acquisition by non-Canadians
of control of a Canadian business enterprise. In effect, the ICA requires review by Investment Canada, the agency which administers
the ICA, and approval by the Canadian government, in the case of an acquisition of control of a Canadian business by a non-Canadian
where: (i) in the case of a direct acquisition (for example, through a share purchase or asset purchase), the assets of the business
are CDN $5 million or more in value; or (ii) in the case of an indirect acquisition (for example, the acquisition of the foreign
parent of the Canadian business) where the Canadian business has assets of CDN $5 million or more in value or if the Canadian
business represents more than 50% of the assets of the original group and the Canadian business has assets of CDN $5 million or
more in value. Review and approval are also required for the acquisition or establishment of a new business in areas concerning
“Canada’s cultural heritage or national identity” such as book publishing, film production and distribution,
television and radio production and distribution of music, and the oil and natural gas industry, regardless of the size of the
investment.



As
applied to an investment in us, three methods of acquiring control of a Canadian business would be regulated by the ICA: (i) the
acquisition of all or substantially all of the assets used in carrying on the Canadian business; (ii) the acquisition, directly
or indirectly, of voting shares of a Canadian corporation carrying on the Canadian business; or (iii) the acquisition of voting
shares of an entity which controls, directly or indirectly, another entity carrying on a Canadian business. An acquisition of
a majority of the voting interests of an entity, including a corporation, is deemed to be an acquisition of control under the
ICA. An acquisition of less than one-third of the voting shares of a corporation is deemed not to be an acquisition of control.
An acquisition of less than a majority, but one-third or more, of the voting shares of a corporation is presumed to be an acquisition
of control unless it can be established that on the acquisition the corporation is not, in fact, controlled by the acquirer through
the ownership of voting shares. For partnerships, trusts, joint ventures or other unincorporated entities, an acquisition of less
than a majority of the voting interests is deemed not to be an acquisition of control.



In
1988, the ICA was amended, pursuant to the Free Trade Agreement dated January 2, 1988 between Canada and the United States, to
relax the restrictions of the ICA. As a result of these amendments, except where the Canadian business is in the cultural, oil
and gas, uranium, financial services or transportation sectors, the threshold for direct acquisition of control by US investors
and other foreign investors acquiring control of a Canadian business from US investors has been raised from CDN $5 million to
CDN $150 million of gross assets, and indirect acquisitions are not reviewable.



In
addition to the foregoing, the ICA requires that all other acquisitions of control of Canadian businesses by non-Canadians are
subject to formal notification to the Canadian government. These provisions require a foreign investor to give notice in the required
form, which notices are for information, as opposed to review, purposes.



| | E. | TAXATION
| | -- | --------



Certain
Canadian Federal Income Tax Consequences

The
following discussion describes the principal Canadian federal income tax consequences applicable to a holder of shares of our
common stock which are traded on the OTCQB, who, at all material times, is a resident of the United States for purposes of the
Canada-United States Income Tax Convention (the “Treaty”) entitled to the full benefit of the Treaty and is not a
resident, or deemed to be a resident, of Canada, deals at arm’s length and is not affiliated with the Company, did not acquire
shares of our common stock by virtue of employment, is not a financial institution, specified financial institution, registered
non-resident insurer, authorized foreign bank, partnership or a trust as defined in the Income Tax Act (Canada) (the “ITA”),
holds shares of our common stock as capital property and as beneficial owner, and does not use or hold, is not deemed to use or
hold, his or her Company in connection with carrying on a business in Canada and, did not, does not and will not have a fixed
base or permanent establishment in Canada within the meaning of the Treaty (a “non-resident holder”).



This
description is based upon the current provisions of the ITA, the regulations thereunder (the “Regulations”), management’s
understanding of the current publicly announced administration and assessing policies of Canada Revenue Agency, and all specific
proposals (the “Tax Proposals”) to amend the ITA and Regulations announced by the Minister of Finance (Canada) prior
to the date hereof. This description is not exhaustive of all possible Canadian federal income tax consequences and, except for
the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial
action, nor does it take into account any income tax laws or considerations of any province or territory of Canada or foreign
tax considerations which may differ significantly from those discussed below.



The
following discussion is for general information only and is not intended to be, nor should it be construed to be, legal or tax
advice to any holder of Company of the Company, and no opinion or representation with respect to the Canadian Federal Income Tax
consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of Company are urged
to consult with their own tax advisors about the federal, provincial and foreign tax consequences of purchasing, owning and disposing
of Company.





73







Dividends

Dividends
paid on shares of our common stock to a non-resident holder will be subject to a 25% withholding tax pursuant to the provision
of the ITA. The Treaty provides that the normal 25% withholding tax rate is generally reduced to 15% on dividends paid on shares
of a corporation resident in Canada (such as the Company) to beneficial owners who are residents of the United States. However,
if the beneficial owner is a resident of the United States and is a corporation which owns at least 10% of the voting stock of
the Company, the withholding tax rate on dividends is reduced to 5%.



Capital
Gains

A
non-resident of Canada is subject to tax under the ITA in respect of a capital gain realized upon the disposition of a share of
a corporation if the shares are considered to be “taxable Canadian property” of the holder within the meaning of the
ITA and no relief is afforded under an applicable tax treaty. For purposes of the ITA, a common share of the Company will be taxable
Canadian property to a non-resident holder if more than 50% of the fair market value of the common share during the 60 month period
immediately preceding the disposition of the common share, was derived directly or indirectly from real or immovable property
situated in Canada, Canadian resource properties or any options or interests in such properties.



In
the case of a non-resident holder to whom shares of our common stock represent taxable Canadian property and who is a resident
in the United States and not a former resident of Canada, no Canadian taxes will be payable on a capital gain realized on such
shares by reason of the Treaty unless the value of such shares is derived principally from real property situated in Canada within
the meaning of the Treaty at the time of the disposition.



Certain
United States Federal Income Tax Consequences

The
following is a general discussion of certain possible United States Federal income tax consequences, under current law, generally
applicable to a US Holder (as defined below) of shares our common stock. This discussion does not address all potentially relevant
Federal income tax matters and does not address consequences peculiar to persons subject to special provisions of Federal income
tax law, such as those described below as excluded from the definition of a US Holder. In addition, this discussion does not cover
any state, local or foreign tax consequences (See “Certain Canadian Federal Income Tax Consequences” above).



The
following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury
Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and
court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive
basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of recently
proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The following discussion
is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder
or prospective holder of shares of our common stock, and no opinion or representation with respect to the United States Federal
income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of shares
of our common stock are urged to consult their own tax advisors about the Federal, state, local, and foreign tax consequences
of purchasing, owning and disposing of shares of our common stock.



U.S.
Holders

As
used herein, a “U.S. Holder” means a holder of shares of our common stock who is a citizen or individual resident
(as defined under United States tax laws) of the United States; a corporation created or organized in or under the laws of the
United States or of any political subdivision thereof; an estate the income of which is taxable in the United States irrespective
of source; or a trust if (a) a court within the United States is able to exercise primary supervision over the trust’s administration
and one or more United States persons have the authority to control all of its substantial decisions or (b) the trust was in existence
on August 20, 1996 and has properly elected to continue to be treated as a United States person. This summary does not address
the United States tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income
tax law, including but not limited to tax-exempt organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment
companies, broker-dealers, non-resident alien individuals, persons or entities that have a “functional currency” other
than the U.S. dollar, persons who hold shares of our common stock as part of a straddle, hedging or a conversion transaction,
and persons who acquire their shares of our common stock as compensation for services. This discussion is limited to U.S. Holders
who own shares of our common stock as capital assets and who hold the shares of our common stock directly (e.g., not through an
intermediary entity such as a corporation, partnership, limited liability company, or trust). This discussion does not address
the consequences to a person or entity of the ownership, exercise or disposition of any options, warrants or other rights to acquire
shares of our common stock.





74







Distributions
on shares of our Common Stock

Subject
to the discussion below regarding passive foreign investment companies (“PFICs”), the gross amount of any distribution
(including non-cash property) by us (including any Canadian taxes withheld therefrom) with respect to shares of our common stock
generally should be included in the gross income of a U.S. Holder as foreign source dividend income to the extent such distribution
is paid out of current or accumulated earnings and profits of ours, as determined under United States Federal income tax principles.
Distributions received by non-corporate U.S. Holders may be subject to United States Federal income tax at lower rates than other
types of ordinary income (generally 15%) in taxable years beginning on or before December 31, 2010 if certain conditions are met.
These conditions include the Company not being classified as a PFIC, it being a “qualified foreign corporation,” the
U.S. Holder’s satisfaction of a holding period requirement, and the U.S. Holder not treating the distribution as “investment
income” for purposes of the investment interest deduction rules. To the extent that the amount of any distribution exceeds
our current and accumulated earnings and profits for a taxable year, the distribution first will be treated as a tax-free return
of capital to the extent of the U.S. Holder’s adjusted tax basis in shares of our common stock and to the extent that such
distribution exceeds the Holder’s adjusted tax basis in shares of our common stock, will be taxed as capital gain. In the
case of U.S. Holders that are corporations, such dividends generally will not be eligible for the dividends received deduction.



If
a U.S. Holder receives a dividend in Canadian dollars, the amount of the dividend for United States federal income tax purposes
will be the U.S. dollar value of the dividend (determined at the spot rate on the date of such payment) regardless of whether
the payment is later converted into U.S. dollars. In such case, the U.S. Holder may recognize additional ordinary income or loss
as a result of currency fluctuations between the date on which the dividend is paid and the date the dividend amount is converted
into U.S. dollars.



Disposition
of Shares of our Common Stock

Subject
to the discussion below regarding PFIC’s, gain or loss, if any, realized by a U.S. Holder on the sale or other disposition
of shares of our common stock (including, without limitation, a complete redemption of shares of our common stock) generally will
be subject to United States Federal income taxation as capital gain or loss in an amount equal to the difference between the U.S.
Holder’s adjusted tax basis in shares of our common stock and the amount realized on the disposition. Net capital gain (i.e.,
capital gain in excess of capital loss) recognized by a non-corporate U.S. Holder (including an individual) upon a sale or other
disposition of shares of our common stock that have been held for more than one year will generally be subject to a maximum United
States federal income tax rate of 15% subject to the PFIC rules below. Deductions for capital losses are subject to certain limitations.
If the U.S. Holder receives Canadian dollars on the sale or disposition, it will have a tax basis in such dollars equal to the
U.S. dollar value. Generally, any gain or loss realized on a subsequent disposition of the Canadian dollars will be U.S. source
ordinary income or loss.



U.S.
“Anti-Deferral” Rules

Passive
Foreign Investment Company (“PFIC”) Regime. If we, or a non-U.S. entity directly or indirectly owned by us (“Related
Entity”), has 75% or more of its gross income as “passive” income, or if the average value during a taxable
year of ours or the Related Entity’s “passive assets” (generally, assets that generate passive income) is 50%
or more of the average value of all assets held by us or the Related Entity, then the United States PFIC rules may apply to U.S.
Holders. If we or a Related Entity is classified as a PFIC, a U.S. Holder will be subject to increased tax liability in respect
of gain recognized on the sale of his, her or its shares of our common stock or upon the receipt of certain distributions, unless
such person makes a “qualified electing fund” election to be taxed currently on its pro rata portion of our income
and gain, whether or not such income or gain is distributed in the form of dividends or otherwise, and we provide certain annual
statements which include the information necessary to determine inclusions and assure compliance with the PFIC rules. As another
alternative to the foregoing rules, a U.S. Holder may make a mark-to-market election to include in income each year as ordinary
income an amount equal to the increase in value of its shares of our common stock for that year or to claim a deduction for any
decrease in value (but only to the extent of previous mark-to-market gains). We or a related entity can give no assurance as to
its status as a PFIC for the current or any future year. U.S. Holders should consult their own tax advisors with respect to the
PFIC issue and its applicability to their particular tax situation.



Controlled
Foreign Corporation Regime (“CFC”). If a U.S. Holder (or person defined as a U.S. persons under Section 7701(aX301)
of the Code) owns 10% or more of the total combined voting power of all classes of our stock (a “U. S. Shareholder”)
and U.S. Shareholders own more than 50% of the vote or value of our Company, we would be a “controlled foreign corporation”.
This classification would result in many complex consequences, including the required inclusion into income by such U. S. Shareholders
of their pro rata shares of “Subpart F income” of our Company (as defined by the Code) and our earnings invested in
“US property” (as defined by the Code). In addition, under Section 1248 of the Code, gain from the sale or exchange
of shares of our common stock by a US person who is or was a U. S. Shareholder at any time during the five year period before
the sale or exchange may be treated as ordinary income to the extent of earnings and profits of ours attributable to the stock
sold or exchanged. It is not clear the CFC regime would apply to the U.S. Holders of shares of our common stock, and is outside
the scope of this discussion.





75







Foreign
Tax Credit

A
U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to us may be entitled to either a deduction
or a tax credit for such foreign tax paid or withheld, at the option of the U.S. Holder. Generally, it will be more advantageous
to claim a credit because a credit reduces United States federal income tax on a dollar-for-dollar basis, while a deduction merely
reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and generally applies to all
foreign taxes paid by (or withheld from) the U.S. Holder during that year.



There
are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot
exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign
source income bears to its worldwide taxable income. This limitation is designed to prevent foreign tax credits from offsetting
United States source income. In determining this limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.



In
addition, this limitation is calculated separately with respect to specific “baskets” of income such as passive income,
high withholding tax interest, financial services income, shipping income, and certain other classifications of income. Foreign
taxes assigned to a particular class of income generally cannot offset United States tax on income assigned to another class.
Under the American Jobs Creation Act of 2004 (the “Act”), this basket limitation will be modified significantly after
2006.



Unused
foreign tax credits can generally be carried back one year and carried forward ten years. U.S. Holders should consult their own
tax advisors concerning the ability to utilize foreign tax credits, especially in light of the changes made by the Act.



Backup
Withholding

Payment
of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries
generally are subject to information reporting requirement and to backup withholding unless the US Holder (i) is a corporation
or other exempt recipient or (ii) in the case of backup withholding, provides a correct taxpayer identification number and certifies
that no loss of exemption from backup withholding has occurred.



The
amount of any backup withholding from a payment to a US Holder will be allowed as a credit against the US Federal income tax liability
of the US Holder and may entitle the US Holder to a refund, provided that the required information is furnished to the IRS.



| | F. | DIVIDENDS
AND PAYING AGENTS
| | -- | ---------------------------



Not
Applicable.



| | G. | STATEMENT
BY EXPERTS
| | -- | --------------------



Not
Applicable.



| | H. | DOCUMENTS
ON DISPLAY
| | -- | --------------------



The
documents and exhibits referred to in this Annual Report are available for inspection at the registered and management office
at 340 Richmond Street West, Toronto, Ontario, M5V 1X2 during normal business hours.



| | I. | SUBSIDIARY
INFORMATION
| | -- | ----------------------

Not
Applicable.



| | ITEM
                                         11 | QUANTITATIVE
                                        AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
| | ------------------------------------------------ | -------------------------------------------------------------------------------------------------

The
Company is exposed in varying degrees to risks arising from its financial instruments. The Company has entered into certain financial
derivative contracts. These instruments are not used for trading or speculative purposes. The Company has not designated its financial
derivative contracts as effective accounting hedges, and thus has not applied hedge accounting. As a result, all financial derivative
contracts are classified as fair value through “fair value through profit or loss” and are recorded on the statement
of financial position at fair value.





76







The
Board approves and monitors the risk management processes. The Board’s main objectives for managing risks are to ensure
liquidity, the fulfillment of obligations and limited exposure to credit and market risks while ensuring greater returns on any
surplus funds.



The
Company’s financial instruments included on the consolidated statements of financial position are comprised of cash, secured
note receivable and trade and other payables. The Company classifies the fair value of financial instruments measured at fair
value according to the following hierarchy based on the amount of observable inputs used to value the instrument.



●
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active
markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing
basis.



●
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either
directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices
for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.



●
Level 3 – Valuations in this level are those with inputs for the asset or liability that are not based on observable market
data.



|                                    |  |       |   |  | August 31, 2018    |  |         | August 31, 2017 | 
|----------------------------------- |  | ----- | - |  | ------------------ |  | ------- | --------------- | 
|Financial Instrument Classification |  | Level |   |  | Carrying Value ($) |  |         | Fair Value ($)  | 
|Fair value through profit or loss:  |  |       |   |  |                    |  |         |                 | 
|Cash                                |  |       | 1 |  |                    |  | 28,906  |                 | 
|Other financial liabilities:        |  |       |   |  |                    |  |         |                 | 
|Trade and other payables            |  |       |   |  |                    |  | 703,306 |                 | 
|Advance from related party          |  |       |   |  |                    |  | 49,415  |                 | 
|Shareholder loans                   |  |       |   |  |                    |  | 79,910  |                 | 



Cash
is stated at fair value (Level 1 measurement). The carrying value of trade and other payables approximate their fair value due
to the short-term maturity of these financial instruments.



The
types of risk exposure and the ways in which such exposures are managed are as follows:



Credit
Risk

Credit
risk is primarily related to the Company’s receivables and cash and the risk of financial loss if a partner or counterparty
to a financial instrument fails to meet its contractual obligations. At August 31, 2018, trade and other receivables amounts are
$Nil (August 31, 2017: $Nil). At August 31, 2018, included in other receivables is HST due from the Government of Canada in the
amount of $4,137 (2017 - $41,007).



Concentration
risk exists in cash because cash balances are maintained with one financial institution. The risk is mitigated because the financial
institution is an international bank and all amounts are due on demand.



The
Company’s maximum exposure to credit risk is as follows:



|        |  |  | August 31, 2018 ($) |        |  | August 31, 2017 ($) | 
|------- |  |  | ------------------- | ------ |  | ------------------- | 
|Cash    |  |  |                     | 28,906 |  |                     | 
|Balance |  |  |                     | 28,906 |  |                     | 



Liquidity
Risk

The
Company monitors its liquidity position regularly to assess whether it has the funds necessary to fulfill planned opportunities
or that viable options are available to fund such opportunities from new equity issuances or alternative sources of financings.
As a company without significant revenue, there are inherent liquidity risks, including the possibility that additional financing
may not be available to the Company, or that such financing terms may not be acceptable to the Company.





77







The
following table illustrates the contractual maturities of financial liabilities:



|August 31, 2018             |  | Payments Due by Period $ |        
|--------------------------- |  | ------------------------ | -------
|                            |  | Total                    |        
|Trade and other payables    |  |                          | 703,306
|Shareholder loans           |  |                          | 79,910 
|Advances from related party |  |                          | 49,415 
|Total                       |  |                          | 832,631



|August 31, 2017          |  | Payments Due by Period $ |        
|------------------------ |  | ------------------------ | -------
|                         |  | Total                    |        
|Trade and other payables |  |                          | 529,823
|Total                    |  |                          | 529,823



Market
Risk

Market
risk represents the risk of loss that may impact the Company’s financial position, results of operations, or cash flows
due to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, and other
relevant market or price risks. The Company does not use derivative instruments to mitigate this risk.



(i)          Currency
Risk

The
Company is exposed to the fluctuations in foreign exchange rates. The Company operates in Canada and a portion of its expenses
are incurred in US dollars. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar
could have an effect on the Company’s financial instruments. The Company does not hedge its foreign currency exposure.



The
following assets and liabilities are denominated in US dollars as at the year-end set out below:



|                                                                                                   |  | August 31, 2018 ($) |         |   | August 31, 2017 ($) | 
|-------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | - | ------------------- | 
|Cash                                                                                               |  |                     | 643     |   |                     | 
|Prepaid expenses and deposits                                                                      |  |                     | —       |   |                     | 
|Trade and other payables                                                                           |  |                     | (39,640 | ) |                     | 
|Net assets (liabilities) denominated in US$                                                        |  |                     | (38,997 | ) |                     | 
|Net assets (liabilities) CDN dollar equivalent at period end (1)                                   |  |                     | (50,910 | ) |                     | 
|(1) Translated at the exchange rate in effect at August 31, 2018 $1.3055 (August 31, 2017 $1.2536)



The
following table shows the estimated sensitivity of the Company’s total loss for the periods set out from a change in the
US dollar exchange rate in which the Company has exposure with all other variables held constant.



|                               |   |  | August 31, 2018 |                                                               |   | August 31, 2017 | 
|------------------------------ | - |  | --------------- | ------------------------------------------------------------- | - | --------------- | 
|                               |   |  | Increase        |                                                               |   | Decrease        | 
|Percentage change in US Dollar |   |  |                 | In total loss from a change in %

in the US Exchange Rate ($) |   |                 | 
|5                              | % |  |                 | (3,323                                                        | ) |                 | 
|10                             | % |  |                 | (6,646                                                        | ) |                 | 
|15                             | % |  |                 | (9,969                                                        | ) |                 | 



(ii)         Interest
Rate Risk

Interest
rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate
due to changes in market interest rates. The majority of the Company’s debt is short-term in nature with fixed rates.





78







| | ITEM
                                         12 | DESCRIPTION
                                        OF SECURITIES OTHER THAN EQUITY SECURITIES
| | ------------------------------------------------ | ----------------------------------------------------------------------------------------------



|A. | DEBT SECURITIES
|-- | ---------------



Not
applicable.



|B. | WARRANTS
AND RIGHTS
|-- | -------------------



Not
applicable.



|C. | OTHER SECURITIES
|-- | ----------------



Not
Applicable.



|D. | AMERICAN
DEPOSITORY SHARES
|-- | --------------------------



Not
Applicable.



PART
II



| | ITEM
                                         13 | DEFAULTS,
                                        DIVIDENDS ARREARAGES AND DELINQUENCIES
| | ------------------------------------------------ | ----------------------------------------------------------------------------------------



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

Under
the supervision and with the participation of our senior management, including our chief executive officer and chief financial
officer, James Cassina, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as of the end of the period covered by this Annual Report (the “Evaluation Date”). Based on this evaluation,
our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures
were effective such that the information relating to us, required to be disclosed in our Securities and Exchange Commission (“SEC”)
reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii)
is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate
to allow timely decisions regarding required disclosure.



Management’s
Annual Report on Internal Control over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.



Our
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurances
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures are being made only in accordance with authorizations of management and
the directors of the Company; and (iii) 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 our financial statements. Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.



Management
assessed the effectiveness of our internal control over financial reporting as of August 31, 2018 based on the framework established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on that assessment, management concluded that, as of August 31, 2018, our internal control over financial reporting
was effective based on the criteria established in Internal Control—Integrated Framework.





79







Limitations
on Effectiveness of Controls and Procedures

Our
management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial
Officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all
fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met. Our control systems are designed to provide such reasonable assurance of achieving
their objectives. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits
of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been
detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty
and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that
any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



Changes
in Internal Control over Financial Reporting

There
have been no changes in our internal control over financial reporting that occurred during the quarter ended August 31, 2018 that
have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



| | ITEM
                                         16 | [RESERVED]
| | ------------------------------------------------ | ----------



|A. | AUDIT COMMITTEE
FINANCIAL EXPERT
|-- | --------------------------------

Our
Board of Directors has determined that Mr. Stephen Gledhill is an “audit committee financial expert”, as defined in
Item 16A of Form 20-F. Stephen Gledhill is the Chairman of the Audit Committee. Please see Item 6.A – Directors and Senior
Management for Mr. Gledhill’s biographical information.



|B. | CODE OF
ETHICS
|-- | --------------

We
have adopted a written code of business conduct and ethics (the “Code”) for our directors, officers and employees.
The board encourages following the Code by making it widely available. It is distributed to directors in the Director’s
Manual and to officers, employees and consultants at the commencement of their employment or consultancy. The Code reminds those
engaged in service to us that they are required to report perceived or actual violations of the law, violations of our policies,
dangers to health, safety and the environment, risks to our property, and accounting or auditing irregularities to the chair of
the Audit Committee. In addition, to requiring directors, officers and employees to abide by the Code, we encourage consultants,
service providers and all parties who engage in business with us to contact the chair of the Audit Committee regarding any perceived
and all actual breaches by our directors, officers and employees of the Code. The chair of our Audit Committee is responsible
for investigating complaints, presenting complaints to the applicable board committee or the board as a whole, and developing
a plan for promptly and fairly resolving complaints. Upon conclusion of the investigation and resolution of a complaint, the chair
of our Audit Committee will advise the complainant of the corrective action measures that have been taken or advise the complainant
that the complaint has not been substantiated. The Code prohibits retaliation by us, our directors and management, against complainants
who raise concerns in good faith and requires us to maintain the confidentiality of complainants to the greatest extent practical.
Complainants may also submit their concerns anonymously in writing. In addition to the Code, we have an Audit Committee Charter
and a Policy of Procedures for Disclosure Concerning Financial/Accounting Irregularities.



Since
the beginning of our most recently completed financial year, no material change reports have been filed that pertain to any conduct
of a director or executive officer that constitutes a departure from the Code. The board encourages and promotes a culture of
ethical business conduct by appointing directors who demonstrate integrity and high ethical standards in their business dealings
and personal affairs. Directors are required to abide by the Code and expected to make responsible and ethical decisions in discharging
their duties, thereby setting an example of the standard to which management and employees should adhere. The board is required
by the Board Mandate to satisfy our CEO and other executive officers are acting with integrity and fostering a culture of integrity
throughout the Company. The board is responsible for reviewing departures from the Code, reviewing and either providing or denying
waivers from the Code, and disclosing any waivers that are granted in accordance with applicable law. In addition, the board is
responsible for responding to potential conflict of interest situations, particularly with respect to considering existing or
proposed transactions and agreements in respect of which directors or executive officers advise they have a material interest.
The Board Mandate requires that directors and executive officers disclose any interest and the extent, no matter how small, of
their interest in any transaction or agreement with us, and that directors excuse themselves from both board deliberations and
voting in respect of transactions in which they have an interest. By taking these steps the board strives to ensure that directors
exercise independent judgment, unclouded by the relationships of the directors and executive officers to each other and us, in
considering transactions and agreements in respect of which directors and executive officers have an interest. Our Code applies
to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting
officer or persons performing similar functions of the Company. There have been no waivers of our Code granted to our principal
executive officer, principal financial officer, principal accounting officer or controller, or similar persons during the period
covered by this Annual Report.





80







Upon
written request to us at our registered and management office, attention: the President, we will provide by mail, to any person
without charge a copy of our Code of Ethics.



|C. | PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|-- | --------------------------------------

It
is the policy of the Audit Committee that all audit and non-audit services are pre-approved prior to engagement. Before the initiation
of each audit, the principal accountant submits a budget of the expected range of expenditures to complete their audit engagement
(including Audit Fees, Audit-Related Fees and Tax Fees) to the Audit Committee for approval. In the event that the principal accountant
exceeds these parameters, the individual auditor is expected to communicate to management the reasons for the variances, so that
such variances can be ratified by the Audit Committee. As a result, 100% of expenditures within the scope of the noted budget
are approved by the Audit Committee.



During
fiscal 2018 and 2017 there were no hours performed by any person other than the primary accountant’s fulltime permanent
employees.



Since
the commencement of the Company’s most recently completed financial year, no recommendations were made by the Audit Committee
to nominate or compensate an external auditor.



External
Auditor Service Fees (By Category)

The
aggregate fees billed or accrued for professional fees rendered by MNP LLP, Chartered Accountants for the years ended August 31,
2018 and August 31, 2017 are as follows:



|Nature of Services    |  | Fees Paid to Auditor for Year-ended August 31, 2018 |        |  | Fees Paid to Auditor for Year-ended August 31, 2017 |  
|--------------------- |  | --------------------------------------------------- | ------ |  | --------------------------------------------------- | -
|Audit Fees(1)         |  | $                                                   | 20,000 |  |                                                     | $
|Audit-Related Fees(2) |  |                                                     | Nil    |  |                                                     |  
|Tax Fees(3)           |  |                                                     | Nil    |  |                                                     |  
|All Other Fees(4)     |  |                                                     | Nil    |  |                                                     |  
|TOTALS                |  | $                                                   | 20,000 |  |                                                     | $



Notes:

1.           “Audit
Fees” include fees necessary to perform the annual audit and any quarterly reviews of the Company’s financial
statements management discussion and analysis. This includes fees for the review of tax provisions and for accounting consultations
on matters reflected in the financial statements. This also includes audit or other attest services required by legislation or
regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.



2.           “Audit-Related
Fees” include fees for assurance and related services that are reasonably related to the performance of the audit or
review of the Company’s financial statements and that are not included in “Audit Fees”.



3.           “Tax
Fees” include fees for all professional services rendered by the Company’s auditors for tax compliance, tax advice
and tax planning.



4.           “All
Other Fees” include all fees for products and services provided by the Company’s auditors not included in “Audit
Fees”, “Audit-Related Fees” and “Tax Fees”.



|D. | EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|-- | ----------------------------------------------------------



Not
Applicable.



|E. | PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|-- | ----------------------------------------------------------------------



Not
applicable.





81







|F. | CHANGE IN
REGISTRANT’S CERTIFYING ACCOUNTANT
|-- | --------------------------------------------



(a)          Resignation
of Swartz Levitsky Feldman LLP



Schwartz
Levitsky Feldman, LLP, Chartered Accountants (“SLF”) tendered their resignation, upon their own initiative, as auditors
of the Company effective November 1, 2017;



The
resignation of SLF was considered and approved by the Board of Directors of the Company;



During
the two fiscal years ended August 31, 2016 and 2015 and the subsequent interim period through May 31, 2017, there were no (i)
disagreements with SLF on any matter of accounting principles or practices, financial statement disclosure, or auditing scope
or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection
with their report to the subject matter of the disagreement, or (ii) reportable events.



(b)          Appointment
of MNP LLP



Effective
November 14, 2017, directors of the Company approved the appointment of MNP LLP, Chartered Accountants (“MNP”), as
successor auditors for the year ended August 31, 2017;



During
the two fiscal years ended August 31, 2016 and 2015 and the subsequent interim period through May 31, 2017, neither we nor anyone
on our behalf consulted MNP regarding either (i) the application of accounting principles to a specified transaction, either completed
or proposed; or the type of audit opinion that might be rendered on our financial statements, and neither a written report nor
oral advice was provided us that MNP concluded was an important factor considered by us in reaching a decision as to the accounting,
auditing or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” (as defined
in Item 16F(a)(1)(iv) of Form 20-F and related instructions to Item 16-F of Form 20-F) with MNP or a “reportable event”
(as described in Item 16F(a)(1)(v) of Form 20-F).



Our
First Notice of Change of Auditor dated November 6, 2017; the resignation of SLF effective November 1, 2017; our Second Notice
of Change of Auditor dated November 14, 2017; and the acceptance of appointment of auditors from MNP dated November 17, 2017 were
previously filed by Registrant on Form 6-K on November 22, 2017 (Exhibit 4.48).



|G. | CORPORATE
GOVERNANCE
|-- | --------------------



Not
Applicable.



|H. | MINE SAFETY
DISCLOSURE
|-- | ----------------------



Not
applicable.



PART
III



| | ITEM
                                         17 | FINANCIAL
                                        STATEMENTS
| | ------------------------------------------------ | ------------------------------------------------------------



Not
applicable.



| | ITEM
                                         18 | FINANCIAL
                                        STATEMENTS
| | ------------------------------------------------ | ------------------------------------------------------------



The
following attached Consolidated Financial Statements are included in this Annual Report on Form 20-F beginning with page F-1:



| | 1. | Audited
                                         Consolidated Financial Statements of Novicius Corp., (Formerly: Intelligent Content Enterprises
                                         Inc.) for the years ended August 31, 2018, 2017 and 2016, comprised of the following:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) | Independent
                                         Auditor’s Report of Registered Public Accounting Firm, MNP LLP, Chartered Accountants
                                         for the years ended August 31, 2018;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Consolidated
                                         Statements of Financial Position as at August 31, 2018 and 2017;
| | --- | ----------------------------------------------------------------------------------------------------------------------



| | (c) | Consolidated
                                         Statements of Operations and Comprehensive Income (Loss) for the years ended August 31,
                                         2018, 2017 and 2016;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Consolidated
                                         Statements of Changes in Shareholders’ Deficiency for the years ended August 31,
                                         2018, 2017 and 2016;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | Consolidated
                                         Statements of Cash Flows for the years ended August 31, 2018, 2017 and 2016;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



| | (f) | Notes
                                         to the Consolidated Financial Statements.
| | --- | ----------------------------------------------------------------------------------------





82









INDEX
TO FINANCIAL STATEMENTS



|Audited
Consolidated Financial Statements of Grown Rogue International Inc. (Formerly: Novicius Corp.) for the years ended August 31,
2018, 2017 and 2016, comprised of the following:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                      
|(a)                                                                                                                                                                                   
|(b)                                                                                                                                                                                   
|(c)                                                                                                                                                                                   
|(d)                                                                                                                                                                                   
|                                                                                                                                                                                      
|(e)                                                                                                                                                                                   











(Novicius Logo)



Consolidated
Financial Statements



For
the years ended August 31, 2018, 2017 and 2016



(Expressed
in Canadian Dollars)











Consolidated
Financial StatementsFor the years ended August 31, 2018, 2017 and 2016(Expressed in Canadian Dollars)



|Contents                                                                    |               
|--------------------------------------------------------------------------- | --------------
|                                                                            |               
|                                                                            |               
|Independent Auditor’s Report of Registered Public Accounting Firm           | F-1
    – F-2 
|                                                                            |               
|Consolidated Financial Statements                                           |               
|                                                                            |               
|Consolidated Statements of Financial Position                               | F-3           
|                                                                            |               
|Consolidated Statements of Operations and Other Comprehensive Income (Loss) | F-4           
|                                                                            |               
|Consolidated Statements of Changes in Shareholders’ Deficiency              | F-5           
|                                                                            |               
|Consolidated Statements of Cash Flows                                       | F-6           
|                                                                            |               
|Notes to Consolidated Financial Statements                                  | F-7
    – F-27











|REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | (MNP LLP LOGO)
|------------------------------------------------------- | --------------





To
the Shareholders and Directors of Novicius Corp.



Opinion
on the Consolidated Financial Statements



We
have audited the accompanying consolidated financial statements of Novicius Corp. (the “Company”), which comprise
the consolidated statements of financial position as at August 31, 2018 and August 31, 2017, and the consolidated statements of
operations and other comprehensive income (loss), changes in shareholders’ deficiency and cash flows for the years then
ended, and the related notes, comprising a summary of significant accounting policies and other explanatory information (collectively
referred to as the consolidated financial statements).



In
our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position
of the Company as at August 31, 2018 and August 31, 2017, and its consolidated financial performance and its consolidated cash
flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board.



Material
Uncertainty Related to Going Concern



Without
modifying our opinion, we draw attention to Note 1 to the consolidated financial statements, which indicates that the Company
incurred a consolidated net loss of $516,323 during the year ended August 31, 2018 and, as of that date, the Company’s consolidated
current liabilities exceeded its total assets by $799,588. As stated in Note 1 to the consolidated financial statements, these
events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that casts
substantial doubt on the Company’s ability to continue as a going concern.



Basis
for Opinion



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 error or fraud.



Auditor’s
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) (“PCAOB”). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement, whether due to error or fraud. Those
standards also require that we comply with ethical requirements, including independence. We are required to be independent with
respect to the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Canada, the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB. We are a public accounting firm registered with the PCAOB.



An
audit includes performing procedures to assess the risks of material misstatements of the consolidated financial statements, whether
due to error or fraud, and performing procedures to respond to those risks. Such procedures include obtaining and examining, on
a test basis, audit evidence regarding 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 error or fraud. 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. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Accordingly,
we express no such opinion.



| | ACCOUNTING   >   CONSULTING   >   TAX
    SUITE 300, 111 RICHMOND STREET W, TORONTO ON, M5H 2G4
    1.877.251.2922    T: 416.596.1711    F: 416.596.7894 MNP.ca
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



F-1







An
audit also includes evaluating the appropriateness of accounting policies and principles 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 audits is sufficient and appropriate to provide a reasonable basis for
our audit opinion.



Other
Matter



The
consolidated financial statements of Novicius Corp. as at August 31, 2016, and for the year then ended, were audited by another
auditor who expressed an unqualified opinion on those consolidated financial statements in their report dated March 13, 2017.





Chartered
Professional AccountantsLicensed Public Accountants



We
have served as the Company’s auditor since 2017.



Toronto,
Canada
December 31, 2018







F-2











|Consolidated Statements of Financial Position  (Expressed in Canadian Dollars) |  | August 31, 2018 |             |   | August 31, 2017 |  
|------------------------------------------------------------------------------ |  | --------------- | ----------- | - | --------------- | -
|                                                                               |  |                 |             |   |                 |  
|Assets                                                                         |  |                 |             |   |                 |  
|Current Assets                                                                 |  |                 |             |   |                 |  
|Cash                                                                           |  | $               | 28,906      |   |                 | $
|Other receivables                                                              |  |                 | 4,137       |   |                 |  
|Total current assets                                                           |  |                 | 33,043      |   |                 |  
|                                                                               |  |                 |             |   |                 |  
|Total Assets                                                                   |  | $               | 33,043      |   |                 | $
|                                                                               |  |                 |             |   |                 |  
|Liabilities and Shareholders’ Deficiency                                       |  |                 |             |   |                 |  
|Current liabilities                                                            |  |                 |             |   |                 |  
|Trade and other payables                                                       |  | $               | 703,306     |   |                 | $
|Advances from related party (Note 8)                                           |  |                 | 49,415      |   |                 |  
|Shareholder loans (Note 9)                                                     |  |                 | 79,910      |   |                 |  
|Total current liabilities                                                      |  |                 | 832,631     |   |                 |  
|                                                                               |  |                 |             |   |                 |  
|Total liabilities                                                              |  |                 | 832,631     |   |                 |  
|                                                                               |  |                 |             |   |                 |  
|Shareholders’ deficiency                                                       |  |                 |             |   |                 |  
|Common shares (Note 11 a)                                                      |  |                 | 23,651,529  |   |                 |  
|Share purchase warrants (Note 11 b)                                            |  |                 | 749,866     |   |                 |  
|Share purchase options (Note 11 d)                                             |  |                 | —           |   |                 |  
|Contributed surplus                                                            |  |                 | 7,000,324   |   |                 |  
|Accumulated deficit                                                            |  |                 | (32,201,307 | ) |                 |  
|Total shareholders’ deficiency                                                 |  |                 | (799,588    | ) |                 |  
|                                                                               |  |                 |             |   |                 |  
|Total Liabilities and Shareholders’ Deficiency                                 |  | $               | 33,043      |   |                 | $
|Going Concern (Note 1 b)                                                       |  |                 |             |   |                 |  
|Related Party Transactions and Balances (Note 8 and 9)                         |  |                 |             |   |                 |  
|Discontinued Operations and Dissolution of Subsidiary (Note 15)                |  |                 |             |   |                 |  
|Subsequent Events (Note 16)                                                    |  |                 |             |   |                 |  



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



Approved
by the Board of Directors

|                                                                       |                            |                           | 
|---------------------------------------------------------------------- | -------------------------- | ------------------------- | 
|Signed “J. Obie Strickler’’                                            |                            | Signed “Stephen Gledhill” | 
|J. Obie Strickler,
    President, Chief Executive Officer and Director | Stephen Gledhill, Director |                          



F-3











|Consolidated Statements of Operations and Other Comprehensive Income (Loss) |  |      |           |   |      |  
|--------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | -
|For the years ended August 31,
(Expressed in Canadian Dollars)              |  | 2018 |           |   | 2017 |  
|                                                                            |  |      |           |   |      |  
|Continuing operations                                                       |  |      |           |   |      |  
|Revenue                                                                     |  |      |           |   |      |  
|Advertising revenue                                                         |  | $    | —         |   |      | $
|                                                                            |  |      |           |   |      |  
|Expenses                                                                    |  |      |           |   |      |  
|Hosting, advertising and technology services                                |  |      | 2,864     |   |      |  
|General and administrative                                                  |  |      | 304,880   |   |      |  
|Loss on foreign exchange                                                    |  |      | 4,068     |   |      |  
|Stock based compensation (Note 11 e)                                        |  |      | 204,511   |   |      |  
|Stock based compensation-non employees (Note 11 e)                          |  |      | —         |   |      |  
|Research, content development and technology support                        |  |      | —         |   |      |  
|Anti-dilution fees (Note 11 b (iii) and Note 11 b (iv))                     |  |      | —         |   |      |  
|Gain on derecognition of financial liabilities (Note 15)                    |  |      | —         |   |      |  
|Impairment loss on secured note receivable (Note 7)                         |  |      | —         |   |      |  
|Gain on disposal of subsidiary (Note 15)                                    |  |      | —         |   |      |  
|Gain on expiry of derivative liabilities (Note 10)                          |  |      | —         |   |      |  
|Interest                                                                    |  |      | —         |   |      |  
|Loss on settlement of debt (Note 9)                                         |  |      | —         |   |      |  
|Impairment loss on marketable securities (Note 6)                           |  |      | —         |   |      |  
|                                                                            |  |      | 516,323   |   |      |  
|                                                                            |  |      |           |   |      |  
|Net (loss) from continuing operations                                       |  |      | (516,323  | ) |      |  
|Net income from discontinued operations net of
    tax (Note 15)            |  |      | —         |   |      |  
|Net loss                                                                    |  |      | (516,323  | ) |      |  
|                                                                            |  |      |           |   |      |  
|Other comprehensive income (loss) to be re-classified to operations         |  |      |           |   |      |  
|Impairment loss on marketable securities (Note 6)                           |  |      | —         |   |      |  
|Total other comprehensive income (loss)                                     |  |      | —         |   |      |  
|                                                                            |  |      |           |   |      |  
|Net loss from operations and other comprehensive income                     |  | $    | (516,323  | ) |      |  
|                                                                            |  |      |           |   |      |  
|Earnings (loss) per share, basic                                            |  |      |           |   |      |  
|Continuing operations                                                       |  | $    | (0.098    | ) |      | $
|Discontinued operations                                                     |  | $    | 0.000     |   |      | $
|Total loss per share, basic                                                 |  | $    | (0.0098   | ) |      | $
|                                                                            |  |      |           |   |      |  
|Earnings (loss) per share, diluted                                          |  |      |           |   |      |  
|Continuing operations                                                       |  | $    | (0.098    | ) |      | $
|Discontinued operations                                                     |  | $    | 0.000     |   |      | $
|Total loss per share, diluted                                               |  | $    | (0.0098   | ) |      | $
|                                                                            |  |      |           |   |      |  
|Weighted average shares outstanding, basic                                  |  |      | 5,283,164 |   |      |  
|Weighted average shares outstanding, diluted                                |  |      | 5,283,164 |   |      |  



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



F-4











Consolidated
Statements of Changes in Shareholders’ DeficiencyFor the years ended August 31, 2018, 2017 and 2016(Expressed in Canadian Dollars)






|                                                        |  |                                             |           |  |                                 |   |            |                             |   |  |                            |   |  |                     |            |   |                            |   |           |                     |   |  |                                      |  
|------------------------------------------------------- |  | ------------------------------------------- | --------- |  | ------------------------------- | - | ---------- | --------------------------- | - |  | -------------------------- | - |  | ------------------- | ---------- | - | -------------------------- | - | --------- | ------------------- | - |  | ------------------------------------ | -
|                                                        |  | SHARE 
    CAPITAL Number of Common Shares* |           |  | SHARE
    CAPITAL Common Shares |   |            | SHARE
    PURCHASE WARRANTS |   |  | SHARE
    PURCHASE OPTIONS |   |  | CONTRIBUTED SURPLUS |            |   | AVAILABLE FOR SALE RESERVE |   |           | ACCUMULATED DEFICIT |   |  | TOTAL
    SHAREHOLDERS’ (DEFICIENCY) |  
|                                                        |  |                                             |           |  |                                 | $ |            |                             | $ |  |                            | $ |  |                     | $          |   |                            | $ |           |                     | $ |  |                                      | $
|Balance,
    August 31, 2015                            |  |                                             | 377,295   |  |                                 |   | 9,997,792  |                             |   |  | 801,079                    |   |  |                     | 272,553    |   |                            |   | 1,861,600 |                     |   |  | (110,525                             | )
|Item re-classified
    to statements of operations:     |  |                                             |           |  |                                 |   |            |                             |   |  |                            |   |  |                     |            |   |                            |   |           |                     |   |  |                                      |  
|-loss on marketable
    securities                      |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | 110,525                              |  
|Shares issued as debt extinguishment                    |  |                                             | 954,311   |  |                                 |   | 6,371,457  |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Shares issued as private placement                      |  |                                             | 500,000   |  |                                 |   | 50,000     |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Shares issued as anti-dilution provision                |  |                                             | 1,032,998 |  |                                 |   | 5,034,157  |                             |   |  | 1,862,643                  |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Units issued as private
    placement                   |  |                                             | 10,000    |  |                                 |   | 9,044      |                             |   |  | 20,956                     |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Units issued as private
    placement                   |  |                                             | 23,636    |  |                                 |   | 133,271    |                             |   |  | 126,729                    |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Units issued as debt
    extinguishment                 |  |                                             | 150,519   |  |                                 |   | 638,295    |                             |   |  | 582,414                    |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Exercise of warrants                                    |  |                                             | 51,868    |  |                                 |   | 986,667    |                             |   |  | (467,984                   | ) |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Stock options expired                                   |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | (60,143    | ) |                            |   | 60,143    |                     |   |  | —                                    |  
|Stock based compensation                                |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | 615,924    |   |                            |   | —         |                     |   |  | —                                    |  
|Net loss for the period,
    continuing operations      |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Net
    loss for the period, discontinued operations    |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Balance, August 31,
    2016                            |  |                                             | 2,650,627 |  |                                 |   | 23,220,683 |                             |   |  | 2,925,837                  |   |  |                     | 828,334    |   |                            |   | 1,921,743 |                     |   |  | —                                    |  
|Stock based compensation                                |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | 1,849,998  |   |                            |   | —         |                     |   |  | —                                    |  
|Units issued as private
    placement                   |  |                                             | 7,692     |  |                                 |   | 30,233     |                             |   |  | 19,767                     |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Stock options expired                                   |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | (1,066,882 | ) |                            |   | 1,066,882 |                     |   |  | —                                    |  
|Warrants expired                                        |  |                                             | —         |  |                                 |   | —          |                             |   |  | (2,195,738                 | ) |  |                     | —          |   |                            |   | 2,195,738 |                     |   |  | —                                    |  
|Shares issued as settlement of shareholder
    advances |  |                                             | 1,187,672 |  |                                 |   | 213,781    |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Shares issued as anti-dilution provision                |  |                                             | 1,420,809 |  |                                 |   | 184,705    |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Units issued as anti-dilution
    provision             |  |                                             | 16,364    |  |                                 |   | 2,127      |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Net
    loss for the period, continuing operations      |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Balance, August 31,
    2017                            |  |                                             | 5,283,164 |  |                                 |   | 23,651,529 |                             |   |  | 749,866                    |   |  |                     | 1,611,450  |   |                            |   | 5,184,363 |                     |   |  | —                                    |  
|Stock based compensation                                |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | 204,511    |   |                            |   | —         |                     |   |  | —                                    |  
|Stock options cancelled                                 |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | (1,815,961 | ) |                            |   | 1,815,961 |                     |   |  | —                                    |  
|Net
    loss for the period, continuing operations      |  |                                             | —         |  |                                 |   | —          |                             |   |  | —                          |   |  |                     | —          |   |                            |   | —         |                     |   |  | —                                    |  
|Balance,
    August 31, 2018                            |  |                                             | 5,283,164 |  |                                 |   | 23,651,529 |                             |   |  | 749,866                    |   |  |                     | —          |   |                            |   | 7,000,324 |                     |   |  | —                                    |  



*Reflects
the May 26, 2017 one (1) for ten (10) consolidation and the February 1, 2016, one (1) for ten (10) consolidation



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



F-5











|Consolidated Statements of Cash FlowsFor the years ended August 31, (Expressed in Canadian Dollars) |  | 2018 |          |   | 2017 |   |            | 2016 | 
|--------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ---------- | ---- | 
|                                                                                                    |  |      |          |   |      |   |            |      | 
|Cash provided by (used in)                                                                          |  |      |          |   |      |   |            |      | 
|Operating activities                                                                                |  |      |          |   |      |   |            |      | 
|Net loss from continuing operations                                                                 |  | $    | (516,323 | ) |      | $ | (2,097,738 | )    | 
|Net income from discontinued operations (Note 15)                                                   |  |      | —        |   |      |   | —          |      | 
|Net loss                                                                                            |  |      | (516,323 | ) |      |   | (2,097,738 | )    | 
|Items not involving cash:                                                                           |  |      |          |   |      |   |            |      | 
|Stock based compensation (Note 11 e)                                                                |  |      | 204,511  |   |      |   | 1,849,998  |      | 
|Anti-dilution fees (Note 11 b (c) and (d))                                                          |  |      | —        |   |      |   | 186,832    |      | 
|Gain on derecognition of financial liabilities (Note 15)                                            |  |      | —        |   |      |   | (893,990   | )    | 
|Impairment loss on secured note receivable (Note 7)                                                 |  |      | —        |   |      |   | 81,483     |      | 
|Loss on settlement of debt (Note 9)                                                                 |  |      | —        |   |      |   | —          |      | 
|Impairment loss on marketable securities (Note 6)                                                   |  |      | —        |   |      |   | —          |      | 
|Gain on disposal of subsidiary (Note 15)                                                            |  |      | —        |   |      |   | —          |      | 
|Gain on expiry of derivative liabilities (Note 10)                                                  |  |      | —        |   |      |   | —          |      | 
|Working capital adjustments:                                                                        |  |      |          |   |      |   |            |      | 
|(Increase) decrease in other receivables                                                            |  |      | 36,870   |   |      |   | (26,202    | )    | 
|Increase in trade and other payables                                                                |  |      | 173,483  |   |      |   | 250,577    |      | 
|Increase in advances from related party                                                             |  |      | 49,415   |   |      |   |            |      | 
|Decrease in prepaid expenses and deposits                                                           |  |      | —        |   |      |   | 17,799     |      | 
|Net cash used in operating activities                                                               |  |      | (52,044  | ) |      |   | (631,241   | )    | 
|                                                                                                    |  |      |          |   |      |   |            |      | 
|Investing activities                                                                                |  |      |          |   |      |   |            |      | 
|Secured note receivable (Note 7)                                                                    |  |      | —        |   |      |   | (81,483    | )    | 
|Net cash used in investing activities                                                               |  |      | —        |   |      |   | (81,483    | )    | 
|                                                                                                    |  |      |          |   |      |   |            |      | 
|Financing activities                                                                                |  |      |          |   |      |   |            |      | 
|Shares issued as settlement of shareholder advances                                                 |  |      | —        |   |      |   | 213,781    |      | 
|Private placement of units                                                                          |  |      | —        |   |      |   | 50,000     |      | 
|Warrants exercised                                                                                  |  |      | —        |   |      |   |            |      | 
|Private placement of shares                                                                         |  |      | —        |   |      |   | —          |      | 
|Shareholders’ loans                                                                                 |  |      | 79,910   |   |      |   | —          |      | 
|Net cash provided by financing activities                                                           |  |      | 79,910   |   |      |   | 263,781    |      | 
|                                                                                                    |  |      |          |   |      |   |            |      | 
|Increase (decrease) in cash for the year                                                            |  |      | 27,866   |   |      |   | (448,943   | )    | 
|Net effect of exchange rate changes on cash                                                         |  |      | —        |   |      |   | —          |      | 
|Cash, beginning of year                                                                             |  |      | 1,040    |   |      |   | 449,983    |      | 
|Cash, end of year                                                                                   |  | $    | 28,906   |   |      | $ | 1,040      |      | 



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





F-6







(Novicius Logo)





Notes to the Consolidated Financial Statements
August 31, 2018 and 2017 and 2016
(Expressed in Canadian Dollars)








|1. | a) | Nature of Business
|-- | -- | ------------------



Novicius Corp., was amalgamated under
the Business Corporations Act (Ontario)on November 30, 2009 (“Novicius” or the “Company”). The
Company filed articles of amendment effective May 26, 2017, and changed its name from Intelligent Content Enterprises Inc., to
Novicius Corp., and consolidated its common shares on the basis of one (1) new share for every ten (10) old shares. The Company
filed articles of amendment effective February 1, 2016, and changed its name from Eagleford Energy Corp., to Intelligent Content
Enterprises Inc., and consolidated its common shares on the basis of one (1) new share for every ten (10) old shares. Through
the Company’s wholly owned Ontario subsidiary, DoubleTap Daily Inc. the Company has developed an online content management
and advertising platform that powers user and advertising engagement programs in real-time to desktop, mobile and portable devices
(http://doubletap.co). Subsequent to year end, the Company completed a reverse takeover transaction with Grown Rogue Unlimited
LLC and changed its name to Grown Rogue International Inc (refer to Note 16).



The Company’s registered office is located
at 340 Richmond Street West, Toronto, Ontario, MSV 1X2. The Company’s common shares trade on the OTCQB under the symbol NVSIF and
on the Canadian Securities Exchange under the symbol NVS.



The consolidated financial statements include
the accounts of Novicius, the legal parent, together with its wholly-owned subsidiaries, Ice Studio Productions Inc. incorporated
in the Province of Ontario on June 16, 2016 (“ICE Studio”), DoubleTap Daily Inc. incorporated in the Province of Ontario
on February 29, 2016, (“DoubleTap”) and Novicius Acquisition Corp. (“Acquisition Corp.”), incorporated in the
Province of Ontario on March 26, 2018.



| | b) | Going Concern
| | -- | -------------



These consolidated financial statements
(the “Consolidated Financial Statements”) have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in
the normal course of business, as they come due for the foreseeable future. The Company has been developing its advertising platform
and has not yet realized profitable operations. The Company requires additional financing for its working capital and for the costs
of development, content creation and marketing of its platform.



Due to continuing operating losses, the
Company’s continuance as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels
of operation. The Company will continue to seek additional forms of debt or equity financing, or other means of funding its operations,
however, there is no assurance that it will be successful in doing so or that funds will be available on terms acceptable to the
Company or at all. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital
market conditions as well as the business performance of the Company.



The Company has accumulated significant
losses and negative cash flows from operations in recent years which raise doubt as to the validity of the going concern assumption.
As at August 31, 2018, the Company has working capital deficiency of $799,588 (2017: working capital deficiency $487,776) and an
accumulated deficit of $32,201,307, (2017: $31,684,984). These material uncertainties may cast significant doubt upon the entity’s
ability to continue as a going concern. The Consolidated Financial Statements do not give effect to adjustments, if any that would
be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and
liquidate its liabilities in other than the normal course of business and at amounts that may differ from those shown in the accompanying
Consolidated Financial Statements.





F-7







(Novicius Logo)



Notes to the Consolidated Financial StatementsAugust 31, 2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 2. | Basis of Preparation
| | -- | --------------------



Statement of Compliance



These Consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretation Committee (“IFRIC”).
The policies applied in these Consolidated Financial Statements are based on IFRS issued and outstanding as of January 1, 2018.
The Board of Directors approved the Consolidated Financial Statements on December 31, 2018.



Basis of Measurement



The Consolidated Financial Statements have been prepared on
a historical cost basis except for certain financial instruments measured at fair value.



Functional and Presentation Currency



The functional and presentation currency of the parent Novicius
and its wholly owned subsidiaries ICE Studio, DoubleTap and Acquisition Corp., is Canadian dollars.



| | 3. | Summary of Significant Accounting Policies
| | -- | ------------------------------------------



Basis of Consolidation



Control exists when the Company is exposed
to, or has rights to variable returns from its involvement with the entity and has the ability to affect these returns through
its power over the entity. The financial statements of the subsidiaries are included in the Consolidated Financial Statements from
the date that control commences until the date that control ceases. Intercompany balances and transactions, and any unrealized
income and expenses arising from intercompany transactions, are eliminated in preparing the Consolidated Financial Statements.
The Consolidated Financial Statements include the accounts of the Company, the legal parent, together with its wholly-owned subsidiaries,
Ice Studio, DoubleTap and Novicius Acquisition Corp.



Revenue Recognition



Revenue is recognized when there is persuasive
evidence that an arrangement exists which is when a contract or sales order is signed by both parties, delivery has occurred, ownership
has been transferred to the customer, price is fixed or determinable and ultimate collection is reasonably assured at the time
of delivery. Revenue from advertising revenue were recognized when services were provided.



Foreign Currency



Items included in the Consolidated Financial
Statements of each of the Company’s wholly owned subsidiaries are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency”). Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of monetary assets and liabilities not denominated in the functional
currency of an entity are recognized in profit or loss.



Assets and liabilities of entities with
functional currencies other than Canadian dollars are translated at the year-end rates of exchange, and the results of their operations
are translated at average rates of exchange for the period. The resulting translation adjustments are included in the foreign currency
translation reserve under other comprehensive income.





F-8







(Novicius Logo)



Notes to the Consolidated Financial Statements 
August 31,
2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 3. | Summary of Significant Accounting Policies (Continued)
| | -- | ------------------------------------------------------



Significant Accounting Estimates and Judgements



The preparation of the Consolidated Financial
Statements in accordance with IFRS requires that management make estimates and assumptions and use judgment regarding the measured
amounts of assets, liabilities and contingent liabilities at the date of the Consolidated Financial Statements and reported amounts
of revenue and expenses during the reporting period. Such estimates and judgments are continuously evaluated and are based on management’s
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Actual outcomes may differ from these estimates.



The key sources of estimation uncertainty that have a significant
risk of causing material adjustment to the amounts recognized in the Consolidated Financial Statements are:



Going Concern



The assessment of the Company’s ability
to execute its strategy by funding future working capital requirements involves judgment. Estimates and assumptions are continually
evaluated and are based on historical experience and other factors, including expectations of future events that are believed to
be reasonable under the circumstances. There is an uncertainty regarding the Corporation’s ability to continue as a going concern
(see Note 1 b and Note 16).



Fair Value of Financial Instruments



The estimated fair value of financial assets and liabilities,
by their very nature, are subject to measurement uncertainty.



Fair Value of Derivative Liabilities



The Company is exposed to risks related
to changes in its share prices, foreign exchange rates, interest rate and volatility rates used to determine the estimated fair
value of its derivative liabilities. In the determination of the fair value of these instruments, the Company utilizes certain
independent values and, when not available, internal financial models which are based primarily on observable market data. Management’s
judgment is required in the development of these models. This estimate also requires determining and making assumptions about the
most appropriate inputs to the valuation model including the expected life, volatility, discount rates and dividend yield.



Settlement of Debt with Equity Instruments



Equity instruments issued to a creditor
to extinguish a financial liability are measured at the fair value of the equity instruments at the date the financial liability
is extinguished. The Company estimates the fair value of warrants using the Binomial Lattice pricing model and further assumptions
including the expected life, volatility, discount rates and dividend yield. The fair value of the units comprising shares and warrants
issued in connection with the extinguishment of a financial liability are then prorated to the total market value of the common
shares.



Fair Value of Stock Based Compensation and Warrants



In determining the fair value of share
based payments the calculated amounts are not based on historical cost, but is derived based on assumptions (such as the expected
volatility of the price of the underlying security, expected hold period before exercise, dividend yield and the risk-free rate
of return) input into a pricing model. The model requires that management make forecasts as to future events, including estimates
of: the average future hold period of issued stock options and compensation warrants before exercise, expiry or cancellation; future
volatility of the Company’s share price in the expected hold period; dividend yield; and the appropriate risk-free rate of interest.
The resulting value calculated is not necessarily the value that the holder of the option or warrant could receive in an arm’s
length transaction, given that there is no market for the options or compensation warrants and they are not transferable. Similar
calculations are made in estimating the fair value of the warrant component of an equity unit. The assumptions used in these calculations
are inherently uncertain. Changes in these assumptions could materially affect the related fair value estimates.





F-9







(Novicius Logo)



Notes to the Consolidated Financial Statements
August 31, 2018 and 2017 and 2016
(Expressed in Canadian Dollars)








| | 3. | Summary of Significant
                                         Accounting Policies (Continued)
| | -- | -----------------------------------------------------------------------------------------------



Earnings (Loss) per Share



The basic loss per share is calculated
by dividing net loss by the weighted average number of common shares outstanding during the period. The diluted earnings per share
reflects the dilution that would occur if outstanding stock options and share purchase warrants were exercised or converted into
common shares using the treasury stock method.



The inclusion of the Company’s stock options and share purchase
warrants in the computation of diluted loss per share would have an anti-dilutive effect on loss per share and are therefore excluded
from the computation.



Discontinued Operations



A discontinued operation is a component
of the Company’s business that represented a separate major line of business or geographical area of operations that has been disposed
of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation
occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. Effective February
29, 2016, the Company disposed of its investment in 1354166 Alberta Ltd., (“1354166 Alberta”) and accordingly their operations
were treated as discontinued operations.



Financial Instruments



Classification and Measurement



Financial instruments are measured at fair
value on initial recognition of the instrument. Measurement in subsequent periods depends on whether the financial instrument has
been classified as “fair value through profit and loss”, “loans and receivables”, “available-for-sale”,
“held-to-maturity”, or “other financial liability” as defined by IAS 39, “Financial Instruments: Recognition
and Measurement”.



Financial assets and financial liabilities
at “fair value through profit or loss” and are measured at fair value with changes in fair value recognized in the statement
of operations. Transaction costs are expensed when incurred. The Company has classified cash and derivative liabilities as “fair
value through profit and loss”.



Financial instruments classified as “loans
and receivables”, “held-to-maturity”, or “financial liabilities” are measured at amortized cost using
the effective interest rate method of amortized cost. “Loans and receivables” are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. “Held-to-maturity” financial assets are non-derivative
investments that an entity has the positive intention and ability to hold to maturity.



“Other financial liabilities measured
at amortized cost” are those financial liabilities that are not designated as “fair value through profit or loss”.
The Company has classified trade and other payables as “other financial liabilities”.



Financial assets classified as “available-for-sale”
are measured at fair value, with changes in fair value recognized in other comprehensive income. The Company has classified its
marketable securities as “available for sale”.



Cash



Cash in the statement of financial position comprise cash held
in banking institutions.



Marketable Securities



At each financial reporting period, the
Company estimates the fair value of investments which are available-for-sale, which could be based on quoted closing bid ask spread
prices or other measures for unquoted instruments. Adjustments to the fair value of the marketable securities at the financial
position date are recorded to other comprehensive income until re-classified to the statement of operations.





F-10







(Novicius Logo)



Notes to the Consolidated Financial Statements 
August 31,
2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 3. | Summary of Significant
                                         Accounting Policies (Continued)
| | -- | -----------------------------------------------------------------------------------------------



Derivative Financial Instruments



The Company’s derivative instruments consisted of derivative
liabilities in relation to its i) anti-dilution units issued; and ii); share purchase warrants with a US Dollar exercise price.



i)             The Company had issued Units that contained
an anti-dilution provision such that if within 18 months of the issue date, the Company issued additional common shares for a consideration
per share or with an exercise or conversion price per share, less than issue price (the “Adjusted Price”) the Holder
shall be entitled to receive (for no additional consideration) additional Units in an amount such that, when added to the number
of Units acquired by Holder under the agreement will equal the number of Units that the Holder would otherwise be entitled to receive
had the transaction occurred at the Adjusted Price. The anti-dilution provision was considered a derivative and required fair value
measurement at each reporting period. During the reporting periods August 31, 2016 and 2015 the Company determined that based on
the market price being greater than the issue price per share, no additional common shares were required to be fair valued and
recorded as a derivative liability.



ii)
           In prior years, the Company had issued share purchase
warrants with an exercise price in US dollars, rather than Canadian dollars (the functional currency of the Company). Such
share purchase warrants are derivative instruments and the Company was required to re-measure the fair value at each
reporting date. The fair value of these share purchase warrants are re-measured at each reporting date using the
Black-Scholes option pricing model with changes recorded to the statement of operations.



Impairment



Financial Assets



A financial asset is assessed at each reporting
date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually
significant financial assets are tested for impairment on an individual basis. Remaining financial assets are assessed collectively
in groups that share similar credit risk characteristics. All impairment losses are recognized in the statement of operations.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized.
For financial assets measured at amortized cost the reversal is recognized in profit or loss.





F-11







(Novicius Logo)



Notes to the Consolidated Financial Statements 
August 31,
2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 3. | Summary of Significant Accounting Policies (Continued)
| | -- | ------------------------------------------------------



Income tax



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



Current tax is recognized and measured
at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively
enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.



Deferred tax is recognized on any temporary
differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding
tax bases used in the computation of taxable earnings. Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the period when the asset is realized and the liability is settled. The effect of a change in the enacted
or substantively enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to
which the adjustment relates.



Deferred tax assets are recognized to the
extent future recovery is probable. At each reporting period end, deferred tax assets are reduced to the extent that it is no longer
probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.



Share-Based Compensation



The Company has a share-based compensation
plan that grants stock options to employees and non-employees. This plan is an equity settled plan. The Company uses the fair
value method for accounting for share-based awards to employees and non-employees.



The fair value determined at the grant
date of the equity-settled share-based payments is expensed over the vesting period, based on the Company’s estimate of equity
instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity
instruments expected to vest.



The impact of the revision of the original estimates, if any,
is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment
to contributed surplus.



Equity-settled share-based payment transactions
with parties other than employees are measured at the fair value of the goods or services received, except where that fair value
cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at
the date the Company obtains the goods or the counterparty renders the service.



Warrants



When the Company issues units comprising
common shares and warrants, the Company follows the relative fair value method of accounting for warrants attached to and issued
with common shares of the Company. Under this method, the fair value of the common shares is estimated and the fair value of the
warrants issued is estimated using an option pricing model. The fair value is then prorated to the total of the net proceeds received
on issuance of the common shares and the warrants.





F-12







(Novicius Logo)



Notes to the Consolidated Financial Statements 
August 31,
2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 4. | Recent Accounting Pronouncements and Recent Adopted
Accounting Standards
| | -- | ------------------------------------------------------------------------



Recent Issued Accounting Pronouncements



The following standards, amendments and interpretations, which
may be relevant to the Company have been introduced or revised by the IASB:



(i) In May 2014, the IASB issued IFRS 15 Revenue from Contracts
with Customers, which supersedes IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, and IFRIC
15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and SIC 31 Revenue – Barter Transactions
Involving Advertising Services. IFRS 15 establishes a comprehensive five-step framework for the timing and measurement of revenue
recognition. The Company intends to adopt IFRS 15 effective September 1, 2018 and does not expect it to have a material impact
on the Consolidated Financial Statements.



(ii) In July 2014, the IASB issued
the final version of IFRS 9, Financial Instruments which reflects all phases of the financial instruments project and
replaces IAS 39, Financial Instruments – Recognition and Measurement and all previous versions of IFRS 9. The standard
introduces new requirements for classification and measurement, impairment and hedge accounting. IFRS 9 is effective for
annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is
required, but comparative information is not compulsory. The Company intends to adopt this new standard September 1, 2018 and
does not expect it to have a material impact on the Consolidated Financial Statements.



(iii) On January 13, 2016, the IASB issued
IFRS 16 Leases (“IFRS 16”) which will replace IAS 17, Leases. IFRS 16 will bring leases on-balance sheet for lessees
under a single model, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely
unchanged and the distinction between operating and finance leases is retained. IFRS 16 is effective for annual reporting periods
beginning on or after January 1, 2019. The Company is assessing the impact of this new standard on the Consolidated Financial Statements.



| | 5. | Segmented Information
| | -- | ---------------------



The Company’s reportable and geographical
segments are Canada and, previously, the United States. The accounting policies used for the reportable segments are the same as
the Company’s accounting policies. For the purposes of monitoring segment performance and allocating resources between segments,
the Company’s executive officer monitors the tangible, intangible and financial assets attributable to each segment. All assets
are allocated to reportable segments. Effective August 31, 2015, the Company discontinued its reportable segment in the United
States.



The following tables show information regarding the Company’s
reportable segments:



|For the year ended August 31, 2018 |  | Canada $ |          |   | United States $ |  |   | Total $ | 
|---------------------------------- |  | -------- | -------- | - | --------------- |  | - | ------- | 
|Revenue, continuing operations     |  |          | —        |   |                 |  | — |         | 
|Net loss, continuing operations    |  |          | (516,323 | ) |                 |  | — |         | 
|Net loss                           |  |          | (516,323 | ) |                 |  | — |         | 



|For the year ended August 31, 2017 |  |  | Canada$    |   |  |  | United States$ |  |  |  | Total$     |  
|---------------------------------- |  |  | ---------- | - |  |  | -------------- |  |  |  | ---------- | -
|Revenue, continuing operations     |  |  | 20,788     |   |  |  | —              |  |  |  | 20,788     |  
|Net loss, continuing operations    |  |  | (2,097,738 | ) |  |  | —              |  |  |  | (2,097,738 | )
|Net loss                           |  |  | (2,097,738 | ) |  |  | —              |  |  |  | (2,097,738 | )



|For the year ended August 31, 2016         |  |  | Canada$     |   |  |  | United States$ |   |  |  | Total$      |  
|------------------------------------------ |  |  | ----------- | - |  |  | -------------- | - |  |  | ----------- | -
|Net loss, continuing operations            |  |  | (13,534,298 | ) |  |  | —              |   |  |  | (13,534,298 | )
|Net income (loss), discontinued operations |  |  | 8,731       |   |  |  | (6,020         | ) |  |  | 2,711       |  
|Net loss                                   |  |  | (13,525,567 | ) |  |  | (6,020         | ) |  |  | (13,531,587 | )





F-13







(Novicius Logo)



Notes to the Consolidated Financial
Statements 
August 31, 2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 5. | Segmented Information (Continued)
| | -- | ---------------------------------



|                      |  |          |          |   |                 |  |   |         | 
|--------------------- |  | -------- | -------- | - | --------------- |  | - | ------- | 
|As at August 31, 2018 |  | Canada $ |          |   | United States $ |  |   | Total $ | 
|Total Assets          |  |          | 33,043   |   |                 |  | — |         | 
|Total Liabilities     |  |          | (832,631 | ) |                 |  | — |         | 



|As at August 31, 2017 |  |  | Canada
                                                               $ |   |  |  | United States
                                            $ |  |  |  | Total $  |  
|--------------------- |  |  | ----------------------------------------------------------------------- | - |  |  | ----------------------------------------------------------- |  |  |  | -------- | -
|Total Assets          |  |  | 42,047                                                                  |   |  |  | —                                                           |  |  |  | 42,047   |  
|Total Liabilities     |  |  | (529,823                                                                | ) |  |  | —                                                           |  |  |  | (529,823 | )



| | 6. | Marketable Securities
| | -- | ---------------------



As at August 31, 2018, the Company held
1,200,000 common shares in Stratex Oil & Gas Holdings, Inc. (“Stratex”). As at August 31, 2015, the Company recorded
a change in the fair value of the securities in other comprehensive income (loss) in the amount of $110,525. For the year ended
August 31, 2016, the Company re-classified the impairment of $110,525 from other comprehensive income (loss) to the statement of
operations and recorded a further impairment of $9,600 as a result of the Stratex common shares being fair valued at $Nil.



|Market value on acquisition            |  | $ | 120,125  |  
|-------------------------------------- |  | - | -------- | -
|Change in fair value                   |  |   | (110,525 | )
|Market value, August 31, 2015          |  | $ | 9,600    |  
|Impairment                             |  |   | (9,600   | )
|Market value, August 31, 2018 and 2017 |  | $ | —        |  



| | 7. | Secured Note Receivable
| | -- | -----------------------



On May 25, 2016, the Company entered into
a Term Sheet to license to acquire all the technology, production and client operations owned and operated by New York based Catch
Star Studios LLC (“Catch Star”). On October 12, 2016, the Company advanced US$65,000 (CDN$81,483 as at August 31, 2017)
to Catch Star and entered into a Secured Promissory Note and General Security Agreement with Catch Star (the “Secured Note”).
The Secured Note is due on demand and is secured by all of the assets of Catch Star. Subsequently, Catch Star and the Company could
not reach a definitive agreement to memorialize the terms and conditions of the Term Sheet and abandoned the prospective transaction.
On February 1, 2017, the Company issued a letter of demand for the repayment in full of the Secured Note from Catch Star. At August
31, 2017, the Company determined that the Secured Note was uncollectible and recorded an impairment of the full amount.



| | 8. | Related Party Transactions and Balances
| | -- | ---------------------------------------



The following transactions with individuals
related to the Company arose in the normal course of business have been accounted for at the amount agreed to by the related parties.



Compensation of Key Management Personnel



The remuneration of directors and other members of key management
personnel during the periods set out were as follows:



|                                     |  | August 31, 2018 |         |  | August 31, 2017 |   |           | August 31, 2016 | 
|------------------------------------ |  | --------------- | ------- |  | --------------- | - | --------- | --------------- | 
|Short term employee benefits (1) (2) |  | $               | 60,200  |  |                 | $ | 129,981   |                 | 
|Stock based compensation (3)         |  |                 | 204,511 |  |                 |   | 1,614,605 |                 | 
|                                     |  | $               | 264,711 |  |                 | $ | 1,734,586 |                 | 





F-14







(Novicius Logo)



Notes to the Consolidated Financial Statements 
August 31,
2018 and 2017 and 2016 
(Expressed in Canadian Dollars)








| | 8. | Related Party Transactions and Balances (Continued)
| | -- | ---------------------------------------------------



The following balances owing to the President and Chief Financial
Officer of the Company are included in trade and other payables and are unsecured, non-interest bearing and due on demand:



|                                            |  | August 31, 2018 |        |  | August 31, 2017 |  
|------------------------------------------- |  | --------------- | ------ |  | --------------- | -
|Short term employee benefits payable (1)(2) |  | $               | 50,398 |  |                 | $
|                                            |  | $               | 50,398 |  |                 | $
|                                            |  |                 |        |  |                 |  

| | (1) | The Company accrues management fees to the Chief Financial
Officer of the Company at a rate of $5,000 per month during fiscal 2018, 2017 and 2016.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | On September 9, 2016, the Company entered into an employment
agreement with the President of the Company under which the Company agreed to pay to the President, a base salary of $90,000 and
grant one hundred thousand (100,000) common share purchase options (Note 11 e). Effective May 21, 2017, the Company and the President
agreed to amend the terms of the employment agreement, by reducing the President’s base salary to $10.00 annually, allowing the
President to contract his services to Torinit contemporaneous with his continued employment with the Company and providing a top
up provision of up to $1,500 in a month from the Company if the gross compensation earned by the President from Torinit during
June, July and August of 2017 (the “Period”), reduces the overall compensation earned by the President below $7,500
in any such month during the Period.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | On April 1, 2016, the Company granted options to purchase
30,000 common shares to a director. On September 9, 2016 and November 1, 2016, the Company granted options to purchase 130,000
and 50,000 common shares to officers and directors (Note 11 e).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On September 1, 2016, the Company entered
into an agreement for a period of 12 months with Torinit Technologies Inc., (“Torinit”) to provide dedicated resource
augmentation to DoubleTap in an effort to optimize user experience while navigating through the http://DoubleTap.co website
and drive traffic growth by engaging users across all demographics (the “Torinit Services”). As consideration
for the Torinit Services, the Company agreed to compensate Torinit the sum of $8,000 per month based on 320 hours per month for
a 12 month period. Dikshant Batra, a director of the Company, is also the President, a director and major shareholder of Torinit.
As at August 31, 2018 and 2017, included in trade and other payables is $23,961 due to Torinit.



As at August 31, 2018, the amount of directors’
fees included in trade and other payables was $40,400 (August 31, 2017: $10,200).



As at August 31, 2017 and 2016, the Company
had a promissory note payable to the former President of the Company of $Nil. For the year ended August 31, 2016, the Company recorded
interest on the promissory note of $496 (August 31, 2015: $838). On February 26, 2016, the former President assigned the promissory
note of $10,000 and all accumulated interest due in the amount of $113,844 to an arms-length third party. The note was due on demand
with interest at a rate of 10% per annum. Effective November 18, 2015, the Company issued to the former President 114,009 Units
in the capital of the Company pursuant to the anti-dilution provision contained in the August 30, 2014, debt conversion agreements.
On February 29, 2016, the former President converted $38,239 in outstanding debt into 12,746 units in the capital of the Company
(Note 9).



During the year, the Company received advances
from Grown Rogue Unlimited LLC (see Note 16) for working capital purposes in the amount of $49,415. The amount will be settled
upon finalization of the reverse takeover transaction.





F-15







(LOGO)





Notes to the Consolidated
Financial StatementsAugust 31, 2018 and 2017 and 2016(Expressed in Canadian Dollars)










| | 9. | Shareholders’ Loans,
                                         Loans Payable and Debt Conversion
| | -- | -----------------------------------------------------------------------------------------------



Shareholder Loans

As at August
31, 2018, the Company had shareholders’ loans payable of $79,910 (August 31, 2017: $Nil). The loans are non-interest bearing
and due on demand.



Effective
November 18, 2015, the Company issued a total of 103,299 Units in the capital of the Company pursuant to an anti-dilution provision
contained in the August 30, 2014 debt conversion agreements. The warrant component was valued using a Binomial Lattice model whereas
the fair value of the common share component was based on the current market value of the company’s stock. The fair value
of the units of $6,896,800 was allocated to the common shares in the amount of $5,034,157 and warrants in the amount of $1,862,643
based on their relative fair values and $6,896,800 was recognized as a loss on settlement of debt in the statement of operations.
Significant assumptions utilized in the Binomial Lattice process for the warrant component of the conversion were as follows:



|                                                           |  | November 18, 2015 |           
|---------------------------------------------------------- |  | ----------------- | ----------
|Market value on valuation date                             |  | $                 | 6.60      
|Contractual exercise rate                                  |  | $                 | 10.00     
|Term                                                       |  |                   | 1.79 years
|Expected market volatility                                 |  |                   | 183.30    
|Risk free rate using zero coupon US Treasury Security rate |  |                   | 0.90      



Loans Payable

Effective
November 18, 2015, the Company converted loans and interest due in the aggregate amount of $899,660 through the issuance of 680,068
common shares in the capital of the Company. The fair value of the common shares of $4,540,474 was allocated to common shares
and $3,640,814 was recorded as loss on settlement of debt in the consolidated statement of operations.



On February
29, 2016, the Company entered into asset purchase and debt settlement agreement and converted loans and interest in the aggregate
amount of $277,473 in exchange for the Company’s 0.03% net smelter return royalty on 8 mining claim blocks located in Red
Lake, Ontario which were carried on the consolidated statement of financial position at $Nil. Accordingly, the Company recorded
a gain on settlement of debt for the full amount in the consolidated statement of operations.



Debt Conversion

On February
29, 2016, the Company converted debt in the aggregate amount of $451,557 through the issuance of 150,519 units in the capital
of the Company. Each unit was comprised of one (1) common share and one (1) common share purchase warrant. Each full warrant entitles
the holder to purchase one (1) common share at an exercise price of $3.50 until March 1, 2019. The fair value of the units of
$1,220,709 was allocated to common shares in the amount of $638,295 and warrants in the amount of $582,414 based on their relative
fair values and $769,152 was recognized as a loss on extinguishment of debt in the consolidated statement of operations. Significant
assumptions utilized in the Binomial Lattice process for the warrant component of the conversion were as follows:



|                                                           |  | February 29, 2016 |        
|---------------------------------------------------------- |  | ----------------- | -------
|Market value on valuation date                             |  | $                 | 8.10   
|Contractual exercise rate                                  |  | $                 | 3.50   
|Term                                                       |  |                   | 3 years
|Expected market volatility                                 |  |                   | 169.73 
|Risk free rate using zero coupon US Treasury Security rate |  |                   | 0.91   





F-16









(LOGO)



Notes to the Consolidated
Financial StatementsAugust 31, 2018 and 2017 and 2016(Expressed in Canadian Dollars)














| | 9. | Shareholders’ Loans,
                                         Loans Payable and Debt Conversion (Continued)
| | -- | -----------------------------------------------------------------------------------------------------------



Debt Conversion (continued)

Effective
November 18, 2015, the Company entered into a shares for debt conversion agreement and converted a note and interest payable to
Core Energy Enterprises Inc. (“Core”) in the aggregate amount of $362,793 through the issuance of 274,243 common shares
in the capital of the Company. The fair value of the common shares of $1,830,983 was recorded as an increase to common shares
and $1,468,190 was recorded as a loss on settlement of debt in the consolidated statement of operations. The CFO of the Company
is a major shareholder, officer and a director of Core.



| | 10. | Derivative Liabilities
| | --- | ----------------------



As at August
31, 2018 and 2017, the Company had no derivative liabilities. As at August 31, 2016, the Company had 175,000 derivative warrant
liabilities outstanding with a fair value of $Nil, an expiry date of January 15, 2017 which meant a remaining life of 0.13 years
and an exercise price of $1.50. As at August 31, 2016, the Company recorded a gain on expiry of derivative warrant liabilities
of $281,210 in the consolidated statement of operations.



The Company
had warrants issued with a cashless exercise price and warrants issued with an exercise price in US dollars which was different
from the functional currency of the Company and accordingly the warrants were treated as a financial liabilities. The following
table sets out the changes in derivative warrant liabilities during the respective periods:



|                                   |  | Number
    of
    Warrants |   | Fair
    Value Assigned $ |   | Average
    Exercise
    Price $ | 
|---------------------------------- |  | -------------------------- | - | ------------------------- | - | -------------------------------- | 
|As
    at August 31, 2015          |  | 1,305                      |   | 281,210                   |   | US 466.66                        | 
|Warrants
    expired               |  | (1,305                     | ) | (281,210                  | ) | —                                | 
|Warrants
    issued                |  | 175,000                    |   | —                         |   | —                                | 
|As
    at August 31, 2016          |  | 175,000                    |   | —                         |   | 15.00                            | 
|Warrants
    expired               |  | (175,000                   | ) | —                         |   | —                                | 
|As
    at August 31, 2017 and 2018 |  | —                          |   | —                         |   | —                                | 



On June
22, 2016, the Company entered into a consulting agreement and issued 175,000 common share purchase warrants exercisable at $15.00
with a cashless exercise option. At August 31, 2016, the Company determined that it would not continue with the agreement and
it was suspended and on January 15, 2017, the agreement was mutually terminated no warrants were exercised.



| | 11. | Share Capital and Reserves
| | --- | --------------------------



The Company
filed articles of amendment effective May 26, 2017, and changed its name from Intelligent Content Enterprises Inc., to Novicius
Corp., and consolidated its common shares on the basis of one (1) new share for every ten (10) old shares. The Company filed articles
of amendment effective February 1, 2016, and changed its name from Eagleford Energy Corp., to Intelligent Content Enterprises
Inc., and consolidated its common shares on the basis of one (1) new share for every ten (10) old shares. The consolidated financial
statements have been adjusted to reflect these consolidations accordingly.



F-17











Notes to the Consolidated
Financial StatementsAugust 31, 2018 and 2017 and 2016(Expressed in Canadian Dollars)












| | 11. | Share Capital and Reserves
                                         (Continued)
| | --- | -------------------------------------------------------------------------------



| | a) | Share Capital
| | -- | -------------



Authorized:

Unlimited
number of common shares at no par value

Unlimited number of preferred shares issuable in series



Common Shares Issued:

The following
table sets out the changes in common shares during the respective periods:



|                                                                            |  | Number |           | Amount $
|--------------------------------------------------------------------------- |  | ------ | --------- | --------
|Balance August 31, 2016                                                     |  |        | 2,650,627 |         
|Common shares issued as private placement (Note 11 b (i))                   |  |        | 7,692     |         
|Common shares issued as settlement of shareholder advances (Note 11 b (ii)) |  |        | 1,187,672 |         
|Common shares issued as anti-dilution provision (Note 11 b (iii))           |  |        | 1,420,809 |         
|Common shares issued as anti-dilution provision (Note 11 b (iv))            |  |        | 16,364    |         
|Balance August 31, 2017 and August 31, 2018                                 |  |        | 5,283,164 |         



Preferred Shares Issued:

As at August 31, 2018 and August
31, 2017, there were no preferred shares issued.



| | b) | Share Purchase Warrants
| | -- | -----------------------



The following table sets out
the changes in warrants during the respective periods:



|                                     |  | August
    31, 2018    |         | August
    31, 2017       
|------------------------------------ |  | ---------------------- | ------- | --------------------------
|Warrants                             |  | Number
    of Warrants |         | Weighted
    Average Price
|Outstanding,
    beginning of year   |  |                        | 208,211 |                           
|Warrants
    issued (Note 11 b (i))  |  |                        | —       |                           
|Warrants
    issued (Note 11 b (iv)) |  |                        | —       |                           
|Warrants
    expired (Note 11 b (v)) |  |                        | —       |                           
|Balance,
    end of year             |  |                        | 208,211 |                           



(i)         On
November 30, 2016, the Company completed private placements for gross proceeds of $50,000 and issued 7,692 units in the capital
of the Company at a purchase price of $6.50 per unit. Each unit is comprised of one (1) common share and one (1) common share
purchase warrant. Each full warrant entitles the holder to purchase one (1) common share at an exercise price of $10.00 until
November 30, 2019. The fair value of the units ($50,000) was allocated to common shares $30,233 and the amount allocated to warrants
component using a Binomial Lattice model was $19,767.



(ii)        Effective
August 31, 2017, the Company settled shareholder advances of $213,781 and issued 1,187,672 common shares in the capital of the
Company at a price of $0.18 per share.



(iii)       Pursuant
to the August 31, 2017, settlement of shareholder advances of $213,781, effective August 31, 2017, the Company issued 1,420,809
common shares in the capital of the Company pursuant to the anti-dilution provision of the August 31, 2016, private placement
agreements. The fair value of $184,705 was calculated on the previous day’s closing price of the Company’s common
shares and allocated to common shares and anti-dilution fees in the consolidated statement of operations.



F-18







(LOGO)



Notes to the Consolidated
Financial StatementsAugust 31, 2018 and 2017 and 2016(Expressed in Canadian Dollars)








| | 11. | Share Capital and Reserves
                                         (Continued)
| | --- | -------------------------------------------------------------------------------



| | b) | Share Purchase Warrants
                                         (Continued)
| | -- | ----------------------------------------------------------------------------



(iv)
     Pursuant to the November 30, 2016, private placement of $50,000, effective August 31, 2017, the
Company issued 16,364 Units in the capital of the Company pursuant to the anti-dilution provision of the August 31, 2016,
private placement agreements. Each unit is comprised of one (1) common share and one (1) common share purchase warrant. Each
full warrant entitles the holder to purchase one (1) common share at an exercise price of $10.00 until November 30, 2019. The
fair value of the units of $2,127 was allocated to common shares and anti-dilution fees in the consolidated statement of
operations. No value was allocated to warrants based on the Binomial Lattice model.



(v)
       On August 31, 2017, 538,417 common share purchase warrants exercisable at $10.00
expired. The amount allocated to warrants based on the Binomial Lattice model was $2,195,738 with a corresponding increase to
contributed surplus.



The following table summarizes
the outstanding warrants as at August 31, 2018 and August 31, 2017, respectively:



|Number of Warrants 2018 |  | Exercise Price |   | Expiry Date |  | Weighted Average Remaining Life (Years) |                   | Warrant Value ($)
|----------------------- |  | -------------- | - | ----------- |  | --------------------------------------- | ----------------- | -----------------
|160,519                 |  |                | $ | 3.50        |  |                                         | March 1, 2019     |                  
|23,636                  |  |                | $ | 12.50       |  |                                         | August 31, 2019   |                  
|24,056                  |  |                | $ | 10.00       |  |                                         | November 30, 2019 |                  
|208,211                 |  |                |   |             |  |                                         |                   |                  



|Number of Warrants 2017 |  | Exercise Price |   | Expiry Date |  | Weighted Average Remaining Life (Years) |                   | Warrant Value ($)
|----------------------- |  | -------------- | - | ----------- |  | --------------------------------------- | ----------------- | -----------------
|160,519                 |  |                | $ | 3.50        |  |                                         | March 1, 2019     |                  
|23,636                  |  |                | $ | 12.50       |  |                                         | August 31, 2019   |                  
|24,056                  |  |                | $ | 10.00       |  |                                         | November 30, 2019 |                  
|208,211                 |  |                |   |             |  |                                         |                   |                  



| | c) | Weighted Average Shares
                                         Outstanding
| | -- | ----------------------------------------------------------------------------



The following table summarizes
the weighted average shares outstanding:



|                                             |  | August 31,
|-------------------------------------------- |  | ----------
|                                             |  | 2017      
|Weighted Average Shares Outstanding, basic   |  |           
|Weighted Average Shares Outstanding, diluted |  |           



At August 31, 2018, there were
208,211 common share purchase warrants that could be exercised, however they are anti-dilutive. The effects of any potential dilutive
instruments on loss per share are anti-dilutive and therefore have been excluded from the calculation of diluted loss per share.





F-19







(LOGO)



Notes to the Consolidated Financial Statements

August 31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








| | 11. | Share Capital and Reserves (Continued)
| | --- | --------------------------------------



| | d) | Share Purchase Options
| | -- | ----------------------



The Company has a stock option plan to
provide incentives for directors, officers, employees and consultants of the Company. The maximum number of shares, which may be
set aside for issuance under the stock option plan, is 20% of the issued and outstanding common shares of the Company on a rolling
basis.



The following table is a summary of the status of the Company’s
stock options and changes during the period:



|                         |  |  | Number of Options |          |   | Weighted Average
 Exercise Price $ | 
|------------------------ |  |  | ----------------- | -------- | - | ---------------------------------- | 
|Balance, August 31, 2016 |  |  |                   | 38,300   |   |                                    | 
|Granted                  |  |  |                   | 200,000  |   |                                    | 
|Expired                  |  |  |                   | (83,300  | ) |                                    | 
|Balance, August 31, 2017 |  |  |                   | 155,000  |   |                                    | 
|Cancelled                |  |  |                   | (155,000 | ) |                                    | 
|Balance, August 31, 2018 |  |  |                   | —        |   |                                    | 



The following table is a summary of the Company’s stock
options outstanding and exercisable as at August 31, 2017:





|                                                                                                         |       |  |                                                                               |  |         |                                                               |  |  |             |  | Options Exercisable |                  
|-------------------------------------------------------------------------------------------------------- | ----- |  | ----------------------------------------------------------------------------- |  | ------- | ------------------------------------------------------------- |  |  | ----------- |  | ------------------- | -----------------
|Exercise

                                                                                         Price |       |  | Number
                                                           of
 Options |  |         | Options Outstanding Weighted
 Average Remaining Life
 (Years) |  |  | Expiry Date |  | Number of
 Options  |                  
|$                                                                                                        | 12.00 |  |                                                                               |  | 5,000   |                                                               |  |  | 2.20        |  |                     | November 11, 2019
|$                                                                                                        | 15.00 |  |                                                                               |  | 70,000  |                                                               |  |  | 4.02        |  |                     | September 8, 2021
|$                                                                                                        | 13.00 |  |                                                                               |  | 80,000  |                                                               |  |  | 4.02        |  |                     | September 8, 2021
|                                                                                                         |       |  |                                                                               |  | 155,000 |                                                               |  |  | 3.95        |  |                     |                  











| | e) | Stock Based Compensation
| | -- | ------------------------



Effective May 1, 2018, all of the stock
options issued by the Company were released and subsequently cancelled and $1,815,961 was recorded as an increase to contributed
surplus.



Employees

On September 9, 2016,
the Company granted 30,000 immediately vesting common share purchase options to shares to a director and 30,000 common share purchase
options vesting February 6, 2017 to the President. These options are exercisable at $13.00 per share and expire on September 8,
2021. As at August 31, 2017, the Company recorded non-cash stock-based compensation expense of $706,178.



On September 9, 2016,
the Company granted to the President 70,000 common share purchase options exercisable at $15.00 per share and expiring on September
8, 2021. Of these options, 35,000 vested on September 8, 2017 and 35,000 vesting on September 8, 2018. As at August 31, 2017,
the Company recorded non-cash stock-based compensation expense of $613,532. As at August 31, 2018, the Company recorded a further
$204,511 in stock-based compensation.



On November 1, 2016,
the Company granted 50,000 common share purchase options vesting March 30, 2017 to the former Chief Financial Officer. These options
were exercisable at $6.40 per share and expired on April 25, 2017. As at August 31, 2017, the Company recorded non-cash stock-based
compensation expense of $294,895.





F-20







(LOGO)



Notes to the Consolidated Financial Statements

August 31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








| | 11. | Share Capital and Reserves (Continued)
| | --- | --------------------------------------



| | e) | Stock Based Compensation (Continued)
| | -- | ------------------------------------



Non Employees

On September 9, 2016, the Company granted
20,000 immediately vesting common share purchase options to a consultant of the Company. These options are exercisable at $13.00
per share and expire on September 8, 2021. As at August 31, 2017, the Company recorded non-cash stock-based compensation expense
of $235,393.



The fair value of the stock options granted were estimated on
the date of the grant using the Black Scholes option pricing model with the following assumptions and inputs:



|                                         |  | November 1, 2016 |        |   | September 9, 2016 |  
|---------------------------------------- |  | ---------------- | ------ | - | ----------------- | -
|Weighted average fair value per option   |  | $                | 5.90   |   |                   | $
|Weighted average risk-free interest rate |  |                  | 0.68   | % |                   |  
|Forfeiture rate                          |  |                  | 0      | % |                   |  
|Weighted average expected volatility     |  |                  | 156.70 | % |                   |  
|Expected life (years)                    |  |                  | 5      |   |                   |  
|Dividend yield                           |  |                  | Nil    |   |                   |  
|Stock price on the date of grant         |  | $                | 6.40   |   |                   | $



| | 12. | Non-Cash Transactions
| | --- | ---------------------



The following table summarizes the non-cash transactions for
the years set out:



|                                                          |  | August 31, |            |   | August 31, |  |            | August 31, | 
|--------------------------------------------------------- |  | ---------- | ---------- | - | ---------- |  | ---------- | ---------- | 
|Non-cash transactions                                     |  | 2018 ($)   |            |   | 2017 ($)   |  |            | 2016 ($)   | 
|Stock based compensation (Note 11 e)                      |  |            | 204,511    |   |            |  | 1,849,998  |            | 
|Stock options cancelled (Note 11 e)                       |  |            | (1,815,961 | ) |            |  | —          |            | 
|Stock options expired (Note 11 d)                         |  |            | —          |   |            |  | (1,066,882 | )          | 
|Warrants expired (Note 11 b (v))                          |  |            | —          |   |            |  | (2,195,738 | )          | 
|Units issued as anti-dilution provision (Note 11 b (iii)) |  |            | —          |   |            |  | 184,705    |            | 
|Shares issued as anti-dilution provision (Note 11 b (iv)) |  |            | —          |   |            |  | 2,127      |            | 
|Shares issued to settle debt                              |  |            | —          |   |            |  | —          |            | 
|Derivative warrants expired (Note 10)                     |  |            | —          |   |            |  | —          |            | 
|Units issued as debt extinguishment (Note 9)              |  |            | —          |   |            |  | —          |            | 
|Debt settled in exchange of property (Note 9)             |  |            | —          |   |            |  | —          |            | 





F-21







(LOGO)



Notes to the Consolidated Financial Statements

August 31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








| | 13. | Financial Instruments and Concentration of Risks
| | --- | ------------------------------------------------



Financial instruments
are measured at fair value on initial recognition of the instrument. The types of risk exposure to the Company’s financial
instruments and the ways in which such exposures are managed are as follows:



Credit Risk

Credit risk is primarily
related to the Company’s receivables and cash and the risk of financial loss if a partner or counterparty to a financial
instrument fails to meet its contractual obligations. At August 31, 2018, trade and other receivables amounts are $Nil (August
31, 2017: $Nil). At August 31, 2018, included in other receivables is HST due from the Government of Canada in the amount of $4,137
(August 31, 2017: $41,007).



Concentration risk exists in cash because
cash balances are maintained with one financial institution. The risk is mitigated because the financial institution is an international
bank and all amounts are due on demand.



The Company’s maximum exposure to credit risk is as follows:



|        |  |  | August 31, 2018 ($) |        |  | August 31, 2017 ($) | 
|------- |  |  | ------------------- | ------ |  | ------------------- | 
|Cash    |  |  |                     | 28,906 |  |                     | 
|Balance |  |  |                     | 28,906 |  |                     | 



Liquidity Risk

The Company monitors its liquidity position
regularly to assess whether it has the funds necessary to fulfill planned opportunities or that viable options are available to
fund such opportunities from new equity issuances or alternative sources of financings. As a company without significant revenue,
there are inherent liquidity risks, including the possibility that additional financing may not be available to the Company, or
that such financing terms may not be acceptable to the Company.



The following table illustrates the contractual maturities of
financial liabilities:



|August 31, 2018             |  | Payments Due by Period $ |        
|--------------------------- |  | ------------------------ | -------
|                            |  |                          |        
|                            |  | Total                    |        
|Trade and other payables    |  |                          | 703,306
|Shareholder loans           |  |                          | 79,910 
|Advances from related party |  |                          | 49,415 
|Total                       |  |                          | 832,361



|August 31, 2017          |  | Payments Due by Period $ |        
|------------------------ |  | ------------------------ | -------
|                         |  |                          |        
|                         |  | Total                    |        
|Trade and other payables |  |                          | 529,823
|Total                    |  |                          | 529,823





F-22







(logo)





Notes
to the Consolidated Financial Statements

August
31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)






|13. | Financial
Instruments and Concentration of Risks (Continued)
|--- | ------------------------------------------------------------



Market
Risk

Market
risk represents the risk of loss that may impact the Company’s financial position, results of operations, or cash flows due to
adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, and other relevant
market or price risks. The Company does not use derivative instruments to mitigate this risk.



|(i) | Currency
Risk
|--- | -------------

The
Company is exposed to the fluctuations in foreign exchange rates. The Company operates in Canada and a portion of its expenses
are incurred in US dollars. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar
could have an effect on the Company’s financial instruments. The Company does not hedge its foreign currency exposure.



The
following assets and liabilities are denominated in US dollars as at the year-end set out below:





|                                                        |  | August 31, 2018 ($) |         |   | August 31, 2017 ($) | 
|------------------------------------------------------- |  | ------------------- | ------- | - | ------------------- | 
|Cash                                                    |  |                     | 643     |   |                     | 
|Prepaid expenses and deposits                           |  |                     | —       |   |                     | 
|Trade and other payables                                |  |                     | (39,640 | ) |                     | 
|Net liabilities denominated in US$                      |  |                     | (38,997 | ) |                     | 
|Net liabilities CDN dollar equivalent at period end (1) |  |                     | (50,910 | ) |                     | 



(1)
Translated at the exchange rate in effect at August 31, 2018 $1.3055 (August 31, 2017 $1.2536)



The
following table shows the estimated sensitivity of the Company’s total loss for the periods set out from a change in the US dollar
exchange rate in which the Company has exposure with all other variables held constant.



|                  |              |   | August 31, 2018                  |                             |        | August 31, 2017                  | 
|----------------- | ------------ | - | -------------------------------- | --------------------------- | ------ | -------------------------------- | 
|                  |              |   | Increase                         |                             |        | Decrease                         | 
|Percentage change |              |   | In total loss from a change in % |                             |        | In total loss from a change in % | 
|                  | in US Dollar |   |                                  | in the US Exchange Rate ($) |        |                                  | 
|                  | 5            | % |                                  |                             | (3,323 | )                                | 
|                  | 10           | % |                                  |                             | (6,646 | )                                | 
|                  | 15           | % |                                  |                             | (9,969 | )                                | 



|(ii) | Interest
Rate Risk
|---- | ------------------

Interest
rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate
due to changes in market interest rates. The Company is not exposed to any significant interest rate risk.



|(iii) | Fair
Value of Financial Instruments
|----- | -----------------------------------

The
Company’s financial instruments included on the consolidated statements of financial position are comprised of cash, trade and
other payables, advances from related party and shareholder loans. The Company classifies the fair value of financial instruments
measured at fair value according to the following hierarchy based on the amount of observable inputs used to value the instrument.



●
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets
are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.



●
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly
or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for
commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.





F-23







(logo)





Notes
to the Consolidated Financial Statements

August
31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








|13. | Financial
Instruments and Concentration of Risks (Continued)
|--- | ------------------------------------------------------------



|(iii) | Fair
Value of Financial Instruments (Continued)
|----- | -----------------------------------------------



●
Level 3 –Valuations in this level are those with inputs for the asset or liability that are not based on observable
market data.



|                                    |  |       |   |  | August 31, 2018     |  |         | August 31, 2017 | 
|----------------------------------- |  | ----- | - |  | ------------------- |  | ------- | --------------- | 
|Financial Instrument Classification |  | Level |   |  | Carrying
 Value ($) |  |         | Fair Value ($)  | 
|Fair value through profit or loss:  |  |       |   |  |                     |  |         |                 | 
|Cash                                |  |       | 1 |  |                     |  | 28,906  |                 | 
|Other financial liabilities:        |  |       |   |  |                     |  |         |                 | 
|Trade and other payables            |  |       |   |  |                     |  | 703,306 |                 | 
|Advance from related party          |  |       |   |  |                     |  | 49,415  |                 | 
|Shareholder loans                   |  |       |   |  |                     |  | 79,910  |                 | 



Cash
is stated at fair value (Level 1 measurement). The carrying values of trade and other payables, advances from related party and
shareholder loans approximate their fair value due to the short-term maturity of these financial instruments.



Capital
Management

The
Company’s objectives when managing capital are to ensure the Company will have sufficient financial capacity, liquidity and flexibility
to fund its operations, growth and ongoing development opportunities. The Company’s capital requirements currently exceed its
operational cash flow. As such, the Company is dependent upon future financings in order to maintain liquidity and will be required
to issue equity or issue debt.



The
Company manages the capital structure and makes adjustments to it in light of changes in economic conditions, availability of
capital and the risk characteristics of any underlying assets in order to meet current and upcoming obligations.



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 and favourable market conditions to sustain future development of the business. As at August 31, 2018
and 2017, the Company considered its capital structure to be comprised of shareholders’ deficiency.



|14. | Income
Taxes
|--- | ------------



The
reconciliation of the combined Canadian federal and provincial statutory tax rate of 26.5% to the effective tax rate is as follows:



|                                                     |  | 2018 |          |   | 2017 |   |           | 2016 | 
|---------------------------------------------------- |  | ---- | -------- | - | ---- | - | --------- | ---- | 
|Net loss before recovery of income taxes             |  | $    | 516,323  |   |      | $ | 2,097,738 |      | 
|Expected income tax (recovery) expense               |  |      | (136,830 | ) |      |   | (555,901  | )    | 
|Share based compensation and non-deductible expenses |  |      | 80,740   |   |      |   | 302,853   |      | 
|Debt forgiveness                                     |  |      | —        |   |      |   | 236,907   |      | 
|Non-taxable items and others                         |  |      | —        |   |      |   | —         |      | 
|Change in tax benefits not recognized                |  |      | 56,090   |   |      |   | 16,141    |      | 
|Income tax (recovery) expense                        |  | $    | —        |   |      | $ | —         |      | 





F-24







(logo)





Notes
to the Consolidated Financial Statements

August
31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








|14. | Income
Taxes (Continued)
|--- | ------------------------



Deferred
taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the
carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following deductible
temporary differences:



|                                            |  | 2018 |           |  | 2017 |   |           | 2016 | 
|------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---- | 
|Non-capital losses carried forward - Canada |  | $    | 5,370,460 |  |      | $ | 5,154,600 |      | 
|Share issue costs                           |  |      | 12,590    |  |      |   | 16,790    |      | 
|Capital losses carry forwards               |  |      | —         |  |      |   | —         |      | 
|Oil and gas interests                       |  |      | —         |  |      |   | —         |      | 
|Unrecognized deferred tax asset             |  | $    | 5,383,050 |  |      | $ | 5,171,390 |      | 



The
Company’s Canadian non-capital losses expire as follows:



|2030 |  |  |   | 703,290   | 
|---- |  |  | - | --------- | 
|2031 |  |  |   | 648,310   | 
|2032 |  |  |   | 1,200,570 | 
|2033 |  |  |   | 870,780   | 
|2034 |  |  |   | 662,600   | 
|2035 |  |  |   | 258,560   | 
|2036 |  |  |   | 766,380   | 
|2037 |  |  |   | 44,120    | 
|2038 |  |  |   | 215,850   | 
|     |  |  | $ | 5,370,460 | 



|15. | Discontinued
Operations and Dissolution of Subsidiary
|--- | -----------------------------------------------------



Discontinued
Operations of Eagleford Energy, Zavala Inc.

In
accordance with the terms of a Secured Note and a General Security Agreement, the Company and Benchmark Enterprises Inc., (“Benchmark”)
entered into a Settlement and Exercise of Security Agreement effective August 31, 2015 for the extinguishment of the Secured Note
and Interest in the amount of $1,762,328. The Company assigned and conveyed to Benchmark all of its rights, title and interest
in and to Zavala Inc. and issued 100,000 common shares of the Company to Benchmark. As a result of the extinguishment of the Note,
the Company’s investment in Zavala Inc. had been derecognized from the Company’s Consolidated Financial Statements as at the effective
date (August 31, 2015) and presented as discontinued operations on the Consolidated Statements of Operations and Comprehensive
Loss and the Consolidated Statements of Cash Flows. Upon the disposition of Zavala Inc., the Company realized a foreign exchange
translation gain of $615,881. The following table presents the consolidated statements of operations and other comprehensive income
(loss) of Zavala Inc., for the years set out:



|                                                               |  | August 31, 2016 |       
|-------------------------------------------------------------- |  | --------------- | ------
|Expenses                                                       |  |                 |       
|General and administrative                                     |  | $               | 6,020 
|Loss from discontinued operations                              |  |                 | (6,020
|Loss per share from discontinued operations, basic and diluted |  | $               | (0.000



The
following table represents the consolidated statements of Zavala Inc. for the periods set out:



|                                                           |  | August 31, 2016 |       
|---------------------------------------------------------- |  | --------------- | ------
|Cash used in:                                              |  |                 |       
|Operating activities                                       |  |                 |       
|Net loss from discontinued operations                      |  | $               | (6,020
|Cash used in operating activities, discontinued operations |  | $               | (6,020





F-25







(LOGO)





Notes to the Consolidated
Financial Statements

August 31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








| | 15. | Discontinued Operations and Dissolution of Subsidiary
(Continued)
| | --- | -----------------------------------------------------------------



Discontinued operations of 1354166 Alberta Ltd.



The Company entered into a Share Purchase
and Debt Settlement Agreement with 1288131 Alberta Ltd. effective February 29, 2016 and disposed of its interest in 1354166 Alberta
for the settlement of debt owed to 1288131 Alberta Ltd., in the amount of $62,867.



As a result of the
extinguishment of the debt, the Company’s investment in 1354166 Alberta had been derecognized from the Company’s Consolidated
Financial Statements as at the effective date (February 29, 2016) and presented as discontinued operations on the Consolidated
Statements of Operations and Comprehensive Loss and the Consolidated Statements of Cash Flows. Upon the disposition of 1354166
Alberta the Company recognized a gain in the amount of $68,489 in the consolidated statement of operations.



The following table presents the statements of operations of
1354166 Alberta for the period set out:



|                                                                   |  | August 31, 2016 |       
|------------------------------------------------------------------ |  | --------------- | ------
|Revenue                                                            |  |                 |       
|Natural gas sales                                                  |  | $               | 13,998
|Expenses                                                           |  |                 |       
|Operating costs                                                    |  |                 | 5,170 
|General and administrative                                         |  |                 | 97    
|                                                                   |  |                 | 5,267 
|Net income from discontinued operations                            |  | $               | 8,731 
|Earnings per share from discontinued operations, basic and diluted |  | $               | 0.000 



The following table presents the statements of cash flows of
1354166 Alberta for the period set out:



|                                                               |  | August 31, 2016 |       
|-------------------------------------------------------------- |  | --------------- | ------
|Cash provided by (used in)                                     |  |                 |       
|Operating activities                                           |  |                 |       
|Net income from discontinued operations                        |  | $               | 8,731 
|Item not involving cash                                        |  |                 |       
|Net changes in non-cash working capital                        |  |                 |       
|Accounts receivable                                            |  |                 | 4,955 
|Accounts payable                                               |  |                 | 14    
|Cash provided by operating activities, discontinued operations |  |                 | 13,700
|Net cash provided by discontinued operations                   |  | $               | 13,700



The following table presents the effect of the disposal of 1354166
Alberta on the Consolidated Statement of Financial Position of the Company:



|                                              |  | February 29, 2016 |        
|--------------------------------------------- |  | ----------------- | -------
|Cash                                          |  | $                 | 2,564  
|Accounts Receivable                           |  |                   | 3,391  
|Accounts payable                              |  |                   | (14    
|Provisions (Note 12)                          |  |                   | (11,563
|Net assets and liabilities of 1354166 Alberta |  | $                 | (5,622 



F-26







(LOGO)





Notes to the Consolidated
Financial Statements

August 31, 2018 and 2017 and 2016

(Expressed in Canadian Dollars)








| | 15. | Discontinued Operations and Dissolution of Subsidiary
(Continued)
| | --- | -----------------------------------------------------------------



Dissolution of Dyami Energy, LLC

Effective
April 3, 2014, the Company’s former wholly owned subsidiary Dyami Energy, LLC (“Dyami Energy”) was dissolved.
The Company’s investment in Dyami Energy had been derecognized from the Company’s Consolidated Financial Statements
as at the effective date and presented on the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows
as an impairment of the net assets and liabilities on dissolution of subsidiary. Prior obligations of Dyami Energy, with respect
to the Matthews and Murphy Leases of $893,990 were previously recorded by the Company as financial liabilities and recognized as
a gain upon de-recognition of financial liabilities for the year ended August 31, 2017.



| | 16. | Subsequent Events
| | --- | -----------------



On October 31, 2018,
the Company, Grown Rogue Unlimited LLC (“Grown Rogue”), Grown Rogue Canada Inc. (“Grown Rogue Canada”)
and Novicius Acquisition Corp. (“Acquisition Corp”) entered into a definitive transaction agreement (the “Definitive
Agreement”) which set out the terms for the reverse take-over of the Company by Grown Rogue and the related transactions
(the ’‘Transaction”). On the closing date of the Transaction, the Company acquired the business of Grown Rogue
and the funds raised by Grown Rogue Canada. Effective November 1, 2018, in preparation for the Transaction, the Company completed
a consolidation (the “Consolidation”) of its common shares on the basis of 1.4 pre-consolidated common shares for 1
post-consolidated common share (a “Resulting Issuer Share”) and changed its name to “Grown Rogue International
Inc.”. In consideration for all of the equity interests of Grown Rogue, the unitholders and warrant holders of Grown Rogue
received an aggregate of 60,746,202 Resulting Issuer Shares at a deemed price of $0.44 per share and 5,446,202 Resulting Issuer
Warrants with an exercise price of $0.55 per share. As part of the transaction, Grown Rogue also completed a non-brokered private
placement of subscription receipts for gross proceeds of $1,646,050, with each subscription receipt being sold for $0.44.



In accordance
with debt settlement agreements between the Company and certain of its creditors, the parties agreed to assign an aggregate of
$369,508 in indebtedness owing to the Company to Acquisition Corp. The debt was subsequently converted (the “Debt Conversion”)
into 839,790 units of Acquisition Corp. at $0.44 per unit (the “Debt Conversion Units”). Each Debt Conversion Unit
was comprised of one common share of Acquisition Corp. (a “Debt Conversion Share”) and one Novicius AcquisitionCo purchase
warrant (“Novicius AcquisitionCo Warrants”). Each Novicius AcquisitionCo Warrant is exercisable into one common share
at an exercise price of $0.55 per share for 24 months. In accordance with the Definitive Agreement, the Debt Conversion Shares
were exchanged for 839,790 Resulting Issuer Shares at the time of the amalgamation for Grown Rogue Canada and Acquisition Corp.,
and the 839,790 Novicius AcquisitionCo Warrants were exchanged, without additional consideration or action, for the same number
of warrants of the Company.





F-27







| | ITEM
                                         19 | EXHIBITS
| | ------------------------------------------------ | --------



The
following exhibits are included in the Annual Report on Form 20-F:



|Exhibit
    # | Description                                                                                                                                                                                                                                                                                           
|------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1           | Certificate of Incorporation
    dated September 22, 1978 (1)                                                                                                                                                                                                                                         
|1.2           | Articles
    of Amendment dated January 14, 1985 (1)                                                                                                                                                                                                                                                  
|1.3           | Articles
    of Amendment dated August 16, 2000 (1)                                                                                                                                                                                                                                                   
|1.4           | Bylaw
    No 1 (1)                                                                                                                                                                                                                                                                                    
|1.5           | Special
    By-Law No 1 (1)                                                                                                                                                                                                                                                                           
|1.6           | Articles
    of Amalgamation dated November 30, 2009 (2)                                                                                                                                                                                                                                              
|1.7           | Code
    of Business Conduct and Ethics (1)                                                                                                                                                                                                                                                           
|1.8           | Compensation
    Committee Charter (1)                                                                                                                                                                                                                                                                
|1.9           | Amended
    Audit Committee Charter (15)                                                                                                                                                                                                                                                              
|1.10          | Amended
    Stock Option Plan, February 24, 2011 (3)                                                                                                                                                                                                                                                  
|1.11          | Amended
    Stock Option Plan, February 24, 2012 (4)                                                                                                                                                                                                                                                  
|1.12          | By-Law
    No. 1, February 24, 2012 (4)                                                                                                                                                                                                                                                               
|1.13          | Articles
    of Amendment, effective March 16, 2012 (5)                                                                                                                                                                                                                                               
|1.14          | Articles
    of Amendment, effective August 25, 2014 (6)                                                                                                                                                                                                                                              
|1.15          | Articles
    of Amendment, effective February 1, 2016 (7)                                                                                                                                                                                                                                             
|1.16          | Articles
    of Amendment, effective February 29, 2016 (8)                                                                                                                                                                                                                                            
|1.17          | Settlement
    Agreement dated December 22, 2016 by and among Digital Widget Factory Inc. (Belize), Intelligent Content Enterprises Inc.
    and Digital Widget Factory Inc. (Ontario) (9)                                                                                                            
|1.18          | Articles
    of Amendment, effective May 26, 2017 (10)                                                                                                                                                                                                                                                
|1.19          | Novicius
    Corp., First Notice of Change of Auditor dated November 6, 2017; the resignation of SLF effective November 1, 2017; Novicius
    Corp Second Notice of Change of Auditor dated November 14, 2017; and the acceptance of appointment of auditors from MNP dated
    November 17, 2017 (11)
|1.20          | Articles
    of Amendment, effective November 1, 2018 (13)                                                                                                                                                                                                                                            
|1.21          | Definitive
    Transaction Agreement, dated October 31, 2018, with Grown Rogue Canada, Inc., Novicius Acquisition Corp., and Grown Rogue
    Unlimited, LLC, an Oregon limited liability company (14)                                                                                                 
|1.22          | Subsidiaries
    of Grown Rogue International Inc. (12)                                                                                                                                                                                                                                               
|2.1/2.2       | Section
    302 Certification of Chief Executive and Financial Officer (12)                                                                                                                                                                                                                           
|3.1/3.2       | Section
    906 Certification of Chief Executive and Financial Officer (12)                                                                                                                                                                                                                           
|Reference #   | Incorporated
    by Reference                                                                                                                                                                                                                                                                         
|(1)           | Previously
    filed on April 29, 2009 by Registrant as part of Registration Statement on Form 20-F (SEC File No. 0-53646)                                                                                                                                                                            
|(2)           | Previously
    Filed by Registrant on Form 6-K on December 1, 2009                                                                                                                                                                                                                                    
|(3)           | Previously
    filed by Registrant on Form 6-K on January 27, 2011                                                                                                                                                                                                                                    
|(4)           | Previously
    filed by Registrant on Form 6-K on February 1, 2012                                                                                                                                                                                                                                    
|(5)           | Previously
    filed by Registrant on Form 6-K on March 9, 2012                                                                                                                                                                                                                                       
|(6)           | Previously
    filed by Registrant on Form 6-K on August 20, 2014                                                                                                                                                                                                                                     
|(7)           | Previously
    filed by Registrant on Form 6-K on February 4, 2016                                                                                                                                                                                                                                    
|(8)           | Previously
    filed by Registrant on Form 6-K on March 9, 2016                                                                                                                                                                                                                                       
|(9)           | Previously
    filed by Registrant on Form 6-K on December 29, 2016                                                                                                                                                                                                                                   
|(10)          | Previously
    filed by Registrant on Form 6-K on April 28, 2017                                                                                                                                                                                                                                      
|(11)          | Previously
    filed by Registrant on Form 6-K on November 22, 2017                                                                                                                                                                                                                                   
|(12)          | Filed
    as an Exhibit hereto                                                                                                                                                                                                                                                                        
|(13)          | Previously
    filed by Registrant on Form 6-K on November 6, 2018                                                                                                                                                                                                                                    
|(14)          | Previously
    filed by Registrant on Form 6-K on November 15, 2018                                                                                                                                                                                                                                   
|(15)          | Previously filed by Registrant on Form 6-K on June 9, 2009                                                                                                                                                                                                                                            



83







The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on its behalf.



| | Grown Rogue International Inc.
| | ------------------------------
| |                               
| | By:                           
| |                               
| |                               



Date:
January 15, 2019



84









INDEX
TO EXHIBITS



|Exhibit
    # | Description                                                                                                                                                                                                                                                                               
|------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1           | Certificate of Incorporation dated September 22, 1978 (1)                                                                                                                                                                                                                                 
|1.2           | Articles of Amendment dated January 14, 1985 (1)                                                                                                                                                                                                                                          
|1.3           | Articles of Amendment dated August 16, 2000 (1)                                                                                                                                                                                                                                           
|1.4           | Bylaw No 1 (1)                                                                                                                                                                                                                                                                            
|1.5           | Special By-Law No 1 (1)                                                                                                                                                                                                                                                                   
|1.6           | Articles of Amalgamation dated November 30, 2009 (2)                                                                                                                                                                                                                                      
|1.7           | Code of Business Conduct and Ethics (1)                                                                                                                                                                                                                                                   
|1.8           | Compensation Committee Charter (1)                                                                                                                                                                                                                                                        
|1.9           | Amended Audit Committee Charter (15)                                                                                                                                                                                                                                                      
|1.10          | Amended Stock Option Plan, February 24, 2011 (3)                                                                                                                                                                                                                                          
|1.11          | Amended Stock Option Plan, February 24, 2012 (4)                                                                                                                                                                                                                                          
|1.12          | By-Law No. 1, February 24, 2012 (4)                                                                                                                                                                                                                                                       
|1.13          | Articles of Amendment, effective March 16, 2012 (5)                                                                                                                                                                                                                                       
|1.14          | Articles of Amendment, effective August 25, 2014 (6)                                                                                                                                                                                                                                      
|1.15          | Articles of Amendment, effective February 1, 2016 (7)                                                                                                                                                                                                                                     
|1.16          | Articles of Amendment, effective February 29, 2016 (8)                                                                                                                                                                                                                                    
|1.17          | Settlement Agreement dated December 22, 2016 by and among Digital Widget Factory Inc. (Belize), Intelligent Content Enterprises Inc. and Digital Widget Factory Inc. (Ontario) (9)                                                                                                        
|1.18          | Articles of Amendment, effective May 26, 2017 (10)                                                                                                                                                                                                                                        
|1.19          | Novicius Corp., First Notice of Change of Auditor dated November 6, 2017; the resignation of SLF effective November 1, 2017; Novicius Corp Second Notice of Change of Auditor dated November 14, 2017; and the acceptance of appointment of auditors from MNP dated November 17, 2017 (11)
|1.20          | Articles
    of Amendment, effective November 1, 2018 (13)                                                                                                                                                                                                                                
|1.21          | Definitive Transaction Agreement, dated October 31, 2018, with Grown Rogue Canada, Inc., Novicius Acquisition Corp., and Grown Rogue Unlimited, LLC, an Oregon limited liability company (14)                                                                                             
|1.22          | Subsidiaries of Grown Rogue International Inc. (12)                                                                                                                                                                                                                                       
|2.1/2.2       | Section 302 Certification of Chief Executive and Financial Officer (12)                                                                                                                                                                                                                   
|3.1/3.2       | Section 906 Certification of Chief Executive and Financial Officer (12)                                                                                                                                                                                                                   










|Reference
    #   | Incorporated
    by Reference                                                                                                                     
|----------------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(1)               | Previously
    filed on April 29, 2009 by Registrant as part of Registration Statement on Form 20-F (SEC File No. 0-53646)                        
|(2)               | Previously
    Filed by Registrant on Form 6-K on December 1, 2009                                                                                
|(3)               | Previously
    filed by Registrant on Form 6-K on January 27, 2011                                                                                
|(4)               | Previously
    filed by Registrant on Form 6-K on February 1, 2012                                                                                
|(5)               | Previously
    filed by Registrant on Form 6-K on March 9, 2012                                                                                   
|(6)               | Previously
    filed by Registrant on Form 6-K on August 20, 2014                                                                                 
|(7)               | Previously
    filed by Registrant on Form 6-K on February 4, 2016                                                                                
|(8)               | Previously
    filed by Registrant on Form 6-K on March 9, 2016                                                                                   
|(9)               | Previously
    filed by Registrant on Form 6-K on December 29, 2016                                                                               
|(10)              | Previously
    filed by Registrant on Form 6-K on April 28, 2017                                                                                  
|(11)              | Previously
    filed by Registrant on Form 6-K on November 22, 2017                                                                               
|(12)              | Filed
    as an Exhibit hereto                                                                                                                    
|(13)              | Previously
    filed by Registrant on Form 6-K on November 6, 2018                                                                                
|(14)
        (15) | Previously
        filed by Registrant on Form 6-K on November 15, 2018
        Previously
        filed by Registrant on Form 6-K on June 9, 2009