---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC
20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2014

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

For the transition period from ______________________To
______________________

Commission file number: 000-53942

URBAN BARNS FOODS INC.(Exact name of registrant as specified in its charter)

|Nevada                                              | N/A                                                 
|--------------------------------------------------- | ----------------------------------------------------
|(State or other jurisdiction of incorporation or    | (I.R.S. Employer Identification No.)                
|organization)                                       |                                                     
|                                                    |                                                     
|Office 205 - 290 Lakeshore Road                     |                                                     
|Pointe-Claire, Quebec, Canada H9S 4L3               | 514-907-4989                                        
|(Address of principal executive offices) (Zip Code) | (Registrants telephone number, including
area code)

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

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

|Large accelerated filer [   ] | Accelerated filer [   ] | Non-accelerated filer [   ] | **Smaller reporting company**[X]
|----------------------------- | ----------------------- | --------------------------- | --------------------------------

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [   ] Yes [   ]
No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of June 16, 2014 the registrants outstanding common stock
consisted of 270,746,982 shares.

---

Table of Contents

|PART
      I - FINANCIAL INFORMATION | 3             
|------------------------------------ | --------------
|                                     | Item
      1. 
|                                     | Item
      2. 
|                                     | Item
      3. 
|                                     | Item
      4. 
|PART
      II - OTHER INFORMATION    | 20            
|                                     | Item
      1. 
|                                     | Item
      1A.
|                                     | Item
      2. 
|                                     | Item
      3. 
|                                     | Item
      4. 
|                                     | Item
      5. 

---

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim financial statements of Urban Barns Foods
Inc. (the Company, Urban Barns, we, our, us) follow. All currency
references in this report are to U.S. dollars unless otherwise noted.

|URBAN BARNS FOODS INC.             
|-----------------------------------
|(A Development Stage Company)      
|Consolidated Financial Statements  
|For the period ended April 30, 2014
|(Expressed in U.S. dollars)        
|(unaudited)                        

Financial Statement Index

|Consolidated
      Balance Sheets                               | F-2
|--------------------------------------------------------------- | ---
|                                                                |    
|Consolidated
      Statements of Operations                     | F-3
|                                                                |    
|Consolidated
      Statements of Stockholder's Equity (Deficit) | F-4
|                                                                |    
|Consolidated
      Statements of Cash Flows                     | F-5
|                                                                |    
|Notes
      to the Consolidated Financial Statements            | F-6

---

|URBAN BARNS FOODS INC.       
|-----------------------------
|(A Development Stage Company)
|Consolidated Balance Sheets  
|(expressed in U.S. dollars)  

|                                                                                                                                                                               |  | April 30,   |   |  | July 31,   |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | - |  | ---------- | -
|                                                                                                                                                                               |  | 2014        |   |  | 2013       |  
|                                                                                                                                                                               |  | $           |   |  | $          |  
|                                                                                                                                                                               |  | (unaudited) |   |  |            |  
|ASSETS                                                                                                                                                                         |  |             |   |  |            |  
|                                                                                                                                                                               |  |             |   |  |            |  
|Current assets                                                                                                                                                                 |  |             |   |  |            |  
|Cash                                                                                                                                                                           |  | 307,303     |   |  | 29,617     |  
|Accounts
      receivable                                                                                                                                                      |  | 1,073       |   |  | 1,143      |  
|Amounts receivable                                                                                                                                                             |  | 24,273      |   |  | 8,615      |  
|Inventory                                                                                                                                                                      |  | 2,783       |   |  | 1,049      |  
|Prepaid expenses and deposits                                                                                                                                                  |  | 37,764      |   |  | 15,621     |  
|Total current assets                                                                                                                                                           |  | 373,196     |   |  | 56,045     |  
|                                                                                                                                                                               |  |             |   |  |            |  
|Deferred financing costs                                                                                                                                                       |  | -           |   |  | 2,863      |  
|Property and equipment (Note 3)                                                                                                                                                |  | 581,347     |   |  | 247,616    |  
|Intangible assets (Note 4)                                                                                                                                                     |  | 94,196      |   |  | 34,864     |  
|Total assets                                                                                                                                                                   |  | 1,048,739   |   |  | 341,388    |  
|                                                                                                                                                                               |  |             |   |  |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIT)                                                                                                                             |  |             |   |  |            |  
|Current liabilities                                                                                                                                                            |  |             |   |  |            |  
|Accounts payable and accrued
      liabilities (Note 7)                                                                                                                        |  | 151,114     |   |  | 226,995    |  
|Convertible debentures,
      net of unamortized discount of $nil (2013 - $nil) (Note 5)                                                                                       |  | 5,062       |   |  | 105,062    |  
|Derivative liabilities (Note 6)                                                                                                                                                |  | 10,824      |   |  | 8,286      |  
|Due to related parties (Note 7)                                                                                                                                                |  | 7,992       |   |  | 303,809    |  
|Total liabilities                                                                                                                                                              |  | 174,992     |   |  | 644,152    |  
|Nature of operations and
      continuance of business (Note 1)                                                                                                                |  |             |   |  |            |  
|Commitments (Note 11)                                                                                                                                                          |  |             |   |  |            |  
|Subsequent events (Note 12)                                                                                                                                                    |  |             |   |  |            |  
|                                                                                                                                                                               |  |             |   |  |            |  
|Stockholders equity
    (deficit)                                                                                                                                             |  |             |   |  |            |  
|Preferred
      stock    Authorized: 100,000,000 preferred shares,
      par value $0.001    Issued and outstanding: nil
      shares                                          |  | -           |   |  | -          |  
|Common
      stock, Class A    Authorized: 500,000,000 common
      shares, par value $0.001    Issued and
      outstanding: 270,746,982 and 153,546,367 shares, respectively |  | 270,747     |   |  | 153,546    |  
|                                                                                                                                                                               |  |             |   |  |            |  
|Common stock,
      Class B                                                                                                                                                    |  |             |   |  |            |  
|Authorized: 25,000,000 common
      shares, value of $0.001                                                                                                                    |  |             |   |  |            |  
|Issued and
      outstanding: nil shares                                                                                                                                       |  | -           |   |  | -          |  
|Additional paid-in capital                                                                                                                                                     |  | 4,370,807   |   |  | 2,024,755  |  
|Deferred
      compensation (Note 7)                                                                                                                                           |  | (68,630     | ) |  | (256,027   | )
|Deficit accumulated during the development stage                                                                                                                               |  | (3,699,177  | ) |  | (2,225,038 | )
|Total stockholders equity (deficit)                                                                                                                                           |  | 873,747     |   |  | (302,764   | )
|Total liabilities and stockholders equity (deficit)                                                                                                                           |  | 1,048,739   |   |  | 341,388    |  

(The accompanying notes are an integral part of these
consolidated financial statements)

F-2

---

|URBAN BARNS FOODS INC.               
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Operations
|(expressed in U.S. dollars)          
|(unaudited)                          

|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  | Accumulated    |  
|---------------------------------------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ----------- | - |  | ----------- | - |  | -------------- | -
|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  | from February  |  
|                                                                             |  | Three Months |   |  | Three Months |   |  | Nine Months |   |  | Nine Months |   |  | 10, 2010 (date |  
|                                                                             |  | Ended        |   |  | Ended        |   |  | Ended       |   |  | Ended       |   |  | of inception)  |  
|                                                                             |  | April 30,    |   |  | April 30,    |   |  | April 30,   |   |  | April 30,   |   |  | to April 30,   |  
|                                                                             |  | 2014         |   |  | 2013         |   |  | 2014        |   |  | 2013        |   |  | 2014           |  
|                                                                             |  | $            |   |  | $            |   |  | $           |   |  | $           |   |  | $              |  
|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Revenue                                                                      |  | -            |   |  | 3,612        |   |  | -           |   |  | 4,390       |   |  | 5,691          |  
|Cost
      of sales                                                          |  | -            |   |  | (740         | ) |  | -           |   |  | (1,132      | ) |  | (1,132         | )
|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Gross margin                                                                 |  | -            |   |  | 2,872        |   |  | -           |   |  | 3,258       |   |  | 4,559          |  
|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Operating expenses                                                           |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Depreciation                                                                 |  | 13,549       |   |  | 6,427        |   |  | 41,644      |   |  | 16,768      |   |  | 89,181         |  
|Foreign exchange loss (gain)                                                 |  | 26,169       |   |  | 2,019        |   |  | 3,134       |   |  | 2,181       |   |  | (15,894        | )
|General and
      administrative (Note 7)                                    |  | 399,931      |   |  | 164,730      |   |  | 865,570     |   |  | 907,840     |   |  | 2,114,741      |  
|Professional fees (Note 7)                                                   |  | 43,327       |   |  | 24,472       |   |  | 127,430     |   |  | 111,412     |   |  | 454,868        |  
|Research and
      development                                               |  | 39,080       |   |  | (298         | ) |  | 118,319     |   |  | 25,952      |   |  | 165,326        |  
|Write-down of property and equipment                                         |  | -            |   |  | -            |   |  | -           |   |  | -           |   |  | 3,463          |  
|Total operating expenses                                                     |  | 522,056      |   |  | 197,350      |   |  | 1,156,097   |   |  | 1,064,153   |   |  | 2,811,685      |  
|Loss
      from operations                                                   |  | (522,056     | ) |  | (194,478     | ) |  | (1,156,097  | ) |  | (1,060,895  | ) |  | (2,807,126     | )
|Other income (expense)                                                       |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Accretion of discounts on
      convertible debentures (Note 5)              |  | (32,500      | ) |  | -            |   |  | (76,781     | ) |  | (132,798    | ) |  | (221,781       | )
|Amortization of deferred financing costs                                     |  | -            |   |  | -            |   |  | (2,863      | ) |  | (4,438      | ) |  | (14,250        | )
|Gain (loss) on change in
      fair value of derivative liabilities (Note 6) |  | 11,822       |   |  | 2,276        |   |  | (140,048    | ) |  | 132,408     |   |  | (407,694       | )
|Interest expense                                                             |  | (4,715       | ) |  | (3,251       | ) |  | (26,912     | ) |  | (7,123      | ) |  | (39,946        | )
|Loss on conversion of
      convertible debenture                            |  |              |   |  | -            |   |  | -           |   |  | (540,788    | ) |  | -              |  
|Loss on
      settlement of accounts payable                                 |  | (71,438      | ) |  | (1,957       | ) |  | (71,438     | ) |  | (1,957      | ) |  | (73,395        | )
|Total other income (expense)                                                 |  | (96,831      | ) |  | (2,932       | ) |  | (318,042    | ) |  | (554,696    | ) |  | (757,066       | )
|Net loss                                                                     |  | (618,887     | ) |  | (197,410     | ) |  | (1,474,139  | ) |  | (1,615,591  | ) |  | (3,564,192     | )
|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Net loss per share, basic and diluted                                        |  | -            |   |  | -            |   |  | (0.01       | ) |  | (0.01       | ) |  |                |  
|                                                                             |  |              |   |  |              |   |  |             |   |  |             |   |  |                |  
|Weighted average shares outstanding                                          |  | 239,250,418  |   |  | 149,010,546  |   |  | 207,314,809 |   |  | 129,598,244 |   |  |                |  

(The accompanying notes are an integral part of these
consolidated financial statements)

F-3

---

|URBAN BARNS FOODS INC.                                   
|---------------------------------------------------------
|(A Development Stage Company)                            
|Consolidated Statements of Stockholders Equity (Deficit)
|(Expressed in U.S. dollars)                              

DeficitAccumulatedCommon Stock
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    During theClass A
    
    
    Class B
    
    
    Paid-In
    
    
    Deferred
    
    
    DevelopmentShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Stage
    
    
    Total#
    
    
    $
    
    
    #
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Balance, July 31, 2013
    
    153,546,367
    
    
    153,546
    
    
    -
    
    
    -
    
    
    2,024,755
    
    
    (256,027
    )
    
    (2,225,038
    )
    
    (302,764
    )Shares issued for cash
    
    88,935,118
    
    
    88,935
    
    
    -
    
    
    -
    
    
    1,411,065
    
    
    -
    
    
    -
    
    
    1,500,000Share issuance costs
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (140,811
    )
    
    -
    
    
    -
    
    
    (140,811
    )Shares issued for the conversion of debenture
      and accrued interest
    
    10,841,414
    
    
    10,842
    
    
    -
    
    
    -
    
    
    126,958
    
    
    -
    
    
    -
    
    
    137,800Fair value of shares issued
      for settlement of debt
    
    17,424,083
    
    
    17,424
    
    
    -
    
    
    -
    
    
    461,738
    
    
    -
    
    
    -
    
    
    479,162Derivative liabilities relating to notes
      payable converted to shares
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    214,291
    
    
    -
    
    
    -
    
    
    214,291Stock based compensation
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    212,000
    
    
    -
    
    
    -
    
    
    212,000Fair value of brokers warrants
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    60,811
    
    
    -
    
    
    -
    
    
    60,811Deferred compensation costs
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    187,397
    
    
    -
    
    
    187,397Net
      loss for the period
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,474,139
    )
    
    (1,474,139
    )Balance, April 30, 2014 (unaudited)
    
    270,746,982
    
    
    270,747
    
    
    -
    
    
    -
    
    
    4,370,807
    
    
    (68,630
    )
    
    (3,699,177
    )
    
    873,747


(The accompanying notes are an integral part of these
consolidated financial statements)

F-4

---

|URBAN BARNS FOODS INC.               
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Cash Flows
|(expressed in U.S. dollars)          
|(unaudited)                          

|                                                                                  |  |             |   |  |             |   |  | Accumulated from    |  
|--------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | - |  | ------------------- | -
|                                                                                  |  | Nine Months |   |  | Nine Months |   |  | February 10, 2010   |  
|                                                                                  |  | Ended       |   |  | Ended       |   |  | (date of inception) |  
|                                                                                  |  | April 30,   |   |  | April 30,   |   |  | to April 30,        |  
|                                                                                  |  | 2014        |   |  | 2013        |   |  | 2014                |  
|                                                                                  |  | $           |   |  | $           |   |  | $                   |  
|Operating Activities                                                              |  |             |   |  |             |   |  |                     |  
|Net loss                                                                          |  | (1,474,139  | ) |  | (1,615,591  | ) |  | (3,564,192          | )
|Adjustments to reconcile net
      loss to net cash used in operating activities: |  |             |   |  |             |   |  |                     |  
|Accretion of discount on
      convertible debentures                             |  | 76,781      |   |  | 132,798     |   |  | 221,781             |  
|Amortization of
      deferred financing costs                                    |  | 2,863       |   |  | 4,438       |   |  | 14,250              |  
|Depreciation                                                                      |  | 41,644      |   |  | 16,768      |   |  | 89,181              |  
|Deferred
      compensation                                                       |  | 187,397     |   |  | (268,630    | ) |  | (68,630             | )
|Gain (loss) on change in fair
      value of derivative liabilities               |  | 140,048     |   |  | (132,408    | ) |  | 407,694             |  
|Loss on
      conversion of convertible debenture                                 |  | -           |   |  | 540,788     |   |  | 502,603             |  
|Loss on settlement of accounts
      payable                                      |  | 71,438      |   |  | 1,957       |   |  | 73,395              |  
|Shares issued
      for consulting fees                                           |  | -           |   |  | 435,403     |   |  | -                   |  
|Stock-based compensation                                                          |  | 212,000     |   |  | 398,211     |   |  | 621,786             |  
|Write-down of
      property and equipment                                        |  | -           |   |  | -           |   |  | 3,463               |  
|Changes in operating assets and liabilities:                                      |  |             |   |  |             |   |  |                     |  
|Accounts
      receivable                                                         |  | 70          |   |  | (2,558      | ) |  | (1,073              | )
|Amounts receivable                                                                |  | (15,658     | ) |  | (8,567      | ) |  | (24,273             | )
|Inventory                                                                         |  | (1,734      | ) |  | (1,049      | ) |  | (2,783              | )
|Prepaid expenses and deposits                                                     |  | (22,143     | ) |  | (1,757      | ) |  | (27,514             | )
|Accounts payable
      and accrued liabilities                                    |  | 228,059     |   |  | 9,859       |   |  | 337,387             |  
|Due to related parties                                                            |  | (83,377     | ) |  | 181,140     |   |  | 157,552             |  
|Net cash used in operating activities                                             |  | (636,751    | ) |  | (309,198    | ) |  | (1,259,373          | )
|Investing Activities                                                              |  |             |   |  |             |   |  |                     |  
|Purchase of
      intangible assets                                               |  | (59,332     | ) |  | -           |   |  | (92,543             | )
|Purchase of property and
      equipment                                          |  | (375,375    | ) |  | (144,786    | ) |  | (629,542            | )
|Cash acquired on recapitalization                                                 |  | -           |   |  | -           |   |  | 1,774               |  
|Net
      cash used in investing activities                                       |  | (434,707    | ) |  | (144,786    | ) |  | (720,311            | )
|Financing Activities                                                              |  |             |   |  |             |   |  |                     |  
|Proceeds from issuance of
      convertible debentures                            |  | 32,500      |   |  | -           |   |  | 274,000             |  
|Proceeds from
      issuance of common shares                                     |  | 1,500,000   |   |  | 473,750     |   |  | 2,214,393           |  
|Proceeds from related parties                                                     |  | 48,424      |   |  |             |   |  | 48,424              |  
|Repayments to
      related parties                                               |  | (151,780    | ) |  | -           |   |  | (151,780            | )
|Finders fees paid                                                                |  | (80,000     | ) |  | (7,550      | ) |  | (98,050             | )
|Net cash provided by financing activities                                         |  | 1,349,144   |   |  | 466,200     |   |  | 2,286,987           |  
|Increase in cash                                                                  |  | 277,686     |   |  | 12,216      |   |  | 307,303             |  
|Cash, beginning of period                                                         |  | 29,617      |   |  | 24,051      |   |  | -                   |  
|Cash, end of period                                                               |  | 307,303     |   |  | 36,267      |   |  | 307,303             |  
|Non-cash investing and
      financing activities:                                |  |             |   |  |             |   |  |                     |  
|Shares issued for settlement of
      debt                                        |  | -           |   |  | 22,620      |   |  | 22,621              |  
|Shares issued
      upon conversion of debentures                                 |  | 132,500     |   |  | 129,038     |   |  | 273,538             |  
|Conversion of Class B shares to
      Class A shares                              |  | -           |   |  | -           |   |  | 50,000              |  
|Fair value of brokers warrants issued                                            |  | 60,810      |   |  | -           |   |  | 60,810              |  
|Supplemental disclosures:                                                         |  |             |   |  |             |   |  |                     |  
|Interest paid                                                                     |  | -           |   |  | -           |   |  | -                   |  
|Income tax paid                                                                   |  | -           |   |  | -           |   |  | -                   |  

(The accompanying notes are an integral part of these
consolidated financial statements)

F-5

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|1. | Nature of Operations and Continuance of
      Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Urban Barns Foods Inc. (the Company) was incorporated
      under the laws of the State of Nevada on May 21, 2007 as HL Ventures Inc.
      The Company is a development stage company and is an urban produce
      production company that aims to be the supplier of choice for fresh and
      high-quality organic and conventional fruits and vegetables for urban
  consumers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On December 4, 2009, the Company closed a reverse
      takeover transaction with Urban Barns Foods Inc., a privately-held company
      incorporated on July 3, 2009 under the laws of the province of Alberta. In
      accordance with the transaction, the Company issued 125,000 shares of
      common stock to the shareholders of Urban Barns in exchange for 100% of
      the issued and outstanding shares of common stock of Urban Barns. As part
      of the acquisition, the Company also cancelled 102,500 shares of common
      stock held by management.                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On June 2, 2011, the Company closed a reverse takeover
      transaction with Non-Industrial Manufacture Inc. (NIM), a privately-held
      company incorporated on February 10, 2010, under the laws of the province
      of Alberta. In accordance with the transaction, the Company issued
      2,500,000 shares of Class B common stock to the shareholders of NIM in
      exchange for 100% of the issued and outstanding shares of common stock of
  NIM.                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements have been
      prepared on the going concern basis, which assumes that the Company will
      be able to realize its assets and discharge its liabilities in the normal
      course of business. As at April 30, 2014, the Company has not generated
      significant revenues and has an accumulated deficit of $3,699,177. The
      continued operations of the Company are dependent on its ability to
      generate future cash flows from operations or obtain additional financing.
      These factors raise substantial doubt about the Companys ability to
      continue as a going concern. These consolidated financial statements do
      not include any adjustments to the recorded assets or liabilities that
      might be necessary should the Company be unable to continue as a going
  concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-6

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   | (c)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (d)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (e)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (f)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (g)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (h)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (i)                                       
|   |                                           
|   |                                           

F-7

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies
  (continued)
|-- | ---------------------------------------------
|   |                                              
|   | (j)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (k)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   | (l)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (m)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (n)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              

F-8

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies
      (continued)
|-- | -------------------------------------------------
|   |                                                  
|   | (n)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   | (o)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   | (p)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  

F-9

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies
      (continued)
|-- | -------------------------------------------------
|   |                                                  
|   | (q)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   | (r)                                              
|   |                                                  
|   |                                                  
|   |                                                  
|   | (s)                                              
|   |                                                  
|   |                                                  

|3. | Property and Equipment
|-- | ----------------------

| |                      |  |         |  |  |              |  |  | April 30,    |  |  | July 31,     | 
| | -------------------- |  | ------- |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                      |  |         |  |  |              |  |  | 2014         |  |  | 2013         | 
| |                      |  |         |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                      |  | Cost    |  |  | Depreciation |  |  | Value        |  |  | Value        | 
| |                      |  | $       |  |  | $            |  |  | $            |  |  | $            | 
| | Production equipment |  | 674,600 |  |  | 93,253       |  |  | 581,347      |  |  | 247,616      | 

|4. | Intangible Assets
|-- | -----------------

| |                          |  |        |  |  |              |  |  | April 30,    |  |  | July 31,     | 
| | ------------------------ |  | ------ |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                          |  |        |  |  |              |  |  | 2014         |  |  | 2013         | 
| |                          |  |        |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                          |  | Cost   |  |  | Depreciation |  |  | Value        |  |  | Value        | 
| |                          |  | $      |  |  | $            |  |  | $            |  |  | $            | 
| | Patent development costs |  | 94,196 |  |  | -            |  |  | 94,196       |  |  | 34,864       | 

F-10

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|5. | Convertible Debentures
|-- | ----------------------
|   |                       
|   | (a)                   
|   |                       
|   |                       
|   |                       
|   | (b)                   
|   |                       
|   |                       
|   |                       
|   | (c)                   
|   |                       
|   |                       

F-11

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|6. | Derivative Liabilities                                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                            
|   | The conversion options of the convertible notes payable,
      as disclosed in Note 5, are required to be record as derivatives at their
      estimated fair values on each balance sheet date with changes in fair
      value reflected in the statements of operations.
|   |                                                                                                                                                                                                                                                                            
|   | The fair value of the derivative liabilities for the
      March 30, 2012 and June 12, 2013 convertible notes were $44,844 and
      $44,281 on vesting, respectively. The fair values as at April 30, 2014 and
      July 31, 2013 are as follows:                        

| |                                  |  | April 30,   |  |  |          | 
| | -------------------------------- |  | ----------- |  |  | -------- | 
| |                                  |  | 2014        |  |  | July 31, | 
| |                                  |  | (unaudited) |  |  | 2013     | 
| |                                  |  | $           |  |  | $        | 
| | Derivative liabilities:          |  |             |  |  |          | 
| | March 2012 convertible debenture |  | 10,824      |  |  | 8,286    | 

During the period ended April 30, 2014,
the Company recorded a gain on the change in fair value of the derivative
liabilities of $140,048 (July 31, 2013 - loss on change in fair value of the
derivative liabilities of $132,408).

The fair value of the derivative
financial liabilities was determined using the Black-Scholes option pricing
model using the following assumptions:

| |                                        |  |            |  |  | Risk-free |  |  | Expected |  |  | Expected | 
| | -------------------------------------- |  | ---------- |  |  | --------- |  |  | -------- |  |  | -------- | 
| |                                        |  | Expected   |  |  | Interest  |  |  | Dividend |  |  | Life (in | 
| |                                        |  | Volatility |  |  | Rate      |  |  | Yield    |  |  | years)   | 
| | At the issuance date:                  |  |            |  |  |           |  |  |          |  |  |          | 
| | March 2012
      convertible debenture |  | 178%       |  |  | 0.11%     |  |  | 0%       |  |  | 0.30     | 
| | As at April 30, 2014:                  |  |            |  |  |           |  |  |          |  |  |          | 
| | March 2012 convertible debenture       |  | 235%       |  |  | 0.05%     |  |  | 0%       |  |  | 0.68     | 

|7. | Related Party Transactions
|-- | --------------------------
|   |                           
|   | (a)                       
|   |                           
|   | (b)                       
|   |                           
|   | (c)                       
|   |                           
|   | (d)                       
|   |                           
|   | (e)                       
|   |                           
|   | (f)                       

F-12

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|7. | Related Party Transactions(continued)
|-- | -------------------------------------
|   |                                      
|   | (g)                                  
|   |                                      
|   | (h)                                  
|   |                                      
|   | (i)                                  
|   |                                      
|   | (j)                                  
|   |                                      
|   | (k)                                  
|   |                                      
|   | (l)                                  
|   |                                      
|8. | Common Stock                         
|   |                                      
|   | (a)                                  
|   |                                      
|   | (b)                                  
|   |                                      
|   | (c)                                  
|   |                                      
|   | (d)                                  
|   |                                      
|   | (e)                                  
|   |                                      
|   | (f)                                  
|   |                                      
|   | (g)                                  
|   |                                      
|   | (h)                                  
|   |                                      
|   | (i)                                  

F-13

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|9. | Share Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On November 1, 2013, the Company granted 2,027,027
      brokers warrants pursuant to a financing agreement. The warrants have an
      exercise price of $0,07 per Class A common stock and expire on October 31,
      2016. The fair value of the stock options were valued at $60,811 using the
      Black-Scholes option price model assuming a risk free rate of 0.61%, an
      expected life of 3 years, volatility of 539%, and no expected
  dividends.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The following table summarizes the continuity of share
      purchase warrants:                                                                                                                                                                                                                                                                                                                                                                                    

| |                                       |  |           |  |  | Weighted       | 
| | ------------------------------------- |  | --------- |  |  | -------------- | 
| |                                       |  |           |  |  | average        | 
| |                                       |  | Number of |  |  | exercise price | 
| |                                       |  | warrants  |  |  | $              | 
| | Balance, July 31, 2012 and
      2013 |  | -         |  |  | -              | 
| | Issued                                |  | 2,027,027 |  |  | 0.07           | 
| | Balance, April 30, 2014               |  | 2,027,027 |  |  | 0.07           | 

As at April 30, 2014, the following
share purchase warrants were outstanding:

| | Number of   |  | Exercise |  |  |                  | 
| | ----------- |  | -------- |  |  | ---------------- | 
| | warrants    |  | price    |  |  |                  | 
| | outstanding |  | $        |  |  | Expiry date      | 
| | 2,027,027   |  | 0.07     |  |  | October 31, 2016 | 

|10. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has adopted a stock option plan pursuant to
      which options may be granted to directors, officers, employees and
      consultants of the Company to a maximum of 25,000,000 shares issued and
      outstanding at the time of the grant. The exercise price and the vesting
      terms of each option is equal to the market price on the date of the
      grant.                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | On February 7, 2014, the Company granted 5,300,000 stock
      options to officers, directors, employees and consultants. The stock
      options vest immediately, have an exercise price of $0.10 per Class A
      common stock, and expire on February 6, 2024. The fair value of the stock
      options were valued at $212,000 using the Black Scholes option price model
      assuming a risk-free rate of 2.71%, an expected life of 10 years,
      volatility of 475%, and no expected dividends.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The following table summarizes the continuity of the
Companys stock options:                                                                                                                                                                                                                                                                                                                                                                                                                                

| |                             |  |            |   |  | Weighted       |  |  | Aggregate | 
| | --------------------------- |  | ---------- | - |  | -------------- |  |  | --------- | 
| |                             |  |            |   |  | average        |  |  | intrinsic | 
| |                             |  | Number     |   |  | exercise price |  |  | value     | 
| |                             |  | of options |   |  | $              |  |  | $         | 
| | Outstanding, July 31, 2012  |  | -          |   |  | -              |  |  |           | 
| | Granted                     |  | 15,850,000 |   |  | 0.10           |  |  |           | 
| | Expired                     |  | (50,000    | ) |  | 0.10           |  |  |           | 
| | Outstanding, July 31, 2013  |  | 15,800,000 |   |  | 0.10           |  |  |           | 
| | Granted                     |  | 5,300,000  |   |  | 0.10           |  |  |           | 
| | Expired                     |  | (800,000   | ) |  | 0.10           |  |  |           | 
| | Outstanding, April 30, 2014 |  | 20,300,000 |   |  | 0.10           |  |  | -         | 

F-14

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|10. | Stock Options(continued)                                                                 
|--- | -----------------------------------------------------------------------------------------
|    |                                                                                          
|    | Additional information regarding stock options as of
      April 30, 2014, is as follows:

| |                 |  | Outstanding and exercisable | 
| | --------------- |  | --------------------------- | 
| |                 |  |                             | 
| |                 |  |                             | 
| | Range of        |  |                             | 
| | exercise prices |  | Number of                   | 
| | $               |  | shares                      | 
| | 0.10            |  | 20,300,000                  | 

|11. | Commitments
|--- | -----------
|    |            
|    | (a)        
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    |            
|    | (b)        
|    |            
|    | (c)        
|    |            
|    | (d)        

F-15

---

|URBAN BARNS FOODS INC.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|11. | Commitments(continued)                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                             
|    | (e)                                                                                                                                                                                         
|    |                                                                                                                                                                                             
|12. | Subsequent Event                                                                                                                                                                            
|    |                                                                                                                                                                                             
|    | We have evaluated subsequent events through the date of
      issuance of the financial statements, and did not have any material
      recognizable subsequent events after April 30,
2014.

F-16

---

|**ITEM 2.** | MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|----------- | --------------------------------------------------------------------------------------------

Forward Looking Statements

This report on Form 10-Q contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.

These forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following: competition,
promotional costs and the risk of declining revenues. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of a number of factors. These forward-looking statements are made as of
the date of this filing, and we assume no obligation to update such
forward-looking statements. The following discusses our financial condition and
results of operations based upon our consolidated financial statements which
have been prepared in conformity with accounting principles generally accepted
in the United States. It should be read in conjunction with our financial
statements and the notes thereto included elsewhere herein.

Results of Operations

Three Months Ended April 30, 2014 and 2013 and from
February 10, 2010 (Date of Inception) to April 30, 2014

We are still in our development stage and did not generate any
revenues during the three months ended April 30, 2014. During the three months
ended April 30, 2013, we generated $3,612 in revenue at a cost of sales of $740,
for a gross margin of $2,872. From February 10, 2010 (date of inception) to
April 30, 2014 we generated $5,691 in revenue at a cost of sales of $1,132 for a
gross margin of $4,559. All of revenue we have generated since our inception
relates to the sale of produce.

We incurred operating expenses of $522,056 during the three
months ended April 30, 2014, compared with $197,350 during the three months
ended April 30, 2013. The increase in our operating expenses of $324,706 was due
to increases in our research and development expenses and general and
administrative expenses due to higher operating costs incurred as we prepare to
open our first growing facility this year., and an increase in the depreciation
incurred during the period related to our R&D growing machines.

We incurred a net loss of $618,887 during the three months
ended April 30, 2014, compared with a net loss of $197,410 during the three
months ended April 30, 2013. In addition to our loss from operations of $522,056
during the current period, we incurred $4,715 in interest expense for accrued
interest on loans and convertible debentures, $32,500 in accretion expenses
relating to our convertible debentures, and a $71,438 loss on the settlement of
accounts payable offset by a gain on the change in fair value of derivative
liabilities of $11,822. During the same period in the prior year we only
incurred $2,932 in other expenses. Our net loss from February 10, 2010 (date of
inception) to April 30, 2014 was $3,564,192.

Nine Months Ended April 30, 2014 and 2013

We did not generate any revenues during the nine months ended
April 30, 2014; however, during the nine months ended April 30, 2013, we
generated $4,390 in revenue at a cost of sales of $1,132, for a gross margin of
$3,258.

During the nine months ended April 30, 2014 we incurred
operating expenses of $1,156,097, compared with $1,064,153 during the nine
months ended April 30, 2013. The increase in our operating expenses of $91,944
was primarily due to an increase in research and development expenses and
professional fees due to higher operating costs and activity.

We incurred a net loss of $1,474,139 during the nine months
ended April 30, 2014 compared with a net loss of $1,615,591 during the nine
months ended April 30, 2013. In addition to our loss from operations of
$1,156,097, we incurred $26,912 in interest expense (nine months ended April 30,
2013 - $7,123) for accrued interest on loans and convertible debentures, $76,781
in accretion expenses (nine months ended April 30, 2013 - $132,798) relating to
our convertible debentures, a loss on the change in fair value of derivative
liabilities of $140,048 (nine months ended April 30, 2013 - gain of $132,408)
and a $71,438 loss on the settlement of accounts payable (nine months ended
April 30, 2013 - $1,957), for a total of $318,042 in other expenses, During the nine months ended April 30, 2013,
we also incurred a $540,788 loss on the conversion of a convertible debenture.

17

---

Liquidity and Capital Resources

The following table provides selected financial data about our
company for the quarter ended April 30, 2014:

|                    |  | April 30,  |   |  | July 31,   |  
|------------------- |  | ---------- | - |  | ---------- | -
|                    |  | 2014       |   |  | 2013       |  
|                    |  | $          |   |  | $          |  
|                    |  |            |   |  |            |  
|Cash                |  | 307,303    |   |  | 29,617     |  
|Current Assets      |  | 373,196    |   |  | 56,045     |  
|Total Assets        |  | 1,048,739  |   |  | 341,388    |  
|Current Liabilities |  | 174,992    |   |  | 644,152    |  
|Accumulated Deficit |  | (3,699,177 | ) |  | (2,225,038 | )

As of April 30, 2014, we had cash of $307,303, total current
assets of $373,196, total current liabilities of $174,992 and a working capital
surplus of $198,204, compared to cash of $29,617, total current assets of
$56,045, total current liabilities of $644,152, and a working capital deficit of
$588,107 as of July 31, 2013. The increase in our working capital is due to our
receipt of additional invested funds as we prepare to open our first growing
facility this year, and the settlement of outstanding liabilities through the
issuance of common shares.

During the nine months ended April 30, 2014, we received net
cash of $1,349,144 from financing activities, compared to net cash received of
$466,200 from financing activities during the nine months ended April 30, 2013.
The increase is primarily due to $1,500,000 in proceeds we received from the
issuance of our common shares (as offset by $80,000 in share issuance costs),
$32,500 in proceeds we received from the issuance of a convertible note payable,
and $48,424 in proceeds we received from related parties and offset by $151,780
we repaid to related parties. During the same period in the prior year we only
received $473,750 in proceeds from the issuance of our common shares, as offset
by $7,550 in share issuance costs.

During the nine months ended April 30, 2014, we used net cash
of $636,751 on operating activities compared to $309,198 during the nine months
ended April 30, 2013. The increase in net cash used was due to our increased
operating expenses as we prepare to open our first growing facility this
year.

During the nine months ended April 30, 2014, we used net cash
of $434,707 on investing activities compared to $144,786 during the period ended
April 30, 2013. The increase in cash used was due to our increased purchase of
equipment as we prepare to open our first growing facility this year as well as
payment for patents on our intellectual property.

From February 10, 2010 (inception) to April 30, 2014, our
accumulated deficit was $3,699,177. We are dependent on the funds raised through
our equity or debt financing, investing activities, and revenue generated
through the sales of our products to fund our operations.

We anticipate that we will meet our ongoing cash requirements
by retaining income as well as through equity or debt financing. We plan to
cooperate with various individuals and institutions to acquire the financing
required to produce and distribute our products and anticipate this will
continue until we accrue sufficient capital reserves to finance all of our
productions independently.

Plan of Operations

Our 2014 operating plan is focused on revenue generation,
product line development and machine design refinement. We recently completed
our first growing facility in the Montreal area and have begun commercial scale
operations and sales. We will continue research and development activities at
our Langley, British Columbia facility, as well as in Montreal with McGill
University.

The Montreal growing facility consists of 12 machines and,
although small, will have considerable production and associated sales. This new
facility is fully operational and will begin shipping product in June.

In addition to the commercial barn operation we will be
collaborating with McGills McDonald campus to research optimization of the
variables of controlled environment agriculture (CEA) and apply those
improvements to the new facility. McGill has set up two machines on their campus as
well as two machines within our Montreal growing facility. McGill will conduct
research in conjunction with their recent NSERC Collaborative Research &
Development grant with industry support from us.

18

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The Langley site will continue work on the development of new
product lines, machine development and the barn setup process.

We estimate that our expenses over the next 6 months will be
approximately $485,000 as summarized in the table below. These estimates may
change significantly depending on the nature of our future business activities
and our ability to raise capital from investors or other sources.

Description
    Potential
      Completion Date
    Estimated
    Expenses ($)Cost of sales
    6 months
    175,000Sales & marketing expenses
    6 months
    50,000Staff and consultanting expenses
    6 months
    135,000General and administrative expenses
    6 months
    125,000Total
    
485,000


Our general and administrative expenses for the year will
consist of professional fees, office maintenance, communication expenses
(cellular, internet, fax and telephone), bank charges, courier and postage
costs, office supply costs and fees related to our website. Our professional
fees will include legal, accounting and auditing fees related to our regulatory
filings throughout the year.

Based on our planned expenditures, we require additional funds
of $485,000 to proceed with our business plan over the next 6 months. If we are
not able to obtain additional financing on a timely basis, we will be unable to
conduct our operations as planned, and we will not be able to meet our
obligations as they become due. In such event, we will be forced to scale down
or perhaps even cease our operations.

Inflation

The amounts presented in the financial statements do not
provide for the effect of inflation on our operations or financial position. The
net operating losses shown would be greater than reported if the effects of
inflation were reflected either by charging operations with amounts that
represent replacement costs or by using other inflation adjustments.

Off-Balance Sheet Arrangements

As of April 30, 2014 we had one off balance sheet transactions
that will have or is reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources. In
collaboration with McGill University researcher Dr. Mark Lefsrud of the Faculty
of Agricultural and Environmental Sciences, we will further develop an indoor
plant growth system aimed at expanding locally grown food. With industrial
support from us, McGill University was recently awarded an NSERC Collaborative
Research & Development (CRD) grant in the amount of $240,000 in order to
continue the development of this important project. The grant will run for an
initial period of two years with the aim of optimizing light emitting diodes to
assess photosynthetic efficiency of horticultural plants. The project is focused
on the refinement of the photosynthetically active radiation efficiency (PAR
curve) of plants using light emitting diodes (LEDs), and the basic science
research will be used to optimize the lighting in our cubic farming system to
maximize production and reduce energy costs.

Critical Accounting Policies

Our financial statements are impacted by the accounting
policies used and the estimates and assumptions made by management during their
preparation. A complete summary of these policies are included in note 2 of the
Notes to our Financial Statements. We have identified below the accounting
policies that are of particular importance in the presentation of our financial
position, results of operations and cash flows, and which require the
application of significant judgment by our management.

19

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Inventory

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

Intangible Assets

Intangible assets consist of patent development costs.
Intangible assets acquired are initially recognized and measured at cost and
amortized over its expected useful life once the patents are in use. Impairment
tests are conducted annually or more frequently if events or changes in
circumstances indicate that the asset may be impaired. The impairment test
compares the carrying amount of the intangible asset with its fair value, and an
impairment loss is recognized in income for the excess, if any. The amortization
methods and estimated useful lives of intangible assets are reviewed
annually.

Foreign Currency Translation

The Companys functional and reporting currency is the U.S.
dollar. Monetary assets and liabilities of integrated operations and other
monetary assets and liabilities denominated in foreign currencies are translated
to U.S. dollars at exchange rates in effect at the balance sheet date.
Non-monetary assets and liabilities are translated at historical rates. Revenues
and expenses are translated at average rates for the period, except for
amortization, which is translated on the same basis as the related asset. The
resulting exchange gains or losses are recognized in income.

|ITEM 3. | **QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**
|------- | ---------------------------------------------------------------------

Not required.

|ITEM 4. | **CONTROLS AND
      PROCEDURES.**
|------- | ----------------------------------

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms and that such
information 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. We carried out an evaluation,
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures as of April
30, 2014. Based on the evaluation of these disclosure controls and procedures
the Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective.

Changes in Internal Controls

During the quarter covered by this report there were no changes
in our internal control over financial reporting (as defined in Rule 13a-15(f)
and Rule 15d-15(f) under the Exchange Act) that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

PART II - OTHER INFORMATION

|ITEM 1. | **LEGAL
      PROCEEDINGS.**
|------- | ----------------------------

None.

|ITEM 1A. | **RISK
  FACTORS.**
|-------- | -------------------

Not required.

20

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|ITEM 2. | **UNREGISTERED SALES OF
      EQUITY SECURITIES AND USE OF PROCCEDS.**
|------- | ----------------------------------------------------------------------

During the period ended April 30, 2014, the Company issued
17,424,083 common shares with a fair value of $479,162 to settle amounts owing
of $336,284 to the President of the Company, an officer of the Company, a
company controlled by the former president of the Company, and the finance
manager. The Company recognized a loss of $71,439 on the settlement of debt.

|ITEM 3. | **DEFAULTS UPON SENIOR
      SECURITIES.**
|------- | ------------------------------------------

None.

|ITEM 4. | **MINE SAFETY DISCLOSURES**.
|------- | ----------------------------

Not applicable.

|ITEM 5. | **OTHER INFORMATION.**
|------- | ----------------------

None.

|ITEM 6. | **EXHIBITS.**
|------- | -------------

The following exhibits are included with this quarterly filing:

|Exhibit No. | Description                                                
|----------- | -----------------------------------------------------------
|            |                                                            
|31.1        | Sec. 302
      Certification of Principal Executive Officer
|            |                                                            
|31.2        | Sec. 302
      Certification of Principal Financial Officer
|            |                                                            
|32.1        | Sec. 906
      Certification of Principal Executive Officer
|            |                                                            
|32.2        | Sec. 906
      Certification of Principal Financial Officer

21

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SIGNATURES

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

|June 16, 2014 | Urban Barns Foods Inc.                                                
|------------- | ----------------------------------------------------------------------
|              |                                                                       
|              |                                                                       
|              |                                                                       
|              | /s/
      Richard Groome                                              
|              | By: Richard Groome                                                    
|              | Chief Executive Officer, President &
      Director                   
|              |                                                                       
|              |                                                                       
|              |                                                                       
|              |                                                                       
|              | /s/
      Horst Hueniken                                              
|              | By: Horst Hueniken                                                    
|              | Chief Financial Officer, Principal Accounting
      Officer & Director

22

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