----

----

| AS AT DECEMBER 31,                                     |   | 2013    |       |   | 2012   |   |
|--------------------------------------------------------|--------|---------|------------|--------|--------|--------|
|                                                   |   | $  |       |   |   | $      |   |
| ASSETS                                                 |   |    |       |   |   |   |   |
| CURRENT                                                |   |    |       |   |   |   |   |
| Cash and cash equivalents                              |   |    | 180,692    |   |   |   | 9,854 |   |
| Goods and Services Tax/Harmonized Sales Tax Receivable |   |    | 7,391      |   |   |   | 809 |   |
| Prepaid expenses and deposits                          |   |    | 36,605     |   |   |   | 97,444 |   |
|                                                   |   |    | 224,688    |   |   |   | 108,107 |   |
| NON-CURRENT ASSETS                                     |   |    |       |   |   |   |   |   |
| PROPERTY AND EQUIPMENT (Note 5)                        |   |    | 2,443      |   |   |   | 4,864 |   |
| INTANGIBLE ASSETS (Note 6)                             |   |    | 59,913     |   |   |   | 93,562 |   |
|                                                   |   |    | 287,044    |   |   |   | 206,533 |   |
|                                                   |   |    |       |   |   |   |   |   |
| LIABILITIES                                            |   |    |       |   |   |   |   |   |
| CURRENT                                                |   |    |       |   |   |   |   |   |
| Trade payables and accrued liabilities                 |   |    | 226,201    |   |   |   | 189,581 |   |
| Convertible note (Note 8)                              |   |    | 30,900     |   |   |   | 16,739 |   |
| Derivative liability (Note 8)                          |   |    | -          |   |   |   | 30,889 |   |
| Due to related parties (Note 9)                   |   |    | 470,087    |   |   |   | 400,314 |   |
|                                                   |   |    | 727,188    |   |   |   | 637,523 |   |
| SHAREHOLDERS' DEFICIENCY                               |   |    |       |   |   |   |   |   |
| Share capital (Note 11)                                |   |    | 2,699,210  |   |   |   | 1,995,716 |   |
| Share subscriptions received (Note 11)                 |   |    | -          |   |   |   | 30,000 |   |
| Warrant and option reserve (Note 12)                   |   |    | 123,704    |   |   |   | 206,212 |   |
| Deficit accumulated during the development stage       |   |    | (3,263,058 | )      |   |   | (2,662,918 | ) |
|                                                   |   |    | (440,144   | )      |   |   | (430,990 | ) |
|                                                   |   |    | 287,044    |   |   |   | 206,533 |   |

| "Douglas H. Unwin"            |   |  Director   | “Doug Wallis”  |   |  Director   |
|------------------------------------|--------|----------------------------|---------------------------------|--------|----------------------------|
|  Douglas H. Unwin   |   |                       |  Doug Wallis               |   |                       |

----

| FOR THE YEAR ENDED DECEMBER 31,                                            |   | 2013   |          |   | 2012   |   |          | 2011   |   |
|----------------------------------------------------------------------------|--------|--------|---------------|--------|--------|--------|---------------|--------|--------|
| Expenses                                                                   |   | $      |          |   | $      |   |          | $      |   |
| Advertising and promotion                                                  |   |   | 187,511       |   |   |   | 43,637        |   |   |   | 7,795 |   |
| Amortization of property and equipment (Note 5)                            |   |   | 2,421         |   |   |   | 2,819         |   |   |   | 1,810 |   |
| Amortization of intangible assets (Note 6)                                 |   |   | 4,708         |   |   |   | 3,944         |   |   |   | 3,489 |   |
| Bank charges and interest                                                  |   |   | 17,993        |   |   |   | 665           |   |   |   | 3,301 |   |
| Computer                                                                   |   |   | -             |   |   |   | 2,130         |   |   |   | 250 |   |
| Insurance                                                                  |   |   | 22,461        |   |   |   | 24,948        |   |   |   | 14,628 |   |
| Investor relations                                                         |   |   | 61,250        |   |   |   | 51,950        |   |   |   | - |   |
| Office and miscellaneous                                                   |   |   | 7,042         |   |   |   | 4,471         |   |   |   | 12,294 |   |
| Professional fees (Note 10)                                                |   |   | 178,947       |   |   |   | 80,923        |   |   |   | 112,809 |   |
| Rent and occupancy costs                                                   |   |   | 13,284        |   |   |   | 17,743        |   |   |   | 16,273 |   |
| Repairs                                                                    |   |   | -             |   |   |   | 414           |   |   |   | - |   |
| Research and development                                                   |   |   | -             |   |   |   | 50,941        |   |   |   | - |   |
| Share-based payments                                                       |   |   | 42,192        |   |   |   | 75,026        |   |   |   | 5,864 |   |
| Telephone and utilities                                                    |   |   | 1,798         |   |   |   | 2,314         |   |   |   | 1,854 |   |
| Transfer agent                                                             |   |   | 5,251         |   |   |   | 7,915         |   |   |   | 2,116 |   |
| Travel                                                                     |   |   | 8,679         |   |   |   | 13,130        |   |   |   | - |   |
| Wages and benefits                                                         |   |   | 157,916       |   |   |   | 100,843       |   |   |   | 115,433 |   |
|                                                                       |   |   |  711,453 |   |   |   |  483,813 |   |   |   | 297,916 |   |
| Interest Expense                                                           |   |   |          |   |   |   |          |   |   |   |   |   |
| ISA interest incurred                                                      |   |   | -             |   |   |   | 3,002         |   |   |   | 38,250 |   |
| ISA accretion of deemed discount                                           |   |   | -             |   |   |   | 69,519        |   |   |   | 42,980 |   |
| Shareholder loan accretion of deemed discount                              |   |   | -             |   |   |   | 26,535        |   |   |   | 15,318 |   |
| Class B Series I Preferred Shares accretion of deemed discount             |   |   | -             |   |   |   | -             |   |   |   | 25,955 |   |
| Amortization of discount on convertible note                               |   |   | 13,261        |   |   |   | 4,422         |   |   |   | - |   |
| Interest expense on convertible note (Note 8)                              |   |   | 3,600         |   |   |   | 900           |   |   |   | - |   |
|                                                                       |   |   | 16,861        |   |   |   | 104,378       |   |   |   | 122,503 |   |
| Other Expenses (Income)                                                    |   |   |          |   |   |   |          |   |   |   |   |   |
| Loss (gain) on derivative liability (Note 8)                               |   |   | (30,889       | )      |   |   | 18,641        |   |   |   | - |   |
| Gain on disposal of property and equipment (Note 5)                        |   |   | -             |   |   |   | (1,425        | )      |   |   | - |   |
| Loss on conversion of Series I Preferred Shares                            |   |   | -             |   |   |   | -             |   |   |   | 43,349 |   |
| Other income                                                               |   |   | 911           |   |   |   | 61            |   |   |   | - |   |
| Write-off of license (Note 6)                                              |   |   | 42,510        |   |   |   | -             |   |   |   | - |   |
|                                                                       |   |   |          |   |   |   |          |   |   |   |   |   |
| Net Loss and Comprehensive Loss                                            |   |   | (740,846      | )      |   |   | (605,468      | )      |   |   | (463,768 | ) |
|                                                                       |   |   |          |   |   |   |          |   |   |   |   |   |
| Loss per Share Basic and Diluted                                           |   |   | (0.03         | )      |   |   | (0.03         | )      |   |   | (0.03 | ) |
| Weighted Average Number of Common Shares Outstanding                       |   |   | 27,561,948    |   |   |   | 21,637,193    |   |   |   |  18,172,472 |   |
|                                                                       |   |   |          |   |   |   |          |   |   |   |   |   |
| The accompanying notes are an integral part of these financial statements. |   |

----

|                                                           |   | Number of common shares |       |   |  Number of Series II preferred shares |   |     | Share capital |   |   | Share Subscriptions received |   |   | Warrant and option reserve |   |   | Deficit |   |    | Total  |   |
|----------------------------------------------------------------|--------|-------------------------|------------|--------|--------------------------------------------|--------|----------|---------------|--------|--------|------------------------------|--------|--------|----------------------------|--------|--------|---------|--------|---------|--------|--------|
|                                                           |   |                    |       |   |                                       |   |     |          | $      |   |                         |   | $      |                       |   |   | $       |   |    |   | $      |   |   |   | $ |   |
| Balance at December 31, 2010                                   |   |                    | 15,930,452 |   |                                       |   | 203,250  |          |   |   | 1,133,136                    |   |   |                       | -      |   |    |   | 136,110 |   |   |   | (1,564,296 | ) |   |   | (295,050 | ) |
| Common shares issued for cash @ $0.15                          |   |                    | 250,000    |   |                                       |   | -        |          |   |   | 37,500                       |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 37,500 |   |
| Common shares issued under Irrevocable Subscription Agreement  |   |                    | 1,107,142  |   |                                       |   | -        |          |   |   | 162,499                      |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 162,499 |   |
| Common shares issued to settle debt                            |   |                    | 110,000    |   |                                       |   | -        |          |   |   | 16,500                       |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 16,500 |   |
| Repricing of common shares                                |   |                    | -          |   |                                       |   | -        |          |   |   | 41,600                       |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 41,600 |   |
| Exercise of common share warrants @ $0.10                      |   |                    | 300,000    |   |                                       |   | -        |          |   |   | 30,000                       |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 30,000 |   |
| Series I Preference Shares converted @ $0.20                   |   |                    | 1,500,000  |   |                                       |   | -        |          |   |   | 300,000                      |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 300,000 |   |
| Class B Series II Preference Shares converted to common shares |   |                    | 1,791,563  |   |                                       |   | (203,250 | )             |   |   | 66,051                       |   |   |                       | -      |   |    |   | -       |   |   |   | (66,051 | ) |   |   | - |   |
| Shares issue costs                                             |   |                    | -          |   |                                       |   | -        |          |   |   | (21,532                      | )      |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | (21,532 | ) |
| Discount on loans payable                                 |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | 20,078  |   |   |   | - |   |   |   | 20,078 |   |
| Share-based payments                                           |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | 5,864   |   |   |   | - |   |   |   | 5,864 |   |
| Loss for the year                                              |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | -       |   |   |   | (463,768 | ) |   |   | (463,768 | ) |
| Balance at December 31, 2011                                   |   |                    | 20,989,157 |   |                                       |   | -        |          |   |   | 1,765,754                    |   |   |                       | -      |   |    |   | 162,052 |   |   |   | (2,094,115 | ) |   |   | (166,309 | ) |
| Common shares issued for cash @ $0.15                          |   |                    | 1,531,002  |   |                                       |   | -        |          |   |   | 229,651                      |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 229,651 |   |
| Subscriptions received for 600,000 shares @ $0.05              |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | 30,000 |   |    |   | -       |   |   |   | - |   |   |   | 30,000 |   |
| Exercise of common share warrants @ $0.15                      |   |                    | 66,666     |   |                                       |   | -        |          |   |   | 10,000                       |   |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | 10,000 |   |
| Expiration of stock options                                    |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | (36,665 | )      |   |   | 36,665 |   |   |   | - |   |
| Share issue costs                                              |   |                    | -          |   |                                       |   | -        |          |   |   | (9,689                       | )      |   |                       | -      |   |    |   | -       |   |   |   | - |   |   |   | (9,689 | ) |
| Warrant reserve                                                |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | 5,799   |   |   |   | - |   |   |   | 5,799 |   |
| Share-based payments                                           |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | 75,026  |   |   |   | - |   |   |   | 75,026 |   |
| Loss for the year                                              |   |                    | -          |   |                                       |   | -        |          |   |   | -                            |   |   |                       | -      |   |    |   | -       |   |   |   | (605,468 | ) |   |   | (605,468 | ) |
| Balance at December 31, 2012                                   |   |                    | 22,586,825 |   |                                       |   | -        |          |   |   | 1,995,716                    |   |   |                       | 30,000 |   |    |   | 206,212 |   |   |   | (2,662,918 | ) |   |   | (430,990 | ) |

----

|                                                                                         |   | Number of common shares |       |   |  Number of Series II preferred shares |   |   | Share capital |   |   | Share Subscriptions received |   |   | Warrant and option reserve |    |   | Deficit |   |     | Total  |   |
|----------------------------------------------------------------------------------------------|--------|-------------------------|------------|--------|--------------------------------------------|--------|--------|---------------|--------|--------|------------------------------|--------|--------|----------------------------|---------|--------|---------|--------|----------|--------|--------|
|                                                                                         |   |                    |       |   |                                       |   |   |          | $      |   |                         |   | $      |                       |    |   | $       |   |     |   | $      |   |   |   | $ |   |
| Balance at December 31, 2012                                                                 |   |                    | 22,586,825 |   |                                       |   | -      |          |   |   | 1,995,716                    |   |   |                       | 30,000  |   |    |   | 206,212  |   |   |   | (2,662,918 | ) |   |   | (430,990 | ) |
| Common shares issued for cash @ $0.05                                                        |   |                    | 13,830,000 |   |                                       |   | -      |          |   |   | 691,500                      |   |   |                       | (30,000 | )      |    |   | -        |   |   |   | - |   |   |   | 661,500 |   |
| Share issue costs                                                                            |   |                    | -          |   |                                       |   | -      |          |   |   | (40,006                      | )      |   |                       | -       |   |    |   | 16,006   |   |   |   | - |   |   |   | (24,000 | ) |
| Shares exchanged for debt @ $0.05                                                            |   |                    | 1,040,000  |   |                                       |   | -      |          |   |   | 52,000                       |   |   |                       | -       |   |    |   | -        |   |   |   | - |   |   |   | 52,000 |   |
| Share-based payments                                                                         |   |                    | -          |   |                                       |   | -      |          |   |   | -                            |   |   |                       | -       |   |    |   | 42,192   |   |   |   | - |   |   |   | 42,192 |   |
| Conversion of Class B Series II Preference Shares and expiry of options and finders warrants |   |                    | -          |   |                                       |   | -      |          |   |   | -                            |   |   |                       | -       |   |    |   | (140,706 | )      |   |   | 140,706 |   |   |   | - |   |
| Loss for the year                                                                            |   |                    | -          |   |                                       |   | -      |          |   |   | -                            |   |   |                       | -       |   |    |   | -        |   |   |   | (740,846 | ) |   |   | (740,846 | ) |
| Balance at December 31, 2013                                                                 |   |                    | 37,456,825 |   |                                       |   | -      |          |   |   | 2,699,210                    |   |   |                       | -       |   |    |   | 123,704  |   |   |   | (3,263,058 | ) |   |   | (440,144 | ) |

----

| FOR THE YEAR ENDED DECEMBER 31,                                                                                      |   | 2013   |     |   | 2012   |   |     | 2011   |   |
|----------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                                                 |   |   | $        |   |   |   | $        |   |   |   | $ |   |
| Cash flows used in operating activities                                                                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Net loss and comprehensive loss                                                                                      |   |   | (740,846 | )      |   |   | (605,468 | )      |   |   | (463,768 | ) |
| Adjustments for items not affecting cash                                                                             |   |   |     |   |   |   |     |   |   |   |   |   |
| Amortization of property and equipment                                                                               |   |   | 2,421    |   |   |   | 2,819    |   |   |   | 1,810 |   |
| Amortization of intangible assets                                                                                    |   |   | 4,708    |   |   |   | 3,944    |   |   |   | 3,489 |   |
| Amortization of deemed discounts on ISAs, Class B series I preferred shares, shareholder loans, and convertible note |   |   | 13,261   |   |   |   | 100,476  |   |   |   | 84,253 |   |
| Accrued interest on promissory note                                                                                  |   |   | 900      |   |   |   | -        |   |   |   | - |   |
| Share-based payments                                                                                                 |   |   | 42,192   |   |   |   | 75,026   |   |   |   | 5,864 |   |
| Loss on conversion of series I preferred shares                                                                      |   |   | -        |   |   |   | -        |   |   |   | 43,349 |   |
| Loss (gain) on derivative liability                                                                                  |   |   | (30,889  | )      |   |   | 18,641   |   |   |   | - |   |
| Gain on disposal of property and equipment                                                                           |   |   | -        |   |   |   | (1,425   | )      |   |   | - |   |
| Write-off of license                                                                                                 |   |   | 42,510   |   |   |   | -        |   |   |   | - |   |
| Other income                                                                                                         |   |   | 911      |   |   |   | 61       |   |   |   | - |   |
| Changes in non-cash working capital balances                                                                         |   |   |     |   |   |   |     |   |   |   |   |   |
| Decrease (increase) in Goods and Services Tax/Harmonized Sales Tax receivable                                        |   |   | (6,582   | )      |   |   | 13,167   |   |   |   | (8,657 | ) |
| Decrease (increase) in prepaid expenses                                                                              |   |   | 60,839   |   |   |   | (92,325  | )      |   |   | (3,084 | ) |
| Decrease in unearned revenue                                                                                         |   |   | -        |   |   |   | -        |   |   |   | (2,600 | ) |
| Increase in trade payables and accrued liabilities                                                                   |   |   | 63,709   |   |   |   | 180,101  |   |   |   | 54,983 |   |
|                                                                                                                 |   |   | (546,866 | )      |   |   | (304,983 | )      |   |   | (284,361 | ) |
| Cash flows used in investing activities                                                                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Additions to property and equipment                                                                                  |   |   | -        |   |   |   | (6,200   | )      |   |   | - |   |
| Disposals of property and equipment                                                                                  |   |   | -        |   |   |   | 6,300    |   |   |   | - |   |
| Additions to intangible assets                                                                                       |   |   | (13,569  | )      |   |   | (6,875   | )      |   |   | (22,580 | ) |
|                                                                                                                 |   |   | (13,569  | )      |   |   | (6,775   | )      |   |   | (22,580 | ) |
| Cash flows from financing activities                                                                                 |   |   |     |   |   |   |     |   |   |   |   |   |
| Common shares issued for cash                                                                                        |   |   | 661,500  |   |   |   | 250,265  |   |   |   | 109,100 |   |
| Share issue cost                                                                                                     |   |   | (24,000  | )      |   |   | 10,000   |   |   |   | - |   |
| Convertible note                                                                                                     |   |   | -        |   |   |   | 30,000   |   |   |   | - |   |
| Due to related parties                                                                                               |   |   | 93,773   |   |   |   | 25,253   |   |   |   | 123,479 |   |
| ISA proceeds from partial draw down of funds                                                                         |   |   | -        |   |   |   | -        |   |   |   | 49,999 |   |
|                                                                                                                 |   |   | 731,273  |   |   |   | 315,518  |   |   |   | 282,578 |   |
|                                                                                                                 |   |   |     |   |   |   |     |   |   |   |   |   |
| Change in cash and cash equivalents                                                                                  |   |   | 170,838  |   |   |   | 3,760    |   |   |   | (24,363 | ) |
| Cash and cash equivalents, beginning of year                                                                         |   |   | 9,854    |   |   |   | 6,094    |   |   |   | 30,457 |   |
| Cash and cash equivalents, end of year                                                                               |   |   | 180,692  |   |   |   | 9,854    |   |   |   | 6,094 |   |
|                                                                                                                 |   |   |     |   |   |   |     |   |   |   |   |   |
| Non-Cash Financing Transactions                                                                                      |   |   |     |   |   |   |     |   |   |   |   |   |
| Debt settled with common shares                                                                                      |   |   | 52,000   |   |   |   | 7,500    |   |   |   | - |   |
| Warrants issued for finder fees                                                                                      |   |   | 16,006   |   |   |   | 365      |   |   |   | - |   |
| Shares issued for finder fees                                                                                        |   |   | -        |   |   |   | 8,500    |   |   |   | - |   |

----

----

| 1. | NATURE AND CONTINUANCE OF OPERATIONS |
|----|--------------------------------------|

| 2. | STATEMENT OF COMPLIANCE AND BASIS OF PRESENTATION |
|----|---------------------------------------------------|

| (a) | Statement of Compliance |
|-----|-------------------------|

| (b) | Basis of Presentation |
|-----|-----------------------|

| (c) | Use of Estimates |
|-----|------------------|

----

----

| 3. | SIGNIFICANT ACCOUNTING POLICIES |
|----|---------------------------------|

| (a) | Cash and cash equivalents |
|-----|---------------------------|

| (b) | Loss per share |
|-----|----------------|

| (c) | Research and development |
|-----|--------------------------|

| (d) | Property and equipment |
|-----|------------------------|

|   | Computer equipment Furniture and fixtures Lab equipment Leasehold improvements | 45%   diminishing balance20%   diminishing balance50%   diminishing balancestraight-line over the term of the lease |
|--------|-----------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Technology licenses and patent costs |
|-----|--------------------------------------|

----

----

| 3. | SIGNIFICANT ACCOUNTING POLICIES - continued |
|----|---------------------------------------------|

| (f) | Impairment |
|-----|------------|

| (g) | Share-based payments |
|-----|----------------------|

| (h) | Income taxes |
|-----|--------------|

| (i) | Comparative figures |
|-----|---------------------|

----

----

| 3. | SIGNIFICANT ACCOUNTING POLICIES - continued |
|----|---------------------------------------------|

| (j) | Financial instruments |
|-----|-----------------------|

----

----

| 3. | SIGNIFICANT ACCOUNTING POLICIES - continued |
|----|---------------------------------------------|

| 4. | RECENT ACCOUNTING PRONOUNCEMENTS |
|----|----------------------------------|

|   | ● |  IFRS 9 “Financial Instruments: Classification and Measurement” is a new financial instruments standard effective for annual periods beginning on or after  January 1, 2015 that replaces IAS 39 and IFRIC 9 for classification and measurement of financial assets and financial liabilities. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● |  IFRS 13, “Fair Value Measurement” is a new standard effective for annual periods beginning on or after January 1, 2014 that replaces fair value measurement guidance in other IFRSs. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● |  IAS 19 “Employee Benefits” is effective for annual periods beginning on or after January 1, 2014 and is revised the recognition, measurement and disclosure on the benefit. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● |  IAS 32 (Amendment) “Financial Instruments: Presentation” is effective for annual periods beginning on or after January 1, 2014 and revises certain aspects of the requirements on offsetting. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 5. | PROPERTY AND EQUIPMENT |
|----|------------------------|

| Balance at:             |   | Computer Equipment |   |   | Furniture and Fixtures |   |   | Leasehold Improvements |   |   | Lab Equipment |   |   | Total  |   |
|-------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|---------------|--------|--------|--------|--------|
| January 1, 2012         |   | $                  | 5,876  |   |                   | $      | 8,093  |                   |   | $      | 8,330         |   |   | $      | -      |   |   | $ | 22,299 |   |
| Additions               |   |               | -      |   |                   |   | -      |                   |   |   | -             |   |   |   | 6,200  |   |   |   | 6,200 |   |
| Disposals               |   |               | -      |   |                   |   | (8,093 | )                      |   |   | (8,330        | )      |   |   | -      |   |   |   | (16,423 | ) |
|  December 31, 2012 |   | $                  | 5,876  |   |                   | $      | -      |                   |   | $      | -             |   |   | $      | 6,200  |   |   | $ | 12,076 |   |
|  December 31, 2013 |   | $                  | 5,876  |   |                   | $      | -      |                   |   | $      | -             |   |   | $      | 6,200  |   |   | $ | 12,076 |   |

| Balance at:               |   | Computer Equipment |   |   | Furniture and Fixtures |   |   | Leasehold Improvements |   |   | Lab Equipment |   |   | Total   |   |
|---------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|---------------|--------|--------|---------|--------|
| January 1, 2012           |   | $                  | 5,487  |   |                   | $      | 5,110  |                   |   | $      | 5,344         |   |   |  $ | -      |   |   | $ | 15,941 |   |
| Disposals                 |   |               | -      |   |                   |   | (5,657 | )                      |   |   | (5,891        | )      |   |    | -      |   |   |   | (11,548 | ) |
| Amortization for the year |   |               | 175    |   |                   |   | 547    |                   |   |   | 547           |   |   |    | 1,550  |   |   |   | 2,819 |   |
|  December 31, 2012   |   | $                  | 5,662  |   |                   | $      | -      |                   |   | $      | -             |   |   | $       | 1,550  |   |   | $ | 7,212 |   |
| Amortization for the year |   |               | 96     |   |                   |   | -      |                   |   |   | -             |   |   |    | 2,325  |   |   |   | 2,421 |   |
|  December 31, 2013   |   | $                  | 5,758  |   |                   | $      | -      |                   |   | $      | -             |   |   | $       | 3,875  |   |   | $ | 9,633 |   |

| Balance at:                |   | Computer Equipment |   |   | Furniture and Fixtures |   |   | Leasehold Improvements |   |   | Lab Equipment |   |   | Total |   |
|----------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|---------------|--------|--------|-------|--------|
|  At December 31, 2012 |   | $                  | 214    |   |                   | $      | -      |                   |   | $      | -             |   |   | $     | 4,650  |   |   | $ | 4,864 |   |
| At December 31, 2013       |   | $                  | 118    |   |                   | $      | -      |                   |   | $      | -             |   |   | $     | 2,325  |   |   | $ | 2,443 |   |

----

----

| 6. | INTANGIBLE ASSETS |
|----|-------------------|

|                         |   | Technology Licenses (i) |    |   | Patents (ii) |   |   | Total  |   |
|------------------------------|--------|-------------------------|---------|--------|--------------|--------|--------|--------|--------|
| Balance at January 1, 2012   |   | $                       | 42,510  |   |         | $      | 57,440 |   |   | $ | 99,950 |   |
| Additions                    |   |                    | -       |   |         |   | 6,875  |   |   |   | 6,875 |   |
| Balance at December 31, 2012 |   | $                       | 42,510  |   |         | $      | 64,315 |   |   | $ | 106,825 |   |
| Additions                    |   |                    | -       |   |         |   | 13,569 |   |   |   | 13,569 |   |
| Write-off                    |   |                    | (42,510 | )      |         |   | -      |   |   |   | (42,510 | ) |
| Balance at December 31, 2013 |   | $                       | -       |   |         | $      | 77,884 |   |   | $ | 77,884 |   |

|                         |   | Technology Licenses (i) |   |   | Patents (ii) |   |   | Total  |   |
|------------------------------|--------|-------------------------|--------|--------|--------------|--------|--------|--------|--------|
| Balance at January 1, 2012   |   | $                       | -      |   |         | $      | 9,319  |   |   | $ | 9,319 |   |
| Amortization for the year    |   |                    | -      |   |         |   | 3,944  |   |   |   | 3,944 |   |
| Balance at December 31, 2012 |   | $                       | -      |   |         | $      | 13,263 |   |   | $ | 13,263 |   |
| Amortization for the year    |   |                    | -      |   |         |   | 4,708  |   |   |   | 4,708 |   |
| Balance at December 31, 2013 |   | $                       | -      |   |         | $      | 17,971 |   |   | $ | 17,971 |   |

|                 |   | Technology Licenses (i) |   |   | Patents (ii) |   |   | Total  |   |
|----------------------|--------|-------------------------|--------|--------|--------------|--------|--------|--------|--------|
| At December 31, 2012 |   | $                       | 42,510 |   |         | $      | 51,052 |   |   | $ | 93,562 |   |
| At December 31, 2013 |   | $                       | -      |   |         | $      | 59,913 |   |   | $ | 59,913 |   |

|   | (i) | On January 9, 2013, the technology license agreement with Dalhousie University was terminated due to breach of contract for non-payment of maintenance amounts due, accordingly the technology license was written down to nil. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Company is currently pursuing a patent application for the compositions and methods of treating fibro proliferative disorders. Costs of this application incurred to date are $77,884 (2012 - $64,315). The application is still pending as at December 31, 2013, however due to a finite life of the patent which begins from the date of application; the Company is amortizing these costs over the expected life of the patent. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 7. | IRREVOCABLE SUBSCRIPTION AGREEMENTS (“ISA”) |
|----|---------------------------------------------------------|

|  As at December 31,           |   | 2013 |   |   | 2012    |   |
|------------------------------------|--------|------|--------|--------|---------|--------|
|                               |   | $    |   |   | $       |   |
|  Net amount allocated to ISA  |   | -    |   |   | 230,481 |   |
|  Accretion of deemed discount |   | -    |   |   | 69,519  |   |
|  Total subscription proceeds  |   | -    |   |   | 300,000 |   |

| 8. | CONVERTIBLE NOTES AND DERIVATIVE LIABILITY |
|----|--------------------------------------------|

----

----

| 8. | CONVERTIBLE NOTES AND DERIVATIVE LIABILITY - continued |
|----|--------------------------------------------------------|

|                       |               |   | Estimated Value |   |   |   |   |   | Allocation of Proceeds |   |
|----------------------------|--------------------|--------|-----------------|--------|--------|--------|--------|--------|------------------------|--------|
| Current Liabilities        |               |   |            |   |   |   |   |   |                   |   |
| Convertible Loan           | Face value of note |   | $               | 30,000 |   |   |   | 41     | %                      |   | $ | 12,317 |   |
| Derivative Liability       | Share option       |   |            | 18,232 |   |   |   | 25     | %                      |   |   | 7,485 |   |
| Derivative Liability       | Warrant option     |   |            | 11,600 |   |   |   | 16     | %                      |   |   | 4,763 |   |
| Warrant and option reserve | Bonus warrants     |   |            | 13,238 |   |   |   | 18     | %                      |   |   | 5,435 |   |
|                       |               |   | $               | 73,070 |   |   |   | 100    | %                      |   | $ | 30,000 |   |

| 9. | DUE TO RELATED PARTIES |
|----|------------------------|

| 10. | RELATED PARTY TRANSACTIONS AND BALANCES |
|-----|-----------------------------------------|

|                                                              |   | 2013   |   |   | 2012   |   |   | 2011   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| CFO fees paid to a shareholder of the Company                     |   | $      | 34,500 |   |   | $      | 18,000 |   |   | $ | 21,000 |   |
| Accounting fees paid to a shareholder of the Company              |   |   | 6,000  |   |   |   | 1,500  |   |   |   | - |   |
| Legal fees incurred from a consultant and director of the Company |   | $      | 8,575  |   |   | $      | 3,200  |   |   | $ | 7,934 |   |

----

----

| 10. | RELATED PARTY TRANSACTIONS AND BALANCES - continued |
|-----|-----------------------------------------------------|

|                                                                                                       |   | 2013 |    |   | 2012   |   |
|------------------------------------------------------------------------------------------------------------|--------|------|---------|--------|--------|--------|
| Amounts owing to a consultant and director and an officer of the Company for fees for legal and accounting |   | $    | 72,617  |   |   | $      | 41,492 |   |
| Amount owing to a shareholder and director of the Company for salary and expenses                          |   | $    | 191,167 |   |   | $      | 100,798 |   |

|                                        |   |   |   | 2013    |   |   |   | 2012    |   |   |   | 2011     |   |
|---------------------------------------------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
| Wages, salaries, and consulting fees        |   |   | $      | 155,000 |   |   | $      | 100,398 |   |   | $      | 115,433  |   |
| Share-based payments                        |   |   |   | 32,824  |   |   |   | 42,390  |   |   |   | 5,864    |   |
| Total key management personnel compensation |   |   | $      | 187,824 |   |   | $      | 142,788 |   |   | $      | $121,297 |   |

| 11. | SHARE CAPITAL |
|-----|---------------|

|   | Unlimited       | Class A common shares without par value              |
|--------|-----------------|------------------------------------------------------|
|   | 1,500,000       | Class B Series I preferred shares without par value  |
|   | 1,000,000  | Class B Series II preferred shares without par value |

|   | 37,456,825 | Class A common shares without par value              |
|--------|------------|------------------------------------------------------|
|   | NIL        | Class B Series I preferred shares without par value  |
|   | NIL        | Class B Series II preferred shares without par value |

|   | Class A Common Shares |
|--------|-----------------------|

----

----

| 11. | SHARE CAPITAL - continued |
|-----|---------------------------|

----

----

| 11. | SHARE CAPITAL - continued |
|-----|---------------------------|

| Expiry Date |   | Exercise Price $ |   |   | 2013   |   |      | 2012   |   |
|-------------|--------|------------------|--------|--------|--------|--------|-----------|--------|--------|
| 14-Aug-13   |   |             | 0.27   |   |   |   | -         |   |   |   | 225,000 |   |
| 4-Nov-14    |   |             | 0.27   |   |   |   | 150,000   |   |   |   | 150,000 |   |
| 5-Mar-15    |   |             | 0.27   |   |   |   | 375,000   |   |   |   | 375,000 |   |
| 3-Jul-17    |   |             | 0.10   |   |   |   | 475,000   |   |   |   | 475,000 |   |
| 21-Dec-17   |   |             | 0.10   |   |   |   | 450,000   |   |   |   | 450,000 |   |
| 04-Apr-18   |   |             | 0.10   |   |   |   | 350,000   |   |   |   | - |   |
| 16-Sep-18   |   |             | 0.10   |   |   |   | 100,000   |   |   |   | - |   |
| Balance     |   |             | 0.15   |   |   |   | 1,900,000 |   |   |   | 1,675,000 |   |

|                 |   | 2013                |      |   | 2012             |   |
|----------------------|--------|---------------------|-----------|--------|------------------|--------|
|                 |   | Options Outstanding |      |   | Exercise Price $ |   |   | Options Outstanding |   |   | Exercise Price $ |   |
| Balance at January 1 |   |                | 1,675,000 |   |             | $      | 0.17 |   |   |   | 1,650,000 |   |   | $ | 0.25 |   |
| Exercised            |   |                | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Expired/Cancelled    |   |                | (225,000  | )      |             |   | 0.27 |   |   |   | (1,000,000 | ) |   |   | 0.24 |   |
| Issued (Note 10)     |   |                | 450,000   |   |             |   | 0.10 |   |   |   | 1,025,000 |   |   |   | 0.10 |   |
| Balance at year end  |   |                | 1,900,000 |   |             | $      | 0.15 |   |   |   | 1,675,000 |   |   | $ | 0.17 |   |

----

----

| 11. | SHARE CAPITAL - continued |
|-----|---------------------------|

|                            |   | 2013   |         |   | 2012   |   |
|---------------------------------|--------|--------|--------------|--------|--------|--------|
| Dividend yield                  |   |   | 0            | %      |   |   | 0 | % |
| Expected volatility             |   |   | 164% - 166   | %      |   |   | 91% - 112 | % |
| Risk free interest rate         |   |   | 1.23% - 1.87 | %      |   |   | 1.19 | % |
| Expected life in years          |   |   | 5            |   |   |   | 2 - 3 |   |
| Grant date fair value per share |   | $      | 0.08 - $0.09 |   |   | $      | 0.04 - $0.11 |   |
| Forfeiture rate                 |   |   | 4            | %      |   |   | 4 | % |

| Expiry Date            | Exercise Price $ |   | 2013                                                         |  2012                                   |
|------------------------|------------------|--------|--------------------------------------------------------------|---------------------------------------------------|
| 15-Nov-13              | $0.15            |   | -                                                            | 602,223                                           |
| 31-Jan-14              | $0.15            | (1)    |     2,473,334                            | 2,473,334                                         |
| 28-Feb-14              | $0.25            | (2)    |          60,000 | 60,000                                            |
| 16-May-14              | $0.15            | (3)    |        600,000            |        600,000 |
| 19-Jun-14              | $0.22            |   | 56,666                                                       | 56,666                                            |
| 20-Jun-14              | $0.22            |   |        732,670            | 732,670                                           |
| 21-Sep-14              | $0.22            |   |        747,166            | 747,166                                           |
| 24-Sep-14              | $0.22            |   |        200,000            | -                                                 |
| 12-Feb-15              | $0.22            |   | 1,000,000                                                    | -                                                 |
| 01-May-15              | $0.22            |   | 1,300,000                                                    | -                                                 |
| 08-Oct-16              | $0.10            |   | 2,250,000                                                    | -                                                 |
| 18-Oct-16              | $0.10            |   | 2,020,000                                                    | -                                                 |
| 05-Nov-16              | $0.10            |   | 6,780,000                                                    | -                                                 |
| BALANCE AT DECEMBER 31 |             |   | 18,219,836                                                   | 5,272,059                                         |

| (1) | On January 18, 2013 the Company extended the expiry date of 2,473,334 warrants from January 31, 2013, to January 31, 2014 (Note 17). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| (2) | On January 18, 2013 the Company extended the expiry date of 60,000 warrants from February 28, 2013, to February 28, 2014 (Note 17). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|

| (3) | On January 18, 2013 the Company extended the expiry date of 600,000 warrants from May 16, 2013, to May 16, 2014 (Note 17). |
|-----|----------------------------------------------------------------------------------------------------------------------------|

----

----

| 11. | SHARE CAPITAL - continued |
|-----|---------------------------|

|            |   | 2013                 |       |   | 2012             |   |
|-----------------|--------|----------------------|------------|--------|------------------|--------|
|            |   | Warrants Outstanding |       |   | Exercise Price $ |   |   | Warrants Outstanding |   |   | Exercise Price $ |
| Opening balance |   |                 | 5,272,059  |   |             |   | 0.18 |   |   |   | 3,830,423 |   |   |   | 0.16 |   |
| Expired         |   |                 | (602,223   | )      |             |   | 0.15 |   |   |   | (28,200 | ) |   |   | 0.10 |   |
| Exercised       |   |                 | -          |   |             |   | 0.15 |   |   |   | (66,666 | ) |   |   | 0.15 |   |
| Issued          |   |                 | 13,550,000 |   |             |   | 0.22 |   |   |   | 1,536,502 |   |   |   | 0.22 |   |
| Closing balance |   |                 | 18,219,836 |   |             |   | 0.21 |   |   |   | 5,272,059 |   |   |   | 0.18 |   |

| 12. | WARRANT AND OPTION RESERVE |
|-----|----------------------------|

| 13. | INCOME TAXES |
|-----|--------------|

|                                             |   | 2013   |     | 2012   |   |
|--------------------------------------------------|--------|--------|----------|--------|--------|
|                                             |   |   |     |   |   |   |   |
| Income tax benefit at Canadian statutory rates   |   | $      | (192,620 | )      |   | $ | (151,367 | ) |
| Other items                                      |   |   | (20,838  | )      |   |   | 46,307 |   |
| Tax rate variation                               |   |   | (10,294  | )      |   |   | (26,360 | ) |
| Change in temporary difference                   |   |   | (50,372  | )      |   |   | 10,283 |   |
| Unused tax losses and tax offsets not recognized |   |   | 274,124  |   |   |   | 121,137 |   |
|                                             |   | $      | -        |   |   | $ | - |   |

----

----

| 13. | INCOME TAXES - continued |
|-----|--------------------------|

|                               |   | 2013    |     |                                                                                                          | 2012   |    |
|------------------------------------|--------|---------|----------|---------------------------------------------------------------------------------------------------------------|--------|---------|
| Deferred tax assets (liabilities): |   |    |     |                                                                                                          |   |    |
| Operating loss carry-forwards      |   |  $ | 770,515  |                                                                                                          |   |  $ | 517,512 |   |
| Share issue cost                   |   |    | 5,559    |                                                                                                          |   |    | - |   |
| Property and equipment             |   |    | 22       |                                                                                                          |   |    | 284 |   |
| Intangible assets                  |   |    | (3,924   | )                   |   |    | (8,711 | ) |
| Derivative liability               |   |    | -        |                                                                                                          |   |    | (7,722 | ) |
| Convertible note                   |   |    | -        |                                                                                                          |   |    | (3,315 | ) |
|                               |   |    | 772,172  |                                                                                                          |   |    |  498,048 |   |
| Valuation allowance                |   |    | (772,172 | )                                                                                                             |   |    | (498,048 | ) |
| Net deferred tax asset             |   |  $ | -        |                                                                                                          |   |  $ |  - |   |

|   |   |
|--------|--------|

|   | The Company has accumulated non-capital losses of approximately $2,963,520 which will expire as follows: |
|--------|----------------------------------------------------------------------------------------------------------|

|  2025       |   |   | 23,179    |   |
|------------------|--------|--------|-----------|--------|
|  2026       |   |   | 129,697   |   |
|  2027  |   |   | 450,884   |   |
|  2028  |   |   | 245,225   |   |
|  2029       |   |   | 253,883   |   |
|  2030       |   |   | 283,283   |   |
|  2031       |   |   | 402,119   |   |
|  2032       |   |   | 435,441   |   |
|  2033  |   |   | 739,809   |   |
|             |   | $      | 2,963,520 |   |

|   | The Company has undepreciated capital cost of $49,928 (2012 - $49,928) available to be deducted against future taxable income. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

| 14. | CAPITAL DISCLOSURE |
|-----|--------------------|

| 15. | FINANCIAL INSTRUMENTS AND RISK |
|-----|--------------------------------|

----

----

| 15. | FINANCIAL INSTRUMENTS AND RISK - continued |
|-----|--------------------------------------------|

| ·   Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are observable either directly or indirectly. |
| ·   Level 3 fair value measurements are those derived from valuation techniques that include inputs that are not based on observable market data.                      |

| 16. | COMPARATIVE FIGURES |
|-----|---------------------|

| 17. | SUBSEQUENT EVENTS |
|-----|-------------------|

----