# EDGAR Filing Document

**Accession Number:** 0001771885
**File Stem:** 0001062993-23-008232
**Filing Date:** 2023-3
**Character Count:** 921272
**Document Hash:** 5012faf95b50d191af54115e36582b77
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001062993-23-008232.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001062993-23-008232

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 123

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FSD Pharma Inc.
- **CENTRAL INDEX KEY:** 0001771885
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A6
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39152
- **FILM NUMBER:** 23789200

**BUSINESS ADDRESS:**
- **STREET 1:** FIRST CANADIAN PLACE
- **STREET 2:** 100 KING STREET WEST, SUITE 4000
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5X 1A4
- **BUSINESS PHONE:** (416) 854-8884

**MAIL ADDRESS:**
- **STREET 1:** FIRST CANADIAN PLACE
- **STREET 2:** 100 KING STREET WEST, SUITE 4000
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5X 1A4

?xml version="1.0" encoding="UTF-8"? FSD Pharma Inc.: Form 20-F - Filed by newsfilecorp.com

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 20-F**

**(Mark One)**

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

**OR**

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

For the fiscal year ended <u>**December 31, 2022**</u>

**OR**

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

**For the transition period from _________ to**

**OR**

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

**Date of event requiring this shell company report ____________________**

Commission file number: <u>**001-39152**</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>FSD Pharma Inc.</u>**

(Exact name of Registrant as specified in its charter)

**Ontario, Canada**

(Jurisdiction of incorporation or organization)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **199 Bay St., Suite 4000** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Toronto, Ontario M5L 1A9, Canada** 

(Address of principal executive offices)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Zeeshan Saeed, Founder, President and Executive Co-Chairman of the Board** 

**FSD Pharma Inc.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **199 Bay St., Suite 4000** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Toronto, Ontario M5L 1A9, Canada** 

**Telephone: (416) 854-8884**

**Email: zsaeed@fsdpharma.com**

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Title of each class** | &nbsp;&nbsp;**Trading Symbol(s)** | &nbsp;&nbsp;**Name of each exchange on which registered** |
| **Class B Subordinate Voting Shares, no par value** | &nbsp;&nbsp; **HUGE** | &nbsp;&nbsp;**The Nasdaq Stock Market LLC** |

---

------

**Securities registered or to be registered pursuant to Section 12(g) of the Act.** <u>**None**</u>

**Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. <u>None</u>**

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

**Class A Multiple Voting Shares, no par value: 72 shares outstanding as of December 31, 2022**

**Class B Subordinate Voting Shares, no par value: 38,504,210 shares outstanding as of December 31, 2022**

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

Yes ☐ No ☒

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

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

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

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

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

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

Item 17 ☐ Item 18 ☐

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

Yes ☐ No ☒

------

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| [**INTRODUCTION**](#page_6) | [**INTRODUCTION**](#page_6) | [**6**](#page_6) |
| [**GLOSSARY OF TERMS**](#page_8) | [**GLOSSARY OF TERMS**](#page_8) | [**8**](#page_8) |
| [**FORWARD-LOOKING STATEMENTS**](#page_12) | [**FORWARD-LOOKING STATEMENTS**](#page_12) | [**12**](#page_12) |
| [**MARKET AND INDUSTRY DATA**](#page_14) | [**MARKET AND INDUSTRY DATA**](#page_14) | [**14**](#page_14) |
| [**SUMMARY RISK FACTORS**](#page_15) | [**SUMMARY RISK FACTORS**](#page_15) | [**15**](#page_15) |
| [**PART I**](#page_17) |  | [**17**](#page_17) |
| [Item 1.](#page_17) | [Identity of Directors, Senior Management and Advisers.](#page_17) | [17](#page_17) |
| [Item 2.](#page_17) | [Offer Statistics and Expected Timetable.](#page_17) | [17](#page_17) |
| [Item 3.](#page_17) | [Key Information.](#page_17) | [17](#page_17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_17) | [*\[Reserved\]*](#page_17) | [*17*](#page_17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_17) | [*Capitalization and Indebtedness*](#page_17) | [*17*](#page_17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_17) | [*Reasons for the Offer and Use of Proceeds*](#page_17) | [*17*](#page_17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_17) | [*Risk Factors*](#page_17) | [*17*](#page_17) |
| [Item 4.](#page_56) | [Information on the Company.](#page_56) | [56](#page_56) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_56) | [*History and Development of the Company*](#page_56) | [*56*](#page_56) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_67) | [*Business Overview*](#page_67) | [*67*](#page_67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_78) | [*Organizational Structure*](#page_78) | [*78*](#page_78) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_78) | [*Property, Plants and Equipment*](#page_78) | [*78*](#page_78) |
| [Item 4A.](#page_78) | [Unresolved Staff Comments.](#page_78) | [78](#page_78) |
| [Item 5.](#page_78) | [Operating and Financial Review and Prospects.](#page_78) | [78](#page_78) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_78) | [*Operating Results*](#page_78) | [*78*](#page_78) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_79) | [*Liquidity and Capital Resources*](#page_79) | [*79*](#page_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_79) | [*Research and Development, Patents and Licenses, etc.*](#page_79) | [*79*](#page_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_79) | [*Trend Information*](#page_79) | [*79*](#page_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*E.*](#page_79) | [*Critical Accounting Estimates*](#page_79) | [*79*](#page_79) |
| [Item 6.](#page_79) | [Directors, Senior Management and Employees.](#page_79) | [79](#page_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_79) | [*Directors and Senior Management*](#page_79) | [*79*](#page_79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_84) | [*Compensation*](#page_84) | [*84*](#page_84) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_97) | [*Board Practices*](#page_97) | [*97*](#page_97) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_106) | [*Employees*](#page_106) | [*106*](#page_106) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*E.*](#page_106) | [*Share Ownership*](#page_106) | [*106*](#page_106) |

---

------

---

| | | |
|:---|:---|:---|
| [Item 7.](#page_106) | [Major Shareholders and Related Party Transactions.](#page_106) | [106](#page_106) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_106) | [*Major Shareholders*](#page_106) | [*106*](#page_106) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_109) | [*Related Party Transactions*](#page_109) | [*109*](#page_109) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_111) | [*Interests of Experts and Counsel*](#page_111) | [*111*](#page_111) |
| [Item 8.](#page_111) | [Financial Information](#page_111) | [111](#page_111) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_111) | [*Consolidated Statements and Other Financial Information*](#page_111) | [*111*](#page_111) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_115) | [*Significant Changes*](#page_115) | [*115*](#page_115) |
| [Item 9.](#page_115) | [The Offer and Listing.](#page_115) | [115](#page_115) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_115) | [*Offer and Listing Details*](#page_115) | [*115*](#page_115) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_116) | [*Plan of Distribution*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_116) | [*Markets*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_116) | [*Selling Shareholders*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*E.*](#page_116) | [*Dilution*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*F.*](#page_116) | [*Expenses of the Issue*](#page_116) | [*116*](#page_116) |
| [Item 10.](#page_116) | [Additional Information.](#page_116) | [116](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_116) | [*Share Capital*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_116) | [*Memorandum and Articles of Association*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_116) | [*Material Contracts*](#page_116) | [*116*](#page_116) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_118) | [*Exchange Controls*](#page_118) | [*118*](#page_118) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*E.*](#page_118) | [*Taxation*](#page_118) | [*118*](#page_118) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*F.*](#page_127) | [*Dividends and Paying Agents*](#page_127) | [*127*](#page_127) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*G.*](#page_127) | [*Statement by Experts*](#page_127) | [*127*](#page_127) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*H.*](#page_127) | [*Documents on Display*](#page_127) | [*127*](#page_127) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*I.*](#page_128) | [*Subsidiary Information*](#page_128) | [*128*](#page_128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*J.*](#page_128) | [*Annual Report to Security Holders*](#page_128) | [*128*](#page_128) |
| [Item 11.](#page_128) | [Quantitative and Qualitative Disclosures About Market Risk.](#page_128) | [128](#page_128) |
| [Item 12.](#page_128) | [Description of Securities Other than Equity Securities.](#page_128) | [128](#page_128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_128) | [*Debt Securities*](#page_128) | [*128*](#page_128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_128) | [*Warrants and Rights*](#page_128) | [*128*](#page_128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_128) | [*Other Securities*](#page_128) | [*128*](#page_129) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_128) | [*American Depositary Shares*](#page_128) | [*128*](#page_128) |
| [**PART II**](#page_129) |  | [**129**](#page_129) |
| [Item 13.](#page_129) | [Defaults, Dividend Arrearages and Delinquencies](#page_129) | [129](#page_129) |

---

------

---

| | | |
|:---|:---|:---|
| [Item 14.](#page_129) | [Material Modifications to the Rights of Security Holders and Use of Proceeds.](#page_129) | [129](#page_129) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.-D.*](#page_129) |  | [*129*](#page_129) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*E.*](#page_129) | [*Use of Proceeds*](#page_129) | [*129*](#page_129) |
| [Item 15.](#page_129) | [Controls and Procedures](#page_129) | [129](#page_129) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*A.*](#page_129) | [*Disclosure Controls and Procedures*](#page_129) | [*129*](#page_129) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*B.*](#page_130) | [*Management's Annual Report on Internal Control over Financial Reporting*](#page_130) | [*130*](#page_130) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*C.*](#page_130) | [*Attestation Report of the Registered Public Accounting Firm*](#page_130) | [*130*](#page_130) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[*D.*](#page_130) | [*Changes in Internal Control Over Financial Reporting*](#page_130) | [*130*](#page_130) |
| [Item 16.](#page_131) | [\[Reserved.\]](#page_131) | [131](#page_131) |
| [Item 16A.](#page_131) | [Audit Committee Financial Expert.](#page_131) | [131](#page_131) |
| [Item 16B.](#page_131) | [Code of Ethics.](#page_131) | [131](#page_131) |
| [Item 16C.](#page_131) | [Principal Accountant Fees and Services.](#page_131) | [131](#page_131) |
| [Item 16D.](#page_132) | [Exemptions from the Listing Standards for Audit Committees.](#page_132) | [132](#page_132) |
| [Item 16E.](#page_132) | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers.](#page_132) | [132](#page_132) |
| [Item 16F.](#page_134) | [Change in Registrant's Certifying Accountant.](#page_134) | [134](#page_134) |
| [Item 16G.](#page_134) | [Corporate Governance.](#page_134) | [134](#page_134) |
| [Item 16H.](#page_136) | [Mine Safety Disclosure.](#page_136) | [136](#page_136) |
| [Item 16I.](#page_136) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](#page_136) | [136](#page_136) |
| [Item 16J.](#page_136) | [Insider Trading Policies.](#page_136) | [136](#page_136) |
| [**PART III**](#page_137) |  | [**137**](#page_137) |
| [Item 17.](#page_137) | [Financial Statements.](#page_137) | [137](#page_137) |
| [Item 18.](#page_137) | [Financial Statements.](#page_137) | [137](#page_137) |
| [Item 19.](#page_137) | [Exhibits.](#page_137) | [137](#page_137) |

---

------

**INTRODUCTION**

Unless otherwise noted or the context otherwise requires, all references in this Annual Report on Form 20-F, or this Annual Report, to "FSD," "FSD Pharma," "Corporation," "Company," "we," "us" and "our" refer to FSD Pharma Inc., a corporation formed under the OBCA (as defined herein) and our wholly owned subsidiaries, Lucid, FSD BioSciences, FV Pharma, Prismic, FSD Strategic Investments and FSD Australia (as such terms are defined herein).

Our fiscal year ends on December 31. This Annual Report includes our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, which are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, or IFRS. None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

Except where expressly indicated otherwise, our financial information is presented in U.S. dollars. All references in this Annual Report to "$" or "US$" mean U.S. dollars, and all references in this Annual Report to "C$" mean Canadian dollars. For the convenience of the reader, in this Annual Report, unless otherwise indicated, translations from Canadian dollars into U.S. dollars were made at the rate of C$1.00 to US$0.7692, which is the average rate for the 2022 fiscal year, (2021 average rate: C$1.00=US$0.798). Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of Canadian dollars at the dates indicated.

We have made rounding adjustments to some of the figures included in this Annual Report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

This Annual Report includes registered and unregistered trademarks such as "In Pursuit of Total Brain Health", "Total Brain Health", "Psycheceuticals" and "Pharmaceutically Green", which are protected under applicable intellectual property laws and are the property of the Corporation. Solely for convenience, our trademarks referred to in this Annual Report and in other publicly filed documents may appear without the <sup>®</sup> or™ symbol, but such references are not intended to indicate, in any way, that we will not assert our rights to the fullest extent under applicable law. All other trademarks used in this Annual Report are the property of their respective owners.

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We are incorporated under the laws of Ontario, Canada. Substantially all of our assets are located outside the United States. In addition, several of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets may be located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or such persons or to enforce against them or against us judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, investors should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us, our officers or directors, or other said persons, predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States or (ii) would enforce, in original actions, liabilities against us or such directors, officers or experts predicated upon the United States federal securities laws or any securities or other laws of any state or jurisdiction of the United States.

In addition, there is doubt as to the applicability of the civil liability provisions of U.S. federal securities law to original actions instituted in Canada. It may be difficult for an investor, or any other person or entity, to assert U.S. securities laws claims in original actions instituted in Canada.

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**GLOSSARY OF TERMS**

In addition to terms defined elsewhere in this Annual Report, the following terms, when used in this Annual Report, have the following meanings (unless otherwise indicated):

"**Acquireco**" means 2620756 Ontario Inc., a wholly owned subsidiary of the Corporation incorporated under the OBCA for the purpose of carrying out the FV Pharma Amalgamation.

"**2021 Annual and Special Meeting**" means the Corporation's annual general and special meeting of shareholders held on May 14, 2021.

"**Articles**" means the articles of amalgamation of the Corporation.

"**Articles of Amendment**" means the amendment to the Articles providing for the change of name of the Corporation from "Century Financial Capital Group Inc." to "FSD Pharma Inc.", and the concurrent reorganization of the Corporation's share capital, as further described herein.

"**Audit Committee**" means the Audit and Risk Committee of the Board.

"**Board**" means the board of directors of the Corporation.

"**Cannabis Act**" means the *Cannabis Act*, S.C. 2018, c.16 (Canada).

"**Cannabis Licenses**" means the three licenses received from Health Canada under (or as migrated to, as applicable) the Cannabis Act: (i) a Cultivation License; (ii) a Standard Processing License; and (iii) a Sale for Medical Purposes License, each of which have been forfeited by the Corporation.

"**CDSA**" means the *Controlled Drugs and Substances Act* (Canada).

"**Century Shares**" means common shares in the capital of the Corporation prior to the reorganization of the Corporation's share capital as described in the Articles of Amalgamation.

"**CEO**" means Chief Executive Officer.

"**CFO**" means Chief Financial Officer.

"**Class A Shares**" means the Class A multiple voting shares in the capital of the Corporation.

"**Class B Shares**" means the Class B subordinate voting shares in the capital of the Corporation.

"**CMO**" means contract manufacturing organization.

"**Coattail Agreement**" means the coattail agreement dated May 24, 2018 among the Corporation, Computershare and certain of the Shareholders holding at least 80% of the Class A Shares.

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"**Cobourg Sale**" has the meaning set out in "*Item 4.A. History and Development of the Company*-*General Development of the Business-Three Year History - Transition from Cannabis to Biotechnology*". 

"**Computershare**" means Computershare Investor Services Inc., the Corporation's previous registrar and transfer agent of the Corporation.

"**COO**" means Chief Operating Officer.

"**Corporation**" means FSD Pharma Inc. (formerly Century Financial Capital Group Inc.), a corporation formed under the OBCA.

"**COVID-19**" means the 2019 novel coronavirus (SARS-CoV-2).

"**CRO**" means contract research organization**.**

**"CSA**" has the meaning set out in "*Description of the Business - Regulatory Environment - Controlled Substances - United States*".

"**CSE**" means the Canadian Securities Exchange.

"**CTA**" means Clinical Trial Application.

"**date hereof**" means the date of this Annual Report, being March 31, 2023.

"**DEA**" means the U.S. Drug Enforcement Administration.

"**Epitech**" means Epitech Group SpA.

"**Epitech License Agreement**" has the meaning set out in "*Item 4.A. History and Development of the Company-General Development of the Business - Three Year History-Epitech License Agreement and Prismic Assignment Agreement*".

"**Facility**" means the former cannabis processing facility located at 520 William Street, Cobourg, Ontario, K9A 3A5.

"**Facility Property**" has the meaning set out in "*Description of the Business - Overview - FV Pharma and the Facility*".

"**FDA**" means the U.S. Food and Drug Administration.

"**FDA Act**" means the *Food and Drugs Act* (Canada), including all regulations thereunder.

"**First Republic**" means First Republic Capital Corporation, a company controlled by Anthony Durkacz.

"**FSD Australia**" means FSD Pharma Australia Pty Ltd, a company formed under the laws of Australia and a wholly owned subsidiary of the Corporation.

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"**FSD BioSciences**" means FSD BioSciences, Inc., a corporation incorporated under the laws of Delaware and a wholly owned subsidiary of the Corporation.

"**FSD-PEA**" means ultra-micronized PEA, also known as FSD-201, a lead compound with exhibited anti-inflammatory properties that is being researched and developed by the Corporation through FSD BioSciences.

"**FSD Strategic Investments**" means FSD Strategic Investments Inc., a corporation incorporated under the laws of Ontario and a wholly owned subsidiary of the Corporation.

"**FV Pharma**" means FV Pharma Inc., a corporation incorporated under the OBCA and a wholly owned subsidiary of the Corporation.

"**FV Pharma Amalgamation**" means the amalgamation of Acquireco and FV Pharma pursuant to the terms of the FV Pharma Amalgamation Agreement.

"**FV Pharma Amalgamation Agreement**" means the business combination agreement dated March 9, 2018, entered into between the Corporation and FV Pharma in respect of the FV Pharma Amalgamation.

"**GMP**" means good manufacturing practices.

"**IND**" means Investigational New Drug Application.

"**JOBS Act**" means the U.S. *Jumpstart Our Business Startups Act*.

"**Lucid**" means Lucid Psycheceuticals Inc., a corporation incorporated under the OBCA and a wholly owned subsidiary of the Corporation.

"**Lucid Acquisition**" has the meaning set out in "*Item 4. Information on the Company-A. History and Development of the Company*-*General Development of the Business - Three Year History - Lucid Acquisition*".

"**Lucid Amalgamation Agreement**" means the amalgamation agreement dated September 20, 2021, entered into among the Corporation, Lucid and a wholly owned subsidiary of the Corporation in respect of the Lucid Acquisition.

"**Lucid-MS**" means the patented new chemical entity that is being researched and developed by the Corporation through Lucid for its potential treatment of MS.

"**Lucid-PSYCH**" means the psychoactive compound that is being researched and developed by the Corporation through Lucid for its potential treatment of major depressive disorder.

"**Master Agreement**" has the meaning set out in "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History - Lucid Acquisition*".

"**MNP**" means MNP LLP, auditors of the Corporation since November 29, 2019.

"**MS**" means multiple sclerosis.

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"**Nasdaq**" means The Nasdaq Stock Market LLC.

"**NDA**" means new drug application.

"**OBCA**" means the *Business Corporations Act* (Ontario).

"**PEA**" means palmitoylethanolamide.

"**Poisons Standard**" means the *Therapeutic Goods (Poisons Standard-February 2023) Instrument 2023* (Cth) (Australia).

"**Prismic**" means Prismic Pharmaceuticals, Inc., a corporation incorporated under the laws of Arizona and a wholly owned subsidiary of the Corporation.

"**Prismic Acquisition**" has the meaning set out in "*Corporate Structure - History of Prismic*".

"**Product Candidates**" has the meaning set out in "*Description of the Business - Products and Sales*".

"**Requisitioning Shareholders**" has the meaning set out in "*Item 4. Information on the Company-A. History and Development of the Company*-*General Development of the Business-Three Year History-Matters Addressed at 2021 Annual and Special Meeting*".

"**Sales Agent**" means A.G.P./Alliance Global Partners.

"**SEC**" means the U.S. Securities Exchange Commission.

"**SEDAR**" means System for Electronic Document Analysis and Retrieval.

"**Shareholders**" means shareholders of the Corporation.

"**Stock Options**" means incentive stock options of the Corporation.

"**TGA**" means the Australian Therapeutic Goods Administration.

"**UHN License Agreement**" has the meaning set out in "*Item 4. Information on the Company-A. History and Development of the Company*-*General Development of the Business - Three Year History - UHN License Agreement*".

"**USPTO**" means the United States Patent and Trademark Office.

"**Warrants**" means warrants of the Corporation to purchase Class B Shares.

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**FORWARD-LOOKING STATEMENTS**

The information provided in this Annual Report, including information incorporated by reference, contains certain "forward-looking information" or "forward-looking statements" within the meaning of Canadian securities laws and United States securities laws (collectively, "**Forward-Looking Statements**"). Forward-Looking Statements relate to future events or future performance, business prospects or opportunities of the Corporation that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management made in light of management's experience and perception of historical trends, current conditions and expected future developments. All statements other than statements of historical fact may be Forward-Looking Statements.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be Forward-Looking Statements. Forward-Looking Statements are often, but not always, identified by words or phrases such as "hope", "would", "seek", "anticipate", "believe", "expect", "plan", "continue", "estimate", "will", "predict", "intend", "forecast", "future", "target", "project", "capacity", "could", "should", "might", "focus", "proposed", "scheduled", "outlook", "potential", "may" or similar expressions and includes suggestions of future outcomes, including, but not limited to statements about: discussions concerning the Corporation's exploration of near-term funding strategies; the Corporation's plans to advance the research & development of Product Candidates (as defined below) to commercialization through studies and clinical trials, including anticipated timing and associated costs; the application and the costs associated with such planned trials, and the Corporation's ability to obtain required funding and the terms and timing thereof; the expansion of our product offering(s), our business objectives and the expected impacts of previously announced acquisitions and developments; the investigational new drug FDA and Health Canada application process and any review thereof and its affects on our business objectives. Readers are cautioned not to place undue reliance on Forward-Looking Statements as the Corporation's actual results may differ materially and adversely from those expressed or implied.

The Corporation has made certain assumptions with respect to the Forward-Looking Statements regarding, among other things: the Corporation's ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Corporation operates; the interest of potential purchasers in the Corporation's Product Candidates; anticipated and unanticipated costs; the government regulation of the Corporation's activities and Product Candidates; the timely receipt of any required regulatory approvals; the Corporation's ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the Corporation's ability to conduct operations in a safe, efficient and effective manner; and the Corporation's expansion plans and timeframe for completion of such plans.

Although the Corporation believes that the expectations and assumptions on which the Forward-Looking Statements are based are reasonable, undue reliance should not be placed on the Forward-Looking Statements, because no assurance can be given that such statements will prove to be correct. Since Forward-Looking Statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially and adversely from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the limited operating history of the Corporation and history of losses, and anticipated significant losses for the foreseeable future incurred to pursue commercialization of Product Candidates (as defined below); the Corporation's inability to file INDs (as defined below) or CTAs (as defined below) on timelines it reasonably anticipates, if at all; the Corporation's ability to identify, license or discover additional product candidates; the Product Candidates being in the preclinical development stage; the Corporation's reliance on its Product Candidates; the Corporation's ability to successfully develop new commercialized products or find a market for their sale; the impact of any future recall of the Corporation's products; the Corporation's ability to promote and sustain its products, including any restrictions or constraints on marketing practices under the regulatory framework in which the Corporation operates; failure to achieve the degree of market acceptance and demand for our products or Product Candidates by physicians, patients, healthcare payors, and others in the medical community which are necessary for commercial success, including due to the possibility that alternative, superior treatments may be available prior to the approval and commercialization of Product Candidates, should such approval be received at all; failure of clinical trials to demonstrate substantial evidence of the safety and/or effectiveness of Product Candidates, which could prevent, delay or limit the scope of regulatory approval and commercialization, including from difficulties encountered in enrolling patients in clinical trials, and reliance on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, or results from future clinical testing which may demonstrate opposing evidence and draw negative conclusions regarding the effectiveness of any Product Candidate, including the effectiveness of Lucid-MS (as defined below) as a treatment for MS (as defined below) or Lucid-PSYCH (as defined below) as a treatment for major depressive disorder or other mental health disorders; results of earlier studies or clinical trials not being predictive of future clinical trials and initial studies or clinical trials not establishing an adequate safety or efficacy profile for the Corporation's Product Candidates to justify proceeding to advanced clinical trials or an application for regulatory approval; potential side effects, adverse events or other properties or safety risks of the Corporation's Product Candidates, which could delay or halt their clinical development, prevent their regulatory approval, cause suspension or discontinuance of clinical trials, abandonment of a Product Candidate, limit their commercial potential, if approved, or result in other negative consequences; preliminary, interim data obtained from the Corporation's clinical trials that it may announce or publish from time to time may not be indicative of future scientific observations or conclusions as more patient data becomes available, further analyses are conducted, and as the data becomes subject to subsequent audit and verification procedures; inability to establish sales and marketing capabilities, or enter in to agreements with third parties, to sell and market any Product Candidates that the Corporation may develop; the ability to provide the capital required for research, product development, operations and marketing; violations of laws and regulations resulting in repercussions; risks inherent in an pharmaceutical business and the development and commercialization of pharmaceutical products, including the inability to accurately predict timing or amounts of expenses, requirements of regulatory authorities, and completion of clinical studies on anticipated timelines, which may encounter substantial delays or may not be able to be completed at all;

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delays in clinical trials; psychedelic-inspired drugs possibly never being approved as medicines or other therapeutic applications; the Corporation's inability to attain or maintain the regulatory approvals it needs in any jurisdiction to commercialize, distribute or sell any Product Candidate or other pharmaceutical products; failure of counterparties to perform contractual obligations; changes, whether anticipated or not, in laws, regulations and guidelines that may result in significant compliance costs for the Corporation, including in relation to restrictions on branding and advertising, regulation of distribution and excise taxes; uncertainty associated with insurance coverage and reimbursement status for newly-approved pharmaceutical products, which could result in Product Candidates becoming subject to unfavourable pricing regulations, third-party coverage and reimbursement practices, or healthcare reform initiatives, including legislative measures aimed at reducing healthcare costs; the effect that any public health crises, such as pandemics or epidemics may have on the Corporation's business; the price of our securities may be volatile due to a variety of factors, including volatility in the capital markets generally, geopolitical events, public health emergencies, macro economic pressures and natural disasters; the Corporation's anticipated negative cash flow from operations and non-profitability for the foreseeable future; the inability to obtain required additional financing on terms favourable to the Corporation or at all; the dilutive effects of future sales or issuances of equity securities and the conversion of outstanding securities to Class B Shares (as defined below); the Corporation's dual class share structure; the market price of the Class B Shares possibly being subject to wide price fluctuations; whether an active trading market for the Corporation's Class B Shares is sustained; the Corporation's ability to maintain compliance with Nasdaq's rules for continued listing on the Nasdaq Stock Market; the Corporation's ability to identify and execute future acquisitions or dispositions effectively, including the ability to successfully manage the impacts of such transactions on its operations; lack of dividends, and reinvestment of retained earnings, if any, into the Corporation's business; the Corporation's reliance on management, key persons and skilled personnel; reliance on contract manufacturing facilities; manufacturing problems that could result in delay of the Corporation's development or commercialization programs; the Corporation's expected minimal environmental impacts; insurance and uninsured risks; claims from suppliers; conflicts of interest between the Corporation and its directors and officers; the Corporation's ability to manage its growth effectively; the Corporation's ability to realize production targets; supply chain interruptions and the ability to maintain required supplies of, equipment, parts and components; the Corporation's ability to successfully implement and maintain adequate internal controls over financial reporting or disclosure controls and procedures; results of litigation; the dependence of the Corporation's operations, in part, on the maintenance and protection of its information technology systems, and the information technology systems of its third-party research institution collaborators, CROs or other contractors or consultants, which could face cyber-attacks; failure to execute definitive agreements with entities in which the Corporation has entered into letters of intent or memoranda of understanding; unfavourable publicity or consumer perception towards the Product Candidates; reputational risks to third parties with whom the Corporation does business; failure to comply with laws and regulations; the Corporation's reliance on its own market research and forecasts; competition from other technologies and pharmaceutical products, including from synthetic production, new manufacturing processes and new technologies, and expected significant competition from other companies with similar businesses, and significant competition in an environment of rapid technological and scientific change; the Corporation's ability to safely, securely, efficiently and cost-effectively transport our products to consumers; liability arising from any fraudulent or illegal activity, or other misconduct or improper activities that the Corporation's directors, officers, employees, contractors, consultants, commercial partners or vendors may engage in, including noncompliance with regulatory standards and requirements; unforeseen claims made against the Corporation, including product liability claims or regulatory actions; reliance on single-source suppliers, including single-source suppliers for the acquisition of the drug substance and drug product for any of the Product Candidates; inability to obtain or maintain sufficient intellectual property protection for the Corporation's Product Candidates; third-party claims of intellectual property infringement; patent terms being insufficient to protect competitive position on Product Candidates; inability to obtain patent term extensions or non-patent exclusivity; inability to protect the confidentiality of trade secrets; inability to protect trademarks and trade names; filing of claims challenging the inventorship of the Corporation's patents and other intellectual property; invalidity or unenforceability of patents, including legal challenges to patents covering any of the Product Candidates; claims regarding wrongfully used or disclosed confidential information of third parties; inability to protect property rights around the world; the impact of general economic conditions on the Corporation's mortgage investment activities; risks related to the Corporation's status as a foreign private issuer; the Corporation taking advantage of reduced disclosure requirements applicable to emerging growth companies; the Corporation's classification as a "passive foreign investment company"; that the Corporation's international business operations, including expansion to new jurisdictions, could expose it to regulatory risks or factors beyond our control such as currency exchange rates and changes in governmental policy; risks related to expansion of international operations; the Corporation's ability to produce and sell products in, and export products to, other jurisdictions within and outside of Canada and the United States, which is dependent on compliance with additional regulatory or other requirements; regulatory regimes of locations for clinical trials outside of Canada and the United States; failure to obtain approval to commercialize Product Candidates outside of Canada and the United States; if clinical trials are conducted for Product Candidates outside of Canada and the United States, the FDA, Health Canada and comparable regulatory authorities may not accept data from such trials, or the scope of such approvals from regulatory authorities may be limited; and other factors beyond the Corporation's control.

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The Corporation cautions that the foregoing list of important risk factors and uncertainties is not exhaustive. Although the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained in Forward-Looking Statements, there may be other factors that cause results not to be as anticipated, estimated, intended or projected. There is no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Statements. You should carefully consider the matters as further discussed in the section of this Annual Report titled "*Item 3. Key Information-D. Risk Factors*".

The Forward-Looking Statements contained or incorporated by reference in this Annual Report are made as of the date of this Annual Report or as otherwise specified. Except as required by applicable securities law, we undertake no obligation to update publicly or otherwise revise any Forward-Looking Statements or the foregoing list of factors affecting those statements, whether as a result of new information, future events or otherwise or the foregoing lists of factors affecting this information.

**MARKET AND INDUSTRY DATA**

This Annual Report includes market and industry data that has been obtained from third party sources, including industry publications. The Corporation believes that its industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Corporation has not independently verified any of the data from third party sources referred to in this Annual Report or ascertained the underlying economic assumptions relied upon by such sources.

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**SUMMARY RISK FACTORS**

Our business is subject to a number of risks and uncertainties, including those risks discussed at length in the section below titled "*Risk Factors.*" These risks include, among others, the following:

* Drug development is a highly uncertain undertaking and involves a substantial degree of risk;

* There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq;

* We have a limited operating history and funding, which may make it difficult to evaluate our product development, product prospects and overall likelihood of success;

* The Product Candidates may not receive regulatory approval, in a timely manner, if at all, or may receive regulatory approval on limiting terms;

* The Corporation may be unable to raise the capital necessary for it to execute its strategy on favorable terms or at all;

* We rely on the Epitech License and the UHN License to use for pharmaceutical purposes certain patents and other intellectual property rights associated with FSD-PEA and Lucid-MS;

* Even if any Product Candidate we develop receives regulatory approval, we may nonetheless fail to achieve the degree of market acceptance by physicians, patients, healthcare payors, and others in the medical community necessary for commercial success;

* We face significant competition, and there is a possibility that our competitors may achieve regulatory approval for an effective treatment before us or develop therapies that are safer, more advanced or more effective than ours;

* Psychedelic or psychedelic-inspired drugs may never be approved as medicines or other therapeutic applications, and violations of applicable laws and regulations, or changes in the regulatory or political discourse with respect to psychedelic or psychedelic-inspired drugs, could result in repercussions;

* The loss of single-source suppliers, or their failure to supply us with the drug substance or drug product, could materially and adversely affect our business;

* We currently rely on, and expect to continue to rely on, third parties to conduct Product Candidate drug trials and aspects of our research and preclinical testing;

* We, our service providers or any third-party manufacturers may fail to comply with regulatory requirements which could subject us to enforcement actions;

* The FDA, Health Canada or other comparable regulatory authorities may not accept data from trials conducted in foreign jurisdictions;

* We may be unable to obtain and maintain sufficient intellectual property protection for our products;

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* Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts;

* If we are unable to adequately protect the confidentiality of our trade secrets, our trademarks or trade names, our business may be adversely affected;

* The COVID-19 pandemic, or a similar pandemic, epidemic, or outbreak of an infectious disease, inflation, stagflation, supply chain and interest rate pressures, foreign currency exchange rate fluctuations, the ongoing conflict between Russia and Ukraine and political developments in Hong Kong and Taiwan, natural disasters and other macroeconomic and geopolitical events may materially and adversely affect our business and financial results and could cause a disruption to the development of our product candidates;

* The Corporation operates in a highly regulated industry and is subject to a wide range of federal, state and local laws, rules and regulations, including FDA and Health Canada regulatory requirements and laws pertaining to fraud and abuse in healthcare, that affect nearly all aspects of our operations. Failure to comply with these laws, rules and regulations, or to obtain and maintain required licenses, could subject the Corporation to enforcement actions, including substantial civil and criminal penalties, and might require us to recall or withdraw a product from the market or cease operations, which could materially and adversely affect our business, financial condition and results of operations;

* Any significant interruption in the supply chain for key inputs could materially impact the Corporation's business;

* Future sales or issuances of equity securities and the conversion of outstanding securities to Class B Shares could decrease the value of the Class B Shares and dilute investors' voting power;

* The Corporation's dual class structure has the effect of concentrating voting control and the ability to influence corporate matters with a limited number of holders of Class A Shares;

* A decline in general economic conditions may impact the viability and success of our mortgage investment activities;

* We may lose our status as a foreign private issuer;

* The Corporation is currently party to several legal proceedings and may become a party to potential future litigation; and

* We may be a passive foreign investment company for U.S. federal income tax purposes, which may result in adverse U.S. federal income tax consequences for U.S. Holders of our Class B Shares.

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**PART I**

**Item 1. Identity of Directors, Senior Management and Advisers.**

Not applicable.

**Item 2. Offer Statistics and Expected Timetable.**

Not applicable.

**Item 3. Key Information.**

**A. [Reserved]**

**B. Capitalization and Indebtedness**

Not applicable.

**C. Reasons for the Offer and Use of Proceeds**

Not applicable.

**D. Risk Factors**

*An investment in securities of the Corporation should only be made by persons who can afford a significant or total loss of their investment.*

*We are exposed to a number of risks through the pursuit of our business objectives. The following risks and uncertainties identified below are those we believe may, individually or in combination with other risks and uncertainties, have a material impact on our business, but these are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us, or risks that we currently deem immaterial, may also impair our business operations. If any of the following risks, or any other risks and uncertainties that we have not yet identified or that we currently consider not to be material, actually occur or become material risks, our business, financial condition, results of operations and cash flows, and consequently the price of the Class B Shares, could be materially and adversely affected. The risks discussed below also include Forward-Looking Statements and our actual results may differ substantially from those discussed in these Forward-Looking Statements. See "Forward-Looking Statements" in this Annual Report.* 

***Risks Related to Product Candidates***

*Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have three pharmaceutical product candidates and no pharmaceutical product sales, which, together with our limited operating history, makes it difficult to evaluate our business and assess our future viability.*

Pharmaceutical and biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a biotechnology corporation with a limited operating history. We have no pharmaceutical products approved for commercial sale and have not generated any revenue from pharmaceutical product sales. We are currently focused on developing three Product Candidates which are in early stages of development and will require substantial additional development time, including extensive resources, and preclinical and clinical testing before any of the candidates would be able to receive regulatory approvals and begin generating revenue from product sales.

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The effectiveness of the Corporation's Product Candidates is not yet known. We continue to incur significant research and development and other expenses related to ongoing operations and expect to incur losses for the foreseeable future. We anticipate these losses will increase and that we will not generate any revenue from product sales unless and until after we have successfully completed clinical development and received regulatory approval for the commercial sale of any of the Product Candidates.

Because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of our expenses, or when we will be able to generate any meaningful revenue or achieve or maintain profitability, if ever. In addition, our expenses could increase beyond our current expectations if we are required by the FDA, Health Canada or comparable foreign regulatory authorities to perform nonclinical or preclinical studies or clinical trials in addition to those that we currently anticipate, or if there are any delays in any of our or our future collaborators' clinical trials. Even if one or more of the Product Candidates are approved for commercial sale, we anticipate incurring significant costs associated with commercializing such Product Candidate(s) and ongoing compliance efforts. Furthermore, changes to government legislation and regulatory authority policies or the interpretation of existing legislation and policies may increase our costs of compliance or ability to generate revenue and ultimately impact our business, results of operations, financial condition and prospects.

We may never be able to develop or commercialize any of the Product Candidates or achieve profitability. Revenue from the sale of any Product Candidates, if regulatory approval is obtained, will be dependent, in part, upon the size of the markets in the territories for which we obtain regulatory approval, the accepted price for the product(s), the ability to obtain reimbursement at any price and whether we own the commercial rights for that territory, as well as the efficiency and availability of any comparable products. Our growth strategy depends on our ability to generate revenue. In addition, if the number of addressable patients is less than anticipated, the indication approved by regulatory authorities is narrower than expected, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of Product Candidates, even if approved. Even if we are able to generate revenue from the sale of Product Candidates, we may not become profitable and may need to obtain additional funding to continue operations. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to achieve sustained profitability would depress our value and could impair our ability to raise capital, expand our business, diversify our research and development pipeline, market Product Candidates and any other product candidates that we may identify and pursue or continue our operations.

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*Clinical trials cannot proceed without an effective IND or CTA (or equivalent), which might not occur in accordance with the Corporation's expected timelines.*

Prior to commencing clinical trials for a Product Candidate in the United States, Canada or other jurisdictions, the Corporation may be required to have an IND or CTA (or equivalent) in effect for the Product Candidate and to file additional INDs or CTAs prior to initiating any additional clinical trials. The Corporation believes that the data from previous studies will support the filing of INDs or CTAs to enable the Corporation to undertake clinical studies as it has planned. However, submission of an IND or CTA (or equivalent) may not result in the FDA or Health Canada (or other comparable regulatory authorities) allowing clinical trials to begin and, once begun, issues may arise that will require the Corporation to suspend or terminate such clinical trials. Additionally, even if relevant regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or CTA, these regulatory authorities may change their requirements in the future. Failure to submit or have effective INDs or CTAs (or equivalent) and commence or continue clinical programs will significantly limit the Corporation's opportunity to generate revenue.

*The Product Candidates may not receive regulatory approval, in a timely manner, if at all, or may receive regulatory approval on limiting terms.*

Before obtaining marketing approval from regulatory authorities for the sale of a Product Candidate, we must conduct extensive preclinical and clinical trials to demonstrate its safety and efficacy in humans. Obtaining regulatory approval for pharmaceuticals, including approval by the FDA, Health Canada, TGA and other comparable regulatory authorities, is a lengthy, expensive and unpredictable process, and depends upon numerous factors at the substantial discretion of the regulatory authorities, including, without limitation, the design of clinical trials, broadness of population studied with respect to clinical trials, risk-benefit ratio for a Product Candidate's proposed indication and processes of our third-party manufacturers of clinical and commercial supplies. Approval policies, regulations, or the type and amount of nonclinical or clinical data necessary to gain approval may change during the course of a Product Candidate's development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application.

In particular, clinical testing is expensive, time consuming, and subject to significant uncertainty. We cannot be certain that future Product Candidate clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing, and Product Candidate drug trials may not be successful. Events that may prevent successful, timely initiation or completion of clinical trials include, without limitation, (i) the inability to obtain additional financing required to conduct the clinical trials; (ii) delays in reaching a consensus with regulatory agencies as to the design or implementation of our clinical studies; (iii) the inability to generate sufficient data to support the initiation or continuation of clinical trials; (iv) delays in confirming target engagement, patient selection or other relevant biomarkers to be utilized in preclinical and clinical product candidate development; (v) delays in establishing clinical trial sites, including reaching agreements on acceptable terms with prospective contract research organizations ("**CROs**"), recruiting suitable clinical investigators, and obtaining required regulatory approvals for each clinical trial site; (vi) deficiencies or delays in testing operations of the Corporation or testing and manufacturing operations of relevant third-parties including CROs; (vii) difficulties in securing access to testing materials, enrolling a sufficient number of suitable patients or obtaining other resources for clinical testing; (viii) unanticipated additional costs associated with the preclinical or clinical trials of any Product Candidates; (ix) side effects, unexpected characteristics and other safety concerns associated with the use of Product Candidates; (x) modifications or terminations of study plans based on findings from preclinical or clinical trials, including discovery of undesirable side effects associated with any of the Product Candidates; (xi) changes to government regulations or regulatory authority policies; and (xii) any negative findings or decisions from regulatory authorities relating to our clinical trials, including delays in approvals, rejections and suspensions.

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Product Candidates require significant additional development; management of clinical and manufacturing activities; and regulatory approval. In addition, we will need to obtain adequate manufacturing supply; build a commercial organization; commence marketing efforts; and obtain reimbursement, or contracts for such services, before we generate any significant revenue from commercial product sales, if ever. We cannot be certain that any Product Candidates will be successful in clinical trials or receive regulatory approval. Further, a Product Candidate may not receive regulatory approval even if it is successful in clinical trials. Moreover, results acceptable to support approval in one jurisdiction may be deemed inadequate by another regulatory authority to support regulatory approval in that other jurisdiction (see "*Risk Factors - The FDA, Health Canada or other comparable regulatory authorities may not accept data from trials conducted in foreign jurisdictions*"). If we do not receive regulatory approvals for a Product Candidate or some other future product candidate that we may identify, we and our subsidiaries may not be able to continue operations, which may require us to out-license the technology or pursue an alternative strategy, or may otherwise have a material adverse effect on our business, operating results and financial condition. Our inability to successfully complete clinical development of Product Candidates could result in additional costs to us and negatively impact our ability to generate revenue, causing a material adverse effect on our business, results of operations, financial condition and prospects. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize and market the Product Candidates. We may never be able to develop, obtain regulatory approval for, or successfully commercialize any of our Product Candidates.

Even if regulatory approval is secured for a Product Candidate, the terms of such approval may limit the scope and use of the Product Candidate, including restricting us from promoting such Product Candidate for approved indications or uses, which may limit its commercial potential. In addition, such approved Product Candidates will be subject to ongoing regulatory requirements for manufacturing, distribution, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy and other post-market information. For example, if any of our Product Candidates receives marketing approval, the FDA, Health Canada, or other regulatory authority could impose a boxed warning or comparable restriction in the labeling of our product and could require us to adopt a risk evaluation and mitigation strategy that includes elements to assure safe use to ensure that the benefits of the product outweigh its risks, which may include, among other things, a Medication Guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners, or comparable restrictions. Failure to comply with such obligations may result in significant negative consequences including product recalls, withdrawal of approvals and civil or criminal penalties, causing a material adverse effect on our business, results of operations, financial condition and prospects.

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*We rely on the Epitech License and the UHN License to use for pharmaceutical purposes certain patents and other intellectual property rights associated with FSD-PEA and Lucid-MS.* 

Our principal assets include the Epitech License and the UHN License, which provides us with an exclusive, multi-jurisdictional license to use certain patents and other intellectual property rights associated with FSD-PEA, that are owned by Epitech, and Lucid-MS, that are owned by UHN. Under the Epitech License, we are obligated to use commercially reasonable efforts to develop FSD-PEA, with a view to filing an NDA with the FDA as soon as practicable. We are also obligated to make milestone payments and royalties to Epitech and UHN under the Epitech License Agreement and UHN License Agreement, respectively, which may limit our future profitability and our ability to enter into marketing partnership agreements. If we materially breach any of the terms of the Epitech License Agreement or UHN License Agreement (and fail to cure such breach with the specified time, to the extent a cure period is available for such breach), Epitech or UHN, as applicable, could terminate such agreement. If we were to lose or otherwise be unable to maintain the Epitech License, or the UHN License on acceptable terms, or find that it is necessary or appropriate to secure new licenses from other third parties, we may not be able to market FSD-PEA or Lucid-MS, as applicable, and our current business model and plan would be impaired, which would have a material adverse effect on our business, operating results and financial condition. See also "*Item 4.A. History and Development of the Company-General Development of the Business - Three Year History-Epitech License Agreement and Prismic Assignment Agreement*".

*Product Candidates may fail to achieve a sufficient degree of market acceptance by physicians, patients, healthcare payors, and others in the medical community.*

The commercial success of any Product Candidate will depend upon their degree of market acceptance by physicians, patients, third-party payors, and others in the medical community. For example, even if future trials for a Product Candidate are successful and such Product Candidate receives marketing approval, which may occur much later than anticipated or not at all, the Product Candidate may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors, and others in the medical community. The degree of market acceptance of a Product Candidate, if approved for commercial sale, will depend on a number of factors, including (i) the availability of alternative, superior treatments for a particular condition prior to the approval and commercialization of the Product Candidate for such treatment; (ii) the efficacy and safety of the Product Candidate, including side effects or unexpected characteristics; (iii) the ability to offer the Product Candidate for sale at competitive prices; (iv) the ability to manufacture the Product Candidate in sufficient quantities and to offer appropriate patient access programs, such as co-pay assistance; (v) convenience and ease of dosing and administration compared to alternative treatments; (vi) the clinical indications for which the Product Candidate is approved by the FDA or Health Canada, if it approved at all, or comparable regulatory agencies; (vii) product labeling or product insert requirements of the FDA, Health Canada or other comparable regulatory authorities, including any limitations, contraindications or warnings contained in a product's approved labeling; (viii) restrictions on how the Product Candidate is distributed; (ix) publicity concerning the Product Candidate or competing products and treatments; (x) the strength of marketing and distribution support; (xi) favorable third-party coverage and sufficient reimbursement; and (xii) the prevalence and severity of any side effects or adverse effects.

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Sales of medical products also depend on the willingness of physicians to prescribe the treatment, which is likely to be based on a determination by these physicians that the products are safe, therapeutically effective and cost effective. In addition, the inclusion or exclusion of products from treatment guidelines established by various physician groups and the viewpoints of influential physicians can affect the willingness of other physicians to prescribe the treatment. We cannot predict whether physicians, physicians' organizations, hospitals, other healthcare providers, government agencies or private insurers will determine that any Product Candidate is safe, therapeutically effective and cost effective as compared with competing treatments. If Product Candidates do not achieve adequate levels of acceptance, we may not generate significant product revenue, and we may not become profitable.

*We face significant competition and there is a possibility that our competitors may achieve regulatory approval for an effective treatment before us or develop therapies that are safer, more advanced or more effective than ours.*

The development and commercialization of new drug products is highly competitive. We face competition with respect to Product Candidates from major pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies world-wide. Potential competitors also include academic institutions, government agencies, and other public and private research organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and commercialization. Even if we are successful in achieving regulatory approval to commercialize a product candidate ahead of our competitors, our future pharmaceutical products may face direct competition from generic and other follow-on drug products. See "*-If approved, our Product Candidates may face competition from generic drugs approved through an abbreviated regulatory pathway*".

Many of our current or potential competitors, either alone or with their strategic partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative transactions with large, established companies. In addition, many universities and private and public research institutes may become active in its target disorder areas. FSD's competitors may succeed in developing, acquiring or licensing on an exclusive basis, technologies and drug products that are more effective or less costly than any of the solutions that FSD is currently developing or that it may develop, which could render its solutions obsolete or non-competitive and may negatively impact its ability to successfully market or commercialize Product Candidates and ultimately harm FSD's financial condition. The availability of our competitors' products could limit the demand, and the price we are able to charge, for any products that we may develop and commercialize.

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*Psychedelic or psychedelic-inspired drugs may never be approved as medicines or other therapeutic applications and violations of applicable laws and regulations could result in repercussions.* 

In the United States, certain psychedelic drugs are classified as Schedule I drugs under the CSA (21 U.S.C. § 811) and the Controlled Substances Import and Export Act and as such, medical and recreational use is illegal under the U.S. federal laws. In Canada, certain substances are classified as controlled substances and are listed on Schedule III of the CDSA and are also listed under the Schedule to Part J to the FDR, which results in very restricted use as substances listed under this Part can generally only be used for research or clinical testing under limited circumstances. There is no guarantee that psychedelic drugs will ever be approved as medicines or other therapeutic applications in any jurisdiction in which the Corporation operates.

The Corporation's programs involving controlled drugs are conducted in strict compliance with the laws and regulations regarding the production, storage and use of such drugs. As such, all facilities engaged with such substances by or on behalf of the Corporation do so under current licenses and permits issued by appropriate governmental agencies. Unforeseen delays to the drug substance and drug product manufacture and supply chain may occur due to delays, errors or other unforeseen problems with the permitting and quota process.

The failure of the Corporation to maintain compliance with applicable federal, state or provincial requirements, or the loss or diversion of controlled substances, can result in significant enforcement actions. The DEA and/or state authorities could seek civil penalties, refuse to renew registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to civil and criminal prosecutions, fines, penalties and forfeitures. Overall, a violation of any laws and regulations in the jurisdictions in which the Corporation operates could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings initiated by either government entities in the jurisdictions in which the Corporation operates, or by private citizens, or through criminal charges. The loss of the necessary licenses, permits or exemptions, including the loss of access to licensed facilities, for use of controlled drugs could have an adverse effect on the Corporation's operations.

*Interim, "top-line," and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data becomes available or as additional analyses are conducted, and as the data are subject to audit and verification procedures, that could result in material changes in the final data.*

From time to time, we may publish interim, "top-line," or preliminary data from our clinical studies. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or "top-line" data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Material adverse changes between preliminary, "top-line," or interim data and final data could significantly harm our business prospects.

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*The loss of single-source suppliers, or their failure to supply us with the drug substance or drug product, could materially and adversely affect our business.*

We rely on single-source suppliers for the supply of drug substances and products. Although we believe that there are alternate sources of supply that could satisfy our clinical and commercial requirements, we cannot assure you that identifying alternate sources and establishing relationships with such sources would not result in significant delay in the development of Product Candidates. Furthermore, under the Epitech License, we must source any PEA used in FSD-PEA that is sold outside of the United States or Canada from Epitech, except in certain limited circumstances described by the agreement.

Our dependence on single-source suppliers exposes us to certain risks, that may materially impact our ability to progress our business, including (i) our suppliers may cease or reduce production or deliveries, raise prices or renegotiate terms; (ii) delays caused by supply issues which may harm our reputation; and (iii) our single-source suppliers or CMOs experiencing significant business challenges, disruption or failures due to issues such as financial difficulties or bankruptcy, issues relating to regulatory or quality compliance issues, or other legal or reputational issues.

Additionally, we may not be able to enter into supply arrangements with alternative suppliers on commercially reasonable terms, or at all. A delay in the development of a Product Candidate or having to enter into a new agreement with a different third party on less favorable terms than we have with our current suppliers could have a material adverse impact upon on our business.

*We expect to rely on third parties to conduct Product Candidate drug trials and aspects of our research and preclinical testing.*

We currently rely and expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct some aspects of research and preclinical testing and clinical trials. Any of these third parties may terminate their engagements with us or be unable to fulfill their contractual obligations. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties on commercially reasonable terms, or at all. If we need to enter into alternative arrangements, it would delay Product Candidate development activities.

Our reliance on these third parties for research and development activities reduces control over these activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that Product Candidate drug trials are each conducted in accordance with the general investigational plan and protocols for each trial and applicable legal, regulatory, and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. In addition, the FDA, Health Canada and other comparable regulatory authorities require compliance with good clinical practices for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible, reproducible and accurate and that the rights, integrity, and confidentiality of trial participants are protected. Regulatory authorities enforce these good clinical practices through periodic inspections of trial sponsors, principal investigators, and trial sites. If we or any of these third parties fail to comply with applicable good clinical practice regulations, some or all of the clinical data generated in any Product Candidate drug trials may be deemed unreliable and the FDA, Health Canada or other comparable regulatory authorities may reject our marketing applications or require us to perform additional nonclinical or clinical trials or to enroll additional patients before approving our marketing applications. We cannot be certain that, upon inspection, such regulatory authorities will determine that any Product Candidate drug trial complies with the good clinical practice regulations. For any violations of laws and regulations during the conduct of clinical trials, we could be subject to untitled and warning letters or enforcement action that may include civil penalties and criminal prosecution. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database within certain timeframes. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions. See "*Item 3.D. Risk Factors - Risks Related to Product Candidates - Psychedelic or psychedelic-inspired drugs may never be approved as medicines or other therapeutic applications and violations of applicable laws and regulations could result in repercussions*" above.

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If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for a Product Candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize Product Candidates. Our failure or the failure of these third parties to comply applicable regulatory requirements or our stated protocols could also subject us to enforcement action.

We also expect to rely on other third parties to store and distribute drug supplies for Product Candidate drug trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of any product candidates we may develop or commercialization of our medicines or other therapeutic applications, producing additional losses and depriving us of potential product revenue.

*There may be unfavourable publicity or consumer perception towards the Product Candidates or psychedelics.*

The success of the Corporation may be significantly influenced by the public's perception of the Product Candidates, including Lucid-PSYCH, which is a psychedelic-inspired product. There is no guarantee that future scientific research, publicity, regulations, medical opinion, and public opinion relating to the Product Candidates will be favourable. Any unfavourable publicity or consumer perception regarding the Product Candidates could have a material adverse effect on the Corporation's operational results, consumer base and financial results.

There may be particular sensitivity regarding publicity and consumer perception surrounding Lucid-PSYCH, which is a psychedelic-inspired product candidate. The psychedelic industry is in its early stages and is constantly evolving, with no guarantee of viability. The market for psychedelic-inspired products is uncertain, and any adverse or negative publicity, scientific research, limiting regulations, medical opinion and public opinion relating to the consumption of psychedelic substances may have a material adverse effect on the Corporation's operational results, consumer base and financial results. While the Corporation is engaged in development of a psychedelic-inspired product candidate, and does not advocate for the legalization of any psychedelic substances or deal with psychedelic substances except within laboratory and clinical trial settings conducted within approved regulatory frameworks, any unfavourable publicity or consumer perception regarding psychedelic substances (in addition to psychedelic-inspired products) could also have a material adverse effect on the Corporation's operational results, consumer base and financial results.

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***Risks Related to the Pharmaceutical Business***

*Results of earlier studies or clinical trials may not be predictive of future clinical trial results and may not justify proceeding to advanced clinical trials or an application for regulatory approval.*

The results of nonclinical and preclinical studies and clinical trials may not be predictive of the results of later-stage clinical trials, and interim results of a clinical trial do not necessarily predict final results. The results of preclinical studies and clinical trials in one set of patients or disease indications, or from preclinical studies or clinical trials that we did not lead, may not be predictive of those obtained in another. In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other clinical trial protocols and the rate of dropout among clinical trial participants. In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval.

Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through nonclinical studies and initial clinical trials. For example, many product candidates that initially show promise in early-stage testing may later be found to cause side effects that prevent further development. As we work to advance the Product Candidates and to identify new product candidates, we cannot be certain that later testing or trials of product candidates that initially showed promise in early testing will not be found to cause similar or different unacceptable side effects that prevent their further development. It is possible that as we test our Product Candidates in larger, longer and more extensive clinical trials, or as the use of these Product Candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by subjects. A number of companies in the pharmaceutical and biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding supportive results in earlier studies, and we cannot be certain that we will not face similar setbacks. Even if early-stage clinical trials are successful, we may need to conduct additional clinical trials of a Product Candidate in additional patient populations or under different treatment conditions before we are able to seek approvals from the FDA, Health Canada and regulatory authorities outside the United States and Canada to market and sell such Product Candidate. Our failure to obtain marketing approval for any Product Candidate would substantially harm our business, results of operations, financial condition and prospects.

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*Product Candidates could be associated with side effects which could delay or halt clinical development, prevent regulatory approval or result in other significant negative consequences.*

As is the case with pharmaceuticals generally, it is likely that there may be side effects associated with our Product Candidates.

If our Product Candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the Product Candidate if approved. We may also be required to modify or terminate our study plans based on findings in our preclinical studies or clinical trials.

Additionally, adverse developments in clinical trials of pharmaceutical and biopharmaceutical products conducted by others may cause the FDA, Health Canada or other regulatory oversight bodies to suspend or terminate our clinical trials or to change the requirements for approval of any of our Product Candidates.

Additionally, if we or others later identify undesirable side effects caused by our Product Candidates once approved, several potentially significant negative consequences could result, including: (i) regulatory authorities may suspend or withdraw approvals of such product candidate; (ii) we may be required to change the way a product candidate is administered or conduct additional clinical trials; (iii) we may be required to include additional warnings on a product candidate's labeling or the product candidate may be subject to restrictive distribution requirements; (iv) we could be sued and held liable for harm caused to patients; and (v) our reputation may suffer. Any of these occurrences may harm our business, financial condition and prospects significantly.

In addition to side effects caused by the product candidate, the administration process or related procedures also can cause adverse side effects. If any such adverse events occur, our clinical trials could be suspended or terminated. If we are unable to demonstrate that any adverse events were caused by the administration process or related procedures, the FDA, Health Canada or other regulatory authorities could order us to cease further development of, or deny approval of, a product candidate for any or all targeted indications. Even if we can demonstrate that all future serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are required, to not initiate, delay, suspend or terminate any future clinical trial of any of our Product Candidates, the commercial prospects of such Product Candidates may be harmed and our ability to generate product revenues from any of these Product Candidates may be delayed or eliminated. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly.

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*The Corporation may not be successful in its efforts to identify, license or discover additional product candidates.*

Although a substantial amount of the Corporation's effort will focus on the continued research and pre-clinical and clinical testing, potential approval and commercialization of its Product Candidates, the success of its business also depends in part upon its ability to identify, license or discover additional product candidates. The Corporation's research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons, including but not limited to the following: (i) the Corporation's research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates; (ii) the Corporation may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates; (iii) the Corporation's product candidates may not succeed in pre-clinical or clinical testing; (iv) the Corporation's product candidates may be shown to have harmful side effects or may have other characteristics that may make the product candidates unmarketable or unlikely to receive marketing approval; (v) competitors may develop alternatives that render the Corporation's product candidates obsolete or less attractive; (vi) product candidates the Corporation develops may be covered by third parties' patents or other exclusive rights; (vii) the market for a product candidate may change during the Corporation's program such that the further development of a product candidate may become undesirable; (viii) a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and (ix) a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

If any of these events occurs, the Corporation may be forced to abandon its development efforts to identify, license or discover additional product candidates, which could have a material adverse effect on its business, prospects, results of operations and financial condition and could potentially cause the Corporation to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources. The Corporation may focus its efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

*The FDA, Health Canada or other comparable regulatory authorities may not accept data from trials conducted in foreign jurisdictions.*

Obtaining regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional or different administrative review periods, including additional preclinical studies or clinical trials, as data from clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States and Canada, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.

Non-U.S. and non-Canadian regulatory approval processes may include all of the risks associated with obtaining FDA or Health Canada approval, as well as additional risks. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approval in international markets is delayed, our target market will be reduced and our ability to realize the full market potential of our Product Candidates will be harmed. In addition, if we conduct trials outside of the U.S. or Canada, the FDA or Health Canada, as applicable, may not accept the data from such trials and may require additional trials, which could be costly and time-consuming and delay aspects of our business plan.

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*We could experience manufacturing problems that result in delays in our development or commercialization programs or otherwise harm our business.*

Our CMOs must employ multiple steps to control the manufacturing process to assure that the process is reproducible and the Product Candidate is made strictly and consistently in compliance with the process. Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory to conduct clinical trials or supply commercial markets. Furthermore, all entities involved in the preparation of product candidates for clinical trials or commercial sale, including our existing CMOs for all of our Product Candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in certain clinical trials must be manufactured in accordance with GMP, or similar regulatory requirements outside the United States and Canada. Our failure, or the failure of third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, suspension of production, seizures or recalls of Product Candidates or marketed drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect clinical or commercial supplies of our Product Candidates and increase our costs. Consequently, there may be a material adverse effect on the business, results of operations, financial condition and prospects of the Corporation.

In addition, the FDA, Health Canada and other regulatory authorities may require us to submit samples of any lot of any approved Product Candidate together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA, Health Canada or other regulatory authorities may require that we not distribute a lot until the agency authorizes its release. Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or product recalls could cause us to delay product launches or clinical trials, which could be costly to us and otherwise harm our business, results of operations, financial condition and prospects.

Our CMOs also may encounter problems hiring and retaining the experienced scientific, quality assurance, quality-control and manufacturing personnel needed to operate our manufacturing processes, which could result in delays in production or difficulties in maintaining compliance with applicable regulatory requirements.

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Any problems in our CMOs' manufacturing process or facilities could result in delays or cancellations of planned clinical trials, failures in satisfying ongoing regulatory obligations (before and after regulatory approval for a Product Candidate is obtained) and increased costs. Such problems could also make us a less attractive collaborator for potential partners, including larger biotechnology companies and academic research institutions, which could limit access to additional attractive development programs. Problems in our manufacturing process could restrict our ability to meet potential future market demand for products.

*The Product Candidates, if approved, will be subject to extensive post-approval regulation.*

Once a product is approved, numerous post-approval requirements apply. Among other things, the holder of an approved NDA is subject to periodic and other FDA monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of the failure of a product to meet the specifications in the NDA. Application holders must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process. Application holders must also submit advertising and other promotional material to the FDA and report on ongoing clinical studies.

Depending on the circumstances, failure to meet these post-approval requirements can result in criminal prosecution, fines, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or refusal to allow us to enter into supply contracts, including government contracts. In addition, even if we comply with FDA and other requirements, new information regarding the safety or effectiveness of a product could lead the FDA to modify or withdraw product approval. Similar laws in other jurisdictions would also apply.

*The Product Candidates, if approved and commercialized, may be subject to recalls for a variety of reasons, which could require the Corporation to expend significant management and capital resources.*

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of the Corporation's approved and commercialized Product Candidates are recalled due to an alleged product defect or for any other reason, the Corporation could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. The Corporation may lose a significant amount of sales made on such products and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Although the Corporation has detailed procedures in place for testing its products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if one of the Corporation's significant brands were subject to recall, the image of that brand and the Corporation could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for the Corporation's products and could have a material adverse effect on the results of the operations and financial condition of the Corporation. Additionally, product recalls may lead to increased scrutiny of the Corporation's operations by the FDA, Health Canada or other regulatory agencies, requiring further management attention and potential legal fees and other expenses.

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*If approved, our Product Candidates may face competition from generic drugs approved through an abbreviated regulatory pathway*

The *Drug Price Competition and Patent Term Restoration Act of 1984*, otherwise known as the *Hatch-Waxman Amendments* to the FDC Act, authorized the FDA to approve generic drugs that are the same as drugs previously approved for marketing under the NDA provisions of the statute pursuant to an abbreviated new drug application ("**ANDA**"). An ANDA relies on the preclinical and clinical testing conducted for a previously approved reference listed drug ("**RLD**"), and must demonstrate to the FDA that the generic drug product is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug and also that it is "bioequivalent" to the RLD. The FDA is prohibited by statute from approving an ANDA when certain marketing or data exclusivity protections apply to the RLD. If any such competitor or third party is able to demonstrate bioequivalence without infringing our patents, then this competitor or third party may then be able to introduce a competing generic product onto the market. The Hatch-Waxman Amendments also enacted the 505(b)(2) NDA pathway, which permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. A Section 505(b)(2) applicant may eliminate the need to conduct certain preclinical or clinical studies, if it can establish that reliance on studies conducted for a previously approved product is scientifically appropriate.

Market exclusivity provisions authorized under the FDC Act can delay the submission or the approval of certain marketing applications. The FDC Act provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not approve or even accept for review an ANDA or an NDA submitted under Section 505(b)(2) by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.

The FDC Act also provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to any preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

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If competitors are able to obtain marketing approval for generic drugs referencing our products, our products may become subject to competition from such generic drugs. The availability of competitive generic products could limit the demand, and the price we are able to charge, for any products that we may develop and commercialize.

*Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidates that we may develop.*

We face an inherent risk of product liability exposure related to the testing of product candidates in human clinical trials and will face an even greater risk if we commercially sell any medicines or other therapeutic applications that we may develop. If we cannot successfully defend ourselves against claims that our Product Candidates, medicines or other therapeutic applications caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in: (i) decreased demand for any product candidates, medicines or other therapeutic applications that we may develop; (ii) injury to our reputation and significant negative media attention; (iii) withdrawal of clinical trial participants; (iv) significant costs to defend the related litigation; (v) substantial monetary awards to trial participants or patients; (vi) loss of revenue; and (vii) the inability to commercialize our Product Candidates.

Although we intend to maintain product liability insurance, including coverage for clinical trials that we plan to sponsor, it may not be adequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage as we commence additional clinical trials and if we successfully commercialize any Product Candidates. The market for insurance coverage is increasingly expensive, and the costs of insurance coverage will increase as our clinical programs increase in size. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

*Our employees, directors, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.*

We are exposed to the risk of fraud, misconduct or other illegal activity by our employees, directors, independent contractors, consultants, commercial partners and vendors. Misconduct by these parties could include intentional, reckless and negligent conduct that fails to: (i) comply with the requirements of the FDA, Health Canada and other comparable regulatory authorities; (ii) provide true, complete and accurate information to the FDA, Health Canada and other comparable regulatory authorities; (iii) comply with manufacturing standards we have established; (iv) comply with healthcare fraud and abuse laws and similar other fraudulent misconduct laws in the United States or Canada; or (v) report financial information or data accurately or to disclose unauthorized activities appropriately. If we obtain approval of our Product Candidates from the FDA, Health Canada or other comparable regulatory authorities and begin commercializing those products in the United States, Canada or other countries, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. In particular, research, sales, marketing, education and other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, educating, marketing and promotion, sales and commission, certain customer incentive programs and other business arrangements generally. Activities subject to these laws and regulations also involve the improper use of information obtained in the course of patient recruitment for clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. The Board has adopted a Code of Conduct and Ethics which provides guidelines surrounding, among other items, compliance with applicable laws, conflicts of interest, certain opportunities, confidentiality and disclosure, employment practices, and use of company property and resources. However, it is not always possible to identify and deter misconduct by employees, directors and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws and regulations. If any such actions or lawsuits are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions or lawsuits could have a significant impact on our business, including the imposition of significant fines or other sanctions.

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*Regulatory or political change with respect to psychedelic-inspired drugs could occur.*

The success of the business strategy of the Corporation depends, in part, on the legality of the use of psychedelic-inspired drugs for the treatment of neuropsychiatric disorders and the acceptance of such use in the medical community. The political environment surrounding the psychedelics industry in general can be volatile and a shift in the regulatory or political realm could occur and have a drastic impact on the use of psychedelics as a whole, adversely impacting the Corporation's ability to successfully operate or grow its business. Furthermore, failure to follow applicable regulatory requirements will have a materially negative impact on the business of the Corporation.

*We may be unable to establish sufficient sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates in a compliant manner even if regulatory approvals are obtained.*

We do not have a sales or marketing infrastructure and have little experience in the sale, marketing, or distribution of pharmaceutical products. To achieve commercial success for any approved product for which we retain sales and marketing responsibilities, we must either develop a sales and marketing organization or outsource these functions to third parties. In the future, we may choose to build a focused sales, marketing, and commercial support infrastructure to market and sell our Product Candidates, if and when they are approved. We may also elect to enter into collaborations or strategic partnerships with third parties to engage in commercialization activities with respect to selected Product Candidates, indications or geographic territories, including territories outside the United States and Canada, although there is no guarantee we will be able to enter into these arrangements even if the intent is to do so.

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Whether we develop an in-house sales and marketing infrastructure or outsource any functions to third parties, we must ensure that our promotional materials, training materials, and other activities surrounding the sales and promotion of our product candidates comply with FDA regulations and other applicable laws and regulations governing the promotion of our products in the U.S. and other jurisdictions. Medical products may be marketed only for the indications for which they are approved. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

If the FDA or the competent authorities in other jurisdictions determine that our promotional materials or training constitutes promotion of an unapproved use, they could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled or warning letter, an injunction, seizure, civil fines and criminal penalties. It is also possible that federal, state or national enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged and the commercialization of our products could be impaired.

*Our Product Candidates may become subject to unfavorable pricing regulations, third-party coverage and reimbursement practices, or healthcare reform initiatives, which would harm our business.*

The regulations that govern marketing approvals, pricing, coverage, and reimbursement for new drugs vary widely from country to country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more Product Candidates, even if any Product Candidates we may develop obtain marketing approval.

Our ability to successfully commercialize our Product Candidates also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations. If coverage and adequate reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our Product Candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medicines, but monitor and control corporation profits. Additional price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our Product Candidates.

***Risks Related to our Intellectual Property***

*We may be unable to obtain and maintain sufficient intellectual property protection for our products.*

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As is the case with pharmaceutical companies and other biotechnology companies, our success depends in large part on our to obtain and maintain protection of the intellectual property we may own solely and jointly with others, particularly patents, in the United States, Canada and other countries with respect to our Product Candidates and technology. We seek to protect our proprietary position by filing patent applications in the United States, Canada and abroad related to the Product Candidates or other product candidates that we may identify.

Obtaining and enforcing pharmaceutical and biopharmaceutical patents is costly, time consuming and complex, and we or our licensors may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner, if at all. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents licensed to third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual questions and has in recent years been the subject of much litigation. In addition, the laws of certain countries may not protect our rights to the same extent as the laws of other countries, including the United States and Canada, and vice versa. Further, we may not be aware of all third-party intellectual property rights potentially relating to our Product Candidates. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States, Canada and other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore, we cannot know with certainty whether our licensors were the first to make the inventions claimed in our licensed patents, or that our licensors were the first to file for patent protection of such inventions. Furthermore, the scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent's prosecution history and can involve other factors such as expert opinion. Our analysis of these issues, including interpreting the relevance or the scope of claims in a patent or a pending application, determining applicability of such claims to our proprietary technologies or Product Candidates, predicting whether a third party's pending patent application will issue with claims of relevant scope, and determining the expiration date of any patent in the United States, Canada or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our Product Candidates. We do not always conduct independent reviews of pending patent applications of and patents issued to third parties. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights, including licensed patent rights, are highly uncertain. Our future patent applications may not result in patents being issued that protect our Product Candidates, in whole or in part, or which effectively prevent others from commercializing competitive product candidates. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our licensed patents by developing similar or alternative product candidates in a non-infringing manner.

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Our licensors' ability to enforce patent rights also depends on our licensors' ability to detect infringement. It may be difficult to detect infringers who do not advertise the components or methods that are used in connection with their products and services. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor's or potential competitor's product or service. We, along with our licensors, may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful. If we initiate lawsuits to protect or enforce our licensed patents, or litigate against third-party claims, such proceedings would be expensive and would divert the attention of our management and technical personnel. Such proceedings could also provoke third parties to assert claims against us, including that some or all of the claims in one or more of our or our licensed patents are invalid or otherwise unenforceable.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, re-examination, inter partes review, post-grant review or interference proceedings challenging our or our licensors' patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our licensed patents, allow third parties to commercialize our Product Candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize drugs without infringing third- party patent rights. In addition, if the breadth or strength of protection provided by our licensed patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our licensed patents may be challenged in the courts or patent offices in the United States, Canada and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our licensors' abilities to stop others from using or commercializing similar or identical product candidates to ours, or limit the duration of the patent protection of our Product Candidates.

Filing, prosecuting and defending the licensed patents on our Product Candidates in all countries throughout the world would be prohibitively expensive. Additionally, the laws of some other countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we and our licensors may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained licensed patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the U.S. or Canada. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio, including licensed patents, may not provide us with sufficient rights to exclude others from commercializing drugs similar or identical to ours.

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*Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.*

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. However, our research, development and commercialization activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties. There is a substantial amount of litigation, both within and outside the U.S. and Canada, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter parties re-examination proceedings. Numerous U.S. and international issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our Product Candidates may be subject to claims of infringement of the patent rights of third parties.

Other third parties may assert that we are employing their proprietary technology without authorization. There may be other third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of the Product Candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that the Product Candidates or other product candidates that we may identify may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of the Product Candidates or other product candidates that we may identify, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire.

Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all, or it may be non-exclusive, which could result in our competitors gaining access to the same intellectual property.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize the Product Candidates or other product candidates that we may identify. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing Product Candidates or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

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Parties making claims against us, may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have material adverse effect on ability to raise additional funds or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.

*If our licensors are not able to obtain patent term extension or non-patent exclusivity in the United States under the Hatch-Waxman Act and in other countries under similar legislation, thereby potentially extending the marketing exclusivity term of our product candidates, our business may be materially harmed.*

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional or international patent application filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited.

Depending upon the timing, duration and specifics of FDA marketing approval of our Product Candidates, one of the U.S. patents covering each of such Product Candidates or the use thereof may be eligible for up to five years of patent term extension under the *Hatch-Waxman Act*. The *Hatch-Waxman Act* allows a maximum of one patent to be extended per FDA approved product as compensation for the patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended.

Patent term extension also may be available in certain other countries upon regulatory approval of our Product Candidates. Nevertheless, our licensors may not be granted patent term extension either in the United States, Canada or in any other country because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the term of extension, as well as the scope of patent protection during any such extension, afforded by the governmental authority could be less than requested.

If our licensors are unable to obtain patent term extension or restoration, or the term of any such extension is less than we request, the period during which we will have the right to exclusively market our product may be shortened and our competitors may obtain approval of competing products following the patent expiration sooner, and our revenue could be reduced, possibly materially.

It is possible that our licensors will not obtain patent term extension under the Hatch-Waxman Act for a U.S. patent covering a Product Candidate even where that patent is eligible for patent term extension, or if we obtain such an extension, it may be for a shorter period than we had sought. Further, for certain of our licensed patents, we do not have the right to control prosecution, including filing with the USPTO, a petition for patent term extension under the Hatch-Waxman Act. Thus, if one of our licensed patents is eligible for patent term extension under the Hatch-Waxman Act, we may not be able to control whether a petition to obtain a patent term extension is filed, or obtained, from the USPTO.

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*If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed.*

We seek to protect our confidential proprietary information, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and collaborators. These agreements are designed to protect our proprietary information. However, we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. For example, any of these parties may breach the agreements and disclose proprietary information, including trade secrets, and we may not be able to obtain adequate remedies for such breaches. We also seek to preserve the integrity and confidentiality of our confidential proprietary information by maintaining physical security of our premises and physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. If any of our confidential proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our Product Candidates that we consider proprietary. We may not be able to obtain adequate remedies in the event of such unauthorized use. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts are less willing or unwilling to protect trade secrets. Trade secrets will also over time be disseminated within the industry through independent development, the publication of journal articles and the movement of personnel skilled in the art from corporation to corporation or academic to industry scientific positions. Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.

In addition, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. Despite employing the contractual and other security precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. If any of these events occurs or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced and our competitive position, business, results of operations, financial condition and prospects would be harmed.

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*If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.*

Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names. Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our competitive position, business, results of operations, financial condition and prospects.

*We may be subject to claims challenging the inventorship of our patents and other intellectual property.*

Our agreements with employees and our personnel policies provide that any inventions conceived by an individual in the course of rendering services to us shall be our exclusive property. Although our policy is to have all such individuals complete these agreements, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. The assignment of intellectual property may not be automatic upon the creation of an invention and despite such agreement, such inventions may become assigned to third parties. In the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information.

We or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest in our owned or licensed patents, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we or our licensors may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our Product Candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or our licensors' ownership of our owned or licensed patents, trade secrets or other intellectual property. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our Product Candidates. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

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Any of the foregoing could have a material adverse effect on our competitive position, business, results of operations, financial condition and prospects.

*We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.*

As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee's former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

***General Corporate Risks***

*Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effect of the COVID-19 pandemic, political developments, geopolitical unrest or other conflicts or natural disasters in foreign nations, including the ongoing conflict between Russia and Ukraine, political developments in Hong Kong and Taiwan, and inflationary pressures may alter the ways in which we conduct our business operations and manage our financial capacities.*

To varying degrees, the ways in which we conduct our business operations and manage our financial capacities are influenced by macroeconomic conditions that affect companies directly involved in or providing services related to the drug and biological product development. For example, real GDP growth, business and investor confidence, the COVID-19 pandemic, inflation, employment levels, oil prices, interest rates, tax rates, availability of consumer and business financing, housing market conditions, foreign currency exchange rate fluctuations, costs for items such as fuel and food and other macroeconomic trends can adversely affect not only our decisions and ability to engage in research and development and clinical trials, but also those of our management, employees, third-party contractors, manufacturers and suppliers, competitors, stockholders and regulatory authorities. The ongoing military conflict between Russia and Ukraine and other geopolitical and social unrest has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest, natural disasters or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs. In addition, higher inflation and macro turmoil and uncertainty could also adversely affect our customers, which could reduce demand for our products.

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*Economic uncertainty may adversely affect our access to capital, cost of capital and ability to execute our business plan as scheduled.* 

Generally, worldwide economic conditions remain uncertain. Access to capital markets is critical to our ability to operate. Traditionally, biotechnology companies have funded their research and development expenditures through raising capital in the equity markets. Declines and uncertainties in these markets in the past have severely restricted raising new capital and have affected companies' ability to continue to expand or fund existing research and development efforts. We require significant capital for research and development for our product candidates and clinical trials. The general economic and capital market conditions, both in the U.S. and worldwide, have been volatile and at times have adversely affected our access to capital and increased the cost of capital. For example, the ongoing military conflict between Russia and Ukraine, the possibility of a wider European or global conflict, global sanctions imposed in response thereto and the possibility of a global energy crisis resulting therefrom, has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely. If global capital markets deteriorate, including as a result of political unrest or war, it may make any necessary financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. If economic conditions become worse, our future cost of equity or debt capital and access to the capital markets could be adversely affected. If we are unable to access the capital markets on favorable terms, our ability to execute our business plan as scheduled would be compromised. Moreover, we rely and intend to rely on third parties, including clinical research organizations, contract manufacturing organizations and other important vendors and consultants. Global economic conditions may result in a disruption or delay in the performance of our third-party contractors and suppliers. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.

*The Corporation's limited operating history makes it difficult to evaluate its current business and future prospects and the Corporation may never be able to generate sufficient revenue to be profitable.*

The Corporation's limited operating history makes it difficult to evaluate its current business and future prospectus. The Corporation has never generated any material amount of revenue and has not generated any revenue from its current business. We have incurred significant losses since our inception, and we anticipate that we will continue to incur significant losses and will not be profitable or generate positive cash flow from operating activities for the foreseeable future. In addition, the Corporation expects to continue to increase operating expenses as it implements initiatives to continue to grow its business and pursue the commercialization of pharmaceutical products, including its Product Candidates. If the Corporation does not generate sufficient revenue to offset these expected increases in costs and operating expenses, it will not be profitable. The Corporation cannot predict when it will generate any revenue, or when or if it will become profitable or generate positive cash flow from operating activities, if at all.

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In general, the Corporation is subject to many of the risks common to early-stage enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial, and other resources and lack of revenues. There is no assurance that the Corporation will be successful in achieving a return on Shareholders' investment and the likelihood of success must be considered in light of the early stage of our operations.

Future transfers by holders of Class A Shares to arm's length parties or other than to permitted holders will generally result in those shares converting to Class B Shares, which will have the effect, over time, of increasing the relative voting power of those holders of Class A Shares who retain their shares. Such holders could, in the future, control a significant percentage of the combined voting power of Class A Shares and Class B Shares.

Each of the Corporation's directors and officers owes a fiduciary duty to the Corporation and must act honestly and in good faith with a view to the best interests of Corporation. However, any director and/or officer that is a Shareholder, even a controlling Shareholder, is entitled to vote its shares in its own interests, which may not always be in the interests of the Shareholders generally. The inability of the Class B Shares to control the matters affecting the Corporation, combined with the ability of holders of Class A Shares to control matters affecting the Corporation and to take actions that the holders of Class B Shares may not view as beneficial, may adversely affect the market price of the Class B Shares.

*Failure to comply with laws and regulations could subject the Corporation to regulatory or agency proceedings which could divert management's attention and resources and result in substantial penalties.*

The Corporation's business requires compliance with many laws and regulations. For example, our operations are subject to environmental and safety laws and regulations concerning, among other things, zoning, emissions and discharges to water, air and land, the handling and disposal of hazardous and non- hazardous materials and wastes, and employee health and safety. In particular, the Corporation may face liabilities arising from environmental issues related to the former use of the Facility and the former owner of the Facility has no obligation to indemnify the Corporation in respect of any such liabilities. Failure to comply with these laws and regulations could subject the Corporation to regulatory or agency proceedings or investigations and could also lead to damage awards, fines and penalties. The Corporation may become involved in a number of government or agency proceedings, investigations and audits. The outcome of any regulatory or agency proceedings, investigations, audits, and other contingencies could harm the Corporation's reputation, require the Corporation to take, or refrain from taking, actions that could harm its operations or require the Corporation to pay substantial amounts of money, harming its financial condition. There can be no assurance that any pending or future regulatory or agency proceedings, investigations and audits will not result in substantial costs or a diversion of management's attention and resources or have a material adverse impact on the Corporation's business, financial condition and results of operation.

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The Corporation currently has international operations and plans to further expand such operations in the future. As a result, our operations, and any expansion thereto, will require us to comply with the tax laws and regulations of multiple jurisdictions, which may vary substantially. Complying with the tax laws of these jurisdictions can be time consuming and expensive and could potentially subject us to penalties and fees in the future if we were to fail to comply.

Furthermore, compliance with U.S., Canadian and international data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure to comply with these laws and regulations could result in government enforcement actions (which could include civil, criminal and administrative penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business. Moreover, clinical trial subjects, employees and other individuals about whom we or our potential collaborators obtain personal information, as well as the providers who share this information with us, may limit our ability to collect, use and disclose the information. Claims that we have violated individuals' privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

Additionally, changes to such laws, regulations and guidelines, including changes to accounting requirements and government taxes and levies, may materially and adversely affect the Corporation's businesses, financial condition and results of operations.

*Any significant interruption in the supply chain for key inputs could materially impact the Corporation's business.*

Our business is dependent on a number of key inputs and their related costs including raw materials and supplies, as well as electricity, water and other local utilities. The ability of the Corporation to research and develop pharmaceutical products is dependent upon, among other things, sufficient access to timely delivery of equipment, parts and components at reasonable costs. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact our business, financial condition and operating results. Any inability to secure required supplies and services or to do so on appropriate terms could have a material adverse impact on our business, financial condition and operating results.

*The Corporation may be unable to raise the capital necessary for it to execute its strategy on favorable terms or at all.*

There is no guarantee that the Corporation will be able to execute on its strategy. Developing biopharmaceutical products is expensive and time-consuming, and we expect to require substantial additional capital to conduct research, preclinical testing and human studies, to potentially establish pilot scale and commercial scale manufacturing processes and facilities, and to establish and develop quality control, regulatory, marketing, sales and administrative capabilities to support our existing programs and pursue potential additional programs. We are or may in the future also be responsible for the payments to third parties of expenses that may include milestone payments, license maintenance fees and royalties, including in the case of certain of our agreements with academic institutions or other companies from whom intellectual property rights underlying their respective programs have been licensed or acquired. Because the outcome of any preclinical or clinical development and regulatory approval process is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of any product candidates we may identify.

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Our future funding requirements for the development of pharmaceutical products will depend on many factors, including, but not limited to: (i) the time and cost necessary to complete planned clinical trials to pursue regulatory approvals for our Product Candidates, and to conduct post-marketing studies that could be required by regulatory authorities; (ii) the progress, timing, scope and costs of our nonclinical studies, preclinical studies, clinical trials and other related activities, including the ability to enroll patients in a timely manner for planned clinical trials described in this Annual Report and potential future clinical trials; (iii) the costs of obtaining clinical and commercial supplies of raw materials and drug products for our Product Candidates; (iv) our ability to successfully identify and negotiate acceptable terms for third-party supply and contract manufacturing agreements with CMOs; (v) our ability to successfully commercialize the Product Candidates; (vi) the manufacturing, selling and marketing costs associated with our Product Candidates, including the cost and timing of expanding our internal sales and marketing capabilities or entering into strategic collaborations with third parties to leverage or access these capabilities; (vii) the amount and timing of sales and other revenues from our Product Candidates, if any are approved, including the sales price and the availability of adequate third-party reimbursement; (viii) the cash requirements of any future acquisitions or discovery of product candidates; (ix) the time and cost necessary to respond to technological, market, regulatory or political developments; (x) the costs of acquiring, licensing or investing in intellectual property rights (including the protection of such rights), products, product candidates and businesses; and (xi) our ability to attract, hire and retain qualified personnel.

Additional funds may not be available when we need them, on terms that are acceptable, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit or terminate one or more research or development programs or the commercialization of any Product Candidates or be unable to expand operations or otherwise capitalize on business opportunities, as desired, which could materially affect our business, results of operations, financial condition and prospects.

In addition, the continued development of the Corporation's pharmaceutical operations will require significant additional financing over several years. The failure to raise such capital could result in the delay or indefinite postponement of current business strategy or the Corporation ceasing to carry on business. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to the Corporation, at times for reasons beyond the Corporation's control. For example, economic downturns or uncertain market conditions, whether affecting the economy in general or the pharmaceutical industry in particular, could adversely impact the Corporation's ability to raise capital through equity or debt financing. In addition, any further issuances of equity securities could have a significant dilutive effect on the holders of Class B Shares.

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In addition, from time to time, the Corporation may enter into transactions to acquire assets or the shares of other companies. These transactions may be financed wholly or partially with debt, which may temporarily increase the Corporation's debt levels above industry standards. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Corporation to obtain additional capital and to pursue business opportunities, including potential acquisitions.

*Future sales or issuances of equity securities and the conversion of outstanding securities to Class B Shares could decrease the value of the Class B Shares and dilute investors' voting power.*

The Corporation may sell additional equity securities in future offerings, including through the sale of securities convertible into equity securities, to finance operations, acquisitions or projects, and issue additional Class B Shares, which may result in dilution.

The Board has the authority to authorize certain offers and sales of additional securities without the vote of, or prior notice to, shareholders. Based on the need for additional capital to fund expected expenditures and growth, it is likely that the Corporation will issue additional securities to provide such capital. Such additional issuances may involve the issuance of a significant number of Class B Shares.

Sales of substantial amounts of the Corporation's securities, or the availability of such securities for sale, as well as the issuance of substantial amounts of the Class B Shares upon conversion of outstanding convertible, exercisable or exchangeable securities, could adversely affect the prevailing market prices for the Corporation's securities and dilute investors' earnings per share. A decline in the market prices of the Corporation's securities could impair its ability to raise additional capital through the sale of securities should the Corporation desire to do so.

*The success of the Corporation is dependent upon its senior management and key personnel and ability to hire skilled personnel.*

Another risk associated with the production and sale of pharmaceutical products is the loss of important personnel. The success of the Corporation will be dependent upon the ability, expertise, judgment, discretion and good faith of its senior management and key personnel. While employment agreements are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. As a consequence of the events leading up to and following the 2021 Annual and Special Meeting, the Corporation experienced significant turnover of its senior management. While, as of the date of this Annual Report, the Company does not anticipate any senior management turnover in the near term, there is no guarantee that the Corporation will be able to retain its senior management going forward. If key personnel depart, including Anthony Durkacz, Zeeshan Saeed, Nathan Coyle, Dr. Lakshmi Kotra or Donal Carroll, the Corporation may not be able to find appropriate replacements on a timely basis.

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Furthermore, each of our executive officers may terminate their employment with us at any time. We do not maintain "key person" insurance for any of our executives or employees. Recruiting and retaining qualified scientific and clinical personnel and, if any of our Product Candidates are commercialized, sales and marketing personnel, will be critical to our success. The loss of the services of key personnel as well as the diversion of management's and the Board's attention to replace the services of such individuals, could have a material adverse effect on the Corporation's business, operating results or financial condition.

In addition, the Corporation's future success depends on its continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Due to the specialized scientific and managerial nature of our business, the Corporation relies heavily on its ability to attract and retain qualified scientific, technical and managerial personnel. In particular, specialized knowledge with respect to research and clinical development is important to the pharmaceutical industry. Qualified individuals are in high demand, and the Corporation may incur significant costs to attract and retain them, if it is able to hire them at all. If we are unable to identify, attract, hire and retain qualified personnel in the future, such inability could have a material adverse effect on our business, operating results and financial condition.

*The Corporation's dual class structure has the effect of concentrating voting control and the ability to influence corporate matters with a limited number of holders of Class A Shares.* 

The Corporation's dual class structure has the effect of concentrating voting control for holders of Class A Shares and the ability to influence corporate matters with those Shareholders. Currently, there are 72 outstanding Class A Shares issued and outstanding. Class A Shares have 276,660 votes per share and Class B Shares have one vote per share. As of March 30, 2023, Shareholders who hold Class A Shares together hold approximately 32.89% of the voting power of the Corporation's outstanding voting shares and therefore have significant influence over management and affairs of the Corporation and over all matters requiring Shareholder approval.

In addition, because of the voting ratio between Class A Shares and Class B Shares, the holders of Class A Shares collectively continue to control a majority of the combined voting power of the voting shares even where the Class A Shares represent a substantially reduced percentage of the total outstanding shares. The different voting rights could diminish the value of the Class B Shares to the extent that investors or any potential future purchasers of the Class B Shares attribute value to the superior voting or other rights of the Class A Shares. Other than as required by applicable law, holders of the Class B Shares will only have a right to vote, as a class, in limited circumstances as described in its constating documents.

The concentrated voting control of holders of Class A Shares limits the ability of holders of Class B Shares to influence corporate matters and all matters requiring Shareholder approval, including the election of directors as well as with respect to decisions regarding amendment of the Corporation's share capital, creating and issuing additional classes of shares, making significant acquisitions, selling significant assets or parts of our business, merging with other companies and undertaking other significant transactions.

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As a result, holders of Class A Shares have the ability to control substantially all matters affecting us and actions may be taken that our holders of Class B Shares may not view as beneficial. The market price of the Class B Shares could be adversely affected due to the significant influence and voting power of the holders of Class A Shares. Additionally, the significant voting interest of holders of Class A Shares may discourage transactions involving a change of control, including transactions in which an investor, as a holder of the Class B Shares, might otherwise receive a premium for the Class B Shares over the then-current market price, or discourage competing proposals if a going private transaction is proposed by one or more holders of Class A Shares.

*The market price of the Class B Shares may be subject to wide price fluctuations.*

The market price of the Class B Shares may be subject to wide fluctuations in response to many factors, including variations in the operating results of the Corporation and its subsidiaries, divergence in financial results from analysts' expectations, changes in earnings estimates by stock market analysts, changes in the business prospects for the Corporation, general economic conditions, legislative changes, and other events and factors outside of the Corporation's control. In addition, stock markets have from time to time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for the Class B Shares.

*There is no assurance of an active or liquid market.*

No assurance can be given that an active or liquid trading market for the Class B Shares will be sustained. If an active or liquid market for the Class B Shares fails to be sustained, the prices at which such securities trade may be adversely affected. Whether or not the Class B Shares will trade at lower prices depends on many factors, including the liquidity of the Class B Shares, prevailing interest rates, the markets for similar securities, general economic conditions and the Corporation's financial condition, historic financial and operating performance and future prospects.

*The Corporation may be unable to manage its growth, including capacity constraints and pressure on its internal systems and controls.*

The Corporation may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of the Corporation to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of the Corporation to deal with this growth may have a material adverse effect on the Corporation's business, results of operations, financial condition and prospects.

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*Management may not be able to successfully implement and maintain adequate internal controls over financial reporting or disclosure controls and procedures.*

Effective internal controls are necessary for the Corporation to provide reliable financial reports and to help prevent fraud. Although the Corporation has undertaken a number of procedures and has implemented a number of safeguards, in each case, in order to help ensure the reliability of its financial reports, including those imposed on the Corporation under applicable securities laws, the Corporation cannot be certain that such measures will ensure that the Corporation will maintain adequate control over financial processes and reporting. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Corporation's results of operations or cause it to fail to meet its reporting obligations.

Effective systems of internal control over financial reporting and disclosure are critical to the operation of a public corporation. However, we do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of such controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected in a timely manner or at all. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results could be materially adversely affected, which could cause investors to lose confidence in us and our reported financial information, which in turn could result in a reduction in the value of the Class B Shares.

*A decline in general economic conditions may impact the viability and success of our mortgage investment activities.* 

FSD Strategic Investments has made investments in loans that are secured by first collateral mortgages on real estate in the Greater Toronto Area. A decline in general economic conditions could adversely impact the ability of borrowers to service their loans and could cause default rates to increase. This could have a material adverse effect on FSD Strategic Investments' financial condition and results of operations.

A decline in property values could adversely affect the value of the security on mortgages held by FSD Strategic Investments, thereby reducing the ability to liquidate properties held by defaulting borrowers at favourable prices.

The profits earned on mortgages depend, in part, on the spread between mortgage rates and capital market funding rates and any fee income derived therefrom. FSD Strategic Investments' mortgage portfolios include assets whose value can fluctuate because of changing interest rates and economic and market conditions. In addition, some of these assets could be difficult to sell at any given time. Changes in interest rates and other market factors such as stock market prices and demographics could affect the preferences of its customers for different types of loan products and adversely impact our profitability. A reduction in positive spreads between mortgage rates and capital market funding rates could have a material adverse effect on FSD Strategic Investments' financial condition and results of operations.

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Investments in mortgages are relatively non-liquid assets. The nature of the assets held by FSD Strategic Investments may inhibit its ability to quickly respond to changes in broader economic or investment conditions. If the value of the properties underlying FSD Strategic Investments' mortgages begin to deteriorate, it will be difficult for FSD Strategic Investments to liquidate certain assets in response to these changes. The liquidity profile of FSD Strategic Investments' mortgages can create challenges for it to manage its risk exposure. Reduced asset liquidity may restrict FSD Strategic Investments' ability to sell assets for cash without taking significant losses, which may result in a material adverse effect on FSD Strategic Investments' financial condition and results of operations.

*Risks related to our status as a foreign private issuer*.**

As a "foreign private issuer" under the rules and regulations of the SEC, we are permitted to, and will, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules, and will follow certain home country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers.

The Corporation is considered a "foreign private issuer" under the Exchange Act and is therefore exempt from certain rules under the Exchange Act. For example, we are not required to file current reports on Form 8-K or quarterly reports on Form 10-Q, we are exempt from the U.S. proxy rules which impose certain disclosure and procedural requirements for U.S. proxy solicitations and we will not be required to file financial statements prepared in accordance with or reconciled to U.S. GAAP so long as our financial statements are prepared in accordance with IFRS as issued by the International Accounting Standards Board. We are not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act. In addition, we are not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. Accordingly, holders of the Corporation's securities may receive less or different information about the Corporation than they may receive with respect to public companies incorporated in the United States.

In addition, as a "foreign private issuer" whose common shares are listed on Nasdaq, we are permitted to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements, including those related to: shareholder approval for certain dilutive events under Nasdaq Marketplace Rule 5635, quorum requirements for shareholder meetings under Nasdaq Marketplace Rule 5620(c), certain independence requirements of certain committees of our Board under Nasdaq Marketplace Rule 5605 and proxy delivery requirements under Nasdaq Marketplace Rule 5620(b). Accordingly, the Corporation has opted to follow certain corporate governance practices required by its home country under the CSE, Canadian federal and provincial corporate and securities laws and the Corporation's Articles, as applicable. See "*Item 16G. Corporate Governance*" for more details related to the differences between our home country requirements and Nasdaq requirements.

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We could lose our status as a "foreign private issuer" under current SEC rules and regulations if more than 50% of our outstanding voting securities become directly or indirectly held of record by U.S. holders and one of the following is true: (i) the majority of our directors or executive officers are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States. If we lose our status as a foreign private issuer in the future, we will no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly financial statements as if we were a company incorporated in the United States (including preparation of financial statements in accordance with U.S. GAAP). If this were to happen, we would likely incur substantial costs in fulfilling these additional regulatory requirements and members of our management would likely have to divert time and resources from other responsibilities to ensuring these additional regulatory requirements are fulfilled.

*There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.*

Our common stock are listed on Nasdaq. There can be no assurance that we will continue to meet Nasdaq's listing standards. On September 27, 2022, we received a letter (the "**Nasdaq Notification Letter**") from the listing qualifications department staff of Nasdaq notifying us that the Corporation is not in compliance with the minimum bid price requirement set forth in Nasdaq's rules for continued listing on the Nasdaq Capital Market. While we have since regained compliance with Nasdaq's minimum bid price requirement, there can be no guarantee that we will be able to maintain such compliance in the future. If we lose our ability to maintain compliance with Nasdaq's continued listing rules, we and our stockholders could face significant material adverse consequences, including:

• a limited availability of market quotations for our securities;

• reduced liquidity for our securities;

• a determination that our Class B Shares is a "penny stock," which will require brokers trading in our Class B Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

• a limited amount of news and analyst coverage; and

• a decreased ability to issue additional securities or obtain additional financing in the future.

*As an "emerging growth company," the Corporation cannot be certain if the reduced disclosure and governance requirements applicable to "emerging growth companies" will make its shares less attractive to investors.*

As an "emerging growth company," the Corporation may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including not being required to obtain an assessment of the effectiveness of its internal controls over financial reporting from its independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, which the Corporation has elected to do.

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We cannot predict if investors will find our shares less attractive because we will rely on these exemptions. If some investors find our shares less attractive as a result, there may be a less active market for our shares, our share price may be more volatile and the price at which our securities trade could be less than if we did not use these exemptions.

We expect to incur costs related to our internal control over financial reporting in the upcoming years to further improve our internal control environment. If we identify deficiencies in our internal controls over financial reporting or if we are unable to comply with the requirements applicable to us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. If this occurs, we also could become subject to sanctions or investigations by the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or express an adverse opinion, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our share price may be adversely affected.

*We may not be able to successfully identify and execute future acquisitions or dispositions or to successfully manage the impacts of such transactions on our operations.*

The Corporation has made and may continue to pursue acquisition opportunities to advance its strategic plan. The successful integration of an acquired business typically requires the management of the pre-acquisition business strategy, including the retention and addition of senior management, customers, realization of identified synergies, retention of key staff and the development of a common corporate culture. Achieving the benefits of acquisitions depends in part on successfully consolidating functions and integrating operations and procedures in a timely and efficient manner, as well as the ability to realize anticipated growth opportunities and synergies from newly formed partnerships. Any failure to integrate an acquired business or realize the anticipated benefits of new partnerships may have a material adverse effect on the Corporation's business, results of operations, financial condition and prospects, including its future prospects for acquisitions or partnerships. There is no assurance that the Corporation will be able to successfully integrate an acquired business in order to maximize or realize the benefits associated with an acquisition.

In addition, from time to time the Corporation enters into letters of intent and memoranda of understanding with respect to which definitive agreements have not yet been, but are expected to be, executed. The Corporation may not be able to perform under these contracts as a result of operational or other breaches or due to events beyond its control, and the Corporation may not be able to ultimately execute a definitive agreement in cases where one does not currently exist.

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*Any expansion of our international operations will result in increased operational, regulatory and other risks.*

We have recently established an Australian subsidiary, FSD Australia (see "*Item 4. Information on the Company-A. History and Development of the Company-Intercorporate Relationships-History of FSD Australia*"), and may in the future expand into other geographic areas, which could increase our operational, regulatory, compliance, reputational and foreign exchange rate risks. The failure of our operating infrastructure to support such expansion could result in operational failures and regulatory fines or sanctions.

*The Corporation is currently party to several legal proceedings and may become a party to potential future litigation.*

The Corporation is currently party to a number of proceedings; see "*Item 8.A. Consolidated Statements and Other Financial Information-Legal Proceedings*". Such litigation could be costly and time-consuming and could divert the attention of management and other key personnel from the Corporation's business and operations. The complexity of any such claims and the inherent uncertainty of commercial, employment and other litigation increases these risks. In recognition of these considerations, the Corporation could suffer significant litigation expenses in defending any of these claims and may enter into settlement agreements.

The Corporation may also become party to additional litigation in the future, including class action lawsuits, securities litigation and anti-trust and anti-competitive actions, which could adversely affect its business. Should any litigation in which the Corporation becomes involved be determined against the Corporation, such a decision could adversely affect the Corporation's ability to continue operating and the market price for Corporation's Class B Shares and could result in the use of significant resources. Even if the Corporation is involved in litigation and wins, litigation can redirect significant corporate resources and management attention.

*Conflicts of interest may arise between the Corporation and its directors and officers as a result of other business activities undertaken by such individuals.*

Certain directors and officers of the Corporation are, and may in the future become, directors and officers of other entities, or are otherwise engaged, and will continue to be engaged, in activities that may put them in conflict with the business strategy of the Corporation. In particular, certain directors and officers of the Corporation serve as directors or officers of entities that may compete with or have conflicting interests with the Corporation.

The Corporation's directors and the officers are required to act honestly and in good faith with a view to its best interests. However, in conflict of interest situations, the Corporation's directors and officers may owe the same duty to another corporation and will need to balance their competing interests with their duties to the Corporation. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavorable to the Corporation. These business interests could require the investment of significant time and attention by our executive officers and directors. In some cases our executive officers and directors may have fiduciary obligations associated with business interests that interfere with their ability to devote time to our business and affairs, which could adversely affect our operations.

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*The Corporation has not paid dividends in the past and does not anticipate paying dividends in the near future.*

The Corporation has not paid dividends in the past and does not anticipate paying dividends in the near future. The Corporation expects to retain earnings to finance the development and enhancement of its Product Candidates and to otherwise reinvest in the Corporation's business. Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, financial results, cash requirements, contractual restrictions and other factors that the Board may deem relevant. As a result, investors may not receive any return on investment in Class B Shares unless they sell them for a share price that is greater than that at which such investors purchased them.

*The Corporation's operations depend, in part, on the maintenance and protection of its information technology systems and the information technology systems of its third-party research institution collaborators, CROs or other contractors or consultants, which could face cyber-attacks that cause material losses to our business.*

We have entered into agreements with third parties for hardware, software, telecommunications and other IT services in connection with our operations. Our operations depend, in part, on how well we, our CROs, other contractors, consultants and our suppliers protect networks, equipment, IT systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, terrorism, fire, power loss, hacking, computer viruses, vandalism and theft. Our operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact our reputation and results of operations.

For example, the loss of, or damage to, clinical trial data from completed, ongoing or future preclinical or clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we rely or expect to rely on third parties for research and development, the manufacture and supply of drug product and to conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our Product Candidates could be delayed.

Certain data breaches must also be reported to affected individuals and certain regulatory bodies, and in some cases may be required to be publicly disclosed under U.S. federal and state law, federal and provincial data protection legislation in Canada and the requirements of other jurisdictions, and financial or other penalties may also apply.

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Cyber incidents can result from deliberate attacks or unintentional events. Cyber-attacks could result in any person gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, including personally identifiable information, corrupting data, or causing operational disruption. Cyber- attacks could also result in important remediation costs, increased cyber security costs, lost revenues due to a disruption of activities, litigation and reputational harm affecting customer and investor confidence, which could materially adversely affect our business and financial results.

We have not experienced any material losses to date relating to cyber-attacks or other information security breaches, but there can be no assurance that we will not incur such losses in the future, which could be in excess of any available insurance and could materially adversely affect our business and financial results. Our risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

*We may be a passive foreign investment company, which may result in adverse U.S. federal income tax consequences for holders of our Class B Shares who are U.S. taxpayers.*

Generally, if for any taxable year 75% or more of our gross income is passive income, or 50% or more of the average quarterly value of our assets are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies that in some circumstances are unclear and subject to varying interpretation, and the Company's PFIC status will depend among other things upon changes in the composition and relative value of its gross receipts and assets. We believe that we may be considered a PFIC for the year ended December 31, 2022. In addition, although PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, we believe that we may be considered a PFIC for the current taxable year. Because we may continue to hold a substantial amount of cash and cash equivalents, and because the market value of the Company's assets (including for this purpose goodwill) may be measured in large part by the market price of our shares, which is likely to fluctuate, no assurance can be given that the Company will not also be a PFIC in any future taxable year. If we are characterized as a PFIC, our shareholders who are U.S. taxpayers may suffer adverse tax consequences, including the treatment of gains realized on the sale of our Class B Shares as ordinary income, rather than as capital gain, the loss of the preferential rate applicable to dividends received on our Class B Shares by individuals who are U.S. taxpayers, and the addition of interest charges to the tax on such gains and certain distributions. For more information, please see "*Item 10.E.-Taxation - Certain Material U.S. Federal Income Tax Considerations-Passive Foreign Investment Company Rules*".

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**Item 4. Information on the Company.**

**A. History and Development of the Company** 

**Corporate Structure**

***Name, Address and Incorporation***

The Corporation was formed under the OBCA on November 1, 1998 pursuant to the amalgamation of Olympic ROM World Inc., 1305206 Ontario Corporation, 1305207 Ontario Inc., Century Financial Capital Group Inc. and Dunberry Graphic Associates Ltd.

On March 15, 2018, the Shareholders approved the amendments contemplated by the Articles of Amendment at the 2018 annual and special meeting of the Shareholders, pursuant to which, among other things, the Shareholders approved the redesignation of the Century Shares to Class B Shares, the creation of the new class of Class A Shares, and the elimination of the Corporation's existing non-voting Class A Preferred Shares and non-voting Class B Preferred Shares.

On May 24, 2018, FV Pharma completed a reverse takeover of the Corporation by way of a three-cornered amalgamation among the Corporation, FV Pharma and Acquireco, a wholly owned subsidiary of the Corporation formed solely for the purposes of completing the FV Pharma Amalgamation. In connection with the completion of the FV Pharma Amalgamation, FV Pharma became a wholly owned subsidiary of the Corporation and the Corporation: (i) changed its name from "Century Financial Capital Group Inc." to "FSD Pharma Inc."; and (ii) reorganized the capital structure of the Corporation to create a new class of Class A Shares, amended the terms of and re-designated the existing common shares as Class B Shares, and eliminated the existing non-voting Class A Preferred Shares and non-voting Class B Preferred Shares, pursuant to the Articles of Amendment.

On May 29, 2018, the Class B Shares commenced trading on the CSE under the trading symbol "HUGE".

On October 16, 2019, the Corporation amended its articles of incorporation to complete a consolidation of all of its issued and outstanding share capital. Pursuant to the amendment, all of the issued and outstanding Class A Shares and Class B Shares were consolidated on the basis of one post-consolidation share for every 201 pre-consolidation shares of the Corporation (the "**Consolidation**"). Unless otherwise noted, presentation in this Annual Report of the number of Class A Shares, Class B Shares, Stock Options, Warrants and the issue or exercise prices and any other data related to the foregoing securities are all presented on a post-Consolidation basis.

On January 9, 2020, the Class B Shares commenced trading on the Nasdaq under the trading symbol "HUGE".

The Corporation's head and registered office is located at 199 Bay Street, Suite 4000, Toronto, Ontario, Canada M5L 1A9 and its telephone number is 416-854-8884. As at the date of this Annual Report, the Corporation is a reporting issuer in each of the provinces of Canada (other than Québec). The Corporation's registrar and transfer agent is Marrelli Trust Company Limited. The Corporation's agent for service in the United States is CT Corporation, 28 Liberty Street, New York, New York 10005.

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***Intercorporate Relationships***

As at the date of this Annual Report, the Corporation has five material subsidiaries, Lucid, FSD BioSciences, Prismic, FSD Strategic Investments and FSD Australia, which are all wholly owned by the Corporation.

*History of Lucid*

Lucid is incorporated under the OBCA and was acquired by the Corporation on September 21, 2021. See "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History - Lucid Acquisition*" below. Lucid is a Canadian-based specialty biotechnology company focused on the development of therapies to treat critical neurodegenerative diseases. Lucid is currently focused on research and development of Lucid-PSYCH and Lucid-MS, which are molecular compounds identified for potential treatment of neurodegenerative disorders, including major depressive disorder, and MS, respectively.

*History of FSD BioSciences*

FSD BioSciences is a specialty biotech pharmaceutical research and development company focused on developing over time multiple applications of its lead compound, FSD-PEA (also known as FSD-201), an ultra-micronized PEA. FSD-PEA stabilizes mast cells and down-regulates the pro-inflammatory cytokines to effectuate an anti-inflammatory response. The registered and head office of FSD BioSciences is located at 199 Bay Street, Suite 4000, Toronto, Ontario M5L 1A9.

*History of Prismic*

Prismic is incorporated under the laws of the State of Arizona. The registered and head office of Prismic is located at 474 Grove Street, Suite 740, Worcester, Massachusetts, United States, 06105. Prior to the acquisition of Prismic by the Corporation (the "**Prismic Acquisition**"), Prismic Pharmaceuticals, Inc. and Epitech had entered into a license agreement (the "**Prismic License Agreement**") which involved the licensing of certain intellectual property rights associated with FSD-PEA. In connection with the Prismic Acquisition, Prismic Pharmaceuticals, Inc. transferred and assigned to the Corporation all of its interest in the Prismic License. Following the completion of the Prismic Acquisition, the Corporation entered into the Epitech License Agreement, which replaces the Prismic License Agreement and grants the Corporation an exclusive, world-wide license (excluding Italy and Spain) to exploit, for certain specified pharmaceutical purposes, patents and other intellectual property rights to FSD-PEA owned by Epitech. Pursuant to an assignment agreement (the "**Prismic Assignment Agreement**") between Prismic and FSD Pharma, Prismic holds the right to receive, from FSD, a percentage of the net sales of Prismic Assignment Products (as defined below). See "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History - Epitech License Agreement and Prismic Assignment Agreement*" for further details.

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*History of FSD Strategic Investments* 

FSD Strategic Investments is incorporated under the laws of Ontario. The registered and head office of FSD Strategic Investments is 199 Bay Street, Suite 4000, Toronto, Ontario M5L 1A9. FSD Strategic Investments is focused on generating returns and cashflow through the issuance of loans secured by residential or commercial property. FSD Strategic Investments earns interest through fixed rate lending arrangements that have an average term to maturity of two years from the date of issuance. The loans are secured by residential or commercial property, with a first collateral mortgage on the secured property. During Fiscal 2022, the Company invested approximately C$7 million dollars in loans secured by real property primarily located in the Greater Toronto Area. These loans are considered to by highly collateralized as they are issued up to 55% of the appraised value of the secured property.

*History of FSD Australia*

FSD Australia is formed under the laws of Australia. The registered and head office of FSD Australia is Level 7 330 Collins Street, Melbourne VIC, 3000. FSD Australia was established to facilitate the Corporation's development of Lucid-PSYCH by running Australian clinical trials in respect of Lucid-PSYCH, and potentially other assets. Subject to satisfaction of relevant eligibility criteria, FSD Australia may be entitled to claim the Australian research and development tax incentive for eligible expenditure it incurs on eligible research and development activities.

**General Development of the Business**

***Three Year History***

*Capital Markets Transactions*

During the Corporation's last three financial years, the Corporation completed several financings and other capital markets transactions, including the following.

On January 9, 2020, the Class B Shares commenced trading on the Nasdaq under the symbol "HUGE".

On June 8, 2020, the Corporation completed a brokered private placement of 1,500,000 Class B Shares at a price of C$6.75 per Class B Share and Warrants to purchase an additional 1,500,000 Class B Shares, each with a five-year term and an exercise price of C$9.65. This private placement generated net proceeds to the Corporation of C$9,185,159.

On August 6, 2020, the Corporation completed a brokered private placement of 2,762,430 Class B Shares at a price of US$3.62 per Class B Share and Warrants to purchase an additional 1,381,215 Class B Shares, each with a five-year term and an exercise price of US$4.26. This private placement generated net proceeds to the Corporation of US$9,086,648.

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On October 20, 2020, the Corporation completed a brokered private placement of 4,318,179 Class B Shares at a price of US$2.20 per Class B Share and Warrants to purchase an additional 3,454,543 Class B Shares, each with a five-year term and an exercise price of US$2.60. This private placement generated aggregate net proceeds to the Corporation of approximately US$8.6 million.

Between July 2020 and February 2021, the Corporation issued and sold Class B Shares for gross proceeds of approximately US$20.0 million under the equity distribution agreement entered into with the Sales Agent on July 10, 2020, reaching the maximum amount allowed under such agreement. On February 11, 2021, the Corporation entered into a new equity distribution agreement (the "**2021 Equity Distribution Agreement**") with the Sales Agent and issued and sold Class B Shares for gross proceeds of US$18,167,511 between February 11, 2021 and March 12, 2021. Sales of Class B Shares under the equity distribution agreements were and will be made through "at-the-market distributions" as defined in the Canadian Securities Administrators' National Instrument 44-102 - *Shelf Distributions*, including sales made directly on the Nasdaq, or any other recognized trading market upon which the Class B Shares are listed or quoted in the United States. No offers or sales of Class B Shares have been nor will be made in Canada on the CSE or other trading markets in Canada.

From June 22, 2021 to September 14, 2021, the Corporation entered into agreements with several service providers (each a "**Service Provider**") to assist the Corporation in a variety of investor relations and market-making functions**.** In consideration for these services, the Corporation agreed to issue to such service providers an aggregate of 16,304 Class B Shares as a one-time issuance at a deemed price of US$1.84; 19,524 Class B Shares per month at a deemed price of US$1.68 per share; US$100,000 in cash per month; and C$13,000 in cash per month. By February 2022, activities with all but four Service Providers were suspended or terminated, reducing aggregate monthly fees paid to the remaining Service Providers to approximately US$35,374 in cash and US$22,500 in Class B Shares. During the year ended December 31, 2022, the Corporation issued 107,144 Class B Shares for services received during the period with a fair value of US$120,000. The fair value for these issuances was based on services received. Further, during the year ended December 31, 2022, the Company also issued 51,000 Class B Shares for services received during the period with a fair value of US$49,500. The Company determined the fair value of the services received in connection with these issuances could not be measured reliably and determined fair value based on the underlying share price on the date of issuance. As of date of this Annual Report, the Corporation has suspended or terminated all activities with these Service Providers.

On December 21, 2021, the Board authorized the repurchase by the Corporation of up to 2,000,000 Class B Shares, being approximately 5% of the Corporation's issued and outstanding Class B Shares as of that date, from time to time over 12 months (the "**2022 NCIB**"). The 2022 NCIB commenced on January 4, 2022 and terminated on December 31, 2022. Under the 2022 NCIB, the Corporation repurchased for cancellation 1,999,800 Class B Shares at an average price of approximately C$1.20 per Class B Shares.

On March 9, 2022, the Corporation issued 30,000 Class B Shares, at the closing market price of the Corporation's Class B Shares on the CSE on such date, to Crystal Research Associates ("**Crystal**") in consideration for the preparation of the research report conducted by Crystal as previously disclosed in the Company's press release dated March 15, 2022.

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On April 15, 2022, the Corporation entered into a contract with Tekkfund Capital Corp ("**TCC**") for services to structure and assist with certain business development strategies, pursuant to which the Corporation has issued an aggregate of 21,000 Class B Shares to TCC and pays TCC a monthly fee of C$12,500 plus HST.

On January 12, 2023, the Board authorized the repurchase by the Corporation of up to 1,925,210 Class B Shares, being approximately 5% of the Corporation's issued and outstanding Class B Shares as of that date, from time to time over 12 months (the "**2023 NCIB**"). The 2023 NCIB commenced on January 18, 2023 and will terminate on January 17, 2024, unless terminated earlier by the Corporation. The actual number of Class B Shares purchased, timing of purchases and purchase price will depend on market conditions. The Corporation will purchase the Class B Shares through the facilities of the CSE at the prevailing market price on the CSE at the time of purchase, subject to limitations imposed by applicable securities laws. All Class B Shares purchased by the Corporation will be cancelled. As of the date of this Annual Report, the Corporation has repurchased 1,904,700 Class B Shares under the 2023 NCIB.

On February 13, 2023, the Corporation issued Warrants to purchase 500,000 Class B Shares to Jason Gold and Warrants to purchase 300,000 Class B Shares to Pillow Hog Ventures Inc. in exchange for consulting services provided to the Corporation. The Warrants vested immediately and will expire on March 30, 2024 with an exercise price ranging from $1.50 USD to $4.50 USD.

On February 13, 2023, the Corporation issued Warrants to purchase 500,000 Class B Shares to Zapability LLC in exchange for consulting services provided to the Corporation. Each tranche of Warrants will expire 12 months from the first day that the individual tranche vests and no later than February 15, 2026 with an exercise price ranging from $1.85 USD to $8.00 USD.

On February 27, 2023, the Corporation issued Warrants to purchase 1,000,000 Class B Shares to Kevin Harrington in exchange for consulting services provided to the Corporation. The Warrants vested immediately and will expire on February 27, 2026 with an exercise price ranging from $1.75 USD to $8.00 USD.

On March 24, 2023, the Corporation issued Warrants to purchase 1,000,000 Class B Shares to Gerard David in exchange for consulting services provided to the Corporation. The Warrants vested immediately and will expire on March 24, 2026 with an exercise price ranging from $1.75 USD to $8.00 USD.

*Transition from Cannabis to Biotechnology*

From May 2018 to March 2020, the focus of the Corporation's business was the cultivation, processing and sale of medical cannabis. Between March 2018 and June 2020, the Corporation made investments in and entered into agreements with a number of cannabis-related ventures (the "**Cannabis Investments**").

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In March 2020, in response to challenging market conditions among Canadian licensed cannabis producers, the Corporation elected to fully pivot from cannabis to becoming a pharmaceutical and biotechnology venture. Following this decision, in July 2020, the Corporation forfeited all of its Cannabis Licenses and suspended all activities of FV Pharma, the wholly owned subsidiary through which it had conducted its cannabis business. All material Cannabis Investments have been liquidated or terminated. Among them was an investment in Cannara Biotech Inc. ("**Cannara**"), which the Corporation sold in February 2020 to a consortium of buyers for cash proceeds of approximately C$7.7 million. The terms of the sale were negotiated at arm's length with a group of buyers that included entities controlled by members of the Cannara board and senior management. A substantial portion of the Corporation's shareholdings in Cannara were subject to a statutory escrow period which expired in December 2021. Under the terms of the transaction, the buyers agreed to acquire all of the Cannara shares owned by the Corporation subject to escrow and, as such, assumed all of the associated market risk. The Corporation is no longer engaged in any cannabis-related activities.

On February 23, 2022, FV Pharma entered into a firm agreement in connection with the sale of the Facility and the Facility Property (the "**Cobourg Sale**"), being substantially all of FV Pharma's assets. The Cobourg Sale was completed on May 6, 2022, for gross proceeds of C$16,400,000. Net of commissions and fees, the sale added approximately C$15,480,780 in non-dilutive cash to the Corporation's balance sheet.

On October 26, 2020, the Corporation entered into a definitive settlement agreement (the "**Settlement Agreement**") with respect to a class action litigation commenced by a plaintiff Shareholder in the Ontario Superior Court of Justice in February 2019 relating to the build-out of its facility in Cobourg, Ontario (the "**Settled Action**"). The Settlement Agreement was approved by the Ontario Superior Court of Justice on February 4, 2021. In entering into the Settlement Agreement, the Corporation made no admissions of liability whatsoever. The Settlement Agreement provided for a full and final release of the Corporation, its officers, directors and various other related parties from any and all claims that arose or could have arisen from the claim issued by the plaintiff within the Settled Action. The Settlement Agreement provided for a settlement amount of C$5,500,000, of which C$4,571,459 was funded with the proceeds of insurance and the remaining C$928,541 was funded by the Corporation. See "*Item 8.A. Consolidated Statements and Other Financial Information-Legal Proceedings*."

*Epitech License Agreement and Prismic Assignment Agreement*

On January 8, 2020, the Corporation entered into an amended and restated license agreement with Epitech, as further amended on July 9, 2020 (the "**Epitech License Agreement**"), which amended and restated the license agreement between Prismic and Epitech through which Prismic secured certain intellectual property rights to PEA from Epitech. The Epitech License Agreement grants the Corporation an exclusive, world-wide license (excluding Italy and Spain where the Corporation is not licensed and Epitech remains entitled to commercialize the Epitech Licensed Products (as defined herein), directly or indirectly) (the "**Epitech License**") to research, manufacture and commercialize products (the "**Epitech Licensed Products**") that are developed using certain proprietary formulations of PEA owned by Epitech and that are to be used to treat chronic kidney disease in humans or, if a prescription drug, any other human condition that is related to pain and chronic pain. In addition, under the terms of the Epitech License, as further amended on July 9, 2020, if Epitech develops or commercializes a prescription drug for the treatment of any other human condition unrelated to pain and chronic pain (a "**Different Prescription Drug**") in its territory, the Corporation has a first refusal right to use Epitech's patents to develop and commercialize this Different Prescription Drug in its territory (i.e. world-wide excluding Italy and Spain). Should the Corporation exercise this right, but then fail to demonstrate commercially reasonable efforts to develop the Different Prescription Drug in the two years following, Epitech would be free to exploit and/or license to third parties the use of the patents for the Different Prescription Drug. Finally, the Epitech License provides the Corporation with a non-exclusive license to use Epitech's scientific and technical know-how with respect to FSD-PEA in connection with the development or commercialization of the Epitech Licensed Products discussed above. See also "*Item 3. Key Information-D. Risk Factors-Risk Relating to the Development of Product Candidates.*"

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Under the terms of the Epitech License Agreement, the Corporation is required to make payments to Epitech upon the achievement of specified milestones. The Corporation was required to pay the non-refundable sum of US$300,000 on or before October 31, 2019. Upon first notification by the FDA of approval of an NDA, the non-refundable sum of US$700,000 is due and payable to Epitech. Within thirty days of the first notification by the FDA of approval of an NDA, the Corporation is required to pay the non-refundable sum of US$500,000. Within ten business days of the first notification of approval of a Supplemental NDA by the FDA, the Corporation is required to pay the non-refundable sum of US$1,000,000 to Epitech.

The Epitech License Agreement also specifies certain royalty payments. Pursuant to the Epitech License Agreement, the Corporation must pay Epitech 25% (in the case of non-prescription drug rights) and 5% (in the case of prescription drug rights) of any one-off lump sum payments it receives as consideration for granting a sublicense to a third-party with respect to a Epitech Licensed Product. In addition, the Corporation is required to pay either: (a) 7% of net sales of the Epitech Licensed Products in a product regulatory category other than prescription drugs placed on the market by the Corporation; (b) 25% of the royalties received by the Corporation from sub-licensees (such royalties, the "**Net Receipts**") where Epitech Licensed Products in a product regulatory category other than prescription drugs are placed on the market by such sub-licensees; or (c) 5% of net sales or Net Receipts of the Epitech Licensed Products that are prescription drugs.

Unless otherwise terminated in accordance with its terms, the Epitech License will remain in force until the Corporation is no longer obligated to pay royalties under the Epitech License Agreement, which obligation will expire on a country-by-country basis when the last valid claim of the licensed patents covering the Epitech Licensed Products in a given country expires. The approval of a therapeutically equivalent, generic version of the Epitech Licensed Product(s) in a country will conclusively demonstrate that a valid claim does not cover the Epitech Licensed Products in that country. If there are no patents covering the Epitech Licensed Products in a country, royalties are payable for the license of the scientific and technical know-how under the Epitech License until expiration of the last-to expire Epitech patent that relates to PEA.

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Pursuant to the Prismic Assignment Agreement, Prismic holds the right to receive a percentage of the net sales of products ("**Prismic Assignment Products**") developed for conditions relating to pain in humans and certain other conditions using certain intellectual property owned or controlled by Epitech or its affiliates including those relating to PEA. Unless otherwise terminated in accordance with its terms, the Prismic Assignment Agreement will remain in force until the Corporation is no longer obligated to pay royalties under the Prismic Assignment Agreement, which obligation will expire on a country-by-country basis when the last valid claim of the licensed patents covering the Prismic Assignment Products in a given country expires. The approval of a therapeutically equivalent, generic version of the Prismic Assignment Product in a country will conclusively demonstrate that a valid claim does not cover the Prismic Assignment Product in that country.

*Phase 1 (Australia) Trials*

On March 9, 2020, the Corporation received approval from the Human Research Ethics Committee of Alfred Hospital ("**Alfred Hospital Ethics Committee**"), part of the Alfred Health group of hospitals serving the state of Victoria, Australia (collectively, "**Alfred Hospital**"), to initiate a Phase 1, randomized, double-blind, placebo-controlled study to evaluate the safety, tolerability and pharmacokinetics of single and multiple ascending doses of FSD-PEA in normal healthy volunteers (the "**Australia FSD-PEA Phase 1 Trials**").

The Corporation has completed Phase 1 clinical trials in accordance with FDA-approved guidelines.

On June 20, 2020, the Corporation received top-line results from the Australia FSD-PEA Phase 1 Trials, with no significant safety concerns found up to the highest dose tested of 2400 mg/day. The Australia FSD-PEA Phase 1 Trials were a single-site study and were conducted at the Alfred Hospital with 48 healthy adult men and women enrolled. The trial sequentially tested single ascending doses ranging from 600 mg to 2400 mg tablets and multiple ascending doses ranging from 600 mg to 1200 mg tablets administered twice daily for 7 consecutive days. The single ascending dose subjects also were tested for food effect.

The study found FSD-PEA to be safe and well-tolerated. Mild and self-limiting side effects were reported and were deemed by the investigators as unlikely to be related to the drug being studied. There were no abnormal laboratory findings or electrocardiograms observed during the study and no serious adverse events were reported. No subjects withdrew due to an adverse event and all eligible subjects completed all doses. See "*Item 3.D. Risk Factors - Risks Related to the Development of Product Candidates - Interim, "top-line," and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data becomes available or as additional analyses are conducted, and as the data are subject to audit and verification procedures that could result in material changes in the final data.*"

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*FSD-PEA COVID-19 Trials*

In June 2020, the Corporation received permission from the FDA to submit an IND to design a Phase 2(a) clinical trial for the use of FSD-PEA to treat suspected or confirmed cases of COVID-19, the disease caused by the SARS-CoV-2 virus (the "**FSD-PEA COVID-19 Trials**"). On August 28, 2020, the Corporation submitted an IND to the FDA in respect of the FSD-PEA COVID-19 Trials. On September 25, 2020, the FDA authorized the initiation of the FSD-PEA COVID-19 Trials on 352 patients.

Following the 2021 Annual and Special Meeting, the Corporation retained an independent biotechnology and pharma-focused investment banking firm to evaluate FSD-PEA's current potential commercial viability for COVID-19 treatment (the "**FSD-PEA Review**"). On August 24, 2021, based on the results of the FSD-PEA Review, the Corporation terminated the Phase 2 clinical trial of FSD-PEA for use in treating COVID-19 in order to concentrate its resources on more commercially viable opportunities for FSD-PEA. The findings of the FSD-PEA Review suggested that while there were potential commercial opportunities for FSD-PEA, the treatment of COVID-19 by FSD-PEA is specifically unlikely to be commercially viable. See also "*Item 3.D. Risk Factors*-*Risks Related to Product Candidates*."

*Matters Addressed at 2021 Annual and Special Meeting and Related Matters*

In response to a requisition for a special meeting submitted to the Corporation by certain Shareholders (the "**Requisitioning Shareholders**") which at the time held over 5.1% of the Class B Shares, including Mr. Zeeshan Saeed, the current President and Executive Co-Chairman of the Corporation, and Mr. Anthony Durkacz, who is now the interim CEO and Executive Co-Chairman of the Corporation, the Corporation held an annual and special meeting of shareholders on May 14, 2021. The Requisitioning Shareholders sought to replace six of the incumbent directors, including Dr. Raza Bokhari, with directors selected by such shareholders and were successful.

At the 2021 Annual and Special Meeting, a new Board, consisting of Anthony Durkacz, Zeeshan Saeed, Nitin Kaushal, Lawrence (Larry) Latowsky, Fernando Cugliari, Donal Carroll and Frank Lavelle, was elected. However, shortly following his election, Mr. Lavelle resigned as a director of the Corporation. At a meeting of the Board following the 2021 Annual and Special Meeting, Anthony Durkacz and Zeeshan Saeed were appointed executive co-chairmen of the Board.

Following the 2021 Annual and Special Meeting on May 14, 2021, Dr. Raza Bokhari the then-current CEO of the Corporation, was placed on administrative leave while a special committee comprised of two independent directors (the "**Special Committee**") investigated, with the assistance of independent counsel, various concerns regarding Dr. Bokhari's actions in his capacity as the Corporation's CEO. Following the completion of its investigation, the Special Committee made a recommendation to the Board and the Board unanimously determined to terminate Dr. Bokhari's employment with the Corporation. Dr. Bokhari was terminated on July 27, 2021 and Anthony Durkacz was appointed as the Corporation's interim CEO.

On June 4, 2021, Dr. Edward J. Brennan, the Chief Medical Officer of the Corporation and former President of FSD BioSciences, resigned from his position as Chief Medical Officer.

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On June 1, 2021, Adnan Bashir was appointed to the Board to fill the vacancy left by Frank Lavelle's resignation.

A number of legal proceedings arose from the events leading to and resulting from the 2021 Annual and Special Meeting, many of which have been concluded. See "*Item 8.A. Consolidated Statements and Other Financial Information-Legal Proceedings*" for more information.

*Lucid Acquisition*

On August 25, 2021, the Corporation entered into a definitive agreement (the "**Master Agreement**") to acquire 100% of the issued and outstanding shares of Lucid Psycheceuticals Inc., an early-stage Canadian-based specialty biotechnology company focused on the development of therapies to treat critical neurodegenerative diseases, for total consideration of 4,502,392 Class B Shares, 161,091 Stock Options and 112,162 Warrants (the "**Lucid Acquisition**"). 304,880 Class B Shares and all of the Warrants issued as part of the consideration for the Lucid Acquisition were issued to First Republic, a company controlled by Anthony Durkacz, the interim CEO and Executive Co-Chairman of the Corporation, in exchange for securities of Lucid Psycheceuticals Inc. held by First Republic prior to the completion of the Lucid Acquisition.

On September 13, 2021, shareholder approval for the Lucid Acquisition was obtained at a special meeting of Lucid shareholders.

On September 21, 2021, the transaction was completed by way of a three-cornered amalgamation between Lucid, the Corporation and a wholly owned subsidiary of the Corporation pursuant to the Lucid Amalgamation Agreement. The Lucid Acquisition involved the issuance of approximately 4.5 million Class B Shares as the acquisition consideration, at a deemed price of approximately US$1.56 per Class B Share. Additionally, all of the outstanding Lucid stock options and warrants became exercisable into Class B Shares, with the number and exercise price of such securities adjusted in accordance with the transaction's exchange ratio. In connection with the closing of the Lucid Acquisition, Dr. Lakshmi Kotra, maintained his position as Lucid's CEO. Prior to the acquisition, Mr. Durkacz held an approximately 4.5% indirect ownership interest in Lucid through his ownership interest in First Republic. As of immediately after the completion of the Lucid Acquisition, 40,557,896 Class B Shares were issued and outstanding.

*UHN License Agreement*

On May 19, 2021, prior to its acquisition by the Corporation, Lucid entered into a license agreement (the "**UHN License Agreement**") with the University Health Network ("**UHN**") that governs the world-wide licensing of certain intellectual property rights and data associated with Lucid-MS from UHN to the Corporation in the field of therapeutics for human health (the "**UHN License**"). Under the terms of the UHN License Agreement, the Corporation shall pay an annual license maintenance fee of C$100,000 to UHN until the first commercial sale of a product utilizing the intellectual property licensed to the Corporation under the UHN License Agreement ("**UHN Licensed Products**"), including Lucid-MS, is made. In addition, the Corporation is committed to making milestone payments totalling up to C$12,500,000 to UHN if all product development and regulatory milestones are met. Furthermore, the Corporation will also pay revenue milestone payments and royalties if revenue milestones from commercial sales are achieved as well as a percentage of sublicensing revenue received by the Corporation under any sublicense. Milestones can be extended by mutual agreement.

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Unless otherwise terminated in accordance with its terms, the UHN License Agreement will remain in force until the expiration of the last valid claim under the last licensed patent covering the UHN Licensed Products.

See also "*Item 3.D. Risk Factors - Risks Related to Product Candidates.*"

*Covar Agreement*

On October 1, 2021, the Corporation entered into an agreement with Covar Pharmaceuticals Inc. ("**Covar**"), a contract development and manufacturing services organization, to commence work on providing research quantities of the Corporation's drug candidate, Lucid-PSYCH, on an exclusive basis for further clinical evaluation (the "**Covar Agreement**"). Lucid-PSYCH is a psychoactive compound that is being researched by the Corporation through Lucid in connection with the treatment of major depressive disorder. Covar's research and development facility is licensed to handle psychoactive compounds such as Lucid-PSYCH, which are "controlled substances" listed under the CDSA. Pursuant to the Covar Agreement, Covar will produce Non-GMP and GMP Lucid-PSYCH for use in the Corporation's planned pre-clinical and Phase 1 clinical trials, respectively.

*FSD-PEA Phase 2 Developments*

In September 2022, the Corporation received a "Study May Proceed" letter for the IND application from the FDA and a "Notice of Authorization" from Health Canada for its Phase 2 clinical trial of FSD-PEA. Trials are currently underway for the Corporation's Phase 2 clinical trial for the treatment of chronic pain associated with idiopathic MCAS (MCAD) at two clinical sites in the United States, with a Canadian site to be ready to recruit soon.

*Lucid MS Phase 1*

In February 2023, the Corporation received regulatory clearance from Health Canada to proceed with the Corporation's Phase 1 clinical trial of Lucid-MS in Canada.

*FSD Strategic Investments* 

FSD Strategic Investments was incorporated in Ontario on May 13, 2022. FSD Strategic Investments is focused on generating returns and cashflow through the issuance of loans secured by residential or commercial property, with FSD Strategic Investments having a first collateral mortgage on the secured property. FSD Strategic Investments was incorporated to assist with the Corporation's treasury functions and assists in managing the Corporation's cash reserves. See "*Item 4. Information on the Company-A. History and Development of the Company-Intercorporate Relationships-History of FSD Strategic Investments*".

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*Australian Expansion and Lucid-PSYCH Phase 1*

FSD Australia was established on November 24, 2022 to facilitate the Corporation's development of Lucid-PSYCH, including by running Australian clinical trials in respect of Lucid-PSYCH and potentially other assets. Subject to satisfaction of relevant eligibility criteria, FSD Australia may be entitled to claim the Australian research and development tax incentive for eligible expenditure it incurs on eligible research and development activities. A project for a Phase 1 clinical trial of Lucid-PSYCH was submitted through FSD Australia to the Alfred Hospital Ethics Committee in January 2023 and a certificate of approval to proceed with such Phase 1 clinical trial in Australia was received from the Alfred Hospital Ethics Committee in March 2023. See "*Item 4. Information on the Company-A. History and Development of the Company-Intercorporate Relationships-History of FSD Australia*".

**Where you can find further information**

Additional information related to us is available on SEDAR at www.sedar.com and on our website at fsdpharma.com. Information on our website does not constitute part of this Annual Report. In addition, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be viewed as www.sec.gov. We do not incorporate the contents of our website, www.sedar.com or www.sec. gov into this Annual Report.

**B. Business Overview** 

**Overview**

FSD is a biotechnology company with three drug candidates in different stages of development. From May 2018 to March 2020, the focus of the Corporation's business was the cultivation, processing and sale of medical cannabis; in March 2020, however, the Corporation pivoted its focus to pharmaceuticals and biotechnology (see "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History-Transition from Cannabis to Biotechnology*").

Through FSD BioSciences, a wholly owned subsidiary, FSD is focused on pharmaceutical research and development of its lead formulation FSD-PEA (also known as FSD-201). PEA, the active substance in FSD-PEA, interacts with the endocannabinoid system (ECS) in the body and exhibits anti-inflammatory activities. FSD has completed FDA-approved Phase 1 clinical trials for FSD-PEA with positive topline results and has received clearance from the FDA and Health Canada to proceed with Phase 2 clinical trials for FSD-PEA. The Phase 2 study began on January 19, 2023.

Through the Corporation's wholly owned subsidiary, Lucid, the Corporation is also currently focused on the research and development of two compounds, Lucid-PSYCH (also known as Lucid-201) and Lucid-MS (also known as Lucid-21-302). Lucid-PSYCH is a psychoactive molecule identified for the potential treatment of neuropsychiatric disorders, such as major depressive disorder. Lucid-MS is a patented new chemical entity shown to prevent and reverse myelin degradation, the underlying mechanism of multiple sclerosis, in preclinical models.

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The Corporation does not operate through Prismic, however Prismic holds the right to receive certain payments based on net sales of certain products from the Corporation pursuant to the Prismic Assignment Agreement.

The Corporation is not engaged in any cannabis-related activities.

Through FSD Strategic Investments, the Corporation is involved in the issuance of loans secured by residential or commercial property. See "*Item 4.A. History and Development of the Company*-*General Development of the Business-Three Year History - FSD Strategic Investments*" for further details.

***FV Pharma and the Facility***

In response to challenging market conditions among Canadian licensed cannabis producers, the Corporation forfeited the Cannabis Licenses in July 2020 and suspended all activities by FV Pharma as of September 2020. As a result, the Corporation is no longer engaged in any cannabis-related activities. FV Pharma has accumulated historic tax losses and continues to exist as an entity wholly owned by the Corporation.

The Corporation owned a 64.43-acre property on which the Facility is located (the "**Facility Property**") and sold the Facility and Facility Property in May 2022. See "*Item 4.A. History and Development of the Company*-*General Development of the Business-Three Year History - Transition from Cannabis to Biotechnology*" for more details on the Cobourg Sale.

**Products and Sales**

The Corporation has no commercialized products or services at this time and has had no revenues in the last three fiscal years. The Corporation's efforts are focused on pharmaceutical research and development of advanced neurodegenerative, mental health and anti-inflammatory treatments. The Corporation is currently focused on developing applications of drug product candidates FSD-PEA, Lucid-MS and Lucid-PSYCH (together, the "**Product Candidates**").

***FSD-PEA***

FSD-PEA is a proprietary formulation of the anti-inflammatory agent PEA in respect of which the Corporation completed Phase 1 clinical trials, received clearance from the FDA and Health Canada to proceed with Phase 2 clinical trials and on January 19, 2023 began Phase 2 clinical trials. PEA is an endogenous molecule produced within the body in response to inflammation and interacts with the endocannabinoid system in the body. For results of Phase 1 clinical trials, see "*Item 4.A. History and Development of the Company-General Development of the Business-Three Year History - Phase 1 (Australia) Trials*" above. Based on the known anti-inflammatory properties, we believe that FSD-PEA has the potential to address markets with growth opportunities in inflammatory disorders, endometriosis, osteoarthritis, fibromyalgia and opioid-sparing indications such as pain and morphine tolerance, but we have not yet fully studied or developed FSD-PEA for these indications. The Corporation was previously engaged in developing FSD-PEA as a potential treatment of suspected or confirmed cases of COVID-19; however, in response to results of the FSD-PEA Review, the Corporation terminated the Phase 2 clinical trial of FSD-PEA for use in treating COVID-19 in order to concentrate its resources on more commercially viable opportunities for FSD-PEA. In September 2022, the Corporation received regulatory clearance from the FDA and Health Canada to proceed with its Phase 2 clinical trial of FSD-PEA for the treatment of chronic pain associated with idiopathic MCAS (MCAD). The trials are currently underway and the study will be carried out at two clinical sites in the United States and one site in Canada. See "*Item 4.A. History and Development of the Company-General Development of the Business-Three Year History- FSD-PEA COVID-19 Trials*".

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The Corporation is party to an exclusive world-wide (excepting Italy & Spain) license agreement with Epitech which grants the Corporation intellectual property rights to certain patents owned by Epitech to develop and sell PEA-based pharmaceutical products (see "*Item 4.A. History and Development of the Company-General Development of the Business-Three Year History-Epitech License Agreement and Prismic Assignment Agreement*").

***Lucid-MS***

Multiple sclerosis is a chronic inflammatory and degenerative disorder of the central nervous system with unpredictable patterns of symptoms and affects millions world-wide. The global treatment market for MS was valued at US$23 billion in 2018, according to a report conducted by Allied Market Research<sup>1</sup> . Lucid-MS is a patented new chemical entity, an inhibitor of peptidyl arginine deiminase enzymes which are responsible for post translational citrullination of peptides. Hypercitrullination occurs in MS and other neurodegenerative diseases. Lucid-MS prevents and reverses myelin degradation and disease manifestation, as shown in preclinical models. The results of such models demonstrated functional recovery, preserved myelin and reduced axonal degeneration without suppressing the immune system.

Through the UHN License Agreement, the Corporation received exclusive world-wide intellectual property rights to the patent family of new chemical entities from which Lucid-MS is derived, in the field of therapeutics for human health (see "*Item 4.A. History and Development of the Company-General Development of the Business-Three Year History-UHN License Agreement*"). In February 2023, the Corporation received regulatory clearance from Health Canada to proceed with the Corporation's Phase 1 clinical trial of Lucid-MS in Canada.

***Lucid-PSYCH***

The lack of progress in the development of new treatments for mental disorders in the last 30 years created renewed interest in psychedelics as an option for therapy of depression and anxiety. According to research conducted by Data Bridge Market Research, the psychedelics market for mental illness was estimated at US$2.0 billion in 2019 and expected to grow to US$6.9 billion by 2027<sup>2</sup> . The Corporation intends to take advantage of this market opportunity through the development and commercialization of Lucid-PSYCH. Lucid-PSYCH is a psychoactive molecule identified for the potential treatment of neuropsychiatric disorders, including major depressive disorder and anxiety. Based on Phase 2 clinical data on MDMA-assisted psychotherapy for post-traumatic stress disorder (PTSD) and other recent developments for treatment of neuropsychiatric disorders, it is believed that there is potential for psychedelic-inspired drugs such as Lucid-PSYCH to serve as effective treatments for various neuropsychiatric disorders, including post-traumatic stress disorder, depression (specifically complex treatment-resistant depression and major depressive disorder) and anxiety. Lucid-PSYCH has not yet been fully studied for these indications.

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<sup>1</sup> https://www.alliedmarketresearch.com/multiple-sclerosis-market

<sup>2</sup> https://www.prnewswire.com/news-releases/psychedelic-drugs-market-projected-to-reach-6-859-95-million-by-2027--301069861.html

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Lucid-PSYCH is a "controlled substance" as defined in the CDSA and is subject to certain additional regulatory requirements and controls. Through agreements with third parties, the Corporation has access to facilities that have experience and licenses to handle Controlled Substances listed under the CDSA. See "*Item 4.B. Business Overview - Regulatory Environment - Controlled Substances-the United States*" and "*-Controlled Substances-Canada*" for additional details.

Proprietary formulations of Lucid-PSYCH are under development by the Corporation, through Lucid. Preclinical development and IND Phase 1-enabling studies on Lucid-PSYCH are underway, in partnership with Covar on an exclusive basis and other contract organizations. A project for a Phase 1 clinical trial of Lucid-PSYCH was submitted through FSD Australia to the Alfred Hospital Ethics Committee in January 2023 and a certificate of approval to proceed with such Phase 1 clinical trial in Australia was received from the Alfred Hospital Ethics Committee in March 2023.

**Specialized Knowledge and Personnel** 

The Board and executive officers of the Corporation, led by Anthony Durkacz, as Executive Co-Chairman and interim CEO, Zeeshan Saeed, as Executive Co-Chairman and President and Dr. Lakshmi P. Kotra, as CEO of Lucid, have a wide combination of the skills, knowledge and experience that are necessary for the successful advancement of the Corporation's business plan. Our future growth and success depend on our ability to recruit, retain, manage and motivate our qualified employees. The inability to hire or retain experienced personnel in the pharmaceutical field could adversely affect our ability to execute our business plan and harm our operating results. Due to the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

**Competitive Conditions**

The pharmaceutical industry is highly competitive and subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial and research and development resources and experience than we have. Some of these competitors and potential competitors also have significantly more experience than we have in the development of pharmaceutical products, including validation procedures and regulatory matters. In addition, each of our Product Candidates, if successfully developed, will compete with, product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than we have or our third-party research collaborators. Other companies with greater resources than us may announce similar plans in the future. In addition, there are other competitive products available in the market that do not have and/or do not require marketing approval from the FDA, Health Canada or other comparable regulatory authorities.

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**Environmental Matters**

The Corporation expects the financial and operational effects of environmental protection requirements on its capital expenditures, profit and competitive position in the current and future financial years to be minimal. For further information, see "*Item 3.D. Risk Factors*" in this Annual Report.

**Employees**

As at December 31, 2022, the Corporation directly employed 17 full-time employees and 25 consultants. The Corporation believes its relationship with its employees, consultants and contractors is good. None of the Corporation's employees are represented by a labour union or subject to a collective bargaining agreement.

**Property, Plants and Equipment**

The Corporation's current operating plan does not include building infrastructure. The Corporation operates from its head office located in Toronto, Ontario, Canada. On May 6, 2022, the Corporation completed the Cobourg Sale. See "*Item 4.A. History and Development of the Company*-*General Development of the Business-Three Year History - Transition from Cannabis to Biotechnology*" for more details on the Cobourg Sale.

The following table outlines the properties that the Corporation currently subleases:

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Location** | &nbsp;&nbsp;**Area (in <br>Square Feet)** | &nbsp;&nbsp;**Lease <br>Expiration <br>Date** | &nbsp;&nbsp;**Use** |
| &nbsp;&nbsp;Toronto, ON, Canada | &nbsp;&nbsp;4837 | &nbsp;&nbsp;September 29, <br>2023 | &nbsp;&nbsp;Management of <br>global operations |
| &nbsp;&nbsp;Toronto, ON, Canada | &nbsp;&nbsp;2149 | &nbsp;&nbsp;December 31, <br>2023 | &nbsp;&nbsp;Sublet |
| &nbsp;&nbsp;Toronto, ON, Canada | &nbsp;&nbsp;2197 | &nbsp;&nbsp;August 28, <br>2024 | &nbsp;&nbsp;Office |
| &nbsp;&nbsp;Sparks, MD, U.S.A. | &nbsp;&nbsp;880 | &nbsp;&nbsp;December 31, <br>2023 | &nbsp;&nbsp;Office and <br>warehousing |

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The Toronto office space costs approximately C$150,000 per annum (excluding operating costs and taxes) and is rented on a fixed term, ending on September 29, 2023. The Sparks office space costs US$1,371 per month (excluding utilities, taxes and other operating costs) and is rented on an annual basis. The Corporation believes that its current facilities are adequate to meet its ongoing needs and that, if the Corporation requires additional space, it will be able to obtain additional facilities on commercially reasonable terms.

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**Regulatory Environment**

***General*** 

The Corporation is currently focused on obtaining regulatory approvals in the United States, Canada and Australia for the drug candidates it is developing through FSD BioSciences, Lucid and FSD Australia. In the future, the Corporation may consider seeking approvals for these drug candidates in other countries. The following is a summary of the FDA, Health Canada and the TGA approval process that the Corporation and/or its related entities are undertaking with each of the Product Candidates in the United States, Canada and Australia. Assuming the Corporation is successful in obtaining the requisite approvals from FDA, Health Canada or TGA ("**Regulatory Approvals**") pursuant to the process set out below, it may decide to seek comparable approvals in other countries, which would be subject to different and additional regulatory requirements. Obtaining Regulatory Approval often takes a number of years, involves the expenditure of substantial resources, and depends on a number of factors, including the severity of the disease in question, the availability of alternative treatments, and the risks and benefits demonstrated in clinical trials.

The Corporation will be subject to extensive regulations while it focuses on gaining Regulatory Approvals for treatments it is developing with each of the Product Candidates. The United States Food, Drug and Cosmetic Act of 1938, as amended (the "**FDC Act**"), the Public Health Service Act (United States) (the "**PHS Act**"), the Therapeutic Goods Act 1989 (Cth) (Australia) (the "**TGA Act**"), FDA Act and other federal, provincial and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labelling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical product candidates for their respective jurisdictions. Failure to comply with applicable regulatory requirements may subject the Corporation to a variety of administrative or judicial sanctions, such as application refusals, warning or untitled letters, product candidate recalls, product candidate seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

***Pre-Clinical and Clinical Development***

Pharmaceutical product candidate development in the United States, Canada and Australia typically involves pre-clinical laboratory and animal tests, followed by a submission to commence clinical testing to, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the FDA for the United States (an IND);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Health Canada for Canada (a CTA); or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in Australia, (i) where the Clinical Trial Notification ("**CTN**") process is utilized, to a Human Research Ethics Committee, or (ii) where the Clinical Trial Application ("**Australian CTA**") process is utilized, to the TGA.

If:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) there are no comments from the FDA within 30 days after the submission of the application in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a "no objection letter" is received from Health Canada; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in Australia, (i) where the CTN process is utilized, the applicable Human Research Ethics Committee provides its approval and the TGA is notified by way of the due submission of a CTN, or (ii) where the Australian CTA process is utilized, the TGA provides its approval,

then clinical trials for the drug may commence in the respective jurisdiction assuming all other requirements are met (such as institution review board approval, informed consents and any additional approvals related to the use of controlled substances). The satisfaction of pre-market approval requirements typically takes many years. The actual time required may vary substantially based upon the type, complexity and novelty of the product candidate or the diseases a product candidate targets.

Before testing any compound in human patients in the U.S., Canada or Australia, a company must generate extensive preclinical data. Preclinical testing generally includes laboratory evaluation of product chemistry and formulation, as well as toxicological and pharmacological studies in several animal species to assess the toxicity and dosing of the product candidate and its potential safety and efficacy. The conduct of the pre-clinical tests must comply with government regulations and requirements, including good laboratory practices. For example in the U.S., certain animal studies must be performed in compliance with the FDA's Good Laboratory Practice regulations and the U.S. Department of Agriculture's Animal Welfare Act.

A Regulatory Approval must be in effect before human clinical trials may commence in the U.S., Canada or Australia, respectively. The results of pre-clinical testing and any previous human experience with the investigational drug are submitted to the FDA, Health Canada or TGA as part of the Regulatory Approval process in each jurisdiction, along with other information, including information about product candidate chemistry, manufacturing and controls, information about the study investigator, and a proposed clinical trial protocol.

There can be regulatory barriers to obtaining an effective Regulatory Approval based on FDA's, Health Canada's or TGA's respective review of the investigative drug and, where applicable, its classification as a known controlled substance.

Clinical trials involve the administration of the product candidate that is the subject of the Regulatory Approval to healthy volunteers or study participants with the disease or condition being studied under the supervision of a qualified investigator. Clinical trials to support an NDA for marketing approval are typically conducted in three sequential phases, but the phases may overlap.

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There is a process under which clinical trials may begin and involve the administration of the product candidate that is the subject of the Regulatory Approval to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with applicable government regulations, (ii) in compliance with Good Clinical Practice, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors, and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on patients and subsequent protocol amendments must be submitted to the FDA, Health Canada and / or TGA as part of the Regulatory Approval process, as applicable.

The FDA, Health Canada or TGA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with applicable regulatory requirements or presents an unacceptable risk to the clinical trial patients. The trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board for approval. An institutional review board (IRB) may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB's requirements or may impose other conditions.

***New Drug Application (NDA) and New Drug Submission (NDS) Process***

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a new drug application (NDA) requesting approval to market the product for one or more indications. The application must include the results of all preclinical, clinical, and other testing and a compilation of data relating to the product's pharmacology and chemistry, manufacture and controls. Under the Prescription Drug User Fee Act, a substantial application user fee is required for most NDAs, and the applicant under an approved NDA is also subject to an annual program fee for each prescription product.

After evaluating the NDA, the FDA issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission. Substantial additional testing or information may be required in order for the FDA to reconsider the application. If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. Additionally, as a condition of approval, the FDA may impose restrictions that could affect the commercial success of a drug or require post-approval commitments, including the completion within a specified time period of additional clinical studies, which often are referred to as "Phase 4" or "post-marketing" studies. For example, as a condition of approval, the FDA may require a risk evaluation and mitigation strategy ("**REMS**") to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, such as special training or certification for prescribing or dispensing. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug's safety or efficacy.

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Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing. Once an NDA is approved, a product will be subject to certain post-approval requirements, including, among other things, requirements related to record-keeping, providing the FDA with updated safety information, product sampling and distribution, and promotion and advertising. Post-approval modifications to the drug, such as changes in indications, labeling, or manufacturing processes or facilities, may require a sponsor to develop additional data or conduct additional preclinical studies or clinical trials, to be submitted in a new or supplemental NDA, which would require FDA approval.

Similarly, Health Canada (in Canada) and the TGA (in Australia) regulates, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, post-approval monitoring, marketing and import and export of pharmaceutical products. Drug approval laws require licensing of manufacturing facilities, carefully controlled research and testing of products, and government review and approval of experimental results prior to giving approval to sell drug products.

The process required by the applicable regulatory authorities before prescription drug product candidates can be marketed in Canada or Australia requires:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in the case of Canada, the submission of a new drug submission ("**NDS**") to Health Canada; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in the case of Australia, an application for registration in the Australian Register of Therapeutic Goods ("**ARTG**"),

the NDS and application for registration on the ARTG collectively referred to as "New Drug Application".

Health Canada and/or TGA, as the case may be, must review and approve the relevant "New Drug Application". Health Canada must also and issue a notice of compliance and both Health Canada and TGA must issue a drug identification number prior to any commercial marketing, sale or shipment of the drug.

Even if Health Canada approves a NDS or TGA registers the drug on the ARTG, the relevant regulatory authority may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies be conducted to further assess a drug's safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms.

The regulatory review process of a drug application in each of the U.S., Canada and Australia includes the satisfactory completion of an inspection of the manufacturing facility or facilities where the product is produced (or other evidence acceptable to the regulator) to ensure that the facilities are in compliance with current good manufacturing practices ("**cGMP**") requirements and are adequate to assure consistent production of the product within required specifications.

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The FDA, Health Canada and TGA also conduct regular, periodic visits to re-inspect equipment, facilities, and processes following the initial approval of a product. Failure to comply with applicable cGMP requirements and other conditions of product approval may lead the regulatory authority to take enforcement action or seek sanctions, including fines, issuance of warning letters, civil penalties, injunctions, suspension of manufacturing operations, operating restrictions, withdrawal of approval, seizure or recall of products, and criminal prosecution.

***Controlled Substances - United States***

As explained above, pharmaceutical products are subject to extensive regulation in the United States, including the FDC Act, the PHS Act, and other federal and state statutes and regulations that govern, among other things, the research, development, testing, manufacturing, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.

Drugs and other substances that are determined to have a potential for abuse are also regulated under the United States Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended, also known as the Controlled Substances Act (the "**CSA**") and its implementing regulations, as "controlled substances." The CSA establishes a closed chain of distribution for entities handling controlled substances, which include researchers, manufacturers, distributors, pharmacies and physicians, importers and exporters. The CSA and regulations enforced by the Drug Enforcement Administration (DEA) impose registration, security, quotas inventory, recordkeeping, reporting, storage, manufacturing, distribution, importation, exportation, and other requirements on entities handling controlled substances. Practitioners such as pharmacies and physicians, as well as other types of entities that handle controlled substances, such as researchers and analytical laboratories, are also subject to DEA registration and other requirements related to controlled substances.

The CSA categorizes controlled substances into one of five schedules - Schedule I, II, III, IV, or V - depending on the potential for abuse and physical or psychological dependence. Schedule I substances by definition have a high potential for abuse, have no currently accepted medical use in treatment in the United States, and lack accepted safety for use under medical supervision. They may not be marketed or sold for dispensing to patients in the United States. Certain "hallucinogens" or psychedelic drugs are currently regulated as Schedule I controlled substances, as is any substance that includes any of a Schedule I substance's salts, isomers (e.g., optical, position, and geometric isomers), or salts of isomers, whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical. Pharmaceutical products having a currently accepted medical use and that are otherwise approved for marketing may be listed as Schedule II, III, IV, or V substances, with Schedule II substances presenting the highest potential for abuse and physical or psychological dependence, and Schedule V substances presenting the lowest relative potential for abuse and dependence.

Whether a new drug or substance is ultimately controlled or not is a fact specific determination that the DEA makes based on the input of the Department of Health and Human Services (including the FDA), which provides scientific and medical findings and recommendations to the DEA. During the FDA approval process, the FDA will generally conduct an abuse potential evaluation of any substance that could have an effect on the central nervous system. If FDA finds that a new drug or substance may have an abuse potential that would require the drug to be controlled, FDA notifies the DEA and provides information/recommendation to the DEA on its scheduling. The DEA must conduct notice and comment rulemaking to propose scheduling of a new substance. If a drug being approved contains a substance already controlled under the CSA, that drug will generally be controlled in the same schedule absent findings or recommendations that it should be placed in another schedule.

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Lucid-PSYCH is a Schedule I listed substance under the CSA. Its use in the United States is highly restricted under Federal law, even though there have been a few state and local laws seeking to loosen restrictions. A facility that seeks to manufacture, distribute, import or export any Schedule I controlled substance must register with the DEA. The DEA registration is specific to the particular location, activity and controlled substance. A DEA registered facility must maintain records documenting all activities, including the manufacture, receipt and distribution, of controlled substances. The import or export of a Schedule I substance requires a permit and may need to comply with international drug control treaties as well as DEA requirements.

Any Schedule I drug or substance approved by the FDA must be rescheduled (or descheduled) to another schedule before it can be commercially marketed in the United States. Rescheduling or descheduling a Schedule I substance to another schedule is dependent on FDA approval and FDA recommendation as to the appropriate schedule. Any rescheduling or descheduling action requires the DEA to conduct notice and comment rulemaking. Such action will be subject to public comment and requests for hearing which could affect the scheduling of these substances.

***Controlled Substances - Canada***

A controlled substance is a type of drug that the Government of Canada has categorized as having a higher-than-average potential for abuse or addiction and is listed in one of the schedules (I to V) of the CDSA. Lucid-PSYCH is a controlled substance in Canada. The possession, sale or distribution of controlled substances is prohibited unless specifically permitted by the government.

Under section 56 of the CDSA the Minister of Health may exempt a person or a class of persons or any controlled substance or class thereof from the application of all or any provision of the CDSA or regulations if necessary for a medical or a scientific purpose or is otherwise in the public interest. Researchers requiring a controlled substance for research, including clinical trials, must receive an exemption under the CDSA, which can permit the importation, possession and/or use of a specified quantity of the controlled substance for a specified purpose. The Minister of Health can impose any terms and conditions that the Minister considers necessary in respect of the exemption. Through agreements with third parties, the Corporation has access to facilities that have experience and licenses required to handle Controlled Substances listed under the CDSA. Similar to the United States, in Canada certain scheduled substances would require reclassification to a different schedule in order to permit commercial marketing.

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***Controlled Substances - Australia***

Like in the United States and Canada, a controlled drug is a type of drug that the Australian Government has categorized as having a higher-than-average potential for abuse or addiction and is listed in one of the schedules (1 to 10) of the Poisons Standard.

Substances with therapeutic uses are generally contained in Schedules 2, 3, 4 and 8 with progression through these Schedules signifying increasingly restrictive regulatory controls. Schedule 9 details substances that should be available only for teaching, training, medical or scientific research including clinical trials conducted with the approval of Commonwealth and/or State and Territory health authorities.

Lucid-PSYCH is currently a prohibited drug in Australia, meaning its supply is largely limited to clinical trials.

**Reorganizations**

The Corporation has not completed any material reorganization within the three most recently completed financial years.

**C. Organizational Structure**

As at the date of this Annual Report, the Corporation has five material subsidiaries, Lucid Psycheceuticals Inc., FSD BioSciences, Inc., FSD Australia, FSD Strategic Investments and Prismic Pharmaceuticals, Inc., which are all wholly owned by the Corporation. For more information related to the Corporation, including its subsidiaries, please see the section in this Annual Report titled "*Item 4. Information on the Company-A. History and Development of the Company-Intercorporate Relationships."*

**D. Property, Plants and Equipment** 

**FV Pharma and the Facility**

The Corporation owned the 64.43-acre Facility Property located at 520 William Street, Cobourg, Ontario, K9A 3A5 and on May 6, 2022, the Corporation completed the Cobourg Sale. See "*Item 4.A. History and Development of the Company*-*General Development of the Business-Three Year History - Transition from Cannabis to Biotechnology*" for more details on the Cobourg Sale.

See "*Item 4.B. Business Overview-Property, Plants and Equipment"* for further details relating to the Corporation's facilities.

**Item 4A. Unresolved Staff Comments.**

Not applicable.

**Item 5. Operating and Financial Review and Prospects.**

**A. Operating Results**

See the Corporation's Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended and fiscal years ended December 31, 2022 and 2021 (the "**MD&A**") attached hereto as Exhibit 15.1.

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**B. Liquidity and Capital Resources**

See the MD&A attached hereto as Exhibit 15.1.

**C. Research and Development, Patents and Licenses, etc.**

For a discussion of our research and development activities, see "*Item 4.B-Business Overview-Products and Sales*" and the MD&A attached hereto as Exhibit 15.1.

**D. Trend Information**

Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022 to December 31, 2022 that are reasonably likely to have a material adverse effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operating results or financial condition. For a discussion of trends, see "It*em 4.B.-Business Overview*" and the MD&A attached hereto as Exhibit 15.1.

**E. Critical Accounting Estimates**

See notes 2 and 3 to our Consolidated Financial Statements in Item 18.

**Item 6. Directors, Senior Management and Employees**

**A. Directors and Senior Management*.***

The following table sets forth certain information with respect to our executive officers and directors, including their ages as of December 31, 2022:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Anthony Durkacz | 47 | Interim CEO, Co-Executive Chairman and Director |
| Zeeshan Saeed <sup>(</sup><sup>4</sup><sup>)</sup><sup>(</sup><sup>5</sup><sup>)</sup> | 53 | President, Co-Executive Chairman and Director |
| Nathan Coyle | 42 | CFO |
| Donal Carroll | 47 | COO and Director |
| Dr. Lakshmi P. Kotra | 52 | CEO of Lucid Psycheceuticals Inc. and Director |
| Adnan Bashir <sup>(1)</sup><sup>(3)</sup><sup>(</sup><sup>5</sup><sup>)</sup> | 53 | Director |
| Joseph L. Romano | 45 | Director |
| Nitin Kaushal <sup>(2)</sup> | 57 | Director |
| Lawrence (Larry) Latowsky <sup>(</sup><sup>1)(</sup><sup>3</sup><sup>)(</sup><sup>6</sup><sup>)</sup> | 63 | Director |

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____________________

(1) Member of Audit Committee.

(2) Chairman of the Audit Committee.

(3) Member of the Compensation, Nominating and Governance Committee.

(4) Chairman of the Compensation, Nominating and Governance Committee.

(5) Member of the Disclosure Committee.

(6) Chairman of the Disclosure Committee.

Unless otherwise indicated, the current business addresses for our executive officers and directors is 199 Bay St., Suite 4000, Toronto, Ontario, Canada, M5L 1A9.

Each executive officer serves at the discretion of our Board and holds office until his or her successor is duly elected or qualified or until his or her earlier resignation or removal. Each of the directors is elected to hold office until the next annual meeting of the Shareholders or until a successor is duly elected or appointed.

**Executive Officers**

***Anthony Durkacz***

Mr. Durkacz has served as the Corporation's interim CEO since July 2021 and as its Executive Co-Chairman since May 2021 and has served as a member of the Corporation's Board since June 2018. Mr. Durkacz is also a director and the Executive Vice-President of First Republic Capital Corporation, and has served in those roles since 2014. In addition, Mr. Durkacz is the chairman of World Class Extractions Inc. (CSE: PUMP; OTCQB: WCEXF) and has served in that role since 2018. Prior to co-founding the Corporation, from January 2013 to December 2013, Mr. Durkacz was President of Capital Ideas Investor Relations. He previously served as the CFO and a director of Snipp Interactive Inc. (TSXV: SPN.V), a global marketing solutions company that provides a modular software-as-a-service technology suite from January 2011 to January 2013. Mr. Durkacz was instrumental in the financing and public listing of Snipp Interactive Inc. with operations in Canada, the United States, Mexico and India. From 2006 to 2009, he served as COO and CFO of MKU Canada Inc. and engaged in mergers and acquisitions of companies around the world. From 2002 to 2006, Mr. Durkacz served as the CFO and a director of Astris Energi Inc., a dual-listed public company in the United States and Canada which was acquired by an international conglomerate. Mr. Durkacz began his career at TD Securities on the capital markets trading floor. He holds an Honours Bachelor of Business Administration degree from Brock University with a major in both Accounting and Finance.

***Zeeshan Saeed***

Mr. Saeed, a co-founder of the Corporation, has served as the Corporation's President and Executive Co-Chairman since May 2021. Previously, he served as President of the Corporation from May 2019 to January 2021 and as a director from May 2018 to January 2021. From December 2017 to May 2019, Mr. Saeed served as Executive Vice President of FV Pharma Inc., a subsidiary of the Corporation and a former licensed producer of cannabis in Canada under the *Cannabis Act* (Canada). From October 2013 to December 2017, he provided consulting services to FV Pharma Inc. From April 2003 to December 2017, Mr. Saeed served as President of ZZ Telecommunications Inc., a long-distance telecommunications common carrier. Mr. Saeed was the founder and CEO of Platinum Telecommunications Inc. from 2011 to 2013. He has a Bachelor of Science in Mechanical Engineering from the University of Engineering and Technology Lahore.

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***Nathan Coyle***

Nathan Coyle has served as the Corporation's CFO since May 2021. He previously served as the Corporation's Corporate Controller from January 2020 to May 2021 and as Controller of Chem-Ecol Ltd. from July 2013 to January 2020. From July 2013 to January 2020, Mr. Coyle worked with Turtle Holdings Limited, a family investment company, implementing corporate strategies to maximize growth. From 2005 to 2013, Mr. Coyle was with Illinois Tool Works, where he was a key player in restructuring the organization, shaping the growth and streamlining businesses within his industrial packaging segment. Mr. Coyle's involvement in multiple mergers and acquisitions and integrating those organizations was key to company growth. Mr. Coyle holds a Bachelor of Business Administration with honours from Brock University and is a Chartered Professional Accountant.

***Dr. Lakshmi P. Kotra***

Dr. Lakshmi P. Kotra has served as CEO of Lucid Psycheceuticals Inc. since September 2020, which he co-founded in 2020 and has served as a director on the Board since November 2022. Dr. Kotra received his Ph.D. in Pharmacy (Medicinal Chemistry) from the University of Georgia under Prof. David Chu's supervision, and completed postdoctoral training at Wayne State University under Prof. Shahriar Mobashery's supervision. He joined the Faculty of Pharmacy, University of Toronto in 2000, and University Health Network in 2006, where he led a research group and drug discovery program with multiple portfolios. An academic entrepreneur, Dr. Kotra has contributed to a number of important drug discovery and development projects, including metabolic disorders, neurodegenerative and immunological disorders, anti-HIV drugs, antibacterials, and antimalarials. He has authored/co-authored over 130 publications and delivered over 140 scientific talks internationally. Dr. Kotra is the recipient of several awards for his accomplishments, including the Julia Levy Award in 2021 from the Society of Chemical Industry (SCI) Canada in recognition of his substantial contribution to the successful commercialization of innovation in Canada in the field of biomedical science and engineering. In addition to Lucid, he co-founded WinSanTor Biosciences, a San Diego, CA-based company developing treatments for peripheral neuropathies, and CannScience Innovations focused on medical cannabis and cannabinoids. Dr. Kotra has been serving the Company as Chief Executive Officer of its wholly owned subsidiary, Lucid, since the completion of the Corporation's acquisition of Lucid in September 2021.

***Donal Carroll***

Mr. Carroll joined the Corporation as interim CFO in 2018 and was appointed to the position on a permanent basis in December 2019, where he served until May 2021. Mr. Carroll was appointed as COO of the Corporation on August 15, 2021. Mr. Carroll has also served as a director on the Corporation's Board from May 2018 to July 2018 and since May 2021. Mr. Carroll has 20 years of corporate finance leadership and public company experience, as well as experience in syndicate investing both in equity and debt securities. From June 2005 to January 2008, he served as an Accounting Supervisor with Alberto Culver (now Unilever (NYSE:UL)), from February 2008 to October 2013, Mr. Carroll has served as Controller with Videojet Technologies, and from October 2013 to July 2017, he served as a Corporate Controller with Cardinal Meats, where he was instrumental in major restructuring activities, mergers and acquisitions and the implementations of new internal controls and ERP systems. Mr. Carroll has been a Director of Bird River Resources Inc. since August 2019 and a Director of Climb Credit Inc. since May 2020. He holds a CPA-CMA designation as well as a Bachelor of Commerce degree from University College Dublin.

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**Non-Employee Directors**

***Adnan Bashir***

Mr. Bashir has over 14 years of experience in strategic management and operations. He is the founder and President of 58Northwest Inc., a management consulting and marketing services company, and has held the role since 2018. From 2005-2018, Mr. Bashir was General Manager for Al Batha Group, a diversified business conglomerate based in Dubai, UAE. Mr. Bashir was responsible for overseeing the management and operations of 4 companies within the group and was instrumental in acquiring and developing new businesses and partners from Europe, the US and China. During his tenure at Al Batha Group, Mr. Bashir gathered extensive experience in executing turnaround strategies, transforming weak businesses into sustainable and profitable ones and implementing new technologies. Mr. Bashir holds a Bachelor of Science Degree in Mechanical Engineering from University of Engineering and Technology Lahore and has completed extensive executive education, including in strategic management, audit, sales management and technical management.

***Joseph Romano***

Joseph Romano has served as a director on the Board since November 2022. He is the founding member and owner of Romano Law Firm, a Toronto-based personal injury law firm. He has dedicated his law career to helping victims of serious personal injury and motor vehicle accidents. A graduate of Osgoode Hall Law School, Joseph has appeared at all levels of court in Ontario with success.

***Nitin Kaushal***

Mr. Kaushal has served as a director on the Board since May 2021. Since March 2020, Nitin Kaushal has served as President of Anik Capital Corp., his family's holding company. In February 2020, he retired from PricewaterhouseCoopers Canada ("**PwC**"), where he was a Managing Director in the corporate finance practice, which focused on the pharmaceutical and healthcare spaces. He had worked at PwC since 2012. Mr. Kaushal also served as a director on the board of 3 Sixty Risk Solutions Ltd. ("**3 Sixty**") from June 2019 to April 12, 2021, a company whose shares were delisted by the CSE after it was unable to file its annual financial statements. Mr. Kaushal has over 30 years of experience in the healthcare and financial services industries, focusing on the biotechnology, medical devices and healthcare services markets. He was a Managing Director of leading healthcare investment banking teams at a number of Canadian investment banks, including Desjardins Securities Inc., Orion Securities Inc., Vengate Capital, HSBC Securities Inc. and Gordon Capital. He has been involved in over 50 mergers and acquisitions, strategic advisory roles and licensing assignments for a range of companies from early-stage biotechnology companies to large pharmaceutical companies. He has participated in capital market transactions ranging from private placements to initial public offerings to bought deal underwritings. His entry into the biotech/healthcare space was with MDS Capital Corp. in 1991, a leading healthcare venture capital firm.

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Mr. Kaushal sits on a number of public and private company boards in the biotech and healthcare space, including Delta 9 Cannabis Inc. (OTCMKTS: DLTNF), High Tide Inc. (NASDAQ: HITI), VieMed Healthcare Inc. (NASDAQ: VMD), Starton Therapeutics Inc., Flower One Holdings Inc. (NASDAQ: FLOOF) and PsyBio Therapeutics Corp. (OTCMKTS: PSYBF). Mr. Kaushal has a Bachelor of Science in Chemistry from the University of Toronto and is a Chartered Professional Accountant.

***Lawrence (Larry) Latowsky***

Mr. Latowsky has served as a director on the Board since May 2021. Mr. Latowsky is currently CEO of Canntab Therapeutics Ltd., an innovator in cannabinoid and terpene blends in hard pill form for therapeutic application. Mr. Latowsky has held a number of leadership positions throughout his career, including Chairman and CEO of Top Drug Corp. from 2014 to 2020 and President and CEO of Katz Group Canada, the largest network of drugstores in Canada, from 1996 to 2010. Mr. Latowsky also led Propharm Technology and DC Labs, a vertical manufacturing and packaging division of pharmaceuticals and over-the-counter drug store products, from 1996 to 2014. Mr. Latowsky is a graduate of the University of Toronto Rotman Business School and Institute of Corporate Directors of Canada program and has served on many profit and non-profit boards, including as Chairman of the board for Well.ca, one of Canada's leading E-commerce companies, from October 2014 to December 2017. Mr. Latowsky's experience is a blend of traditional retail bricks and mortar, distribution, manufacturing and e-commerce/internet-based marketing and sales.

**Certain Proceedings involving Directors**

Mr. Durkacz has been serving as director of FSD since June 18, 2018. On March 5, 2021, FSD was subject to a court order with respect to the 2021 Annual and Special Meeting which, among other things, prohibited the Corporation's then CEO and directors, other than Mr. Durkacz, from voting certain of their shares at the 2021 Annual and Special Meeting. On April 9, 2021, the Court ordered an injunction restraining the Corporation's then CEO and former directors, other than Mr. Durkacz, from authorizing or undertaking any transaction by FSD other than in the ordinary course of business, issuing any Class B Shares or authorizing the payment of any form of compensation to such former CEO and directors prior to the 2021 Annual and Special Meeting.

Mr. Kaushal served as a director of 3 Sixty from June 2019 to April 2021. On June 9, 2020, 3 Sixty announced that it was not able to file its annual financial statements and accompanying management's discussion and analysis for the financial year ended December 31, 2019 within the period prescribed for such filings. 3 Sixty made an application for a management cease trade order (the "**MCTO**") and, on June 18, 2020, the MCTO was issued by the Ontario Securities Commission (the "**OSC**") and restricted all trading in securities of 3 Sixty by its directors and officers until two business days following the completion of the required filings. On July 15, 2020, the OSC revoked the MCTO and issued a failure-to-file cease trade order (the "**FFCTO**") in replacement of it, ordering that all trading in the securities of 3 Sixty would cease, except in accordance with the conditions of the FFCTO, if any, for so long as the FFCTO remains in effect. 3 Sixty was delisted from the CSE on July 14, 2021.

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**Family Relationships**

There are no family relationships among any of our executive officers or directors.

**B. Compensation.**

**Executive Compensation**

***Introduction***

The following disclosure describes the compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by the Corporation to each NEO (as defined herein). This section also identifies the objectives and material elements of compensation awarded to such executives and the reasons for their compensation. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosure included in this Annual Report.

The Board's assessment of corporate performance is based on a number of qualitative and quantitative factors, including execution of ongoing projects and transactions, and progress on key growth initiatives.

***Named Executive Officers***

The purpose of this section is to provide information about the Corporation's philosophy, objectives and processes regarding executive compensation. This disclosure is intended to communicate the compensation provided to the most highly compensated executive officers of the Company (the "**Named Executive Officers**" or "**NEOs**"). For the purposes of this Annual Report, a NEO means each of the following individuals:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) each individual who served as CEO of the Corporation, during any part of the most recently completed financial year, including an individual performing functions similar to a CEO;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) each individual who served as CFO of the Corporation, during any part of the most recently completed financial year, including an individual performing functions similar to a CFO;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in respect of the Corporation, the three most highly compensated executive officers, other than the individuals identified in paragraphs (a) and (b) at the end of the most recently completed financial year whose total compensation was more than $100,000 for that financial year; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) up to two individuals who would be a Named Executive Officer under paragraph (c) but for the fact that the individual was not an executive officer of the Corporation, and was not acting in a similar capacity, at the end of that financial year.

For the financial year ended December 31, 2022 ("**Fiscal 2022**"), the NEOs are:

Anthony Durkacz, *Interim CEO, Co-Executive Chairman and Director*

Zeeshan Saeed, *President, Co-Executive Chairman and Director*

Nathan Coyle, *CFO*

Donal Carroll, *COO, Director and Former CFO*

Dr. Lakshmi Kotra, *CEO of Lucid*

Dr. Andrzej Chruscinski, *Vice President, Clinical and Scientific Affairs of Lucid*

Kevin Cassidy, *Vice-President, Quality of Lucid*

***Compensation Governance***

The Compensation, Nominating and Governance Committee is currently comprised of three directors, Zeeshan Saeed (Chair), Lawrence Latowsky and Adnan Bashir.

The Compensation, Nominating and Governance Committee has been tasked with establishing an executive compensation program, which, prior to May 16, 2022, included equity compensation by way of share awards and options to purchase Class B Shares ("**Options**") granted under the Stock Option Plan (as defined below). Since the Company's adoption of a new equity incentive plane (the "**Equity Incentive Plan**") on May 16, 2022, the executive compensation program has also included share awards, restricted share units ("**RSUs**") and performance share units ("**PSUs**").

The primary goal of the Corporation's executive compensation program is to attract and retain the key executives necessary for the Corporation's long-term success, to encourage executives to further the development of the Corporation and its operations, and to motivate top quality and experienced executives. The key elements of the executive compensation program are: (i) base salary; (ii) potential annual incentive award; (iii) Options; (iv) RSUs; and (v) PSUs.

The Compensation, Nominating and Governance Committee reviews the adequacy of remuneration for the executive officers by evaluating their performance in light of the Corporation's goals and objectives, the bonus opportunities contained in their employment agreements, and by comparing the performance of the Corporation with other reporting issuers of similar size in the same industry.

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The Board is of the view that all elements of the total program should be considered, rather than any single element. As such, the Corporation does not use fixed criteria in determining the mix of compensation and instead determines compensation based on a contextual analysis of the Corporation. While the Corporation does not have a formally established peer group in determining compensation, the Compensation, Nominating and Governance Committee will on occasion reference other comparable publicly traded Canadian companies to align its compensation practices with market practice.

The terms of any proposed compensation for the directors of the Corporation who are not also officers of the Corporation (including any Options, RSUs and PSUs to be granted) will be determined by the Compensation, Nominating and Governance Committee.

The compensation program is designed to provide income certainty, to attract and retain executives and to provide incentives for the achievement of both short-term and long-term objectives of the Corporation.

***Compensation Process***

The Compensation, Nominating and Governance Committee, through discussion without any formal objectives, criteria or analysis, determines the compensation of the Corporation's executive officers. The Compensation, Nominating and Governance Committee has no formal criteria or goals tied to total compensation or any significant element of total compensation. The Board, through the Compensation, Nominating and Governance Committee, is responsible for determining all forms of compensation, including share-based compensation and long-term incentives in the form of Options, RSUs and PSUs to be granted to the Corporation's executive officers and directors, and for reviewing the recommendations respecting compensation of other officers of the Corporation from time-to-time, to ensure such arrangements reflect the responsibilities and risks associated with each position. The Compensation, Nominating and Governance Committee determines compensation by considering: (i) recruiting and retaining executives critical to the Corporation's success and the enhancement of shareholder value; (ii) providing fair and competitive compensation; (iii) balancing the interests of management and the Corporation's Shareholders; and (iv) rewarding performance, both on an individual basis and with respect to the Corporation's operations in general.

***Annual Incentive Awards***

Annual incentive awards are designed to motivate NEOs to achieve the Corporation's short-term corporate goals, and rewards individual and overall performance. Annual incentives are based on objective, identifiable measures set at the beginning of each financial year at the discretion of the Compensation, Nominating and Governance Committee, which may vary from year to year. Incentive payments are expected to be determined by the Board on the recommendation of the Compensation, Nominating and Governance Committee.

***Option Awards***

Long-term incentives in the form of Options are intended to align the interests of the Corporation's directors and its executive officers with those of its Shareholders, to provide a long-term incentive that rewards these individuals for their contribution to the creation of Shareholder value, and to reduce the cash compensation the Corporation would otherwise pay. The Equity Incentive Plan is administered by the Compensation, Nominating and Governance Committee. While the Corporation does not have a formally established peer group in determining compensation, in considering the number of Options to be granted to the NEOs, reference is made to the number of Options granted to officers of other comparable publicly traded Canadian companies. The Compensation, Nominating and Governance Committee also considers previous grants of equity incentives and the overall number of equity incentives that are outstanding relative to the number of outstanding Shares in determining whether to make any new grants of Options and the size and terms of any such grants, as well as the level of effort, time, responsibility, ability, experience and level of commitment of the executive officer in determining the level of Option compensation (see "*- Equity Incentive Plan*" below).

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***Share Unit Awards***

The Equity Incentive Plan provides that Eligible Persons (as defined in the Equity Incentive Plan) may be allocated share units in the form of RSUs or PSUs (collectively, "**Share Units**"), which represent the right to receive an equivalent number of Class B Shares of the Company or the Market Price (as defined in the Equity Incentive Plan) in cash on the vesting date.

Share Units may be designated at the Board's discretion as either RSUs, which have time-based vesting conditions, or PSUs, which have performance-based vesting conditions over a specified period. The Equity Incentive Plan provides that if Share Units are scheduled to settle during a blackout period, such settlement shall be postponed until the trading day following the date on which the blackout period ends (or as soon as practicable thereafter, and in any event, within 10 business days following the end of the blackout period), and the Market Price of any RSUs or PSUs settled in cash will be determined as of the trading day immediately prior to the settlement date.

The Compensation, Nominating and Governance Committee also considers previous grants of equity incentives and the overall number of equity incentives that are outstanding relative to the number of outstanding Shares in determining whether to make any new grants of Share Units and the size and terms of any such grants, as well as the level of effort, time, responsibility, ability, experience and level of commitment of the executive officer in determining the level of Share Unit compensation (see "*- Equity Incentive Plan*" below).

***Insider Trading and Blackout Period Policy***

All of the Corporation's executives, other employees and directors are subject to the Corporation's Insider Trading and Blackout Period Policy, which prohibits trading in the Corporation's securities while in possession of material undisclosed information about the Corporation. Under this policy, such individuals are also prohibited from entering into hedging transactions involving securities of the Corporation, such as short sales, puts and calls. Furthermore, subject to certain limited exceptions, the Corporation permits executives, including the NEOs, to trade in the Corporation's securities only during prescribed trading windows.

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***Summary Compensation Table*** 

The following table shows the compensation earned by, paid to, or awarded to the NEOs in respect of Fiscal 2022, 2021 and 2020. Following the 2021 Annual and Special Meeting on May 14<sup>th</sup>, 2021, the Board adopted a new director compensation program (see "*-Director Compensation-Director Compensation Program*" below for details on the new compensation program.). Compensation for NEOs disclosed below reflects the compensation received by each NEO during the relevant fiscal year.

**Summary Compensation Table**

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Name and<br>Principal<br>Position** | &nbsp;&nbsp; **Year** | &nbsp;&nbsp; **Salary** | &nbsp;&nbsp; **Bonus** | &nbsp;&nbsp; **Stock<br>Awards<sup>(1)</sup>** | &nbsp;&nbsp; **Option<br>Awards<sup>(2)(8)</sup>** | &nbsp;&nbsp; **Non-Equity<br>Incentive Plan<br>Compensation** | &nbsp;&nbsp; **All Other<br>Compensation<sup>(3)</sup>** | &nbsp;&nbsp; **Total** |
| &nbsp;&nbsp; **Name and<br>Principal<br>Position** |  | &nbsp;&nbsp; **(US$)** | &nbsp;&nbsp; **(US$)** | &nbsp;&nbsp; **(US$)** | &nbsp;&nbsp; **(US$)** | &nbsp;&nbsp; **(US$)** | &nbsp;&nbsp; **(US$)** | &nbsp;&nbsp; **(US$)** |
| Anthony Durkacz<sup>(4)</sup><br> *Interim CEO and Co-Executive Chairman* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 239269.00 | &nbsp;&nbsp; 136710.00<sup>(11)</sup> | &nbsp;&nbsp; 316834.25<sup>(9)</sup> | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 692813.25 |
| Anthony Durkacz<sup>(4)</sup><br> *Interim CEO and Co-Executive Chairman* | &nbsp;&nbsp; 2021 | &nbsp;&nbsp; 103702.69 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 777798.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 881500.69 |
| Anthony Durkacz<sup>(4)</sup><br> *Interim CEO and Co-Executive Chairman* | &nbsp;&nbsp; 2020 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 438881.39 | &nbsp;&nbsp; 236014.19 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 674895.58 |
| Nathan Coyle<sup>(5)</sup><br> *CFO* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 191891.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 191891.00 |
| Nathan Coyle<sup>(5)</sup><br> *CFO* | &nbsp;&nbsp; 2021 | &nbsp;&nbsp; 189186.02 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 46586.00 | &nbsp;&nbsp; 15734.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 251506.02 |
| Nathan Coyle<sup>(5)</sup><br> *CFO* | &nbsp;&nbsp; 2020 | &nbsp;&nbsp; 143834.62 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 143834.62 |
| Zeeshan Saeed<sup>(6)</sup><br> *President & Co-Executive Chairman* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 239269.00 | &nbsp;&nbsp; 136710.00<sup>(11</sup><sup>)</sup> | &nbsp;&nbsp; 398010.23<sup>(9)</sup> | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 773989.23 |
| Zeeshan Saeed<sup>(6)</sup><br> *President & Co-Executive Chairman* | &nbsp;&nbsp; 2021 | &nbsp;&nbsp; 225270.73 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 777798.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 1003068.73 |
| Zeeshan Saeed<sup>(6)</sup><br> *President & Co-Executive Chairman* | &nbsp;&nbsp; 2020 | &nbsp;&nbsp; 212292.43 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 438881.39 | &nbsp;&nbsp; 236014.19 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 12310.65 | &nbsp;&nbsp; 899498.66 |
| Donal Carroll<sup>(7)</sup><br> *COO, Director & Former CFO* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 239269.00 | &nbsp;&nbsp; 136710.00<sup>(11)</sup> | &nbsp;&nbsp; 321543.29<sup>(9)</sup> | &nbsp;&nbsp; 34519.39 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 732041.68 |
| Donal Carroll<sup>(7)</sup><br> *COO, Director & Former CFO* | &nbsp;&nbsp; 2021 | &nbsp;&nbsp; 351406.32 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 777798.00 | &nbsp;&nbsp; 78670.00 | &nbsp;&nbsp; 4778.70 | &nbsp;&nbsp; 1212653.02 |
| Donal Carroll<sup>(7)</sup><br> *COO, Director & Former CFO* | &nbsp;&nbsp; 2020 | &nbsp;&nbsp; 191188.13 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 219440.69 | &nbsp;&nbsp; 138137.28 | &nbsp;&nbsp; 74610.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 623376.11 |
| Dr. Lakshmi Kotra, *CEO of Lucid, Director* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 331510.00<sup>(10)</sup> | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 80212.18<sup>(9)(10)</sup> | &nbsp;&nbsp; 0.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 411722.18 |
| Dr. Lakshmi Kotra, *CEO of Lucid, Director* | &nbsp;&nbsp; 2021 | &nbsp;&nbsp; 44430.00<sup>(10)</sup> | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 172798.96 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 217228.96 |
| Dr. Andrzej Chruscinski, *Vice President, Clinical and Scientific Affairs of Lucid* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 110304.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 110304.00 |
| Kevin Cassidy, *Vice-President, Quality of Lucid* | &nbsp;&nbsp; 2022 | &nbsp;&nbsp; 144822.00 | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; 144822.00 |

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**Notes:** 

(1) "**Stock Award**" means an award of Class B Shares and includes PSU Awards (as defined below). The dollar amount disclosed is based on the closing price per Class B Share at the date of each grant.

(2) "**Option Award**" means an award of Options under the Stock Option Plan or Equity Incentive Plan. This does not represent cash paid to the NEO. This figure is based on the grant date fair value of such Options. The grant date fair value was determined in accordance with International Financial Reporting Standards. This methodology was chosen in order to be consistent with the accounting fair value used by the Corporation in its financial statements, and the Black-Scholes option pricing model is a commonly used methodology for valuing options which provides an objective and reasonable estimate of fair value. Calculating the value of stock options using the Black-Scholes option pricing model is very different from a simple "in-the-money" value calculation. Accordingly, caution must be exercised in comparing grant date fair value amounts with cash compensation or an in-the-money option value calculation.

(3) Includes Corporation-paid health and life insurance benefits and car allowances for all NEOs.

(4) Mr. Durkacz has been a director of the Corporation since June 18, 2018 and was appointed as interim CEO of the Corporation on July 27, 2021.

(5) Mr. Coyle was appointed as CFO of the Corporation on May 4, 2021, initially on an interim basis and then on a permanent basis.

(6) Mr. Saeed departed from his position as President and director of the Corporation effective January 25, 2021 but was re-elected as a director of the Corporation on May 14, 2021 and re-appointed as President of the Corporation on July 27, 2021.

(7) Mr. Carroll resigned as CFO of the Corporation on May 4, 2021 and was elected as a director of the Corporation at the Annual and Special Meeting on May 14, 2021. Mr. Carroll was appointed as COO of the Corporation on August 15, 2021.

(8) Certain Option Awards for the years-ended 2019 and 2020 were cancelled during the years-ended 2020 and 2021. For details on these cancellations, see "*Item 7.B.-Major Shareholders and Related Party Transactions-Related Party Transactions-Performance Share Units*".

(9) This figure represents a "**PSU Award**", which means an award of PSUs under the Equity Incentive Plan. This does not represent cash paid to the NEO. This figure is based on the incremental grant date fair value of such PSUs. The grant date fair value was determined in accordance with International Financial Reporting Standards. The incremental fair value is the difference between the fair value of the PSUs based on the share price on the grant date and the fair value of the share options cancelled as measured on date of modification. This methodology was chosen in order to be consistent with the accounting fair value used by the Corporation in its financial statements. For further details on the valuation of PSUs, see Note 16 to our consolidated financial statements, which are appended at the end of this Annual Report, starting at page F-1. For details on the material terms and vesting of such PSU Awards, see "*Item 7.B.-Major Shareholders and Related Party Transactions-Related Party Transactions-Performance Share Units*".

(10) Dr. Kotra is not paid a salary by the Corporation, but was paid a consulting fee of $331,510.00 for Fiscal 2022 and $44,430.00 for the year ended December 31, 2021. Dr. Kotra's PSU Awards for the Fiscal 2022 includes 51,500 PSUs issued to ILace Therapeutics International Inc., a corporation controlled by Dr. Kotra.

(11) These amounts represent cash bonuses paid to the NEO.

***Outstanding Equity Awards at Fiscal Year End***

The following table indicates, for each NEO, Option Awards and PSUs outstanding as of December 31, 2022.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Name and Position** | &nbsp;&nbsp; **Option Awards** | &nbsp;&nbsp; **Option Awards** | &nbsp;&nbsp; **Option Awards** | &nbsp;&nbsp; **Stock Awards** | &nbsp;&nbsp; **Stock Awards** |
| &nbsp;&nbsp; **Name and Position** | &nbsp;&nbsp; **Number of<br>Securities<br>Underlying<br>Unexercised<br>Options<br>(Exercisable)<sup>(</sup>**<sup>**1)**</sup> | &nbsp;&nbsp; **Option Exercise<br>Price** | &nbsp;&nbsp; **Option<br>Expiration Date** | &nbsp;&nbsp; **Equity Incentive Plan<br>Awards: Number of<br>Unearned Shares That Have<br>Not Vested<sup>(3)</sup>** | &nbsp;&nbsp; **Equity Incentive Plan<br>Awards: Market Value of<br>Unearned Shares That Have<br>Not Vested<sup>(4)</sup>** |
| &nbsp;&nbsp; **Name and Position** | &nbsp;&nbsp; **(#)** | &nbsp;&nbsp; **(US$)** |  | &nbsp;&nbsp; **(#)** | &nbsp;&nbsp; **(US$)** |
| Anthony Durkacz<br> *Interim CEO and Co-Executive Chairman* | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | 699502 | 316834.25 |
| Nathan Coyle<br>*CFO* | &nbsp;&nbsp; 5000 | &nbsp;&nbsp; 2.8845 | &nbsp;&nbsp; March 18, 2024 | Nil. | Nil. |
| Nathan Coyle<br>*CFO* | &nbsp;&nbsp; 30000 | &nbsp;&nbsp; 1.7307 | &nbsp;&nbsp; June 1, 2024 | Nil. | Nil. |
| Donal Carroll <br>*COO, Director & former CFO* | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | 704801 | 321543.29 |
| Zeeshan Saeed <br>*President & Co-Executive Chairman* | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | &nbsp;&nbsp; Nil. | 799004 | 398010.23 |
| Dr. Lakshmi Kotra<br>*CEO of Lucid, Director*<sup>(</sup><sup>5</sup><sup>)</sup> | &nbsp;&nbsp; Nil. | Nil. | Nil. | 216797 | 80212.18 |
| Dr. Andrzej Chruscinski<br>*Vice President, Clinical and Scientific Affairs of Lucid* | &nbsp;&nbsp; Nil. | Nil. | Nil. | Nil. | Nil. |
| Kevin Cassidy<br>*Vice-President, Quality of Lucid* | &nbsp;&nbsp; Nil. | Nil. | Nil. | Nil. | Nil. |

---

**Notes:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) As of June 1, 2021, all of these Option Awards have been fully vested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The value of the unexercised in-the-money Options is calculated based on the difference between the market value of the Class B Shares as at December 31, 2022 and the exercise price of the Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Represents unvested PSUs. Each PSU represents the right to receive an equivalent number of Class B Shares of the Company or the Market Price (as defined in the Equity Incentive Plan) in cash on the vesting date. See *"- Equity Incentive Plan*" below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) This figure represents a PSU Award. This does not represent cash paid to the NEO. This figure is based on the incremental grant date fair value of such PSUs. The grant date fair value was determined in accordance with International Financial Reporting Standards. The incremental fair value is the difference between the fair value of the PSUs based on the share price on the grant date and the fair value of the share options cancelled as measured on date of modification. This methodology was chosen in order to be consistent with the accounting fair value used by the Corporation in its financial statements. For further details on the valuation of PSUs, see Note 16 to our consolidated financial statements, which are appended at the end of this Annual Report, starting at page F-1. For details on the material terms and vesting of such PSU Awards, see "*Item 7.B.-Major Shareholders and Related Party Transactions-Related Party Transactions-Performance Share Units*".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Dr. Kotra's PSU Awards for Fiscal 2022 includes 51,500 PSUs issued to ILace Therapeutics International Inc., a corporation controlled by Dr. Kotra.

***Narrative Discussion of Summary Compensation Table and Outstanding Equity Awards at Fiscal Year End***

***Stock Option Plan***

On February 9, 2018, the Board approved a stock option plan (the "**Stock Option Plan**"). The Stock Option Plan provides that the total number of Options available to be issued under the Stock Option Plan is 10% of the number of Class B Shares issued and outstanding from time to time, on a fully diluted basis, each in accordance with the policies of the CSE and Nasdaq applicable to the Corporation.

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The Stock Option Plan was established to provide incentive to qualified parties to increase their proprietary interest in the Corporation and thereby encourage their continuing association with the Corporation. Management proposes Option grants to the Compensation, Nominating and Governance Committee based on such criteria as performance, previous grants, and hiring incentives. All grants require approval of the Compensation, Nominating and Governance Committee. The Stock Option Plan provides that Options may be issued to directors, officers, employees or consultants of the Corporation.

The Stock Option Plan is administered by the Compensation, Nominating and Governance Committee, which has full and final authority with respect to the granting of all Options thereunder. Options may be granted under the Stock Option Plan to such service providers of the Corporation and its affiliates, if any, as the Compensation, Nominating and Governance Committee may from time to time designate. The exercise prices will be determined by the Compensation, Nominating and Governance Committee but will, in no event, be less than the market value of the Class B Shares or the lowest price permitted by the policies of any stock exchange on which the Class B Shares may be listed. All Options granted under the Stock Option Plan will expire not later than the date that is ten years from the date that such Options are granted. Options granted under the Stock Option Plan are not transferable or assignable other than by testamentary instrument or pursuant to the laws of succession. For further information about the number of Options currently held by our NEOs, please see the section in this Annual Report titled "*Directors, Senior Management and Employees-Compensation-Executive Compensation-Outstanding Equity Awards at Fiscal Year End"*.

***Equity Incentive Plan***

On May 16, 2022, the Company adopted the Equity Incentive Plan, pursuant to which the Company may grant share awards, restricted share units ("**RSUs**"), performance share units ("**PSUs**") and Options.

The Equity Incentive Plan provides that: (i) the aggregate number of Class B Shares of the Company that may be issued pursuant to the Equity Incentive Plan, together with all other security-based compensation arrangements of the Company, shall be equal to 10% of the issued and outstanding Class B Shares, from time to time; (ii) the aggregate number of Class B Shares reserved for issuance pursuant to the Equity Incentive Plan to any one participant, together with all other security-based compensation arrangements of the Company, must not exceed 5% of the aggregate issued and outstanding Class B Shares; (iii) the maximum number of Class B Shares of the Company (a) issued to Insiders (as defined in the Equity Incentive Plan) within any one year period, and (b) issuable to Insiders, at any time, under the Equity Incentive Plan or when combined with all other security-based compensation arrangements of the Company, shall not exceed 10% of the number of the aggregate issued and outstanding Class B Shares; and (iv) the maximum number of Class B Shares issued within any 12-month period to an individual Employed (as defined in the Equity Incentive Plan) by the Company or any of its subsidiaries or a service provider engaged in investor relations activities must not exceed 1% of the issued and outstanding Class B Shares. Unless otherwise designated by the Board in the applicable grant agreement, 25% of the Options granted under the Equity Incentive Plan shall vest and become exercisable on the first anniversary of the grant date and the remaining 75% of the Options shall vest and become exercisable in equal quarterly installments beginning on the 15-month anniversary of the grant date and ending on the four-year anniversary of the grant date.

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The Equity Incentive Plan was established to: (i) promote further alignment of interests between officers, employees and other eligible service providers and Shareholders; (ii) associate a portion of the compensation payable to officers, employees and other eligible service providers with the returns achieved by Shareholders; and (iii) attract and retain officers, employees and other eligible service providers with the knowledge, experience and expertise required by the Company.

The Equity Incentive Plan is administered by the Board, which has full and complete discretionary authority with respect to the granting of all awards thereunder. The Board may, subject to applicable law and certain restrictions, delegate its powers, rights and duties under the Equity Incentive Plan to a committee of the Board, a person or persons, as it may determine, from time to time, on terms and conditions as it may determine. Awards may be granted under the Equity Incentive Plan to such service providers of the Company and its subsidiaries, if any, as the Board may from time to time designate. With respect to Options, exercise prices will be determined by the Board but will, in no event, be less than the market price of the Class B Shares on the grant date or the lowest price permitted by the policies of any stock exchange on which the Class B Shares may be listed. Generally, all Options granted under the Equity Incentive Plan will expire not later than the date that is ten years from the date that such Options are granted. With respect to RSUs and PSUs, the number of such awards granted shall be determined by dividing the grant value for such grant, as determined by the Board, by the market price of a Class B Share as at the grant date (or otherwise determined by the Board). Settlement of RSUs and PSUs shall be made by the issuance of one Class B Share for each RSU or PSU then being settled, a cash payment equal to the market price of one Class B Share on the vesting date of the RSUs or PSUs being settled in cash or a combination of Class B Shares and cash, all as determined by the Board in its discretion, or as specified in applicable grant agreement. Subject to certain exceptions, any awards granted under the Equity Incentive Plan are not transferable or assignable other than by testamentary disposition or pursuant to the laws of intestate succession.

***Pension Plan Benefits***

The Corporation established a 401(k) plan on January 31, 2021 but the plan was terminated on December 31, 2021. The Corporation currently does not have any pension plans that provide for payments or benefits at, following, or in connection with retirement.

***Termination, Change of Control Benefits and Executive Agreements of the NEOs***

The Corporation has entered into executive employment agreements with each of the NEOs (the "**Executive Agreements**") other than Nathan Coyle and Dr. Lakshmi Kotra. Each Executive Agreement provides for the NEO's annual base salary, vacation entitlement and benefits.

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The following is a description of material provisions of the Executive Agreements as they relate to termination and change of control.

*Anthony Durkacz (Interim CEO, Co-Executive Chairman and Director)*

Mr. Durkacz has an executive employment agreement with the Company. In the event of both a change of control transaction and Mr. Durkacz ceasing to be employed by the company for any reason, all outstanding unvested Options held as of the date Mr. Durkacz ceases to be employed by the Company shall immediately vest and remain outstanding and exercisable for a period of five years from that date. All vested Options held by Mr. Durkacz that are outstanding on that date shall remain outstanding and be exercisable for five years following the applicable vesting date of the Options. Additionally, in the event of any change of control transaction, the expiry date of each Option issued to Mr. Durkacz prior to the date, and during the term, of his Executive Agreement shall be the date that is five years from the applicable vesting date of such Option. In the event Mr. Durkacz's employment is terminated, he would be entitled to receive C$50,000.

*Zeeshan Saeed (President, Co-Executive Chairman and Director)*

Mr. Saeed has an executive employment agreement with the Company. In the event the Company terminates Mr. Saeed's employment without cause or in the event of any termination of the agreement by either party following a change of control, the Company will provide Mr. Saeed with a cash payment in an amount equal to 24-months (2 years) compensation, being the sum of: (i) base salary; (ii) the applicable target bonus; and (iii) the cash value of any stock grants provided in the last 12-months. In the event of a change of control transaction and Mr. Saeed ceasing to be employed by the Company for any reason, all outstanding unvested Options held by Mr. Saeed as of the date that he ceases being employed by the Company shall immediately vest and shall remain outstanding and be exercisable for five years following that date. All vested Options held by Mr. Saeed that are outstanding on that date will remain outstanding and be exercisable for five years following the applicable vesting date of the Options. Additionally, in the event of any change of control transaction, the expiry date of each Option issued to Mr. Saeed prior to the date, and during the term, of his Executive Agreement shall be the date that is five years from the applicable vesting date of such Option. In the event Mr. Saeed's employment is terminated without cause or as a result of a change of control transaction, he would be entitled to receive C$600,000.

*Donal Carroll (COO, Director and Former CFO)*

Mr. Carroll has an executive employment agreement with the Company. In the event the Company terminates Mr. Carroll's employment without cause or in the event of any termination of the agreement by either party following a change of control, the Company shall pay Mr. Carroll a cash payment in an amount equal to 24 months (2 years) compensation, being the sum of: (i) base salary; (ii) the applicable target bonus; and (iii) the cash value of any stock grants provided in the last 12-months. In the event of a change of control transaction and Mr. Carroll ceasing to be employed by the Company for any reason, all outstanding unvested Options, as of the date Mr. Carroll ceases to be employed by the Company shall immediately vest and shall remain outstanding and be exercisable for a period of five years following that date. All vested Options held by Mr. Carroll that are outstanding as of that date shall remain outstanding and be exercisable for five years following the applicable vesting date of the Options. Additionally, in the event of any change of control transaction, the expiry date of each Option issued to Mr. Carroll prior to the date, and during the term, of his Executive Agreement shall be the date that is five years from the applicable vesting date of such Option. In the event Mr. Carroll's employment is terminated without cause or as a result of a change of control transaction, he would be entitled to receive C$600,000.

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*Dr. Andrzej Chruscinski (Vice President, Clinical and Scientific Affairs of Lucid)*

Mr. Chruscinski has an employment agreement with Lucid. In the event Lucid terminates the agreement without cause, Lucid will provide Mr. Chruscinski with a cash payment equal to one month of Mr. Chruscinski's base salary at the time of termination. Additionally, Lucid will continue Mr. Chruscinski's benefits as required by the *Ontario Employment Standards Act, 2000*. In the event of termination with cause, Mr. Chruscinski is only entitled to any additional payments and benefits expressly required under the *Ontario Employment Standards Act, 2000.* At the time of cessation of employment, any awards received by Mr. Chruscinski under the Company's Equity Incentive Plan or any similar plan maintained by the Company will be addressed in accordance with the terms and conditions of the Equity Incentive Plan or the applicable award agreement.

*Kevin Cassidy (Vice-President, Quality of Lucid)*

Mr. Cassidy has an employment agreement with Lucid. In the event Lucid terminates the agreement without cause, Lucid will provide Mr. Cassidy with a cash payment equal to one month of Mr. Cassidy's base salary at the time of termination. Additionally, Lucid will continue Mr. Cassidy's benefits as required by the *Ontario Employment Standards Act, 2000*. In the event of termination with cause, Mr. Cassidy is only entitled to any additional payments and benefits expressly required under the *Ontario Employment Standards Act, 2000.* At the time of cessation of employment, any awards received by Mr. Cassidy under the Company's Equity Incentive Plan or any similar plan maintained by the Company will be addressed in accordance with the terms and conditions of the Equity Incentive Plan or the applicable award agreement.

**Liability Insurance of Directors and Officers**

The Company has directors' and officers' liability insurance coverage for losses to the Company if the Company is required to reimburse directors and officers, where permitted, and for direct indemnity of directors and officers where corporate reimbursement is not permitted by law. This insurance protects the Company against liability (including costs), subject to standard policy exclusions, which may be incurred by directors and/or officers acting in such capacity for the Company. All directors and officers are covered by the policy and the amount of insurance applies collectively to all. The annual cost for this insurance in 2022 was US$713,887.

**Indemnification**

By-law No. 1 provides for indemnification of each of our directors and executive officers to the fullest extent permitted by the OBCA.

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We have entered into indemnity agreements with each director and officer providing that if such director or officer is or was involved in any threatened, pending or completed proceeding by reason of the fact that such director or officer is or was a director or officer of the Company or is or was serving at our request as a director or officer of another entity, such director or officer will be indemnified and held harmless by us to the fullest extent authorized by and in the manner set forth in the OBCA against all expense, liability and loss reasonably incurred or suffered by such director or officer in connection therewith. Under such indemnity agreements, to the fullest extent allowable under applicable law, we shall also indemnify against any costs actually and reasonably paid or incurred by a director or officer in connection with any action or proceeding by such director or officer for (i) indemnification or reimbursement of any costs, or payment of any cost advance, by us under any provision of the agreements, or under any other agreement or provision of our constating documents and (ii) recovery under any directors' and officers' liability insurance policies maintained by us, regardless of whether the director or officer ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be.

**Director Compensation**

***Director Compensation Program***

The following describes the director compensation program that was in effect for Fiscal 2022. A cash retainer of $60,000 per year is paid on a monthly basis. In addition, $20,000 per year is paid to the Chair of the Audit Committee and $10,000 per year is paid to the Chairs of each of the Compensation, Nominating and Governance Committee and the Disclosure Committee, paid on a monthly basis in each case. No additional fees are paid to the members for attending the meetings of our board of directors and meetings of our standing committees. In accordance with the Equity Incentive Plan, directors are entitled to receive incentive awards, including share awards, PSUs, RSUs and Options.

***Director Compensation Table***

The following table sets forth information concerning compensation accrued or paid to our non-employee directors during Fiscal 2022 for their service on our Board, other than NEOs whose compensation is reported in the Summary Compensation table above.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Fees Earned or Paid<br>in Cash**<br>**($)** | &nbsp;&nbsp;**Stock** <br>**Awards<sup>(1)</sup>** <br>**($)** | &nbsp;&nbsp;**Total**<br>**($)** |
| &nbsp;&nbsp;Nitin Kaushal | &nbsp;&nbsp;61404.94 | &nbsp;&nbsp;48708.82 &nbsp;&nbsp;Nil | &nbsp;&nbsp;110113.76 |
| &nbsp;&nbsp;Fernando Cugliari<sup>(</sup><sup>3</sup><sup>)</sup> | &nbsp;&nbsp;49425.31 | &nbsp;&nbsp;48708.82 &nbsp;&nbsp;Nil | &nbsp;&nbsp;98134.13 |
| &nbsp;&nbsp;Lawrence (Larry) Latowsky | &nbsp;&nbsp;53729.44 | &nbsp;&nbsp;48708.82 &nbsp;&nbsp;Nil | &nbsp;&nbsp;102438.26 |
| &nbsp;&nbsp;Adnan Bashir | &nbsp;&nbsp;46053.75 | &nbsp;&nbsp;48708.82 &nbsp;&nbsp;Nil | &nbsp;&nbsp;94762.57 |
| &nbsp;&nbsp;Joseph L. Romano<sup>(</sup><sup>4</sup><sup>)</sup> | &nbsp;&nbsp;4490.48 | &nbsp;&nbsp;Nil | &nbsp;&nbsp;4490.48 |

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**Notes:**

(1) This figure represents a PSU Award. This does not represent cash paid to the NEO. This figure is based on the incremental grant date fair value of such PSUs. The grant date fair value was determined in accordance with International Financial Reporting Standards. The incremental fair value is the difference between the fair value of the PSUs based on the share price on the grant date and the fair value of the share options cancelled as measured on date of modification. This methodology was chosen in order to be consistent with the accounting fair value used by the Corporation in its financial statements. For further details on the valuation of PSUs, see Note 16 to our consolidated financial statements, which are appended at the end of this Annual Report, starting at page F-1. For details on the material terms and vesting of such PSU Awards, see "*Item 7.B.-Major Shareholders and Related Party Transactions-Related Party Transactions-Performance Share Units*".

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(2) This does not represent cash paid to the NEO. This figure is based on the grant date fair value of such Options. The grant date fair value was determined in accordance with International Financial Reporting Standards. This methodology was chosen in order to be consistent with the accounting fair value used by the Company in its financial statements, and the Black-Scholes option pricing model is a commonly used methodology for valuing options which provides an objective and reasonable estimate of fair value. Calculating the value of stock options using the Black-Scholes option pricing model is very different from a simple "in-the-money" value calculation. Accordingly, caution must be exercised in comparing grant date fair value amounts with cash compensation or an in-the-money option value calculation.

(3) Mr. Cugliari resigned from the Board on November 25, 2022.

(4) Mr. Romano was appointed to the Board on November 25, 2022.

***Incentive Plan Awards***

All directors were entitled to participate in the Stock Option Plan or Equity Incentive Plan. During Fiscal 2022, no Options were granted to, and no Options were exercised by, non-employee directors under the Stock Option Plan or Equity Incentive Plan. During Fiscal 2022, 400,000 PSUs were granted to non-employee directors under the Equity Incentive Plan. For details on the material terms and vesting of such PSUs, see "*Item 7.B.-Major Shareholders and Related Party Transactions-Related Party Transactions-Performance Share Units*".

***Outstanding Equity Awards at Fiscal Year End***

As at December 31, 2022, there were no outstanding equity awards for any non-employee directors of the Company.

***Securities Authorized For Issuance Under Equity Compensation Plans***

The following table sets forth the number of Class B Shares to be issued upon exercise of outstanding Options and PSUs, the weighted-average exercise price of such outstanding Options and the number of Class B Shares remaining available for future issuance under the Stock Option Plan or Equity Incentive Plan as of December 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Plan Category** | &nbsp;&nbsp;**Number of Class B Shares to be<br>issued upon exercise of<br>outstanding Options, Warrants<br>and Rights** | &nbsp;&nbsp;**Weighted-average exercise** <br>**price of outstanding Options,<br>Warrants and Rights**<br>**(C$)<sup>(1)</sup>** | &nbsp;&nbsp;**Number of Class B Shares remaining<br>available for future issuance under<br>equity compensation plans** <br>**(excluding securities reflected in the<br>first column)<sup>(</sup>**<sup>**2**</sup><sup>**)**</sup> |
| &nbsp;&nbsp;Equity compensation plans approved by security holders | &nbsp;&nbsp;2838633 | &nbsp;&nbsp;3.71 | &nbsp;&nbsp;1011788 |
| &nbsp;&nbsp;Equity compensation plans not approved by security holders | &nbsp;&nbsp;Nil. | &nbsp;&nbsp;Nil. | &nbsp;&nbsp;Nil. |
| &nbsp;&nbsp;Total | &nbsp;&nbsp;2838633 | &nbsp;&nbsp;3.71 | &nbsp;&nbsp;1011788 |

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**Notes:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The weighted-average exercise prices in this column reflect only the weighted-average exercise prices of Options, as the PSUs issued by the Company do not have an exercise price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Based on 10% of the 38,504,210 Class B Shares issued and outstanding as of December 31, 2022.

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***Indebtedness of Directors and Executive Officers***

No current or proposed director, executive officer or employee of the Company, or any associate of any of the foregoing, (i) is, or has been at any time since the beginning of the Company's most recently completed financial year, indebted to the Company or any of its subsidiaries, or (ii) has indebtedness to another entity that is, or has been at any time since the beginning of the Company's most recently completed financial year, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries.

**C. Board Practices**

Our board of directors is responsible for our stewardship and strategic direction. It does not actively manage but rather supervises the management of our business and affairs to ensure a consistent focus on increasing shareholder value. In exercising their powers and discharging their duties, our directors shall (a) act honestly and in good faith with a view to the best interests of the Company; and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Our board of directors currently consists of eight members. The following table sets forth the names of our directors, their current positions with the Company and the years of their initial appointment as directors and the expiration dates of their current term.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Current**<br>**Position(s)** | **Date of**<br>**Initial**<br>**Appointment** | **Term**<br>**Expiration**<br>**Year** |
| Anthony Durkacz | Interim CEO and Co-Executive Chairman | June 18, 2018 | 2023 |
| Zeeshan Saeed | President and Co-Executive Chairman | May 24, 2018<sup>(1)</sup> | 2023 |
| Donal Carroll | COO and Director | May 24, 2018 | 2023 |
| Nitin Kaushal | Director | May 14, 2021 | 2023 |
| Lawrence (Larry) Latowsky | Director | May 14, 2021 | 2023 |
| Adnan Bashir | Director | June 1, 2021 | 2023 |
| Dr. Lakshmi P. Kotra | CEO of Lucid Psycheceuticals Inc. and Director | November 25, 2022 | 2023 |
| Joseph L. Romano | Director | November 25, 2022 | 2023 |

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**Notes:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Mr. Saeed departed from his position as President and director of the Corporation effective January 25, 2021 but was re-elected as a director of the Corporation on May 14, 2021 and re-appointed as President of the Corporation on July 27, 2021.

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***Board of Directors***

The Board is responsible for the stewardship of the Company and for the supervision of management to protect Shareholder interests. The Board oversees the development of the Company's strategic plan and the ability of management to continue to deliver on the corporate objectives.

The independent judgment of the Board in carrying out its responsibilities is the responsibility of all directors. The Board facilitates independent supervision of management through meetings of the Board and through frequent informal discussions among independent members of the Board and management. In addition, the Board has free access to the Company's external auditors, external legal counsel and to the Company's officers.

The Board is responsible for assessing the effectiveness of the Board as a whole, the committees of the Board and the contribution of individual directors. Each Board member has considerable experience in the guidance and management of public companies and the Board has found this has been sufficient to meet the needs of the Company to date.

**Composition and Independence of the Board**

The Board is currently comprised of eight directors: Anthony Durkacz, Zeeshan Saeed, Donal Carroll, Nitin Kaushal, Lawrence (Larry) Latowsky, Dr. Lakshmi Kotra, Joseph Romano and Adnan Bashir (collectively, the "**Current Directors**").

The Board has determined that four of the eight Current Directors of the Company, namely Nitin Kaushal, Lawrence (Larry) Latowsky, Joseph Romano and Adnan Bashir, have no material relationship with the Company, either directly or indirectly, which could, in the view of the Board, be reasonably expected to interfere with the exercise of such individual's independent judgment, and are "independent" within the meaning of such term under NI 58-101 and the applicable Nasdaq Rules.

Anthony Durkacz, Zeeshan Saeed, Dr. Lakshmi Kotra and Donal Carroll are not "independent" within the meaning of such term under NI 58-101 and the applicable Nasdaq Rules, as Anthony Durkacz is the interim CEO and Co-Executive Chairman of the Company and a holder, through a corporation he owns and controls, of Class A Shares, Zeeshan Saeed is the President and Co-Executive Chairman of the Corporation and has an interest in Class A Shares held in a trust for his economic benefit, Dr. Lakshmi Kotra is the CEO of Lucid, and Donal Carroll is the COO of the Corporation and was the CFO of the Corporation until May 4, 2021.

**Board Meetings**

Although the independent directors do not hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance, the Board has adopted the practice of following each meeting with an independent directors' discussion. The Board ensures open and candid discussion among its independent directors by continuously monitoring situations where a conflict of interest or perceived conflict of interest with respect to a director may exist. In cases where such a conflict of interest or perceived conflict of interest is identified, it is addressed in accordance with the *Business Corporations Act* (Ontario) and the Board Mandate. The Board may determine that it is appropriate to hold an in-camera session excluding a director with a conflict of interest or perceived conflict of interest, or such director may consider that it is appropriate to recuse him or herself from considering and voting with respect to the matter under consideration.

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The Co-Executive Chairmen of the Board, Anthony Durkacz and Zeeshan Saeed, are non-independent directors. The independent chair of the Audit Committee, Nitin Kaushal, provides leadership for its independent directors. Mr. Durkacz, Mr. Saeed and Mr. Kaushal are responsible for encouraging open and candid discussion among the independent directors, as discussed above, as well as facilitating Board meetings.

Mr. Durkacz, Mr. Saeed and Mr. Kaushal collaborate when setting the agenda of Board meetings and both work with the broader Board to promote good governance and ethics in the decision-making process of the Board.

The attendance record of each of the Corporation's directors for Board meetings and committee meetings held during the year ended December 31, 2022, is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Name** | &nbsp;&nbsp; **Board Meetings<br>Attended/Held** | &nbsp;&nbsp; **Audit Committee<br>Meetings<br>Attended/Held** | &nbsp;&nbsp; **Compensation,<br>Nominating and<br>Governance<br>Committee<br>Meetings<br>Attended/Held** | &nbsp;&nbsp; **Disclosure<br>Committee<br>Meetings<br>Attended/Held** |
| &nbsp;&nbsp; Anthony Durkacz | &nbsp;&nbsp; 7/7 | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A |
| &nbsp;&nbsp; Zeeshan Saeed | &nbsp;&nbsp; 6/7 | &nbsp;&nbsp; N/A | &nbsp;&nbsp; 3/3 | &nbsp;&nbsp; 1/1 |
| &nbsp;&nbsp; Donal Carroll | &nbsp;&nbsp; 7/7 | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A |
| &nbsp;&nbsp; Adnan Bashir | &nbsp;&nbsp; 6/7 | &nbsp;&nbsp; 4/4 | &nbsp;&nbsp; 3/3 | &nbsp;&nbsp; 1/1 |
| &nbsp;&nbsp; Fernando Cugliari<sup>(1)</sup> | &nbsp;&nbsp; 6/7 | &nbsp;&nbsp; 4/4 | &nbsp;&nbsp; 3/3 | &nbsp;&nbsp; N/A |
| &nbsp;&nbsp; Nitin Kaushal | &nbsp;&nbsp; 7/7 | &nbsp;&nbsp; 4/4 | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A |
| &nbsp;&nbsp; Lawrence (Larry) Latowsky | &nbsp;&nbsp; 7/7 | &nbsp;&nbsp; 0/0<sup>(2)</sup> | &nbsp;&nbsp; 3/3 | &nbsp;&nbsp; 1/1 |
| &nbsp;&nbsp; Joseph Romano<sup>(1)</sup> | &nbsp;&nbsp; 0/0 | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A |
| &nbsp;&nbsp; Dr. Lakshmi P. Kotra<sup>(1)</sup> | &nbsp;&nbsp; 0/0 | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A | &nbsp;&nbsp; N/A |

---

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**Notes:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Mr. Cugliari resigned from the Board on November 25, 2022. Mr. Romano and Dr. Kotra were appointed to the Board on November 25, 2022. The numbers in these rows reflect attendance with respect to board and committee meetings held in the period in 2022 during which such individual was a member of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Mr. Latowsky was appointed to the Audit Committee following the resignation of Mr. Cugliari. No Audit Committee meetings were held following Mr. Cugliari's resignation from the Board.

**Board Mandate**

The duties and responsibilities of the directors of the Board are to supervise the management of the business and affairs of the Company; and to act in the best interests of the Company. In discharging its mandate, the directors of the Company are responsible for the oversight and review of the development of, among other things, the following matters:

* the strategic direction of the Company;

* identifying the principal business risks of the Company and ensuring that procedures and people are in place to appropriately manage these risks;

* succession planning, including appointing, training and monitoring senior management;

* a communications policy for the Company to facilitate communications with investors and other interested parties; and

* the integrity of the internal controls and procedures (including adequate management information systems and the oversight of the testing of internal controls) within the Company.

The Board also has the mandate to assess the effectiveness of the Board as a whole, its committees and the contributions of individual directors. The Board discharges its responsibilities and obligations either directly or through its committees, currently consisting of the Audit Committee, the Compensation, Nominating and Governance Committee and the Disclosure Committee.

**Orientation and Continuing Education**

New directors are provided orientations which include meetings with management on business directions, operational issues and financial aspects of the Company.

The Compensation, Nominating and Governance Committee ensures that new directors receive orientation materials describing the Company's business and its corporate governance policies and procedures. New directors will have meetings with the Co-Executive Chairmen of the Board and CEO, and with the CFO, and are expected to visit the Company's principal offices. The Compensation, Nominating and Governance Committee is responsible for confirming that procedures are in place and resources are made available to provide directors with appropriate continuing education opportunities.

Management updates the Board on a regular basis regarding the business and activities of the Company to ensure that the directors have the necessary knowledge to meet their obligations as directors. Directors are encouraged to communicate with management, the auditors and the Company's legal counsel to keep themselves current with the Company's business. Directors are also provided with full access to the Company's records.

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**Ethical Business Conduct**

All Board members and employees are committed to maintaining the highest standards of integrity and ethical business conduct in the management of the Company and their interaction with all key Shareholders. These standards can only be achieved by the Company by adhering to the values and principles of conduct.

The Company expects all Board members and employees to conduct themselves in an ethical and law-abiding manner, in all areas, including but not limited to conflicts of interest and the protection and proper use of corporate assets, information and opportunities.

The Board has adopted a Code of Conduct and Ethics (the "**Code**") which provides guidelines surrounding, among other items, compliance with applicable laws, conflicts of interest, certain opportunities, confidentiality and disclosure, employment practices, and use of company property and resources. The Code is available on the Company's SEDAR profile accessible at www.sedar.com and the Company's website, https://fsdpharma.com/for-investors/.

The Board has delegated responsibility for monitoring compliance with the Code and for investigating and enforcing matters related to the Code to management, who will report breaches of the Code to the Company's general counsel or human resources.

Directors are required by applicable law and the Code to promptly disclose any potential conflict of interest that may arise. If a director has a material interest in an agreement or transaction, applicable law, the Code and principles of sound corporate governance require them to declare the interest in writing or request to have such interest entered in the minutes of meetings of directors and, where required by applicable law, abstain from voting with respect to the agreement or transaction.

**Conflicts of Interest**

When faced with a conflict, it is required that business judgment of responsible persons, uninfluenced by considerations other than the best interests of the Company, will be exercised in compliance with the guidelines set out in the Code. Pursuant to the OBCA, any officer or director of the Company with a conflict of interest must disclose the nature and extent of such conflict to the Board and recuse themselves from a matter that materially conflicts with that individual's duty as a director or senior officer of the Company.

**Protection and Proper Use of Corporate Assets, Information and Opportunities**

Confidential information is not to be used for any purposes other than those of the Company. This requirement of confidentiality extends beyond the duty not to discuss private information, whether about the Company and/or its management and also applies to any asset of the Company, including trade secrets, patient, supplier or customer lists, business plans, computer software, company records and other proprietary information. The Code adopted by the Board provides for certain specific guidelines around the duty of confidentiality of employees, officers and directors of the Company.

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In the situation of contracts with third parties such as suppliers and service providers, management is to share only that information which is needed to satisfy the conditions of the contract and only to those individuals who need to know.

The duty of confidentiality applies to all Board members and employees even after leaving the Company regardless of the reason for departing.

**Compliance with Laws, Rules and Regulations**

It is required that the Company is in compliance with all legislation applicable to the Company's business operations, including but not restricted to the laws of the Province of Ontario, all Canadian provincial laws and legislation, and any other similar legislation in jurisdictions where the Company operates.

All Board members and employees have a duty to know, understand and comply with any specific legislation pertaining to the business of the Company and any legislation applicable to their duties and responsibilities.

The Board has adopted a Code of Conduct and Ethics which provides guidelines surrounding, among other items, compliance with applicable laws, conflicts of interest, certain opportunities, confidentiality and disclosure, employment practices, and use of company property and resources.

**Board Committees**

***Audit Committee***

The Audit Committee is governed by an Audit Committee charter, which is incorporated by reference hereto as Exhibit 99.1.

*Composition of the Audit Committee*

As of the date of this Annual Report, the following are the members of the Audit Committee:

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**Independent** | &nbsp;&nbsp;**Financially Literate** |
| Nitin Kaushal (Chair) | &nbsp;&nbsp;Yes | &nbsp;&nbsp;Yes |
| Lawrence (Larry) Latowsky | &nbsp;&nbsp;Yes | &nbsp;&nbsp;Yes |
| Adnan Bashir | &nbsp;&nbsp;Yes | &nbsp;&nbsp;Yes |

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The Audit Committee's functions include, but are not limited to: reviewing the integrity of the Corporation's financial statements, financial disclosures and internal controls over financial reporting; monitoring the Corporation's ongoing compliance with legal and regulatory requirements; selecting the external auditor for Shareholder approval; and reviewing the qualifications, independence and performance of the external auditor. Information concerning the relevant education and experience of the Audit Committee members is set forth below.

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*Relevant Education and Experience*

The Board believes that the composition of the Audit Committee reflects financial literacy and expertise. Currently, all members of the Audit Committee have been determined by the Board to be "independent" and "financially literate" as such terms are defined under National Instrument 52-110 - *Audit Committees*. The Board has made these determinations based on the education as well as breadth and depth of experience of each member of the Audit Committee.

All the members of the Audit Committee have the education and/or practical experience required to understand and evaluate financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation's financial statements. For more information related to the experience of each of the members of the Audit Committee, see "*Item 6.A. Directors and Senior Management*".

***Compensation, Nominating and Governance Committee***

*Nomination of Directors*

The Compensation, Nominating and Governance Committee is currently comprised of three directors of the Company: Zeeshan Saeed (Chair), Lawrence Latowsky and Adnan Bashir and. Lawrence Latowsky and Adnan Bashir are considered to be "independent" within the meaning of such term under applicable law and Nasdaq Rules.

The Compensation, Nominating and Governance Committee is responsible for recommending to the Board a list of candidates for nomination for election to the Board at each annual meeting of Shareholders. In addition, as the need arises, it will identify and recommend to the Board new candidates for Board membership. The Compensation, Nominating and Governance Committee selects potential directors with the desired background and qualifications, taking into account the needs of the Board at the time. In making its recommendations, the Compensation, Nominating and Governance Committee considers whether each candidate is or would be "independent" and "financially literate" within the meaning of applicable law and the Nasdaq Rules and possesses the competencies and skills that: (i) are considered to be necessary for the Board, as a whole, to possess; (ii) are considered to be necessary for each existing director to possess; and (iii) each new nominee will bring to the boardroom. The Compensation, Nominating and Governance Committee also considers whether or not each new nominee can devote sufficient time and resources to his or her duties as a Board member.

The Compensation, Nominating and Governance Committee is also responsible for examining the size of the Board and recommending to the Board a size that facilitates effective decision making, reviewing the overall composition of the Board, taking into consideration factors such as business experience, areas of expertise and competency of each director and evaluating whether the necessary and appropriate committees exist to support the work of the Board.

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***Compensation***

The Compensation, Nominating and Governance Committee is also responsible for determining the compensation for the directors and the executive officers. The Compensation, Nominating and Governance Committee reviews the adequacy of remuneration for the executive officers by evaluating their performance in light of the Company's goals and objectives, and by comparing with other reporting issuers of similar size in the same industry.

The Compensation, Nominating and Governance Committee also periodically reviews the adequacy and form of directors' compensation and recommends to the Board a compensation model that appropriately compensates directors for the responsibilities and risks involved in being a director and a member of one or more committees, as applicable. The Compensation, Nominating and Governance Committee is also responsible for reviewing the executive compensation disclosure before the Company discloses this information publicly.

The Compensation, Nominating and Governance Committee is also responsible for: (i) ensuring that the mission and strategic direction of the Company is reviewed annually; (ii) ensuring that the Board and each of its committees carry out its functions in accordance with due process; (iii) assessing the effectiveness of the Board as a whole, each committee of the Board, and the contribution of each individual director; (iv) identifying, recruiting, endorsing, appointing, and orienting new directors; (v) reviewing and making compensation related recommendations and determinations regarding senior executives and directors; and (vi) the Company's human resources and compensation policies and processes.

***Governance***

The Compensation, Nominating and Governance Committee is also responsible for, among other things: (i) assisting the Company and the Board in fulfilling their respective corporate governance responsibilities under applicable securities laws, instruments, rules and mandatory policies and regulatory requirements; (ii) promoting a culture of integrity throughout the Company; and (iii) developing the Company's approach to governance issues and establishing sound corporate governance practices that are in the interests of shareholders and that contribute to effective and efficient decision-making.

***Disclosure Committee***

The Disclosure Committee is currently comprised of three directors of the Company: Lawrence Latowsky (Chair), Adnan Bashir and Zeeshan Saeed. Mr. Latowsky and Adnan Bashir are considered to be "independent" within the meaning of such term under and applicable law and Nasdaq Rules.

The Disclosure Committee is responsible for, among other things, ensuring that the Company complies with its timely continuous disclosure obligations, overseeing and monitoring compliance with the Company's disclosure policies, guidelines and procedures, promoting effective communication and preserving confidentiality of material information.

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**Assessments**

The Board and its individual directors are assessed on an informal basis continually as to their effectiveness and contribution. The Board encourages discussion among members as to evaluation of its effectiveness as a whole, of each individual director and each of its committees. The Board does not consider that formal assessments would be useful at this stage of the Company's development. To assist in its review, the Board may conduct informal surveys of its directors. In addition, the Board works closely with management and, accordingly, are in a position to assess individual director's performance on an ongoing basis.

**Director Term Limits and Other Mechanisms of Board Renewal**

The Board has not adopted a term limit for directors and, as part of the Board's assessment process, the Board considers the benefit of renewal among directors in the context of the needs of the Board from time to time. In light of the nature of the industry in which the Company operates, the Board does not believe that adopting a term limit for directors is necessary or appropriate at this time.

**Policies Regarding the Representation of Women on the Board**

The Company does not have a written policy relating to the identification and nomination of women directors. When considering and recommending qualified director nominees, the Compensation, Nominating and Governance Committee evaluates all candidates on their skills and experience in the context of what the Board as a whole requires to be effective, taking the background and diversity, including gender, of all directors and nominees into consideration.

**Consideration of the Representation of Women in the Director Identification and Selection Process**

The Compensation, Nominating and Governance Committee goes through a rigorous process when considering a director nominee, including an evaluation of the skills and experience of the current directors, determining the gaps in skills and experience that exist and finding potential candidates to fill those gaps and round out the skills and experience of the Board as a whole. Diversity (including the representation of women on the Board and in executive officer positions) is a factor considered in determining the optimal composition of the Board. The final recommendation for nomination or appointment to the Board has been based on the best combination of skills and experience for the position, with due regard for the benefits of diversity on the Board.

**Consideration Given to the Representation of Women in Executive Officer Appointments**

The Board encourages the consideration of women who have the necessary skills, knowledge, experience and character when considering new potential candidates for executive officer positions.

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**Issuer's Targets Regarding the Representation of Women on the Board and in Executive Officer Positions**

The Board does not have specific targets in respect of appointing women to the Board and in respect of executive officer appointments.

**Number of Women on the Board and in Executive Officer Positions**

As of the date of this Annual Report there are no women on the Board or in executive officer positions (0%).

**D. Employees**

As of December 31, 2022, we had 17 full-time employees. None of our employees are represented by collective bargaining agreements. We believe that we maintain good relations with our employees. At each date shown, we had the following number of full-time employees, broken out by function.

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| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2020** |
| **Function:** |  |  |  |
| Research and development | 12 | 4 | 4 |
| General and administrative | 5 | 6 | 7 |
| Total | 17 | 10 | 11 |

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**E. Share Ownership.**

For information regarding the share ownership of our directors and executive officers, see "*Item 6.B.-Compensation*" and "*Item 7.A.-Major Shareholders*."

**F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation.**

Not applicable.

**Item 7. Major Shareholders and Related Party Transactions.**

**A. Major Shareholders**

The following table provides information with respect to the beneficial ownership of our Class A Shares and Class B Shares as of March 30, 2023:

* each person, or group of affiliated persons, known by us to beneficially own five percent (5%) or more of any class of our shares;

* each of our NEOs;

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* each of our directors; and

* all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares that can be acquired within 60 days of March 30, 2023. The percentage ownership information shown in the table is based upon 72 Class A Shares and 40,643,714 Class B Shares outstanding as of March 30, 2023. Each Class A Share is convertible into one Class B Share at the option of the Class A Share holder. The Class A Shares have 276,660 votes per share and the Class B Shares have one vote per share. For further information regarding the voting rights of the Class A Shares and the Class B Shares, see Exhibit 2, "*Description of Securities*".

Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.

In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares subject to Options and Warrants held by that person that are immediately exercisable or exercisable within 60 days of March 30, 2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. The information in the table below is based on information known to us or ascertained by us from public filings made by the shareholders. Except as otherwise indicated, addresses of the directors, executive officers and named beneficial owners are in the care of FSD at 199 Bay Street, Suite 4000, Toronto, Ontario, Canada M5L 1A9.

For additional information regarding the options reported in the following table, see "*Item 6.B. Compensation-Executive Compensation-Outstanding Equity Awards at Fiscal Year End*."

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;**Class A Shares<sup>(1)</sup>** | &nbsp;&nbsp;**Class A Shares<sup>(1)</sup>** | &nbsp;&nbsp;**Class B Shares** | &nbsp;&nbsp;**Class B Shares** | &nbsp;&nbsp;**Total<br>Voting<br>Power** |
| **Name of Beneficial Owner** | &nbsp;&nbsp;**Number** | &nbsp;&nbsp;**Percent** | &nbsp;&nbsp;**Number** | &nbsp;&nbsp;**Percent** | &nbsp;&nbsp;**Percent** |
| ***Five Percent or Greater Holders:*** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dr. Raza Bokhari<br>*Former Executive Chairman and Director and Former CEO*<sup>(2)</sup> | &nbsp;&nbsp;24 | &nbsp;&nbsp;33.3% | &nbsp;&nbsp;24 | &nbsp;&nbsp;0% | &nbsp;&nbsp;11.0% |
| Rehan Saeed<sup>(3)</sup> | &nbsp;&nbsp;24<sup>(12)</sup> | &nbsp;&nbsp;33.3%<sup>(12)</sup> | &nbsp;&nbsp;1045832<sup>(12)</sup> | &nbsp;&nbsp;2.6%<sup>(12)</sup> | &nbsp;&nbsp;12.7% |
| ***Current Directors and Named Executive Officers:*** |  |  |  |  |  |
| Anthony Durkacz<br>*Interim CEO, Co-Executive Chairman and Director*<sup>(4)</sup> | &nbsp;&nbsp;24 | &nbsp;&nbsp;33.3% | &nbsp;&nbsp;1623189 | &nbsp;&nbsp;3.9% | &nbsp;&nbsp;13.5% |
| Zeeshan Saeed<br>*President, Co-Executive Chairman and Director*<sup>(5)</sup> | &nbsp;&nbsp;24<sup>(12)</sup> | &nbsp;&nbsp;33.3%<sup>(12)</sup> | &nbsp;&nbsp;2366951<sup>(12)</sup> | &nbsp;&nbsp;5.8%<sup>(12)</sup> | &nbsp;&nbsp;14.7% |
| Nathan Coyle<br>*CFO*<sup>(</sup><sup>6</sup><sup>)</sup> | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;37500 | &nbsp;&nbsp;0.1% | &nbsp;&nbsp;0.1% |
| Donal Carroll<br>*COO and Director*<sup>(</sup><sup>7</sup><sup>)</sup> | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;1471268 | &nbsp;&nbsp;3.6% | &nbsp;&nbsp;2.4% |
| Adnan Bashir<br>*Director*<sup>(8</sup><sup>)</sup> | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;9393 | &nbsp;&nbsp;0.0% | &nbsp;&nbsp;0.0% |
| Joseph Romano<br>*Director*<sup>(9)</sup> | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;3061 | &nbsp;&nbsp;0.0% | &nbsp;&nbsp;0.0% |
| Nitin Kaushal<br>*Director* | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;0 | &nbsp;&nbsp;0.0% | &nbsp;&nbsp;0.0% |
| Lawrence (Larry) Latowsky<br>*Director* | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;0 | &nbsp;&nbsp;0.0% | &nbsp;&nbsp;0.0% |
| Dr. Andrzej Chruscinski<br>*Vice President, Clinical and Scientific Affairs of Lucid*<sup>(</sup><sup>10</sup><sup>)</sup> | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;30000 | &nbsp;&nbsp;0.1% | &nbsp;&nbsp;0.0% |
| Kevin Cassidy<br>*Vice-President, Quality of Lucid* | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;0 | &nbsp;&nbsp;0.0% | &nbsp;&nbsp;0.0% |
| Dr. Lakshmi P. Kotra <br>*CEO of Lucid and Director*<sup>(1</sup><sup>1</sup><sup>)</sup> | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;1922197 | &nbsp;&nbsp;4.7% | &nbsp;&nbsp;3.1% |
| All current directors and executive officers (11 individuals) | &nbsp;&nbsp;48 | &nbsp;&nbsp;66.7% | &nbsp;&nbsp;7463559 | &nbsp;&nbsp;18.1% | &nbsp;&nbsp;34.0% |

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**Notes:**

(1) The Class A Shares have 276,660 votes per share.

(2) The reported number of Class A Shares consists of shares held by Mr. Bokhari. The reported number of Class B Shares consists of 24 Class B Shares issuable upon conversion of Class A Shares.

(3) The reported number of Class A Shares consists of shares held by the Xorax Family Trust ("**Xorax**"), as to which Mr. Rehan Saeed, the trustee of Xorax, has shared voting and dispositive power (and which such Class A Shares are held for the benefit of Mr. Zeeshan Saeed). The reported number of Class B Shares consists of (a) 40,055 outstanding Class B Shares held by Mr. Rehan Saeed, and (b) the following shares as to which Mr. Rehan Saeed has shared voting and dispositive power: (i) 441,031 outstanding Class B Shares held by Xorax, (ii) 24 Class B Shares issuable upon conversion of Class A Shares held by Xorax, (iii) 100,000 Class B Shares issuable upon exercise of outstanding Warrants held by Legacy Family Trust ("**Legacy**"), of which Mr. Rehan Saeed is the trustee, exercisable within 60 days of March 30, 2023 and (iv) 464,722 outstanding Class B Shares held by Legacy.

(4) The reported number of Class A Shares consists of shares held by Fortius Research and Trading Corporation ("**Fortius**"), as to which Mr. Durkacz, who controls Fortius, has shared voting and dispositive power. The reported number of Class B Shares consists of (a) the following shares as to which Mr. Durkacz has sole voting and dispositive power: (i) 975,122 outstanding Class B Shares and (ii) 500,000 Class B Shares issuable upon exercise of outstanding Options exercisable within 60 days of March 30, 2023 and (b) the following shares as to which Mr. Durkacz has shared voting and dispositive power: (i) 106,043 outstanding Class B Shares held by Fortius, (ii) 24 Class B Shares issuable upon conversion of Class A Shares held by Fortius and (iii) 42,000 outstanding Class B Shares held by Jacqueline Burns, the spouse of Mr. Durkacz. The reported number of Class B Shares does not include 373,671 outstanding Class B Shares held by First Republic, of which Mr. Durkacz is a director, Executive Vice President and majority stockholder. Mr. Durkacz does not have or share voting or investment power over the Class B Shares held by First Republic.

(5) The reported number of Class A Shares consists of 24 Class A Shares held by Xorax, of which Mr. Zeeshan Saeed has shared voting and dispositive power. The reported number of Class B Shares consists of the following shares as to which Mr. Zeeshan Saeed (a) has sole voting and dispositive power: (i) 1,425,896 outstanding Class B Shares and (ii) 500,000 Class B Shares issuable upon exercise of outstanding Options exercisable within 60 days of March 30, 2023 and (b) has shared voting and dispositive power: (i) 24 Class B Shares issuable upon conversion of Class A Shares held by Xorax and (ii) 441,031 outstanding Class B Shares held by Xorax.

(6) The reported number of Class B Shares consists of the following shares as to which Mr. Nathan Coyle has sole voting and dispositive power: (a) 2,500 outstanding Class B Shares and (b) 35,000 Class B Shares issuable upon exercise of outstanding Options exercisable within 60 days of March 30, 2023 as to which Mr. Nathan Coyle has sole voting and dispositive power.

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(7) The reported number of Class B Shares consists of (a) 971,268 outstanding Class B Shares and (b) 500,000 Class B Shares issuable upon exercise of outstanding Options exercisable within 60 days of March 30, 2023.

(8) The reported number of Class B Shares consists of (a) 9,200 outstanding Class B Shares as to which Mr. Adnan Bashir has sole voting and dispositive power, (b) 98 outstanding Class B Shares held by 58 Northwest, a corporation controlled by Mr. Bashir, and (c) 95 outstanding Class B Shares held by TFSA, a corporation controlled by Mr. Bashir.

(9) The reported number of Class B Shares consists of 3,061 outstanding Class B Shares as to which Mr. Joseph Romano has sole voting and dispositive power.

(10) The reported number of Class B Shares consists of 30,000 Class B Shares issuable upon exercise of outstanding Options exercisable within 60 days of March 30, 2023.

(11) The reported number of Class B Shares consists of the following shares as to which Dr. Lakshmi Kotra has sole voting and dispositive power: (a) 515,797 outstanding Class B Shares, (b) 865,200 outstanding Class B Shares held by ILace Therapeutics International Inc., a corporation controlled by Dr. Kotra, (c) 41,200 outstanding Class B Shares held by Kotra Trust, a trust of which Dr. Kotra is the trustee, and (d) 500,000 Class B Shares issuable upon exercise of outstanding Options exercisable within 60 days of March 30, 2023.

(12) As noted above in Notes 3 and 5 to this chart, the 24 Class A Shares and 441,031 of the Class B Shares reported under Mr. Rehan Saeed and Mr. Zeeshan Saeed's shareholdings represent the same Class A Shares and Class B Shares, which are held by Xorax, of which Mr. Rehan Saeed and Mr. Zeeshan Saeed have shared voting and dispositive power.

As of March 30, 2023, we estimate that approximately 61.06% of our outstanding Class B Shares were held in the United States by 29 holders of record. The number of holders of record does not include beneficial owners whose Class B Shares are held in street name by brokers and other nominees. The number of holders of record also does not include holders whose shares may be held in trust by other entities.

**B. Related Party Transactions**

Since January 1, 2020, we have engaged in the following transactions with our related parties. For this purpose, our related parties include (a) enterprises that directly or indirectly control or are controlled by, or are under common control with, us; (b) our associates; (c) shareholders beneficially owning 10% or more of our voting power and other individuals with significant influence over us, and close members of any such individual's family; (d) our directors and executive officers, and close members of their families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. Our related parties include enterprises owned by directors or major shareholders and enterprises that have a member of key management in common with us. All of the transactions have been reviewed and approved by our board of directors or another independent committee of the board.

***Lucid Acquisition***

On August 25, 2021, the Corporation entered into the Master Agreement to acquire 100% of the issued and outstanding shares of Lucid Psycheceuticals Inc., an early-stage Canadian-based specialty biotechnology company focused on the development of therapies to treat critical neurodegenerative diseases. 304,880 Class B Shares and all of the Warrants issued as part of the consideration for the Lucid Acquisition were issued to First Republic, a company controlled by Anthony Durkacz, the interim CEO and Executive Co-Chairman of the Corporation, in exchange for securities of Lucid Psycheceuticals Inc. held by First Republic prior to the completion of the Lucid Acquisition. Prior to the acquisition, Mr. Durkacz held an approximately 4.5% indirect ownership interest in Lucid through his ownership interest in First Republic.

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See "*Item 4.A. History and Development of the Company-General Development of the Business - Three Year History-Lucid Acquisition*" for further details.

***Directors and Officers Liability Insurance***

We maintain directors' and officers' liability insurance policies for the liability of our directors and officers arising out of the performance of their duties and for our liability arising out of securities claims. The policies provide coverage in respect of a maximum total liability of $3,000,000, and includes specific exclusions described in the policy.

***D&O Indemnification Agreements***

See "*Item 6.B Compensation - Indemnification*" for details.

***Transactions with Former CEO***

Prior to FSD's termination of its former CEO, Dr. Raza Bokhari, Parkway Clinical Laboratories ("**PCL**"), a company wholly owned by Dr. Bokhari, provided certain services to FSD. FSD paid expenses of nil (2021 - $262,834 and 2020 - $1,445,043) to PCL for the year ended December 31, 2022, included in the consolidated statement of loss and comprehensive loss under various expense line categories. FSD was involved in legal proceedings with PCL, which were dismissed with prejudice on July 11, 2022 after the parties reached a settlement. See "*Item 8.A. Financial information-Consolidated Statements and Other Financial Information-Legal Proceedings*".

As well, as at December 31, 2020, the former CEO had repaid a related party loan of $355,778 for withholding taxes paid by FSD on behalf of the former CEO in relation to the Class B Shares issued during the year ended December 31, 2020.

***Requisitioning the 2021 Annual and Special Meeting***

The Company reimbursed certain directors C$1,334,158 for expenses incurred in relation to requisitioning, calling and holding the 2021 Annual and Special Meeting. See "*Item 4.A. History and Development of the Company-General Development of the Business - Three Year History - Matters Addressed at 2021 Annual and Special Meeting and Related Matters*" and "*Item 8.A. Consolidated Statements and Other Financial Information - Legal Proceedings - Requisitioning Shareholder*".

***Performance Share Units***

In the second quarter of 2022, the Company cancelled 2,820,104 Options held by related parties and granted 2,820,104 PSUs to those related parties as replacement awards. Unlike the cancelled Options, which had only time-based vesting, the PSUs had performance conditions keyed to the achievement of milestones important to the Company's future success, which are described below. The cancelled Options had a weighted average exercise price of C$2.56, with a weighted average remaining term of 2.14 years. The weighted-average exercise price of the cancelled Options significantly exceeded trading prices of the Company's Class B Shares in the period leading up to the cancellation and, in the view of the Board of Directors of the Company, the Options had ceased to provide the intended performance incentive. All of the cancelled Options were fully vested at the time of cancellation, except that 20,000 Options held by Mr. Donal Carroll were unvested. 400,000 of the PSUs were issued to non-employee directors of the Corporation and vested only upon the successful implementation of a Phase 2 trial for FSD-PEA with Health Canada and/or the FDA, which occurred in the fourth quarter of 2022. The remaining PSUs were issued to the Corporation's other directors, being Mr. Zeeshan Saeed, Mr. Donal Carroll, Mr. Anthony Durkacz and Dr. Lakshmi Kotra, and vested only upon the filing of the Lucid-MS Phase 1 IND, which occurred in January 2023. See "*Item 6.B. Compensation-Executive Compensation-Equity Incentive Plan*". The Company calculated the difference between the fair value of the PSUs and the fair value of the cancelled Options and recorded that difference as incremental compensation cost as of the date of grant of the PSUs.

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**C. Interests of Experts and Counsel**

Not applicable.

**Item 8. Financial Information**

**A. Consolidated Statements and Other Financial Information**

**Consolidated Financial Statements**

Our consolidated financial statements are appended at the end of this Annual Report, starting at page F-1, and incorporated herein by reference.

**Dividend Distribution Policy**

We have not paid any dividends on our outstanding Class B Shares, and we have no current intention to declare dividends on our Class B Shares in the foreseeable future. Any decision to pay dividends on our Class B Shares in the future will be at the discretion of our board of directors and will depend on, among other things, our results of operations, current and anticipated cash requirements and surplus, financial condition, any future contractual restrictions and financing agreement covenants, solvency tests imposed by corporate law and other factors that our board of directors may deem relevant.

**Legal Proceedings**

The Corporation is engaged in certain legal proceedings, as further described below. Litigation has been, and is expected to be, costly and time-consuming and could divert the attention of management and key personnel from our business operations. Although we intend to vigorously defend ourselves against any pending claims, and future claims that may occur, we cannot assure that we will succeed in defending any of these claims and that the judgments will not be upheld against us. If we are unsuccessful in our defense of these claims or unable to settle the claims in a manner satisfactory to us, we may be faced with outcomes that could have a material adverse effect on the Corporation and its financial condition. Except for as otherwise disclosed below, there are no material outstanding legal proceedings or regulatory actions to which the Corporation is party, nor, to Corporation's knowledge, are there any such proceedings or actions contemplated.

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***Oppression Action***

On April 6, 2021, the Requisitioning Shareholders filed a Statement of Claim in the Superior Court against the Corporation and the Board, claiming that the business and affairs of the Corporation were being carried out in a manner that was oppressive (the "**Oppression Action**"). The claim, among other things, sought to restrain the Corporation from issuing any new shares in the capital of the Corporation or cash compensation prior to the 2021 Annual and Special Meeting, and a claim of C$68 million, payable to the Corporation for harm caused to it and its shareholders. On April 9, 2021, the Requisitioning Shareholders obtained an order in the Oppression Action restraining the Corporation and the Board from entering into or closing a share purchase agreement to acquire a periodontal company named Periovance Inc. The Oppression Action has been dormant since the proxy contest concluded at the 2021 Annual and Special Meeting but has not yet been formally dismissed.

***Parkway Clinical Laboratories***

PCL, a company wholly owned by the Corporation's former CEO, Dr. Raza Bokhari, filed an action in the Bucks County Court of Common Pleas in Pennsylvania on July 8, 2021, against the Corporation. PCL advanced two claims: (1) breach of contract in which PCL alleges that the Corporation failed to pay for $1,412,951 worth of services rendered (e.g., providing office space, personnel, and financial assistance); and (2) alleging that the Corporation received the benefit of the same services referenced in the breach of contract claim without paying for them. The case was dismissed with prejudice on July 11, 2022 after the parties reached a settlement.

***Dr. Raza Bokhari***

On July 15, 2021, the Corporation's former CEO, Dr. Raza Bokhari, filed a notice of arbitration and sought relief and support for breach of contract and severance and damages in the amount of $30,200,000, for aggravated and punitive damages in the amount of $500,000 and legal fees and disbursements associated with the arbitration. Dr. Bokhari was placed on administrative leave from his role as the Corporation's CEO following the 2021 Annual and Special Meeting, pending the outcome of an investigation of various concerns by the Special Committee using independent legal counsel. Upon the recommendation of the Special Committee, Dr. Bokhari's employment was terminated for cause by the Corporation's board of directors on July 27, 2021. The arbitration hearing commenced in March 2022 before a retired judge of the Ontario Superior Court of Justice. The hearing concluded in August 2022. In his 174-page arbitral award, the arbitrator dismissed Dr. Bokhari's claims in their entirety. The arbitrator also ordered Dr. Bokhari to repay certain monies to FSD, while also holding Dr. Bokhari responsible for FSD's costs of the arbitration. Dr. Bokhari subsequently filed an application (the "**Set Aside Application**") in the Ontario Superior Court of Justice to set aside the arbitral award, claiming that he was not treated equally and fairly and that the arbitrator's written reasons are inadequate. The Company intends to contest these claims. On December 20, 2022, counsel for the Company wrote to the Commercial List of the Superior Court of Justice seeking to transfer the Set Aside Application from the Civil List to the Commercial List. That request was granted on January 12, 2023. On February 28, 2023, the Company filed an application seeking to enforce the arbitral award (the "**Enforcement Application**"). The Set Aside Application and Enforcement Application are currently set to be heard by the Court in June 2023.

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The Company has made submissions before the arbitrator seeking approximately $3.5 million in costs of the arbitration, and that matter remains outstanding and is currently set to be heard in April 2023.

***Bokhari v. FSD Pharma Inc. Et al. ; E.D. Pa. No. 2 :21-cv-03136***

This action was filed in the Montgomery County Court of Common Pleas in Pennsylvania on July 2, 2021, by Dr. Raza Bokhari against the Corporation, FSD BioSciences, Anthony Durkacz, and Zeeshan Saeed (the "**Defendants**"). The Corporation removed the action to the United States District Court for the Eastern District of Pennsylvania on July 14, 2021. In this action, Dr. Bokhari alleges that he had received shares of stock in FSD Pharma pursuant to the terms of an employment contract, and that FSD Pharma thereafter contacted his broker in a purportedly improper effort to claw back those shares after they were issued.

On October 1, 2021, the Defendants filed a motion seeking to have the case dismissed in its entirety or, alternatively, stayed pending the outcome of a separate proceeding in Ontario that relates to Dr. Bokhari's shares of stock in the Corporation.

On December 2, 2021, the Court granted the motion and ordered the parties to present the dispute for binding arbitration in Ontario. The Court then placed the case in civil suspense pending resolution of the arbitration and ordered the parties to notify the Court within seven days of any final award in any arbitration proceeding. This means that no further activity will occur in this case unless and until any such arbitration concludes. As of the date hereof, no arbitration in respect of this dispute has been commenced.

***Restraining Order / Share Cancellation Application***

On January 21, 2021 and February 10, 2021, the Board authorized the issuance of an aggregate of 1,349,765 Class B Shares as share-based awards to certain directors and officers of the Corporation, including Dr. Raza Bokhari. Upon determining that 1,198,146 of these Class B Shares (the "**Contested Shares**") had been inappropriately issued contrary to applicable laws, the Board resolved to cancel the Contested Shares on June 1, 2021 and, later that summer, the Corporation directed Computershare to cancel and return to treasury the Contested Shares.

On July 2, 2021, Dr. Bokhari, filed an action against the Corporation (the "**Complaint**") seeking to prevent the Corporation from cancelling shares of the Corporation issued in February 2021, to Dr. Bokhari.

Dr. Bokhari alleged that he had received shares of stock in FSD Pharma pursuant to the terms of an employment contract, and that the Corporation thereafter contacted his broker in a purportedly improper effort to cancel those shares after they were issued. Dr. Bokhari advanced two claims in his Complaint: (a) claiming tortious interference with contractual relations, in which Dr. Bokhari alleges that the Corporation interfered with the contract between him and his broker by demanding the return of the shares; and (b) conversion, in which Dr. Bokhari alleges that he is entitled to the shares at issue and will be harmed by the Corporation's demand for their return. The damages sought by Dr. Bokhari were not stated in the Complaint.

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Dr. Bokhari filed a Motion for Temporary Restraining order and Preliminary Injunction, in which he sought to prevent the defendants from interfering with his access to and use of the disputed shares. This motion was heard in Court and denied in its entirety on July 26, 2021.

On July 21, 2021, the Corporation commenced a legal proceeding against Dr. Bokhari, former members of the Board including James Datin, Robert Ciaruffoli, Stephen Buyer and Gerald Goldberg, as well as Dr. Bokhari's brokerages, Haywood Securities Inc., Haywood Securities (US) Inc., and the Corporation's previous transfer agent, Computershare. The Corporation made the application before the Superior Court that the Contested Shares were issued contrary to section 23(2) of the OBCA and validly cancelled by resolution of the Board passed on June 1, 2021.

The Corporation was able to reach an agreement with all of the former directors other than Dr. Bokhari under which they did not oppose FSD's application and agreed to be bound by the decision in the application, and the Corporation agreed not to seek costs against them. Neither Computershare nor any of Dr. Bokhari's brokerages took any position on the application.

The application hearing proceeded before Justice Koehnen on December 20, 2021. On March 8, 2022, Justice Koehnen issued a mixed decision in the application, permitting the Contested Share grant to Dr. Bokhari until the date of his termination but cancelling 504,888 Contested Shares relating to services that were to be provided after the date of termination (the "**Invalid Shares**"). On FSD's direction, Computershare cancelled the Invalid Shares on March 29, 2022.

***Derivative Complaint***

On July 20, 2021, a shareholder filed a claim in the Delaware Chancery Court against the Corporation and its directors and officers seeking to remedy harm they believe the directors and officers of the Corporation have caused by their actions. The shareholder filed the claim on count of breach of fiduciary duties and corporate waste against the directors and officers with no dollar amount being claimed.

On September 13, 2021, the Corporation filed a motion to dismiss in its entirety and the motion was heard on February 8, 2022. On May 5, 2022, the Court granted the motion to dismiss (without prejudice) based on the shareholder's lack of standing, namely, his failure to seek and obtain Canadian court approval to proceed. The Court found that if the shareholder wants to attempt to pursue the claims on behalf of either FSD Pharma or FSD BioSciences, he first needs to file an application in the Ontario Superior Court of Justice and satisfy Ontario's statutory requirements for bringing a derivative action. The shareholder did not appeal the Court's order to dismiss.

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***FSD BioSciences Employees***

During the three months ended June 30, 2021, two former FSD BioSciences employees resigned from their positions ("**former employees**") and the Corporation accepted their resignations. Subsequent to their resignations, the former employees sued the Corporation and FSD Biosciences in the Bucks County Court of Common Pleas in Pennsylvania on July 9, 2021 seeking relief and support for (i) severance and bonuses in the amount of $600,000; undetermined amounts for (ii) detrimental reliance, (iii) unjust enrichment, (iv) fraud, (v) promissory estoppel and (vi) Pennsylvania wage payment and collection law.

On August 24, 2021, the Corporation and FSD BioSciences removed the case to the Eastern District of Pennsylvania.

On September 17, 2021, the Corporation filed a motion to dismiss the claim in its entirety.

On December 13, 2021, the Court granted FSD's motion and dismissed the case as to all of the former employees' claims. As to one of the former employees, the Court ruled that he may bring his claims in Ontario, and if an Ontario court finds that the venue provision in his employment agreement was modified to allow him to bring claims in Pennsylvania, he could try and revive this case in the Pennsylvania federal court; as to the other former employee, the Court dismissed her claims with prejudice, meaning she cannot re-file them anywhere.

***Indemnity Application***

Dr. Raza Bokhari had commenced an application in the Ontario Superior Court of Justice seeking an order appointing an arbitrator to arbitrate his claim to be entitled to indemnification of his legal expenses associated with the litigation he had commenced against the Corporation or in which he has been named as a party by the Corporation. The Corporation denied the validity of the underlying indemnification agreement and was opposing the application. In April 2022, the parties agreed to adjourn the application without setting a new hearing date.

***CRO Dispute***

The Corporation was party to a Master Clinical Services Agreement ("MCSA") with Syneos Health, LLC and Syneos Health UK Limited (collectively, "Syneos") dated as of July 30, 2020. On August 25, 2021, the Corporation terminated the MCSA and all related work orders for cause, and alleged that Syneos had materially breached the MCSA. Syneos disputes that it materially breached the MCSA and has alleged that the Corporation owes Syneos amounts due under the MCSA. In January 2022, Syneos commenced an arbitration proceeding against the Corporation. An evidentiary hearing was held in November 2022. The Corporation is awaiting the decision of the arbitrators.

**B. Significant Changes**

Not applicable.

**Item 9. The Offer and Listing**

**A. Offer and Listing Details**

The Class B Shares commenced trading on the CSE on May 29, 2018 under the symbol "HUGE". Prior to the CSE listing, there was no public trading in any securities of the Corporation. The Class B Shares commenced trading on the Nasdaq in the United States on January 9, 2020 under the symbol "HUGE".

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**B. Plan of Distribution**

Not applicable.

**C. Markets**

The Class B Shares commenced trading on the CSE on May 29, 2018 under the symbol "HUGE". Prior to the CSE listing, there was no public trading in any securities of the Corporation. The Class B Shares commenced trading on the Nasdaq in the United States on January 9, 2020 under the symbol "HUGE".

**D. Selling Shareholders**

Not applicable.

**E. Dilution**

Not applicable.

**F. Expenses of the Issue**

Not applicable.

**Item 10. Additional Information**

**A. Share Capital**

Not applicable.

**B. Memorandum and Articles of Association**

See Exhibit 2.1 to this Annual Report on Form 20-F for a summary of certain material provisions of our articles of incorporation, as amended; bylaws, as amended; and certain related sections of the *Canada Business Corporations Act*. See Exhibit 1.1 to this Annual Report on Form 20-F for our articles of incorporation, as amended, and Exhibit 1.2 for our bylaws, as amended.

**C. Material Contracts.**

Except as set forth below, the material terms of our material contracts are described elsewhere in this Annual Report. Below is a list of our material contracts, together with references to the relevant sections of this Annual Report where the material terms of such contracts are described.

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The summaries provided below and elsewhere in this Annual Report are not meant to be exhaustive and are qualified in their entirety by the full text of the relevant agreements, copies of which are filed as exhibits to this Annual Report.

***Coattail Agreement***

In accordance with the rules of the CSE designed to ensure that, in the event of a take-over bid, the holders of Class B Shares will be entitled to participate on an equal footing with holders of Class A Shares, the holders of not less than 80% of the outstanding Class A Shares have entered into the Coattail Agreement. The Coattail Agreement contains provisions customary for dual class, publicly-traded Ontario corporations designed to prevent transactions that otherwise would deprive the holders of Class B Shares of rights under the take-over bid provisions of applicable Canadian securities legislation to which they would have been entitled if the Class A Shares had been Class B Shares.

See Exhibit 2.1, "*Description of Securities*," for details.

***Epitech License Agreement and Prismic Assignment Agreement***

See "*Item 4.A. History and Development of the Company - General Development of the Business - Three Year History - Epitech License Agreement and Prismic Assignment Agreement*" for details.

***UHN License Agreement***

See "*Item 4.A. History and Development of the Company - General Development of the Business - Three Year History - UHN License Agreement*" for details.

***2021 Equity Distribution Agreement***

See "*Item 4.A. History and Development of the Company-General Development of the Business - Three Year History - Capital Markets Transactions*" for details on the 2021 Equity Distribution Agreement. In addition, compensation for the Sales Agent was agreed to be 3.5% of gross offering proceeds of a certain number of Class B Shares sold through the Sales Agent, as sales agent for the Company.

***Master Agreement***

See "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History - Lucid Acquisition*" for details.

***Lucid Amalgamation Agreement***

The Lucid Amalgamation Agreement is the amalgamation agreement dated September 20, 2021, entered into among the Corporation, Lucid Psycheceuticals Inc. and a wholly owned subsidiary of the Corporation ("**Subco**") in connection with the Lucid Acquisition. Pursuant to the Lucid Amalgamation Agreement, Lucid Psycheceuticals Inc. and Subco agreed to amalgamate into Lucid. See "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History - Lucid Acquisition*" for additional details.

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***Covar Agreement***

See "*Item 4.A. History and Development of the Company*-*General Development of the Business - Three Year History -Covar Agreement*" for details.

***Cobourg Sale Agreement***

See "*Item 4.A. History and Development of the Company*-*General Development of the Business-Three Year History - Transition from Cannabis to Biotechnology*"for details.

**D. Exchange Controls** 

The Corporation was formed under and subject to the laws of the Province of Ontario, Canada. Subject to the next paragraph and the disclosure under "*Exhibit 2.1-Description of Securities-Competition Act*" and "*Exhibit 2.1-Description of Securities-Investment Canada Act*" below, there is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the payment of dividends or interest or other amounts to a non-resident holder of Class B Shares, other than withholding tax requirements.

There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Corporation on the right of a non-resident to hold or vote Class B Shares of the Corporation. However, the *Competition Act* (Canada) and the *Investment Canada Act* (Canada) have rules regarding certain acquisitions of shares by certain persons, including non-residents, along with other requirements under that legislation.

See "*Item 10.E.-Taxation*" for additional information regarding the material U.S. and Canadian federal income tax consequences relating to the ownership and disposition of our Class B Shares by U.S. Holders (as defined therein).

**E. Taxation**

**Certain Material U.S. Federal Income Tax Considerations**

The following discussion describes the material U.S. federal income tax consequences relating to the purchase, ownership and disposition of our Class B Shares by U.S. Holders (as defined below). This discussion applies to U.S. Holders that hold our Class B Shares as capital assets. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect.

This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as banks or other financial institutions, insurance companies, broker-dealers, traders in securities or other persons that generally mark their securities to market for U.S. federal income tax purposes, governments or agencies or instrumentalities thereof, tax-exempt entities, retirement plans, regulated investment companies, real estate investment trusts, certain former citizens or residents of the United States, persons who hold our Class B Shares as part of a "straddle", "hedge", "conversion transaction", "synthetic security" or other integrated or similar transaction, persons that have a "functional currency" other than the U.S. dollar, persons that own directly, indirectly or through attribution 10% or more of the total combined voting power or value of our equity interests, persons that acquired Class B Shares pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation, corporations that accumulate earnings to avoid U.S. federal income tax, persons subject to special tax accounting rules under Section 451(b) of the Code and partnerships (and other entities or arrangements classified as partnerships or as other pass-through entities for U.S. federal income tax purposes) and investors in such pass-through entities. This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences.

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As used in this discussion, the term "U.S. Holder" means a beneficial owner of our Class B Shares that is, for U.S. federal income tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or other entity treated as a corporation) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (4) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions or (y) that has validly elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our Class B Shares, the U.S. federal income tax consequences relating to an investment in our Class B Shares will depend in part upon the status and activities of such entity and the particular partner. Any such entity should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership and disposition of our Class B Shares. Persons considering an investment in our Class B Shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership and disposition of our Class B Shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

***Passive Foreign Investment Company Rules***

In general, a non-U.S. corporation will be treated as a passive foreign investment company, or PFIC, for any taxable year in which either (1) 75% or more of its gross income is passive income, or (2) on average 50% or more of its assets, determined on a quarterly basis, are assets that produce, or are held for the production of, passive income. Passive income for this purpose generally includes, among other things and subject to various exceptions, dividends, interest, royalties, rents, and gains from the disposition of assets that produce passive income. Assets that produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

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We believe that we may be considered a PFIC for the year ended December 31, 2022. In addition, although PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, we believe that we may be considered a PFIC for the current taxable year. Because we may continue to hold a substantial amount of cash and cash equivalents, and because the market value of the Company's assets (including for this purpose goodwill) may be measured in large part by the market price of our shares, which is likely to fluctuate, no assurance can be given that the Company will not also be a PFIC in any future taxable year. Our determination of whether we are a PFIC in respect of any particular year is based on an interpretation of complex provisions of the law, in respect of which the Internal Revenue Service has not issued significant guidance. Because the determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies that in some circumstances are unclear and subject to varying interpretation, there can be no assurance that our conclusions regarding our status as a PFIC for any tax year will not be challenged by the Internal Revenue Service and, if challenged, upheld in appropriate proceedings. Accordingly, our U.S. counsel expresses no opinion with respect to our PFIC status and also expresses no opinion with regard to our expectations regarding our PFIC status.

If we are a PFIC in any taxable year during which a U.S. Holder owns our Class B Shares, the U.S. Holder could be liable for additional taxes and interest charges under the "PFIC excess distribution regime" upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder's holding period for our Class B Shares, and (2) any gain recognized on a sale, exchange or other taxable disposition, including certain pledges, of our Class B Shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder's holding period for our Class B Shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.

If we are a PFIC for any year during which a U.S. Holder holds our Class B Shares, we must generally continue to be treated as a PFIC by that U.S. Holder for all succeeding years during which the U.S. Holder holds our Class B Shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a "deemed sale" election with respect to our Class B Shares. If the election is made, the U.S. Holder will be deemed to sell our Class B Shares that it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder's Class B Shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.

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If we are a PFIC for any taxable year during which a U.S. Holder holds our Class B Shares and we have a non-U.S. corporate subsidiary that is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to non-U.S. subsidiaries.

If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on our Class B Shares if such U.S. Holder makes a valid "mark-to-market" election for our Class B Shares. A mark-to-market election is available to a U.S. Holder only for "marketable stock". Our Class B Shares will be marketable stock as long as they remain listed on the Nasdaq and are regularly traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. No assurance can be given that our Class B Shares will be traded in sufficient frequency and quantity to be considered "marketable stock." A valid mark-to-market election cannot be revoked without the consent of the IRS unless our Class B Shares cease to be marketable stock.

If a mark-to-market election is in effect, a U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of our Class B Shares held at the end of such taxable year over the adjusted tax basis of such Class B Shares. The U.S. Holder generally would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of our Class B Shares held at the end of such taxable year over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder's tax basis in our Class B Shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Gain from a sale, exchange or other taxable disposition of the U.S. Holder's Class B Shares generally would be treated as ordinary income, and loss from such a sale, exchange or other taxable disposition generally would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. A mark-to-market election will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize or acquire in the future notwithstanding the U.S. Holder's mark-to-market election for our Class B Shares.

As an alternative, if the Company is a PFIC, a U.S. Holder also may avoid the excess distribution rules described above in respect of our Class B Shares by electing to treat the Company (generally, for the first taxable year in which the Company is a PFIC in respect of the U.S. Holder's Class B Shares) and any lower-tier PFIC (for the first taxable year in which the U.S. Holder is treated as owning an equity interest in such lower-tier PFIC) as a qualified electing fund (or a QEF). If a U.S. Holder makes an effective QEF election with respect to the Company (and any lower-tier PFIC), the U.S. Holder will be required to include in gross income each year, whether or not the Company makes distributions, as capital gains, its pro rata share of the Company's (and such lower-tier PFIC's) net capital gains and, as ordinary income, its pro rata share of the Company's (and such lower-tier PFIC's) net earnings in excess of its net capital gains. U.S. Holders can make a QEF election only if the Company (and each lower-tier PFIC) provides certain information, including the amount of its ordinary earnings and net capital gains determined under U.S. tax principles. The Company has not determined whether it will provide U.S. Holders with this information.

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Each U.S. taxpayer that is an investor in a PFIC is generally required to file an annual information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income taxation.

**The U.S. federal income tax rules relating to PFICs are very complex. Prospective investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of our Class B Shares, the consequences to them of an investment in a PFIC, any elections available with respect to an investment in shares of a PFIC and the IRS information reporting obligations with respect to the purchase, ownership and disposition of the shares of a PFIC.**

***Distributions***

Subject to the PFIC rules discussed above, the gross amount of any distribution of cash or property (other than certain pro rata distributions of Class B Shares) paid by the Company will generally be subject to U.S. federal income tax as dividend income to the extent of the U.S. Holder's pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such amount will be includable in gross income by a U.S. Holder as ordinary income on the date that such U.S. Holder actually or constructively receives the distribution in accordance with such U.S. Holder's regular method of accounting for U.S. federal income tax purposes. The amount of any distribution made by the Company in property other than cash will be the fair market value (determined in U.S. dollars) of such property on the date of the distribution.

To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder's pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder's Class B Shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by such U.S. Holder upon a subsequent disposition of the Class B Shares). To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder's Class B Shares, the remainder will be taxed as capital gain recognized on a sale or exchange (as discussed below in "Sale, Exchange or Other Taxable Disposition of Our Class B Shares"). Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends.

Subject to certain limitations, Canadian tax withheld with respect to distributions made on our Class B Shares may be treated as foreign taxes eligible for credit against a U.S. Holder's U.S. federal income tax liability. Alternatively, a U.S. Holder may, subject to applicable limitations, elect to deduct the otherwise creditable Canadian withholding taxes for U.S. federal income tax purposes. The rules governing the foreign tax credit are complex and involve the application of rules that depend upon a U.S. Holder's particular circumstances. Accordingly, a U.S. Holder is urged to consult its tax advisor regarding the availability of the foreign tax credit under the U.S. Holder's particular circumstances. Dividends paid by the Company will not be eligible for the "dividends received" deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.

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So long as the Company is a "qualified foreign corporation", dividends paid by the Company will be "qualified dividend income" if certain holding period and other requirements are met (including a requirement that the Company is not a PFIC in the taxable year of the dividend or the immediately preceding taxable year). Qualified dividend income of certain non-corporate U.S. Holders is subject to tax at a reduced maximum U.S. federal income tax rate. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the preferential tax rate on dividends with regard to such U.S. Holder's particular circumstances.

A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information provision, or (b) with respect to any dividend it pays on its shares that are readily tradable on an established securities market in the United States. We believe that we qualify as a resident of Canada for purposes of, and are eligible for the benefits of, the Income Tax Convention between the United States and Canada (or the U.S.-Canada Treaty), although there can be no assurance in this regard. Furthermore, the IRS has determined that the U.S.-Canada Treaty is satisfactory for purposes of the qualified dividend rules and that it includes an exchange of information provision. Therefore, subject to the PFIC rules discussed above, if the U.S.-Canada Treaty is applicable, dividends paid to our Class B Shares will generally be "qualified dividend income" in the hands of certain non-corporate U.S. Holders, provided that certain conditions are met, including holding period requirements and the absence of certain risk reduction transactions.

***Sale, Exchange or Other Taxable Disposition of Our Class B Shares***

Subject to the discussion above under "Passive Foreign Investment Company Rules", a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon a sale, exchange or other taxable disposition of our Class B Shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the disposition and such U.S. Holder's adjusted tax basis in our Class B Shares. A U.S. Holder's adjusted tax basis in our Class B Shares will generally be the U.S. Holder's U.S. dollar cost for such Class B Shares. Capital gain or loss generally will be long-term capital gain or loss if, on the date of disposition, our Class B Shares were held by the U.S. Holder for more than one year. If such U.S. Holder is an individual or other non-corporate U.S. Holder, long-term capital gains are subject to a reduced maximum U.S. federal income tax rate. The deductibility of capital losses is subject to limitations. Any gain or loss recognized from a sale, exchange or other taxable disposition of our Class B Shares will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.

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***Medicare Tax***

Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of our Class B Shares. If you are a United States person that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of this Medicare tax to your income and gains in respect of your investment in our Class B Shares.

***Receipt of Foreign Currency***

The U.S. dollar value of any cash distribution made in Canadian dollars to a U.S. Holder will be calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the distribution, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. For U.S. Holders following the accrual method of accounting, the amount realized on a disposition of our Class B Shares for an amount in Canadian dollars will be the U.S. dollar value of this amount on the date of disposition. On the settlement date, such U.S. Holder will recognize U.S. foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the U.S. dollar value of the amount received based on the exchange rates in effect on the date of sale or other disposition and the settlement date. However, in the case of shares traded on an established securities market that are sold by a cash method U.S. Holder (or an accrual method U.S. Holder that so elects), the amount realized will be based on the spot rate in effect on the settlement date for the disposition, and no exchange gain or loss will be recognized at that time. A U.S. Holder will generally have a basis in Canadian dollars equal to their U.S. dollar value on the date of receipt of such distribution, on the date of disposition, or, in the case of cash method U.S. Holders (and accrual method U.S. Holders that so elect), on the date of settlement. Any U.S. Holder that receives payment in Canadian dollars and converts or disposes of the Canadian dollars after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss and that generally will be U.S. source income or loss for foreign tax credit purposes. U.S. Holders are urged to consult their own U.S. tax advisors regarding the U.S. federal income tax consequences of receiving, owning, and disposing of Canadian dollars.

***Information Reporting and Backup Withholding***

U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in our Class B Shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets) and, in the case of a U.S. Holder claiming significant losses, IRS Form 8886 (Reportable Transaction Disclosure Statement). As described above under "Passive Foreign Investment Company Rules", each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than US$100,000 for Company equity interests may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting. Dividends on and proceeds from the sale or other disposition of our Class B Shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption. U.S. backup withholding may apply to amounts subject to information reporting if the U.S. Holder fails to provide an accurate U.S. taxpayer identification number or certification of exempt status or fails to report dividend and interest income in full. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder's U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.

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U.S. Holders are urged to consult their own tax advisors regarding the U.S. backup withholding and information reporting rules.

**Certain Canadian Federal Income Tax Considerations**

The following summary describes, as of the date hereof, the material Canadian federal income tax considerations generally applicable to a Shareholder who is a beneficial owner of our Class B Shares and who, at all relevant times, for the purposes of the application of the *Income Tax Act* (Canada) and the *Income Tax Regulations* (collectively, the "Canadian Tax Act"), (1) is not, and is not deemed to be, resident in Canada for purposes of the Canadian Tax Act and any applicable income tax treaty or convention; (2) deals at arm's length with us; (3) is not affiliated with us; (4) does not use or hold, and is not deemed to use or hold, Class B Shares in a business or part of a business carried on in Canada; (5) has not entered into, with respect to the Class B Shares, a "derivative forward agreement", as that term is defined in the Canadian Tax Act and (6) holds the Class B Shares as capital property (a "Non-Canadian Holder"). This summary does not apply to a Non-Canadian Holder that is an insurer carrying on an insurance business in Canada and elsewhere or an "authorized foreign bank", as that term is defined in the Canadian Tax Act. Such Non-Canadian Holders should consult their own tax advisors for advice having regards to their particular circumstances.

This summary is based on the current provisions of the Canadian Tax Act and the Canada-United States Tax Convention (1980), as amended (the "Canada-U.S. Tax Treaty"), and an understanding of the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. It takes into account all specific proposals to amend the Canadian Tax Act and the Canada-U.S. Tax Treaty, publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the "Proposed Amendments") and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, regulatory, administrative or judicial decision or action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.

**This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular shareholder, and no representations with respect to the income tax consequences to any particular shareholder are made. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, you should consult your own tax advisor with respect to your particular circumstances.**

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Generally, for purposes of the Canadian Tax Act, all amounts relating to the acquisition, holding or disposition of the Class B Shares must be converted into Canadian dollars based on the exchange rate quoted by the Bank of Canada on the date such amount arose or such other rate of exchange as is acceptable to the Minister of National Revenue (Canada).

***Dividends***

Dividends paid or credited on the Class B Shares or deemed to be paid or credited on the Class B Shares to a Non-Canadian Holder will be subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend, subject to any reduction in the rate of withholding to which the Non-Canadian Holder is entitled under any applicable income tax treaty or convention between Canada and the country in which the Non-Canadian Holder is resident. For example, under the Canada-U.S. Tax Treaty, where dividends on the Class B Shares are considered to be paid to or derived by a Non-Canadian Holder that is a beneficial owner of the dividends and is a U.S. resident for the purposes of, and is entitled to the full benefits of, the Canada-U.S. Tax Treaty, the applicable rate of Canadian withholding tax is generally reduced to 15%. We will be required to withhold the applicable withholding tax from any dividend and remit it to the Canadian government for the Non-Canadian Holder's account. Non-Canadian Holders are urged to consult their own advisors to determine their entitlement to relief under an applicable income tax treaty or convention.

***Dispositions***

A Non-Canadian Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition or deemed disposition of a Class B Share, unless the Class B Share is "taxable Canadian property" to the Non-Canadian Holder for purposes of the Canadian Tax Act at the time of disposition and the Non-Canadian Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country in which the Non-Canadian Holder is resident.

Generally, the Class B Shares will not constitute "taxable Canadian property" to a Non-Canadian Holder at a particular time provided that the Class B Shares are listed at that time on a "designated stock exchange" (as defined in the Canadian Tax Act), which currently includes the CSE and the Nasdaq, unless at any particular time during the 60-month period that ends at that time the following two conditions are met concurrently:

* at least 25% of the issued shares of any class or series of our capital stock was owned by or belonged to any combination of (a) the Non-Canadian Holder, (b) persons with whom the Non-Canadian Holder does not deal at arm's length for purposes of the Canadian Tax Act, and (c) partnerships in which the Non-Canadian Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships, and

* more than 50% of the fair market value of the Class B Shares was derived, directly or indirectly, from one or any combination of : (i) real or immoveable property situated in Canada, (ii) "Canadian resource properties" (as that term is defined in the Canadian Tax Act), (iii) "timber resource properties" (as that term is defined in the Canadian Tax Act) or (iv) options in respect of, or interests in, or for civil law rights in, a property described in any of the foregoing whether or not the property exists.

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Notwithstanding the foregoing, in certain circumstances, Class B Shares could be deemed to be "taxable Canadian property" to a Non-Canadian Holder. **Non-Canadian Holders whose Class B Shares are, or may constitute, "taxable Canadian property" should consult their own tax advisors**.

**F. Dividends and Paying Agents**

Not applicable.

**G. Statement by Experts**

Not applicable.

**H. Documents on Display**

We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and under those requirements will file reports with the SEC. Those reports may be inspected without charge at the locations described below. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. Nevertheless, we will file with the SEC an Annual Report on Form 20-F containing financial statements that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm.

We maintain a corporate website at *www.fsdpharma.com*. We intend to post our Annual Report on Form 20-F on our website promptly following its filing with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference.

The SEC maintains a website (*www.sec.gov*) that contains reports, proxy and information statements and other information regarding registrants, such as us, that file electronically with the SEC.

This Annual Report, copies of our financial statements and other continuous disclosure documents required under the *Securities Act* (Ontario) are available for viewing on SEDAR at www.sedar.com. All of the documents referred to are in English.

With respect to references made in this Annual Report to any contract or other document of our company, such references are not necessarily complete, and you should refer to the exhibits attached or incorporated by reference to this Annual Report for copies of the actual contract or document.

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**I. Subsidiary Information**

Not applicable.

**J. Annual Report to Security Holders**

Not applicable.

**Item 11. Quantitative and Qualitative Disclosures About Market Risk.**

Not applicable.

**Item 12. Description of Securities Other than Equity Securities**

**A. Debt Securities**

Not applicable.

**B. Warrants and Rights**

Not applicable.

**C. Other Securities**

Not applicable.

**D. American Depositary Shares**

Not applicable.

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**PART II**

**Item 13. Defaults, Dividend Arrearages and Delinquencies**

Not applicable.

**Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.**

**A.-D.**

Not applicable.

**E. Use of Proceeds**

On February 8, 2020, we filed a shelf registration statement on Form F-10, SEC File No. 333- 236780 (as amended, the "**Registration Statement**") with respect to the offering of up to an aggregate of C$100.0 million (US$75,300,000) of Class B Shares, subscription receipts, warrants, debt securities and units. The Registration Statement became effective on June 17, 2020.

Following the effectiveness of the Registration Statement, we commenced an offering of Class B Shares and Warrants (the "**July 2020 Offering**"). A.G.P./Alliance Global Partners served as the placement agent for the July 2020 Offering. On August 6, 2020, we sold pursuant to the Registration Statement an aggregate of 2,762,430 Class B Shares and Warrants to purchase an additional 1,381,215 Class B Shares (at an exercise price of at a price of US$4.26 per share) for aggregate proceeds to the Corporation of approximately US$10.0 million (before deducting placement agent fees and offering expenses). The aggregate proceeds of the July 2020 Offering, net of aggregate placement agent fees of US$700,000 and other legal, accounting and other offering expenses of US$213,349 (inclusive of placement agent expense allowances of up to $125,000), were US$9,086,648. None of these fees or expenses was paid to any of our directors or officers or their associates, or any 10% stockholder or any affiliate of ours. We also granted the placement agent an option to arrange for purchases of up to an additional US$10.0 million of Class B Shares and Warrants on the terms above for a period of 30 days following the closing of the July 2020 Offering. The July 2020 Offering terminated upon the expiration of such option.

We applied the net proceeds of the offering to advance our research and development program for the commercialization of ultramicronized-PEA, being the submission of the IND application to the FDA for the FSD-201 COVID-19 trials and the initiation of the associated Phase 2(a) clinical trials, as well as for working capital and general corporate purposes. None of the net proceeds was paid to any of our directors or officers or their associates, or any 10% stockholder or any affiliate of ours.

**Item 15. Controls and Procedures**

**A. Disclosure Controls and Procedures**

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are designed to ensure that information required to be disclosed 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 CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

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Under the supervision and with the participation of our CEO and CFO, our management has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022, the end of the period covered by this annual report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2022.

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

**B. Management's Annual Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is the process designed by and under the supervision of our CEO and CFO to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Under the supervision and with the participation of our CEO and CFO, our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 and concluded that it was effective.

**C. Attestation Report of the Registered Public Accounting Firm**

Not applicable.

**D. Changes in Internal Control Over Financial Reporting**

Under the supervision and with the participation of our CEO and CFO, our management has evaluated changes in our internal control over financial reporting that occurred during the period covered by this Annual Report. Based on that evaluation, our CEO and CFO did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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**Item 16. [Reserved.]**

**Item 16A. Audit Committee Financial Expert.**

Our board of directors has determined that Nitin Kaushal, the Chair of the Audit Committee of our Board of Directors, is an "audit committee financial expert" as defined by SEC rules and has the requisite financial sophistication under the listing standards of the Nasdaq Stock Market. Mr. Kaushal meets the standards of independence applicable to audit committees under Rule 10A-3 under the Exchange Act and under the listing standards of the Nasdaq Stock Market.

**Item 16B. Code of Ethics.**

We have adopted a Code of Conduct and Ethics, or the Code of Conduct, that is applicable to all of our directors, executive officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller. A copy of the Code of Conduct is available on our website at *www.fsdpharma.com*.

During 2022, no provision of the Code of Conduct applicable to our principal executive officer, principal financial officer, principal accounting officer or controller was amended (other than technical, administrative or other non-substantive amendments), nor did we grant any waiver (including an implicit waiver) of any provision of the Code of Conduct to any such officer.

We intend to disclose any amendments to the Code of Conduct applicable to our principal executive officer, principal financial officer, principal accounting officer or controller (other than technical, administrative or other non-substantive amendments) and any waiver of the Code of Conduct for any such officer on our website within five business days following the date of the amendment or waiver. We expect to maintain any such disclosure on our website for a period of at least twelve months from the date of posting.

**Item 16C. Principal Accountant Fees and Services.** 

MNP served as our independent registered public accounting firm for the years ended December 31, 2022, 2021 and 2020. The following table provides a summary of the fees for professional services rendered by MNP for the years ended December 31, 2022 and 2021.

**Auditors' Fees**

The following table sets forth the fees billed by the Corporation's auditor during the years ended December 31, 2022 and December 31, 2021:

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Fee** | &nbsp;&nbsp;**For the year ended** <br>**December 31, 2021** | &nbsp;&nbsp;**For the year ended** <br>**December 31, 2022** |
| &nbsp;&nbsp;Audit Fees<sup>(1)</sup> | &nbsp;&nbsp;C$485,805 | &nbsp;&nbsp;C$386,599 |
| &nbsp;&nbsp;Audit-Related Fees<sup>(2)</sup> | &nbsp;&nbsp;Nil | &nbsp;&nbsp;Nil |
| &nbsp;&nbsp;Tax Fees<sup>(3)</sup> | &nbsp;&nbsp;C$46,400 | &nbsp;&nbsp;C$45,176 |
| &nbsp;&nbsp;All Other Fees<sup>(4)</sup> | &nbsp;&nbsp;Nil | &nbsp;&nbsp;Nil |
| &nbsp;&nbsp;**Total** | &nbsp;&nbsp;**C$532,205** | &nbsp;&nbsp;**C$431,775** |

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___________

(1) "Audit Fees" include fees necessary to perform the annual audit and quarterly reviews of the Corporation's consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.

(2) "Audit-Related Fees" include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.

(3) "Tax Fees" include fees for all tax services other than those included in "Audit Fees" and "Audit-Related Fees". This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.

(4) "All Other Fees" include all other non-audit services.

All permissible categories of non-audit services require pre-approval by the Audit Committee, subject to certain statutory exemptions.

***Pre-Approval Policies and Procedures***

Our Audit Committee approves each engagement for audit or non-audit services before we engage our independent registered public accounting firm to provide those services.

Our Audit Committee has not established any pre-approval policies or procedures that would allow our management to engage our independent registered public accounting firm to provide any specified services with only an obligation to notify the Audit Committee of the engagement for those services.

**Item 16D. Exemptions from the Listing Standards for Audit Committees.**

Not applicable.

**Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.**

The Corporation repurchased 1,999,800 Class B Shares for cancellation, at an average price of approximately C$1.20, under the 2022 NCIB.

The following table specifies the number of shares purchased by the Corporation under the 2022 NCIB:

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Period** | &nbsp;&nbsp;&nbsp;&nbsp;**Total Number of<br>Shares<br>Purchased** | &nbsp;&nbsp;**Average Price Paid<br>Per Share**<br>**(C$)** | &nbsp;&nbsp;**Total Number of<br>Shares Purchased<br>as Part of Publicly Announced Plans or Programs** | &nbsp;&nbsp;**Maximum Number of Shares that May Yet Be Purchased Under the<br>Plans or Programs** |
| Month #1<br>(January 1, 2022 - January 31, 2022) | &nbsp;&nbsp;420600 | &nbsp;&nbsp;1.22 | &nbsp;&nbsp;420600 | &nbsp;&nbsp;1579400 |
| Month #2<br>(February 1, 2022 - February 28, 2022) | &nbsp;&nbsp;575000 | &nbsp;&nbsp;1.15 | &nbsp;&nbsp;995600 | &nbsp;&nbsp;1004400 |
| Month #3<br>(March 1, 2022 - March 31, 2022) | &nbsp;&nbsp;529100 | &nbsp;&nbsp;1.25 | &nbsp;&nbsp;1524700 | &nbsp;&nbsp;475300 |
| Month #4<br>(April 1, 2022 - April 30, 2022) | &nbsp;&nbsp;0 | &nbsp;&nbsp;0 | &nbsp;&nbsp;1524700 | &nbsp;&nbsp;475300 |
| Month #5<br>(May 1, 2022 - May 31, 2022) | &nbsp;&nbsp;138400 | &nbsp;&nbsp;1.20 | &nbsp;&nbsp;1663100 | &nbsp;&nbsp;336900 |
| Month #6<br>(June 1, 2022 - June 30, 2022) | &nbsp;&nbsp;117300 | &nbsp;&nbsp;1.16 | &nbsp;&nbsp;1780400 | &nbsp;&nbsp;219600 |
| Month #7<br>(July 1, 2022 - July 31, 2022) | &nbsp;&nbsp;209400 | &nbsp;&nbsp;1.21 | &nbsp;&nbsp;1989800 | &nbsp;&nbsp;10200 |
| Month #8<br>(August 1, 2022 - August 31, 2022) | &nbsp;&nbsp;0 | &nbsp;&nbsp;0 | &nbsp;&nbsp;1989800 | &nbsp;&nbsp;10200 |
| Month #9<br>(September 1, 2022 - September 30, 2022) | &nbsp;&nbsp;10000 | &nbsp;&nbsp;1.26 | &nbsp;&nbsp;1999800 | &nbsp;&nbsp;200 |
| Month #10<br>(October 1, 2022 - October 31, 2022) | &nbsp;&nbsp;0 | &nbsp;&nbsp;0 | &nbsp;&nbsp;1999800 | &nbsp;&nbsp;200 |
| Month #11<br>November 1, 2022 - November 30, 2022 | &nbsp;&nbsp;0 | &nbsp;&nbsp;0 | &nbsp;&nbsp;1999800 | &nbsp;&nbsp;200 |
| Month #12<br>(December 1, 2022 - December 31, 2022) | &nbsp;&nbsp;0 | &nbsp;&nbsp;0 | &nbsp;&nbsp;1999800 | &nbsp;&nbsp;200 |

---

------

On January 12, 2023, the Board authorized the 2023 NCIB, which authorizes the Corporation to repurchase up to 1,925,210 Class B Shares, being approximately 5% of the Corporation's issued and outstanding Class B Shares as of that date, from time to time over 12 months. The 2023 NCIB commenced on January 18, 2023 and will terminate on January 17, 2024, unless terminated earlier by the Corporation. See "*Item 4.A. History and Development of the Company-General Development of the Business - Three Year History - Capital Markets Transactions*" for details on the 2022 NCIB and 2023 NCIB.

The following table specifies the number of shares purchased by the Corporation since the initiation of the 2023 NCIB:

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Period** | &nbsp;&nbsp;&nbsp;&nbsp;**Total Number of<br>Shares<br>Purchased** | &nbsp;&nbsp;**Average Price Paid<br>Per Share**<br>**(C$)** | &nbsp;&nbsp;**Total Number of<br>Shares Purchased<br>as Part of Publicly<br>Announced Plans<br>or Programs** | &nbsp;&nbsp;**Maximum Number of<br>Shares that May Yet Be<br>Purchased Under the<br>Plans or Programs** |
| Month #1<br>(January 12, 2023 - January 31, 2023) | &nbsp;&nbsp;289600 | &nbsp;&nbsp;1.39 | &nbsp;&nbsp;289600 | &nbsp;&nbsp;1635610 |
| Month #2<br>(February 1, 2023 - February 28, 2023) | &nbsp;&nbsp;1328700 | &nbsp;&nbsp;2.27 | &nbsp;&nbsp;1618300 | &nbsp;&nbsp;306910 |
| Month #3<br>(March 1, 2023 - March 31, 2023) | &nbsp;&nbsp;286400 | &nbsp;&nbsp;2.10 | &nbsp;&nbsp;1904700 | &nbsp;&nbsp;20510 |
| **Total** | &nbsp;&nbsp;1904700 | &nbsp;&nbsp;2.11 | &nbsp;&nbsp;1904700 | &nbsp;&nbsp;20510 |

---

**Item 16F. Change in Registrant's Certifying Accountant.**

Not applicable.

**Item 16G. Corporate Governance.**

The Corporation is a foreign private issuer and its Class B Shares are listed on Nasdaq. Nasdaq Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practices in lieu of most of the requirements of the 5600 Series of the Nasdaq Marketplace Rules. In order to claim such an exemption, the Corporation must disclose the significant differences between its corporate governance practices and those required to be followed by U.S. domestic issuers under Nasdaq's corporate governance requirements. Set forth below is a brief summary of such differences:

***Independent Director Requirements***

Nasdaq Marketplace Rule 5605(b)(1) requires a majority of the board of directors of each issuer to be comprised of independent directors, as that term is defined under Rule 5605(a)(2). The Corporation does not follow this Nasdaq Marketplace Rule. Instead, and in accordance with the Nasdaq exemption, the Corporation complies with the applicable CSE rules and applicable Canadian and Ontario corporate and securities regulatory requirements.

------

***Shareholder Approval Requirements***

Nasdaq Marketplace Rule 5635 requires each issuer to obtain shareholder approval prior to certain dilutive events, including a transaction other than a public offering involving the sale of 20% or more of the issuer's outstanding shares of common stock prior to the transaction for less than the greater of book or market value of the stock. The Corporation does not follow this Nasdaq Marketplace Rule. Instead, and in accordance with the Nasdaq exemption, the Corporation complies with Ontario corporate and securities laws, which do not require shareholder approval for dilutive events unless the Corporation were to dispose of all or substantially all of its undertaking. In addition, the Corporation follows the CSE policies which require shareholder approval on the occurrence of a "fundamental change," defined by the policies of the CSE to be a "major acquisition" (whereby for the next 12-month period at least 50% of the issuer's assets will be comprised of, or anticipated revenues are expected to be derived from, the assets, properties, businesses or other interests that are the subject of the major acquisition) accompanied or preceded by a "change of control." In such context, a "change of control" would include the distribution of a number of equity securities of the issuer equal to or greater than 100% of the number outstanding prior to the transaction, as well as a substantial change of management or the board of directors of the issuer.

In addition, Nasdaq Marketplace Rule 5635 requires shareholder approval of most equity compensation plans and material revisions to such plans. We do not follow this Nasdaq Marketplace Rule. Instead, and in accordance with the Nasdaq exemption, we comply with Ontario corporate and securities laws, which do not require shareholder approval of equity compensation plans. In addition, the Corporation intends to follow the CSE policies and certain provisions of Canadian securities laws which require limitations on the number of equity compensation securities that can be distributed to persons performing investor relations services to 1% of the issued and outstanding amount of listed securities in a 12-month period, and further limit the number of equity compensation securities that can be distributed to a director, officer or a related entity of the issuer, or an associate thereof (each a "related person"), on a fully diluted basis to not exceed 5% of the outstanding securities of the issuer, or collectively to related persons exceeds 10% of the outstanding securities of the issuer.

***Quorum Requirement***

Nasdaq Marketplace Rule 5620(c) requires that each company that is not a limited partnership shall provide for a quorum as specified in its by-laws for any meeting of holders of common stock; provided, however, that in no case shall such quorum be less than 33-1/3% of the outstanding shares of the Corporation's common voting stock. The Corporation does not presently follow this Nasdaq Marketplace Rule. Instead, the Corporation complies with Ontario corporate and securities laws and its by-laws which do not require a quorum of no less than 33-1/3% of the outstanding shares of the Corporation's common voting stock and provides that the quorum for the transaction of business at a meeting of shareholders is at least two voting persons holding or representing, in the aggregate, not less than 10% of the issued and outstanding shares of the applicable class.

------

***Independent Director Oversight of Executive Compensation and Board Nominations***

Nasdaq's Marketplace Rule 5605(d) requires independent director oversight of executive officer compensation arrangements by approval of such compensation by a committee comprised solely of independent directors, and Marketplace Rule 5605(e) requires similar oversight with respect to the process of selecting nominees to the board or oversight by a majority of the independent directors. Under the exemption available to foreign private issuers under Rule 5615(a)(3), the Company is not required to comply with Nasdaq Marketplace Rules 5605(d) or 5605(e). Instead, and in accordance with the Nasdaq exemption, the Corporation complies with the applicable CSE rules and applicable Canadian corporate and securities regulatory requirements.

***Proxy Delivery Requirements***

Nasdaq Marketplace Rule 5620(b) requires that a listed company that is not a limited partnership to solicit proxies and provide proxy statements for all meetings of shareholders, and also provide copies of such proxy solicitation materials to Nasdaq. The Corporation is a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act, and the equity securities of the Corporation are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. The Corporation solicits proxies in accordance with applicable rules and regulations in Canada.

**Item 16H. Mine Safety Disclosure**

Not applicable.

**Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**Item 16J. Insider Trading Policies**

This disclosure item does not yet apply to the Corporation.

------

**PART III**

**Item 17. Financial Statements**

Not applicable.

**Item 18. Financial Statements**

See pages F-1 through F-44 appearing at the end of this Annual Report on Form 20-F following the signature page.

**Item 19. Exhibits.** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | &nbsp;&nbsp;**Incorporation by Reference** | &nbsp;&nbsp;**Incorporation by Reference** | &nbsp;&nbsp;**Incorporation by Reference** | &nbsp;&nbsp;**Incorporation by Reference** |
| &nbsp;&nbsp;**Exhibit**<br> **No.** | &nbsp;&nbsp;**Description** | &nbsp;&nbsp;**Form** | &nbsp;&nbsp;**File No.** | &nbsp;&nbsp;**Exhibit<br>No.** | &nbsp;&nbsp;**Filing<br>Date** |
| &nbsp;&nbsp;[1.1](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit1-1.htm) | [Articles of Amalgamation of FSD Pharma Inc. dated November 1, 1998, as amended through February 3, 2020.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit1-1.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit1-1.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit1-1.htm) | &nbsp;&nbsp;[1.1](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit1-1.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit1-1.htm) |
| &nbsp;&nbsp;[1.2](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321004130/exhibit99-1.htm) | [Amended and Restated By-Law Number 1.](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321004130/exhibit99-1.htm) | &nbsp;&nbsp;[6-K](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321004130/exhibit99-1.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321004130/exhibit99-1.htm) | &nbsp;&nbsp;[99.1](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321004130/exhibit99-1.htm) | &nbsp;&nbsp;[May 5, 2021](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321004130/exhibit99-1.htm) |
| &nbsp;&nbsp;[2.1\*](exhibit2-1.htm) | [Description of Securities](exhibit2-1.htm) |  |  |  |  |
| &nbsp;&nbsp;[2.2](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-18.htm) | [Coattail Agreement, dated May 24, 2018, by and among FSD Pharma Inc., Computershare Trust Company of Canada, and each of the individuals listed on Schedule A thereto.](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-18.htm) | &nbsp;&nbsp;[40-F](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-18.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-18.htm) | &nbsp;&nbsp;[99.18](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-18.htm) | &nbsp;&nbsp;[December 6, 2019](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-18.htm) |
| &nbsp;&nbsp;[4.1](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321001236/exhibit99-1.htm) | [Equity Distribution Agreement, dated February 11, 2021, by and between FSD Pharma Inc. and A.G.P. Alliance Global Partners.](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321001236/exhibit99-1.htm) | &nbsp;&nbsp;[6-K](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321001236/exhibit99-1.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321001236/exhibit99-1.htm) | &nbsp;&nbsp;[99.1](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321001236/exhibit99-1.htm) | &nbsp;&nbsp;[February 11, 2021](http://www.sec.gov/Archives/edgar/data/0001771885/000106299321001236/exhibit99-1.htm) |
| &nbsp;&nbsp;[4.3](http://www.sec.gov/Archives/edgar/data/0001771885/000106299320001389/exhibit99-1.htm) | [Amended and Restated License Agreement, dated January 8, 2020, between FSD Pharma Inc. and Epitech Group SPA.](http://www.sec.gov/Archives/edgar/data/0001771885/000106299320001389/exhibit99-1.htm) | &nbsp;&nbsp;[6-K](http://www.sec.gov/Archives/edgar/data/0001771885/000106299320001389/exhibit99-1.htm) | &nbsp;&nbsp;[001-38152](http://www.sec.gov/Archives/edgar/data/0001771885/000106299320001389/exhibit99-1.htm) | &nbsp;&nbsp;[99.1](http://www.sec.gov/Archives/edgar/data/0001771885/000106299320001389/exhibit99-1.htm) | &nbsp;&nbsp;[March 18, 2020](http://www.sec.gov/Archives/edgar/data/0001771885/000106299320001389/exhibit99-1.htm) |
| &nbsp;&nbsp;[4.4](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-4.htm) | [First Amendment to the Restated License Agreement, dated July 9, 2020, by and between FSD Pharma Inc. and Epitech Group SPA.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-4.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-4.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-4.htm) | &nbsp;&nbsp;[4.4](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-4.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-4.htm) |
| &nbsp;&nbsp;[4.5#](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-5.htm) | [Assignment Agreement, dated June 28, 2019, by and between FSD Pharma Inc. and Prismic Pharmaceuticals, Inc.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-5.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-5.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-5.htm) | &nbsp;&nbsp;[4.5](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-5.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-5.htm) |
| &nbsp;&nbsp;[4.6#](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-6.htm) | [Proposal Agreement, dated October 1, 2021, by and between FSD Pharma Inc. and Covar Pharmaceuticals Inc.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-6.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-6.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-6.htm) | &nbsp;&nbsp;[4.6](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-6.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-6.htm) |

---

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;[4.7](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_1.htm) | [Master Agreement, dated August 25, 2021, by and among FSD Pharma Inc., 2861435 Ontario Inc. and Lucid Psycheceuticals Inc.](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_1.htm) | &nbsp;&nbsp;[6-K](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_1.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_1.htm) | &nbsp;&nbsp;[99.1](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_1.htm) | &nbsp;&nbsp;[September 21, 2021](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_1.htm) |
| &nbsp;&nbsp;[4.8](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_2.htm) | [Amalgamation Agreement, dated September 20, 2021, by and among FSD Pharma Inc., 2861435 Ontario Inc. and Lucid Psycheceuticals Inc.](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_2.htm) | &nbsp;&nbsp;[6-K](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_2.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_2.htm) | &nbsp;&nbsp;[99.2](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_2.htm) | &nbsp;&nbsp;[September 21, 2021](http://www.sec.gov/Archives/edgar/data/0001771885/000115752321001156/a52495136ex99_2.htm) |
| &nbsp;&nbsp;[4.9#](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-9.htm) | [Exclusive License Agreement, dated May 19, 2021, by and between Lucid Psycheceuticals Inc. and the University Health Network.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-9.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-9.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-9.htm) | &nbsp;&nbsp;[4.9](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-9.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-9.htm) |
| &nbsp;&nbsp;[4.13†](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-9.htm) | [Stock Option Plan, dated for reference February 9, 2018.](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-9.htm) | &nbsp;&nbsp;[40-F](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-9.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-9.htm) | &nbsp;&nbsp;[99.9](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-9.htm) | &nbsp;&nbsp;[December 6, 2019](http://www.sec.gov/Archives/edgar/data/0001771885/000106299319004677/exhibit99-9.htm) |
| &nbsp;&nbsp;[4.14†](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-14.htm) | [Form of 2022 Indemnification Agreement, by and among FSD Pharma Inc., and certain of its Directors and Officers.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-14.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-14.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-14.htm) | &nbsp;&nbsp;[4.14](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-14.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-14.htm) |
| &nbsp;&nbsp;[4.15†](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-15.htm) | [Employment Agreement, dated July 26, 2021, by and between FSD Pharma Inc. and Anthony Durkacz.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-15.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-15.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-15.htm) | &nbsp;&nbsp;[4.15](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-15.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-15.htm) |
| &nbsp;&nbsp;[4.16 †](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-16.htm) | [Employment Agreement, dated July 26, 2021, by and between FSD Pharma Inc. and Zeeshan Saeed.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-16.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-16.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-16.htm) | &nbsp;&nbsp;[4.16](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-16.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-16.htm) |
| &nbsp;&nbsp;[4.17 †](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-17.htm) | [Employment Agreement, dated August 29, 2021, by and between FSD Pharma Inc. and Donal Carroll.](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-17.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-17.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-17.htm) | &nbsp;&nbsp;[4.17](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-17.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/1771885/000106299322009034/exhibit4-17.htm) |
| &nbsp;&nbsp;[4.18\*†](exhibit4-18.htm) | [Equity Incentive Plan, dated for reference May 16, 2022.](exhibit4-18.htm) |  |  |  |  |
| &nbsp;&nbsp;[4.19\*†](exhibit4-19.htm) | [Employment Agreement, dated January 19, 2022, by and among Lucid Psycheceuticals Inc. and Kevin Cassidy.](exhibit4-19.htm) |  |  |  |  |
| &nbsp;&nbsp;[4.20\*†](exhibit4-20.htm) | [Employment Agreement, dated March 21, 2022, by and among Lucid Psycheceuticals Inc. and Dr. Andrzej Chruscinski.](exhibit4-20.htm) |  |  |  |  |

---

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;[8.1\*](exhibit8-1.htm) | [List of subsidiaries of the Registrant.](exhibit8-1.htm) |  |  |  |  |
| &nbsp;&nbsp;[12.1\*](exhibit12-1.htm) | [Certification by the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](exhibit12-1.htm) |  |  |  |  |
| &nbsp;&nbsp;[12.2\*](exhibit12-2.htm) | [Certification by the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](exhibit12-2.htm) |  |  |  |  |
| &nbsp;&nbsp;[13.1\*\*](exhibit13-1.htm) | [Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](exhibit13-1.htm) |  |  |  |  |
| &nbsp;&nbsp;[13.2\*\*](exhibit13-2.htm) | [Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](exhibit13-2.htm) |  |  |  |  |
| &nbsp;&nbsp;[15.1\*](exhibit15-1.htm) | [Management's Discussion and Analysis of Financial Condition and Results of Operations for three months ended and fiscal years ended December 31, 2022 and 2021](exhibit15-1.htm) |  |  |  |  |
| &nbsp;&nbsp;[99.1](http://www.sec.gov/Archives/edgar/data/0001771885/000106299322009034/exhibit99-1.htm) | [Audit Committee Charter](http://www.sec.gov/Archives/edgar/data/0001771885/000106299322009034/exhibit99-1.htm) | &nbsp;&nbsp;[20-F](http://www.sec.gov/Archives/edgar/data/0001771885/000106299322009034/exhibit99-1.htm) | &nbsp;&nbsp;[001-39152](http://www.sec.gov/Archives/edgar/data/0001771885/000106299322009034/exhibit99-1.htm) | &nbsp;&nbsp;[99.1](http://www.sec.gov/Archives/edgar/data/0001771885/000106299322009034/exhibit99-1.htm) | &nbsp;&nbsp;[March 31, 2022](http://www.sec.gov/Archives/edgar/data/0001771885/000106299322009034/exhibit99-1.htm) |
| 101.1\* | Interactive Data File. |  |  |  |  |
| 101.INS\* | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |  |  |  |  |
| [101.SCH\*](huge-20221231.xsd) | [Inline XBRL Taxonomy Extension Schema Document.](huge-20221231.xsd) |  |  |  |  |
| [101.CAL\*](huge-20221231_cal.xml) | [Inline XBRL Taxonomy Extension Calculation Linkbase Document.](huge-20221231_cal.xml) |  |  |  |  |
| [101.DEF\*](huge-20221231_def.xml) | [Inline XBRL Taxonomy Extension Definition Linkbase Document.](huge-20221231_def.xml) |  |  |  |  |

---

------

---

| | |
|:---|:---|
| [101.LAB\*](huge-20221231_lab.xml) | [Inline XBRL Taxonomy Extension Label Linkbase Document.](huge-20221231_lab.xml) |
| [101.PRE\*](huge-20221231_pre.xml) | [Inline XBRL Taxonomy Extension Presentation Linkbase Document.](huge-20221231_pre.xml) |
| 104.1\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

______________

\* Filed herewith.

\*\* Furnished herewith.

† Indicates a management contract or any compensatory plan, contract or arrangement.

# Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would likely cause competitive harm to the Corporation if publicly disclosed.

------

**SIGNATURES**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

FSD Pharma Inc.

By: /s/ Anthony Durkacz

Name: Anthony Durkacz

Title: Interim Chief Executive Officer

(Principal Executive Officer)

Date: March 31, 2023

------

**INDEX TO FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| Report of Independent Registered Public Accounting Firm (PCAOB ID:1930) |  |
| [Consolidated Statements of Financial Position as at December 31, 2022 and 2021](#page_2_integixAnchor) | [1](#page_2_integixAnchor) |
| [Consolidated Statements of Loss and Comprehensive Loss for the Years Ended December 31, 2022, 2021 and 2020](#page_3_integixAnchor) | [2](#page_3_integixAnchor) |
| [Consolidated Statements of Changes in Shareholder's Equity for the Years Ended December 31, 2022, 2021 and 2020](#page_4_integixAnchor) | [3](#page_4_integixAnchor) |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020](#page_5_integixAnchor) | [4](#page_5_integixAnchor) |
| [Notes to the Consolidated Financial Statements](#page_5_integixAnchor) | [5 - 42](#page_5_integixAnchor) |

---

------

---

| |
|:---|
| ![mnp.jpg](form20fxz001.jpg) |
| **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** |

---

To the Board of Directors and Shareholders of FSD Pharma Inc.

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated statements of financial position of FSD Pharma Inc. (the "Company") as of December 31, 2022 and 2021 and the related consolidated statements of loss and comprehensive loss, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the results of its consolidated operations and its consolidated cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

![mnpllp.jpg](form20fxz002.jpg)

Chartered Professional Accountants;

Licensed Public Accountants

We have served as the Company's auditor since 2019.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Toronto, Canada

March 31, 2023

---

| | |
|:---|:---|
| **MNP LLP** |  |
| 1 Adelaide Street East, Suite 1900, Toronto ON, M5C 2V9 | 1.877.251.2922 T: 416.596.1711 F: 416.596.7894 |

---

------

**FSD Pharma Inc.**

**Consolidated financial statements** 

For the years ended December 31, 2022, 2021 and 2020

(expressed in United States dollars, except per share amounts)

------

**FSD PHARMA INC.** 

**CONSOLIDATED STATEMENTS OF FINANCIAL POSITION**

(expressed in United States dollars)

---

| | |
|:---|:---|
| **As at** |  |
|  | Notes |
| **ASSETS** |  |
| **Current assets** |  |
| Cash and cash equivalents |  |
| Other receivables | 6 |
| Prepaid expenses and deposits | 7 |
| Investments | 9 |
| Net investment in lease |  |
| **Assets held for sale** | 5 |
| **Non-current assets** |  |
| Equipment, net |  |
| Investments | 9 |
| Right-of-use asset, net | 10 |
| Finance receivables, net | 8 |
| Intangible assets, net | 11 |
| **LIABILITIES** |  |
| **Current liabilities** |  |
| Trade and other payables | 12 |
| Lease obligations | 13 |
| Warrants liability | 14 |
| Notes payable |  |
| **Non-current liabilities** |  |
| Lease obligations | 13 |
| **SHAREHOLDERS' EQUITY** |  |
| Class A share capital | 15 |
| Class B share capital | 15 |
| Warrants | 15 |
| Contributed surplus |  |
| Foreign exchange translation reserve |  |
| Accumulated deficit |  |
| Commitments and contingencies | 21 |
| Subsequent events | 25 |

---

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

On behalf of the Board:

"Signed" "Signed" <br> Director - Donal Carroll Director - Nitin Kaushal

------

**FSD PHARMA INC.** 

**CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS**

(expressed in United States dollar, except number of shares)

---

| | |
|:---|:---|
| For the years ended December 31, |  |
|  | Notes |
| **Expenses** |  |
| General and administrative | 18 |
| External research and development fees |  |
| Share-based payments | 16 |
| Depreciation and amortization | 10 & 11 |
| Legal provision |  |
| Impairment of right-of-use asset |  |
| **Total operating expenses** |  |
| **Loss from continuing operations** |  |
| Interest income | 19 |
| Finance expense, net |  |
| Gain on settlement of financial liability |  |
| Gain on change in fair value of derivative liability | 14 |
| Loss on changes in fair value of investments | 9 |
| **Net loss from continuing operations** |  |
| Net income (loss) from discontinued operations | 5 |
| **Net loss** |  |
| **Other comprehensive loss** |  |
| Items that may be subsequently reclassified to loss: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Exchange gain on translation of foreign operations |  |
| **Comprehensive loss** |  |
| Net (loss) income per share |  |
| Basic and diluted - continuing operations | 17 |
| Basic and diluted - discontinued operations | 17 |
| Weighted average number of shares outstanding – basic and diluted | 17 |

---

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

------

**FSD PHARMA INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY**

For the years ended December 31, 2022, 2021 and 2020

(expressed in United States dollar, except number of shares)

---

| | | | |
|:---|:---|:---|:---|
|  | **Class A shares** | **Class B shares** | **Warrants** |
|  | **#** | $**#** | **#** |
| **Balance, December 31, 2019** | **72** | **7905727** | **467451))** |
| Shares issued [note 15] |  | 8925942 | 6335758) |
| Share-based payments [note 16] |  | 2307569 |  |
| Share options exercised |  | 22382 | -) |
| Warrants expired |  |  | (54100) |
| Comprehensive loss for the period |  |  | -) |
| **Balance, December 31, 2020** | **72** | **19161620** | **6749109)** |
| Shares issued [note 15] |  | 15480462 |  |
| Share-based payments [note 16] |  | 1462558 | 100000 |
| Share cancelation [note 15] |  | (156278) |  |
| Lucid acquisition [note 4] |  | 4502392 | 112162 |
| Warrants expired |  |  | (4476) |
| Comprehensive loss for the period |  |  | -) |
| **Balance, December 31, 2021** | **72** | **40450754** | **6956795)** |
| Share repurchase [note 15] |  | (1999800) | -) |
| Share-based payments [note 16] |  | 158144 |  |
| Share cancellation [note 15] |  | (504888) |  |
| Warrants expired |  |  | (474702) |
| PSUs converted to shares [note 16] |  | 400000 | -) |
| Comprehensive loss for the period |  |  | -) |
| **Balance, December 31, 2022** | **72** | **38504210** | **6482093)** |

---

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

------

**FSD PHARMA INC.** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

For the years ended December 31, 2022, 2021 and 2020

(expressed in United States dollars)

---

| |
|:---|
| **Operating activities** |
| Net loss from continuing operations**)** |
| Add (deduct) items not affecting cash |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of right-of-use asset |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based payments |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of investments |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of derivative liability**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized foreign exchange loss (gain) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on settlement of financial liability**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on net investment in lease**)** |
| Changes in non-cash working capital balances |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance receivables**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Other receivables) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and deposits) |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables**)** |
| **Cash used in continuing operating activities)** |
| **Cash used in discontinued operating activities)** |
| **Cash used in operating activities)** |
| **Investing activities** |
| Cash acquired from acquisition of Lucid Psycheceuticals Inc. |
| Purchase of investments**)** |
| Purchase of equipment**)** |
| Additions to intangible assets**)** |
| Proceeds from sale of investments |
| **Cash (used in) provided by continuing investing activities)** |
| **Cash provided by discontinued investing activities** |
| **Cash provided by investing activities** |
| **Financing activities** |
| Share repurchase**)** |
| Proceeds from issuance of shares, net |
| Proceeds from exercise of share-options |
| Repayment of notes payable) |
| Payment of lease obligation**)** |
| **Cash (used in) provided by continuing financing activities)** |
| **Cash provided by discontinued financing activities** |
| **Cash (used in) provided by financing activities)** |
| **Net (decrease) increase)** |
| Cash and cash equivalents, beginning of the year |
| **Cash and cash equivalents, end of the year** |

---

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

------

**FSD PHARMA INC.** <br> **Notes to the consolidated financial statements** <br> (expressed in United States dollars)<br> December 31, 2022, 2021 and 2020<br>

**1. Nature of business** 

FSD Pharma Inc. ("FSD" or the "Company") is a biotechnology company with three drug candidates in different stages of development. FSD Biosciences Inc., a wholly-owned subsidiary, is focused on pharmaceutical research and development ("R&D") of its lead compound, ultra-micronized palmitoylethanolamide ("PEA") or FSD-PEA (also known as FSD-201). Through the Company's wholly owned subsidiary, Lucid Psycheceuticals Inc. ("Lucid"), the Company is also focused on the research and development of its lead compounds, Lucid-PSYCH (also known as Lucid-201) and Lucid-MS (also known as Lucid-21-302). PEA, the active substance in FSD-PEA, interacts with the endocannabinoid system in the body and exhibits anti-inflammatory activities. Lucid PSYCH is a molecular compound identified for the potential treatment of mental health disorders. Lucid-MS is a molecular compound identified for the potential treatment of neurodegenerative disorders.

FV Pharma Inc. ("FV Pharma"), a wholly owned subsidiary of the Company, was a licensed producer of cannabis in Canada under the Cannabis Act (Canada) (together with the regulations promulgated thereunder (the "Cannabis Regulations"), the "Cannabis Act") and associated Cannabis Regulations. FV Pharma surrendered its cannabis license in July 2020 and suspended all activities in September 2020. In March 2020, the Company decided to focus its efforts and resources on the pharmaceutical business and initiated the process to exit the medical cannabis industry and sell FV Pharma's facility located at 520 William Street, Cobourg, Ontario, K9A 3A5 (the "Facility") and the 64-acre property on which the Facility is located (the "Facility Property"). On May 6, 2022, the Company closed the sale of the Facility and the Facility Property (refer to Note 5).

On May 13, 2022, FSD Strategic Investments Inc. ("FSD Strategic Investments"), a wholly owned subsidiary of the Company, was incorporated. FSD Strategic Investments is focused on generating returns and cashflow through the issuance of loans secured by residential or commercial property, with FSD Strategic Investments having a first collateral mortgage on the secured property.

The Company's registered office is located at 199 Bay Street, Suite 4000, Toronto, Ontario, M5L 1A9.

**Subsidiaries**

These audited consolidated financial statements are comprised of the financial results of the Company and its subsidiaries, which are the entities over which the Company has control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee.

The Company has the following subsidiaries:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Ownership percentage as at** | **Ownership percentage as at** |  |
| **Entity Name** | **Country** | **December 31, 2022** | **December 31, 2021** | **December 31, 2020** |
|  |  | **%** | **%** | **%** |
| FSD Biosciences Inc. | USA | 100 | 100 | 100 |
| Prismic Pharmaceuticals Inc. | USA | 100 | 100 | 100 |
| FV Pharma Inc. | Canada | 100 | 100 | 100 |
| Lucid Psycheceuticals Inc. | Canada | 100 | 100 |  |
| FSD Strategic Investments Inc. | Canada | 100 |  |  |
| FSD Pharma Australia Pty Ltd | Australia | 100 |  |  |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**2. Basis of presentation** 

**[a] Statement of compliance** 

These financial statements have been prepared by management in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The policies set out below have been consistently applied to all periods presented, unless otherwise noted.

These financial statements were approved and authorized for issuance by the Board of Directors of the Company on March 31, 2023.

**[b] Basis of measurement**

These financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair value. Historical costs are generally based upon the fair value of the consideration given in exchange for goods and services received.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, Share-based Payment ("IFRS 2") and measurements that have some similarities to fair value, but are not fair value, such as value in use in IAS 36, Impairment of Assets ("IAS 36").

**[c] Basis of presentation**

The accompanying financial statements include the accounts of FSD and its subsidiaries, FV Pharma Inc., FSD Biosciences Inc., Prismic Pharmaceuticals Inc., Lucid Psycheceuticals Inc., FSD Strategic Investments Inc. and FSD Pharma Australia Pty Ltd. The financial statements incorporate the assets and liabilities of the Company and its subsidiaries as at December 31, 2022 and 2021 and the results of these subsidiaries for the years ended December 31, 2022, 2021 and 2020.

Subsidiaries are those entities over which the Company has control. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. All intra-entity assets and liabilities, revenues, expenses and cash flows relating to transactions between subsidiaries of the Company are eliminated in full on consolidation.

**[d] Functional currency and presentation currency** 

The financial statements of each company within the consolidated group are measured using their functional currency, which is the currency of the primary economic environment in which an entity operates. The Company's functional currency is the United States dollar and the functional currencies of its subsidiaries are as follows:

---

| | |
|:---|:---|
| FSD Biosciences Inc. | United States Dollar |
| Prismic Pharmaceuticals Inc. | United States Dollar |
| FV Pharma Inc. | Canadian Dollar |
| Lucid Psycheceuticals Inc. (Note 4) | Canadian Dollar |
| FSD Strategic Investments Inc. | Canadian Dollar |
| FSD Pharma Australia Pty Ltd | Australian Dollar |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**[e] Use of estimates and judgments**

The preparation of these financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

Estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgments, apart from those involving estimations, that management has made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognized in the financial statements:

[i] Going concern

At each reporting period, management assesses the basis of preparation of the financial statements. These financial statements have been prepared on a going concern basis in accordance with IFRS. The going concern basis of presentation assumes that the Company will continue its operations for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

[ii] Contingencies

From time to time, the Company is named as a party to claims or involved in proceedings, including legal, regulatory and tax related, in the ordinary course of its business. While the outcome of these matters may not be estimable at the reporting date, the Company makes provisions, where possible, for the estimated outcome of such claims or proceedings. Should a loss result from the resolution of any claims or proceedings that differs from these estimates, the difference will be accounted for as a charge to profit or loss in that period. The actual results may vary and may cause significant adjustments.

[iii] Intangible assets

The Company employs significant estimates to determine the estimated useful lives of intangible assets, considering the nature of the asset, contractual rights, expected use and review of asset useful lives. The Company reviews amortization methods and useful lives annually or when circumstances change and adjusts its amortization methods and assumptions prospectively.

The Company reviews intangible assets for impairment annually or when impairment indicators exist. If the recoverable amount of the respective intangible asset is less than its carrying amount, it is considered to be impaired. In the process of measuring the recoverable amount, management makes assumptions about future events and circumstances. The actual results may vary and may cause significant adjustments.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

[iv] Valuation ofshare-based payments and warrants

Management measures the costs for share-based payments and warrants, including certain warrant liabilities, using market-based option valuation techniques. Assumptions are made and estimates are used in applying the valuation techniques. These include estimating the future volatility of the share price, expected dividend yield, expected term, expected risk-free interest rate and the rate of forfeiture. For performance share units ("PSUs"), management is required to estimate when the vesting conditions will be met. Such estimates and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates of share-based payments, warrants and warrant liabilities.

[v] Allowance for credit losses

Judgment is required as to the timing of establishing an allowance for credit losses and to estimate the amount of expected credit losses taking into consideration counterparty creditworthiness, the fair value of underlying collateral, current and future economic trends, the expected residual value of the underlying assets and past experience.

[vi] Valuation of investments

The Company holds investments that have do not have quoted prices in active markets. In determining the fair value of investments, management is required to make certain estimates and assumptions regarding the fair value as of the reporting date. Assumptions are made and estimates are used in applying the valuation techniques to determine fair value. These include observable inputs other than quoted prices in active markets. Such investments are classified as Level 2 within the fair value hierarchy. The value at which the Company could ultimately realize upon disposition of these investments may differ from their carrying value and such differences could be material.

The financial information of private companies may not always be available, or such information may be insufficient or unreliable for valuation purposes. In determining the fair value of shares held in private company investments, management is required to make certain estimates and assumptions regarding the fair value as of the reporting date. Assumptions are made and estimates are used in applying the valuation techniques to determine fair value. These include the most recently available financial statements of the investee, price for most recently completed financing, as well as closely comparable public companies and general market and economic conditions. Such investments are classified as Level 3 within the fair value hierarchy. The value at which the Company could ultimately realize upon disposition of these investments may differ from their carrying value and such differences could be material.

[vii] Assets held for sale

The determination as to whether a disposal group meets the requirements to be classified as held for sale, and the assets and liabilities to be included within that disposal group, requires management to exercise judgment when making these determinations. Management must also exercise judgment when determining at which date all of the criteria are satisfied to be classified as held for sale. Management must also use estimates when determining the fair value less costs to sell of the disposal group to assess if the carrying value of the disposal group is greater than its recoverable amount.

[viii] Asset acquisition

In the acquisition of Lucid on September 21, 2021, judgment was required to determine if the acquisition represented either a business combination or an asset purchase. Management concluded that Lucid did not represent a business as the assets acquired were not an integrated set of activities with inputs, processes and outputs. Since it was concluded that the acquisition represented the purchase of assets, there was no goodwill recognized on the transaction and acquisition costs were capitalized to the assets purchased rather than expensed. The fair values of the net assets acquired were determined using estimates and judgments. Refer to Note 4 for additional information on the Company's asset acquisition.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

[ix] Functional currency

The Company and its subsidiaries are required to determine their functional currencies based on the primary economic environment in which each entity operates. In order to do that, management has to analyze several factors, including which currency mainly influences the cost of undertaking the business activities, in which currency the entity has received financing, and in which currency it keeps its receipts from operating activities. Management uses its judgment to determine which factors are most important when the above indicators are mixed and the functional currency is not obvious.

**3. Significant accounting policies** 

[a] Cash and cash equivalents

Cash and cash equivalents include cash held at financial institutions, cash held in trust accounts and short-term investments in highly liquid marketable securities, having a term to maturity of three months or less. There are no restrictions on cash held in trust and no cash was held in trust as at December 31, 2022.

[b] Equipment

Equipment is measured at cost less accumulated depreciation and impairment losses.

When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

The cost of replacing part of an item of equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of equipment are recognized in consolidated statements of loss and comprehensive loss.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated statements of loss and comprehensive loss.

Gains and losses on disposal of an item of equipment are determined by comparing the proceeds from disposal with the carrying amount and are recognized net within other income in the consolidated statements of loss and comprehensive loss.

Depreciation is based on the estimated useful lives of the assets provided as follows:

---

| | |
|:---|:---|
| Computer equipment | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3 years  |
| Furniture and fixtures | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3 - 10 years  |
| Lease improvements | Over the term of the lease |

---

An item of equipment and any significant part initially recognized are derecognized upon disposal or when no future economic benefits are expected from their use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statements of loss and comprehensive loss when the asset is derecognized. The assets' residual values, useful lives and methods of depreciation and the depreciation charge are adjusted prospectively, if appropriate.

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

[c] Intangible Assets

Intangible assets are recorded at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in profit or loss on a straight-line basis over the following terms:

---

| | |
|:---|:---|
| Intellectual Property | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5 - 15 years  |

---

Expenditures on internally generated intangible assets during the development phase, which comprise deferred development costs, are initially capitalized and recognized in the consolidated balance sheet if they meet the recognition criteria. Subsequent to initial recognition, deferred development costs are accounted for at cost less accumulated amortization and are amortized on a straight-line basis over an estimated useful life beginning once the deferred development costs are used in commercial production. Expenditures on internally generated intangible assets during the research phase are expensed as incurred.

[d] Revenue Recognition

The Company's accounting policy for revenue recognition under IFRS 15, Revenue from Contracts with Customers ("IFRS 15") is to follow a five step model to determine the amount and timing of revenue to be recognized i) identify the contract with a customer; ii) identify the performance obligations in the contract; iii) determine the transaction price; iv) allocate the transaction price to the performance obligations in the contract; and v) recognize revenue when (or as) the Company satisfies a performance obligation.

Revenue from the sale of cannabis in fiscal 2020 was recognized when the Company transfers control of the good to the customer. This was generally considered to have occurred when products have been delivered to the location specified in the sales contract and accepted by the customer.

The Company recognized revenue in an amount that reflects the consideration the Company expects to receive taking into account any variation that may result from rights of return.

Prior to surrendering its cannabis licenses, the Company was required to remit excise tax to the Canada Revenue Agency on the sale of medical cannabis in Canada. The Company became liable for these excise duties when cannabis products were delivered to the customer. In accordance with IFRS 15, revenue presented within discontinued operations (Note 5) represents revenue from the sale of goods less applicable excise tax.

[e] Foreign Currency Translation

Foreign currency transactions are translated into functional currencies at exchange rates in effect on the date of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated into functional currencies at the foreign exchange rate applicable at that period-end date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Expenses are translated at the exchange rates that approximate those in effect on the date of the transaction. Realized and unrealized exchange gains and losses are recognized in the consolidated statement of loss and comprehensive loss.

On consolidation, assets and liabilities of operations with functional currency other than United States dollar are translated into United States dollar at period end foreign currency rates. Expenses of such operations are translated into the United States dollar at average rates for the period. Foreign currency translation gains and losses are recognized in other comprehensive income. The relevant amount in cumulative foreign currency translation adjustment is reclassified into earnings upon disposition of a foreign operation.

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

[f] Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

• Financial assets

On initial recognition, a financial asset is classified as measured at amortized cost, fair value through other comprehensive income (''FVOCI''), or fair value through profit and loss (''FVTPL''). The classification of financial assets is based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

* It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

* Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition.

The following accounting policies apply to the subsequent measurement of financial assets.

---

| | |
|:---|:---|
| &nbsp;&nbsp; Financial assets at FVTPL | &nbsp;&nbsp; Subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss. |
| &nbsp;&nbsp; Financial assets at amortized cost | &nbsp;&nbsp; Subsequently measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses and impairment losses are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. |

---

• Financial liabilities

The Company initially recognizes financial liabilities at fair value on the date at which the Company becomes a party to the contractual provisions of the instrument.

The Company classifies its financial liabilities as either financial liabilities at FVTPL or amortized cost.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

Subsequent to initial recognition, other liabilities are measured at amortized cost using the effective interest method. Financial liabilities at FVTPL are stated at fair value with changes being recognized in profit or loss.

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

• Financial liabilities and equity instruments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. The Company does not reclassify financial liabilities or equity after initial recognition due to a change in circumstance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company's own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

• Classification of financial instruments

The Company classifies its financial assets and liabilities depending on the purpose for which the financial instruments were acquired, their characteristics and management intent as outlined below:

---

| | |
|:---|:---|
| Cash | Amortized cost |
| Other receivables | Amortized cost |
| Investments | Fair value through profit or loss |
| Finance receivables | Amortized cost |
| Trade and other payables | Amortized cost |
| Warrants liability | Fair value through profit or loss |
| Notes payable | Amortized cost |

---

• Impairment of financial assets

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other receivables

An expected credit loss ("ECL") model applies to financial assets measured at amortized cost. The Company's financial assets measured at amortized cost and subject to the ECL model consist primarily of finance and other receivables. The Company applies the simplified approach to impairment for finance and other receivables by recognizing a loss allowance based on lifetime expected losses at each reporting date taking into considerations historical credit loss experience and financial factors specific to the debtors and general economic conditions. The Company has assessed the impairment of its finance and other receivables using the expected credit loss model, and no material difference was noted.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Finance receivables

Finance receivables are a financial asset initially recognized at fair value and are subsequently carried at amortized cost using the effective interest method. The Company's business model is to hold these receivables to collect contractual cash flows that represent solely payments of principal and interest. Finance receivables are assessed for impairment at the end of each reporting period in accordance with IFRS 9 as outlined below.

The ECL model is based on the credit losses expected to arise over the life of the assets, unless there has been no significant increase in credit risk since origination, in which case the allowance is based on the 12 months' expected credit loss. The ECL model uses a three-stage impairment approach based on changes in the credit risk of the finance receivable since initial recognition. The three stages are as follows:

Stage 1- Finance receivables that have not experienced a significant increase in credit risk since initial recognition.

Stage 2- Finance receivables that have experienced a significant increase in credit risk since initial recognition.

Stage 3 - Finance receivables for which there is objective evidence of impairment.

The Company considers a number of factors when assessing if there has been a significant increase in credit risk, including the number of days past due, changes in the financial condition of the borrower, responsiveness of the borrower and other borrower specific information that may be available, without consideration of collateral.

In determining its estimation of the ECL allowances, the Company also considers past events, current market conditions including interest rates, real estate market statistics, and supportable forward-looking information, including macro-economic factors, such as housing price and interest rate forecasts.

The ECL model requires the recognition of credit losses equal to 12-month ECLs for Stage 1 and recognition of lifetime expected credit losses for Stage 2 and 3. The 12-month ECLS are lifetime ECLS that are expected to occur within 12 months after the reporting date. The lifetime ECLs represent the expected loss in value due to possible default events over the life of a mortgage receivable weighted by the likelihood of a loss. Three factors are primarily used to measure ECLs: probability of default (PD), loss given default (LGD) and exposure at default (EAD).

[g] Impairment of long-lived assets

Long-lived assets, including equipment and intangible assets are tested for impairment when there are indicators of impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. Intangible assets with an indefinite useful life are tested for impairment at least annually in the fourth quarter and whenever there is an indication that the asset may be impaired. The Company has no indefinite life intangible assets.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or "CGU"). The recoverable amount of an asset or a CGU is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in net loss equal to the amount by which the carrying amount exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

[h] Income Taxes

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

Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.

Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting period, the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

[i] Share-based Compensation

Share options and warrants awarded to non-employees are accounted for using the fair value of the instrument awarded or service provided, whichever is considered more reliable. Share options, PSUs and warrants awarded to employees are accounted for using the fair value method. The fair value of the share options, PSUs and warrants granted are recognized as an expense on a proportionate basis consistent with the vesting features of each tranche of the grant. The fair value of share options and warrants are calculated using the Black-Scholes option pricing model with assumptions applicable at the date of grant. The fair value of PSUs is calculated using market share prices at the date of grant.

[j] Net Loss per Share

Net loss per share is calculated based on the loss for the financial year and the weighted average number of common shares outstanding during the year. Diluted net loss per share is calculated using the loss for the financial year adjusted for the effect of any dilutive instruments and the weighted average diluted number of shares (ignoring any potential issue of common shares that would be anti-dilutive) during the year.

[k] Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of identified asset for a period of time in exchange for consideration. The Company recognized a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of the costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use assets are depreciated to the earlier of the end of useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of the consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. In addition, the right-of-use asset can be periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, and the Company's incremental borrowing rate.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from the change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, unless it has been reduced to zero.

[l] External research and development

External research and development costs are expensed in the periods in which they are incurred, with the exception of development costs for new products with proven technical feasibility and for which a defined future market exists. Such development costs are capitalized in accordance with the Company's policy for intangible assets. The Company's external research and development costs consist primarily of third-party services.

[m] Discontinued operations

Discontinued operations are reported when a component of the Company, representing a separate major line of business or area of operations with clearly distinguishable cash flows, has been disposed of or is held for sale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. Discontinued operations are reported as a separate element of net income or loss on the consolidated statement of net and comprehensive loss for both the current and comparative periods. When a disposal group is classified as held for sale, assets and liabilities are aggregated and presented as separate line items, respectively, on the consolidated statement of financial position. Comparative periods are not restated on the consolidated statement of financial position. Assets held for sale are not depreciated and are measured at the lower of carrying value and fair value less costs to sell.

**New standards, amendments and interpretations not yet adopted by the Company**

*IAS 1, Presentation of financial statements ("IAS 1")*

In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1). The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the consolidated statements of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted. On October 31 2022, the IASB issued an amendment to defer the effective date of the amendments by one year from its originally planned effective date to annual periods beginning on or after January 1, 2024, due to the impact of the COVID-19 pandemic. The Company is still assessing the impact of adopting these amendments on its financial statements.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

*IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors ("IAS 8")*

In February 2021, the IASB issued Definition of Accounting Estimates, which amends IAS 8. The amendment will require the disclosure of material accounting policy information rather than disclosing significant accounting policies and clarifies how to distinguish changes in accounting policies from changes in accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". The amendment provides clarification to help entities to distinguish between accounting policies and accounting estimates.

The amendments are effective for annual periods beginning on or after January 1, 2023. The Company is still assessing the impact of adopting these amendments on its financial statements.

*IAS 12, Income Taxes ("IAS 12")*

In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a single transaction (Amendments to IAS 12). The amendment narrows the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal taxable and deductible temporary differences. As a result, companies will need to recognize a deferred tax asset and deferred tax liability for temporary differences arising on initial recognition of transactions such as leases and decommissioning obligations.

The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are to be applied retrospectively. The Company is still assessing the impact of adopting these amendments on its financial statements.

All other IFRSs and amendments issued but not yet effective have been assessed by the Company and are not expected to have a material impact on the Consolidated Financial Statements.

**4. Acquisition of Lucid**

On September 21, 2021, the Company acquired all of the issued and outstanding common shares of Lucid, an early-stage Canadian-based specialty pharmaceutical company focused on the development of therapies to treat critical neurodegenerative diseases, for total consideration of $7,290,731. The acquisition is part of the Company's strategy of building a portfolio of biotech assets.

Prior to the acquisition, the Company's current CEO and Executive Co-Chairman of the Board beneficially held approximately 4.5% ownership interest in Lucid through an entity related to this individual.

It was determined that the acquisition of Lucid did not qualify as a business combination in accordance with IFRS 3, and therefore it was accounted for as an asset acquisition. The individual identifiable assets acquired and liabilities assumed were identified. The purchase consideration was first allocated to the fair values of the acquired cash and cash equivalents, other receivables, prepaid expenses and deposits and trade and other payables, as their carrying values were determined to equal their fair values. The remaining purchase price was allocated to the acquired intangible assets.

The total consideration for the purchase of Lucid was $7,290,731. The purchase consideration consisted of $7,023,732 of Class B shares, $196,436 of share options and $70,563 of warrants. 304,880 Class B shares and all of the warrants were issued to an entity related to the interim CEO and Executive Co-Chairman of the Board. The fair value of the Class B shares was determined based on a total of 4,502,392 shares issued and a fair value of $1.56 per share, which reflects the share price on the date of acquisition. The fair value of the 161,091 share options and 112,162 warrants issued as part of the consideration were determined using the Black-Scholes options pricing model with the following assumptions:

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

---

| | | |
|:---|:---|:---|
|  | **Warrants** | **Share Options** |
| Grant date share price | $1.56 | $1.56 |
| Exercise Price | $0.96 - $1.93 | $1.35 - $2.31 |
| Expected dividend yield |  |  |
| Risk free interest rate | 0.43% | 0.43% - 0.79% |
| Expected life (years) | 1.19 - 1.28 | 2.23 - 4.28 |
| Annualized volatility | 88% | 124% |

---

The allocation of the total consideration to the fair value of the identifiable assets acquired and liabilities assumed as at the date of the acquisition was as follows:

---

| |
|:---|
| Cash and cash equivalents |
| Other receivables |
| Prepaid expenses and deposits |
| Intangible assets |
| Trade and other payables) |

---

The Company also capitalized $128,320 of acquisition related costs to the acquired intellectual property (Note 11).

**5. Assets held for sale**

In March 2020, the Company decided to focus its efforts and resources on the pharmaceutical business and initiated the process to exit the medical cannabis industry and the Facility and the Facility Property. On May 6, 2022, the Company closed the sale of the Facility and the Facility Property for total consideration of $12,730,942 (C$16,400,000). The Company recognized a gain of $4,249,582 on the sale of the Facility and the Facility Property and incurred selling expenses of $616,002.

Results of operations related to the Facility and the Facility Property are reported as discontinued operations for the period ended December 31, 2022, 2021 and 2020.

Assets held for sale as at December 31, 2022 and, 2021 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  | $| $|
| Property and plant |  | 8647779 |

---

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

Net income (loss) and comprehensive income (loss) from discontinued operations for the years ended December 31, 2022, 2021 and 2020 is comprised of the following:

---

| | |
|:---|:---|
|  | Notes |
| **Revenue** |  |
| Cost of revenue |  |
| **Gross loss before fair value adjustments**) |  |
| Fair value adjustments on inventory sold) |  |
| Unrealized loss on changes in fair value of biological assets |  |
| **Gross loss**) |  |
| **Expenses** |  |
| General and administrative | 18 |
| Depreciation and amortization |  |
| Impairment of equipment |  |
| **Total operating expenses** |  |
| **Loss from discontinued operations)** |  |
| Other income**)** |  |
| Loss on sale of equipment |  |
| Gain on sale of property and plant**)** |  |
| **Net income (loss) from discontinued operations** |  |

---

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

Cash flows from discontinued operations for the years ended December 31, 2022, 2021 and 2020 are comprised of the following:

---

| |
|:---|
| **Operating activities** |
| Net income (loss) from discontinued operations |
| Add (deduct) items not affecting cash |
| Depreciation and amortization |
| Change in fair value adjustments on inventory sold) |
| Impairment of inventory |
| Impairment of equipment |
| Change in fair value of biological assets |
| Loss on disposal of inventory |
| Loss on sale of equipment |
| Changes in non-cash working capital balances |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of property and plant**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Other receivables**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories) |
| &nbsp;&nbsp;&nbsp;&nbsp;Biological assets) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and deposits) |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables) |
| **Cash used in operating activities)** |
| Proceeds from sale of property and plant, net |
| **Cash provided by investing activities** |

---

**6. Other receivables**

The Company's other receivables are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | December 31, 2021 |
|  | **$** | $|
| Sales tax recoverable | **279333** | 272212 |
| ITC receivable | **-** | 228752 |
| Interest receivable | **95044** |  |
|  | **374377** | 500964 |

---

**7. Prepaid expenses and deposits** 

The Company's prepaid expenses and deposits include the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | December 31, 2021 |
|  | **$** | $|
| Research and development | **308502** | 602497 |
| Insurance | **95697** | 116649 |
| Other prepaids and deposits | **67938** | 647275 |
|  | **472137** | 1366421 |

---

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**8. Finance receivables**

Finance receivables consist of secured loans to customers measured at amortized cost, net of allowance for credit losses.

Finance receivables as at December 31, 2022 are as follows:

---

| |
|:---|
| Balance - December 31, 2021 |
| Additions |
| Add: Interest income |
| Less: Interest payments) |
| Less: Principal payments) |
| Effects of foreign exchange) |
| **Balance - December 31, 2022** |
| Current |
| Non-current |
| **Balance - December 31, 2022** |

---

Allowances for credit losses as at December 31, 2022, were $nil. Finance receivables earn fees at fixed rates and have an average term to maturity of two years from the date of issuance. The loans are secured by residential or commercial property with a first collateral mortgage on the secured property. Loans are issued up to 55% of the initial appraised value of the secured property.

Finance receivables include the following:

---

| |
|:---|
| Minimum payments receivable |
| Unearned income) |
| Net investment |
| Allowance for credit losses |
| **Finance receivables, net** |

---

As at December 31, 2022 all loans were classified as stage 1 and there were no changes between stages during the year.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**9. Investments**

The following tables outline changes in investments during the periods:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | **Balance at** |
|  |  |  | **Balance at Proceeds from** | **Balance at Proceeds from** |  | **December 31,** |
| **Entity** | **Instrument** | **Note** | **December 31, 2021** | **sale** | **Additions** | **2022** |
|  |  |  | **$** | **$** | **$** | **$** |
| True Pharma Strip Inc. | Shares | (i) | 197 | 197 |  |  |
| HUGE Shops | Shares | (ii) | 157760 | 157760 |  |  |
| SciCann Therapeutics | Shares | (iii) | 79 | 79 |  |  |
| Solarvest BioEnergy Inc. | Shares | (iv) | 366792 |  |  | 221490 |
| Solarvest BioEnergy Inc. | Convertible debenture | (iv) | 293434 |  |  | 177192 |
| A2ZCryptoCap Inc. | Shares | (v) |  |  | 6162 | 10632 |
| Lions Bay Fund | Shares | (vi) |  |  | 395450 | 418298 |
|  |  |  | **818262** | **158036** | **401612** | **827612** |
|  |  |  |  |  |  | **-** |
|  |  |  |  |  |  | **827612** |
|  |  |  |  |  |  | **827612** |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Balance at** | **Balance at** |
| **Entity** | **Instrument** | **December 31, 2020** | **December 31, 2021** |
|  |  | **$** | **$** |
| True Pharma Strip Inc. | Shares (i) |  | 197 |
| HUGE Shops | Shares (ii) | 600433 | 157760 |
| SciCann Therapeutics | Shares (ii) | 195679 | 79 |
| Solarvest BioEnergy Inc. | Shares (iv) | 447678 | 366792 |
| Solarvest BioEnergy Inc. | Warrants (iv) | 74813 |  |
| Solarvest BioEnergy Inc. | Convertible debenture (iv) | 358142 | 293434 |
|  |  | **1676745** | **818262** |
|  |  |  | **158036** |
|  |  |  | **660226** |
|  |  |  | **818262** |

---

(i) True Pharma Strip Inc. ("True Pharma")

On September 6, 2018, the Company subscribed for $1,128,450 of equity units in a brokered private placement. The equity investment is measured at fair value through profit or loss. True Pharma is not a publicly traded company; therefore, the fair value was classified as level 3 within the fair value hierarchy - significant unobservable inputs that are supported by little or no market activity. On December 31, 2021, the Company entered into an agreement to sell the investment. Subsequent to December 31, 2021, the Company completed the sale for gross proceeds of C$250 ($197).

(ii) HUGE Shops

The Company's investment in HUGE Shops includes 17,333,333 shares based on the December 2018 subscription price of C$0.075 per share. The equity investment is measured at fair value through profit or loss. Huge Shops is not a publicly traded company; therefore, the fair value was classified as level 3 within the fair value hierarchy. On December 31, 2021, the Company entered into an agreement to sell the investment. Subsequent to December 31, 2021, the Company completed the sale for gross proceeds of C$200,000 ($157,760).

(iii) SciCann Therapeutics Inc. ("SciCann")

The investment includes 117,648 shares based on the subscription price in May of 2018 and October of 2018 of C$17 per share. The equity investment is measured at fair value through profit or loss. SciCann is not a publicly traded company therefore, the fair value was classified as level 3 within the fair value hierarchy. On December 31, 2021, the Company entered into an agreement to sell the investment. Subsequent to December 31, 2021, the Company completed the sale for gross proceeds of C$100 ($79).

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

(iv) Solarvest BioEnergy Inc. ("Solarvest")

On May 7, 2019, the Company acquired 3,000,000 common shares, 3,000,000 warrants and a convertible debenture at a principal amount of $1,805,520 for a total fair value of $2,256,900 of Solarvest in exchange for 49,751 Class B shares of the Company with a fair value of $1,880,750 based on a market price of C$50.25 and recognition of a derivative liability of $376,150.

As at December 31, 2021, the fair value of the shares was determined based on the quoted market price of the shares of C$0.155 per share. The warrants expired unexercised during the year ended December 31, 2021. The fair value of the convertible debenture is calculated as the fair value of the shares if the debenture were converted at the Solarvest share price of C$0.155 as at December 31, 2021.

As at December 31, 2022, the fair value of the shares was determined based on the quoted market price of the shares of C$0.10 per share. The fair value of the convertible debenture is calculated as the fair value of the shares if the debenture were converted at the Solarvest share price of C$0.10 as at December 31, 2022. The shares have been classified as level 1 within the fair value hierarchy - quoted market price, and the convertible debenture has been classified as level 2 - valuation technique with observable market inputs.

(v) A2ZCryptoCap Inc. ("A2Z")

On June 23, 2022, the Company acquired 80,000 shares of A2Z for C$0.10 per share. As at December 31, 2022, the fair value of the shares was determined based on the quoted market price of the shares of C$0.18 per share. The shares have been classified as level 1 within the fair value hierarchy - quoted market price.

(vi) Lions Bay Fund ("Fund")

During the year ended December 31, 2022, the Company invested C$500,000 into the Fund. As at December 31, 2022, the fair value of the investment was determined to be C$566,569 based on the Company's share of the net asset value of the fund. The net asset value as provided by the Fund manager provides the most reasonable assessment of the investments fair value given the magnitude of the investment. Due to the unobservable nature of the net asset value, the investment has been classified as level 3 within the fair value hierarchy and is measured at fair value through profit or loss. Therefore, the Company cannot assess whether applying reasonable possible alternative assumptions would have an impact on the fair value of the investment.

**10. Right-of-use asset**

Right-of-use assets as at December 31, 2022 are as follows:

---

| |
|:---|
| Balance - December 31, 2020 |
| Additions |
| Amortization) |
| Effects of foreign exchange) |
| Balance - December 31, 2021 |
| Additions |
| Amortization) |
| Effects of foreign exchange |
| **Balance - December 31, 2022** |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**11. Intangible assets**

Intangible assets as at December 31, 2022 are as follows:

---

| | |
|:---|:---|
|  | **$** |
| As at December 31, 2020 | 19201493 |
| Additions | 500000 |
| Acquisition of Lucid | 6314571 |
| As at December 31, 2021 | 26016064 |
| Additions | 250000 |
| **As at December 31, 2022** | **26266064** |
| **Accumulated amortization** |  |
| As at December 31, 2020 | 5777102 |
| Amortization | 4037223 |
| As at December 31, 2021 | 9814325 |
| Amortization | 4411450 |
| **As at December 31, 2022** | **14225775** |
| **Net book value** |  |
| As at December 31, 2021 | 16201739 |
| **As at December 31, 2022** | **12040289** |

---

On March 9, 2021, the Company entered into a license agreement ("Innovet License Agreement") with Innovet Italia S.R.L. ("Innovet"), under which Innovet granted the Company a license to use ultra-micro PEA to develop FDA approved veterinary drugs for the treatment of gastro-intestinal diseases in canines and felines. Under the Innovet license agreement, the Company is required to make payments to Innovet upon the achievement of certain milestones (Note 21), including $500,000 which was paid upon execution of the Innovet License Agreement as consideration in exchange for the rights to the Licensed Products. The Company made a payment of $250,000 on March 9, 2022, as part of the consideration payable for the rights to use the intellectual property. The life of the intellectual property has been determined to be 5 years. Amortization of the intellectual property commenced on the date of the agreement.

**12. Trade and other payables**

Trade and other payables consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | December 31, 2021 |
|  | **$** | $|
| Trade payables | **2760002** | 2995726 |
| Accrued liabilities (i) | **4348417** | 4455346 |
| Other payables | **-** | 59699 |
|  | **7108419** | 7510771 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Accrued liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | December 31, 2021 |
|  | **$** | $|
| External research and development fees | **3531996** | 3062844 |
| Operational expenses | **92783** | 412008 |
| Professional and other fees | **314445** | 570193 |
| Accrued interest | **409193** | 364275 |
| Severance | **-** | 46026 |
|  | **4348417** | 4455346 |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**13. Lease obligations**

The lease obligations as at December 31, 2022 and 2021, are as follows:

---

| |
|:---|
| **Balance - December 31, 2020** |
| Additions |
| Add: Interest Expense |
| Less: Lease Payments) |
| Effects of foreign exchange) |
| **Balance - December 31, 2021** |
| Additions |
| Add: Interest Expense |
| Less: Lease Payments) |
| Effects of foreign exchange) |
| **Balance - December 31, 2022** |
| Current |
| Non-current |
| **Balance - December 31, 2022** |

---

Lease obligations are related to the Company's office leases.

The following table sets out a maturity analysis of the lease payments payable, showing the undiscounted lease payments to be paid on an annual basis, reconciled to the lease obligation.

---

| |
|:---|
| Less than one year |
| One to two years |
| Thereafter |
| Total undiscounted lease payments payable |
| Less: impact of present value) |
| **Balance - December 31, 2022** |

---

**14. Warrants Liability**

In August 2020, the Company issued 2,762,430 Class B shares and 1,381,215 warrants to purchase Class B shares for total cash proceeds of $9,999,997. Each warrant is exercisable to purchase one Class B share of the Company at an exercise price of $4.26 per share and expire five years from the date of issuance. The fair value of these warrants is classified as Level 2 in the fair value hierarchy.

On initial recognition the Company determined that these warrants did not meet the IFRS definition of equity due to the exercise price being denominated in United States dollar, which was not the functional currency of the Company at the time resulting in variability in exercise price. The change in functional currency on October 1, 2020, was determined to be a change in circumstance and, as such, the Company has made an accounting policy choice to continue to recognize the warrants as a financial liability classified at fair value through profit or loss. The classification of any new warrants issued from October 1, 2020; forward are assessed based on the new functional currency which is the United States dollar.

The fair value of the warrants liability as at December 31, 2021 was $765,403 resulting in a gain of change in fair value of $682,507 for the year ended December 31, 2021. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $1.02, risk-free interest rate of 1.22% and annualized volatility of 120%.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The fair value of the warrants liability as at December 31, 2022 was $243,594 resulting in a gain on change in fair value of $521,809 for the year ended December 31, 2022. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $0.79, risk-free interest rate of 4.07% and annualized volatility of 96%.

**15. Share capital**

**[a] Authorized**

The Company is authorized to issue an unlimited number of Class A multiple voting shares ("Class A shares") and an unlimited number of Class B subordinate voting shares ("Class B shares"), all without par value. All shares are ranked equally with regards to the Company's residual assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The holders of Class A shares are entitled to 276,660 votes per Class A share held. Class A shares are held by certain Directors and Officers of the Company and the former CEO of the Company. The holders of Class B shares are entitled to one (1) vote per share held.

**[b] Issued and outstanding**

Reconciliation of the Company's share capital is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Class A shares** | **Class B shares** | **Warrants** |
|  | **#** | $**#** | **#** |
| **Balance, December 31, 2019** | **72** | **7905727** | **467451** |
| Shares issued [b] [e] [f] [g] [i] [j] |  | 8925942 | 6335758 |
| Share-based payments [a] [c] [d] [h] |  | 2307569 |  |
| Share options exercised |  | 22382 |  |
| Warrants expired |  |  | (54100) |
| **Balance, December 31, 2020** | **72** | **19161620** | **6749109** |
| Shares issued [k] |  | 15480462 |  |
| Share-based payments [l] |  | 1462558 | 100000 |
| Share cancellation [l] |  | (156278) |  |
| Lucid acquisition [m] |  | 4502392 | 112162 |
| Warrants expired |  |  | (4476) |
| **Balance, December 31, 2021** | **72** | **40450754** | **6956795** |
| Share repurchase [n] |  | (1999800) |  |
| Shares-based payments [o] |  | 158144 |  |
| Share cancellation [p] |  | (504888) |  |
| PSU converted to shares |  | 400000 |  |
| Warrants expired |  |  | (474702) |
| **Balance, December 31, 2022** | **72** | **38504210** | **6482093** |

---

[a] On January 2, 2020, the Company issued 27,580 Class B Common Shares as share-based compensation to certain members of the Board of Directors for services performed as directors for the fiscal year 2019 for the amount payable of $74,117, which was recorded as trade and other payables as at December 31, 2019.

[b] On February 4, 2020, the Company issued 225,371 Class B Common Shares to Solarvest as settlement under the Share Exchange Agreement to settle the derivative liability of $1,990,788.

[c] On March 16, 2020, the Company issued 405,926 Class B Common Shares as part of a share-based bonus to employees for performance related to fiscal year 2019 resulting in movement of $1,302,076 from contributed surplus to share capital and the recognition of an additional share-based compensation expense of $93,502 as a result of the increase in value of the shares issued.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

[d] On March 16, 2020, the Company issued 69,069 Class B Common Shares to members of the Board of Directors as share-based compensation, in lieu of cash, for their annual compensation for the year ended December 31, 2020.

[e] On April 15, 2020, the Company issued 63,714 Class B Common Shares to settle Prismic notes payable of $226,385. The fair value of the Class B Common Shares was $185,976 resulting in a gain on settlement of liability of $40,409.

[f] On June 8, 2020, the Company issued 1,500,000 Class B Common Shares and 1,500,000 warrants as part of a private placement financing for total cash proceeds of C$10,125,000 ($7,617,038). The more reliably measured component, Class B Common Shares, were measured first, with the residual amount being allocated to the warrants. The fair value of the Class B Common Shares was $7,515,477 and the residual value allocated to the warrants was $101,561. The Company incurred issuance costs of $707,043, which has been allocated pro-rata to the common shares and warrants.

[g] On August 6, 2020, the Company issued 2,762,430 Class B Common Shares and 1,381,215 warrants as part of a direct offering for total cash proceeds of $9,999,997. Total cash proceeds were allocated to the warrants liability first with the residual amount allocated to the Class B Common Shares (Note 15). The fair value of the warrants liability was determined to be $3,289,069 and the residual amount of $6,710,928 was allocated to the Class B Common Shares. The Company incurred total cash transaction costs of $913,349. Transaction costs allocated to the warrants of $284,049 were expensed immediately and the transaction costs allocated to common shares were deducted from equity.

[h] In August 2020, the Company approved the issuance of 1,804,994 Class B Common Shares to members of the Board of Directors and certain officers and employees of the company in the form of a compensation bonus for past services provided. Total fair value of the share-based compensation bonus was $4,956,324.

[i] In October 2020, the Company issued 4,318,179 Class B Common Shares and 3,454,543 warrants as part of a direct offering for total proceeds of $9,499,994. The more reliably measured component, Class B Common Shares, were measured first, with the residual amount being allocated to the warrants. The fair value of the Class B Common Shares was $8,377,267 and the residual value allocated to the warrants was $1,122,727. The Company incurred issuance costs of $879,621, which has been allocated pro-rata to the common shares and warrants.

[j] During the year ended December 31, 2020, the Company issued 56,248 Class B Common Shares through the Equity Distribution Agreement with A.G.P/Alliance Global Partners for net proceeds of $199,785.

[k] During the year ended December 31, 2021, the Company issued 15,480,462 Class B shares through the Equity Distribution Agreements with A.G.P/Alliance Global Partners for gross proceeds of $39,765,474. The Company incurred transaction fees of $1,424,067.

[l] On February 17, 2021, the Company issued 1,349,764 Class B shares to certain officers and members of the Board of Directors as share-based compensation with a fair value of $3,576,875 based on a share-price of $2.65 on the day of issuance.

On July 26, 2021, the Company issued 100,000 warrants to a related party with a fair value of $98,513. Each warrant is exercisable to purchase one Class B share of the Company. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $1.99, underlying share price of $1.63, risk-free interest rate of 0.46% and annualized volatility of 129%.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

During the year ended December 31, 2021, the Company issued 112,794 Class B shares for services received during the period with a fair value of $174,537. The Company determined the fair value of the services received could not be measured reliably and determined fair value based on the underlying share price on the date of issuance.

[m] On September 21, 2021, the Company issued 4,502,392 Class B shares and 112,162 warrants as part of the Lucid acquisition (Note 4).

[n] During the year ended December 31, 2022, the Company repurchased and cancelled 1,999,800 Class B Common Shares at prevailing market prices as part of its share repurchase program.

[o] During the year ended December 31, 2022, the Company issued 107,144 Class B shares for services received during the period with a fair value of $120,000. The fair value was based on services received. During the year ended December 31, 2022, the Company issued 51,000 Class B shares for services received during the period with a fair value of $49,500. The Company determined the fair value of the services received could not be measured reliably and determined fair value based on the underlying share price on the date of issuance.

[p] On March 29, 2022, the Company cancelled 504,888 Class B shares previously held by the former CEO following a court decision with respect to the shares issued in February 2021.

The changes in the number of warrants outstanding during the years ended December 31, 2022, 2021 and 2020 were as follows:

---

| | | |
|:---|:---|:---|
|  | **Number of warrants** | **Weighted average** |
|  | **#** | **C$** |
| Outstanding as at December 31, 2019 | 467451 | 10.20 |
| Issued | 6335758 | 5.27 |
| Expired | (54100) | 4.97 |
| Outstanding as at December 31, 2020 | 6749109 | 5.62 |
| Issued | 212162 | 1.93 |
| Expired | (4476) | 5.43 |
| Outstanding as at December 31, 2021 | 6956795 | 5.50 |
| Expired | (474702) | 8.54 |
| **Outstanding as at December 31, 2022** | **6482093** | **5.48** |

---

**Measurement of fair values**

There were no warrants granted during the year ended December 31, 2022.

The fair value of the warrants issued during the years ended December 31, 2021 and 2020, were estimated at the date of grant using the Black-Scholes option pricing model with the following inputs:

---

| | | |
|:---|:---|:---|
|  | **2021** | 2020 |
| Grant date share price | **C$2.00 - C$2.04** | C$2.58 - C$4.00 |
| Exercise price | **C$1.53 - C$2.50** | C$3.46 - C$5.80 |
| Expected dividend yield | **-** |  |
| Risk free interest rate | **0.43% - 0.46%** | 0.32% 0.36% |
| Expected life | **1.19 - 2 years** | 5 years |
| Expected volatility | **88% - 129%** | 118% - 121% |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The following table is a summary of the Company's warrants outstanding as at December 31, 2022:

---

| | | |
|:---|:---|:---|
|  | **Warrants Outstanding** |  |
|  | **Exercise price** | **Number outstanding** |
| **Expiry Date** | **C$** | **#** |
| May 20, 2023 | 16.08 | 7311 |
| June 23, 2023 | 2.50 | 100000 |
| July 24, 2023 | 13.07 | 3357 |
| September 11, 2023 | 5.43 | 22382 |
| May 4, 2025 | 26.73 | 3730 |
| May 10, 2025 | 26.73 | 1865 |
| May 17, 2025 | 26.73 | 3730 |
| May 31, 2025 | 26.73 | 1865 |
| June 8, 2025 | 9.65 | 1500000 |
| August 6, 2025 (i) | 5.77 | 1381215 |
| October 20, 2025 (ii) | 3.52 | 3454543 |
| January 16, 2026 | 26.73 | 1722 |
| January 20, 2026 | 26.73 | 373 |
|  | **5.48** | **6482093** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Warrants were issued in US$ with exercise price of $4.26

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Warrants were issued in US$ with exercise price of $2.60

The following table is a summary of the Company's warrants outstanding as at December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **Warrants Outstanding** |  |
|  | **Exercise price** | **Number outstanding** |
| **Expiry Date** | **C$** | **#** |
| May 24, 2022 | 18.09 | 163535 |
| September 15, 2022 | 4.42 | 199005 |
| November 30, 2022 | 1.21 | 46242 |
| December 31, 2022 | 2.43 | 65920 |
| May 20, 2023 | 16.08 | 7311 |
| June 23, 2023 | 2.50 | 100000 |
| July 24, 2023 | 13.07 | 3357 |
| September 11, 2023 | 5.43 | 22382 |
| May 4, 2025 | 26.73 | 3730 |
| May 10, 2025 | 26.73 | 1865 |
| May 17, 2025 | 26.73 | 3730 |
| May 31, 2025 | 26.73 | 1865 |
| June 8, 2025 | 9.65 | 1500000 |
| August 6, 2025 (i) | 5.40 | 1381215 |
| October 20, 2025 (ii) | 3.30 | 3454543 |
| January 16, 2026 | 26.73 | 1722 |
| January 20, 2026 | 26.73 | 373 |
|  | **5.50** | **6956795** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Warrants were issued in US$with exercise price of $4.26

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Warrants were issued in US$with exercise price of $2.60

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The following table is a summary of the Company's warrants outstanding as at December 31, 2020:

---

| | | |
|:---|:---|:---|
|  | **Warrants Outstanding** |  |
|  | **Exercise price** | **Number outstanding** |
| **Expiry Date** | **C$** | **#** |
| August 1, 2021 | 5.43 | 4476 |
| May 24, 2022 | 18.09 | 163535 |
| September 15, 2022 | 4.42 | 199005 |
| May 20, 2023 | 16.08 | 7311 |
| July 24, 2023 | 13.07 | 3357 |
| September 11, 2023 | 5.43 | 22382 |
| May 4, 2025 | 26.73 | 3730 |
| May 10, 2025 | 26.73 | 1865 |
| May 17, 2025 | 26.73 | 3730 |
| May 31, 2025 | 26.73 | 1865 |
| June 8, 2025 | 9.65 | 1500000 |
| August 6, 2025 (i) | 5.42 | 1381215 |
| October 20, 2025 (ii) | 3.31 | 3454543 |
| January 16, 2026 | 26.73 | 1722 |
| January 20, 2026 | 26.73 | 373 |
|  | **5.62** | **6749109** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Warrants were issued in US$ with exercise price of $4.26

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Warrants were issued in US$ with exercise price of $2.60

**16. Share-based compensation** 

**[i] Share-based payment arrangements** 

The Company has established a share option plan (the "Option Plan") for directors, officers, employees and consultants of the Company. The Company's Board of Directors determines, among other things, the eligibility of individuals to participate in the Option Plan, the term and vesting periods, and the exercise price of options granted to individuals under the Option Plan.

Each share option converts into one common share of the Company on exercise. No amounts are paid or payable by the individual on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

The changes in the number of share options during the period ended December 31, 2022, 2021 and 2020 were as follows:

---

| | | |
|:---|:---|:---|
|  | **Number of** | **Weighted average** |
|  | **options** | **exercise price** |
|  | **#** | **C$** |
| Outstanding as at December 31, 2021 | 3224859 | 2.75 |
| Granted | 60000 | 1.30 |
| Forfeited | (4000) | 3.75 |
| Expired | (42226) | 3.71 |
| Cancelled | (2820104) | 2.56 |
| **Outstanding as at December 31, 2022** | **418529** | **3.71** |
| **Exercisable as at December 31, 2022** | **416271** | **3.71** |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

---

| | | |
|:---|:---|:---|
|  | **Number of** | **Weighted average** |
|  | **options** | **exercise price** |
|  | **#** | **C$** |
| Outstanding as at December 31, 2020 | 1693063 | 6.11 |
| Granted | 2841086 | 2.26 |
| Forfeited | (47500) | 4.83 |
| Expired | (953803) | 4.87 |
| Cancelled | (307987) | 9.85 |
| **Outstanding as at December 31, 2021** | **3224859** | **2.75** |
| **Exercisable as at December 31, 2021** | **3197601** | **2.72** |

---

---

| | | |
|:---|:---|:---|
|  | **Number of** | **Weighted average** |
|  | **options** | **exercise price** |
|  | **#** | **C$** |
| Outstanding as at December 31, 2019 | 1454943 | 21.96 |
| Granted | 1082639 | 4.14 |
| Exercised | (22382) | 2.61 |
| Cancelled | (822137) | 31.65 |
| **Outstanding as at December 31, 2020** | **1693063** | **6.11** |
| **Exercisable as at December 31, 2020** | **1528186** | **6.13** |

---

During the year ended December 31, 2022, 42,226 share options related to former officers and employees who are no longer with the Company expired. Individuals who are no longer with the Company have 30 days after their last day to exercise any vested share options. Vested options that remain unexercised after 30 days expire.

During the year ended December 31, 2022, the Company cancelled 2,820,104 share options issued to officers and consultants of the Company and issued 2,820,104 replacement PSUs.

**Measurement of fair values**

The fair value of share options granted during the period ended December 31, 2022, 2021 and 2020, were estimated at the date of grant using the Black-Scholes option pricing model with the following inputs:

---

| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | 2020 |
| Grant date share price | **C$1.19** | C$1.96 - C$2.85 | C$3.75 - C$9.54 |
| Exercise price | **C$1.30** | C$1.70 - C$4.25 | C$3.68 - C$9.80 |
| Expected dividend yield | **-** |  |  |
| Risk free interest rate | **2.87%** | 0.34% - 1.10% | 0.27% - 1.55% |
| Expected life | **3 years** | 2 - 6 years | 4 - 9 years |
| Expected volatility | **112%** | 116% - 132% | 120% |

---

Expected volatility was estimated by using the annualized historical volatility of the Company. The expected option life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on Canadian government bonds with a remaining term equal to the expected life of the options.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The following table is a summary of the Company's share options outstanding as at December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options outstanding** |  | **Options exercisable** | **Options exercisable** |
|  |  | Weighted average |  |  |
|  |  | remaining contractual |  |  |
| Exercise price | Number outstanding | life [years] | Exercise price | Number exercisable |
| C$ | # | # | C$ | # |
| 1.30 | 60000 | 2.58 | 1.30 | 60000 |
| 1.70 | 103453 | 2.21 | 1.70 | 103453 |
| 2.25 | 168898 | 1.04 | 2.25 | 168898 |
| 2.61 | 12687 | 0.49 | 2.61 | 12683 |
| 2.91 | 5150 | 3.00 | 2.91 | 5150 |
| 3.75 | 5000 | 1.21 | 3.75 | 5000 |
| 3.86 | 5000 | 3.86 | 3.86 | 2750 |
| 5.43 | 16265 | 0.49 | 5.43 | 16264 |
| 10.65 | 3731 | 0.49 | 10.65 | 3730 |
| 13.07 | 10856 | 0.49 | 13.07 | 10855 |
| 13.47 | 1418 | 0.49 | 13.47 | 1418 |
| 16.08 | 18410 | 0.49 | 16.08 | 18409 |
| 17.89 | 4178 | 0.49 | 17.89 | 4178 |
| 50.25 | 3483 | 1.28 | 50.25 | 3483 |
| **3.71** | **418529** | **1.52** | **3.71** | **416271** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options outstanding** |  | **Options exercisable** | **Options exercisable** |
|  |  | Weighted average |  |  |
|  |  | remaining contractual |  |  |
| Exercise price | Number outstanding | life [years] | Exercise price | Number exercisable |
| C$ | # | # | C$ | # |
| 1.70 | 154953 | 3.46 | 1.70 | 154953 |
| 2.25 | 2559995 | 2.42 | 2.25 | 2559995 |
| 2.61 | 12684 | 1.49 | 2.61 | 12683 |
| 2.91 | 5150 | 4.00 | 2.91 | 5150 |
| 3.75 | 10500 | 3.92 | 3.75 | 6500 |
| 3.86 | 256245 | 3.21 | 3.86 | 252993 |
| 4.42 | 99503 | 0.71 | 4.42 | 99502 |
| 4.75 | 15000 | 3.29 | 4.75 | 15000 |
| 5.43 | 16265 | 1.49 | 5.43 | 16264 |
| 7.63 | 50000 | 4.00 | 7.63 | 30000 |
| 10.65 | 3731 | 1.49 | 10.65 | 3730 |
| 13.07 | 10856 | 1.49 | 13.07 | 10855 |
| 13.47 | 1418 | 1.49 | 13.47 | 1418 |
| 16.08 | 18410 | 1.49 | 16.08 | 18409 |
| 17.89 | 4178 | 1.49 | 17.89 | 4178 |
| 18.09 | 2488 | 1.24 | 18.09 | 2488 |
| 50.25 | 3483 | 2.28 | 50.25 | 3483 |
| **2.75** | **3224859** | **2.50** | **2.72** | **3197601** |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The following table is a summary of the Company's share options outstanding as at December 31, 2020:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options outstanding** |  | **Options exercisable** | **Options exercisable** |
|  |  | Weighted average |  |  |
|  |  | remaining contractual |  |  |
| Exercise price | Number outstanding | life [years] | Exercise price | Number exercisable |
| C$ | # | # | C$ | # |
| 2.61 | 12683 | 2.49 | 2.61 | 12683 |
| 3.75 | 5500 | 6.47 | 3.75 | 500 |
| 3.86 | 872139 | 4.08 | 3.86 | 864139 |
| 4.42 | 99502 | 1.71 | 4.42 | 99502 |
| 4.75 | 110000 | 4.29 | 4.75 | 77500 |
| 5.03 | 60000 | 4.70 | 5.03 | 7498 |
| 5.43 | 16264 | 2.49 | 5.43 | 16264 |
| 6.16 | 20000 | 3.18 | 6.16 | 20000 |
| 7.17 | 199005 | 3.83 | 7.17 | 199005 |
| 7.63 | 203750 | 4.34 | 7.63 | 138750 |
| 9.54 | 15000 | 4.06 | 9.54 | 13125 |
| 10.65 | 3730 | 2.49 | 10.65 | 3730 |
| 13.07 | 10855 | 2.49 | 13.07 | 10855 |
| 13.47 | 1418 | 2.49 | 13.47 | 1418 |
| 16.08 | 18409 | 2.49 | 16.08 | 18409 |
| 17.89 | 4178 | 2.49 | 17.89 | 4178 |
| 18.09 | 17413 | 2.21 | 18.09 | 17413 |
| 20.10 | 8289 | 2.27 | 20.10 | 8289 |
| 47.24 | 1493 | 3.37 | 47.24 | 1493 |
| 50.25 | 5224 | 3.31 | 50.25 | 5224 |
| 52.26 | 498 | 3.21 | 52.26 | 498 |
| 55.28 | 498 | 3.12 | 55.28 | 498 |
| 59.30 | 498 | 2.96 | 59.30 | 498 |
| 75.38 | 498 | 3.04 | 75.38 | 498 |
| 86.43 | 1244 | 2.87 | 86.43 | 1244 |
| 142.71 | 4975 | 2.74 | 142.71 | 4975 |
| **6.11** | **1693063** | **3.88** | **6.13** | **1528186** |

---

**[ii] Performance Share Units**

In May 2022, the Company established a performance share unit plan ("PSU Plan"), for directors, offers, employees and consultants of the Company. The Company's Board of Directors determines the eligibility of individuals to participate in the PSU Plan in order to align their interests with those of the Company's shareholders.

No amounts are paid or payable by the individual on receipt of the PSUs. Each PSU converts into one common share of the Company at $nil exercise price. The Company's PSU Plan provides that the number of common shares reserved for issuance may not exceed 10% of the aggregate number of common shares that are outstanding unless the Board has increased such limit by a Board resolution.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**Performance-based payment arrangements**

The change in the number of PSUs during the year ending December 31, 2022, is as follows:

---

| | |
|:---|:---|
|  | **Number of PSUs** |
|  | **#** |
| Outstanding as at December 31, 2021 |  |
| Granted | 2820104 |
| Converted to Class B Common shares | (400000) |
| **Outstanding as at December 31, 2022** | **2420104** |

---

During the year ended December 31, 2022, the Company granted 2,820,104 PSUs, as replacement awards for the 2,820,104 share options that were cancelled. As at December 31, 2022, 400,000 of the PSUs had fully vested upon the successful implementation of a Phase 2 trial for FSD-PEA with Health Canada and/or the FDA. The remaining PSUs will fully vest upon the filing of the MS Phase 1 IND, expected in January 2023 (Note 25).

**Measurement of fair values**

The fair value of PSUs granted during the year ended December 31, 2022, is measured based on the incremental fair value measured on the date of grant. The incremental fair value is the difference between the fair value of the PSUs based on the share price on the grant date and the fair value of the share options cancelled as measured on date of modification. The incremental fair value on the date of grant was determined to be C$1,812,696. The fair value of the share options cancelled was determined using the Black-Scholes option pricing model and the following assumptions:

---

| | |
|:---|:---|
|  | **May 16, 2022** |
| Grant date share price | **C$1.15** |
| Exercise price | **C$1.70 - C$7.63** |
| Expected dividend yield | **-** |
| Risk free interest rate | **2.58% - 2.70%** |
| Expected life | **1 - 6 years** |
| Expected volatility | **113%** |

---

The Company recognized share-based compensation for the years ended December 31, 2022, 2021 and 2020 as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021 | 2020 |
|  | **$** | $| $|
| Share options | **69780** | 3594005 | 2825863 |
| PSUs | **1291978** | 98513 |  |
| Class B Common Shares issued for services | **169500** | 174537 |  |
| Class B Common Shares issued for compensation | **-** | 3576875 | 5226148 |
|  | **1531258** | 7443930 | 8052011 |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

**17. Loss per share**

Net loss per common share represents net loss attributable to common shareholders divided by the weighted average number of common shares outstanding during the year.

For all the periods presented, diluted loss per share equals basic loss per share due to the anti-dilutive effect of warrants, share options and PSUs. The outstanding number and type of securities that could potentially dilute basic net loss per share in the future but would have decreased the loss per share (anti-dilutive) for the year ended December 31, 2022, 2021 and 2020 presented are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2022** | December 31, 2021 | December 31, 2020 |
|  | **#** | # | # |
| Warrants | **6,482,093** | 6956795 | 6749109 |
| Share Options | **418,529** | 3224859 | 1693063 |
| PSUs | **2,420,104** |  |  |
|  | **9,320,726** | 10181654 | 8442172 |

---

**18. General and administrative**

Components of general and administrative expenses for the years ended December 31, 2022, 2021 and 2020 were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021 |
|  | **$** | $|
| Professional fees | **5208356** | 6256165 |
| General office, insurance and administration |  |  |
| expenditures | **2838303** | 3479801 |
| Consulting fees | **1452070** | 2196812 |
| Salaries, wages and benefits | **2798074** | 2856887 |
| Investor relations | **1495695** | 1642653 |
| Building and facility costs | **519954** | 759590 |
| Foreign exchange loss (gain) | **1323242** | 146587) |
|  | **15635694** | 17338495 |
| Allocated to: |  |  |
| Continuing operations | **14450094** | 15926103 |
| Discontinued operations | **1185600** | 1412392 |

---

**19. Segment information** 

Reportable segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, with appropriate aggregation. The chief operating decision maker is the CEO who is responsible for allocating resources, assessing performance of the reportable segment and making key strategic decisions. The Company operates in two segments: Biotechnology and Strategic Investments.

The Company's Biotechnology segment is focused on furthering the research and development of the Company's three drug candidates consisting of FSD-PEA, Lucid-PSYCH and Lucid-MS.

The Company's Strategic Investments segment is focused on generating returns and cashflow through the issuance of loans secured by residential or commercial property, with FSD Strategic Investments having a first collateral mortgage on the secured property.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

Assets by segment are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31, 2022** | **As at December 31, 2022** | **As at December 31, 2021** | **As at December 31, 2021** |
|  | **Biotechnology** | **Strategic Investments** | **Biotechnology** | **Strategic Investments** |
|  | **$** | **$** | **$** | **$** |
| Current assets | 17850174 |  | 45932845 |  |
| Non-current assets | 13128826 | 7431656 | 17030272 |  |

---

Interest income by segments is presented below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** |
|  | **Biotechnology** | **Strategic Investments** | **Biotechnology** | **Strategic Investments** |
|  | **$** | **$** | **$** | **$** |
| Interest income | 184698 | 183037 | 1292 |  |

---

**20. Income taxes**

The reconciliation of income tax expense for the years ended December 31, 2022 and 2021 consists of the following:

---

| |
|:---|
| Loss from continuing operations before income taxes**)** |
| Statutory federal and provincial tax rate |
| Income tax recovery at the statutory tax rate**)** |
| Permanent differences |
| Book to filing adjustments |
| Share issuance cost booked directly to equity) |
| Impact of tax rate changes |
| Foreign exchange) |
| Change in tax benefits not recognized |

---

Deferred taxes reflect the tax effects of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax liabilities as at December 31, 2022 and 2021 are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
|  | **$** | $|
| Other investments | **-** | 0 |
| Capital losses carried forward | **-** | 0 |
| Total | **-** |  |

---

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

Deferred tax assets have not been recognized in respect of the following temporary differences as at December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
|  | **$** | $|
| Non-capital losses - Canada | **77271986** | 63216617 |
| Net-operating loss - US | **5120395** | 5111610 |
| Unrealized foreign exchange loss | **94733** | 94733 |
| Share-issuance costs | **2045027** | 3349261 |
| Other investments | **5542253** | 5308027 |
| IFRS 16 | **37439** | 87050 |
| Property, plant and equipment | **324798** | 167653 |
| **Total** | **90436631** | 77334951 |

---

The Company's Canadian non-capital income tax losses expire as follows:

---

| | |
|:---|:---|
|  | **$** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2038 | **6057633** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2039 | **10730529** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2040 | **21771974** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2041 | **19046688** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2042 | **19665162** |
|  | **77271986** |

---

The company has cumulative US federal net operating loss carryforwards of approximately $5.12 million which will start to expire in 2026. Utilization of net operating loss carryforwards may be subject to limitations in the event of a change in ownership pursuant to United States Internal Revenue Code ("IRC") § 382, and similar state provisions. As a result of the acquisition of Prismic on June 28, 2019, the preacquisition net operating loss carryforwards of approximately $4.93 million could be subject to IRC § 382 limitation as the acquisition could constitute a change of ownership.

**21. Commitments and contingencies**

**Commitments**

*Epitech License Agreement*

Under the terms of the Company's License Agreement with Epitech Group SPA ("Epitech"), the Company has payments due to Epitech pending the achievement of specified milestones. Upon first notification by the U.S. Food and Drug Administration ("FDA") of approval of a New Drug Application, the non-refundable sum of $700,000 will be due and payable to Epitech. Within thirty days of the first notification by the FDA of approval of a New Drug Application, the Company is required to pay the non-refundable sum of $500,000 to Epitech. Within ten business days of the first notification of approval of a Supplemental New Drug Application by the FDA, the Company will pay the non-refundable sum of $1,000,000 to Epitech.

For non-prescription drug rights, any one-off lump sum payments received by the Company as consideration for granting a sub-license to a Commercial Partner with respect to a Licensed Product, shall require the Company to pay to Epitech 25% of the lump sum payment received by the Company. For prescription drug rights the Company shall pay 5% of any one-off lump sum payments to Epitech as consideration for granting a sub-license to a Commercial Partner with respect to a Licensed Product. The Company will pay the amounts payable on a quarterly basis within 60 days of the end of each calendar quarter.

The Company shall pay either a) 7% of Net Sales of the Licensed Product in a Product Regulatory Category other than prescription drugs placed on the market by the Company; or b) 25% of Net Receipts received by the Company from Commercial Partners where Licensed Products in a Product Regulatory Category other than prescription drugs are placed on the market by such Commercial Partners; or c) 5% of Net Sales or Net receipts of the Licensed Products in the Product Regulatory Category of prescription drugs. The Company will pay the amounts payable on a quarterly basis within 60 days of the end of each calendar quarter. No payments have been made to date related to these milestones.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

*Innovet License Agreement* 

Under the terms of the Innovet license agreement, the Company has payments due to Innovet pending the achievement of specified milestones. Within thirty days from the first notification by the FDA of approval of a New Animal Drug Application ("NADA"), the Company will pay the non-refundable sum of $750,000 to Innovet.

Any one-off lump sum payments received by the Company as consideration for granting a sub-license to a Commercial Partner with respect to a Licensed Product, shall require the Company to pay to Innovet 14% of the lump sum payment received by the Company. The Company will pay the amounts payable on a quarterly basis within 60 days of the end of each calendar quarter.

The Company shall pay 5% of Net Sales of the Licensed Product. The Company will pay the amounts payable on a quarterly basis within 60 days of the end of each calendar quarter. No payments have been made to date related to these milestones.

*Lucid-MS Agreement*

The Company has entered into a license agreement that governs the Lucid-MS compound. Under the terms of the agreement, the Company shall pay a yearly license maintenance fee of C$100,000 until the first commercial sale of a product is made.

Under the agreement the Company is committed to minimum milestones payments of $nil and maximum milestones payments of C$12,500,000 if all product development and regulatory milestones are met.

Furthermore, the Company is also responsible to pay revenue milestone payments and royalties if revenue milestones from commercial sales are achieved. Milestones can be extended by mutual agreement. No payments have been made to date related to these milestones.

**Contingencies**

*Legal Matters*

From time to time, the Company is named as a party to claims or involved in proceedings, including legal, regulatory and tax related, in the ordinary course of its business. While the outcome of these matters may not be estimable at the reporting date, the Company makes provisions, where possible, for the estimated outcome of such claims or proceedings. Should a loss result from the resolution of any claims or proceedings that differs from these estimates, the difference will be accounted for as a charge to profit or loss in that period.

*Contract Research Organization ("CRO") Dispute* 

The Company is involved in arbitration proceedings with a CRO regarding amounts claimed to be owed to the CRO by the Company. The CRO is claiming it is owed amounts outstanding for work on clinical trials in the United States. The Company is disputing the amounts claimed to be owed. The Company believes it has sufficiently provided for amounts claimed to be owed to the CRO which are recorded in trade and other payables.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

In November 2022, evidentiary hearings were held in New York. The parties submitted post-hearing briefs in December 2022 and are awaiting a decision.

As at December 31, 2022, the ultimate outcome of the matter cannot be reliably determined at this time, however, the Company believes it is sufficiently provisioned for any potential outcome.

*Raza Bokhari* 

On July 15, 2021, the Company's former CEO, Raza Bokhari, filed a notice of arbitration seeking relief and support for breach of contract and severance and damages in the amount of $30,200,000, for aggravated and punitive damages in the amount of $500,000 and legal fees and disbursements associated with the arbitration.

Raza Bokhari was placed on administrative leave from his role as the Company's Chief Executive Officer following the Company's annual general and special meeting of shareholders on May 14, 2021, pending the outcome of an investigation of various concerns by a Special Committee comprised of independent directors using independent legal counsel. Upon the recommendation of the Special Committee, Raza Bokhari's employment was terminated for cause by the Company's board of directors on July 27, 2021.

The Company disputed the allegations and counterclaimed against Raza Bokhari for losses sustained as a result of his alleged breaches of his duties to the Corporation. The arbitration hearing concluded in August 2022 and the arbitrator issued his decision in November 2022. Raza Bokhari's claim for USD $30.2 million was dismissed in its entirety along with his claim that he had been wrongfully dismissed. The arbitrator ordered that Raza Bokhari repay certain monies to FSD Pharma, while also holding him responsible for FSD Pharma's costs of the arbitration.

On December 9, 2022, Raza Bokhari filed an application in the Ontario Superior Court seeking to set aside the arbitral award of the court on the grounds that he was not treated equally and fairly and the arbitrator's written award provided inadequate reasons for his decision.

On December 20, 2022, the Company's legal counsel wrote to the Commercial List of the Ontario Superior Court of Justice seeking to transfer the application from the Civil List to the Commercial List. The request was granted on January 12, 2023.

*Indemnity Application*

Raza Bokhari commenced an application in the Superior Court seeking an order appointing an arbitrator to arbitrate his claim to be entitled to indemnification of his legal expenses associated with the litigation he has commenced against the Company or in which he has been named as a party by the Company. The Company denies the validity of the underlying indemnification agreement and is opposing the application. In April 2022, the parties agreed to adjourn the application without setting a new hearing date.

*Parkway Clinical Laboratories*

Parkway Clinical Laboratories ("PCL"), a company wholly owned by the Company's former CEO, Raza Bokhari, filed an action in Pennsylvania on July 8, 2021, against the Company in respect of two claims: (1) breach of contract in which PCL alleges that the Company failed to pay for $1,412,951 worth of services rendered (e.g., providing office space, personnel, and financial assistance); and (2) alleging that the Company received the benefit of the same services referenced in the breach of contract claim without paying for them.

------

**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The case was settled in July 2022 and all amounts have been paid related to this settlement as at December 31, 2022.

*Derivative Complaint*

On July 20, 2021, a shareholder filed a claim in Delaware against the Company and its directors and officers seeking to remedy harm they believe the directors and officers of the Company have caused by their actions. The shareholder has filed the claim on count of breach of fiduciary duties and corporate waste against the directors and officers with no dollar amount being claimed. On September 13, 2021, the Company filed a motion to dismiss in its entirety and the motion was heard on February 8, 2022. On May 5, 2022, the Company's motion to dismiss was granted and all claims were dismissed without prejudice.

**22. Related party transactions**

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the entity, directly or indirectly.

Transactions with key management and directors comprised the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) In fiscal 2022, the Company pays independent directors' compensation of C$60,000, with the chair of the audit committee receiving an additional C$20,000 and the chair of the compensation committee receiving an additional C$10,000. Director's compensation for the year ended December 31, 2022, was $215,104 (2021 - $757,690 and 2020 - $246,226), which includes $nil (2021 - $466,546 and 2020 - $238,703) recognized as share-based compensation for shares issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) During the year ended December 31, 2022, the Company granted 2,820,104 PSUs to related parties, as replacement awards for the 2,820,104 share options that were cancelled. As at December 31, 2022, 400,000 of the PSUs had fully vested upon the successful implementation of a Phase 2 trial for FSD-PEA with Health Canada and/or the FDA. The remaining PSUs will fully vest upon the filing of the MS Phase 1 IND, expected in January 2023 (Note 25).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) In February 2021, as compensation, the Company issued 1,349,764 shares with a fair value of $3,576,875 to Raza Bokhari, in his capacity as Board Chair and Chief Executive Officer, and to certain other directors. Of the 1,349,764 shares issued, 1,173,709, with a fair value of $3,110,330, were issued to Raza Bokhari and 176,055 shares, with a fair value of $466,545, were issued to other directors. In June 2021, 156,278 of the shares issued to directors in February 2021 were cancelled. On March 8, 2022, following litigation with respect to certain of the shares issued to Raza Bokhari in February 2021, the court issued a decision, permitting the part of the share grant to Raza Bokhari until the date of his termination (being 536,979 Class B shares) but cancelling the shares relating to services that were to be provided after the date of termination (being 504,888 Class B shares). The shares were cancelled on March 29, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) The Company paid expenses of $nil (2021 - $262,834 and 2020 - $1,445,043) to a company owned by the former CEO for the year ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) During the year ended December 31, 2021, the Company reimbursed certain directors C$1,334,158 for expenses incurred in relation to requisitioning, calling and holding the shareholders' meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) During the year ended December 31, 2020, the Company issued 1,676,066 shares to key management and directors in the form of a compensation bonus for past services provided. The fair value of shares issued to key management and directors is $4,602,301 and is included in share-based payments and bonuses for the year ended December 31, 2020.

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

Key management personnel compensation during the year ended December 31, 2022, 2021 and 2020 is comprised of:

---

| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | 2020 |
|  | **$** | $| $|
| Salaries, benefits, bonuses and consulting fees | **1839441** | 2075893 | 2936816 |
| Share-based payments | **1345952** | 6881641 | 7045994 |
| Total | **3185393** | 8957534 | 9982810 |

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**23. Capital Management**

The Company's capital management objectives are to maintain financial flexibility in order to complete the pharmaceutical research and development programs centered on the lead compounds, FSD-PEA, Lucid-PSYCH and LUCID-MS. The Company defines capital as the aggregate of its capital stock and borrowings.

As at December 31, 2022, the Company's Share Capital was $143,410,560 (2021 - $152,324,677). The Company does not have any long-term debt. Outstanding notes payable were assumed on acquisition of Prismic and are due on demand.

The Company manages its capital structure in accordance with changes in economic conditions. In order to maintain or adjust its capital structure, the Company may elect to issue or repay financial liabilities, issue shares, repurchase shares or undertake any other activities as deemed appropriate under the specific circumstances. The Company is not subject to any externally imposed capital requirements.

**24. Financial Instruments and Risk Management**

*Credit risk*

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from deposits with banks and outstanding other receivables and finance receivables. The Company trades only with recognized, creditworthy third parties.

The Company does not hold any collateral as security for its outstanding finance receivables but mitigates this risk by dealing only with, what management believes to be, financially sound counterparties and, accordingly, does not anticipate significant loss for non-performance. The loans are secured by real estate properties and the Company is granted a first collateral charge mortgage on the properties for a sum equal to the interest payments plus the principal amount. The Company performs assessments on factors such as: timing of payments, loan to value, communications with the borrower and external macro factors such as interest rates and economic conditions to mitigate risks.

*Liquidity risk*

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they come due. The Company's exposure to liquidity risk is dependent on the Company's ability to raise additional financing to meet its commitments and sustain operations. The Company mitigates liquidity risk by management of working capital, cash flows, the issuance of share capital and if desired, the issuance of debt. The Company's trade and other payables and notes payables are all due within twelve months from the date of these financial statements.

If unanticipated events occur that impact the Company's ability to carry out the planned clinical trials, the Company may need to take additional measures to increase its liquidity and capital resources, including issuing debt or additional equity financing or strategically altering the business forecast and plan. In this case, there is no guarantee that the Company will obtain satisfactory financing terms or adequate financing. Failure to obtain adequate financing on satisfactory terms could have a material adverse effect on the Company's results of operations or financial condition.

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

*Market risk*

Market risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk.

• Foreign currency risk

Foreign currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The Company's primary exposure with respect to foreign currencies is from Canadian dollar denominated cash, investments and trade and other payables. A 1% change in the foreign exchange rates would not result in any significant impact to the financial statements.

• Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have any material long-term borrowings outstanding subject to variable interest rates. Therefore, the Company is not exposed to interest rate risk as at December 31, 2022.

• Other price risk

Other price risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risk as at December 31, 2022.

*Fair values*

The carrying values of cash, other receivables, trade and other payables and notes payable approximate fair values due to the short-term nature of these items or they are being carried at fair value or, for notes payable, interest payables are close to the current market rates. The risk of material change in fair value is not considered to be significant. The Company does not use derivative financial instruments to manage this risk.

Financial instruments recorded at fair value on the consolidated statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company's valuation techniques. A level is assigned to each fair value measurement based on the lowest-level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 - Unadjusted quoted prices as at the measurement date for identical assets or liabilities in active markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 - Significant unobservable inputs that are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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**FSD PHARMA INC.** <br>**Notes to the consolidated financial statements**<br> (expressed in United States dollars)<br>December 31, 2022, 2021 and 2020<br>

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

Private company investments measured at fair value are classified as Level 3 financial instruments. The valuation method and significant assumptions used to determine the fair value of private company investments have been disclosed in Note 9. The Company did not hold any private company investments as of December 31, 2022. The Company's investment in the Lion's Bay Fund (Note 9) is measured at fair value and classified as Level 3. During the year, there were no transfers of amounts between levels.

**25. Subsequent events** 

On January 12, 2023, the Board of Directors approved a share buyback program for 2023 to repurchase up to 5% of the Company's issued and outstanding Class B Common Shares for aggregate consideration of $3,000,000, commencing on January 16, 2023 and expiring on December 31, 2023. The Company has repurchased 1,904,700 and cancelled 289,600 Class B Common Shares at prevailing market prices through March 31, 2023.

On January 18, 2023, the Company issued 2,420,104 Class B Common Shares, on the conversion of PSUs to related parties. The PSUs vested upon the filing of the MS Phase 1 IND, the day the Company submitted a Clinical Trial Application. The Company announced the submission of the Company's clinical trial application for a planned Phase 1 clinical trial for Lucid-MS on January 17, 2023.

On January 25, 2023, the Company granted 500,000 share options each to the CEO, President, COO and CEO of Lucid with an exercise price of C$1.30 and an expiry date of January 25, 2028. All options were fully vested on the grant date. Each share option can be exercised to acquire one Class B Common Share.

On January 25, 2023, the Company granted 100,000 PSUs each to the four independent members of the Board of Directors. The PSUs fully vest on the filing of Lucid Psych Phase 1 IND.

On February 25, 2023, the Company granted 500,000 share options to employees and consultants with an exercise price of C$2.45. Each share option can be exercised to acquire one Class B Common Share.

On February 27, 2023, the Company granted 15,000 share options to an advisor to the Board of Directors with an exercise price of $1.75 and an expiry date of February 27, 2026. Each share option can be exercised to acquire one Class B Common Share.

On March 24, 2023, the Company granted 15,000 share options to an advisor to the Board of Directors with an exercise price of $1.75 and an expiry date of March 24, 2026. Each share option can be exercised to acquire one Class B Common Share.

Subsequent to December 31, 2022, the Company issued 3,300,000 warrants in exchange for services with exercise prices ranging from $1.50 to $8.00. Each warrant can be exercised to acquire one Class B Common Share.

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## Exhibit 2.1

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**Exhibit 2.1**

**DESCRIPTION OF SECURITIES**

Except as otherwise stated, the information in this Description of Securities is provided as of the date of the Annual Report.

The Corporation's authorized share capital consists of an unlimited number of Class A Shares and an unlimited number of Class B Shares, each with no par value. As of March 30, 2023, there were 72 Class A Shares issued and outstanding and 40,634,714 Class B Shares issued and outstanding. Neither the Class A Shares nor the Class B Shares are bearer shares; instead, the Corporation maintains a register of the holders of the Class A Shares and the Class B Shares and engages a transfer agent and registrar to process transfers of shares and maintain the register. The Class B Shares are registered under Section 12(b) of the Exchange Act and trade on the CSE, or the CSE, and the Nasdaq Capital Market under the symbol "HUGE". The Class B Shares are also listed and posted for trading on the Börse Frankfurt, or Frankfurt Stock Exchange, under "WKN: A2JM6M" and the trading symbol "0K9A". Prior to the CSE listing, there was no public trading in any securities of the Corporation. As of March 30, 2023, the Class B Shares represented approximately 67.11% of the voting rights attached to outstanding voting securities of the Corporation. In addition, as of March 30, 2023, there were 2,939,529 Stock Options with a weighted average exercise price of C$1.84 and 11,163,308 Warrants with a weighted average exercise price of C$5.42 (with certain Warrant exercise prices converted based on the rate of US$1.00 to C$1.36, as reported by the Bank of Canada for March 29, 2023) outstanding. The following is a summary of the rights, privileges, restrictions and conditions attached to the Class A Shares and Class B Shares.

***Voting Rights***

Except as otherwise prescribed by the Ontario Business Corporations Act, or OBCA, at a meeting of the Shareholders, each Class B Share entitles the holder thereof to one vote, and each Class A Share entitles the holder thereof to 276,660 votes on all matters.

***Rank***

The Class A Shares and Class B Shares rank pari passu with respect to the payment of dividends, return of capital and distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation. In the event of the liquidation, dissolution or winding-up of the Corporation or any other distribution of its assets among its shareholders for the purpose of winding-up its affairs, whether voluntarily or involuntarily, the holders of Class A Shares and the holders of Class B Shares are entitled to participate equally, share for share, subject always to the rights of the holders of any class of shares ranking senior to the Class A Shares and the Class B Shares, in the remaining property and assets of the Corporation available for distribution to Shareholders, without preference or distinction among or between the Class A Shares and the Class B Shares.

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***Dividends***

Holders of Class A Shares and Class B Shares are entitled to receive, subject always to the rights of the holders of any class of shares ranking senior to the Class A Shares and Class B Shares, dividends out of the assets of the Corporation legally available for the payment of dividends at such times and in such amount and form as the Board may from time to time determine, and the Corporation will pay dividends thereon on a pari passu basis, if, as and when declared by the Board.

***Conversion***

The Class B Shares are not convertible into any other class of shares. Each outstanding Class A Share may, at any time at the option of the holder, be converted into one Class B Share. Upon the first date that any Class A Share is held other than by a permitted holder, the permitted holder which held such Class A Share until such date, without any further action, shall automatically be deemed to have exercised his, her or its rights to convert such Class A Share into a fully paid and non-assessable Class B Share.

Future transfers by holders of Class A Shares to arm's length parties or other than to permitted holders will generally result in those shares converting to Class B Shares, which will have the effect, over time, of increasing the relative voting power of those holders of Class A Shares who retain their shares. Such holders could, in the future, control a significant percentage of the combined voting power of Class A Shares and Class B Shares.

***Subdivision or Consolidation***

No subdivision or consolidation of the Class A Shares or the Class B Shares may be carried out unless, at the same time, the Class A Shares or the Class B Shares, as the case may be, are subdivided or consolidated in the same manner and on the same basis.

On October 16, 2019, the Corporation completed the Consolidation of all of its issued and outstanding Class A Shares and Class B Shares. Pursuant to the Consolidation, all of the issued and outstanding Class A Shares and Class B Shares were consolidated on the basis of one post-Consolidation share for every 201 pre-Consolidation shares of each class.

***Change of Control Transactions***

The holders of Class B Shares are entitled to participate on an equal basis with holders of Class A Shares in the event of a "Change of Control Transaction" requiring approval of the holders of Class A Shares and Class B Shares under the OBCA, unless different treatment of the shares of each such class is approved by a majority of the votes cast by the holders of outstanding Class A Shares and by a majority of the votes cast by the holders of outstanding Class B Shares, each voting separately as a class.

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***Proposals to Amend the Articles of Amendment***

Neither the holders of the Class A Shares nor the holders of the Class B Shares are entitled to vote separately as a class upon a proposal to amend the Articles of Amendment in the case of an amendment referred to in paragraph (a) or (e) of subsection 170(1) of the OBCA.

Neither the holders of the Class A Shares nor the holders of the Class B Shares shall be entitled to vote separately as a class upon a proposal to amend the Articles of Amendment in the case of an amendment referred to in paragraph (b) of subsection 170(1) of the OBCA unless such exchange, reclassification or cancellation: (a) affects only the holders of that class; or (b) affects the holders of Class A Shares and Class B Shares differently, on a per share basis, and such holders are not otherwise entitled to vote separately as a class under any applicable law in respect of such exchange, reclassification or cancellation.

***Take-Over Bid Protection***

Under applicable Canadian law, an offer to purchase Class A Shares would not necessarily require that an offer be made to purchase Class B Shares. In accordance with the rules of the CSE designed to ensure that, in the event of a take-over bid, the holders of Class B Shares will be entitled to participate on an equal footing with holders of Class A Shares, the holders of not less than 80% of the outstanding Class A Shares have entered into the Coattail Agreement. The Coattail Agreement contains provisions customary for dual class, publicly-traded Ontario corporations designed to prevent transactions that otherwise would deprive the holders of Class B Shares of rights under the take-over bid provisions of applicable Canadian securities legislation to which they would have been entitled if the Class A Shares had been Class B Shares.

The undertakings in the Coattail Agreement do not apply to prevent a sale of Class A Shares by a holder of Class A Shares party to the Coattail Agreement if concurrently an offer is made to purchase Class B Shares that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) offers a price per Class B Share at least as high as the highest price per share paid or required to be paid pursuant to the take-over bid for the Class A Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) provides that the percentage of outstanding Class B Shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of outstanding Class A Shares to be sold (exclusive of Class A Shares owned immediately prior to the offer by the offeror and persons acting jointly or in concert with the offeror);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) has no condition attached other than the right not to take up and pay for Class B Shares tendered if no shares are purchased pursuant to the offer for Class A Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) is in all other material respects identical to the offer for Class A Shares.

In addition, the Coattail Agreement does not prevent the sale of Class A Shares by a holder thereof to a permitted holder, provided such sale does not or would not constitute a take-over bid or, if so, is exempt or would be exempt from the formal bid requirements (as defined in applicable securities legislation). The conversion of Class A Shares into Class B Shares shall not, in or of itself, constitute a sale of Class A Shares for the purposes of the Coattail Agreement.

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Under the Coattail Agreement, any sale of Class A Shares (including a transfer to a pledgee as security) by a holder of Class A Shares party to the Coattail Agreement is conditional upon the transferee or pledgee becoming a party to the Coattail Agreement, to the extent such transferred Class A Shares are not automatically converted into Class B Shares in accordance with the Articles of Amendment.

The Coattail Agreement contains provisions for authorizing action by the trustee to enforce the rights under the Coattail Agreement on behalf of the holders of the Class B Shares. The obligation of the trustee to take such action will be conditional on the Corporation or holders of the Class B Shares providing such funds and indemnity as the trustee may require. No holder of Class B Shares has the right, other than through the trustee, to institute any action or proceeding or to exercise any other remedy to enforce any rights arising under the Coattail Agreement unless the trustee fails to act on a request authorized by holders of not less than 10% of the outstanding Class B Shares and reasonable funds and indemnity have been provided to the trustee.

The Coattail Agreement may not be amended, and no provision thereof may be waived, unless, prior to giving effect to such amendment or waiver, the following have been obtained: (a) the consent of the CSE and any other applicable securities regulatory authority in Canada and (b) the approval of at least 66<sup>2</sup>/<sub>3</sub>% of the votes cast by holders of Class B Shares represented at a meeting duly called for the purpose of considering such amendment or waiver, excluding votes attached to Class B Shares held directly or indirectly by holders of Class A Shares, their affiliates and related parties and any persons who have an agreement to purchase Class A Shares on terms which would constitute a sale for purposes of the Coattail Agreement other than as permitted thereby.

No provision of the Coattail Agreement limits the rights of any holders of Class B Shares under applicable law.

At the annual and special meeting of Shareholders of the Corporation held December 16, 2019, the Shareholders approved an amendment to the Articles to authorize certain transfers of Class A Shares. The Shareholders approved an amendment to permit the holders of Class A Shares to complete transfers of Class A Shares to a director, executive officer or founder of the Corporation, such that a founder who is no longer actively involved in the business and affairs of the Corporation could transfer that founder's Class A Shares to those individuals who remain active.

***Lock-Up Agreements***

Pursuant to the Lucid Acquisition, the Corporation issued 1,957,000 Class B Shares (the "**Acquisition Shares**") to certain former shareholders of Lucid that were subject to restrictions on transfer prescribed by the Lock-Up Agreements in accordance with the following release schedule and subject to limited exceptions:

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* 20% of the Acquisition Shares were immediately available on the date of issuance (being September 21, 2021);

* 20% of the Acquisition Shares were released from the transfer restrictions 6 months following the completion of the Lucid Acquisition (being March 21, 2022);

* 20% of the Acquisitions Shares were released from the transfer restrictions 12 months following the completion of the Lucid Acquisition (being September 21, 2022); and

* 40% of the Acquisition Shares were released from the transfer restrictions 18 months following the completion of the Lucid Acquisition (being March 21, 2023).

***Competition Act***

Limitations on the ability to acquire and hold our Class B Shares may be imposed by the *Competition Act* (Canada). This legislation establishes a pre-merger notification regime for certain types of merger transactions that exceed certain statutory shareholding and financial thresholds. Transactions that are subject to notification cannot be closed until the required materials are filed and the applicable statutory waiting period has expired or been waived by the Commissioner of Competition ("the Commissioner"). Further, the *Competition Act* (Canada) permits the Commissioner to review any acquisition of control over or of a significant interest in us, whether or not it is subject to mandatory notification. This legislation grants the Commissioner jurisdiction, for up to one year following completion of an acquisition, to challenge this type of acquisition before the Canadian Competition Tribunal if the Commissioner believes it would, or would be likely to, prevent or lessen competition substantially in any market in Canada.

***Investment Canada Act***

*The following discussion summarizes the principal features of the Investment Canada Act (Canada) for a non-resident who proposes to acquire Class B Shares of the Corporation. The discussion is general only; it is not a substitute for independent legal advice from an investor's own advisor; and it does not anticipate statutory or regulatory amendments.*

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

A non-Canadian would acquire control of the Corporation for the purposes of the *Investment Canada Act* (Canada) through the acquisition of Class B Shares if the non-Canadian acquired shares to which are attached the majority of the voting rights of the Corporation.

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Further, the acquisition of less than a majority but one-third or more of the shares to which are attached more than one-third of the voting rights of the Corporation would be presumed to be an acquisition of control of the Corporation unless it could be established that, on the acquisition, the Corporation was not controlled in fact by the acquirer through the ownership of Class B Shares.

For a direct acquisition that would result in an acquisition of control of the Corporation, subject to the exceptions for "WTO Investors" that are controlled by persons who are resident in World Trade Organization ("WTO") member nations and for "Trade Agreement Investors" that are controlled by persons who are resident in certain countries in with which Canada has trade agreements, a proposed investment would be reviewable where the value of the acquired assets is C$5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada's cultural heritage or national identity, where the value of the acquired assets is less than C$5 million.

For a proposed indirect acquisition that is not by a WTO Investor or Trade Agreement Investor and that would result in an acquisition of control of the Corporation through the acquisition of a non-Canadian parent entity, the investment would be reviewable where (a) the value of the Canadian assets acquired in the transaction is C$50 million or more, or (b) the value of the Canadian assets is greater than 50% of the value of all of the assets acquired in the transaction and the value of the Canadian assets is C$5 million or more.

In the case of a direct acquisition by or from a WTO Investor or Trade Agreement Investor, the threshold is significantly higher and varies depending on (i) the residency of the investor and (ii) whether the investor is a State-Owned Enterprise ("SOE").

Starting January 1, 2019, and for subsequent years, threshold levels have been adjusted annually based on growth in nominal gross domestic product in accordance with a formula set out in the *Investment Canada Act* (Canada) (i.e., the growth in the nominal gross domestic product at market prices multiplied by the threshold amount determined for the previous year).

For WTO Investors and Trade Agreement Investors that are not SOEs, the threshold is based on enterprise value. In 2022, the review threshold for non-SOE WTO Investors was increased to an enterprise value of C$1.141 billion and the review threshold for non-SOE Trade Agreement Investors was increased to C$1.711 billion. Other than the exception noted below, an indirect acquisition involving a non-SOE WTO Investor is not reviewable under the *Investment Canada Act* (Canada).

For SOEs, the threshold is based on the book value of our assets. In 2022, the review threshold for SOEs that are WTO Investors or Trade Agreement Investors was increased to C$454 million. Other than the exception noted below, an indirect acquisition involving a SOE WTO Investor is not reviewable under the *Investment Canada Act* (Canada).

The higher threshold for direct investments by WTO Investors and Trade Agreement Investors and the exemption for indirect investments do not apply where the relevant Canadian business is carrying on a "cultural business". The acquisition of a Canadian business that is a "cultural business" is subject to lower review thresholds under the *Investment Canada Act* (Canada) because of the perceived sensitivity of the cultural sector.

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In 2009, amendments were enacted to the *Investment Canada Act* (Canada) concerning investments that may be considered injurious to national security. If the Minister of Innovation, Science and Industry has reasonable grounds to believe that an investment by a non-Canadian "could be injurious to national security," the Minister of Innovation, Science and Industry may send the non-Canadian a notice indicating that an order for review of the investment may be made. The review of an investment on the grounds of national security may occur whether or not an investment is otherwise subject to review on the basis of net benefit to Canada or otherwise subject to notification under the *Investment Canada Act* (Canada). The Minister of Innovation, Science and Industry has published guidelines that provide an open-ended list of factors that may be considered in determining whether an investment may be "injurious to national security". These include the potential effects of the investment on the transfer of sensitive technology (including biotechnology) that may have military, intelligence, or dual military/civilian applications.

Certain transactions, except those to which the national security provisions of the *Investment Canada Act* (Canada) may apply, relating to Class B Shares of the Corporation are exempt from the *Investment Canada Act* (Canada), including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) acquisition of Class B Shares of the Corporation by a person in the ordinary course of that person's business as a trader or dealer in securities,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) acquisition of control of the Corporation in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions on the *Investment Canada Act* (Canada), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) acquisition of control of the Corporation by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Corporation, through the ownership of Class B Shares, remained unchanged.

See "Item 10.E.-Taxation" for additional information regarding the material U.S. and Canadian federal income tax consequences relating to the ownership and disposition of our Class B Shares by Non-Canadian Holders (as defined therein).

Any of these provisions may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to our Shareholders. We cannot predict whether investors will find the Corporation and our Class B Shares less attractive because we are governed by Canadian laws.

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## Exhibit 4.18

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**FSD PHARMA INC.**

**EQUITY INCENTIVE PLAN**

**ADOPTED MAY 16, 2022**

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**PART I - GENERAL PROVISIONS**

**1. PREAMBLE AND DEFINITIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>1.1</u> <u>Title and Parts.</u>**

The Plan described in this document shall be called the "FSD Pharma Inc. Equity

Incentive Plan".

The Plan is divided into three Parts. This Part I contains provisions of general application to all Grants; Part II applies specifically to Options; and, Part III applies specifically to Share Units.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>1.2</u> <u>Eligibility.</u>**

Only Eligible Persons shall be eligible to receive Grants under this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>1.3</u> <u>Purpose of the Plan.</u>**

The purposes of the Plan are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to promote a further alignment of interests between officers, employees and other eligible service providers and the shareholders of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to associate a portion of the compensation payable to officers, employees and other eligible service providers with the returns achieved by shareholders of the Corporation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to attract and retain officers, employees and other eligible service providers with the knowledge, experience and expertise required by the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>1.4</u> <u>Definitions.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.1 "**affiliate**" means "affiliated corporations" and a corporation shall be deemed to be an affiliate of another corporation if one of them is the Subsidiary of the other or if both are Subsidiaries of the same corporation or if each of them is controlled by the same Person and also includes those issuers that are similarly related, whether or not any of the issuers are corporations, partnerships, limited partnerships, trusts, income trusts or investment trusts or any other organized entity issuing securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.2 "**Applicable Law**" means any applicable provision of law, domestic or foreign, including, without limitation, applicable securities legislation, together with all regulations, rules, policy statements, rulings, notices, orders or other instruments promulgated thereunder, and Stock Exchange Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.3 "**associate**", where used to indicate a relationship with a Person, means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any corporation of which such Person beneficially owns, directly or indirectly, voting securities carrying more than 10 per cent of the voting rights attached to all voting securities of the corporation for the time being outstanding;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any partner of that Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any trust or estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar capacity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any relative of that Person who resides in the same home as that Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any Person who resides in the same home as that person and to whom that Person is married or with whom that Person is living in a conjugal relationship outside marriage; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any relative of a Person mentioned in clause (e) who has the same home as that Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.4 "**Beneficiary**" means, subject to Applicable Law, an individual who has been designated by a Participant, in such form and manner as the Board may determine, to receive benefits payable under the Plan upon the death of the Participant, or, where no such designation is validly in effect at the time of death, the Participant's legal representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.5 "**Blackout Period**" means a period of time when, pursuant to any policies of the Corporation, any securities of the Corporation may not be traded by certain persons as designated by the Corporation, including any holder of a Grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.6 "**Board**" means the Board of Directors of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.7 "**Cause**" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) subject to (b) or (c), as applicable, below, "just cause" or "cause" for Termination by the Corporation or a Subsidiary of the Corporation as determined under Applicable Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) where a Participant has a written employment agreement with the Corporation or a Subsidiary of the Corporation, "**Cause**" as defined in such employment agreement, if applicable; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) where a Participant provides services as an independent contractor pursuant to a contract for services with the Corporation or a Subsidiary of the Corporation, any material breach of such contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.8 "**Change in Control**" means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any transaction (other than a transaction described in clause

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) below) pursuant to which any person or group of persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Corporation representing fifty percent (50.0%) or more of the aggregate voting power of all of the Corporation's then issued and outstanding securities entitled to vote in the election of Directors, other than any such acquisition that occurs upon the exercise or settlement of options or other securities granted by the Corporation under any of the Corporation's Security Based Compensation Arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving (directly or indirectly) the Corporation and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation or similar transaction, the shareholders of the Corporation immediately prior thereto do not beneficially own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50.0%) of the combined outstanding voting power of the surviving or resulting entity in such amalgamation, merger, consolidation or similar transaction or (B) more than fifty percent (50.0%) of the combined outstanding voting power of the parent of the surviving or resulting entity in such arrangement, amalgamation merger, consolidation or similar transaction, in each case in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) (A) the sale, lease, exchange, license or other disposition of all or substantially all of the Corporation's assets to a person other than a person that was an affiliate of the Corporation at the time of such sale, lease, exchange, license or other disposition or (B) a sale, lease, exchange, license or other disposition to an entity, more than fifty percent (50.0%) of the combined voting power of the voting securities of which are beneficially owned by shareholders of the Corporation in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such sale, lease, exchange, license or other disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the passing of a resolution by the Board or shareholders of the Corporation to substantially liquidate the assets of the Corporation or wind up the Corporation's business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re- arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and the shareholdings remain substantially the same following the re- arrangement);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) individuals who, on the Effective Date, are members of the Board (the "**Incumbent Board**") cease for any reason, other than pursuant to the Corporation's investor rights agreements, to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of the Plan, be considered as a member of the Incumbent Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any other matter determined by the Board to be a Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.9 "**Code**" means the United States Internal Revenue Code of 1986, as amended, and any applicable United States Treasury Regulations and other binding regulatory guidance thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.10 "**Control**" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) when applied to the relationship between a Person and another Person, the beneficial ownership by that first Person, directly or indirectly, of voting securities or other interests in such second Person entitling the holder to exercise control and direction in fact over the activities of such second Person, including by way of electing a majority of the members of the board of the second Person; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) notwithstanding the foregoing, when applied to the relationship between a Person and a partnership, limited partnership or joint venture, means the contractual right to direct the affairs of the partnership, limited partnership or joint venture; and

the words "**Controlled by**", "**Controlling**" and similar words have corresponding meanings; provided that a Person who Controls a second Person will be deemed to Control a third Person which is Controlled by such second Person and so on.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.11 "**Corporation**" means FSD Pharma Inc., and includes any successor corporation thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.12 "**Director**" means a director of the Corporation from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.4.13 "Disability" means:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) subject to (b) below, a Participant's physical or mental incapacity that prevents him/her from substantially fulfilling his or her duties and responsibilities on behalf of the Corporation or, if applicable, a Subsidiary of the Corporation as determined by the Board and, in the case of a Participant who is an employee of the Corporation or a Subsidiary of the Corporation, in respect of which the Participant commences receiving, or is eligible to receive, disability benefits under the Corporation's or Subsidiary's long-term disability plan; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) where a Participant has a written employment agreement with the Corporation or a Subsidiary of the Corporation, "**Disability**" as defined in such employment agreement, if applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.14 "**Disability Date**" means, the date of a Participant's Termination as a result of a Disability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.15 "**Effective Date**" has the meaning set out in Section 7.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.16 "**Eligible Person**" means an individual Employed by the Corporation or any Subsidiary of the Corporation, a Director, and a Service Provider, who, by the nature of his or her position or job is, in the opinion of the Board, in a position to contribute to the success of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.17 "**Employed**" means, with respect to a Participant, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Participant is rendering services to the Corporation or a Subsidiary of the Corporation (excluding services exclusively as a Director or Service Provider) (referred to in Section 1.4.40 as "active Employment"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Participant is not actively rendering services to the Corporation or a Subsidiary of the Corporation due to vacation, temporary illness, maternity or parental leave or leave on account of Disability or other authorized leave of absence (provided, in the case of a US Taxpayer, that the Participant has not incurred a "Separation from Service", within the meaning of Section 409A of the Code).

and "**Employment**' has the corresponding meaning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.18 "**Exercise Price**" means, with respect to an Option, the price payable by a Participant to purchase one Share on exercise of such Option, which shall not be less than one hundred percent (100%) of the Market Price on the Grant Date of the Option covering such Share, subject to adjustment pursuant to Section 5.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.19 "**Grant**" means a grant or right granted under the Plan consisting of one or more Options, RSUs or PSUs, or such other award as may be permitted hereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.20 "**Grant Agreement**" means an agreement between the Corporation and a Participant evidencing a Grant and setting out the terms under which such Grant is made, together with such schedules, amendments, deletions or changes thereto as are permitted under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.21 "**Grant Date**" means the effective date of a Grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.22 "**Insider**" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a Director or officer of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a director or officer of a Person that is itself an insider or subsidiary of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a Person that has,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) beneficial ownership of, or control or direction over, directly or indirectly, securities of the Corporation carrying more than 10 per cent of the voting rights attached to all the Corporation's outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the Person as underwriter in the course of a distribution; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a combination of beneficial ownership of, and control or direction over, directly or indirectly, securities of a reporting issuer carrying more than 10 per cent of the voting rights attached to all the Corporation's outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the Person as underwriter in the course of a distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Corporation in the event that it has purchased, redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) a Person designated as an insider under the *Securities Act* (Ontario); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) an associate or affiliate of any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.4.23 "Market Price" means:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if the Shares are listed on only one Stock Exchange, the volume weighted average trading price per Share on such Stock Exchange during the five (5) immediately preceding Trading Days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if the Shares are listed on more than one Stock Exchange, the Market Price as determined in accordance with paragraph (a) above for the primary Stock Exchange on which the greatest volume of trading of the Shares occurred during the five (5) immediately preceding Trading Days; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if the Shares are not listed for trading on a Stock Exchange, a price which is determined by the Board in good faith to be the fair market value of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.24 "**Option**" means an option to purchase a Share granted by the Board to an Eligible Person in accordance with Section 3 and Section 8.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.25 "**Participant**" means an Eligible Person to whom a Grant is made and which Grant or a portion thereof remains outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.26 "**Performance Conditions**" means such financial, personal, operational or transaction-based performance criteria as may be determined by the Board in respect of a Grant to any Participant or Participants and set out in a Grant Agreement. Performance Conditions may apply to the Corporation, a Subsidiary of the Corporation, the Corporation and its Subsidiaries as a whole, a business unit of the Corporation or group comprised of the Corporation and some Subsidiaries of the Corporation or a group of Subsidiaries of the Corporation, either individually, alternatively or in any combination, and measured either in total, incrementally or cumulatively over a specified performance period, on an absolute basis or relative to a pre-established target or milestone, to previous years' results or to a designated comparator group, or otherwise, and may incorporate multipliers or adjustments based on the achievement of any such performance criteria.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.27 "**Performance Period**" means, with respect to PSUs, a period specified by the Board for achievement of any applicable Performance Conditions as a condition to Vesting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.28 "**Performance Share Unit**" or "**PSU**" means a right granted to an Eligible Person in accordance with Section 3.1(c) and (d) and Section 11.1 to receive a Share or the Market Price, as determined by the Board, that generally becomes Vested, if at all, subject to the attainment of certain Performance Conditions and satisfaction of such other conditions to Vesting, if any, as may be determined by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.29 "**Person**" means an individual, corporation, company, cooperative, sole proprietorship, partnership, limited partnership, limited liability partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, trust, trustee, executor, administrator, legal personal representative, estate, unincorporated association, organization or syndicate, entity with juridical personality or governmental authority or body, or other entity, whether or not having legal status, however designated or constituted, and pronouns which refer to a Person shall have a similarly extended meaning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.30 "**Plan**" means this FSD Pharma Inc. Equity Incentive Plan, including any schedules or appendices hereto, as may be amended from time to time.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.31 "**Restricted Share Unit**" or "**RSU**" means a right granted to an Eligible Person in accordance with Section 3.1(c) and (d) and Section 11.1 to receive a Share or a cash amount equal to the Market Price of a Share, as determined by the Board, that generally becomes Vested, if at all, following a period of continuous Employment or service of the Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.32 "**Restrictive Covenant**" means any obligation of a Participant to the Corporation or a Subsidiary of the Corporation to (A) maintain the confidentiality of information relating to the Corporation or the Subsidiary of the Corporation and/or its business, (B) not engage in employment or business activities that compete with the business of the Corporation or the Subsidiary of the Corporation, (C) not solicit employees or other service providers, customers and/or suppliers of the Corporation or the Subsidiary of the Corporation, whether during or after employment with the Corporation or Subsidiary of the Corporation, and whether such obligation is set out in a Grant Agreement issued under the Plan or other agreement between the Participant and the Corporation or Subsidiary of the Corporation, including, without limitation, an employment agreement, or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.33 "**Security Based Compensation Arrangement**" means an option, option plan, security based appreciation right, employee unit purchase plan, restricted, performance of deferred unit plan, long-term incentive plan or any other compensation or incentive mechanism, in each case, involving the issuance or potential issuance of Shares to one or more directors or officers of the Corporation or a Subsidiary of the Corporation, current or past full-time or part-time employees of the Corporation or a Subsidiary of the Corporation, Insiders or Service Providers of the Corporation or any Subsidiary of the Corporation including a Share purchased from treasury by one or more officers, directors or officers of the Corporation or any Subsidiary of the Corporation, current or past full- time or part-time employees of the Corporation or a Subsidiary of the Corporation, Insiders or Service Providers of the Corporation or a Subsidiary of the Corporation which is financially assisted by the Corporation or a Subsidiary of the Corporation by way of a loan, guarantee or otherwise, but a Security Based Compensation Arrangement does not include an arrangement that does not involve the issuance from treasury or potential issuance from treasury of Shares or other equity securities of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.34 "**Service Provider**" means a Person, other than an employee, officer or director of the Corporation or a Subsidiary of the Corporation, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) is engaged to provide, on a *bona fide* basis, for an initial, renewable or extended period of twelve (12) months or more, services to the Corporation or a Subsidiary of the Corporation, other than services provided in relation to a distribution of securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) provides the services under a written contract between the Corporation or a Subsidiary of the Corporation and the Person;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in the reasonable opinion of the Corporation, spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or a Subsidiary of the Corporation;

and includes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) for an individual Service Provider, a corporation of which the individual Service Provider is an employee or shareholder, and a partnership of which the individual Service Provider is an employee or partner; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) for a Service Provider that is not an individual, an employee, executive officer, or director of the Service Provider, provided that the individual employee, executive officer, or director spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or a Subsidiary of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.35 "**Share**" means a subordinated voting share of the Corporation or, in the event of an adjustment contemplated by Section 5.1, such other security to which a Participant may be entitled upon the exercise or settlement of a Grant as a result of such adjustment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.36 "**Share Unit**" means either an RSU or a PSU, as the context requires.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.37 "**Stock Exchange**" means the Toronto Stock Exchange and such other stock exchange on which the Shares are listed, or if the Shares are not listed on any stock exchange, then on the over-the-counter market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.38 "**Stock Exchange Rules**" means the applicable rules of any Stock Exchange upon which Shares of the Corporation are listed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.39 "**Subsidiary**" means, in respect of a Person, another Person that is Controlled directly or indirectly by such Person and includes a Subsidiary of that Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.4.40 "Termination" means:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in the case of an employee of the Corporation or a Subsidiary of the Corporation (i) the termination of the Participant's Employment with the Corporation or a Subsidiary of the Corporation (other than in connection with the Participant's transfer to Employment with the Corporation or another Subsidiary), which shall occur on the date on which the Participant ceases to be employed by the Corporation or Subsidiary, as applicable, whether such termination is lawful or otherwise, (including, without limitation, by reason of resignation, death, frustration of contract, termination for cause, termination without cause, or constructive dismissal), without giving effect to any pay in lieu of notice (paid by way of lump sum or salary continuance), severance pay, benefits continuance or other termination-related payments or benefits to which the Participant may be entitled pursuant to the common law or otherwise (except as may be expressly required to satisfy the minimum requirements of applicable employment or labour standards legislation), but, for greater certainty, a Participant's absence from active work during a period of vacation, temporary illness, maternity or parental leave, leave on account of Disability or any other authorized leave of absence shall not be considered to be a "Termination", and (ii) in the case of a Participant who does not return to active Employment with the Corporation or a Subsidiary of the Corporation immediately following a period of absence due to vacation, temporary illness, maternity or parental leave, leave on account of Disability or other authorized leave of absence, such cessation shall be deemed to occur on the last day of such period of absence as approved by the Corporation or a Subsidiary of the Corporation;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in the case of a Director, the date on which the Director ceases to hold office; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in the case of a Service Provider, the date that is designated by the Corporation or a Subsidiary of the Corporation, as the case may be, in a written notice of termination as the date by which the Participant's consulting agreement or arrangement is terminated for any reason;

provided, in each case, that, in the case of a US Taxpayer, the Termination constitutes a "Separation from Service", within the meaning of Section 409A of the Code, and "**Terminated**" and "**Terminates**" shall be construed accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.41 "**Time Vesting**" means any conditions relating to the passage of time or continued service with the Corporation or Subsidiary of the Corporation for a period of time in respect of a Grant, as may be determined by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.42 "**Trading Day**" means a day on which the Stock Exchange is open for trading and on which the Shares actually traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.43 "**US Securities Act**" means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.44 **"US Taxpayer"** means an individual who is subject to tax under the Code in respect of any Grants, amounts payable or Shares deliverable under this Plan.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.45 "**Vested**" means, with respect to any Option, Share Unit or other award included in a Grant, that the applicable conditions with respect to Time Vesting, achievement of Performance Conditions and/or any other conditions established by the Board have been satisfied or, to the extent permitted under the Plan, waived, whether or not the Participant's rights with respect to such Grant may be conditioned upon prior or subsequent compliance with any Restrictive Covenants (and any applicable derivative term shall be construed accordingly).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.46 "**Vesting Date**" means the date on which the applicable Time Vesting, Performance Conditions and/or any other conditions for an Option, Share Unit, or other award included in a Grant becoming Vested are met, deemed to have been met or waived as contemplated in Section 3.1.

**2. CONSTRUCTION AND INTERPRETATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>2.1</u> <u>Gender, Singular, Plural.</u>**

In the Plan, references to one gender include all genders; and references to the singular shall include the plural and vice versa, as the context shall require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>2.2</u> <u>Severability.</u>**

If any provision or part of the Plan is determined to be void or unenforceable in whole or in part, such determination shall not affect the validity or enforcement of any other provision or part thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>2.3</u> <u>Headings and Sections.</u>**

Headings wherever used herein are for reference purposes only and do not limit or extend the meaning of the provisions herein contained. A reference to a section or schedule shall, except where expressly stated otherwise, mean a section or schedule of the Plan, as applicable.

**3. ADMINISTRATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>3.1</u> <u>Administration by the Board.</u>**

The Plan shall be administered by the Board in accordance with its terms and subject to Applicable Law. Subject to and consistent with the terms of the Plan, in addition to any authority of the Board specified under any other terms of the Plan, the Board shall have full and complete discretionary authority to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) interpret the Plan and Grant Agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) prescribe, amend and rescind such rules and regulations and make all determinations necessary or desirable for the administration and interpretation of the Plan and instruments of grant evidencing Grants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) determine those Eligible Persons who may receive Grants as Participants, grant one or more Grants to such Participants and approve or authorize the applicable form and terms of the related Grant Agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) determine the terms and conditions of Grants granted to any Participant, including, without limitation, as applicable (i) Grant Value and the number of Shares subject to a Grant, (ii) the Exercise Price for Shares subject to a Grant, (iii) the conditions to the Vesting of a Grant or any portion thereof, including, as applicable, the period for achievement of any applicable Performance Conditions as a condition to Vesting, and conditions pertaining to compliance with Restrictive Covenants, and the conditions, if any, upon which Vesting of any Grant or any portion thereof will be waived or accelerated without any further action by the Board, (iv) the circumstances upon which a Grant or any portion thereof shall be forfeited, cancelled or expire, including in connection with the breach by a Participant of any Restrictive Covenant, (v) the consequences of a Termination with respect to a Grant, (vi) the manner of exercise or settlement of the Vested portion of a Grant, (vii) whether, and the terms upon which, a Grant may be settled in cash, newly issued Shares or a combination thereof, and (viii) whether, and the terms upon which, any Shares delivered upon exercise or settlement of a Grant must be held by a Participant for any specified period of time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) determine whether, and the extent to which, any Performance Conditions or other conditions applicable to the Vesting of a Grant have been satisfied or shall be waived or modified;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any leave of absence or disability of any Participant. Without limiting the generality of the foregoing, the Board shall be entitled to determine:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) whether or not any such leave of absence shall constitute a Termination within the meaning of the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the impact, if any, of any such leave of absence on Grants issued under the Plan made to any Participant who takes such leave of absence (including, without limitation, whether or not such leave of absence shall cause any Grants to expire and the impact upon the time or times such Grants shall be exercisable);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) amend the terms of any Grant Agreement or other documents evidencing Grants; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) determine whether, and the extent to which, adjustments shall be made pursuant to Section 5 and the terms of such adjustments.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 All determinations, interpretations, rules, regulations, or other acts of the Board respecting the Plan or any Grant shall be made in its sole discretion and shall be conclusively binding upon all persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 Subject to Section 6.5, the Board may, from time to time, amend the Plan for the purpose of establishing one or more sub-plans for the benefit of Eligible Persons who are subject to the laws of a jurisdiction other than Canada in connection with their participation in the Plan.

The Board may also prescribe terms for Grant Agreements in respect of Eligible Persons who are subject to the laws of a jurisdiction other than Canada in connection with their participation in the Plan that are different than the terms of the Grant Agreements for Eligible Persons who are subject to the laws of Canada in connection with their participation in the Plan, and/or deviate from the terms of the Plan set out herein, for purposes of compliance with Applicable Law in such other jurisdiction or where, in the Board's opinion, such terms or deviations are necessary or desirable to obtain more advantageous treatment for the Corporation, a Subsidiary of the Corporation or the Eligible Person in respect of the Plan under the Applicable Law of the other jurisdiction.

Notwithstanding the foregoing, the terms of any Grant Agreement authorized pursuant to this Section 3.3 shall be consistent with the Plan to the extent practicable having regard to the Applicable Law of the jurisdiction in which such Grant Agreement is applicable and in no event shall contravene the Applicable Law of Canada.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 The Board may, in its discretion, subject to Applicable Law, delegate its powers, rights and duties under the Plan, in whole or in part, to a committee of the Board, a person or persons, as it may determine, from time to time, on terms and conditions as it may determine, except that the Board shall not, and shall not be permitted to delegate any such powers, rights or duties (i) with respect to the grant, amendment, administration or settlement of any Grant to the extent delegation is not consistent with Applicable Law and any such purported delegation or action shall not be given effect, and (ii) provided that the composition of the committee of the Board, person or persons, as the case may be, shall comply with Applicable Law. In addition, provided it complies with the foregoing, the Board may appoint or engage a trustee, custodian or administrator to administer or implement the Plan or any aspect of it.

**4. SHARE RESERVE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 Subject to Section 4.4 and any adjustment pursuant to Section 5.1, the aggregate number of Shares that may be issued pursuant to Grants made under the Plan together with all other Security Based Compensation Arrangements of the Corporation shall be equal to ten percent (10.0%) of the outstanding Shares from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The aggregate number of Shares reserved for issuance to any one Participant under the Plan, together with all other Security Based Compensation Arrangements of the Corporation, must not exceed five percent (5.0%) of the aggregate issued and outstanding Shares.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 The maximum number of Shares of the Corporation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) issued to Insiders within any one year period, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) issuable to Insiders, at any time,

under the Plan, or when combined with all of the Corporation's other Security Based Compensation Arrangements, shall not exceed ten percent (10.0%) of the number of the aggregate issued and outstanding Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 For purposes of computing the total number of Shares available for grant under the Plan or any other Security Based Compensation Arrangement of the Corporation, Shares subject to any Grant (or any portion thereof) that are forfeited, surrendered, cancelled or otherwise terminated prior to the issuance of such Shares shall again be available for grant under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 The maximum number of Shares of the Corporation which may be issued within any 12-month period to an individual Employed by the Corporation or any Subsidiary of the Corporation or a Service Provider engaged in investor relations activities must not exceed 1% of the issued and outstanding Shares.

**5. ALTERATION OF CAPITAL AND CHANGE IN CONTROL**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 Notwithstanding any other provision of the Plan, and subject to Applicable Law, in the event of any change in the Shares by reason of any dividend (other than dividends in the ordinary course), split, recapitalization, reclassification, amalgamation, arrangement, merger, consolidation, combination or exchange of Shares or distribution of rights to holders of Shares or any other relevant changes to the authorized or issued capital of the Corporation, if the Board shall determine that an equitable adjustment should be made, such adjustment shall, subject to Applicable Law, be made by the Board to (i) the number of Shares subject to the Plan; (ii) the securities into which the Shares are changed or are convertible or exchangeable; (iii) any Options then outstanding; (iv) the Exercise Price in respect of such Options; and/or (v) with respect to the number of Share Units outstanding under the Plan, and any such adjustment shall be conclusive and binding for all purposes of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 No adjustment provided for pursuant to Section 5.1 shall require the Corporation to issue fractional Shares or consideration in lieu thereof in satisfaction of its obligations under the Plan. Any fractional interest in a Share that would, except for the provisions of this Section 5.2, be deliverable upon the exercise of any Grant shall be cancelled and not deliverable by the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 In the event of a Change in Control prior to the Vesting of a Grant, and subject to the terms of a Participant's written employment agreement or contract for services with the Corporation or a Subsidiary of the Corporation and the applicable Grant Agreement, the Board shall have full authority to determine in its sole discretion the effect, if any, of a Change in Control on the Vesting, exercisability, settlement, payment or lapse of restrictions applicable to a Grant, which effect may be specified in the applicable Grant Agreement or determined at a subsequent time. Subject to Applicable Law, rules and regulations, the Board shall, at any time prior to, coincident with or after the effective time of a Change in Control, take such actions as it may consider appropriate, including, without limitation: (i) provide for the acceleration of any Vesting or exercisability of a Grant; (ii) provide for the deemed attainment of Performance Conditions relating to a Grant; (iii) provide for the assumption, substitution, replacement or continuation of any Grant by a successor or surviving corporation (or a parent or subsidiary thereof) with cash, securities, rights or other property to be paid or issued, as the case may be, by the successor or surviving corporation (or a parent or subsidiary thereof); (iv) provide that that a Grant shall terminate or expire unless exercised or settled in full on or before a date fixed by the Board; or (v) terminate or cancel any outstanding Grant in exchange for a cash payment (provided that, if as of the date of the Change in Control, the Board determines that no amount would have been realized upon the exercise or settlement of the Grant, then the Grant may be cancelled by the Corporation without payment of consideration).

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**6. MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.1</u> <u>Compliance with Laws and Policies.</u>**

The Corporation's obligation to make any payments or deliver (or cause to be delivered) any Shares hereunder is subject to compliance with Applicable Law. Each Participant shall acknowledge and agree (and shall be conclusively deemed to have so acknowledged and agreed by participating in the Plan) that the Participant will, at all times, act in strict compliance with Applicable Law and all other laws and any policies of the Corporation applicable to the Participant in connection with the Plan and furnish to the Corporation all information and undertakings as may be required to permit compliance with Applicable Law.

If the offer and sale of Shares are required to be, but have not been, registered under the US Securities Act or registered or qualified under any other Applicable Law, the Corporation may require, as a condition to the making of any Grant, the exercise of any Option or the issuance of any Shares, such representations or agreements as counsel for the Corporation may consider appropriate to avoid violation of the US Securities Act or such other Applicable Law. The Corporation may require that certificates evidencing (and notifications of book-entry registration of) Shares issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Shares, and the Corporation may hold the certificates pending lapse of the applicable restrictions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.2</u> <u>Withholdings.</u>**

So as to ensure that the Corporation or a Subsidiary of the Corporation, as applicable, will be able to comply with the applicable obligations under any federal, provincial, state or local law relating to the withholding of tax or other required deductions, the Corporation or the Subsidiary of the Corporation shall withhold or cause to be withheld from any amount payable to a Participant, either under this Plan, or otherwise, such amount as may be necessary to permit the Corporation or the Subsidiary of the Corporation, as applicable, to so comply. The Corporation and any Subsidiary of the Corporation may also satisfy any liability for any such withholding obligations, on such terms and conditions as the Corporation may determine in its sole discretion, by (a) selling on such Participant's behalf, or requiring such Participant to sell, any Shares, and retaining any amount payable which would otherwise be provided or paid to such Participant in connection with any such sale, or (b) requiring, as a condition to the delivery of Shares hereunder, that such Participant make such arrangements as the Corporation may require so that the Corporation and its Subsidiaries can satisfy such withholding obligations, including requiring such Participant to remit an amount to the Corporation or a Subsidiary of the Corporation in advance, or reimburse the Corporation or any Subsidiary of the Corporation for, any such withholding obligations.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.3</u> <u>No Right to Continued Employment.</u>**

Nothing in the Plan or in any Grant Agreement entered into pursuant hereto shall confer upon any Participant the right to continue in the employ or service of the Corporation or any Subsidiary of the Corporation, to be entitled to any remuneration or benefits not set forth in the Plan or a Grant Agreement or to interfere with or limit in any way the right of the Corporation or any Subsidiary of the Corporation to terminate Participant's employment or service arrangement with the Corporation or any Subsidiary of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.4</u> <u>No Additional Rights.</u>**

Neither the designation of an individual as a Participant nor the Grant of any Options, Share Units, or other award to any Participant entitles any person to the Grant, or any additional Grant, as the case may be, of any Options, Share Units, or other award under the Plan. For greater certainty, the Board's decision to approve a Grant in any period shall not require the Board to approve a Grant to any Participant in any other period; nor shall the Board's decision with respect to the size or terms and conditions of a Grant in any period require it to approve a Grant of the same or similar size or with the same or similar terms and conditions to any Participant in any other period. The Board shall not be precluded from approving a Grant to any Participant solely because such Participant may have previously received a Grant under this Plan or any other similar compensation arrangement of the Corporation or a Subsidiary. No Eligible Person has any claim or right to receive a Grant except as may be provided in a written employment or services agreement between an Eligible Person and the Corporation or a Subsidiary of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.5</u> <u>Amendment, Termination.</u>**

The Plan and any Grant made pursuant to the Plan may be amended, modified or terminated by the Board without approval of shareholders, provided that no amendment to the Plan or Grants made pursuant to the Plan may be made without the consent of a Participant if it adversely alters or impairs the rights of the Participant in respect of any Grant previously granted to such Participant under the Plan, except that Participant consent shall not be required where the amendment is required for purposes of compliance with Applicable Law. For greater certainty, the Plan may not be amended without shareholder approval in accordance with the requirements of the Stock Exchange to do any of the following:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) increase in the maximum number of Shares issuable pursuant to the Plan and as set out in Section 4.1;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) reduce the Exercise Price of an outstanding Option, except as set forth in Section 5;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) extend the maximum term of any Grant made under the Plan, except pursuant to Sections 8.6 and 13.3;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) amend the assignment provisions contained in Section 6.11;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) increase the number of Shares that may be issued or issuable to Insiders above the restriction or deleting the restriction on the number of Shares that may be issued or issuable to Insiders contained in Section 4.3;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) include other types of equity compensation involving the issuance of Shares under the Plan; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) amend this Section 6.5 to amend or delete any of (a) through (k) or grant additional powers to the Board to amend the Plan or entitlements without shareholder approval.

For greater certainty and without limiting the foregoing, shareholder approval shall not be required for the following amendments and the Board may make the following changes without shareholder approval, subject to any regulatory approvals including, where required, the approval of any Stock Exchange:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) amendments of a "housekeeping" nature;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a change to the Vesting provisions of any Grants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) a change to the termination provisions of any Grant that does not entail an extension beyond the original term of the Grant; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) amendments to the provisions relating to a Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.6</u> <u>Currency.</u>**

All references in the Plan to currency refer to lawful Canadian, U.S. or other currency as determined from time to time by the Board in its sole discretion, failing which the reference shall be deemed to be to Canadian currency except where the context otherwise requires. To the extent that any amounts referenced in this Plan are denominated in a currency other than Canadian dollars or U.S. dollars, and are determined by the Board in its sole discretion to be converted to Canadian dollars, U.S. dollars or other currency, such amounts shall be converted at the applicable Bank of Canada daily exchange rate on the date as of which the converted amount is required to be determined.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.7</u> <u>Administration Costs.</u>**

The Corporation will be responsible for all costs relating to the administration of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.8</u> <u>Designation of Beneficiary.</u>**

Subject to the requirements of Applicable Law, a Participant may designate a Beneficiary, in writing, to receive any benefits that are provided under the Plan upon the death of such Participant. The Participant may, subject to Applicable Law, change such designation from time to time. Such designation or change shall be in such form as may be prescribed by the Board from time to time. A Beneficiary designation under this Section 6.8 and any subsequent changes thereto shall be filed with the general counsel of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.9</u> <u>Governing Law.</u>**

The Plan and any Grants pursuant to the Plan shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, and with respect to Participants who are US Taxpayers, with the Code and applicable federal laws of the US. The Board may provide that any dispute to any Grant shall be presented and determined in such forum as the Board may specify, including through binding arbitration. Any reference in the Plan, in any Grant Agreement issued pursuant to the Plan or in any other agreement or document relating to the Plan to a provision of law or rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability. To the extent applicable, with respect to Participants who are US Taxpayers, this Plan shall be interpreted in accordance with the requirements of Code Section 409A and the regulations, notices, and other guidance of general applicability issued thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.10</u> <u>Assignment.</u>**

The Plan shall inure to the benefit of and be binding upon the Corporation, its successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.11</u> <u>Transferability.</u>**

Unless otherwise provided in the Plan or in the applicable Grant Agreement, no Grant, and no rights or interests therein, shall or may be assigned, transferred, sold, exchanged, encumbered, pledged or otherwise hypothecated or disposed of by a Participant other than by testamentary disposition by the Participant or the laws of intestate succession. No such interest shall be subject to execution, attachment or similar legal process including without limitation seizure for the payment of the Participant's debts, judgments, alimony or separate maintenance.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>6.12</u> <u>Compensation Recovery.</u>**

All Grants, Shares, rights, payments and other consideration received under the Plan shall be subject to (a) the provisions of applicable law providing for the recoupment, clawback or recovery of incentive or other compensation, including Section 304 of the United States Sarbanes-Oxley Act of 2002, Section 954 of the United States Dodd-Frank Wall Street Reform and Consumer Protection Act (enacted as Section 10D of the United States Securities Exchange Act of 1934, as amended) and the requirements of any stock exchange to which the Corporation is subject, (b) the provisions of any Grant Agreement, Restrictive Covenant or other agreement providing for recoupment, clawback or recovery of compensation, including upon violation of any Restrictive Covenant or upon engaging in any conduct or activity that is in conflict with or adverse to the interests of the Corporation or any of its affiliates, and (c) the provisions of any compensation recoupment, clawback, recovery or similar policy of the Corporation that may be in effect or that the Corporation may adopt from time to time.

**7. EFFECTIVE DATE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 The Plan is established effective May 16, 2022 (the "**Effective Date**").

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**PART II - OPTIONS**

**8. OPTIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 The Corporation may, from time to time, make one or more Grants of Options to Eligible Persons on such terms and conditions, consistent with the Plan, as the Board shall determine. In granting such Options, subject to the provisions of the Plan, the Corporation shall specify,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the maximum number of Shares which the Participant may purchase under the Options;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Exercise Price at which the Participant may purchase his or her Shares under the Options; and,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the term of the Options, to a maximum of ten (10) years from the Grant Date of the Options, the Vesting period or periods within this period during which the Options or a portion thereof may be exercised by a Participant and any other Vesting conditions (including Performance Conditions).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 The Exercise Price for each Share subject to an Option shall be fixed by the Board but under no circumstances shall any Exercise Price be less than one hundred percent (100%) of the Market Price on the Grant Date of such Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 Unless otherwise designated by the Board in the applicable Grant Agreement, 25% of the Options of a given Grant shall vest and become exercisable on the first anniversary of the Grant Date and the remaining 75% of the Options shall vest and become exercisable in equal quarterly installments beginning on the 15-month anniversary of the Grant Date and ending on the four-year anniversary of the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 Subject to Section 8.6, Options shall expire on the tenth anniversary of the Grant Date (unless exercised or terminated earlier in accordance with the terms of the Plan or the Grant Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 Subject to the provisions of the Plan and the terms governing the granting of the Option, and subject to payment or other satisfaction of all related withholding obligations in accordance with Section 6.2, Vested Options or a portion thereof may be exercised from time to time by delivery to the Corporation at its registered office of a notice in writing signed by the Participant or the Participant's legal personal representative, as the case may be, and addressed to the Corporation. This notice shall state the intention of the Participant or the Participant's legal personal representative to exercise the said Options and the number of Shares in respect of which the Options are then being exercised and must be accompanied by payment in full of the Exercise Price under the Options which are the subject of the exercise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6 If the normal expiry date of a Participant's Option falls within a Blackout Period applicable to such Participant, then the expiry date of such Option shall, without any further action, be extended to the date that is ten (10) business days following the end of such Blackout Period. The foregoing extension applies to all Options whatever the Grant Date and shall not be considered an extension of the term of the Options as referred to in Section 6.5.

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**9. TERMINATION OF EMPLOYMENT, DEATH, AND DISABILITY - OPTIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 Outstanding Options held by a Participant as of the Participant's Termination shall be subject to the provisions of this Section 9, as applicable; except that, in all events, the period for exercise of Options shall end no later than the last day of the maximum term thereof established under Section 8.1(c), 8.6, or 9.4, as the case may be. Options that are not exercised prior to the expiration of the exercise period, including any extended exercise period authorized pursuant to this Section 9.1, following a Participant's date of Termination or Disability Date, as the case may be, shall automatically expire on the last day of such period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 Subject to the applicable Grant Agreement and Section 9.1, in the case of a Participant's Termination due to death or Disability, (i) all of the Participant's outstanding Options which would have Vested prior to or on the third anniversary of the Grant Date but for the Participant's Termination due to death or Disability shall Vest and be exercisable during the twelve (12) month period following the Participant's date of Termination due to death or Disability Date, and (ii) the Participant's outstanding Options that are unvested on the Participant's date of Termination due to death or Disability Date shall be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 Subject to the applicable Grant Agreement and Section 9.1, in the case of a Participant's Termination for any reason other than death, Disability or for Cause (including resignation or the voluntary withdrawal of services by a Participant who is not an employee under Applicable Law), (i) the Participant's outstanding Options that Vested prior to the Participant's Termination shall be exercisable during the ninety (90) day period following the Participant's Termination and then expire, and (ii) the Participant's outstanding Options that are unvested on the Participant's Termination shall be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 In addition to the Board's rights under Section 3.1, the Board may, at the time of a Participant's Termination or Disability Date, extend the period for exercise of some or all of the Participant's Options, but not beyond the original expiry date, and/or allow for the continued Vesting of some or all of the Participant's Options during the period for exercise or a portion of it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5 Notwithstanding any other provision hereof or in any Grant Agreement, in the case of a Participant's Termination for Cause, any and all then outstanding Vested and unvested Options granted to the Participant shall be immediately forfeited and cancelled, without any consideration as of the Termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6 For greater certainty, a Participant shall have no right to receive Shares or a cash payment, as compensation, damages or otherwise, with respect to any Options that do not become Vested, that have been forfeited, or that are not exercised before the date on which the Options expire, whether related or attributable to any contractual or common law termination entitlements or otherwise**.**

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**PART III - SHARE UNITS**

**10. DEFINITIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 **"Grant Value"** means the dollar amount allocated to an Eligible Person in respect of a Grant of Share Units.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 "**Share Unit Account**" has the meaning set out in Section 12.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 "**Valuation Date**" means the date as of which the Market Price is determined for purposes of calculating the number of Share Units included in a Grant, which unless otherwise determined by the Board shall be the Grant Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 "**Vesting Period**" means, with respect to a Grant of Share Units, the period specified by the Board, commencing on the Grant Date and ending on the last Vesting Date for such Share Units.

**11. ELIGIBILITY AND GRANT DETERMINATION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 The Board may from time to time make one or more Grants of Share Units to Eligible Persons on such terms and conditions, consistent with the Plan, as the Board shall determine, provided that, in determining the Eligible Persons to whom Grants are to be made and the Grant Value for each Grant, the Board shall take into account the terms of any written employment agreement or contract for services between an Eligible Person and the Corporation or any Subsidiary of the Corporation and may take into account such other factors as it shall determine in its sole and absolute discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 The Board shall determine the Grant Value and the Valuation Date (if not the Grant Date) for each Grant under this Part III. The number of Share Units to be covered by each such Grant shall be determined by dividing the Grant Value for such Grant by the Market Price of a Share as at the Valuation Date for such Grant, rounded up to the next whole number.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 Each Grant Agreement issued in respect of Share Units shall set forth, at a minimum, the type of Share Units and Grant Date of the Grant evidenced thereby, the number of RSUs or PSUs subject to such Grant, the applicable Vesting conditions, the applicable Vesting Period(s) and the treatment of the Grant upon Termination and may specify such other terms and conditions consistent with the terms of the Plan as the Board shall determine or as shall be required under any other provision of the Plan. The Board may include in a Grant Agreement under this Part III terms or conditions pertaining to confidentiality of information relating to the Corporation's operations or businesses which must be complied with by a Participant including as a condition of the grant or Vesting of Share Units.

**12. ACCOUNTS AND DIVIDEND EQUIVALENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>12.1</u> <u>Share Unit Account.</u>**

An account, called a "**Share Unit Account**", shall be maintained by the Corporation, or a Subsidiary of the Corporation, as specified by the Board, for each Participant who has received a Grant of Share Units and will be credited with such Grants of Share Units as are received by a Participant from time to time pursuant to Section 11 and any dividend equivalent Share Units pursuant to Section 12.2. Share Units that fail to Vest to a Participant and are forfeited pursuant to Section 13, or that are paid out to the Participant or his or her Beneficiary, shall be cancelled and shall cease to be recorded in the Participant's Share Unit Account as of the date on which such Share Units are forfeited or cancelled under the Plan or are paid out, as the case may be. For greater certainty, where a Participant is granted both RSUs and PSUs, such RSUs and PSUs shall be recorded separately in the Participant's Share Unit Account.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>12.2</u> <u>Dividend Equivalent Share Units.</u>**

Except as otherwise provided in the Grant Agreement relating to a Grant of RSUs or PSUs, if and when cash dividends (other than extraordinary or special dividends) are paid with respect to Shares to shareholders of record as of a record date occurring during the period from the Grant Date under the Grant Agreement to the date of settlement of the RSUs or PSUs granted thereunder, a number of dividend equivalent RSUs or PSUs, as the case may be, shall be credited to the Share Unit of Account of the Participant who is a party to such Grant Agreement. The number of such additional RSUs or PSUs will be calculated by dividing the aggregate dividends or distributions that would have been paid to such Participant if the RSUs or PSUs in the Participant's Share Unit Account had been Shares by the Market Price on the date on which the dividends or distributions were paid on the Shares. The additional RSUs or PSUs granted to a Participant will be subject to the same terms and conditions, including Vesting and settlement terms, as the corresponding RSUs or PSUs, as the case may be.

**13. VESTING AND SETTLEMENT OF SHARE UNITS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.1</u> <u>Vesting.</u>**

Subject to this Section 13 and the applicable Grant Agreement, Share Units subject to a Grant and dividend equivalent Share Units credited to the Participant's

Share Unit Account in respect of such Share Units shall Vest in such proportion(s) and on such Vesting Date(s) as may be specified in the Grant Agreement governing such Grant provided that the Participant has not experienced a Termination on or before the relevant Vesting Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.2</u> <u>Settlement.</u>**

A Participant's RSUs and PSUs, adjusted in accordance with the applicable multiplier, if any, as set out in the Grant Agreement, and rounded down to the nearest whole number of RSUs or PSUs, as the case may be, shall be settled, by a distribution as provided below to the Participant or his or her Beneficiary following the Vesting thereof in accordance with Section 13.1 or 13.6, as the case may be, subject to the terms of the applicable Grant Agreement. In all events, unless the Grant Agreement specifies that RSUs and PSUs must only be settled through the issuance of Shares, settlement will occur upon or as soon as reasonably practicable following Vesting and, in any event, on or before December 31 of the third year following the year in which the Participant performed the services to which the Grant of RSUs or PSUs relates. Settlement shall be made by the issuance of one Share for each RSU or PSU then being settled, a cash payment equal to the Market Price of one Share on the Vesting Date of the RSUs or PSUs being settled in cash (subject to Section 13.3), or a combination of Shares and cash, all as determined by the Board in its discretion, or as specified in the applicable Grant Agreement, and subject to payment or other satisfaction of all related withholding obligations in accordance with Section 6.2.

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For greater certainty, settlement for Participants who are US Taxpayers shall be made by March 15 of the year following the year in which Vesting occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.3</u> <u>Postponed Settlement.</u>**

If a Participant's Share Units would, in the absence of this Section 13.3, be settled within a Blackout Period applicable to such Participant, such settlement shall be postponed until the Trading Day following the date on which such Blackout Period ends (or as soon as practicable thereafter, and in any event, within 10 business days following the end of the Blackout Period), and the Market Price of any RSUs or PSUs being settled in cash will be determined as of the Trading Day immediately prior to the settlement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.4</u> <u>Failure to Vest.</u>**

Subject to the terms of the Grant Agreement and this Section 13, all Share Units that are not Vested and do not become Vested on the Participant's Termination shall be immediately forfeited. For greater certainty, a Participant shall have no right to receive Shares or a cash payment, as compensation, damages or otherwise, whether related or attributable to any contractual or common law notice period or otherwise, with respect to any RSUs or PSUs that do not become Vested or are forfeited hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.5</u> <u>Resignation.</u>**

Subject to the applicable Grant Agreement and Section 13.9, in the event a Participant is Terminated as a result of the Participant's resignation (which is not in connection with a constructive dismissal by the Corporation or a Subsidiary of the Corporation), no Share Units that have not Vested prior to such Termination, including dividend equivalent Share Units in respect of such Share Units, shall Vest and all such Share Units shall be forfeited immediately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.6</u> <u>Death.</u>**

Subject to the applicable Grant Agreement, in the case of a Participant`s Termination due to death, (i) all RSUs granted to the Participant that have not Vested, including dividend equivalent RSUs in respect of such RSUs, prior to the Participant's date of death shall Vest; and (ii) all PSUs granted to the Participant that have not Vested, including dividend equivalent PSUs in respect of such PSUs, prior to the Participant's date of death shall Vest based on target performance under applicable Performance Conditions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.7</u> <u>Disability.</u>**

In the case of a Participant's Disability, Share Units, including Dividend Equivalent Share Units in respect of such Share Units, shall continue to Vest and be settled in accordance with the terms of the Grant Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.8</u> <u>Termination without Cause.</u>**

Subject to the applicable Grant Agreement and Section 13.9, in the event of a Participant's Termination without Cause (which shall include a constructive dismissal by the Corporation or a Subsidiary of the Corporation) the unvested Share Units shall Vest as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the number of unvested RSUs that Vest on Termination is determined by the formula A x B/C, where

A equals the total number of RSUs relating to such Grant that have not previously Vested and dividend equivalent RSUs in respect of such RSUs,

B equals the total number of days between the first day of the Vesting Period relating to such Grant and the Participant's date of Termination, and

C equals total number of days in the Vesting Period relating to such Grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the number of unvested PSUs (if any) that Vest on Termination is determined by the formula A x B/C, where

A equals the total number of PSUs relating to such Grant that have not previously Vested and dividend equivalent PSUs in respect of such PSUs that would have Vested had the Participant not experienced a Termination until the end of the applicable Vesting Period having regard to the extent to which the applicable Performance Conditions were satisfied,

B equals the total number of days between the first day of the Performance Period relating to such Grant and the

Participant's date of Termination, and

C equals total number of days in the Performance Period relating to such Grant.

The Participant shall have no further entitlement to RSUs or PSUs following the Termination and waives any claim to damages in respect thereof whether related or attributable to any contractual or common law termination entitlements or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.9</u> <u>Extension of Vesting.</u>**

The Board may, at the time of Termination or a Disability Date, extend the period for Vesting of Share Units, but not beyond the original end of the applicable Vesting Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>13.10</u> <u>Termination for Cause.</u>**

In the event a Participant is Terminated for Cause by the Corporation or a Subsidiary, no Share Units that have not Vested prior to the date of the Participant's Termination for Cause, including dividend equivalent Share Units in respect of such Share Units, shall Vest after the date of Termination. All Share Units that are outstanding on the date of Termination (vested and unvested) shall be forfeited immediately, except only as may be required to satisfy the express minimum requirements of applicable employment or labour standards legislation. The Participant shall have no further entitlement to Share Units following the Termination and waives any claim to damages in respect thereof whether related or attributable to any contractual or common law termination entitlements or otherwise.

**14. SHAREHOLDER RIGHTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>14.1</u> <u>No Rights to Shares.</u>**

Share Units are not Shares and a Grant of Share Units will not entitle a Participant to any shareholder rights, including, without limitation, voting rights, dividend entitlement or rights on liquidation.

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**Exhibit "A"**

**FSD Pharma Inc. Equity Incentive Plan**

**<u>Special Provisions Applicable to US Taxpayer</u>**

This Exhibit sets forth special provisions of the FSD Pharma Inc. Equity Incentive Plan (the "Plan") that apply to Participants who are US Taxpayers. This Exhibit shall apply to such Participants notwithstanding any other provisions of the Plan. Terms defined elsewhere in the Plan and used herein shall have the meanings set forth in the Plan, as may be amended from time to time.

**Definitions**

"**Disability**" means, solely with respect to an award that constitutes deferred compensation subject to Section 409A of the Code, a "disability" as defined under Section 409A of the Code.

"**Eligible Person**" means a natural person who is a director, officer or employee of, or a consultant or advisor to, the Corporation or any of its Subsidiaries who, by the nature of his or her position or job is, in the opinion of the Board, in a position to contribute to the success of the Corporation; provided, however, a consultant or advisor shall not be an Eligible Person if (a) he or she does not provide bona fide services to the Corporation or any of its Subsidiaries, (b) he or she provides services in connection with the offer or sale of securities in a capital-raising transaction or (c) he or she directly or indirectly promotes or maintains a market for securities of the Corporation. The term Eligible Person also includes former Eligible Persons as well as executors, administrators or beneficiaries of the estates of deceased Eligible Persons, guardians or members of a committee for incompetent former Eligible Persons, or similar persons duly authorized by law to administer the estate or assets of former Eligible Persons, but only for the purpose of the exercise of Stock Options and the subsequent sale of Shares.

"**Market Price**" means, solely with respect to the terms "Exercise Price", (a) if the Shares are listed on the Stock Exchange, the closing price per Share on the Stock Exchange on the Grant Date; (b) if the Shares are listed on more than on Stock Exchange, the fair market value as determined in accordance with paragraph (a) above for the primary Stock Exchange on which the Shares are listed, as determined by the Board; and (c) if the Shares not listed for trading on a Stock Exchange, a price which is determined by the Board in good faith to be the fair market value of the Shares in compliance with the Code Section 409A.

"**Separation from Service**" means such employment or service with the Corporation and any entity that is to be treated as a single employer with the Corporation for purposes of United States Treasury Regulation Section 1.409A-1(h) terminates such that it is reasonably anticipated that no further services will be performed.

"**Specified Employee**" means a US Taxpayer who meets the definition of "specified employee," as defined in Section 409A(a)(2)(B)(i) of the Code.

**Change in Control Treatment**

Notwithstanding anything to the contrary, if the Change in Control event does not constitute a change in ownership or effective control of the Corporation or a change in ownership of a substantial portion of the assets of the Corporation under Section 409A of the Code, and if the Corporation determines any award under the Plan constitutes deferred compensation subject to Section 409A of the Code, then as determined in the sole discretion of the Board, the vesting of such award may be accelerated as of the effective date of the Change in Control, but the Corporation shall pay such award on its original payment date, but in no event more than ninety (90) days following the original payment date.

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**Compliance with Section 409A**

The intent of the parties is that payments and benefits under this Plan comply with or be exempt from the provisions of Section 409A of the Code, to the extent subject thereto, and accordingly, to the maximum extent permitted, this Plan shall be interpreted and administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, a Participant shall not be considered to have terminated employment with the Corporation for purposes of this Plan unless the Participant would be considered to have incurred a Separation from Service from the Corporation. Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes of Section 409A of the Code, and any payments described in this Plan that are due within the "short term deferral period" as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Plan (or any other plan or agreement of the Corporation) during the six (6) month period immediately following the Specified Employee's Separation from Service shall instead be paid on the first business day after the date that is six (6) months following the Specified Employee's Separation from Service (or death, if earlier). The Plan and any award agreements issued thereunder may be amended in any respect deemed by the Board to be necessary in order to preserve compliance with Section 409A of the Code. The Corporation makes no representation that any or all of the payments described in this Plan will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. Each Participant shall be solely responsible for the payment of any taxes and penalties incurred under Section 409A of the Code.

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## Exhibit 4.19

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**EMPLOYMENT AGREEMENT**

**THIS EMPLOYMENT AGREEMENT (this "Agreement") dated January 19, 2022**

**B E T W E E N:**

**Lucid Psycheceuticals, a wholly-owned subsidiary of FSD Pharma Inc. (the "Company")**

<br>- and -<br>

**Kevin Cassidy (the "Employee")<br>**

<br> **RECITALS**

**WHEREAS** the Company wishes to hire the Employee with the Company effective as of February 7, 2022 (the "**Effective Date**"), in the position of Vice-President;

**NOW THEREFORE** in consideration of the mutual covenants and promises and other good and valuable consideration set forth in this Agreement, the parties agree as follows:

**SECTION 1 - EFFECTIVE DATE AND TERM**

**1.1 Effective Date and Term.** The terms and conditions of this Agreement shall become effective on the Effective Date and shall continue indefinitely subject to the termination provisions set forth in <u>Section 4</u>. Notwithstanding the foregoing, the Hire Date is the Employee's hire/anniversary date as it relates to any service-related calculations or entitlements (except as otherwise set out herein).

**SECTION 2- POSITION**

**2.1 Capacity and Services.** The Company shall employ the Employee on a full-time basis in the position of **Vice-President**, reporting directly to the CEO of Lucid (the "**CEO**") or the designate. In this position, the Employee shall perform such duties and have such authority as are normally associated with the Employee's position and as may be assigned, delegated or limited from time to time. At all times, the Employee's employment is conditioned upon his/her/their exercising the Employee's duties with due regard to the Company's Business (as defined below) and the Employee's fiduciary and other obligations to the Company. The Employee shall perform all duties and responsibilities in a manner consistent with all applicable laws as well as with the written policies of the Company in effect from time to time.

**2.2 Other Duties**. The Employee agrees that he/she/they shall seek written permission from the Company regarding any external roles, including board roles, that he/she/they holds or wishes to hold outside of his/her/their employment with the Company, and the Company agrees that it shall not exercise its discretion unreasonably in this regard.

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**SECTION 3 - COMPENSATION AND BENEFITS**

**3.1 Base Salary.** The annual gross base salary of the Employee shall be CDN $206,000 (the "**Base Salary**"), to be pro-rated for any partial year of employment.

**3.2 Discretionary Bonus.** The Employee shall be eligible for an annual bonus based on performance of both the employee and the Company. The bonus is discretionary in the range of 0-20% of base salary, and will be decided by the manager of the employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any cash bonus payable under the Bonus Plan is generally payable within 60 days of completion of the applicable anniversary year;

Except as otherwise set out herein or otherwise required by the express minimum requirements of the *Ontario Employment Standards Act, 2000*, as amended (the "**ESA**"), the Employee will have no entitlement to any award under the Bonus Plan (or any portion thereof), unless he/she/they is employed by the Company at the time that the bonus is paid by the Company (regardless of the reason for the cessation of employment) and by signing this Agreement the Employee waives any claim for compensation or damages in lieu thereof.

**3.3 Share Incentive Plan.** The Employee shall be eligible to be considered by the Board for awards under the Company's Share Incentive Plan or any similar plan maintained by the Company (the "**SIP**") from time to time in the sole discretion of the Board. Any awards under the SIP will be subject to the terms and conditions of the SIP and any applicable award agreement(s). For certainty, except as otherwise set out herein or otherwise expressly required by the ESA, treatment of the Employee outstanding awards under the SIP at the time of cessation of employment (if any) will be addressed in accordance with the terms and conditions of the SIP and any applicable award agreement(s).

**3.4 Benefits.** The Employee shall be eligible to participate in all benefit plans that the Company maintains from time to time for the benefit of similar employees, in accordance with the terms and conditions of the plans. The Company may, at any time and from time to time, modify, suspend, or discontinue any or all such benefits plans with or without prior notice, subject only to the express minimum requirements of the ESA.

**3.5 Paid Time Off.** The Employee shall be entitled to take 21 days of paid time off ("**PTO**") vacation per calendar year, pro-rated for any partial calendar year of employment. This PTO benefit is in addition to the Employee's entitlement to statutory holidays, sick and bereavement leave under the ESA. The Company will allow remaining PTO to be carried over from one calendar year to the next; however, any PTO that is carried over from one calendar year to the next and not used before December 31<sup>st</sup> of the following calendar year shall be forfeited and forever lost without any compensation, subject only to the express minimum requirements of the ESA. The Employee acknowledges that this <u>Section 3.5</u> is a greater right or benefit under the ESA and that in no case will he/she/they receive less vacation pay or holiday pay than that which is expressly required by the ESA.

**3.6 Expenses.** The Company shall reimburse the Employee for the Employee's travel and other expenses or disbursements reasonably and necessarily incurred or made in connection with the Company's business. Expenses will be reimbursed in accordance with policies and practices approved by the Company. The Employee shall furnish statements and receipts for all such expenses prior to reimbursement.

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**SECTION 4 - TERMINATION AND RESIGNATION**

**4.1 Termination for Cause.** The Company may terminate the employment of the Employee at any time for Cause by written notice to the Employee and any additional payments and benefits to which the Employee is expressly entitled under the ESA. For the purposes of this Agreement, "**Cause**" means just cause at common law.

**4.2 Resignation by Employee.** The Employee shall give the Company fourteen (14) days' notice of the resignation (the "**Resignation Period**") of the Employee's employment hereunder; however, it is understood and agreed that the Company shall be entitled to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) waive all or part of that notice and accept the Employee's resignation effective at an earlier date, subject to providing the Employee with his/her/their wages and accrued but unpaid vacation pay up to the end of the Resignation Period, which shall not be less than his/her/their minimum statutory entitlements under the ESA over that period. The Employee agrees that any waiver of the Resignation Period by the Company hereunder shall not amount to a termination of the Employee's employment by the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) assign the Employee transitional or temporary duties through such Resignation Period, or have the Employee work at another location (within reason), and the Employee agrees that these actions by the Company shall not amount to a termination of the Employee's employment by the Company.

**4.3 Termination without Cause.** The Company may terminate the employment of the Employee without Cause at any time, whereupon the Company will provide the Employee with the severance compensation payable pursuant to the terms of section 4.4. It is understood and agreed that a constructive termination of the Employee's employment will constitute a termination without Cause under this Agreement.

**4.4 Severance & Benefit Continuation**. In the event of a termination of the Employee's employment by the Company pursuant to <u>Section 4.3</u>, and subject to the terms of this Agreement, the Company will provide the Employee with a cash payment in an amount equal to one months of Compensation. "**Compensation**" for the purposes of this Section 4.4 means the Employee's Base Salary at the time of the termination. In addition to payment of the Compensation described above, in the event of a termination without cause pursuant to <u>Section 4.3</u>, the Company will continue the Employee's benefits as required by the ESA, in accordance with the terms and conditions of the applicable benefit plans.

**4.5 No Further Claims.** In the event of the Employee's dismissal without cause in accordance with <u>Section 4.3, and upon provision of the payments and other benefits set forth in Section 4.3</u> the Employee will not be entitled to any additional notice, pay in lieu of notice, severance payments or other compensation or entitlements of any kind, pursuant to the common law or otherwise. Notwithstanding the foregoing, in no event will the Employee receive less than his/her/their minimum statutory entitlements as prescribed by the ESA.

**4.6 Release of Claims.** In order to receive any entitlement hereunder in excess of the statutory minimums prescribed by the ESA, (a) the Employee shall first execute a release of claims relating to his/her/their employment, in favour of the Company and its affiliates and in a form provided by the Company, and (b) the Employee shall be in compliance with all of his/her/their obligations to the Company that survive the termination of his/her/their employment.

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**SECTION 5- NON-COMPETITION, CONFIDENTIALITY AND PROPRIETARY RIGHTS**

**5.1 Definitions**. For the purposes of this <u>Section 55</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "**Business**" means the R&D and products in the therapeutic areas that FSD Pharma and its subsidiaries are engaged in**.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **"Customer"** means any commercial or institutional Entity who has: (i) purchased or licensed from the Company or its affiliates (with the Employee's knowledge) any product produced or service supplied, sold, licensed or distributed by the Company; or (ii) supplied to the Company or its affiliates (with the Employee's knowledge) any product to be produced, sold, licensed or distributed by the Company; provided that Customers shall only include any Entity who was a Customer during the twelve (12) months immediately preceding the last date of the Employee's active employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**Entity**" means a partnership, limited partnership, limited liability partnership, company, joint stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and pronouns have a similarly extended meaning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "**Prospective Customer"** means any Entity with which the Company or any of its affiliates was in active discussions about selling products or services related to the Business during the twelve (12) months immediately preceding the last date of the Employee's active employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "**Restricted Period**" means a period of one (1) month immediately following the last day of active employment of the Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "**Territory**" means Canada and the United States.

**5.2 Non-Competition.** During the Restricted Period, the Employee shall not, in the Territory, whether individually or in partnership or jointly or in conjunction with any other person, as principal, agent, consultant, contractor, employer, employee or in any other manner, directly or indirectly, perform any services that are similar to any services that he/she/they provided on behalf of the Company and/or its subsidiaries or other affiliates at any time during the twelve (12) month immediately prior to the Employee's termination of employment with the Company, or establish, control, own a beneficial interest in, or be otherwise commercially involved in any endeavour, activity or business in the Territory that is substantially similar to or competitive with the Business of the Company.

**5.3 Non-Solicitation.** During the Restricted Period, the Employee shall not, either individually or in partnership or jointly or in conjunction with any other person, as principal, agent, consultant, contractor, employer, Employee or in any other manner, directly or indirectly:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Customer for any purpose which is competitive with the Business; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Prospective Customer for any purpose which is competitive with the Business.

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**5.4 Non-Solicitation of Employees.** During the Restricted Period, the Employee shall not, either individually or in partnership or jointly or in conjunction with any other person or entity, as principal, agent, consultant, contractor, employer, employee or in any other manner, directly or indirectly, solicit, induce or entice away or in any other manner persuade or attempt to persuade any officer, employee, consultant or agent of the Company or its affiliated or related entities whom the Employee supervised or had business contact with on behalf of the Company or its affiliated or related entities during the twelve (12) month period immediately prior to the end of the the Employee's employment, to discontinue or alter any one or more of their relationships with the Company or its subsidiaries or related entities. For greater certainty, this <u>Section</u> shall not prohibit general advertisements in electronic or print media through which the Employee has not intentionally targeted any officer, employee, consultant or agent of the Company or its affiliated or related entities and where the first contact with respect thereto is initiated by such officer, Executive, consultant, or agent.

**5.5 Confidentiality.** Except in the normal and proper course of the Employee's duties, the Employee shall not use for the Employee's own account or disclose to anyone else, during or after the Employee's last day of active employment, any confidential or proprietary information or material relating to the Company's operations or business that the Employee obtains from the Company or the Company's subsidiaries and affiliates, and their officers, employees, agents, suppliers or customers or otherwise by virtue of the Employee's employment by the Company. Confidential or proprietary information or material includes, without limitation, the following types of information or material, in whatever form, both existing and contemplated, regarding the Company or any subsidiary or other affiliate of the Company: corporate information, including contractual licensing arrangements, plans, strategies, tactics, policies, resolutions, patent, trade- mark and trade name applications, and any litigation or negotiations; information concerning suppliers; marketing information, including sales, investment and product plans, customer lists, strategies, methods, customers, prospects and market research data; financial information, including cost and performance data, debt arrangements, equity structure, investors and holdings; operational and scientific information, including trade secrets; software; technical information, including technical drawings and designs; and personnel information, including personnel lists, resumes, personnel data, organizational structure and performance evaluations (the "**Confidential Information**"). Confidential Information does not include: (a) information that is in the public domain, unless such information falls into the public domain through unauthorized disclosure or other acts by the Employee; (b) information that was in the Employee's lawful possession prior to the disclosure and has not been obtained by the Employee either directly or indirectly from the Company or its affiliated or related entities; or (c) information that the Employee is required by law to disclose, provided that the Employee provides the Company with prior written notice of such disclosure.

**5.6 Intellectual Property.** All right, title and interest in all inventions, methodologies, concepts, documentation, specifications and any other works developed by the Employee in the scope of and during the course of the Employee's employment (the "**Works**") including all patent, copyright, trade-mark, trade secret and any other intellectual property and proprietary rights therein (the "**Intellectual Property Rights**") shall be the sole and exclusive property of the Company and the Employee hereby assigns and shall assign to the Company all such Intellectual Property Rights and waives all moral rights that the Employee may have in such Works for the benefit of the Company and its successors, assigns and licensees. The Employee represents and warrants that the Works will not infringe the intellectual property and proprietary rights of any third parties. The Employee shall not disclose the Works to any third parties without the prior written consent of Company.

**5.7 Privacy.** The Employee acknowledges and agrees that the Employee will take all necessary steps to protect and maintain the confidentiality of personal information of the Employee's, consultants, customers and suppliers of the Company and its affiliated and related entities obtained in the course of the Employee's employment with the Company. The Company shall at all times comply, and shall assist the Employee to comply, with all applicable privacy laws. The Employee acknowledges and agrees that the disclosure of the Employee's personal information may be required as part of the ongoing operations of the Company's business, as required by law, as part of the Company's audit process, as part of a potential business or commercial transaction or as part of the Company's management of the employment relationship, and the Employee hereby grants consent as may be required by applicable privacy laws to the use and disclosure of personal information for those purposes, to only the limited extent necessary.

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**5.8 Return of Property.** The Employee agrees that all property and documents (including software and information in machine-readable form) of any nature pertaining to activities of the Company or any affiliate or related entity of the Company, including Confidential Information, in the Employee's possession now or at any time during employment, are and shall be the property of the Company or such subsidiary or other related entity, and that all such documents and all copies of them shall be surrendered to the Company whenever requested by the Company. Subject to applicable laws, in the event the Employee does not return such property upon termination of employment or if otherwise requested by the Company, the Company has the right to deduct from any monies owing to the Employee the cost of such property from any amounts due or owing to the Employee.

**5.9 Acknowledgement.** The Employee acknowledges that the Employee's services are unique and extraordinary. The Employee also acknowledges that the Employee's position will give or has given the Employee access to Confidential Information of substantial importance to the Company and its business. The Employee acknowledges that, in connection with the Employee's employment by the Company, the Employee will receive, or will become eligible to receive, substantial benefits and compensation. The Employee acknowledges that the Employee's continued employment by the Company and all compensation and benefits and potential compensation and benefits to the Employee from such employment will be conferred by the Company upon the Employee only because and on condition of the Employee's willingness to commit the Employee's best efforts and loyalty to the Company, including protecting the Company's right to have its Confidential Information protected from non-disclosure by the Employee and abiding by the confidentiality, non-competition, non-solicitation and other provisions herein. The Employee understands the Employee's duties and obligations as set forth in this <u>Section 5</u><u>5</u> and agrees that such duties and obligations would not unduly restrict or curtail the Employee's legitimate efforts to earn a livelihood following any termination of the Employee's employment with the Company.

**5.10 Reasonableness.** The Employee acknowledges that he/she/they has carefully read and considered <u>Section 5</u> and, having done so, agrees that the restrictions set forth in this <u>Section 5</u> are fair and reasonable, and are legitimately required for the protection of the Company's business interests and goodwill. In the event that any part or portion of <u>Section 5</u> is deemed by a court of competent jurisdiction to be overbroad or otherwise invalid, the Employee authorizes such court to enforce the provisions at issue to the fullest extent possible to protect the interests of the Company. In addition, the Employee specifically agrees and understands that the covenants set forth in <u>section 5</u> shall survive the termination of the Employee's employment relationship with the Company.

**SECTION 6 - MISCELLANEOUS COVENANTS**

**6.1 Entire Agreement.** This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. The Employee hereby waives any right to assert a claim based on pre-contractual representations, negligent or otherwise, made by the Company or its representatives.

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**6.2 Successors and Assigns.** The Employee may not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of this Agreement without the prior written consent of the Company (which consent may be arbitrarily withheld for any or no reason) and any assignment or delegation made without such consent shall be void. Nothing shall prevent the Company from assigning any of its rights or obligations under the Agreement. The Employee by the Employee's signature hereto expressly consents to such assignment. This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs, administrators, executors, successors and permitted assigns.

**6.3 Amendment.** No amendment of this Agreement shall be effective unless made in writing and signed by the parties.

**6.4 Waiver.** Any purported waiver of any default, breach or non-compliance under this Agreement shall not be effective unless in writing and signed by the party to be bound by the waiver. No waiver shall be inferred from or implied by any failure to act or delay in acting by a party in respect of any default, breach or non-observance or by anything done or omitted to be done by the other party. The waiver by a party of any default, breach or non-compliance under this Agreement shall not operate as a waiver of that party's rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance (whether of the same or any other nature).

**6.5 Severability.** Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

**6.6 Governing Law.** This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable in that Province and shall be treated, in all respects, as an Ontario contract.

**6.7 Attornment.** The parties agree to attorn to the exclusive jurisdiction of Ontario.

**6.8 Minimum Entitlements.** At no time shall the Employee receive less than his/her/their minimum statutory entitlements under the ESA.

**6.9 Statutory Deductions and Withholdings.** The Company may withhold from any amounts payable under this Agreement such federal or provincial taxes and other statutory deductions that are required by applicable law to be so withheld or deducted. All amounts referenced herein are in Canadian dollars.

**SECTION 7- EMPLOYEE'S ACKNOWLEDGEMENT**

**7.1 Acknowledgement.** The Employee acknowledges that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Part of the Employee's duties shall include entertaining and socializing from time to time in various settings and locations and during weekends. The Employee agrees that if the Employee is not comfortable participating in any such entertainment or social event, the Employee will promptly notify the immediate supervisor. In the absence of any such notification, it is understood that the Employee is voluntarily and/or willingly participating in such entertainment and social events, and does not find them objectionable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Employee has received a copy of this Agreement, and by signing below the Employee hereby accepts its terms and conditions, and agrees that there is good and sufficient consideration for the Employee's obligations contained in this Agreement, including the Employee's obligations arising under this <u>Section 7.1(b)</u>. The Employee acknowledges having been given an opportunity to obtain independent legal advice with respect to the terms and conditions stated herein, and the Employee executes this Agreement freely and voluntarily with full understanding of its contents. The Employee acknowledges that the Employee has not relied on any representations made by the Company except as specifically set forth in this Agreement. In further consideration of the obligations of the Company under this Agreement, and intending to be legally bound, the Employee irrevocably and unconditionally releases and forever discharges the Company and each parent entity, direct or indirect subsidiary, or other entity that is affiliated with the Company, and each shareholder, member, partner, equity holder, director, officer, manager, Executive, trustee and agent of the Company and/or each such affiliated entity (collectively, the "**Company Releasees**") from any and all charges, liabilities, damages or causes of action (including attorneys' fees and costs) of any nature whatsoever, whether known or unknown, disclosed or undisclosed, asserted or unasserted, in law or at equity, that Employee has or holds against any Company Releasee as of the date of this Agreement. These include, without limitation, any claims arising from the Employee's employment by the Company prior to the date of this Agreement, any claims relating to violation of any provincial employment practices or human rights law or regulation, and any claims relating to in any way to improper workplace behaviour, including workplace violence, workplace harassment (including sexual harassment) or discrimination pursuant to the Human Rights Code, the Occupational Health and Safety Act, or any other applicable law or regulation. The Employee further acknowledge and agrees that the Employee has not experienced, nor does the Employee have any basis for, any claim against any Company Releasee described in the immediately preceding sentence. The Employee acknowledges the parties' intent that this <u>Section 7.1(b)</u> shall release and discharge the Company Releasees to the maximum extent permitted by law. Further, the Employee waives irrevocably any right to recover under any claim that may be filed by or to any governmental agency with respect to the Employee's employment with the Company.

***[THE REST OF THE PAGE LEFT INTENTIONALLY BLANK]***

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**IN WITNESS WHEREOF**, the Parties hereto have executed this Agreement on the date first above written.

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| | |
|:---|:---|
| **For Lucid Psycheceuticals a subsidiary of<br>FSD Pharma Inc.** | **For Lucid Psycheceuticals a subsidiary of<br>FSD Pharma Inc.** |
| ***By:*** | ***(Signed) Nathan Coyle*** |
|  | Name: Nathan Coyle<br>Title: CFO FSD Pharma Inc.<br>*I have authority to bind the Company.* |

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## Exhibit 4.20

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**EMPLOYMENT AGREEMENT**

**THIS EMPLOYMENT AGREEMENT (this "Agreement") dated March 21, 2022**

**BETWEEN:**

**Lucid Psycheceuticals, a wholly-owned subsidiary of FSD Pharma Inc. (the "Company")**

<br>- and -<br>

**Dr. Andrzej Chruscinski (the "Employee")**

**<br>RECITALS**

**WHEREAS** the Company wishes to hire the Employee with the Company effective as of March 23, 2022 (the "**Effective Date**"),in the position of Associate Vice-President. Medical Affairs:

**NOW THEREFORE** in consideration of the mutual covenants and promises and other good and valuable consideration set forth in this Agreement, the parties agree as follows:

**SECTION 1 - EFFECTIVE DATE AND TERM**

**1.1 Effective Date and Term.** The terms and conditions of this Agreement shall become effective on the Effective Date and shall continue indefinitely subject to the termination provisions set forth In <u>Section 4.</u> This contract is offered for a term of 2 Years from the effective date and may be renewed with mutual consent. Notwithstanding the foregoing. the Hire Date is the Employee's hire/anniversary date as it relates to any service-related calculations or entitlements (except as otherwise set out herein).

**SECTION 2- POSITION**

**2.1 Capacity and Services.** The Company shall employ the Employee on a full-time basis in the position of Associate Vice-President, Medical Affairs, reporting directly to the CEO of Lucid (the "**CEO**") or the designate. In this position, the Employee shall perform such duties and have such authority as are normally associated with the Employee's position and as may be assigned, delegated or limited from time to time. At all times, the Employee's employment is conditioned upon his/her/their exercising the Employee's duties with due regard to the Company's Business (as defined below) and the Employee's fiduciary and other obligations to the Company. The Employee shall perform all duties and responsibilities in a manner consistent with all applicable laws as well as with the written policies of the Company in effect from time to time.

**2.2 Other Duties.** The Employee agrees that he/she/they shall seek written permission from the Company regarding any external roles, Including board roles, that he/she/ hey holds or wishes to hold outside of his/her/their employment with the\* Company, and the Company agrees that it shall not exercise-Its discretion unreasonably in this regard.

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**SECTION 3 - COMPENSATION AND BENEFITS**

**3.1 Base Salary.** The annual gross base salary of the Employee shall be CDN $175,000 (the <sup>-</sup>Base Salary") to be pro-rated for any partial year of employment.

**3.2 Discretionary Bonus.** The Employee shall be eligible for an annual bonus based on performance of both the employee and the Company. The bonus is discretionary in the range of 0-30% of base salary, and will be decided by the manager of the employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any cash bonus payable under the Bonus Plan is generally payable within 60 days of completion of the applicable anniversary year:

Except as otherwise set out herein or otherwise required by the express minimum requirements of the *Ontario Employment Standards Act. 2000,* as amended (the "**ESA**"), the Employee will have no entitlement to any award under the Bonus Plan for any portion thereof), unless he/she/they is employed by the Company at the time that the bonus is paid by the Company (regardless of the reason for the cessation of employment) and by signing this Agreement the Employee waives any claim for compensation or damages in lieu thereof

**3.3 Share Incentive Plan.** The Employee shall be eligible to be considered by the Board for awards under the Company's Share Incentive Plan or any similar plan maintained by the Company (the "**SIP**") from time to time in the sole discretion of the Board. Any awards under the SIP will be subject to the terms and conditions of the SIP and any applicable award agreement(s). For certainty, except as otherwise set out herein or otherwise expressly required by the ESA. treatment of the Employee outstanding awards under the SIP at the time of cessation of employment (if any) will be addressed in accordance with the terms and conditions of the SIP and any applicable award agreement(s).

**3.4 Benefits.** The Employee shall be eligible to participate in all benefit plans that the Company maintains from time to time for the benefit of similar employees. in accordance with the terms and conditions of the plans. The Company may, at any time and from time to time, modify. suspend. or discontinue any or all such benefits plans with or without prior notice, subject only to the express minimum requirements of the ESA.

**3.5 Paid Time Off.** The Employee shall be entitled to take 14 days of paid time off ("**PTO**") vacation per calendar year, pro-rated for any partial calendar year of employment. This PTO benefit is in addition to the Employee's entitlement to statutory holidays, sick and bereavement leave under the ESA. The Company will allow remaining PTO to be carried over from one calendar year to the next however, any PTO that is carried over from one calendar year to the next and not used before December 31a' of the following calendar year shall be forfeited and forever lost without any compensation, subject only to the express minimum requirements of the ESA The Employee acknowledges that this <u>Section 3 5</u> is a greater right or benefit under the ESA and that in no case will he/she/they receive less vacation pay or holiday pay than that which is expressly required by the ESA.

**3.6 Expenses.** The Company shall reimburse the Employee for the Employee's travel and other expenses or disbursements reasonably and necessarily incurred or made in connection with the Company's business. Expenses will be reimbursed in accordance with policies and practices approved by the Company. The Employee shall furnish statements and receipts for all such expenses prior to reimbursement.

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**SECTION 4 - TERMINATION AND RESIGNATION**

**4.1 Termination for Cause.** The Company may terminate the employment of the Employee at any time for Cause by written notice to the Employee and any additional payments and benefits to which the Employee is expressly entitled under the ESA. For the purposes of this Agreement. "Cause" means just cause at common law.

**4.2 Resignation by Employee.** The Employee shall give the Company fourteen (14) days' notice of the resignation (the "Resignation **Period")** of the Employee's employment hereunder, however, it is understood and agreed that the Company shall be entitled to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) waive all or part of that notice and accept the Employee's resignation effective at an earlier date, subject to providing the Employee with his/her/their wages and accrued but unpaid vacation pay up to the end of the Resignation Period. which shall not be less than his/her/their minimum statutory entitlements under the ESA over that period. The Employee agrees that any waiver of the Resignation Period by the Company hereunder shall not amount to a termination of the Employee's employment by the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) assign the Employee transitional or temporary duties through such Resignation Period, or have the Employee work at another location (within reason), and the Employee agrees that these actions by the Company shall not amount to a termination of the Employee's employment by the Company.

**4.3 Termination without Cause.** The Company may terminate the employment of the Employee without Cause at any time, whereupon the Company will provide the Employee with the severance compensation payable pursuant to the terms of section 4.4. It is understood and agreed that a constructive termination of the Employee's employment will constitute a termination without Cause under this Agreement.

**4.4 Severance & Benefit Continuation.** In the event of a termination of the Employee's employment by the Company pursuant to <u>Section 4.3</u> and subject to the terms of this Agreement, the Company will provide the Employee with a cash payment in an amount equal to one months of Compensation. **"Compensation"** for the purposes of this Section 4.4 means the Employee's Base Salary at the time of the termination. In addition to payment of the Compensation described above, In the event of a termination without cause pursuant to <u>Section 4.3,</u> the Company will continue the Employee's benefits as required by the EM, In accordance with the terms and conditions of the applicable benefit plans.

**4.5 No Further Claims.** In the event of the Employee's dismissal without cause in accordance with <u>Section 4.3</u> and upon provision of the payments and other benefits set forth in <u>Section 4.3</u> the Employee will not be entitled to any additional notice, pay in lieu of notice, severance payments or other compensation or entitlements of any kind, pursuant to the common law or otherwise. Notwithstanding the foregoing, in no event wilt the Employee receive less than histher/thefr minimum statutory entitlements as prescribed by the ESA.

**4.6 Release of Claims.** In order to receive any entitlement hereunder In excess of the statutory minimums prescribed by the ESA, (a) the Employee shall first execute a release of claims relating to hisfher/their employment, in favour of the Company and its affiliates and in a form provided by the Company, and (b) the Employee shall be in compliance with all of his/her/their obligations to the Company that survive the termination of his/her/their employment.

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**- 4 -**

**SECTION 5- NON-COMPETITION, CONFIDENTIALITY AND PROPRIETARY RIGHTS**

**5.1 Definitions.** For the purposes of this <u>Section 55:</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) "Business"** means the R&D and products in the therapeutic areas that FSD Pharma and its subsidiaries are engaged in.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) "Customer"** means any commercial or institutional Entity who has: (i) purchased or licensed from the Company or its affiliates (with the Employee's knowledge) any product produced or service supplied, sold, licensed or distnbuted by the Company; or (ii) supplied to the Company or its affiliates (with the Employee's knowledge) any product to be produced, sold, licensed or distributed by the Company: provided that Customers shall only Include any Entity who was a Customer during the twelve (12) months immediately preceding the last date of the Employee's active employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) "Entity"** means a partnership, limited partnership, limited liability partnership, company, Joint stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and pronouns have **a** similarly extended meaning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) 'Prospective Customer'**means any Entity with which the Company or any of its affiliates was in active discussions about selling products or services related to the Business during the twelve (12) months immediately preceding the last date of the Employee's active employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) "Restricted Period" means** a period of one (1) month immediately following the last day of active employment of the Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f) "Territory" means Canada and the United States.**

**5.2 Non-Competition.** During the Restricted Period, the Employee shall not, in the Territory, whether individually or in partnership or jointly or in conjunction with any other person, as principal, agent, consultant, contractor, employer, employee or in any other manner, directly or indirectly, perform any services that are similar to any services that he/she/they provided on behalf of the Company and/or its subsidiaries or other affiliates at any time during the twelve (12) month immediately prior to the Employee's termination of employment with the Company, or establish, control, own a beneficial interest in, or be otherwise commercially involved in any endeavour, activity or business in the Territory that is substantially similar to or competitive with the Business of the Company.

**5.3 Non-Solicitation. During the Restricted Period. the** Employee shall not, either individually or in partnership or jointly or in conjunction with any other person, as principal, agent, consultant, contractor, employer, Employee or in any other manner, directly or indirectly:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Customer for any purpose which is competitive with the Business: or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Prospective Customer for any purpose which is competitive with the Business.

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**-5-**

**5.4 Non-Solicitation of Employees.** During the Restricted Period, the Employee shall not. either individually or in partnership or jointly or In conjunction with any other person or entity, as principal, agent, consultant, contractor, employer, employee or in any other manner, directly or indirectly, solicit, induce or entice away or In any other manner persuade or attempt to persuade any officer, employee, consultant or agent of the Company or its affiliated or related entities whom the Employee supervised or had business contact with on behalf of the Company or its affiliated or related entities during the twelve (12) month period immediately prior to the end of the Employee's employment, to discontinue or alter any one or more of their relationships with the Company or Its subsidiaries or related entities. For greater certainty, this <u>Section</u> shall not prohibit general advertisements in electronic or print media through which the Employee has not Intentionally targeted any officer, employee, consultant or agent of the Company or its affiliated or related entities and where the first contact with respect thereto is initiated by such officer, Executive, consultant, or agent.

**5.5 Confidentiality.** Except in the normal and proper course of the Employee's duties, the Employee shall not use for the Employee's own account or disclose to anyone else, during or after the Employee's last day of active employment, any confidential or proprietary Information or material relating to the Company's operations or business that the Employee obtains from the Company or the Company's subsidiaries and affiliates, *and* their officers, employees, agents, suppliers or customers or otherwise by virtue of the Employee's employment by the Company. Confidential or proprietary information or material includes, without limitation, the following types of information or material, In whatever form, both existing and contemplated, regarding the Company or any subsidiary or other affiliate of the Company: corporate Information, Including contractual licensing arrangements, plans, strategies, tactics, policies, resolutions, patent, trade- mark and trade name applications, and any litigation or negotiations; information concerning suppliers; marketing information, including sales, investment and product plans, customer lists, strategies, methods, customers, prospects and market research data; financial information, including cost and performance data, debt arrangements, equity structure, Investors and holdings; operational and scientific Information, including trade secrets; software; technical information, including technical drawings and designs; and personnel information, including personnel lists, resumes, personnel data, organizational structure and performance evaluations (the **"Confidential Information").** Confidential Information does not include: (a) information that is in the public domain, unless such information falls into the public domain through unauthorized disclosure or other acts by the Employee; (b) information that was in the Employee's lawful possession prior to the disclosure and has not been obtained by the Employee either directly or Indirectly from the Company or its affiliated or related entities; or (c) information that the Employee is required by law to disclose, provided that the Employee provides the Company with prior written notice of such disclosure.

**6.6 Intellectual Property.** All right, title and interest in all Inventions, methodologies, concepts, documentation, specifications and any other works developed by the Employee in the scope of and during the course of the Employee's employment (the **"Works')** including all patent, copyright, trade-mark, trade secret and any other intellectual property and proprietary rights therein (the **intellectual Property Rights")** shall be the sole and exclusive property of the Company and the Employee hereby assigns and shall assign to the Company all such Intellectual Property Rights and waives all moral rights that the Employee may have in such Works for the benefit of the Company and its successors, assigns and licensees. The Employee represents and warrants that the Works will not Infringe the intellectual property and proprietary rights of any third parties. The Employee shall not disclose the Works to any third parties without the prior written consent of Company.

**5.7 Privacy. The** Employee acknowledges and agrees that the Employee will take all necessary steps to protect and maintain the confidentiality of personal information of the

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Employee's, consultants, customers and suppliers of the Company and Its affiliated and related entities obtained In the course of the Employee's employment with the Company. The Company shall at all times comply, and shall assist the Employee to comply, with all applicable privacy laws. The Employee acknowledges and agrees that the disclosure of the Employee's personal information may be required as part of the ongoing operations of the Company's business, as required by law, as part of the Company's audit process, as part of a potential business or commercial transaction or as part of the Company's management of the employment relationship. and the Employee hereby grants consent as may be required by applicable privacy laws to the use and disclosure of personal Information for those purposes, to only the limited extent necessary.

**5.8 Return of Property.** The Employee agrees that all property and documents (including software and information in machine-readable form) of any nature pertaining to, activities of the Company or any affiliate or related entity of the Company, Including Confidential Information, in the Employee's possession now or at any time during employment. are and shall be the property of the Company or such subsidiary or other related entity, and that all such documents and all copies of them shall be surrendered to the Company whenever requested by the Company. Subject to applicable taws, in the event the Employee does not return such property upon termination of employment or if otherwise requested by the Company, the Company has the right to deduct from any monies owing to the Employee the cost of such property from any amounts due or owing to the Employee.

**5.9 Acknowledgement.** The Employee acknowledges that the Employee's services are unique and extraordinary. The Employee also acknowledges that the Employee's position will give or has given the Employee access to Confidential Information of substantial importance to the Company and its business. The Employee acknowledges that, in connection with the Employee's employment by the Company, the Employee will receive, or will become eligible to receive, substantial benefits and compensation. The Employee acknowledges that the Employee's continued employment by the Company and all compensation and benefits and potential compensation and benefits to the Employee from such employment will be conferred by the Company upon the Employee only because and on condition of the Employee's willingness to commit the Employee's best efforts and loyalty to the Company, including protecting the Company's right to have its Confidential Information protected from non-disclosure by the Employee and abiding by the confidentiality, non-competition, non-solicitation and other provisions herein. The Employee understands the Employee's duties and obligations as set forth In this <u>Section 5</u> and agrees that such duties and obligations would not unduly restrict or curtail the Employee's legitimate efforts to earn a livelihood following any termination of the Employee's employment with the Company.

**5.10 Reasonableness.** The Employee acknowledges that he/she/they has carefully read and considered <u>Section 5</u> and, having done so, agrees that the restrictions set forth in this <u>Section 5</u> are fair and reasonable, and are legitimately required for the protection of the Company's business interests and goodwill. In the event that any part or portion of <u>Section 5</u> is deemed by a court of competent jurisdiction to be overbroad or otherwise Invalid, the Employee authorizes such court to enforce the provisions at issue to the fullest extent possible to protect the interests of the Company. In addition, the Employee specifically agrees and understands that the covenants set forth in <u>section 5</u> shall survive the termination of the Employee's employment relationship with the Company.

**SECTION 6 - MISCELLANEOUS COVENANTS**

**6.1 Entire Agreement.** This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. The Employee hereby waives any right to assert a claim based on pre-contractual representations, negligent or otherwise, made by the Company or its representatives.

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**6.2** Successors and Assigns. The Employee may not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of this Agreement without the prior written consent of the Company (which consent may be arbitrarily withheld for any or no reason) and any assignment or delegation made without such consent shall be void. Nothing shall prevent the Company from assigning any of its rights or obligations under the Agreement. The Employee by the Employee's signature hereto expressly consents to such assignment. This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs. administrators, executors, successors and permitted assigns.

**6.3** Amendment. No amendment of this Agreement shall be effective unless made in writing and signed by the parties.

**6.4 Waiver.** Any purported waiver of any default, breach or non-compliance under this Agreement shall not be effective unless in writing and signed by the party to be bound by the waiver. No waiver shall be inferred from or implied by any failure to act or delay in acting by a party in respect of any default, breach or non-observance or by anything done or omitted to be done by the other party, The waiver by a party of any default, breach or non-compliance under this Agreement shall not operate as a waiver of that party's rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance (whether of the same or any other nature),

**6.5 Severability.** Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

**6.6 Governing Law.** This Agreement shall be governed by and construed In accordance with the laws of the Province of Ontario and the laws of Canada applicable in that Province and shall be treated, in all respects, as an Ontario contract.

**6.7 Attornment.** The parties agree to attom to the exclusive jurisdiction of Ontario.

**6.8 Minimum Entitlements.** At no time shall the Employee receive less than his/her/their minimum statutory entitlements under the ESA

**6.9 Statutory Deductions and Withholdings.** The Company may withhold From any amounts payable under this Agreement such federal or provincial taxes and other statutory deductions that are required by applicable law to be so withheld or deducted. All amounts referenced herein are in Canadian dollars.

**SECTION 7- EMPLOYEE'S ACKNOWLEDGEMENT**

**7.1 Acknowledgement.** The Employee acknowledges that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Part of the Employee's duties shall include entertaining and soaalizing from time to time in various settings and locations and dunng weekends. The Employee agrees that if the Employee is not comfortable participating In any such entertainment or social event, the Employee will promptly notify the immediate supervisor. In the absence of any such notification, it is understood that the Employee is voluntarily and/or willingly participating In such entertainment and social events, and does not find them objectionable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Employee has received a copy of this Agreement, and by signing below the Employee hereby accepts its terms and conditions, and agrees that there is good and sufficient consideration for the Employee's obligations contained in this Agreement, including the Employee's obligations arising under this <u>Section 7.1141.</u> The Employee acknowledges having been given an opportunity to obtain independent legal advice with respect to the terms and conditions stated herein, and the Employee executes this Agreement freely and voluntarily with full understanding.of its contents. The Employee acknowledges that the Employee has not relied on any representations made by the Company except as specifically set forth in this Agreement. In further consideration of the obligations of the Company under this Agreement, and intending to be legally bound, the Employee Irrevocably and unconditionally releases and forever discharges the Company and each parent entity, direct or indirect subsidiary, or other entity that is affiliated with the Company, and each shareholder, member, partner, equity holder, director, officer, manager, Executive, trustee and agent of the Company and/or each such affiliated entity (collectively, the **"Company Releasees")** from any and all charges. liabilities, damages or causes of action (including attorneys' fees and costs) of any nature whatsoever, whether known or unknown, disclosed or undisclosed, asserted or unasserted, in law or at equity, that Employee has or holds against any Company Releasee as of the date of this Agreement. These include, without limitation, any claims arising from the Employee's employment by the Company prior to the date of this Agreement, any claims relating to violation of any provincial employment practices or human rights law or regulation, and any claims relating to in any way to improper workplace behaviour, including workplace violence, workplace harassment (including sexual harassment) or discrimination pursuant to the Human Rights Code, the Occupational Health and Safety Act, or any other applicable law or regulation. The Employee further acknowledge and agrees that the Employee has not experienced, nor does the Employee have any basis for, any claim against any Company Releasee described in the immediately preceding sentence. The Employee acknowledges the parties' intent that this <u>Section 7.1(41</u> shall release and discharge the Company Releasees to the maximum extent permitted by law. Further, the Employee waives irrevocably any right to recover under any claim that may *be* filed by or to any governmental agency with respect to the Employee's employment with the Company.

***[THE REST OF THE PAGE LEFT INTENTIONALLY BLANK]***

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**IN WITNESS WHEREOF the Parties hereto have executed this Agreement on the date** first above written

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| | | |
|:---|:---|:---|
| **SIGNED. SEALED AND DELIVERED in** | **Employee** | **Employee** |
| **the presence of:** |  |  |
|  | ***(Signed) Andrzej Chruscinski*** | ***(Signed) Andrzej Chruscinski*** |
| **Witness** | **Andrzej Chruscinski, MD, PhD** | **Andrzej Chruscinski, MD, PhD** |
|  | **For Lucid Psycheceuticals a subsidiary of FSD Pharma Inc.** | **For Lucid Psycheceuticals a subsidiary of FSD Pharma Inc.** |
|  |  | ***(Signed) Nathan Coyle*** |
|  |  | Name: Nathan Coyle<br>Title: CFO FSD **Pharma Inc**<br>*I have authority to bind the Company* |

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## Exhibit 8.1

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| | |
|:---|:---|
| &nbsp;&nbsp;**Subsidiaries** | &nbsp;&nbsp;**Subsidiaries** |
| **Name of Subsidiary** | **State or Other Jurisdiction of Incorporation** |
| FSD Australia Pty Ltd. | Australia |
| FSD BioSciences, Inc. | Delaware |
| FSD Strategic Investments Inc. | Ontario, Canada |
| FV Pharma Inc. | Ontario, Canada |
| Lucid Psycheceuticals Inc. | Ontario, Canada |
| Prismic Pharmaceuticals, Inc. | Arizona |

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## Exhibit 12.1

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**Exhibit 12.1**

**CERTIFICATION REQUIRED BY RULE 13a-14(a) UNDER THE**<br>**SECURITIES EXCHANGE ACT OF 1934**

I, Anthony Durkacz, certify that:

1. I have reviewed this annual report on Form 20-F of FSD Pharma Inc.;

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

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

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

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

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

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

d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

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

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

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

---

| | | |
|:---|:---|:---|
| Date: March 31, 2023 | By: | /s/ Anthony Durkacz |
|  |  | Anthony Durkacz |
|  |  | Interim Chief Executive Officer and Co-Executive Chairman<br>(Principal Executive Officer) |

---

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## Exhibit 12.2

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**Exhibit 12.2**

**CERTIFICATION REQUIRED BY RULE 13a-14(a) UNDER THE**<br>**SECURITIES EXCHANGE ACT OF 1934**

I, Nathan Coyle, certify that:

1. I have reviewed this annual report on Form 20-F of FSD Pharma Inc.;

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

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

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

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

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

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

d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

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

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

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

---

| | | |
|:---|:---|:---|
| Date: March 31, 2023 | By: | /s/ Nathan Coyle |
|  |  | Nathan Coyle |
|  |  | Chief Financial Officer<br>(Principal Financial Officer) |

---

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## Exhibit 13.1

------

**Exhibit 13.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. §1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 20-F of FSD Pharma Inc. (the "Company") for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony Durkacz, Interim Chief Executive Officer and Co-Executive Chairman of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

---

| | | |
|:---|:---|:---|
| Date: March 31, 2023 | By: | /s/ Anthony Durkacz |
|  |  | Anthony Durkacz |
|  |  | Interim Chief Executive Officer and Co-Executive Chairman<br>(Principal Executive Officer) |

---

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

------

## Exhibit 13.2

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**Exhibit 13.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. §1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 20-F of FSD Pharma Inc. (the "Company") for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Nathan Coyle, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

---

| | | |
|:---|:---|:---|
| Date: March 31, 2023 | By: | /s/ Nathan Coyle |
|  |  | Nathan Coyle |
|  |  | Chief Financial Officer<br>(Principal Financial Officer) |

---

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

------

## Exhibit 15.1

------

**FSD PHARMA INC.**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF**

**OPERATIONS**

*As used in this management's discussion and analysis of financial condition and results of operations ("MD&A"), unless the context indicates or requires otherwise, all references to the "Company", "FSD", "we", "us" or "our" refer to FSD Pharma Inc., together with our subsidiaries, on a consolidated basis as constituted on December 31, 2022.*

*This MD&A for the three months ended and fiscal years ended December 31, 2022 and 2021 should be read in conjunction with the Company's audited consolidated financial statements and the accompanying notes for the fiscal years ended December 31, 2022, 2021 and 2020 ("financial statements"). The financial information presented in this MD&A is derived from the financial statements which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All amounts are in United States dollars except where otherwise indicated.*

*This MD&A is dated as of March 31, 2023.*

**About FSD Pharma**

FSD Pharma Inc. is a biotechnology company with three drug candidates in different stages of development. FSD BioSciences, Inc., a wholly owned subsidiary, is focused on pharmaceutical research and development of its lead compound, FSD201, a proprietary ultra-micronized PEA formulation, for the treatment of inflammatory diseases. Lucid Psycheceuticals Inc., a wholly owned subsidiary, is focused on the research and development of its lead compounds, Lucid-Psych and Lucid-MS. Lucid-Psych is a molecular compound identified for the potential treatment of mental health disorders, and expanding this category, the Company is investigating other products addressing acute medical needs due to the abuse of drugs such as alcohol. Lucid-MS is a molecular compound identified for the potential treatment of neurodegenerative disorders.

**FORWARD-LOOKING INFORMATION**

*The information provided in this MD&A, including information incorporated by reference, contains certain "forward-looking information" or "forward-looking statements" within the meaning of Canadian securities laws and United States securities laws (collectively, "forward-looking statements"). Forward-looking statements relate to future events or future performance, business prospects or opportunities of the Company that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management made in light of management's experience and perception of historical trends, current conditions and expected future developments. All statements other than statements of historical fact may be forward-looking statements.* 

<br> *Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking statements. forward-looking statements are often, but not always, identified by words or phrases such as "hope", "would", "seek", "anticipate", "believe", "expect", "plan", "continue", "estimate", "will", "predict", "intend", "forecast", "future", "target", "project", "capacity", "could", "should", "might", "focus", "proposed", "scheduled", "outlook", "potential", "may" or similar expressions and includes suggestions of future outcomes, including, but not limited to statements about: discussions concerning the Company's exploration of near-term funding strategies; the Company's plans to advance the research & development of product candidates to commercialization through studies and clinical trials, including anticipated timing and associated costs; the application and the costs associated with such planned trials, and the Company's ability to obtain required funding and the terms and timing thereof; the expansion of our product offering(s), our business objectives and the expected impacts of previously announced acquisitions and developments; the investigational new drug U.S. Food and Drug Administration ("FDA") and Health Canada application process and any review thereof and its affects on our business objectives. Readers are cautioned not to place undue reliance on forward-looking statements as the Company's actual results may differ materially and adversely from those expressed or implied. The Company has made certain assumptions with respect to the forward-looking statements regarding, among other things: the Company's ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Company operates; the interest of potential purchasers in the Company's product candidates; anticipated and unanticipated costs; the government regulation of* 

------

*the Company's activities and product candidates; the timely receipt of any required regulatory approvals; the Company's ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the Company's ability to conduct operations in a safe, efficient and effective manner; and the Company's expansion plans and timeframe for completion of such plans.*

*Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that such statements will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially and adversely from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the limited operating history of the Company and history of losses, and anticipated significant losses for the foreseeable future incurred to pursue commercialization of product candidates; the Company's inability to file INDs (as defined below) or clinical trial applications on timelines it reasonably anticipates, if at all; the Company's ability to identify, license or discover additional product candidates; the product candidates being in the preclinical development stage; the Company's reliance on its product candidates; the Company's ability to successfully develop new commercialized products or find a market for their sale; the impact of any future recall of the Company's products; the Company's ability to promote and sustain its products, including any restrictions or constraints on marketing practices under the regulatory framework in which the Company operates; failure to achieve the degree of market acceptance and demand for our products or product candidates by physicians, patients, healthcare payors, and others in the medical community which are necessary for commercial success, including due to the possibility that alternative, superior treatments may be available prior to the approval and commercialization of product candidates, should such approval be received at all; failure of clinical trials to demonstrate substantial evidence of the safety and/or effectiveness of product candidates, which could prevent, delay or limit the scope of regulatory approval and commercialization, including from difficulties encountered in enrolling patients in clinical trials, and reliance on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, or results from future clinical testing which may demonstrate opposing evidence and draw negative conclusions regarding the effectiveness of any product candidate, including the effectiveness of Lucid-MS as a treatment for multiple sclerosis or Lucid-PSYCH as a treatment for major depressive disorder or other mental health disorders; results of earlier studies or clinical trials not being predictive of future clinical trials and initial studies or clinical trials not establishing an adequate safety or efficacy profile for the Company's product candidates to justify proceeding to advanced clinical trials or an application for regulatory approval; potential side effects, adverse events or other properties or safety risks of the Company's product candidates, which could delay or halt their clinical development, prevent their regulatory approval, cause suspension or discontinuance of clinical trials, abandonment of a product candidate, limit their commercial potential, if approved, or result in other negative consequences; preliminary, interim data obtained from the Company's clinical trials that it may announce or publish from time to time may not be indicative of future scientific observations or conclusions as more patient data becomes available, further analyses are conducted, and as the data becomes subject to subsequent audit and verification procedures; inability to establish sales and marketing capabilities, or enter in to agreements with third parties, to sell and market any product candidates that the Company may develop; the ability to provide the capital required for research, product development, operations and marketing; violations of laws and regulations resulting in repercussions; risks inherent in an pharmaceutical business and the development and commercialization of pharmaceutical products, including the inability to accurately predict timing or amounts of expenses, requirements of regulatory authorities, and completion of clinical studies on anticipated timelines, which may encounter substantial delays or may not be able to be completed at all; delays in clinical trials; psychedelic-inspired drugs possibly never being approved as medicines or other therapeutic applications; the Company's inability to attain or maintain the regulatory approvals it needs in any jurisdiction to commercialize, distribute or sell any product candidate or other pharmaceutical products; failure of counterparties to perform contractual obligations; changes, whether anticipated or not, in laws, regulations and guidelines that may result in significant compliance costs for the Company, including in relation to restrictions on branding and advertising, regulation of distribution and excise taxes; uncertainty associated with insurance coverage and reimbursement status for newly-approved pharmaceutical products, which could result in product candidates becoming subject to unfavourable pricing regulations, third-party coverage and reimbursement practices, or healthcare reform initiatives, including legislative measures aimed at reducing healthcare costs; the effect that any public health crises, such as pandemics or epidemics may have on the Company's business; the price of our securities may be volatile due to a variety of factors, including volatility in the capital markets generally, geopolitical events, public health emergencies, macro economic pressures and natural disasters; the Company's anticipated negative cash flow from operations and non-profitability for the foreseeable future; the inability to obtain required additional financing on terms favourable to the Company or at all; the dilutive effects of future sales or issuances of equity securities and the conversion of outstanding securities to Class B Shares (as defined below); the Company's dual class share structure; the market price of the Class B Shares possibly being subject to wide price fluctuations; whether an active trading market for the Company's Class B Shares is sustained; the Company's ability to maintain compliance with Nasdaq's rules for continued listing on the Nasdaq Stock Market; the Company's ability to identify and execute future acquisitions or dispositions effectively, including the ability to successfully manage the impacts of such*

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*transactions on its operations; lack of dividends, and reinvestment of retained earnings, if any, into the Company's business; the Company's reliance on management, key persons and skilled personnel; reliance on contract manufacturing facilities; manufacturing problems that could result in delay of the Company's development or commercialization programs; the Company's expected minimal environmental impacts; insurance and uninsured risks; claims from suppliers; conflicts of interest between the Company and its directors and officers; the Company's ability to manage its growth effectively; the Company's ability to realize production targets; supply chain interruptions and the ability to maintain required supplies of, equipment, parts and components; the Company's ability to successfully implement and maintain adequate internal controls over financial reporting or disclosure controls and procedures; results of litigation; the dependence of the Company's operations, in part, on the maintenance and protection of its information technology systems, and the information technology systems of its third-party research institution collaborators, CROs or other contractors or consultants, which could face cyber-attacks; failure to execute definitive agreements with entities in which the Company has entered into letters of intent or memoranda of understanding; unfavourable publicity or consumer perception towards the product candidates; reputational risks to third parties with whom the Company does business; failure to comply with laws and regulations; the Company's reliance on its own market research and forecasts; competition from other technologies and pharmaceutical products, including from synthetic production, new manufacturing processes and new technologies, and expected significant competition from other companies with similar businesses, and significant competition in an environment of rapid technological and scientific change; the Company's ability to safely, securely, efficiently and cost-effectively transport our products to consumers; liability arising from any fraudulent or illegal activity, or other misconduct or improper activities that the Company's directors, officers, employees, contractors, consultants, commercial partners or vendors may engage in, including noncompliance with regulatory standards and requirements; unforeseen claims made against the Company, including product liability claims or regulatory actions; reliance on single-source suppliers, including single-source suppliers for the acquisition of the drug substance and drug product for any of the product candidates; inability to obtain or maintain sufficient intellectual property protection for the Company's product candidates; third-party claims of intellectual property infringement; patent terms being insufficient to protect competitive position on product candidates; inability to obtain patent term extensions or non-patent exclusivity; inability to protect the confidentiality of trade secrets; inability to protect trademarks and trade names; filing of claims challenging the inventorship of the Company's patents and other intellectual property; invalidity or unenforceability of patents, including legal challenges to patents covering any of the product candidates; claims regarding wrongfully used or disclosed confidential information of third parties; inability to protect property rights around the world; the impact of general economic conditions on the Company's mortgage investment activities; risks related to the Company's status as a foreign private issuer; the Company taking advantage of reduced disclosure requirements applicable to emerging growth companies; the Company's classification as a "passive foreign investment company"; that the Company's international business operations, including expansion to new jurisdictions, could expose it to regulatory risks or factors beyond our control such as currency exchange rates and changes in governmental policy; risks related to expansion of international operations; the Company's ability to produce and sell products in, and export products to, other jurisdictions within and outside of Canada and the United States, which is dependent on compliance with additional regulatory or other requirements; regulatory regimes of locations for clinical trials outside of Canada and the United States; failure to obtain approval to commercialize product candidates outside of Canada and the United States; if clinical trials are conducted for product candidates outside of Canada and the United States, the FDA, Health Canada and comparable regulatory authorities may not accept data from such trials, or the scope of such approvals from regulatory authorities may be limited; and other factors beyond the Company's control.*

*The Company cautions that the foregoing list of important risk factors and uncertainties is not exhaustive. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated, intended or projected. There is no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. You should carefully consider the matters discussed under "Risks Factors" in our Short Form Base Shelf Prospectus dated June 16, 2020, Prospectus Supplement dated February 11, 2021 and in the section of our Annual Report on Form 20-F, for the year ended December 31, 2022, titled "Item 3. Key Information—D. Risk Factors".*

*The forward-looking statements contained or incorporated by reference in this MD&A are made as of the date of this MD&A or as otherwise specified. Except as required by applicable securities law, we undertake no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of factors affecting those statements, whether as a result of new information, future events or otherwise or the foregoing lists of factors affecting this information.*

*All of the forward-looking information contained in this MD&A is expressly qualified by the foregoing cautionary statements.*

*Additional information relating to FSD can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.*

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**OVERVIEW** 

The Company was formed under and is governed by the provisions of the *Business Corporations Act* (Ontario) (the "OBCA") on November 1, 1998 pursuant to the amalgamation of Olympic ROM World Inc., 1305206 Ontario Company, 1305207 Ontario Inc., Century Financial Capital Group Inc. and Dunberry Graphic Associates Ltd. The Company's registered office is located at 199 Bay Street, Suite 4000, Toronto, Ontario, M5L 1A9.

On March 15, 2018, the Company's shareholders approved the amendments contemplated by the Articles of Amendment at the 2018 annual and special meeting of the shareholders, pursuant to which, among other things, the Company's shareholders approved certain changes to the capital structure of the Company.

On May 24, 2018, pursuant to Articles of Amendment, the Company changed its name to "FSD Pharma Inc." and the capital structure of the Company was reorganized to create a new class of Class A shares, amend the terms of and re-designate the existing common shares as Class B shares (the "Class B Shares), and eliminate the existing non-voting Class A preferred shares and non-voting Class B preferred shares.

On May 29, 2018, the Class B shares commenced trading on the Canadian Stock Exchange under the trading symbol "HUGE".

On October 16, 2019, the Company amended its articles of incorporation to complete a consolidation of all of its issued and outstanding share capital. Pursuant to the amendment, all of the issued and outstanding Class A shares and Class B shares were consolidated on the basis of one post-consolidation share for every 201 pre-consolidation shares of the Company (the "Consolidation"). Unless otherwise noted, presentation in this MD&A of the number of Class A shares, Class B shares, stock options, warrants and the issue or exercise prices and any other data related to the foregoing securities are all presented on a post-Consolidation basis.

On January 9, 2020, the Class B Shares commenced trading on the Nasdaq under the trading symbol "HUGE".

The Company operates in two segments: Biotechnology and Strategic Investments. The Company's Biotechnology segment is focused on furthering the research and development of the Company's three drug candidates consisting of FSD-PEA, Lucid-PSYCH and Lucid-MS, as further defined below. The Company's Strategic Investments segment is focused on generating returns and cashflow through the issuance of loans secured by real estate property. The loans are secured by real estate properties and the Company is granted a first collateral charge mortgage on the properties for a sum equal to the interest payments plus the principal amount.

As of the date hereof, the Company currently has five material subsidiaries:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) FSD Biosciences Inc. ("FSD BioSciences"), which is wholly owned by the Company and incorporated under the laws of the State of Delaware;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Lucid Psycheceuticals Inc. ("Lucid"), which is wholly owned by the Company and incorporated under the OBCA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Prismic Pharmaceuticals Inc. ("Prismic"), which is wholly owned by the Company and incorporated under the laws of the State of Arizona;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) FSD Strategic Investments Inc. ("FSD Strategic Investments"), which is wholly owned by the Company and incorporated under the OBCA; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) FSD Pharma Australia Pty Ltd. ("FSD Australia"), which is wholly owned by the Company and incorporated under the laws of Australia.

The Company also wholly owns FV Pharma Inc. ("FV Pharma"), which is incorporated under the OBCA. Following the sale of substantially all of the assets of FV Pharma in 2022, the Company no longer considers FV Pharma a material subsidiary.

**BIOTECHNOLOGY OPERATIONS** 

The Company through its wholly owned subsidiaries, FSD BioSciences, Prismic, Lucid and FSD Australia is a pharmaceutical research and development ("R&D") company focused on developing over time multiple applications of its three compounds:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Ultra micro-palmitoylethanolamide ("PEA") or FSD-PEA (also known as FSD-201), which is a licensed compound (as described below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Lucid-PSYCH (formerly Lucid-201); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Lucid-MS (formerly Lucid-21-302), which is a licensed compound (as described below).

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Through the acquisition of Prismic, the Company acquired an exclusive, worldwide license (excluding Italy and Spain) to access, for certain specified pharmaceutical purposes, patents and other intellectual property rights to PEA owned by Epitech Group SpA ("Epitech"). Pursuant to a royalty agreement between Prismic and FSD Pharma, Prismic holds the right to receive, from FSD, a percentage of the net sales of products developed for conditions relating to pain in humans and certain other conditions using certain intellectual property owned or controlled by Epitech or its affiliates, including those relating to PEA. PEA is a naturally occurring substance that is produced within the body in response to inflammation. FSD Pharma is currently seeking to advance pharmaceutical development programs centered on PEA that meet one or more selected criteria. All efforts are intended to be founded on a biological plausibility of an efficacious effect with a high safety profile.

The Company has successfully completed Phase 1 first-in-human safety and tolerability study for PEA and has found the compound to be safe with no serious adverse side effects. This study also validated considerable scientific literature already published in the European Union that claims safety and tolerability of PEA. PEA is currently being dispensed in Italy and Spain as a prescription based medical food supplement since 2004.

The Company received permission from the FDA in June 2020 to submit an IND Application for the use of PEA to treat COVID-19, the disease caused by the SARS-CoV-2 virus.

The Company submitted to the FDA an IND Application for the use of PEA in August 2020. In September 2020, the Company received authorization from the FDA to initiate Phase 2 clinical program for the use of PEA to treat COVID-19. On August 24, 2021, the Company announced it was terminating the Phase 2 clinical program specific to treating COVID-19, while the Company continues to evaluate other indications to potentially target for PEA. The Company had retained an independent biotechnology and pharma-focused investment banking firm to evaluate FSD-PEA's current potential commercial viability for COVID-19 treatment (the "FSD-PEA Review"). The findings of the FSD-PEA Review suggested that while there were potential commercial opportunities for FSD-PEA, the treatment of COVID-19 by FSD-PEA is specifically unlikely to be commercially viable.

On May 31, 2022, the Company submitted an IND application with the FDA and Health Canada detailing a planned Phase 2 clinical trial of FSD-PEA for the treatment of a yet-to-be-disclosed inflammatory disorder.

On July 13, 2022, the Company filed a provisional patent application on novel formulations of PEA. The new patent application is based on the results of completed preclinical animal toxicology studies and the Phase 1 clinical trial sponsored by FSD Pharma.

On September 6, 2022, the Company announced that it received a "Study May Proceed" letter for the IND application from the FDA and "Notice of Authorization" from Health Canada for its Phase 2 clinical trial of FSD-PEA.

On January 17, 2023, the Company announced the submission of the Company's clinical trial application for a planned Phase 1 clinical trial for Lucid-MS, a candidate for the treatment of multiple sclerosis.

On January 30, 2023, the Company announced that recruitment is underway for the Company's Phase 2 clinical trial of FSD201 for the treatment of chronic pain associated with idiopathic MCAS (MCAD) at two clinical sites in the USA, and a Canadian site to be ready to recruit soon.

On February 7, 2023, the Company announces the receipt of a No Objection Letter ("NOL") from Health Canada regarding the Company's proposed Phase 1 clinical trial of Lucid-MS. The NOL provides FSD Pharma with regulatory approval to move forward with the clinical trial in Canada.

On February 14, 2023, the Company announced the launch of a new research and development program focused on unmet medical needs for alcohol misuse.

*Epitech License Agreement*

On January 8, 2020, the Company entered into an amended and restated license agreement with Epitech, as further amended in July 2020 (defined in this subsection as the "License Agreement"), which amended and restated the license agreement between Prismic and Epitech through which Prismic secured certain intellectual property rights to PEA from Epitech. The License Agreement grants the Company an exclusive, worldwide license (excluding Italy and Spain where the Company is not licensed and Epitech remains entitled to commercialize the Licensed Products (as defined herein), directly or indirectly) (the "Epitech License") to research, manufacture and commercialize products (defined in this subsection as the "Licensed Products") that are developed using certain proprietary formulations of PEA owned by Epitech and that are to be used to treat chronic kidney disease in humans or, if a prescription drug, any other human condition that is related to pain and chronic pain. In addition, under the terms of the Epitech License, as further amended on July 9, 2020, if Epitech develops or commercializes a prescription drug for the treatment of any other human condition unrelated to pain and chronic pain (a "Different Prescription Drug") in its territory,

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the Company has a first refusal right to use Epitech's patents to develop and commercialize this Different Prescription Drug in its territory (i.e. worldwide excluding Italy and Spain). Should the Company exercise this right, but then fail to demonstrate commercially reasonable efforts to develop the Different Prescription Drug in the two years following, Epitech would be free to exploit and/or license to third parties the use of the patents for the Different Prescription Drug. Finally, the Epitech License provides the Company with a nonexclusive license to use Epitech's scientific and technical know-how with respect to FSD-PEA in connection with the development or commercialization of the Licensed Products discussed above.

Under the terms of the License Agreement, the Company is required to make payments to Epitech upon the achievement of specified milestones. The Company was required to pay the non-refundable sum of $300,000 on or before October 31, 2019. Upon first notification by the FDA of approval of a New Drug Application, the non-refundable sum of $700,000 is due and payable to Epitech. Within thirty days of the first notification by the FDA of approval of a New Drug Application, the Company is required to pay the non-refundable sum of $500,000. Within ten business days of the first notification of approval of a Supplemental New Drug Application by the FDA, the Company is required to pay the non-refundable sum of $1,000,000 to Epitech.

The License Agreement also specifies certain royalty payments. Pursuant to the License Agreement, the Company must pay Epitech 25% (in the case of non-prescription drug rights) and 5% (in the case of prescription drug rights) of any one-off lump sum payments it receives as consideration for granting a sub-license to a third-party with respect to a Licensed Product. In addition, the Company is required to pay either: (a) 7% of net sales of the Licensed Products in a product regulatory category other than prescription drugs placed on the market by the Company; (b) 25% of the royalties received by the Company from sub-licensees (such royalties, the "Net Receipts") where Licensed Products in a product regulatory category other than prescription drugs are placed on the market by such sub-licensees; or (c) 5% of net sales or Net Receipts of the Licensed Products that are prescription drugs.

Unless otherwise terminated in accordance with its terms, the Epitech License will remain in force until the Company is no longer obligated to pay royalties under the License Agreement, which obligation will expire on a country-by-country basis when the last valid claim of the Licensed Patents covering the Licensed Products in a given country expires. The approval of a therapeutically equivalent, generic version of the Licensed Product(s) in a country will conclusively demonstrate that a valid claim does not cover the Licensed Products in that country. If there are no patents covering the Licensed Products in a country, royalties are payable for the license of the scientific and technical know-how under the Epitech License until expiration of the last-to expire Epitech patent that relates to PEA.

The above description of the License Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which is available under the Company's SEDAR and EDGAR profiles.

*Innovet License Agreement*

On March 9, 2021, the Company entered into the Innovet License Agreement (defined in this subsection as the "License Agreement") with Innovet Italia S.R.L. ("Innovet"). The License Agreement grants the Company an exclusive, worldwide license (excluding Italy, and subject to a first refusal right maintained by Innovet, any other country in Europe) to research, manufacture and commercialize products using certain proprietary formulations of ultra-micro PEA (defined in this subsection as the "Licensed Products") to treat gastro-intestinal diseases in canines and felines. The License Agreement provides that the Company shall develop the Licensed Products with a view to submitting an Investigational Animal Drug Application with the FDA within thirty-six (36) months of the date of the agreement and shall submit a New Animal Drug Application within sixty (60) months of the effective date of the agreement.

Under the terms of the License Agreement, the Company will be required to make payments to Innovet upon the achievement of specified milestones. An initial non-refundable sum of $500,000 was payable to Innovet on the effective date of the License Agreement and a second non-refundable sum of $250,000 was payable to Innovet on the first anniversary of the effective date of the License Agreement. Within thirty business days of the first notification of approval of a New Animal Drug Application by the FDA of the first Licensed Product to receive such approval in the United States, the Company is required to pay an additional non-refundable sum of $750,000 to Innovet. None of the specified milestones have been met to date and there is no guarantee or assurance that they will be met in the future.

The License Agreement also specifies certain royalty payments. Pursuant to the License Agreement, the Company is required to pay Innovet 14% of any one-off lump sum payments it receives as consideration for granting a sub-license to a third-party with respect to a Licensed Product. In addition, the Company is required to pay 5% of net sales of the Licensed Products.

The above description of the License Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which is available under the Company's SEDAR and EDGAR profiles.

------

*Lucid-MS Agreement*

On May 19, 2021, prior to its acquisition by the Company, Lucid entered into a license agreement with the University Health Network ("UHN") that governs the world-wide licensing of certain intellectual property rights and data associated with Lucid-MS. Under the terms of the agreement, the Company shall pay a yearly license maintenance fee of C$100,000 to UHN until the first commercial sale of a product utilizing the intellectual property licensed to the Company under the agreement, including Lucid-MS is made.

Under the agreement the Company is committed to minimum milestones payments of $nil and maximum milestones payments of C$12,500,000 if all product development and regulatory milestones are met.

Furthermore, the Company is also responsible to pay revenue milestone payments and royalties if revenue milestones from commercial sales are achieved. Milestones can be extended by mutual agreement.

*Lucid-PSYCH Agreement*

On October 1, 2021, the Company entered into an agreement with Covar Pharmaceuticals Inc. ("Covar"), a contract development and manufacturing services organization, to commence work on providing research quantities of the Company's drug candidate, Lucid-PSYCH, on an exclusive basis for further clinical evaluation (the "Covar Agreement"). Covar's research and development facility is licensed to handle psychoactive compounds such as Lucid-PSYCH, which are "controlled substances" listed under the Controlled Drugs and Substances Act (Canada). Pursuant to the Covar Agreement, Covar will produce non-good manufacturing practices and good manufacturing practices for Lucid-PSYCH for use in the Company's planned pre-clinical and Phase 1 clinical trials, respectively.

**STRATEGIC INVESTMENT OPERATIONS**

On May 13, 2022, FSD Strategic Investments, a wholly owned subsidiary of the Company, was incorporated. FSD Strategic Investments is focused on generating returns and cashflow through the issuance of loans secured by real estate property. FSD Strategic Investments earns interest through fixed rate lending arrangements that have an average term to maturity of two years from the date of issuance. The loans are secured by real estate properties and the Company is granted a first collateral charge mortgage on the properties for a sum equal to the interest payments plus the principal amount. Loans are issued up to 55% of the appraised value of the secured property. As at December 31, 2022, the Company has a finance receivables balance of $7,431,656, and minimum payments receivable at the end of the loan terms of $8,340,953. All of the Company's outstanding finance receivables as of December 31, 2022, will mature between June 2024 and December 2024.

**DISCONTINUED OPERATIONS** 

In March 2020, the Company decided to focus its efforts and resources on the pharmaceutical business and initiated a process to sell FV Pharma's facility located at 520 William Street, Cobourg, Ontario, K9A 3A5 (the "Facility") and the 64-acre property on which the Facility is located (the "Facility Property") and exit the medical cannabis industry. On May 6, 2022, the Company closed the sale of the Facility and the Facility Property for total consideration of $12,730,942 (C$16,400,000). The Company recognized a gain of $4,249,582 on the sale of the Facility and the Facility Property and incurred selling expenses of $616,002.

Assets included in the sale consisted of the Facility and Facility Property. No liabilities of the Company were transferred as part of the sale.

**ACQUISITION OF LUCID**

On September 21, 2021, the Company acquired all of the issued and outstanding common shares of Lucid, an early-stage Canadian-based specialty pharmaceutical company focused on the development of therapies to treat critical neurodegenerative diseases for total consideration of $7,290,731. In connection with the closing of the Lucid acquisition, Dr. Lakshmi Kotra, maintained his position as Lucid's CEO.

Prior to the acquisition, the Company's interim CEO and Executive Co-Chairman of the Board beneficially held approximately 4.5% ownership interest in Lucid through an entity related to this individual.

It was determined that the acquisition of Lucid did not qualify as a business combination in accordance with IFRS 3 - Business Combinations, and therefore it was accounted for as an asset acquisition. The individual identifiable assets acquired and liabilities assumed were identified. The purchase consideration was first allocated to the fair values of the acquired cash and

------

cash equivalents, other receivables, and trade and other payables, as their carrying values was determined to equal their fair values. The remaining purchase price was allocated to the acquired intangible assets.

The total consideration for the purchase of Lucid was $7,290,731. The purchase consideration consisted of $7,023,732 of Class B shares, $196,436 of share options and $70,563 of warrants. 304,880 Class B Shares and all of the warrants issued as part of the consideration for the Lucid acquisition were issued to an entity related to the interim CEO and Executive Co-chairman of the Board in exchange for securities of Lucid held by the entity prior to the completion of the Lucid acquisition. The fair value of the Class B shares was determined based on a total of 4,502,392 shares issued and a fair value of $1.56 per share, which reflects the share price on the date of acquisition. The fair value of the 161,091 share options and 112,162 warrants issued as part of the consideration were determined using the Black-Scholes options pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **Warrants** | **Share Options** |
| Grant date share price | $1.56 | $1.56 |
| Exercise Price | $0.96 - $1.93 | $1.35 - $2.31 |
| Expected dividend yield | - | - |
| Risk free interest rate | 0.43% | 0.43% - 0.79% |
| Expected life (years) | 1.19 - 1.28 | 2.23 - 4.28 |
| Annualized volatility | 88% | 124% |

---

The allocation of the total consideration to the fair value of the identifiable assets acquired and liabilities assumed as at the date of the acquisition was as follows:

---

| |
|:---|
| **Fair value recognized on acquisition** |
| Cash and cash equivalents |
| Other receivables |
| Prepaid expenses and deposits |
| Intangible assets |
| Trade and other payables |

---

The Company also capitalized $128,320 of acquisition related costs to the acquired intellectual property.

**SELECTED FINANCIAL HIGHLIGHTS** 

The following table presents selected financial information for the three months and years ended December 31, 2022 and 2021:

---

| |
|:---|
| General and administrative |
| External research and development fees |
| Share-based payments |
| Depreciation and amortization |
| Total operating expenses |
| Net loss from continuing operations**))** |
| Net income (loss) from discontinued operations |
| Net loss for the period**)**)**)** |
| Net (loss) income per share |
| Basic and diluted - continuing operations**))** |
| Basic and diluted - discontinued operations) |

---

------

The following table presents selected financial information for the three months and years ended December 31, 2021 and 2020:

---

| |
|:---|
| General and administrative |
| External research and development fees |
| Share-based payments |
| Depreciation and amortization |
| Legal provision |
| Impairment of right-of-use asset |
| Total operating expenses |
| Net loss from continuing operations**))** |
| Net loss from discontinued operations**))** |
| Net loss for the period**)**)**)** |
| Net loss per share |
| Basic and diluted - continuing operations**))** |
| Basic and diluted - discontinued operations)**)** |

---

**OVERALL FINANCIAL PERFORMANCE**

*Three months and year ended December 31, 2022*

For the three months and year ended December 31, 2022, general and administrative expenses were $2,300,502 and $14,450,094, respectively, compared to $3,817,541 and $15,926,103 for the comparative periods in the prior year. This represents a decrease of $1,517,039 or 40% for the three months ended December 31, 2022, and a decrease of $1,476,009 or 9% for the year ended December 31, 2022, compared to the equivalent periods in the prior year. The decrease for the three months ended December 31, 2022, is primarily related to lower expenses offset by higher consulting fees. The decrease for the year ended December 31, 2022, is primarily related to lower expenses offset by higher foreign exchange loss.

For the three months and year ended December 31, 2022, external research and development fees were $2,694,955 and $6,910,844 respectively, compared to $852,393 and $6,328,104 for the comparative periods in the prior year. This represents

an increase of $1,842,562 or 216% for the three months ended December 31, 2022, and an increase of $582,740 or 9% for the year ended December 31, 2022, compared to the equivalent periods in the prior year. For the three months and year ended December 31, 2022, external research and development fees were higher due costs incurred for ongoing research and development compared to the equivalent periods in the prior year, as the Company terminated Phase 2 Safety and Tolerability testing and COVID-19 study in August 2021.

For the three months and year ended December 31, 2022, share-based payments expense was $506,583 and $1,531,258 compared to $341,567 and $7,443,930, respectively, for the comparative periods in the prior year. This represents an increase of $165,016 or 48%, and a decrease of $5,912,672 or 79% compared to the equivalent periods in the prior year, respectively. Share-based payment expenses fluctuate based on the variability in the number of share-based awards granted, vesting periods of the awards and the grant date fair values.

For the three months and year ended December 31, 2022, depreciation and amortization was $1,157,735 and $4,537,415 compared to $1,107,477 and $4,045,523, respectively, for the comparative periods in the prior year. This represents an increase of $50,258 or 5%, and an increase of $491,892 or 12% compared to the equivalent periods in the prior year, respectively. Depreciation and amortization are primarily related to the amortization of intellectual property.

For the three months and year ended December 31, 2022, net loss was $6,148,441 and $23,606,828 compared to $6,347,723 and $35,100,839, respectively, for the comparative periods in the prior year. Net loss for the three months and year ended December 31, 2022, is comprised of net loss from continuing operations of $6,148,441 and $26,703,662 and net income from discontinued operations of $nil and $3,096,834, respectively, compared to net loss from continuing operations for the three months and year ended December 31, 2021 of $6,163,133 and $33,937,956 and net loss from discontinued operations of $184,590 and $1,347,473.

------

---

| | | | |
|:---|:---|:---|:---|
|  | **As at December 31, As at December 31,** | **As at December 31, As at December 31,** |  |
|  | **2022** | 2021**Change** | **Change** |
|  | **$** | **$** | **%** |
| Cash and cash equivalents | **16980472** | 35259645) | -52% |
| Total assets | **38410656** | 62963117) | -39% |
| Total liabilities | **7868436** | 8832079) | -11% |

---

The Company concluded the year ended December 31, 2022, with cash and cash equivalents of $16,980,472 (December 31, 2021 - $35,259,645).

*Three months and year ended December 31, 2021*

For the three months and year ended December 31, 2021, general and administrative expenses were $3,817,541 and $15,926,103, respectively, compared to $2,323,347 and $10,058,083 for the comparative periods in the prior year. This represents an increase of $1,494,194 or 64% for the three months ended December 31, 2021, and an increase of $5,868,020 or 58% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. The increase for the three months ended December 31, 2021, is primarily related to investor relations expenses. The increase for the year ended December 31, 2021, is primarily related to one-time professional fees incurred during the period due to litigation and the process leading up to the Company's contested annual general and special meeting of the shareholders held on May 14, 2021.

For the three months and year ended December 31, 2021, external research and development fees were $852,393 and $6,328,104, respectively, compared to $2,456,010 and $7,832,847 for the comparative periods in the prior year. This represents a decrease of $1,603,617, or 65% for the three months ended December 31, 2021, and a decrease of $1,504,743 or 19% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. For the three months ended December 31, 2020, and the year ended December 31, 2020, external research and development fees were incurred for the research and development of PEA, for Phase 2 Safety and Tolerability testing and COVID-19 study that terminated in August 2021.

For the three months and year ended December 31, 2021, share-based payments expense was $341,567 and $7,443,930, respectively, compared to $215,255 and $8,052,011 for the comparative periods in the prior year. This represents an increase of $126,312 or 59% for the three months ended December 31, 2021, and a decrease of $608,081 or 8% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. Share-based payments expense changes based on the variability in the number of options granted, vesting periods of the options, the grant date fair values and share-based bonuses issued.

For the three months and year ended December 31, 2021, depreciation and amortization was $1,107,477 and $4,045,523, respectively, compared to $967,957 and $3,900,458 for the comparative periods in the prior year. This represents an increase of $139,520 or 14% for the three months ended December 31, 2021, and an increase of $145,065 or 4% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. Depreciation and amortization are primarily related to the amortization of intellectual property.

For the three months and year ended December 31, 2021, net loss was $6,347,723 and $35,285,429, respectively, compared to $4,378,271 and $31,799,793 for the three months and year ended December 31, 2020. Net loss for the three months and year ended December 31, 2021, is comprised of net loss from continuing operations of, respectively, $6,163,133 and $33,937,956 and net loss from discontinued operations of, respectively, $184,590 and $1,347,473 compared to net loss from continuing operations for the three months and year ended December 31, 2020 of, respectively, $3,964,147 and $28,452,232 and net loss from discontinued operations of, respectively, $414,124 and $3,347,561.

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**RESULTS OF OPERATIONS 2022**

The following table outlines our consolidated statements of loss for three months and years ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Three months ended December 31,** | **For the years ended December 31,** |
| Change | ChangeChange | Change |
|  | % | % |
| **Expenses** |  |  |
| General and administrative) | -40%) | -9% |
| External research and development fees | 216% | 9% |
| Share-based payments | 48%) | -79% |
| Depreciation and amortization | 5% | 12% |
| **Total operating expenses** | 9%) | -19% |
| **Loss from continuing operations)** | 9%**)** | -19% |
| Other income**)** | 100%**)** | 28362% |
| Finance expense) | -100%) | -30% |
| Loss (gain) on settlement of financial liability | 100%**)** | 140% |
| Gain on change in fair value of derivative liability**)** | -78%**)** | -24% |
| Loss (gain) on changes in fair value of investments**)** | -110%) | -73% |
| **Net loss from continuing operations)** | 0%**)** | -21% |
| Net income (loss) from discontinued operations | -100%) | -330% |
| **Net loss)** | -3%**)** | -33% |

---

**REVIEW OF OPERATIONS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2022 AND 2021**

*General and administrative*

General and administrative expenses for the three months and years ended December 31, 2022 and 2021 are comprised of:

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| | | | |
|:---|:---|:---|:---|
| **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| **Change** | **2022** | 2021**Change** | **Change** |
| **%** | **$** | $| **%** |
| -44% | **5208356** | 6256165) | -17% |
| -37% | **2838303** | 3479801) | -18% |
| 132% | **1452070** | 2196812) | -34% |
| -9% | **2798074** | 2856887) | -2% |
| -89% | **1495695** | 1642653) | -9% |
| -100% | **519954** | 759590) | -32% |
| 991% | **1323242** | 146587 | 803% |
| -43% | **15635694** | 17338495) | -10% |
| -40% | **14450094** | 15926103) | -9% |
| -100% | **1185600** | 1412392) | -16% |

---

*Professional fees*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021**Change** | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| Professional fees | **708888** | 1257870) | -44% | **5208356** | 6256165) | -17% |

---

Professional fees decreased from $1,257,870 to $708,888 or 44% and decreased from $6,256,165 to $5,208,356 or 17% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. The Company incurred approximately $1,700,000 of legal fees directly related to non-recurring litigation expenses during the year ended December 31, 2022. For the three months and year ended December 30, 2021, the Company incurred expenses related to litigation and the Company's contested annual general and special shareholders meeting held on May 14, 2021. Professional fees fluctuate from period to period based on the nature of the transactions the Company undertakes.

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*General office, insurance and administration expenditures* 

General office, insurance and administration expenditures for the three months and years ended December 31, 2022 and 2021 are comprised of the following:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021**Change** | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| Insurance, shareholders and public company costs | **137088** | 561519) | -76% | **1200835** | 2678906) | -55% |
| Travel, meals and entertainment | **74698** | 70844 | 5% | **277863** | 212496 | 31% |
| Office and general administrative | **357048** | 273041 | 31% | **1359605** | 588399 | 131% |
| **General office, insurance and administration expenditures** | **568834** | 905404) | -37% | **2838303** | 3479801) | -18% |

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*Insurance, shareholders and public company costs*

Insurance, shareholders and public company costs decreased from $905,404 to $568,834 or 37% and decreased from $3,479,801 to $2,838,303 or 18% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. These costs primarily consist of insurance and other related expenditures associated with being a publicly listed Company on the NASDAQ. The primary reason for the decrease for the three months and year ended December 31, 2022, compared to the equivalent periods in the prior year is a decrease in the cost of director and officers' insurance and shareholders and public company costs.

*Travel, meals and entertainment*

Travel, meals and entertainment expenses increased from $70,844 to $74,698 or 5% and increased from $212,496 to $277,863 or 31% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. Travel, meals and entertainment expenses fluctuate from period to period based on the nature of the transactions the Company undertakes.

*Office and general administrative*

Office and general administrative expenses increased from $273,041 to $357,048 or 31% and increased from $588,399 to $1,359,605 or 131% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. The primary reason for the increase is due to selling expenses incurred related to the sale of the Facility and Facility Property. Office and general administrative expenses may vary from period to period based on operational activities.

*Consulting fees*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021 | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| $**%** | **$** | $| **%** |
| Consulting fees | **431171** | 186119 | 132% | **1452070** | 2196812) | -34% |

---

Consulting fees increased from $186,119 to $431,171 or 132% and decreased from $2,196,812 to $1,452,070 or 34% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes.

*Salaries, wages and benefits*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021**Change** | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| Salaries, wages and benefits | **622988** | 686001) | -9% | **2798074** | 2856887) | -2% |

---

Salaries, wages and benefits expenses decreased from $686,001 to $622,988 or 9% and decreased from $2,856,887 to $2,798,074 or 2% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. During the year ended December 31, 2022, the Company paid one-time bonus payments to the CEO, COO, President and Lucid CEO in the amount of C$180,000 each. During the year ended December 31, 2021, the Company incurred

------

non-recurring expenses in connection with the termination of employment of employees during the period and employer health tax offset.

*Investor relations*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021**Change** | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| Investor relations | **102742** | 948669) | -89% | **1495695** | 1642653) | -9% |

---

Investor relations expenses decreased from $948,669 to $102,742 or 89% and decreased from $1,642,653 to $1,495,695 or 9% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. Spending on investor relations and marketing varies from period to period based on the Company's strategy.

*Building and facility costs*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021**Change** | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| Building and facility costs | **-** | 46805) | -100% | **519954** | 759590) | -32% |

---

Building and facility costs decreased from $46,805 to $nil or 100% and decreased from $759,590 to $519,954 or 32% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. Such costs include property taxes, security services, repairs and maintenance expenditures and utilities. The decrease was due to the sale of the Facility and Facility Property in May 2022.

*Foreign exchange loss (gain)*

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| **Change** | **Change** | **2022** | 2021 | **Change** |
|  | **%** | **$** | $| $**%** |
| Foreign exchange loss (gain)**)** | 991% | **1323242** | 146587 | 803% |

---

Foreign exchange loss (gain) increased from gain of $12,299 and to gain of $134,121 and increased from loss of $146,587 to loss of $1,323,242 for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. The primary reason for the foreign exchange change was due to the change of the Canadian dollar relative to the US dollar and its impact on monetary assets and liabilities denominated in the Canadian dollar.

*External research and development fees*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021 | **Change** | **2022** | 2021 | **Change** |
|  | **$** | $| $**%** | **$** | $| $**%** |
| External research and development fees | **2694955** | 852393 | 216% | **6910844** | 6328104 | 9% |

---

External research and development fees increased from $852,393 to $2,694,955 or 216% and increased from $6,328,104 to $6,910,844 or 9% for the three months and year December 31, 2022, respectively, compared to the equivalent periods in the prior year. For the three months and year ended December 31, 2022, external research and development fees were higher due costs incurred for ongoing research and development compared to the equivalent periods in the prior year, as the Company terminated Phase 2 Safety and Tolerability testing and COVID-19 study in August 2021.

*Share-based payments*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021 | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| $**%** | **$** | $| **%** |
| Share-based payments | **506583** | 341567 | 48% | **1531258** | 7443930) | -79% |

---

Share-based payments increased from $341,567 to $506,583 and decreased from $7,443,930 to $1,531,258 for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. Share-based

------

payment expenses fluctuate based on the variability in the number of share-based awards granted, vesting periods of the awards and the grant date fair values. The decrease during the year ended December 31, 2022, compared to the equivalent period in the prior year is primarily due to a share-based bonus issued in February 2021 of $3,576,875 compared to $nil during the year ended December 31, 2022.

*Depreciation and amortization*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021 | **Change** | **2022** | 2021 | **Change** |
|  | **$** | $| $**%** | **$** | $| $**%** |
| Depreciation and amortization | **1157735** | 1107477 | 5% | **4537415** | 4045523 | 12% |

---

Depreciation and amortization increased from $1,107,477 to $1,157,735 or 5% and increased from $4,045,523 to $4,537,415 or 12% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. The increase in depreciation and amortization is primarily related to intangible asset additions.

*Other income*

Other income increased from $nil to $300,018 or 100% and increased from $1,292 to $367,735 or 28362% for the three months and year ended December 31, 2022, respectively, compared to the equivalent periods in the prior year. The increase is primarily due to monthly interest payments received related to finance receivables and interest income earned on short term Guaranteed Investment Contracts.

*Finance expense*

For the three months and year ended December 31, 2022, finance expense was $135 and $48,822 compared to $29,205 and $69,404 for equivalent period in the prior year, respectively. Finance expense is primarily comprised of interest on notes payable assumed on acquisition of Prismic Pharmaceuticals in June 2019.

*Loss (gain) on settlement of financial liability*

For the three months and year ended December 31, 2022, the Company recognized a loss on settlement of financial liabilities of $506 and a gain of $119,453, compared to $nil and a gain of $49,792, for the three months and year ended December 31, 2021.

*Loss (gain) on change in fair value of derivative liability*

In August 2020, the Company issued warrants as part of a private placement that did not meet the IFRS definition of equity due to the exercise price being denominated in United States Dollar, which was not the functional currency of the Company at the time resulting in a variability in exercise price. As such, the warrants were recognized as a derivative liability with a fair value of $3,289,069 at the time of issuance.

The fair value of the warrants liability as at December 31, 2022 was $243,594 resulting in a gain on change in fair value of $521,809 for the year ended December 31, 2022. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $0.79, risk-free interest rate of 4.07% and annualized volatility of 96%.

*Loss (gain) on changes in fair value of investments*

The Company has various investments accounted for at fair value through profit or loss resulting in recognition of losses or gains as the fair value fluctuates.

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Balance at Proceeds** | **Balance at Proceeds** |  | **Balance at** |
| **Entity** | **Instrument** | **December 31, 2021** | **from sale** | **Additions** | **December 31, 2022** |
|  |  | **$** | **$** | **$** | **$** |
| True Pharma Strip Inc. | Shares | 197 | 197 |  |  |
| HUGE Shops | Shares | 157760 | 157760 |  |  |
| SciCann Therapeutics | Shares | 79 | 79 |  |  |
| Solarvest BioEnergy Inc. | Shares | 366792 |  |  | 221490 |
| Solarvest BioEnergy Inc. | Convertible debenture | 293434 |  |  | 177192 |
| A2ZCryptoCap Inc. | Shares |  |  | 6162 | 10632 |
| Lions Bay Fund | Shares |  |  | 395450 | 418298 |
|  |  | **818262** | **158036** | **401612** | **827612** |

---

**RESULTS OF OPERATIONS 2021**

The following table outlines our consolidated statements of loss for three months and years ended December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **Three months ended December 31,** | **For the years ended December 31,** |
| Change | ChangeChange | Change |
|  | % | % |
| **Expenses** |  |  |
| General and administrative | 64% | 58% |
| External research and development fees) | -65%) | -19% |
| Share-based payments | 59%) | -8% |
| Depreciation and amortization | 14% | 4% |
| Legal provision) | -100%) | -100% |
| Impairment of right-of-use asset | 0%) | -100% |
| **Total operating expenses** | 2% | 10% |
| **Loss from continuing operations)** | 2%**)** | 10% |
| Other income) | -100%**)** | -65% |
| Finance expense) | -11%) | -71% |
| Loss (gain) on settlement of financial liability | -100%**)** | -93% |
| Loss (gain) on change in fair value of warrants and derivative liability**)** | -47%**)** | -73% |
| Loss (gain) on changes in fair value of investments | -263% | 11% |
| **Net loss from continuing operations)** | 55%**)** | 19% |
| Net loss from discontinued operations**)** | -55%**)** | -60% |
| **Net loss)** | 45%**)** | 11% |

---

**REVIEW OF OPERATIONS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2021 AND 2020**

*General and administrative*

General and administrative expenses for the three months and years ended December 31, 2021 and 2020 are comprised of:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| **Change** | **Change** | **2021** **Change** | **Change** |
|  | **%** | **$** | **%** |
| Professional fees | 152% | **6256165** | 129% |
| General office, insurance and administration expenditures | 1% | **3479801**) | -4% |
| Consulting fees) | -57% | **2196812** | 24% |
| Salaries, wages and benefits) | -30% | **2856887** | 8% |
| Investor relations | 1637% | **1642653** | 203% |
| Building and facility costs) | -80% | **759590** | 29% |
| Foreign exchange (gain) loss**)** | -96% | **146587**) | -178% |
|  | 45% | **17338495** | 48% |
| Allocated to: |  |  |  |
| Continuing operations | 64% | **15926103** | 58% |
| Discontinued operations) | -56% | **1412392**) | -15% |

---

------

*Professional fees*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020 | **Change** | **2021** | 2020 | **Change** |
|  | **$** | $| $**%** | **$** | $| $**%** |
| Professional fees | **1257870** | 498295 | 152% | **6256165** | 2734123 | 129% |

---

Professional fees increased from $498,295 to $1,257,870 or 152% and increased from $2,734,123 to $6,256,165 or 129% for, respectively, the three months and year ended December 31, 2021, compared to the equivalent periods in the prior year. Professional fees fluctuate from period to period based on the nature of the transactions the Company undertakes. For the year ended December 31, 2021, the increase is primarily due to litigation and the Company's contested annual general and special shareholders meeting held on May 14, 2021.

*General office, insurance and administration expenditures* 

General office, insurance and administration expenditures for the three months and years ended December 31, 2021 and 2020 are comprised of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020 |  | **2021** | 2020 |  |
|  | **$** | $| **%** | **$** | $| **%** |
| Insurance, shareholders and public company costs | **561519** | 360125 | 56% | **2678906** | 2048726 | 31% |
| Travel, meals and entertainment | **70844** | 211816) | -67% | **212496** | 608876) | -65% |
| Office and general administrative | **273041** | 325804) | -16% | **588399** | 958557) | -39% |
| **General office, insurance and administration expenditures** | **905404** | 897745 | 1% | **3479801** | 3616159) | -4% |

---

*Insurance, shareholders and public company costs*

Insurance, shareholders and public company costs increased from $360,125 to $561,519 or 56% and increased from $2,048,726 to $2,678,906 or 31% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. These costs primarily consist of insurance and other related expenditures associated with being a publicly listed Company on the NASDAQ. The primary reason for the increase for the year ended December 31, 2021, compared to the equivalent periods in the prior year is due to an increase in the cost of director and officers' insurance.

*Travel, meals and entertainment*

Travel, meals and entertainment expenses decreased from $211,816 to $70,844 or 67% and decreased from $608,876 to $212,496 or 65% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Travel, meals and entertainment expenses fluctuate from period to period based on the nature of the transactions the Company undertakes.

*Office and general administrative*

Office and general administrative expenses decreased from $325,804 to $273,041 or 16% and decreased from $958,557 to $588,399 or 39% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Office and general administrative expenses may vary from period to period based on operational activities.

*Consulting fees*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020**Change** | **Change** | **2021** | 2020 | **Change** |
|  | **$** | $| **%** | **$** | $| $**%** |
| Consulting fees | **186119** | 435090) | -57% | **2196812** | 1775269 | 24% |

---

Consulting fees decreased from $435,090 to $186,119 or 57% and increased $1,775,269 to $2,196,812 or 24% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes.

------

*Salaries, wages and benefits*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020**Change** | **Change** | **2021** | 2020 | **Change** |
|  | **$** | $| **%** | **$** | $| $**%** |
| Salaries, wages and benefits | **686001** | 973125) | -30% | **2856887** | 2656162 | 8% |

---

Salaries, wages and benefits expenses decreased from $973,125 to $686,001 or 30% and increased from $2,656,162 to $2,856,887 or 8% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The decrease is primarily due to reduced headcount for the three months ended December 31, 2021, compared to the three months ended December 31, 2020. The increase for the year ended December 31, 2021, is primarily due to expenses incurred in connection with the termination of employment of employees during the period and employer health tax offset by lower headcount.

*Investor relations*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020 | **Change** | **2021** | 2020 | **Change** |
|  | **$** | $| $**%** | **$** | $| $**%** |
| Investor relations | **948669** | 54630 | 1637% | **1642653** | 541944 | 203% |

---

Investor relations expenses increased from $54,630 to $948,669 or 1637% and increased from $541,944 to $1,642,653 or 203% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The increase is primarily related to higher spending on investor relations and marketing during the three months and year ended December 31, 2021.

*Building and facility costs*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020**Change** | **Change** | **2021** | 2020 | **Change** |
|  | **$** | $| **%** | **$** | $| $**%** |
| Building and facility costs | **46805** | 232766) | -80% | **759590** | 586926 | 29% |

---

Building and facility costs decreased from $232,766 to $48,805 or 80% and increased from $586,926 to $759,590 or 29% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. Such costs include property taxes, security services, repairs and maintenance expenditures and utilities. The decrease in the three months ended December 31, 2021, compared to the equivalent period in the prior year is due to costs incurred in the prior year related to restoration of the Heritage Building located on the Facility property. The increase for the year ended December 31, 2021, compared to the equivalent period in the prior year is primarily due to environmental land studies of the Facility Property incurred in preparation for sale.

*Foreign exchange (gain) loss*

---

| | | | |
|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **Change** | **2021** | **Change** |
|  | $**%** | **$** | $**%** |
| Foreign exchange (gain) loss**)** | -96% | **146587**) | -178% |

---

Foreign exchange (gain) loss decreased from a gain of $312,856 and $186,959 to a gain of $12,299 and a loss of $146,587 for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The primary reason for the foreign exchange change was due to the strengthening of the Canadian dollar relative to the US dollar and its impact on cash balances denominated in the Canadian dollar.

*External research and development fees*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020**Change** | **Change** | **2021** | 2020**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| External research and development fees | **852393** | 2456010) | -65% | **6328104** | 7832847) | -19% |

---

External research and development fees decreased from $2,456,010 to $852,393 or 65% and decreased from $7,832,847 to $6,328,104 or 19% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. For the three months ended December 31, 2020, and the year ended December 31, 2020, external research

------

and development fees were incurred for the research and development of PEA, for Phase 2 Safety and Tolerability testing and COVID-19 study that terminated in August 2021.

*Share-based payments*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020 | **Change** | **2021** | 2020**Change** | **Change** |
|  | **$** | $| $**%** | **$** | $| **%** |
| Share-based payments | **341567** | 215255 | 59% | **7443930** | 8052011) | -8% |

---

Share-based payments increased from $215,255 to $341,567 and decreased from $8,052,011 to $7,443,930 for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. This represents an increase of $126,312, or 59%. for the three months ended December 31, 2021, and a decrease of $608,081 or 8% for the year ended December 31, 2021, compared to the equivalent periods in the prior year. Share-based payments change based on the variability in the number of options granted, vesting periods of the options, the grant date fair values and share-based bonuses.

*Depreciation and amortization*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020 | **Change** | **2021** | 2020 | **Change** |
|  | **$** | $| $**%** | **$** | $| $**%** |
| Depreciation and amortization | **1107477** | 967957 | 14% | **4045523** | 3900458 | 4% |

---

Depreciation and amortization increased from $967,957 to $1,107,477 or 14% and increased from $3,900,458 to $4,045,523 or 4% for the three months and year ended December 31, 2021, respectively, compared to the equivalent periods in the prior year. The increase is primarily due to additions from the acquisition of Lucid during the period. Depreciation and amortization is primarily related to the intellectual property.

*Finance expense*

For the three months and year ended December 31, 2021, finance expense was $29,205 and $69,404 compared to $32,967 and $235,581, respectively, for the three months and year ended December 31, 2020. Finance expense is primarily comprised of interest on notes payable assumed on acquisition of Prismic Pharmaceuticals in June 2019. The Company settled a certain balance of notes payable, resulting in lower finance expense for the three months and year ended December 31, 2021, compared to the equivalent periods in the prior year.

*Loss (gain) on settlement of financial liability*

For the three months and year ended December 31, 2021, the Company recognized a gain on settlement of financial liabilities of $nil and $49,792, compared to $420,936 and $680,164, respectively for the three months and year ended December 31, 2020. The gain recognized is primarily due to the settlement of Prismic notes payable and trade and other payables for Class B shares and cash. The difference between the carrying value of the notes payable and trade and other liabilities and the consideration given was recorded as gain on settlement.

*Loss (gain) on change in fair value of warrants and derivative liability*

In August 2020, the Company issued warrants as part of a private placement that did not meet the IFRS definition of equity due to the exercise price being denominated in United States Dollar, which was not the functional currency of the Company at the time resulting in a variability in exercise price. As such, the warrants were recognized as a derivative liability with a fair value of $3,289,069 at the time of issuance.

The fair value of the warrants liability as at December 31, 2020 was $1,447,910. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $1.56, risk-free interest rate of 0.33% and annualized volatility of 117%. The Company recognized a gain on change in fair value of $1,927,041 for the year ended December 31, 2020.

The fair value of the warrants liability as at December 31, 2021, was $765,403 resulting in a gain on change in fair value of $682,507 for the year ended December 31, 2021. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $1.02, risk-free interest rate of 1.22% and

------

annualized volatility of 120%. The Company recognized a gain on change in fair value of $663,400 and $682,507 for the three months and year ended December 31, 2021.

*Loss (gain) on changes in fair value of investments*

The Company has various investments accounted for at fair value through profit or loss resulting in recognition of loss/gain as the fair value fluctuates.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Balance at** | **Balance at** |
| **Entity** | **Instrument** | **December 31, 2020** | **December 31, 2021** |
|  |  | **$** | **$** |
| True Pharma Strip Inc. | Shares |  | 197 |
| HUGE Shops | Shares | 600433 | 157760 |
| SciCann Therapeutics | Shares | 195679 | 79 |
| Solarvest BioEnergy Inc. | Shares | 447678 | 366792 |
| Solarvest BioEnergy Inc. | Warrants | 74813 |  |
| Solarvest BioEnergy Inc. | Convertible debenture | 358142 | 293434 |
|  |  | **1676745** | **818262** |
|  |  |  | **158036** |
|  |  |  | **660226** |
|  |  |  | **818262** |

---

**REVIEW OF DISCONTINUED OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021**

The following table outlines our net income (loss) from discontinued operations for the years ended December 31, 2022 and 2021:

---

| | |
|:---|:---|
|  | **For the three months ended** |
|  | **December 31,** |
|  | **2022** |
|  | $|
| **Expenses** |  |
| General and administrative | **-** |
| **Total operating expenses** | **-** |
| **Loss from discontinued operations** | **-**)**)** |
| Other income | **-**)**)** |
| Gain on sale of property and plant | **-)** |
| **Net income (loss) from discontinued operations** | **-**) |

---

*General and administrative*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2022** | 2021**Change** | **Change** | **2022** | 2021**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| General office and administration | **-** | 94852) | -100% | **649874** | 324969 | 100% |
| Salaries, wages and benefits | **-** | 59371) | -100% | **15772** | 327833) | -95% |
| Building and facility costs | **-** | 46805) | -100% | **519954** | 759590) | -32% |
|  | **-** | 201028) | -100% | **1185600** | 1412392) | -16% |

---

General and administrative expenses from discontinued operations decreased from $1,412,392 to $1,185,600 for the year ended December 31, 2022, compared to the equivalent periods in the prior year. On May 6, 2022, the Company closed the sale of the Facility and the Facility Property. Subsequent to sale of the Facility and the Facility Property results of operations related to FV Pharma are reported as continued operations for the year ended December 31, 2022.

------

**REVIEW OF DISCONTINUED OPERATIONS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2021 AND 2020**

The following table outlines our net loss from discontinued operations for the three months and years ended December 31, 2021 and 2020:

---

| |
|:---|
| **Revenue** |
| Cost of revenue |
| **Gross loss before fair value adjustments**) |
| Fair value adjustments on inventory sold) |
| Unrealized loss (gain) on changes in fair |
| value of biological assets |
| **Gross loss**) |
| **Expenses** |
| General and administrative |
| Depreciation and amortization |
| Impairment of equipment |
| **Total operating expenses** |
| **Loss from discontinued operations))** |
| Other income**))** |
| Loss on sale of equipment |
| **Net loss from discontinued operations))** |

---

*Revenue*

Revenue was $nil and $nil from discontinued operations for the three months and years December 31, 2021, compared to $nil and $14,514, for the equivalent period in the prior year, respectively. The decrease is due to the Company discontinuing its cannabis operations.

*Cost of revenue*

For the three months and year ended December 31, 2021, cost of revenue from discontinued operations was $nil and $nil compared to $nil and $1,032,010, for the equivalent periods in the prior year, respectively. The decrease for the year ended December 31, 2021, compared to the equivalent period in the prior year is primarily due to FV Pharma forfeiting its licenses and ceasing all operations at the end of July 2020 and discontinuing the sale of cannabis. Cost of revenue includes the cost of inventory sold, production costs expensed and impairment charges. Direct and indirect production costs include labor, processing, testing, packaging, quality assurance, security, inventory, shipping, depreciation of production equipment, production management and other related expenses.

*Unrealized loss on changes in fair value of biological assets*

Unrealized loss on change in fair value of biological assets for the three months and year ended December 31, 2021, was $nil and $nil compared to $nil and $166,886, for the equivalent period in the prior year, respectively. As of December 31, 2021, the Company did not have any biological assets.

------

*General and administrative*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the three months ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2021** | 2020**Change** | **Change** | **2021** | 2020**Change** | **Change** |
|  | **$** | $| **%** | **$** | $| **%** |
| General office and administration | **94852** | 121675) | -22% | **324969** | 566816) | -43% |
| Salaries, wages and benefits | **59371** | 101006) | -41% | **327833** | 511799) | -36% |
| Building and facility costs | **46805** | 232767) | -80% | **759590** | 586926 | 29% |
|  | **201028** | 455448) | -56% | **1412392** | 1665541) | -15% |

---

General and administrative expenses from discontinued operations decreased from $455,448 to $201,028 and decreased from $1,665,541 to $1,412,392 for the three months and year ended December 31, 2021, respectively, compared to the equivalent period in the prior year. The decrease for the three months and year ended December 31, 2021, compared to the three months and year ended December 31, 2020, is due to FV Pharma ceasing all activities.

*Depreciation and amortization*

Depreciation and amortization from discontinued operations for the three months and year ended December 31, 2021, was $nil and $nil compared to $nil and $90,340, for the equivalent periods in the prior year, respectively. Depreciation and amortization expense decreased as the Company ceased depreciation of these assets upon recognition as being held for sale in March of 2020.

**SELECTED QUARTERLY INFORMATION**

The following table sets forth selected unaudited quarterly statements of operations data for each of the eight quarters commencing January 1, 2021 and ending December 31, 2022. The information for each of these quarters has been prepared on the same basis as the audited annual financial statements for the year ended December 31, 2022. This data should be read in conjunction with our audited annual financial statements for the year ended December 31, 2022. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future period. Results disclosed are from all operations.

---

| | |
|:---|:---|
|  | **September 30,** |
|  | **2022** |
| Other income) | (65499) |
| Net loss for the period) | (7128885) |
| Net loss per share - basic) | (0.19) |
| Net loss per share - diluted) | (0.19) |

---

------

**FINANCIAL POSITION**

---

| | | | |
|:---|:---|:---|:---|
|  | **As at** | **As at** |  |
|  | **December 31,** | **December 31,** **Change** | **Change** |
|  | **2022** | **2021** | **%** |
| **ASSETS** |  |  |  |
| **Current assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | **16980472** | 35259645) | -52% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other receivables | **374377** | 500964) | -25% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and deposits | **472137** | 1366421) | -65% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments | **-** | 158036) | -100% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment in lease | **23188** |  | 100% |
|  | **17850174** | 37285066) | -52% |
| **Assets held for sale** | **-** | 8647779) | -100% |
|  | **17850174** | 45932845) | -61% |
| **Non-current assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equipment, net | **105729** |  | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments | **827612** | 660226 | 25% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right-of-use asset, net | **155196** | 168307) | -8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance receivables, net | **7431656** |  | 100% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets, net | **12040289** | 16201739) | -26% |
|  | **20560482** | 17030272 | 21% |
| **Total assets** | **38410656** | 62963117) | -39% |
| **LIABILITIES** |  |  |  |
| **Current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables | **7108419** | 7510771) | -5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease obligations | **177870** | 124311 | 43% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants liability | **243594** | 765403) | -68% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable | **300549** | 300549 | 0% |
|  | **7830432** | 8701034) | -10% |
| **Non-current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease obligations | **38004** | 131045) | -71% |
| **Total liabilities** | **7868436** | 8832079) | -11% |
| **SHAREHOLDERS' EQUITY** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class A share capital | **151588** | 151588 | 0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B share capital | **143258972** | 152173089) | -6% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrant | **2142400** | 5137417) | -58% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contributed surplus | **28500924** | 22583649 | 26% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange translation reserve | **652601** | 239612 | 172% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | **(144164265)** | (126154317) | 14% |
| **Total shareholders' equity** | **30542220** | 54131038) | -44% |
| **Total liabilities and shareholders' equity** | **38410656** | 62963117) | -39% |

---

**Assets**

*Current assets*

Cash and cash equivalents decreased by $18,279,173 or 52%, as a result of cash used for the issuance of finance receivables and cash used during the period to fund research initiatives offset by cash received from the sale the Facility and Facility Property.

Other receivables decreased by $126,587 or 25%, primarily due to HST and investment tax refund received offset by sales taxes receivable.

------

Prepaid expenses and deposits decreased by $894,284 or 65% primarily related to expenses incurred for the Company's insurance policies and research and development activities offset by deposits made related to insurance and research and development activities.

Current investments decreased by $158,036 or 100%, due to the sale of investments.

Net investment in lease increased by $23,188 or 100%, due to a sublease entered into by the Company.

*Assets Held for Sale*

Assets held for sale consisted of the Facility and Facility Property. On May 6, 2022, the Company closed the sale of the Facility and the Facility Property.

*Non-current assets*

Equipment increased by $105,729 or 100%, primarily due to equipment purchase made by the Company offset by deprecation.

Investments increased by $167,386 or 25%, primarily due to investments purchased during the year offset by the change in fair value of investments as a result of decreases in the underlying share prices.

Finance receivables increased by $7,431,656 or 100%, due to the commencement of FSD Strategic Investments operations during the year ended December 31, 2022.

Intangible assets decreased by $4,161,450 or 26%, primarily due to amortization expense incurred for the year ended December 31, 2022, offset by additions of $250,000.

**Liabilities**

*Current liabilities*

Trade and other payables decreased by $402,352 or 5%, primarily due to timing of payments.

Lease obligations increased by $53,559 or 43%, due to new lease entered by the Company offset by lease payments.

Warrants liability

Warrants were issued as part of the financing in August 2020. The Company determined that these warrants did not meet the IFRS definition of equity due to the exercise price being denominated in United States dollar which was not the functional currency of the Company at the time resulting in variability in exercise price. Accordingly, these warrants are treated as a derivative financial liability measured at fair value through profit or loss. As at the date of issuance the fair value of the warrants was determined to be $3,289,069 using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $3.01 on date of issuance, risk free interest rate of 0.32% and annualized volatility of 121%.

The fair value of the warrants liability as at December 31, 2021, was $765,403 resulting in a gain on change in fair value of $682,507 for the year ended December 31, 2021. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $1.02, risk-free interest rate of 1.22% and annualized volatility of 120%.

The fair value of the warrants liability as at December 31, 2022 was $243,594 resulting in a gain on change in fair value of $521,809 for the year ended December 31, 2022. The fair value was determined using the Black-Scholes option pricing model and the following assumptions: exercise price of $4.26, the underlying share price of $0.79, risk-free interest rate of 4.07% and annualized volatility of 96%.

*Notes payable*

The Company recognized notes payable from the acquisition of Prismic on June 29, 2019, made up of convertible notes and short-term notes. The notes and short-term notes are due to former board members of Prismic. The notes carry an annual interest rate of 20% and the short-term notes carry an annual interest rate of 10%.

*Non-current liabilities*

Non-current portion of lease liability represents the Company's obligations for office leases.

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**Shareholders' equity**

Shareholder's equity decreased by $23,588,818, primarily due to a decrease of $7,523,117 related to share buyback program, $2,995,017 related to expired warrants, and net loss of $23,606,828, offset by $5,917,275 of contribution surplus related to share cancelation, warrants expired, PSUs converted to shares and share based payments and $412,989 related to the translation of foreign operations and cancellation of shares.

**LIQUIDITY, CAPITAL RESOURCES AND FINANCING**

The general objectives of our capital management strategy are to preserve our capacity to continue operating, provide benefits to our stakeholders and provide an adequate return on investment to our shareholders by continuing to invest in our future that is commensurate with the level of operating risk we assume. We determine the total amount of capital required consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic environment and risks of the underlying assets. We are not subject to any externally imposed capital requirements.

The financial statements and this MD&A have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. In making this assessment, management concluded that it has sufficient working capital as of December 31, 2022, in order to carry out its planned operations over the next twelve months.

The Company is in the preliminary stages of its planned operations and has not yet determined whether its processes and business plans are economically viable. The continuing operations of the Company are dependent upon the ability of the Company to complete the pharmaceutical research and development programs centered on the Company's compounds (two of which are licensed).

As at December 31 2022, the Company had cash and cash equivalents of $16,980,472 representing a decrease of $18,279,173 from December 31, 2021. This decrease is primarily due to $28,333,273 of cash used in operating activities, $12,123,408 of cash provided by investing activities and $2,069,308 of cash used in financing activities.

**Cash flows for the years ended December 31, 2022 and 2021**

---

| |
|:---|
| Net cash provided by (used in): |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash used in continuing operating activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash used in discontinued operating activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash used in operating activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash (used in) provided by continuing investing activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash provided by discontinued investing activities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash provided by investing activities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash (used in) provided by financing activities**)** |
| Net change in cash during the period**)** |

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*Cash Flows Used in Operating Activities*

Cash flows used in continuing operating activities for the year ended December 31, 2022, were $27,190,291 compared to cash flows used in continuing operating activities of $19,364,182 for the year ended December 31, 2021. Cash flows used in discontinued operating activities for the year ended December 31, 2022, were $1,142,982 compared to cash flows used in discontinued operating activities of $1,382,041 for the year ended December 31, 2022. The increase in cash used in operating activities is primarily due to cash outflows related to finance receivables issued during the year ended December 31, 2022.

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*Cash Flows Provided by (Used in) Investing Activities*

Cash flows provided by investing activities for the year ended December 31, 2022, were $12,123,408 compared to cash flows provided by investing activities of $268,964 for the year ended December 31, 2022. The change is primarily due to cash provided by the sale of the Facility and the Facility Property during the year ended December 31, 2022.

*Cash Flows (Used in) Provided by Financing Activities*

Cash flows used in financing activities for the year ended December 31, 2022, were $2,069,308 compared to cash provided by financing activities of $38,212,082 for the year ended December 31, 2021. During the year ended December 31, 2021, the Company issued shares for net proceeds of $38,341,407 offset by the repayment of $71,759 for notes payable and repayment of $57,566 for lease obligations compared to, $1,926,237 spend on share repurchases and the payment of $143,071 for lease obligations made during the year ended December 31, 2022.

**Cash flows for the years ended December 31, 2021 and 2020**

---

| |
|:---|
| Net cash provided by (used in): |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash used in continuing operating activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash used in discontinued operating activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash used in operating activities**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash (used in) provided by continuing investing activities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash provided by discontinued investing activities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash provided by investing activities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash (used in) provided by financing activities |
| Net change in cash during the period |

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*Cash Flows Used in Operating Activities*

Cash flows used in continuing operating activities for the year ended December 31, 2021, were $19,364,182 compared to cash flows used in continuing operating activities of $18,392,814 for the year ended December 31, 2020. Cash flows used in discontinued operating activities for the year ended December 31, 2021, were $1,382,041 compared to cash flows used in discontinued operating activities of $737,659 for the year ended December 31, 2020. The increase in cash used in operating activities of $1,615,750 is primarily due to an increase in net loss from continuing operations of $5,485,724, offset by an increase in cash provided by a change in trade and other payables of $2,706,075. The increase in cash provided by the change in trade and other payables is due to the timing of payments and invoices received.

*Cash Flows Provided by Investing Activities*

Cash flows provided by investing activities for the year ended December 31, 2021, were $268,964 compared to cash flows provided by investing activities of $6,514,126 for the year ended December 31, 2020. The change is primarily due to the acquisition of intellectual property during the year ended December 31, 2021, of $500,000, offset by cash acquired from acquisition of Lucid, compared to proceeds of $6,477,510 from the sale of investments during the year ended December 31, 2020.

*Cash Flows Provided by Financing Activities*

Cash provided by financing activities for the year ended December 31, 2021, was $38,212,082 compared to cash provided by financing activities of $24,173,371 for the year ended December 31, 2020. During the year ended December 31, 2021, the Company issued shares for net proceeds of $38,341,407 offset by the repayment of $71,759 for notes payable and repayment of $57,566 for lease obligations compared to, issued shares for net proceeds of $25,100,459 and proceeds from exercise of

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stock options of $59,548, offset by repayment of $946,643 for notes payable and repayment of $39,993 for lease obligations made during the year ended December 31, 2020.

As at December 31, 2021, the Company had cash of $35,259,645 representing an increase of $17,734,823 from December 31, 2020. This increase is primarily due to $268,964 of cash provided by investing activities and $38,212,082 of cash provided by financing activities, offset by $20,746,223 of cash used in operating activities.

**CONTRACTUAL OBLIGATIONS**

We have no significant contractual arrangements other than those noted in our financial statements.

**OFF-BALANCE SHEET ARRANGEMENTS**

We have no off-balance sheet arrangements other than those noted in our financial statements.

**TRANSACTIONS WITH RELATED PARTIES**

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the entity, directly or indirectly.

Transactions with key management and directors comprised the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. In fiscal 2022, the Company paid independent directors' compensation of C$60,000, with the chair of the audit committee receiving an additional C$20,000 and the chair of the compensation committee receiving an additional C$10,000. Director's compensation for the year ended December 31, 2022, was $215,104 (2021 - $757,690 and 2020 - $246,226), which includes $nil (2021 - $466,546 and 2020 - $238,703) recognized as share-based compensation for shares issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. During the year ended December 31, 2022, the Company granted 2,820,104 PSUs to related parties, as replacement awards for the 2,820,104 share options that were cancelled. As at December 31, 2022, 400,000 of the PSUs had fully vested upon the successful implementation of a Phase 2 trial for FSD-PEA with Health Canada and/or the FDA. The remaining PSUs will fully vest upon the filing of the MS Phase 1 IND, expected in January 2023.

&nbsp;&nbsp;&nbsp;&nbsp;c. In February 2021, as compensation, the Company issued 1,349,764 shares with a fair value of $3,576,875 to Raza Bokhari, in his capacity as Board Chair and Chief Executive Officer, and to certain other directors. Of the 1,349,764 shares issued, 1,173,709, with a fair value of $3,110,330, were issued to Raza Bokhari and 176,055 shares, with a fair value of $466,545, were issued to other directors. In June 2021, 156,278 of the shares issued to directors in February 2021 were cancelled. On March 8, 2022, following litigation with respect to certain of the shares issued to Raza Bokhari in February 2021, the court issued a decision, permitting the part of the share grant to Raza Bokhari until the date of his termination (being 536,979 Class B shares) but cancelling the shares relating to services that were to be provided after the date of termination (being 504,888 Class B shares). The shares were cancelled on March 29, 2022.

---

| | | |
|:---|:---|:---|
| **Related Party** | **Number of Securities** | **Total Amount** |
| Dr. Raza Bokhari | 1173709 | 3110330 |
| Robert Ciaruffoli | 46948 | 124412 |
| Jim Datin | 46948 | 124412 |
| Steve Buyer | 46948 | 124412 |
| Gerry Goldberg | 35211 | 93309 |
|  | **1349764** | $**3576875** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. The Company paid expenses of $nil (2021 – $262,834 and 2020 – $1,445,043) to a company owned by the former CEO for the year ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. During the year ended December 31, 2021, the Company reimbursed certain directors C$1,334,158 for expenses incurred in relation to requisitioning, calling and holding the shareholders' meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. During the year ended December 31, 2020, the Company issued 1,676,066 shares to key management and directors in the form of a compensation bonus for past services provided. The fair value of shares issued to key management and directors is $4,602,301 and is included in share-based payments and bonuses for the year ended December 31, 2020.

------

Key management personnel compensation during the years ended December 31, 2022 and 2021 is comprised of:

---

| | | | |
|:---|:---|:---|:---|
|  | **2022** | 2021 | 2020 |
|  | **$** | $| $|
| Salaries, benefits, bonuses and consulting fees | **1839441** | 2075893 | 2936816 |
| Share-based payments | **1345952** | 6881641 | 7045994 |
| **Total** | **3185393** | 8957534 | 9982810 |

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**FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS**

*Credit risk*

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from deposits with banks and outstanding other receivables and finance receivables. The Company trades only with recognized, creditworthy third parties.

The Company does not hold any collateral as security for its outstanding finance receivables but mitigates this risk by dealing only with, what management believes to be, financially sound counterparties and, accordingly, does not anticipate significant loss for non-performance. The loans are secured by real estate properties and the Company is granted a first collateral charge mortgage on the properties for a sum equal to the interest payments plus the principal amount. The Company performs assessments on factors such as: timing of payments, loan to value, communications with the borrower and external macro factors such as interest rates and economic conditions to mitigate risks.

*Liquidity risk*

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they come due. The Company's exposure to liquidity risk is dependent on the Company's ability to raise additional financing to meet its commitments and sustain operations. The Company mitigates liquidity risk by management of working capital, cash flows, the issuance of share capital and if desired, the issuance of debt. The Company's trade and other payables and notes payables are all due within twelve months from the date of these financial statements.

If unanticipated events occur that impact the Company's ability to carry out the planned clinical trials, the Company may need to take additional measures to increase its liquidity and capital resources, including issuing debt or additional equity financing or strategically altering the business forecast and plan. In this case, there is no guarantee that the Company will obtain satisfactory financing terms or adequate financing. Failure to obtain adequate financing on satisfactory terms could have a material adverse effect on the Company's results of operations or financial condition.

*Market risk*

Market risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk.

• Foreign currency risk

Foreign currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The Company's primary exposure with respect to foreign currencies is from Canadian dollar denominated cash and trade and other payables. A 1% change in the foreign exchange rates would not result in any significant impact to the financial statements.

• Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's finance receivables are at fixed rates and there are no material long-erm borrowings outstanding. The Company is not exposed to interest rate risk as at December 31, 2022.

• Other price risk

Other price risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to

------

the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risk as at December 31, 2022.

*Fair values*

The carrying values of cash, other receivables, trade and other payables and notes payable approximate fair values due to the short-term nature of these items or they are being carried at fair value or, for notes payable, interest payables are close to the current market rates. The risk of material change in fair value is not considered to be significant. The Company does not use derivative financial instruments to manage this risk.

Financial instruments recorded at fair value on the consolidated statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company's valuation techniques. A level is assigned to each fair value measurement based on the lowest-level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 - Unadjusted quoted prices as at the measurement date for identical assets or liabilities in active markets.

• Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 - Significant unobservable inputs that are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

Private company investments measured at fair value are classified as Level 3 financial instruments. The valuation method and significant assumptions used to determine the fair value of private company investments have been disclosed in the notes of the financial statements. The Company did not hold any private company investments as of December 31, 2022. The Company's investment in the Lion's Bay Fund is measured at fair value and classified as Level 3. During the year, there were no transfers of amounts between levels.

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**

Refer to Note 2 and Note 3 of the audited consolidated financial statements for the fiscal year ended December 31, 2022, for a full discussion of our critical accounting policies and estimates.

**OUTSTANDING SHARE DATA**

The Company is authorized to issue an unlimited number of Class A multiple voting shares ("Class A shares") and an unlimited number of Class B shares, all without par value. All shares are ranked equally with regards to the Company's residual assets.

The holders of Class A shares are entitled to 276,660 votes per Class A share held. Class A shares are held by certain Directors and Officers of the Company and the former CEO of the Company. The holders of Class B shares are entitled to one (1) vote per share held.

The Company's outstanding capital was as follows as at the date of this MD&A:

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| | |
|:---|:---|
| &nbsp;&nbsp; Class A shares | &nbsp;&nbsp; 72 |
| &nbsp;&nbsp; Class B shares | &nbsp;&nbsp; 40,643,714 |
| &nbsp;&nbsp; Share options | &nbsp;&nbsp; 2,939,529 |
| &nbsp;&nbsp; Warrants | &nbsp;&nbsp; 11,163,308 |
| &nbsp;&nbsp; PSUs | &nbsp;&nbsp; 400,000 |

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**SUBSEQUENT EVENTS**

On January 12, 2023, the Board of Directors approved a share buyback program for 2023 to repurchase up to 5% of the Company's issued and outstanding Class B Shares for aggregate consideration of $3,000,000, commencing on January 16, 2023 and expiring on December 31, 2023. The Company has repurchased 1,904,700 and cancelled 289,600 Class B Shares at prevailing market prices through March 31, 2023.

On January 18, 2023, the Company issued 2,420,104 Class B Shares, on the conversion of PSUs to related parties. The PSUs vested upon the filing of the MS Phase 1 IND, the day the Company submitted a Clinical Trial Application. The Company announced the submission of the Company's clinical trial application for a planned Phase 1 clinical trial for Lucid-MS on January 17, 2023.

On January 25, 2023, the Company granted 500,000 share options each to the CEO, President, COO and CEO of Lucid with an exercise price of C$1.30 and an expiry date of January 25, 2028. All options were fully vested on the grant date. Each share option can be exercised to acquire one Class B Share.

On January 25, 2023, the Company granted 100,000 PSUs each to the four independent members of the Board of Directors. The PSUs fully vest on the filing of Lucid Psych Phase 1 IND.

On February 25, 2023, the Company granted 500,000 share options to employees and consultants with an exercise price of C$2.45. Each share option can be exercised to acquire one Class B Share.

On February 27, 2023, the Company granted 15,000 share options to an advisor to the Board of Directors with an exercise price of $1.75 and an expiry date of February 27, 2026. Each share option can be exercised to acquire one Class B Share.

On March 24, 2023, the Company granted 15,000 share options to an advisor to the Board of Directors with an exercise price of $1.75 and an expiry date of March 24, 2026. Each share option can be exercised to acquire one Class B Share. Subsequent to December 31, 2022, the Company issued 3,300,000 warrants in exchange for services with exercise prices ranging from $1.50 to $8.00. Each warrant can be exercised to acquire one Class B Share.

**DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING** 

**A. Disclosure Controls and Procedures**

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are designed to ensure that information required to be disclosed 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 CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our CEO and CFO, our management has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022, the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2022.

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

**B. Management's Annual Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is the process designed by and under the supervision of our CEO and CFO to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the

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effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Under the supervision and with the participation of our CEO and CFO, our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 and concluded that it was effective.

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