The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements, the notes to those financial statements and other financial information appearing elsewhere in this document. In addition to historical information, the following discussion and other parts of this document contain forward-looking statements that reflect plans, estimates, intentions, expectations and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the "Risk Factors" in Part II, Item 1A of this Quarterly Report.

The discussion provided in this Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2022, filed with the United States Securities and Exchange Commission (the "SEC") on April 7, 2023.





Overview

We were incorporated under the laws of the State of Nevada on March 19, 2010. On April 26, 2016, we formed our wholly owned subsidiary, Cell MedX (Canada) Corp., (the "Subsidiary") under the laws of the Province of British Columbia.

We are a biotech company focused on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general health, pain relief, wellness and alleviate complications associated with medical conditions including, but not limited to: diabetes, Parkinson's disease, high blood pressure, neuropathy and kidney function. Our Subsidiary is engaged in development and manufacturing of therapeutic devices based on our proprietary eBalance® Technology, which harnesses power of microcurrents and their effects on human body.





Recent Corporate Developments



BCSC Cease Trade Order

On October 11, 2022, the British Columbia Securities Commission (the "BCSC") issued a cease trade order in respect of the securities of the Company for failing to timely file its Annual Information Form (AIF), annual audited financial statements for the fiscal year ended May 31, 2022, and the related management's discussion and analysis (collectively, the "Canadian Filings"). The Company's inability to file the required Canadian Filings is due to the Company having insufficient funds to complete the audit of its annual financial statements. The Company had filed its Canadian Filings on April 7, 2023, and hopes to file its required quarterly filings under applicable United States securities laws, as soon as it is possible. However, at this time, the Company is unable to provide any further guidance on its ability to make the required quarterly filings.

Delisting from OTCQB Market Tier

Our securities currently trade on the "Expert Market" tier operated by OTC Markets. Quotes on the Expert Market are "Unsolicited Only" and are restricted from public viewing. The Company is currently in default of Section 2.2 of the OTCQB Standards relating to the Company's ongoing disclosure obligations due to the late filing of its annual report for the year ended May 31, 2022, and for non-filing of the quarterly reports for the interim periods ended August 31, 2022, November 30, 2022, and February 28, 2023. The Company is currently working to complete and file the required reports.

Update on eBalance® Research and Development Activities

Due to the Company's financial situation, the Company was forced to suspend further research of the eBalance® Technology, including the FDA's Pre-Market Approval process for 510(k) clearance, and is at risk of defaulting on its Health Canada Class II Medical Device System Certification licenses that were issued for both eBalance® Home and eBalance® Pro Systems.

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Results of Operations for the Three Months ended August 31, 2022 and 2021

Our operating results for the three-month periods ended August 31, 2022 and 2021, and the changes in the operating results between those periods are summarized in the table below.





                                       Three Months Ended
                                                             Percentage
                                    August 31,   August 31,  Increase/
                                       2022         2021     (Decrease)
Sales                                $      516  $     1,197    (56.9)%
Cost of goods                             (797)        (325)     145.2%
Gross margin                              (281)          872   (132.2)%
Operating expenses
Amortization                                  -          540   (100.0)%
Consulting fees                          23,665       64,814    (63.5)%

General and administrative expenses 98,215 134,089 (26.8)% Research and development costs

           22,843       35,841    (36.3)%
Total operating expenses                144,723      235,284    (38.5)%
Interest                                  9,681        4,940      96.0%
Net loss                             $  154,685  $   239,352    (35.4)%




Revenues

During the three-month period ended August 31, 2022, we recognized $516 in revenue, which consisted of monthly recurring revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $797.

During the three-month period ended August 31, 2021, we recognized $1,197 in revenue from monthly recurring revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $325.





Operating Expenses

During the three-month period ended August 31, 2022, our operating expenses decreased by 38.5% from $235,284 we incurred during the three months ended August 31, 2021, to $144,723 we incurred during the three months ended August 31, 2022. The most significant changes were as follows:

·During the three-month period ended August 31, 2022, our consulting fees decreased by $41,149, or 63.5%, from $64,814 we incurred during the three-month period ended August 31, 2021, to $23,665 we incurred during the three-month period ended August 31, 2022.

·Our research and development fees for the three-month period ended August 31, 2022, decreased by $12,998, or 36.3%, from $35,841 we incurred during the three-month period ended August 31, 2021, to $22,843 we incurred during the three-month period ended August 31, 2022. The lower research and development fees during the three-month period ended August 31, 2022, were associated with our decision to suspend further development of the eBalance® devices due to lack of funding and unfavorable financial position.

·Our general and administrative fees for the three-month period ended August 31, 2022, decreased by $35,874, or 26.8%, from $134,089 we incurred during the three-month period ended August 31, 2021, to $98,215 we incurred during the three-month period ended August 31, 2022. The largest factor that contributed to this change was associated with out expenditures on corporate communications, which decreased by $48,526 to $7,949 we recorded during the three-month period ended August 31, 2022, as compared to $56,475 we incurred during the three-month period ended August 31, 2021. This reduction was associated with lack of funding and overall unfavorable financial position. Our filing and regulatory fees decreased by $5,255 to $4,875, and loss on foreign exchange decreased by $6,559 to $40,823. These decreases were in part offset by $27,000 increase to our management fees, which were associated with engagement of our new CEO.





Other Items

During the three-month period ended August 31, 2022, we accrued $9,681 (August 31, 2021 - $4,940) in interest associated with the outstanding notes payable.

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Liquidity and Capital Resources





Working Capital



                                                            Percentage
                              As at             As at       Increase/
                         August 31, 2022    May 31, 2022    (Decrease)
Current assets           $         28,576   $      41,344    (30.9)%
Current liabilities             2,133,298       2,050,375      4.0%
Working capital deficit  $    (2,104,722)   $ (2,009,031)      4.8%

As of August 31, 2022, we had a cash balance of $9,620, a working capital deficit of $2,104,722 and cash flows used in operations of $75,655 for the period then ended. During the three-month period ended August 31, 2022, we funded our operations with $61,000 we borrowed from Mr. Richard Jeffs under loan agreements accumulating interest at 6% per annum, compounded monthly, and due on demand.

We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the three-month period ended August 31, 2022. The amount of cash we have generated from our operations to date is significantly less than our current debt obligations. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under the outstanding notes and advances payable, or to service our other debt obligations. If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that we will be able to continue as a going concern.

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