UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended March 31, ~~2016~~2017

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

For the transition period from ___________ to _____________

Commission file number: 333-199612

ALGAE DYNAMICS CORP.

(Exact name of registrant as specified in its charter)

CANADA		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

37 – 4120 Ridgeway Drive
Mississauga, Ontario Canada		L5L 5S9
(Address of principal executive offices)		(Postal Code)

Registrant’s telephone number, including area code: (289) 997 6740

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Securities registered pursuant to Section 15 of the Act:

Common Shares, no par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o [ ] No þ[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o [ ] No þ[X]

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 þ [X] No [ o]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o[ ] No þ[X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ~~o No~~[ þ] No [X]

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

Large accelerated filer o[ ] Accelerated filer o[ ] Non-accelerated filer o[ ] Smaller reporting company þ[X] (Do not check if a smaller reporting company) [ ]

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

As of the last business day of the registrant’s most recently completed second fiscal quarter the aggregate voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter is $1,922,797.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common Shares		Outstanding at June 29, 2016
Common Stock, no par value per share		9,759,425 shares

Common Shares no par value -

Outstanding at August 11, 2017 - 13,337,521

DOCUMENTS INCORPORATED BY REFERENCE: None.

ALGAE DYNAMICS CORP.

TABLE OF CONTENTS

			Page	~~Page~~
Part I
	Item 1	Business	4	4
	Item 1A	Risk Factors	23	27
	Item 1B	Unresolved Staff Comments	34	36
	Item 2	Properties
	Item 3	Legal Proceedings	34	36
	Item 4	Mine Safety Disclosures	34	36
Part II
	Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34	36
	Item 6	Selected Financial Data	38	39
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operation	39	40
	Item 7A	Quantitative and Qualitative Disclosures about Market Risk	42	45
	Item 8	Financial Statements and Supplementary Data	43	46
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial ~~Disclosure~~Disclosure7	79	73
	Item 9A	Controls and Procedures	80	73
	Item 9B	Other Information	81	74
Part III
	Item 10	Directors and Executive Officers and Corporate Governance	81	75
	Item 11	Executive Compensation	83	78
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	91	85
	Item 13	Certain Relationships and Related Transactions, and Director Independence	93	87
	Item 14	Principal Accounting Fees and Services	94	88
Part IV
	Item 15	Exhibits, Financial Statement Schedules	95	89
Signatures			96	90

PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some discussion in this Annual Report on Form 10-K contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and relate to future events or future financial performance. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Form 10-K. Forward-looking statements are often identified by words such as “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project,” “plans,” “seek” and similar expressions or words which, by their nature, refer to future events. In some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” below that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In addition, you are directed to factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section as well as those discussed elsewhere in this Form 10-K.

Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. However, readers should carefully review the risk factors set forth below or in other reports or documents the Company files from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. All written and oral forward-looking statements made subsequent to the date of this report and attributable to us or persons acting on our behalf are expressly qualified in their entirety by this section.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

●	the “Registrant,” “Company,” “we,” “us,” and “our” refer to the business of Algae Dynamics Corp., a Canadian corporation, and its subsidiary;

●	“Exchange Act” refers the United States Securities Exchange Act of 1934, as amended;

●	“SEC” refers to the United States Securities and Exchange Commission;

●	“Securities Act” refers to the United States Securities Act of 1933, as amended;

●	“U.S. dollars,” and “USD$” refer to the legal currency of the United States; and

●	“$” refer to the legal currency of Canada as the financial statements are stated in Canadian Dollars.

In the discussion of our business below, we frequently make reference to a market report obtained from Frost & Sullivan (hereafter " “F&S"”) dated August 2015, which was commissioned and paid for by us. These references are noted by a superscript numeral "“1."”

ITEM 1. BUSINESS.

~~Mission~~Business Overview

Algae Dynamics’ ~~mission~~Corp (ADYNF) is tofocused beon athe ~~leading~~development ~~producer~~of proprietary research and products utilizing cannabis oil and algae oil. The original core of ~~low-cost~~our ~~ultra~~product development strategy is the extraction of Omega-~~pure~~3 fatty acids from certain strains of algae with high concentrations of DHA to create various nutraceutical products. As a result of the many demonstrated health benefits of other botanical oils, most notably cannabis oil, we have developed a strategy aimed at developing products that combined the health benefits of algae and ~~biomass~~cannabis ~~with~~oils. ~~high~~Capitalizing ~~nutrient~~on ~~content~~the burgeoning demand for ~~the~~cannabis ~~functional~~oil ~~food/beverage~~and ~~additive~~other smoke-free alternatives to marijuana consumption will help support ongoing initiatives to create and ~~health~~market ~~supplement~~research-driven ~~industries~~product formulations.

~~Overview~~Collaborating with prominent Canadian universities is a core part of our plan to bolster cannabis extraction expertise, develop premium products and add to our portfolio of intellectual property. Through our agreements with the University of Waterloo and the University of Western Ontario, the Company is focusing primarily on the use of extracts from cannabis oil and algae oil in the context of cancer as well as the development of new pharmacotherapies for mental health.

~~The~~Near-term goals ~~Company~~include ~~has~~expanding ~~developed~~research ~~the~~and ~~scalable~~development ~~BioSilo®~~work ~~algae~~with ~~cultivation~~existing ~~system~~and ~~for~~new ~~the~~Canadian ~~production~~universities, ofsecuring ~~ultra-pure~~supply/service ~~algae~~agreements with ~~biomass~~licensed ~~for~~producers, ~~the~~and ~~functional~~submitting ~~food/beverage~~an ~~additives~~application to Health Canada to become a licensed producer of medical marijuana and ultimately ~~pure~~have ~~supplement~~a ~~markets.~~license ~~Management~~to ~~believes~~sell ~~this~~products ~~core~~derived ~~technology~~from ~~produces~~cannabinoids. ~~algae~~The ~~biomass~~Company ~~that~~also ~~exceeds~~owns ~~the~~a ~~purity~~proprietary technology for the cultivation of ~~our~~low ~~competitors~~cost, ~~without~~highly ~~the~~pure ~~need~~algae ~~for~~biomass, ~~additional~~which ~~refinement,~~will ~~providing~~be adeveloped ~~key~~as ~~cost~~a ~~advantage.~~vertical ~~This~~integration ~~positions~~strategy in the ~~Company~~future to ~~meet~~support the need ~~increasing~~to ~~market~~source ~~gap~~algae ~~between~~oil ~~supply~~for ~~and~~research-driven ~~demand~~product ~~for~~formulations. ~~algae~~The ~~biomass~~management inteam ~~several~~leading ~~rapidly~~these ~~growing~~initiatives ~~markets~~has ~~including~~relevant experience ~~high~~ranging ~~value~~from ~~ingredients~~public ~~for~~company ~~beverage,~~management ~~food,~~and ~~healthcare,~~process ~~nutraceuticals~~experience ~~and~~to ~~supplement~~successful ~~products~~fund raising and commercialization.

~~Assuming~~The Company ~~receipt~~has ofalso ~~funding~~formed ina ~~accordance~~strong ~~with~~team ~~its~~of ~~financing~~scientific ~~strategy,~~and ~~the~~strategic ~~Company~~advisors isthat ~~ready~~complement toongoing ~~build~~R&D ~~its~~relationships ~~first~~and ~~commercial~~initiatives. With ~~scale~~this ~~system~~strong ~~within~~foundation, 8we -are 10positioned ~~months~~ to beexecute ~~followed~~on byour ~~multiple~~plan ~~additional~~to ~~systems~~build asa ~~part of its commercial growth strategy. The Company will generate~~ revenue-generating, bysustainable ~~supplying~~opportunity ~~algae biomass~~ in a ~~powder~~rapidly ~~form~~expanding ~~or oil that can be used as nutrient rich ingredients for its customers~~market.

~~EPA~~Sponsored Research (eicosapentaenoic acid) and DHA(docosahexaenoic acid) are long-chain omega-3 fatty acids. Studies have shown that EPA and DHA are important for proper fetal development, including neuronal, retinal, and immune function. EPA and DHA may affect many aspects of cardiovascular function including inflammation, peripheral artery disease, major coronary events, and anticoagulation. EPA and DHA have been linked to promising results in prevention, weight management, and cognitive function in those with very mild Alzheimer’s disease. Source: Advances in Nutrition -An International Review Journal January 2012.Programs

~~(DHA)~~In order ~~Algae~~to ~~oil~~support ~~prices~~our ~~are~~new ~~trading~~mission, inwe ~~the~~engaged ~~range~~two ofprominent ~~$60~~Canadian universities to ~~$90~~provide ~~per~~research ~~kilogram~~and ~~today~~product ~~depending~~development onin the ~~DHA~~use ~~concentration~~of ~~and~~extracts ~~country~~from ofcannabis ~~origin,~~oil ~~however,~~and algae oil isin ~~typically~~the ~~selling~~context ~~for~~of ~~$70~~cancer, toand ~~$75~~the ~~per~~development ~~kilogram.~~of ~~(source:~~novel Fpharmacotherapies &for mental Shealth, ~~May~~as ~~24th. 2016).~~follows:

The average price observed for Chlorella, an algae based protein powder of a type to be produced by the Company, was approximately €26.83/kg (US$30.59) in 2015, in bulk form, ranging from less than €10 (US$11.40) to more than €40 (US$45.60). Chlorella products on the upper range will be products produced from environmentally-controlled closed systems with 3rd party-substantiated quality claims. Users of these high-end products are dietary supplement, medical food, and personal care producers in the West. (F & S August 2015)

	1.	Dr. Jonathan Blay, PhD, FRSB, FIBMS, Csci, CBiol (Professor of Pharmacy, University of Waterloo, Professor of Pathology, Dalhousie University), the University of Waterloo – to perform research and product development on cannabis oil and its constituents in the context of the development and treatment of the colorectum, pancreas, breast and prostate cancers.

	2.	Dr. Steven Laviolette, BSc, PhD (Addiction Research Group, Dept. of Anatomy & Cell Biology, Dept. of Psychiatry, Canadian Institute for Military and Veterans Health Research), University of Western Ontario - to perform research and product development on cannabis oil and its constituents in the context of depression, post-traumatic stress disorder, anxiety and schizophrenia.

~~Our~~Each research ~~key~~program ~~competitive~~is ~~advantage~~a issponsored ~~process~~research ~~engineering~~program ~~control~~in which ~~management~~the ~~believes~~Company ~~ensures~~pays ~~the~~an ~~best~~agreed ~~possible~~amount ~~outcomes~~to ~~for~~ each ~~algae~~university ~~species~~and atin areturn ~~low~~receives the ~~cost.~~benefits ~~Growing~~of ~~algae~~the ~~successfully~~research ~~requires~~and athe ~~blend~~right ofto aacquire ~~controlled~~the ~~environment~~associated ~~and~~intellectual ~~species~~property, ~~selection.~~based ~~The~~on ~~Company's~~an ~~production~~agreed ~~flexibility~~fixed ~~and~~payment ~~tight~~with no ~~control~~ongoing ~~allows~~royalties. itThe tosponsored ~~interchange~~programs ~~selected~~run ~~species~~ for ~~improved~~three ~~algae~~years ~~yield~~at ~~and~~the ~~quality~~University orof ~~client~~Waterloo, ~~and~~at ~~marketplace~~a ~~demands~~cost asof ~~required.~~C$600,000 ~~This~~over ~~provides~~the three-year anlife, ~~immediate~~ and ~~long~~for ~~term~~four ~~competitive~~years ~~advantage~~at ~~which~~University ~~the~~of ~~Company~~Western ~~believes~~Ontario, ~~will~~at ~~allow~~a itcost toof ~~quickly~~C$1,000,000 ~~and~~over ~~profitably enter~~ the ~~market~~life asof ~~R&D~~the ~~on species selection evolves~~program.

Through its assignment of rights agreement with researchers at the University of Waterloo, the Company has access to proprietary algae species developed in the researcher's labs that management believes have very high growth rates Collaboration and ~~nutrient~~Supply content. The design enables full control of all cultivation parameters allowing Algae Dynamics to achieve optimum growing conditions for any algae species. As well, a unique CO₂ delivery system enhances delivery efficiency and minimizes CO₂ losses from the system. In essence, Algae Dynamics is combining expertise in the science of algae cultivation with the efficiency of thoughtful engineering.Agreement

~~The~~We have ~~Company has~~ entered into a ~~memorandum~~letter of ~~understanding~~intent with ~~POS~~6779264 Manitoba ~~Biosciences~~Ltd dba Bonify (“~~POS~~Bonify”), athat ~~Saskatchewan,~~will ~~Canada~~provide ~~based~~the ~~company,~~Company ~~for~~with ~~key~~several ~~process~~important ~~variables~~benefits. ~~such~~We ~~as oil extraction~~ and ~~EPA/DHA~~Bonify ~~separation.~~have agreed ~~POS~~to ~~offers~~work ~~expertise~~together ~~and~~in ~~service~~good infaith ~~bioprocessing~~to ~~applied~~finalize ~~research~~definitive ~~from~~documents ~~bench-top~~by toSeptember ~~commercialization~~30, ~~scale~~2017. ~~CO₂~~Bonify ~~and~~currently ~~agriculture~~holds ~~quality~~a ~~nutrients~~Cultivation License ~~are~~pursuant ~~expected~~ to bethe ~~supplied~~Access byto ~~outside~~Cannabis ~~suppliers~~for ~~which~~Medical ~~will~~Purposes beRegulations ~~managed~~(“ACMPR”) byin ~~us.~~Canada ~~Under~~with the ~~POS~~capability to ~~memorandum~~grow ofmultiple ~~understanding,~~strains ~~POS~~of ~~will~~cannabis ~~assist the Company~~ in ~~the~~its ~~commercialization~~state of the ~~Company's~~art ~~algae strains by identifying~~320,000 ~~isolating,~~square ~~extracting,~~foot ~~concentrating, spray drying and purifying a wide range of algae-based components~~facility. ~~POS~~In ~~also has in place~~ the ~~appropriate~~letter ~~licenses~~of ~~and~~intent, ~~quality~~we ~~assurance standards for food~~ and ~~nutraceutical~~Bonify agree ~~products.~~as ~~Billing for POS services will be on a project by project basis on terms to be negotiated.~~follows:

~~BioSilo®~~1. The Company will purchase cannabis oil extraction equipment for installation at Bonify’s facility; 2. Bonify will supply raw cannabis material and will extract cannabis oil from the raw material; 3. Upon receiving its Sales License, Bonify will ship cannabis oil to our research universities and to our end customers; 4. The Company may also purchase raw material from other Licensed Producers for processing by Bonify; and 5. The Company and Bonify will split revenues and operating costs equally after Bonify deducts the market value of cannabis material that it supplies.

~~Algae~~We believe ~~Dynamics~~that ~~has~~this ~~engineered~~relationship ais ~~proprietary~~the ~~algae~~fastest ~~production~~and ~~technology,~~surest ~~the~~path ~~Algae~~to ~~Dynamics~~revenues ~~BioSilo®,~~and ~~which~~profits ~~maximizes~~for ~~growth~~the ~~and~~Company. ~~purity,~~The ~~while~~term ~~minimizing~~of ~~its~~the ~~footprint~~agreement is ~~through~~for a3 ~~modular~~years ~~design.~~from Itcommencement ~~allows~~of usoperations toand ~~cultivate~~may abe ~~wide~~extended ~~variety~~by ofmutual ~~algae~~agreement. ~~species~~Should ~~tailored~~the toagreement ~~the~~not ~~nutrient~~be ~~and~~extended ~~purity~~we agree ~~requirements~~to oftransfer ~~our~~title ~~prospective~~to ~~customers~~the equipment to Bonify. ~~BioSilo®~~Bonify is acurrently ~~novel~~in ~~method~~the process of ~~cultivating~~obtaining ~~algae~~its ~~that~~Sales ~~combines~~License ~~the~~to ~~positive~~sell cannabis-related ~~features~~products ofsuch ~~open~~as ~~pond~~cannabis ~~systems~~oil. ~~with~~The ~~those~~key benefits of ~~enclosed~~the ~~photobioreactor~~agreement ~~algae~~to ~~production~~the ~~systems.~~Company ~~The~~are ~~system~~1) ~~produces~~the aability ~~continuous~~to supply cannabis ofoil ~~ultra-pure~~to ~~algae~~The ~~biomass~~University inof ~~high~~Waterloo ~~volumes.~~and ~~The~~University ~~design's~~of ~~small~~Western ~~footprint~~Ontario ~~and~~for ~~scalability~~research ~~results~~purposes, inand ~~very~~2) ~~low~~the ~~maintenance~~potential ~~cost.~~for ~~The~~a pathway ~~BioSilo~~to ~~® is~~revenues ~~capable~~much offaster ~~producing~~than aif ~~variety~~we ofsimply ~~species,~~applied ~~including~~for ~~Chlorella~~our ~~and~~own ~~algae~~licenses. ~~suited~~Our current target for ~~Omega-3~~commencement ~~rich~~of ~~Algae~~operations is ~~oil~~the second quarter after completion of necessary financing.

~~The~~Licensing under BioSilo® is comprised of two distinct components - the Pure BioSilo® and the Pro-BioSilo®. These two components are part of the same production method and process, each designed to perform a different function in order to optimize the cultivation of algae biomass. Essentially, the Pure BioSilo® produces algae biomass in batches in low concentrations. This low density biomass is then used to inoculate (i.e. introduced to) the larger scale Pro-BioSilo® component, which when combined with carbon sources and air/oxygen, the high density biomass is produced.ACPMR

~~The~~While we ~~Pro-BioSilo®~~believe ~~operates~~that inour aagreement ~~fed-batch~~with ~~mode~~Bonify, ~~for~~when ~~suspended~~fully ~~cell cultures. In fed-batch mode~~operational, ~~additional~~provides ~~media~~us ~~and~~with ~~nutrients~~a ~~are~~pathway ~~added~~ to revenues in the ~~bioreactor~~near-term, atwe also ~~different~~intend ~~times~~to ~~during~~apply ~~the~~for ~~cell~~our ~~cultivation~~own ~~process~~licenses to– ~~supplement~~both ~~the~~a ~~carbon~~Cultivation ~~source~~License and ~~other~~a ~~nutrients~~Sales License.

~~During~~The Cultivation ~~the~~License ~~cultivation~~allows ~~process,~~ the ~~mammalian~~holder ~~cells exhibit four phases~~to:

~~1. lag~~possess, ~~phase~~produce, provide, ship, deliver, transport and destroy dried cannabis or cannabis oil; possess, produce, and destroy cannabis in its natural form, other than marijuana or cannabis oil, for the purpose of producing cannabis oil; and possess and destroy cannabis, other than marijuana or cannabis oil, for the purpose of conducting in vitro testing that is necessary to determine the cannabinoid content of marijuana or cannabis oil.

2. exponential growth phase

3. stationary or production phase and

4. end of life phase

To achieve the highest biological product yields possible in the least amount of time, we have sourced sensors and controls to be installed in the scaled-up Pro-BioSilo®. These sensors, which measure states such as dissolved oxygen, dissolved CO₂, pH, temperature and conductivity, have been sourced, purchased and are being installed into both 50 and 100 liter bioreactors. The Sales ~~data~~License ~~equation~~allows ~~and control units have been purchased and are ready to be installed together with air, oxygen and nutrients/medium feeding connections. In order to achieve~~ the ~~highest~~holder ~~biological product yield without compromise on purity and quality, the system must have two distinct production phases. In the first phase the process is~~ to ~~ensure~~sell ~~quality~~dried ~~not~~marijuana quantity. All procedures should concentrate to provide the best condition for biological life in order to maximize product quality ignoring yield. After the growing parameters are established the second process is employed to maximize the growth. In the case of algae growth under heterotrophic conditions the cells multiply very fast. The objective when producing products such as Chlorella is to modify the growing parameters in order to establish a steep growing curve and ~~harvest~~cannabis ~~at “the midpoint” at which algae is young and healthy. In contrast, when growing algae to maximize lipids (omega~~ oil), ~~the maximum density and maximum lipid production is achieved at the top flat portion of the growth cycle.~~to:

~~Recognized~~a ~~critical~~client ~~process~~of ~~parameters~~the ~~are~~Company asor ~~follows:~~an individual who is responsible for the client; a hospital employee, if the purpose is in connection with their employment; another Licensed Producer; a Licensed Dealer; the Minister of Health; and a person to whom an exemption relating to the substance has been granted under section 56 of the Controlled Drugs and Substances Act (CDSA).

●We have pHincluded ●a ~~dissolved~~full ~~oxygen~~description ~~(DO)~~of ●the ~~temperature ● nutrient composition and by~~cannabis-~~product~~related ~~profiles~~licensing ●process ~~agitation~~at ~~profile~~the ●end ~~gas~~of ~~sparging~~this ~~method~~Business ●Description ~~nutrient~~section ~~feed~~for further ~~and~~information ~~product harvest profiles ● dissolved carbon dioxide (d CO₂)~~ and ~~osmolality (i~~disclosure.~~e. concentration of dissolved particles per kilogram of solution)~~

We do not require similar special licensing with respect to the extraction of Omega-3 oils from algae biomass and related sales.

Capital Requirement

In order to execute on our strategy as described above, we estimate an initial capital requirement of US$1.6 million to support activities over the following twelve months, including the following:

	1.	Payment to the universities to support the sponsored research programs;

	2.	Application to Health Canada for licensing under the ACPMR;

	3.	Purchase and installation of oil extraction equipment at Bonify’s facility; and

	4.	Working capital to support ongoing operations.

We have engaged investment bankers to assist with raising the required capital.

Legal and Business Context

The Company’s business of the development of unique health products and pharmaceuticals that utilize hemp and cannabis oils is rigorously regulated.

~~The~~Legal access ~~following~~to ~~flow~~medicinal ~~chart~~cannabis ~~shows~~or medical marihuana has been a ~~schematic~~gradual and regulated process in Canada, which started as early as 1999 with the granting of exemptions under the ~~Algae~~Controlled ~~Dynamics~~Drugs ~~Production~~and ~~Process:~~Substances Act (Canada). Following successful court actions in which patients reliant on medical marihuana won legal recognition of their rights to access marihuana as a medicine, the Federal Government implemented the Marihuana Medical Access Regulations (MMAR) in 2001. The MMAR created an initial regime for individuals with a prescription from their health care practitioner in the required form, to possess and use medical marihuana which they grew themselves, or which they purchased from designated producers or a Health Canada supplier.

In general, this regime of supply was restrictive, and faced continuing court challenges from users, eventually leading to the implementation of the Marihuana for Medical Purposes Regulations (MMPR) in June 2013, providing for an expansion of supply based on a regulated private industry of licensed producers of medical marihuana.

Over time, court challenges were also mounted to the restrictions in the MMPR, which initially restricted the products made available by Licensed Producers to only dried marihuana. In 2015, the Supreme Court of Canada held that the restriction making only dried medicinal marihuana available to patients was unconstitutional. In response, the Federal Government broadened the scope of available licenses for Licensed Producers to include the production and sale of cannabis oils as well as fresh marihuana leaves and buds.

The current ACMPR provides a more advanced and rigorous regulatory regime for the production, distribution and sale of medical marihuana in Canada, and regulates and contemplates the sale of medical marihuana by Licensed Producers to jurisdictions outside of Canada where the use and sale of medical marihuana and derivatives thereof are legally sanctioned.

Liberalizing Regulatory Environment and Competitive Conditions

The ACMPR, like prior regulations, requires patients seeking medical marihuana to obtain medical approval from their health care practitioner and to provide a medical document to a Licensed Producer. However, the ACMPR provisions have simplified the requirements of the MMPR, offering easier access to medical marihuana in Canada.

According to Health Canada, more than 98,000 patients had enrolled with Licensed Producers under the ACMPR regime by September 30, 2016. Health Canada also indicates that, as of September 30, 2016, the average amount of dried marihuana for medical purposes authorized per client was 2.6 grams per day. For further information, see the Health Canada website at:

http://www.hc-sc.gc.ca/dhpmps/marihuana/info/market-marche-eng.php.

Further information has recently been released by Canada’s Parliamentary Budget Officer (the “PBO”) in its November 1, 2016 report, which estimates that, in 2018, an estimated 4.6 million individuals aged 15 and over will use cannabis at least once, representing 655 metric tons of cannabis. This number could rise to 5.2 million individuals by 2021, representing 734 metric tons of cannabis. The PBO stated that the pre-tax price of legal cannabis is projected to be between $6.67 and $8.33 per gram, with a mid-point estimate of $7.50. For further information, see “Legalized Cannabis: Fiscal Considerations”, authored by the Office of the PBO and dated November 1, 2016.

Recent Developments

The Task Force on Cannabis Legalization and Regulation (the “Task Force”) appointed by the Federal Government recently released its report entitled “A Framework for the Legalization and Regulation of Cannabis”, dated November 30, 2016 (the “Report”). The Task Force makes a number of recommendations in the Report that are relevant to the market for recreational marihuana and, in particular, recommends that the legislation and regulations ultimately put in place by the Federal Government, among other things, do the following:

	●	set a national minimum age of purchase of 18;

	●	apply comprehensive restrictions to the advertising and promotion of cannabis and related merchandise;

	●	allow limited promotion in areas accessible by adults, similar to those restrictions under the Tobacco Act (Canada);

	●	require plain packaging for cannabis products that only display the producer company name, strain name, price, amounts of THC and cannabidiol (CBD), and warnings and other labelling requirements;

	●	impose strict sanctions on false or misleading promotion as well as promotion that encourages excessive consumption, where promotion is allowed;

	●	impose requirements to protect children;

	●	impose a price and tax scheme based on potency to discourage purchase of high-potency products;

	●	prohibit mixed products, for example cannabis-infused alcoholic beverages or cannabis products with tobacco, nicotine or caffeine; and

	●	allow for personal cultivation for non-medicinal purposes of up to four plants per residence subject to additional local and safety requirements.

~~Competing Algae Production Systems~~Of particular importance, the Task Force recommended that the Federal Government:

~~Algae~~● continue to regulate the production ~~systems~~of ~~can~~cannabis beand ~~divided~~its ~~into~~derivatives, ~~two~~drawing ~~broad~~on ~~categories:~~the ~~open~~current ~~pond~~medicinal marihuana production regime; ● use licensing and ~~photobioreactors~~production controls to encourage a competitive market; and ● implement a tracking system to prevent diversion and to allow for product recalls.

~~Open~~A full ~~pond~~copy ~~systems~~of the Report can be found at: http://healthycanadians.gc.ca/task-force-marijuana-groupeetude/framework-cadre/index-eng.php.

Open pond systems involve large areas of land which are converted into artificial ponds in which algae is cultured in the open air. Although they are capable of producing large volumes of algae, they suffer from a number of drawbacks, including:Markets

●	Requires vast areas of land
●	Algae growth depends on consistent temperatures
●	Sunlight variation adversely affects production
●	High risk of pond contamination
●	Evaporation	Open Pond production system
●	Low CO2 availability

We believe that our focus on development of product formulations that utilize both cannabis oil and algae is a niche strategy that will give us a unique market position. While we believe that this strategy is a natural extension of existing, rapidly growing markets, there is limited data available to measure the market opportunity. With that in mind, what follows is a discussion about the cannabis oil market and the algae oil market.

~~Closed~~Market for ~~photobioreactors~~Cannabis Oil

AtThe Canadian ~~the~~oil ~~other~~extraction ~~end~~marketplace ofis ~~the~~forecast ~~spectrum~~to ~~are~~grow ~~photobioreactors~~from ~~which~~C$1 ~~involve~~million ~~the~~in ~~use~~2015 ofto ~~complex~~C$1.7 ~~enclosed~~billion ~~reactor~~in ~~systems.~~2020, ~~These~~assuming ~~systems~~full ~~allow~~legalization in ~~the~~2018. ~~continuous~~In ~~cultivation~~terms of ~~algae~~conversion infrom adried ~~highly~~marijuana ~~controlled~~to ~~environment.~~extracts/oil, ~~Common~~due ~~systems~~diligence ~~often~~has ~~involve~~been ~~rows~~conducted ofon ~~tubes~~the ofColorado ~~various~~market, finding ~~shapes~~that ~~and~~45% ~~configurations.~~of ~~Although~~dried ~~much~~marijuana ~~effort~~users ~~has~~would ~~been~~eventually ~~put~~convert ~~into~~to ~~these~~marijuana ~~systems~~extracts/oil. inThe ~~recent~~Company ~~years,~~assumes ~~their~~the ~~large~~market ~~scale~~would gradually ~~commercialization~~reach ~~for~~an ~~algae~~approximate ~~production~~45% ~~has~~conversion ~~been~~rate ~~hampered~~ by a2018. ~~number~~Source: ofMackie ~~drawbacks~~Research ~~including:~~Capital ~~Closed~~Corporation, ~~Tube~~April ~~photobioreactor~~8, 2016 – MRCC Estimates

●CIBC World ~~High~~Markets ~~construction~~issued ~~costs~~a ●report ~~High~~in ~~maintenance~~January ~~costs~~2016 that provided some early estimates of the size of the Canadian recreational marihuana market (to be legalized by July 1, ~~especially~~2018). ~~for~~Using ~~cleaning~~the ●legalized ~~Poor~~markets ~~gas~~in ~~diffusivity~~the ●States ~~Poor~~of ~~control~~Colorado and Washington as a comparison, it estimated the Canadian recreational marihuana market is in the broad range of ~~growth~~$5 ~~conditions~~billion (eto $10 billion per year.g This compares with estimated annual Canadian liquor sales of between $5 billion and 8.7 ~~oxygen~~billion ~~accumulation~~according to Deloittes. Canaccord Genuity estimates that the number of marihuana users in the first year following the legalization of marihuana will be approximately 4,000,000. Even ~~overheating)~~as ●an ~~CO₂~~early ~~delivery~~estimate, ~~limitations~~this indicates a recreational market size in the order of 4 to 8 times the size of the medical marihuana market in Canada. (please, see the link for complete report)

~~A problem common to all enclosed reactors is that algae sticks to the internal surfaces of the light source(s), reducing the amount of light available to the algae~~http://research. ~~This viscous film must be cleaned to ensure optimal growth, increasing operating costs and down-time~~cibcwm.com//economic_public/download/eijan16.pdf.

Market for Algae Oil

The market data for algae oil presented below is brief since our plan is to utilize algae oil in our products largely to the extent that it complements our products that contain cannabis oil. Whereas until recently, our intention was to commercialize our BioSilo® algae cultivation system for the purpose of selling bulk algae oil, as well as algae biomass, to global markets, our current intention is to utilize the BioSilo system to the extent required to support our internal needs for cannabis/algae oil blends. Any algae oil that is surplus to our mission would be made available to other markets.

~~BioSilo® Advantages~~EPA (eicosapentaenoic acid) and DHA (docosahexaenoic acid) are long-chain omega-3 fatty acids. Studies have shown that EPA and DHA are important for proper fetal development, including neuronal, retinal, and immune function. EPA and DHA may affect many aspects of cardiovascular function including inflammation, peripheral artery disease, major coronary events, and anticoagulation. EPA and DHA have been linked to promising results in prevention, weight management, and cognitive function in those with very mild Alzheimer’s disease. Source: Advances in Nutrition -An International Review Journal January 2012.

●(DHA) Algae ~~Complete~~oil ~~control~~prices ofcurrently ~~all~~trade ~~growth~~in ~~parameters~~the ●range ~~Small~~of ~~foot~~$60 ~~print~~to ●$90 ~~Efficient~~per ~~aeration,~~kilogram ~~agitation~~today depending on DHA concentration and ~~mixing~~country of origin, however, ~~thus~~algae DOoil ~~(dissolved~~typically ~~oxygen)~~sells ~~control~~for ●$70 ~~Effective~~to ~~CO2~~$75 ~~removal~~per ●kilogram. ~~Water~~(source: ~~recycling~~F ~~with~~& ~~inline~~S ~~continuous~~May ~~decontamination~~24th. ~~method~~2016).

The opportunity in the global algae market stood at US$608.0 million in 2015 and is projected to be worth US$1.1 billion by 2024, growing at an annual rate of 7.39% therein. By volume, the market is poised to expand at a 5.32% CAGR between 2016 and 2024. Source: Transparency Market Research (TMR) Sept 20, 2016

Algae Used Extensively for DHA Production in Healthcare and F&B Sectors

Based on application, DHA production takes the lead in the global algae market and is expected to retain its lead throughout the forecast period. Algal biomass is most extensively used in the production of DHA, which is used in the healthcare, pharmaceutical, and food and beverages sectors. Within this segment, the pharmaceutical application sub-segment held a larger share of just under 28% in 2016, which is expected to decline over the coming years to make room for the protein sales sub-segment.

Sales and Distribution

We intend to develop marketing channels including but not limited to website promotion, medical doctors, product distributors, as appropriate and in compliance with the regulatory requirements.

Initially, we intend to sell our product formulations mainly through Bonify, our collaboration and raw material supply partner. When we have received our Sales License from Health Canada, we expect to broaden our sales and distribution channels to include patients, medical doctors, and product distributors.

The Company intends to build brand awareness by working with brand/marketing management professionals, specializing in the medical health market, to have packaged products available for sale to customers.

Marketing Strategies and Competition

Advertising and marketing of medical marihuana in Canada is regulated by the Food and Drugs Act (Canada) and the Narcotic Control Regulations issued under the Controlled Drugs and Substances Act (Canada). Licensed Producers are strictly prohibited from advertising marihuana products or promoting their use.

Our marketing activities will be focused on the promotion of the Company and increasing its visibility within the marketplace. Those efforts will include working with numerous client education centers (patient aggregators), which will review the available research data provided by the universities on medical cannabis oils and products available to clients. We believe this scientific data will help clients make educated decisions.

We believe we will have significant advantages in the market that will include multiple strain selection and consistently-produced cannabis oil products backed by scientific research that supports the improved effectiveness of each treatment.

We are actively preparing to respond to increased market demand that is expected to occur following the coming into force of proposed legislation to legalize and regulate recreational marihuana. We intend to participate fully in the legalized recreational marihuana marketplace, subject to compliance with applicable regulatory requirements.

According to Health Canada, there are currently 45 Licensed Producers in total and of these, just over 30 hold Sales Licenses. For further information, see the Health Canada website at: http://www.hc-sc.gc.ca/dhp-mps/marihuana/info/list-eng.php

Cannabinoids and Omega-3

Cannabis by itself has long been used for medical purposes and in recent decades has gained significant traction in becoming a common and preferred treatment for specific ailments. Cannabis is one of the fastest growing industries in North America. The Company’s new strategic initiative will seek product development and formulation opportunities that combine the benefits of algae and cannabis oils.

The Company’s core product development strategy has been the production of high volume specific algae species and extraction of Essential Fatty Acids (EFAs) which is the foundation of the endocannabinoid system (ECS). The ECS is a group of endogenous cannabinoid receptors located in the mammalian brain and throughout the central and peripheral nervous systems, consisting of neuromodulatory lipids and their receptors. The extracted algae Omega 3 oil with high concentrations of DHA is used as a health supplement product. In light of the potential synergies, the Company has developed its strategy which is aimed at developing new products and formulations that combine the health benefits of algae and cannabis oils.

Health Benefits of Algae Omega-3 and Cannabis

The following are some of the health benefits of algae and cannabis that the Company intends to research further to potentially combine into synergistic products:

Algae Omega-3		Cannabis
Detoxes heavy metals and toxins		Reduces stress and anxiety
Supports immune system		Reduces glaucoma and prevents macular degeneration
Fights cancer		Prevents certain cancers
Detoxifies radiation and chemotherapy		Relives pain
Lowers cholesterol and blood glucose levels		Increases appetite
Improves cardiovascular function		Stimulates antioxidant processes
Improves cognitive functioning		Fights multiple sclerosis and schizophrenia
Fights Alzheimer’s disease		Fights neurodegenerative disorders
Reduces antiplatelet effects		Reduces migraines and headaches
Reduces major coronary events		Fights epilepsy
Acts as an anti-inflammatory agent		Fights obesity and metabolic syndrome
Improves memory		Fights anorexia and osteoporosis

Research and Product Development Relationships and Scientific Advisors

Dr. Jonathan Blay, PhD, FRSB, FIBMS, Csci, CBiol (Professor of Pharmacy, University of Waterloo, Professor of Pathology, Dalhousie University), the University of Waterloo - performs research and product development on cannabis oil and its constituents in the context of the development and treatment of the colorectum, pancreas, breast and prostate cancers.

Research/Expertise:

	●	Tumour microenvironment of solid cancers (colorectal carcinoma);

	●	Mechanisms of metastasis and its regulation by proteins at the cell surface; and

	●	Development of drugs (both synthetic and natural product-derived) that interfere with cancer metastasis.

Dr. Blay’s research group applies a range of techniques in molecular and cellular biology to understand how cell behavior and the action of existing anticancer drugs are affected by the unique physiology of the cancer. This research involves investigations of chemokine pathways, and tumor-initiating cells; as well as the capacity of both synthetic and natural product-derived agents to interfere with the steps that favor metastasis. Researchers in the group identify novel pathways that may be the targets for future anticancer drugs, both derived from natural products and synthesized with the aid of colleagues through molecular design. The goal is to perform fundamental cancer-related research on botanical oils and their constituents which will carry out studies relating to the cellular safety and known cancer-related potential of components within the oils.

His full profile may be seen on the University of Waterloo, website at

https://uwaterloo.ca/:https://uwaterloo.ca/pharmacy/people-profiles/jonathan-blay

Dr. Steven Laviolette, BSc, PhD (Addiction Research Group, Dept. of Anatomy & Cell Biology, Dept. of Psychiatry, Canadian Institute for Military and Veterans Health Research), University of Western Ontario - performs research and product development on cannabis oil and its constituents in the context of depression, post-traumatic stress disorder, anxiety and schizophrenia.

Research/Expertise:

Dr. Laviolette’s research interests explore the interface between neurobiology, psychology and emotion by using an integrative combination of in vivo neuronal electrophysiology and behavioral neuropharmacology. At the general level, Dr. Laviolette is interested in exploring the neurobiological mechanisms that control how the brain processes emotionally salient information and how disturbances in these basic neural processes may lead to disorders such as addiction and schizophrenia.

Dr. Laviolette’s investigations into the neurobiology of addiction have focused on nicotine and opiates, both of which represent highly addictive substances and act on pathways in the brain that control reward, motivation and learning. Dr. Laviolette’s research group has characterized and identified specific regions in the mammalian brain that control the ‘switch’ from the non-addicted state, to the addicted state following exposure to drugs of abuse. Their ongoing research seeks to precisely define and identify the neurobiological mechanisms that control the addiction process at the behavioral, molecular and single neuron levels of analysis.

In addition, Dr. Laviolette’s research group is interested in exploring the neuronal mechanisms of emotional associative learning both in single neurons and in specific brain circuits. They have focused on the roles of the endocannabinoid system and specific dopamine receptor populations in the processing of emotionally salient information. Their ongoing research seeks to examine how disturbances in these brain receptor substrates may underlie the distorted sensory processing and emotional associative learning observed in individuals with schizophrenia.

His full profile may be seen on the University of Western Ontario, website:

www.uwo.ca:http://www.schulich.uwo.ca/anatomy/people/bios/faculty/laviolette_steve.html

Dr. Kirsten Muller (PhD) – Lead Phycologist

Over 10 years’ experience researching and cultivating algae. Currently Associate Professor at the University of Waterloo and Associate Director of the Canadian Phycology Culture Centre (CPCC), which is housed within her laboratory at the University of Waterloo (500 species). She has authored over 25 papers in leading phycology journals and has received many national and international research awards. Dr. Muller won The Luigi Provasoli Award in recognition of authoring the outstanding paper published in the Journal of Phycology (Phycological Society of America) during 2011.

Dr. Brendan McConkey (PhD) – Oil Analysis

Over 7 years’ research experience as Associate Professor at the University of Waterloo. His areas of expertise include proteomics, biochemistry, toxicology, and computational biology. Research emphasis has been on interdisciplinary approaches that combine biology, chemical engineering, and computational research.

BioSilo®

Algae Dynamics has engineered a proprietary algae production technology, the Algae Dynamics BioSilo®, which maximizes growth and purity, while minimizing its footprint through a modular design. It allows us to cultivate a wide variety of algae species tailored to the nutrient and purity requirements of our prospective customers. BioSilo® is a novel method of cultivating algae that combines the positive features of open pond systems with those of enclosed photobioreactor algae production systems. The system produces a continuous supply of ultra-pure algae biomass in high volumes. The design’s small footprint and scalability results in very low maintenance cost. The BioSilo ® is capable of producing a variety of species, including Chlorella and algae suited for Omega-3 rich Algae oil.

Intellectual Property

~~Algae~~Our intellectual ~~Dynamics~~property iscurrently ~~protecting~~pertains ~~its~~to ~~technological~~the ~~advantage~~legacy ~~through~~business aplan ~~two-pronged~~of ~~strategy.~~commercialization ~~Firstly,~~of aour ~~United~~BioSilo ~~States~~algae ~~Patent~~cultivation ~~(US~~system. The ~~8,800,202~~development ~~B2)~~of ~~Bioreactor~~BioSilo ~~was~~is ~~issued~~commercially ~~August~~relevant ~~12,~~in ~~2014,~~the acontext ~~second~~of USour ~~patent~~missions ~~(US~~of ~~14/334,909)~~developing ~~has~~unique ~~been~~products ~~filed and~~that acontain cannabis ~~Patent~~and ~~Application~~algae ~~(CA 2,735,635) on the same claims as the U~~oils.~~S. patent has been filed for Canada.~~

The following is our approach to intellectual property protection historically. Firstly, a United States Patent (US 8,800,202 B2) Bioreactor was issued August 12, 2014, a second US patent (US 14/334,909) has been filed and a Patent Application (CA 2,735,635) on the same claims as the U.S. patent has been filed for Canada.

The patent abstract is: “Biomass production apparatus is disclosed and comprises a stack of trays, each tray, in use, being in receipt of a respective layer of liquid, the layers being spaced apart from one another such that each layer has associated therewith a respective headspace. Light sources are provided for each layer and are disposed in the headspace associated with said each layer, to illuminate, at least in part, said each layer”.

Secondly, significant know-how and proprietary in-house knowledge were acquired during development at the University of Waterloo, with the result that the engineering component of intellectual property related to the BioSilo® is a significant part of the “secret sauce”. As well, the Company has identified proprietary algae species isolated by phycology (the study of algae) scientists at the University of Waterloo, Drs. K. Muller and B. McConkey. Algae Dynamics has exclusive access to these species. These species which are not genetically modified have been selected for their high nutrient values.

History of Algae Dynamics

During 2008 and 2009, ~~Algae~~we ~~Dynamics~~ developed the BioSilo® design. In 2010, ~~Algae~~we ~~Dynamics~~ partnered with ~~algae or~~ phycology experts Dr. Muller and Dr. McConkey at the University of Waterloo. This partnership provided ~~the~~us ~~Company~~ with exclusive access to proprietary algae species along with phycology expertise. Through this arrangement, ~~Algae~~we ~~Dynamics~~ operated ~~its~~our laboratory and advanced from bench scale algae experiments to operating a one meter BioSilo® installation. ~~Algae~~We ~~Dynamics~~ successfully completed ~~its~~the R&D validating key data points allowing ~~Algae~~the ~~Dynamics~~Company to deploy its technology at commercial scale, producing algae biomass of the highest quality at significantly reduced costs. ~~Algae~~We ~~Dynamics~~received funding ~~was funded~~ in part byfrom Ontario Power Authority “OPA” for the design and construction of ~~its~~the one meter BioSilo® system.

~~Algae~~The following ~~Dynamics~~summarizes ~~has~~sources ~~operated~~of ~~its~~funding ~~system~~to ~~for three years, harvested algae biomass and analyzed the product. In summary, it has achieved the following technical developments~~date:

● Demonstrated full control over algae growing parameters, facilitating optimum growth ● Grown three different species of algae successfully

	Amount ($)
Ontario Power Authority (Grant)	$	250,000
Scientific Research and Experimental Development Tax Credit		72,400
Common stock issued and fully paid at March 31, 2017		4,313,931
Additional paid in capital		1,000,214
Total	$	5,636,545

9On the basis of technology, open ponds cultivation technology held the dominant share in the algae market, while the closed photo bioreactors segment is projected to witness strong growth by 2024, in terms of both demand and sales. Geographically, Asia Pacific will emerge as one of the most attractive segments, registering a value-based CAGR of 8.0% during the forecast period. In terms of percentage share, North America dominates the algae market and is expected to generate US$344.49 million by 2024. Source: Transparency Market Research (TMR) Sept 20, 2016

● Produced algae biomass with key nutrient content that meets market requirements ● Inoculated algae culture at low levels, maintaining viability and rapid growth ● Designed, installed, and proved the nutrient and CO₂ delivery system ● Discovered and mastered a biological dewatering method ● Extracted BioOil successfully ● Demonstrated and measured the very low energy usage requirements of the system

The Company has moved into an industrial facility to commission a commercial cultivation system in readiness for commercial roll out. To date, Algae Dynamics has obtained investments from a variety of sources:

	Amount ($)
Ontario Power Authority (Grant)	$	250,000
Scientific Research and Experimental Development Tax Credit		72,400
Founders Cash		383,990
Private Funds raised as of March 31, 2016		771,901
Total	$	1,478,291

Marketing Strategies

The Company intends to enter the North American market through food/beverage and health supplement distributors as well as food and beverage manufacturers directly. Many of these companies have distribution globally which could provide Algae Dynamics access to world markets. In addition, the Company intends to develop a direct to consumer strategy with its line of branded products.

Although we will be primarily focused on selling Algae powders and tablets, subsequently, Omega-3 oils will be extracted from Algae Dynamics’ algae biomass under a toll processing agreement expected to be negotiated with POS Biosciences, Saskatoon, Saskatchewan which is subject to a memorandum of understanding. POS is approved by the Canadian Food Inspection Agency and experienced in the oil extraction process. Under the POS memorandum of understanding, POS will assist the Company in the commercialization of the Company's algae strains by identifying, isolating, extracting, concentrating, spray drying and purifying a wide range of algae-based components. POS also has in place the appropriate licenses and quality assurance standards for food and nutraceutical products. Billing for POS services will be on a project by project basis on terms to be negotiated.

The execution of the business plan has been put on hold until the appropriate commitments have been made for funding. In order to move forward the Company has entered into an agency agreement with Midtown Partners LLC (a registered broker/dealer based in New York) as of May 19, 2016 with the objective being to raise up to $10 Million. The Company is projecting that $2 to $3 Million is required to implement the first phase of the business plan. The initial funding is expected to be comprised of a combination of debt and equity.

The financing will provide working capital for the Company to execute its long term plan as well as facilitating the initial development of the branded products strategy. The launch of the branded product strategy will involve the implementation of an awareness program for the Company’s brand as well as the establishment of an online ecommerce distribution model .

The Company will build brand awareness by working with a brand/marketing management professional, specializing in the health food and supplement market, to have packaged products available for sale to customers (online and retail) as well as ingredient to sell wholesale.

We are also utilizing channel partners, or indirect connections to obtain introductions to potential customers.

Global Omega-3 Ingredients Market

InGlobal Omega ~~2014, total revenue for the global omega-~~3 ~~ingredients~~Ingredients ~~market~~Market was valued at US$1 3.883 billion ~~and~~in is2016, ~~expected~~ to ~~reach~~Surpass US$~~2.9~~ ~~billion~~13 inBillion by 2025, ~~growing~~Fueled atby aBurgeoning ~~compound annual growth rate (CAGR)~~ Growth of ~~4.2%.~~Foodborne 1Diseases

~~The~~“Major players ~~demand~~in ~~for~~the ~~omega-3~~global ~~dietary~~Omega ~~supplements~~3 inIngredients ~~the~~market ~~United~~include ~~States~~Koninklijke ~~and~~DSM ~~Western~~NV, ~~Europe~~BASF ~~will~~SE, beCroda ~~approximately~~International 2%Plc., ~~year~~NU-~~over-year~~MEGA ~~growth~~Ingredients Pty Ltd., 1Pronova BioPharma ASA, Omega Protein Corporation, and Ocean Nutrition Canada Limited, among others.”

11Global Omega 3 Ingredients Market, By Source (Nuts and Seeds, Vegetable Oils, Marine, Soya), Type (ALA, DHA, EPA), Application (Infant Formula, Supplements & Functional Foods, Animal Feed, Pharmaceuticals), and Geography - Insights, Opportunity Analysis, and Industry Forecast till 2025

~~This growth continues~~ According to ~~be supported by~~ a ~~strong~~new ~~drive~~report published by ~~the~~Coherent ~~industry~~Market toInsights. ~~continue~~Omega to3 ~~invest~~ingredients inare ~~clinical~~naturally-occurring ~~research~~polyunsaturated fatty acids and ~~development.~~nutrients ~~This~~that ~~helps~~are toessential ~~not~~for ~~only~~human ~~demonstrate known~~ health. ~~benefits,~~There ~~such~~are asthree ~~its~~types ~~impact~~of onomega ~~blood,~~3 ~~lipid levels~~ingredients, ~~but~~namely ~~also~~alpha-linoleic ~~the~~acid ~~discovery~~(ALA), eicosapentaenoic ofacid ~~previously~~(EPA) ~~unknown health benefits like cognitive~~ and ~~eye~~docosahexaenoic ~~health.~~acid (~~source: 1 F & S. August 2015~~DHA).

~~World~~Increasing cardiovascular ~~Demand~~disease and growing demand for ~~Algae~~supplements, especially in North America and Europe is surging demand for DHA and EPA. Consumers are increasingly inclined towards food rich in omega 3 fatty and also supplements containing the acid, due to increasing awareness about the various health benefits associated with the same. Cold water fish are the primary source of omega 3 fatty acids and have various health benefits such effective treatment of hypertriglyceridemia and other cardiovascular diseases. This in turn creates a highly conducive environment for growth of the global omega-~~Derived~~3 ~~Products~~market.

~~Algae oil is a good source of DHA and is widely promoted for its cognitive health benefits in infant formula and other formulas throughout the world~~https://www.coherentmarketinsights.com/insight/request-sample/370

~~Globally,~~Average life ~~the~~expectancy ~~infant~~worldwide ~~formula~~during ~~application~~2010–2013, ~~represented~~was ~~about~~pegged 48at 71.9%0 years. Increasing life expectancy, in turn increases incidence of ~~microalgae~~lifestyle and age-~~based~~related ~~DHA~~diseases ~~oils~~and ~~sold,~~conditions ~~followed~~such byas ~~dietary~~high ~~supplements~~blood ~~with~~pressure, ~~about~~diabetes, ~~28.4%~~obesity, and ~~food~~cholesterol. &Consumers across ~~beverage~~the world are looking to follow healthy lifestyles to ensure optimum calorie intake and nutrition to keep diseases at ~~19%~~bay. This ~~(source:~~change Fin &consumer Slifestyle ~~July~~is ~~2014)~~characterized by increasing demand for omega 3 ingredients.

~~Algae-based~~The U.S. ~~Omega-~~and Japan are the largest markets for omega 3 ~~Market~~ingredients. This is mainly attributed to high discretionary income and relatively high health awareness among the populace in these countries. China, India and Brazil are emerging economies that offer major potential for the omega 3 ingredients market. Germany and Israel have emerged as the key innovation hubs of the omega 3 ingredients industry. In Germany, the industry is driven by the joint venture of Royal DSM and Evonik in March 8, 2017, for omega 3 fatty acid products from natural marine algae for animal nutrition. This innovation will enable the production of omega 3 fatty acids for animal nutrition without using fish oil. Also, in May 6, 2014, AstraZeneca got approval of Epanova (omega 3 carboxylic acid), from U.S. Food and Drug Administration (FDA) which is used to lower the triglyceride level with severe hypertriglyceridemia.

~~Algae~~To know in the ~~Omega-3~~latest ~~market~~trends ~~is well established~~ and ~~Algae~~insights ~~Dynamics’~~prevalent ~~algae~~in ~~biomass~~this ~~business is validated by production of Omega-3 derived from algae. This will be a significant opportunity for Algae Dynamics~~market, ~~given~~click ~~that~~ the ~~Omega-3~~link ~~ingredients market is expected to reach $2.9 billion in 2025, growing at a compound annual growth rate of 4.2%. (source~~below: ~~F & S August 2015).~~

~~Specifically, Algae Dynamics expects to see a more significant growth rate within the algae~~https://www.coherentmarketinsights.com/market-~~derived Omega~~insight/omega-3 ~~segment.~~-ingredients-market-370

DHA Algae oil prices are trading in the range of $60 to $90 per kilogram today depending on DHA concentration and country of origin, however, algae oil is typically selling for $70 to $75 per kilogram. (source: F & S May 24th. 2016).

Traditionally, fish oils were the main source for omega-3 Polyunsaturated Fatty Acids (PUFAs), but their usage was limited due to problems such as unpleasant odor and taste, and poor oxidative stability (less shelf life). (source: F & S July 2014). However, recent technological advancements have enabled some manufacturers to overcome these formulation challenges.

The global omega-3 market was estimated to be US$14.5 billion in 2013 and is expected to reach US$21.7 billion by 2019, growing at a CAGR of 7.0% from 2014 to 2019. In 2013, the global omega-3 market was dominated by Europe and Asia-Pacific, with estimated 34.5% and 31.0% shares, respectively. Omega- 3 isIngredients ~~the most consumed ingredient as compared with fiber because of its wide-ranging applications in food, pharmaceuticals~~ and ~~dietary~~Health supplements. Various health concerns such as obesity, cardiac failure and neural disorders are driving the consumers toward nutraceuticals that contain omega-3 fatty acids as a main ingredient. The European omega-3 market was estimated to be US$5.0 billion in 2013 and is expected to reach US$7.7 billion by 2019, growing at a CAGR of 7.8% from 2014 to 2019. Consumers are ready to spend premium amounts for quality nutraceutical products, which drive demand for omega-3 fatty acids in Europe. Asia-Pacific’s market for omega-3 was estimated to be US$4.5 billion in 2013 and is expected to reach US$6.7 billion by 2019, growing at a CAGR of 6.9% from 2014 to 2019. There is an increasing number of cardiac disorders due to unhealthy food habits owing to changing lifestyles of the people in the Asia-Pacific region. Omega-3 fatty acids control the cholesterol, which is raising demand for them in the Asia-Pacific region. (source: BCC Research November 2014)Benefits

~~The~~Increasing various ~~North~~health ~~American~~diseases ~~omega-3 market was estimated to be US$4.0 billion in 2013~~ and isfueling ~~expected~~the todemand ~~reach~~for ~~US$5.9~~omega ~~billion~~3 byfatty ~~2019~~acids, ~~growing~~due atto avarious ~~CAGR~~health ofbenefits ~~6.5%~~is ~~from~~expected ~~2014~~ to ~~2019.~~propel ~~Supplements~~the market ~~are~~for ~~the~~omega ~~largest~~3 ~~application~~ingredients ~~segment~~during ~~that~~the ~~drives~~forecast ~~North~~period. ~~America’s~~For ~~omega-3~~instance, ~~market.~~a ~~(source:~~few ~~BCC~~health ~~Research~~benefits ~~November~~are ~~2014)~~listed below:

~~Beverages~~● ~~and~~Blood ~~supplements~~fat ~~dominate~~(triglycerides): consumption of fish oil can lower the ~~global~~risk ~~nutraceutical~~of heart attack and lower triglyceride levels. ● Rheumatoid arthritis: consumption of omega- 3 ~~market~~ingredients ~~with~~may 50lower the join pain and curb stiffness. ● Depression: regular consumption of omega 3% ingredients in food products may lower the level of ~~share~~depression and boost the antidepressants effects. ● Baby development: consumption of DHA is helpful for neurological and visual development in ~~2013~~infant. ~~The~~● Asthma: consumption of omega- 3 ~~based~~ingredients ~~nutraceutical~~lower ~~beverages~~the inflammation level for asthma patients and ~~supplements~~also ~~market~~enhance ~~was~~lungs ~~estimated~~function. ● ADHD: consumption of omega 3 ingredients improves mental skills such as learning and thinking capacity of children. ● Alzheimer’s disease and dementia: consumption of omega 3 ingredients may help to beprotect against Alzheimer’s disease and dementia, and have a positive effect on gradual memory loss linked to aging.

~~US$7.3 billion in 2013 and is expected to reach US$11.5 billion by 2019, growing at a CAGR of 8.1% from 2014 to 2019. (source~~Source: Coherent ~~BCC~~Market ~~Research~~Insights ~~November~~Analysis ~~2014~~(2016)

The omega-3 PUFAs ingredients market analyzed in this study include EPA and DHA omega-3s from marine oils such as fish oils, krill oils, squid oils, and algal oils. The end use application markets covered in the report include dietary supplements, food & beverages, pet nutrition, infant nutrition, pharmaceuticals and clinical nutrition. Worldwide, consumption of omega-3 PUFAs, estimated at 123.8 thousand metric tons worth US$2.3 billion in 2013, is forecast to be 134.7 thousand metric tons valued at US$2.5 billion in 2014. By 2020, it is projected that demand for omega-3 PUFAs globally will reach 241 thousand metric tons with a value of US$4.96 billion, thereby posting a volume CAGR of almost 10% and a value CAGR of 11.6% between 2013 and 2020. (source: Health & Nutrition, Omega-3: A Global Market Overview, February 25, 2014)

Algae oils represent approximately 16.8% of the global Omega-3 Ingredients market, and are expected to increase their market share, as indicated above. Algae Dynamics is focused on providing North American clients with ultra-pure algae products; however Algae Dynamics recognizes that the market for its potential products is global in nature, connecting Algae Dynamics’ business to many other markets around the world. Algae-derived Omega-3 is a relatively new entry into the food and beverage additive industry, competing against fish oil which has been produced for centuries. Microalgae Oils generate 34.8% revenue of the global Omega-3 ingredients market. (source: F & S August 2015)

In 2012, the global market for microalgae based DHA +30% oil was estimated to be nearly $350 million, and about 4,614 metric tons. Globally, the infant formula application represented about 48.9 percent (unit shipment) Description of ~~microalgae based DHA +30% oils sold, followed by dietary supplements with about 28.4 percent. Food and beverage was 19.4 percent of the volumes. (source: F & S May 2014)~~Property

~~Algae~~The Company ~~Omega-3~~has entered into a five year operating lease, expiring November 2018, for Unit 37-4120 ~~Growth~~Ridgeway ~~Factors~~Drive in Mississauga, Ontario, which consists of 2,224 square feet of office and production facilities. The current space is adequate for the purpose of constructing an initial production system. The monthly base rental of the current facility is $1,362 plus the Company’s estimated portion of property taxes and operating expenses which are currently $810 per month.

● Sustainability of marine sources of omega-3 is rapidly becoming a key concern, particularly in light of the recent estimate by the Global Organization for EPA and DHA Omega -3 “GOED” indicating that based on the World Health Organization’s omega-3 intake recommendation of 250 milligrams (mg) per day, 650 thousand metric tons of DHA and EPA are required relative to current ocean capacity of 530,000 tons. (source: www.nutraingredients-usa.com October 2014) ● Algae-based omega-3 oils are perceived to be sustainable, vegan friendly, and free of contamination such as heavy metals. They are therefore becoming increasingly popular with end users. 1 ● Additionally, the fishing industry is constrained by fishing quotas of about 1 million metric tonnes annually, therefore it is anticipated that fish oil demand will exceed supply by 2017. This opens up the market to other sources of omega-3 ingredients, such as algae. 1 ● Despite there being an increasing trend for consumers to demand heart health solutions, which drives growth of the omega-3 ingredients market, there continues to be quality concerns that negatively impact consumer adoption. These quality concerns relate to inconsistent quality compositions of raw materials and the fear of toxin contamination, which is dependent on technology and raw material origins. 1 ● In 2010, the industry witnessed several class action lawsuits stating that various industry participants did not effectively report the amount of mercury and polychlorinated biphenyls (PCB) in fish-based products. (source: 1 F & S August 2015)

Chlorella Market

Due to strict safety regulations and commercial factors, Chlorella is one of the few microalgae species eligible for human consumption. Algae Dynamics’ business model initially focuses on the cultivation of Chlorella, a species which Algae Dynamics believes has underutilized properties:

Ounce per ounce, Chlorella contains the following:

● Six times more beta-carotene than spinach. ● More dietary fiber than leading fruits and vegetables. ● More complete protein per serving than soy – and twice as much as steak. ● Higher nucleic acid content than any food – even more than sardines – for slowing down the visible signs of aging. ● 50 times the antioxidants and flavonoids as Vitamin C or Vitamin E for fighting free radical damage. ● 18 powerful amino acids including glutamic acid to help sharpen memory and defense boosting lysine, and arginine to enhance your natural production of immune cells. ● More than 20 vitamins and minerals to encourage optimum health and energy.

In 2014, the global market for chlorella powder ingredients was estimated to be €148.8 million (US$169.6 million), corresponding to 6,600 metric tons of demand. 1

In 2015, the average price observed was approximately €26.83 (US$30.59) in 2015, in bulk form, ranging from less than €10 (US$11.40) to more than €40 (US$45.60). Chlorella products on the upper range will be products derived from environmentally-controlled closed systems with 3rd party-substantiated quality claims. Users of these high-end products are dietary supplement, medical food, and personal care producers in the West. 1

In 2017, the global market for chlorella powder ingredients is expected to be over 10,000 metric tons of demand and the food and beverage application in the Asia-Pacific region (APAC) will account for two-thirds of chlorella powder ingredients sold. Other significant market opportunities will exist in the dietary supplement/functional food sectors in North America and Europe. 1

It is expected that price will grow at an estimated compound annual growth rate of 7.9% from 2014 to 2020. 1

Chlorella is claimed to help fight several types of cancer, bacterial and viral infections, enhance the immune system, lower blood pressure and cholesterol levels, and promote healing of intestinal ulcers, diverticulosis, and Crohn's disease. It is said to "cleanse" the blood, digestive system, and the liver. 1

Chlorella contains vitamin C and carotenoids, both of which are antioxidants that help block the action of free radicals (activated oxygen molecules that can damage cells). Chlorella is also reported to contain high concentrations of B-complex vitamins. (source: 1 F & S August 2015)

Nutritional and Functional Food Ingredients Market for Algae Biomass

Consumers represent the strongest driver for the nutritional and functional ingredients market as they switch to functional foods. The functional food trend has seen substances such as ginseng, kombucha, Omega-3 and vitamins added to food and beverages. Algae Dynamics’ products, powder algae biomass and Omega-3, can be used as additives in these functional foods and additives. This functional food trend offers food manufacturers many possibilities for developing customized functional food products. In 2011, functional foods accounted for approximately 30 percent of the North American Food Market volume.

● The largest segment (22%) of the functional food ingredients market is a collection of additives that do not neatly fit into other categories. These include polyol, phytoestrogens, and Omega-3. ● The second-largest segment (21%) is vitamins. Major ingredients of this category are vitamin A, B3 (niacin), B2 (riboflavin), B1 (thiamine), B5 (pantothenic acid), B6 (pyridoxine), B9 (folate), B12 (cobalamine), C, D, E, and biotin. ● The third-largest segment (16%) is minerals. The major minerals used as functional ingredients are calcium, potassium, magnesium, and selenium.

Algae Dynamics’ algae biomass is rich in all of these elements, which should allow it to penetrate the entire market, rather than only one segment. One of the initial target products is the chlorella algae species.

In 2014, total revenue for the global chlorella was €148.8 million (US$169.6 million) and is expected to reach €666.8 million (US$760 million) in 2020, growing at a CAGR of 28.4%. Growth will be driven by the increasing demand for protein ingredients. As well, the lower euro value relative to the US dollar increases growth. 1

The APAC market leads in terms of demand due to chlorella products being an integral part of many APAC countries cuisine, but Europe and North America are expected to make up ground by 2020. (source: 1 F & S August 2015)

Sales & Marketing Strategy

Globally, there were 351 products containing Chlorella launched between February 2013 and April 2016: 180 in the food category; 91 in the drink category, and 80 in the pet products category. (source: Agriculture Canada April 2016)

Algae Dynamics intends to enter the North American market through food and health supplement distributors as well as food and beverage manufacturers directly. Many of these companies have distribution globally which could provide Algae Dynamics access to world markets.

Christopher Shanahan, Global Program Manager – Food & Agriculture, Frost & Sullivan, North America, San Antonio, United States has agreed in principle to be Algae Dynamics’ market development and customer integration advisor. Mr. Shanahan has direct experience in data analysis, project management, consulting and market engineering. Particular expertise in: econometric-based market analysis including mathematical programming, statistical benefit-cost analysis, market forecasting, scenario engineering, product innovation adoption models and business strategy decision models.

Algae Dynamics is also utilizing channel partners to gain access to potential clients. Key channel partners are:

Bioenterprise Corporation, a business accelerator and commercialization agent. Bioenterprise was established to help promote the creation, growth and expansion of businesses engaged in agri- technologies. Acting as coach and catalyst, Bioenterprise works with companies at all stages, from start-ups to emerging and well- established businesses. Through their global network of industry contacts and professionals, they are able to assess the critical components needed to mitigate risks inherent in early stage business. Areas of expertise include; market/industry research and competitive analysis, nutraceutical, functional food, and biomaterial based technologies. Algae Dynamics is working directly with Jessica Bowes, M.Sc. in Human Health & Nutritional Science, Sr. Business Analyst, Food Nutrition & Health.

Innovation Guelph (“IG”). IG assists companies in achieving growth of market share, entry into new markets, and improving the bottom line. IG is also a member of the Ontario Network of Excellence (“ONE”). Algae Dynamics is working directly with Dr. Mark Goldberg (our mentor), an Entrepreneur In Residence for IG. Dr, Goldberg has a PhD in pharmacology and has over 25 years of experience in bio-medical research and as a regulatory consultant.

As noted in the Marketing Strategies section implementation of the business plan, including the development of the branded product strategy noted therein is dependent on financing.

Competition

Companies Developing Open Pond Systems

The basic premise of this methodology is that by mimicking the natural environment of algae, commercially profitable amounts of algae can be produced albeit with a degree of unpredictability due to Mother Nature. Unfortunately, there are drawbacks with this method as previously described “Competing Algae Production Systems”.

Companies Developing Enclosed Photobioreactors

Cultivating algae in enclosed photobioreactors has drawn a lot of attention in recent years due to the ability to better control algae cultivation conditions. We believe this has resulted in larger algae yields compared to open pond systems, with some photobioreactor systems able to reach 150g/m2/day biomass production compared to 3,600g/m2/day for Algae Dynamics’ technology. However, this production rate was achieved only at laboratory scale but, in any event, appears lower than Algae Dynamics’ production rate.

The market is continually facing competition from other competing nutritional ingredients. However, the wide range of health benefits offered by PUFA ingredients is unmatched. 1

Having a strong scientific focus in this industry is critical in terms of gaining and maintaining a sustainable competitive advantage. (source: 1 FAS. August 2015)

Total Omega-3 and Omega-6 PUFA Ingredients Market – Competitive Landscape

Microalgae Production Capacity and Insights by Selected Industry Participants, Global, 2012

Microalgae Production Capacity/Tons,

Company	System	2012
Lonza Group	Closed system/bioreactor		12,500
Royal DSM	Close system/bioreactor		5,000
Seambiotic Ltd.	Open pond technology		2,500
Solazyme	Closed system/bioreactor		N/A
Soliance	Closed system/bioreactor		100
Heliae Inc.	Algae cultivation supplier		1
Aurora	Open pond technology		1,750
Cellana	Open pond technology		180
AlgaeBio	Closed pond technology		10
Roquette	Closed system		250
Enzymotec	Produces DHA from fish sources		N/A

Updated Competitive Landscape

The top 3 Tier I companies (DSM, BASF, Wuxi Xunda Marine Biological Products) in the total omega-3 ingredients market occupy 52% of the global market and the selected Tier II companies occupy a combined 14% of the global market.

(source: F & S August 2015)

Risks & Risk Mitigation Strategy

Algae Dynamics has identified several key risk factors including:

1. Biological expertise is important. It is not enough to build an algae cultivation system but only have limited expertise on the algae itself. Algae are complex organisms that require knowledge and experience to effectively culture. Algae Dynamics Response. Algae Dynamics has access to a number of propriety species collected, isolated and incubated by Dr. Muller and her colleagues. 2. Growth Rate critical. There must be complete control of all parameters in a contaminant-free environment and it is critical to efficiently uptake nutrients and carbon sources. Algae Dynamics Response. The closed loop design minimizes contamination issues and all parameters are integrated for optimum growing conditions. 3. Impurities must be avoided. Cultivation systems in the open environment are exposed to variable elements. If their design does not facilitate sectional integrity, detrimental contamination can result. Algae Dynamics Response. The Algae Dynamics BioSilo® will be in an environment which meets good manufacturing practices for the production of nutriceuticals and the modular design facilitates isolating contamination. Each module can be disinfected and re-inoculated.

4. CO₂ delivery must be efficient. Most systems rely on “bubbling” of CO₂ into the algae allowing large amounts to pass through the culture to the atmosphere reducing CO₂ sequestration by the algae. Algae Dynamics Response. The Algae Dynamics BioSilo® has a unique CO₂ delivery system that significantly reduced bubbling and CO₂ loss to the atmosphere. 5. Land area must be minimized. Using large tracts of land for cultivating algae can be costly and inefficient. Algae Dynamics Response. The Algae Dynamics BioSilo® has a small footprint and can be located at any industrial site. 6. Operating and energy costs must be minimized. Although some photobioreactor designs have demonstrated excellent algae yields, their maintenance costs are high. Algae Dynamics Response. The Algae Dynamics BioSilo® operates using a dual lighting system and a low amount of electrical energy. The multi- layer design takes advantage of gravity and the selection of narrow spectrum LED lighting reduces energy requirements. As well, Algae Dynamics’s design eliminates tube fouling.

Description of Properties and Production Plans

The Company has entered into a five year operating lease, expiring November 2018, for Unit 37-4120 Ridgeway Drive in Mississauga, Ontario, which consists of 2,224 square feet of office and production facilities. The current space is adequate for the purpose of constructing an initial production system. The monthly base rental of the current facility is $1,362 plus the Company’s estimated portion of property taxes and operating expenses which are currently $810 per month. The Company will require additional space for multiple production systems; however, suitable facilities are readily available.

The Company is projecting that $2 to $3 Million is required to implement the first phase of the business plan. The initial funding will be comprised of a combination of debt and equity. Upon completion of the first phase of the planned financing, the Company expects to complete the build out of its production process within 8 months. We estimate that the amount of time between commencement of production and product reaching market to be approximately 3 to 4 months.

The Company obtains its algae strains from the University of Waterloo. Other raw ingredients include water, nutrients, and carbon dioxide, all of which are readily available. During the first year of operations, we anticipate using approximately 1,526 gallons of water, 312 pounds of nutrients (such as glucose, chemical fertilizer, metal trace elements, and vitamins) and 3,330 pounds of carbon dioxide. When the Company commences production of algae, there will be certain lead times before completed products reach market.

When in service, the Company believes it will require only four employees to operate the initial production installation, a process control engineer, biochemical engineer, biochemical technician and a maintenance technician.

Regulatory Risks

Algae Dynamics will be subject to various US, federal, provincial, and local environmental laws and regulations including the health and safety of employees, and manufacturing practices. In addition, some of these laws and regulations require contemplated facilities to operate under permits that are subject to renewal or modification. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns.

The Company does not intend to conduct any cannabis related business in the United States due to the uncertain regulatory environment. However, it may distribute its algae produced products to the United States nutraceutical market.

United States

The processing, formulation, safety, manufacturing, packaging, labeling, advertising, and distribution of food supplement products are subject to regulation by one or more federal agencies, including the FDA, the Federal Trade Commission (“FTC”), the Consumer Product Safety Commission (“CPSC”), the United States Department of Agriculture (“USDA”), and the Environmental Protection Agency (“EPA”), and by various agencies of the states and localities in which the products are sold. The area of business that these and other authorities regulate include, among others:

● claims and advertising; ● labels; ● ingredients; and ● manufacturing, distributing, importing, selling and storing of products.

● labels;

● ingredients; and

● manufacturing, distributing, importing, selling and storing of products.

In particular, the FDA regulates the formulation, manufacturing, packaging, storage, labeling, promotion, importation, and distribution and sale of dietary supplements and food ingredients in the United States, while the FTC regulates marketing and advertising claims.

Some of our potential products ~~are~~may be packaged and sold directly to retailers and consumers, and therefore are subject to greater oversight and enforcement action by the FTC. In recent years, the FTC has instituted numerous enforcement actions against consumer packaged goods companies for failure to have adequate substantiation for claims made in advertising or for use of false or misleading advertising claims.

The Dietary Supplement Health and Education Act of 1994 (“DSHEA”), an amendment to the Federal Food, Drug and Cosmetic Act (“FDC Act”), established a framework governing the composition safety, labeling, manufacturing and marketing of dietary supplements. Generally, under DSHEA, dietary ingredients that were marketed in the United States prior to October 15, 1994 may be used in dietary supplements without notifying the FDA. “New” dietary ingredients (i.e., dietary ingredients that were “not marketed in the United States before October 15, 1994”) must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been “present in the food supply as an article used for food” without being “chemically altered”. A new dietary ingredient notification must provide the FDA evidence of a “history of use or other evidence of safety” establishing that use of the dietary ingredient "will reasonably be expected to be safe”. A new dietary ingredient notification must be submitted to the FDA at least 75 days before the initial marketing of the new dietary ingredient. The FDA may determine that a new dietary ingredient notification does not provide an adequate basis to conclude that a dietary ingredient is reasonably expected to be safe. Such a determination could prevent the marketing of such dietary ingredient.14

22The Dietary Supplement Health and Education Act of 1994 (“DSHEA”), an amendment to the Federal Food, Drug and Cosmetic Act (“FDC Act”), established a framework governing the composition safety, labeling, manufacturing and marketing of dietary supplements. Generally, under DSHEA, dietary ingredients that were marketed in the United States prior to October 15, 1994 may be used in dietary supplements without notifying the FDA. “New” dietary ingredients (i.e., dietary ingredients that were “not marketed in the United States before October 15, 1994”) must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been “present in the food supply as an article used for food” without being “chemically altered”. A new dietary ingredient notification must provide the FDA evidence of a “history of use or other evidence of safety” establishing that use of the dietary ingredient “will reasonably be expected to be safe”. A new dietary ingredient notification must be submitted to the FDA at least 75 days before the initial marketing of the new dietary ingredient. The FDA may determine that a new dietary ingredient notification does not provide an adequate basis to conclude that a dietary ingredient is reasonably expected to be safe. Such a determination could prevent the marketing of such dietary ingredient.

The FDA has issued a draft guidance governing notification of new dietary ingredients. While it is not mandatory to comply with FDA guidance, it is a strong indication of the FDA'’s current views on the topic of the guidance, including the agency’s position on enforcement. Depending on the recommendations made in the guidance, if and when it is finalized, particularly those relating to animal or human testing, such guidance could make it more difficult for Algae Dynamics to successfully provide notification of new dietary ingredients. Moreover, such guidance could change the status of ingredients that the industry has viewed as “old” dietary ingredients to “new” dietary ingredients that may require submission of a new dietary ingredient notification.

The FDA or other agencies could take actions against products or product ingredients that in its determination present an unreasonable health risk to consumers which would make it illegal for us to sell such products. In addition, the FDA could issue consumer warnings with respect to the products or ingredients that Algae Dynamics sells. Such information could be based on information received through reporting of serious adverse events mandated by the FDC Act.

DSHEA permits “structure/function claims” to be included in labeling for dietary supplements without FDA pre-market approval. Such statements must be submitted to the FDA within 30 days of marketing. Such statements may describe how a particular dietary ingredient affects the structure, function, or general well-being of the body, or the mechanism of action by which a dietary ingredient may affect body structure, function, or well- being, but may not expressly or implicitly represent that a dietary supplement will diagnose, cure, mitigate, treat, or prevent a disease. A company that uses a structure/function claim in labeling must possess scientific evidence substantiating that the statement is truthful and not misleading. If the FDA determines that a particular structure/function claim is an unacceptable drug claim or an unauthorized version of a “health claim”, or, if the FDA determines that a particular claim is not adequately supported by existing scientific data or is false or misleading, we would be prevented from using the claim.

In addition, DSHEA provides that so-called “third-party literature”, e.g., a reprint of a peer-reviewed scientific publication linking a particular dietary ingredient with health benefits, may be used “in connection with the sale of a dietary supplement to consumers” without the literature being subject to regulation as labeling. The literature: (1) must not be false or misleading; (2) may not “promote” a particular manufacturer or brand of dietary supplement; (3) must present a balanced view of the available scientific information on the subject matter; (4) if displayed in an establishment, must be physically separate from the dietary supplements; and (5) should not have appended to it any information by sticker or any other method. If the literature fails to satisfy each of these requirements, the Company may be prevented from disseminating such literature in connection with Algae Dynamics products, and any dissemination could subject our products to regulatory action as an illegal drug.

In June 2007, pursuant to the authority granted to the FDA by DSHEA, the FDA published detailed Current Good Manufacturing Practice ("“GMP"”) regulations that govern the manufacturing, packaging, labeling and holding operations of dietary supplement manufacturers. The GMP regulations, among other things, impose significant recordkeeping requirements on manufacturers. The GMP requirements are in effect for all manufacturers, and the FDA is conducting inspections of dietary supplement manufacturers pursuant to these requirements. There remains considerable uncertainty with respect to the FDA'’s interpretation of the regulations and their actual implementation in manufacturing facilities. In addition, the FDA'’s interpretation of the regulations will likely change over time as the agency becomes more familiar with the industry and the regulations. The failure of a manufacturing facility to comply with the GMP regulations renders products manufactured in such facility "“adulterated,"” and subjects such products and the manufacturer to a variety of potential FDA enforcement actions.

In addition, under the FDA Food Safety Modernization Act (“FSMA”), which was enacted on January 4, 2011, the manufacturing of dietary ingredients contained in dietary supplements will be subject to similar or even more burdensome requirements, which will likely increase the costs of dietary ingredients and will subject suppliers of such ingredients to more rigorous inspections and enforcement. The FSMA will also require importers to take measures to ensure that the foods they import, including dietary supplements and dietary ingredients, meet domestic requirements. This could increase the cost of those articles, subject their importation to greater scrutiny, and potentially restrict their availability.

The FDA has broad authority to enforce the provisions of federal law applicable to dietary supplements, including powers to issue a public warning or notice of violation letter to a company, publicize information about illegal products, detain products intended for import, request a recall of illegal products from the market, and request the Department of Justice to initiate a seizure action, an injunction action, or a criminal prosecution in the U.S. courts. The FSMA expands the reach and regulatory powers of the FDA with respect to the production of food, including dietary supplements. The expanded reach and regulatory powers include the FDA'’s ability to order mandatory recalls, administratively detain domestic products and administratively revoke manufacturing facility registrations, thereby effectively enjoining manufacturing of dietary ingredients and dietary supplements without judicial process. The regulation of dietary supplements may increase or become more restrictive in the future.

The FTC exercises jurisdiction over the advertising of dietary supplements. In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to have adequate substantiation for claims made in advertising or for the use of false or misleading advertising claims. Such actions could result in substantial financial penalties and significantly restrict the marketing of a dietary supplement.

Legislation or regulations may be introduced which, if passed, would impose substantial new regulatory requirements on the manufacture, packaging, labeling, advertising and distribution and sale of our products. In March 2009, the General Accounting Office (the “GAO”) issued a report that made four recommendations to enhance the FDA'’s oversight of dietary supplements. The GAO recommended that the Secretary of the Department of Health and Human Services direct the Commissioner of the FDA to: (1) request authority to require dietary supplement companies to identify themselves as a dietary supplement company and update this information annually, provide a list of all dietary supplement products they sell and a copy of the labels and update this information annually, and report all adverse events related to dietary supplements; (2) issue guidance to clarify when an ingredient is considered a new dietary ingredient, the evidence needed to document the safety of new dietary ingredients, and appropriate methods for establishing ingredient identity; (3) provide guidance to industry to clarify when products should be marketed as either dietary supplements or conventional foods formulated with added dietary ingredients; and (4) coordinate with stakeholder groups involved in consumer outreach to identify additional mechanisms for educating consumers about the safety, efficacy, and labeling of dietary supplements, implement these mechanisms, and assess their effectiveness. These recommendations could lead to increased regulation by the FDA or future legislation concerning dietary supplements.

International

In Canada and foreign markets, prior to commencing operations and prior to making or permitting sales of our products in the market, we may be required to obtain an approval, license or certification from the relevant country’s ministry of health or comparable agency. Where a formal approval, license or certification is not required, we nonetheless seek a favorable opinion of counsel regarding our compliance with applicable laws. Prior to entering a new market in which a formal approval, license or certificate is required, we work extensively with local authorities in order to obtain the requisite approvals. The approval process generally requires us to present each product and product ingredient to appropriate regulators and, in some instances, arrange for testing of products by local technicians for ingredient analysis. The approvals may be conditioned on reformulation of our products, or may be unavailable with respect to some products or some ingredients. Product reformulation or the inability to introduce some products or ingredients into a particular market may have an adverse effect on sales. We must also comply with product labeling and packaging regulations that vary from country to country. Our failure to comply with these regulations can result in a product being removed from sale in a particular market, either temporarily or permanently.

The Company cannot determine what effect additional domestic or international governmental legislation, regulations, or administrative orders, when and if promulgated, would have on Company’s business in the future. New legislation or regulations may require the reformulation, elimination, or relabeling of certain products to meet new standards and revisions to certain sales and marketing materials, and it is possible that the costs of complying with these new regulatory requirements could be material.

~~Technical Risks~~17

~~Although~~The ACMPR ~~algae~~Licensing ~~growth is well documented, there are three primary challenges in cultivating algae at high volumes:~~Process

1The market for cannabis (including Medical Marijuana) in Canada is regulated by the Controlled Drugs and Substances Act (CDSA), the ACMPR, the Narcotic Control Regulations, and other applicable law. ~~Growth~~ ~~Rates~~Health Canada is the primary regulator of the industry as a whole. The ACMPR aims to treat cannabis like any other narcotic used for medical purposes by creating conditions for a new commercial industry that is responsible for its production and distribution.

The table ~~BioSilo®~~below ~~system~~provides isa ~~designed~~general tooverview ~~tailor the growing parameters for several species~~ of ~~algae, allowing Algae Dynamics to exceed~~ the ~~average~~licensing ~~production~~process ~~rate~~as ofdescribed ~~other~~by ~~systems.~~Health Canada:

	Growing parameters control		Benefits
	Summary
	-	Light source intensity	-	Extremely high purity levels
Step 1	Preliminary Screening: When Health Canada receives an application, preliminary screening is conducted to ensure that the application is complete. Any incomplete applications will be returned to the applicant, and complete applications are assigned an application numbers. The assignment of an application number indicates that the application has completed the preliminary screening stage.
	-	CO₂ absorption efficiency	-	Scalable
Step 2	Enhanced Screening: After being assigned an application number, a more thorough review of the application is conducted to ensure that there is sufficient information to assess whether the requirement of the regulations are met. Specific elements given initial consideration include: the location of the proposed site; risks to public health, safety and security; the proposed security measures; and the credentials of the proposed quality assurance person to meet the good production requirements outlined in Subdivision D of the ACMPR. Health Canada will verify that the applicant has provided notice of the application to the senior official with the local government in the jurisdiction of the proposed site. The applicant is responsible for ensuring that they are in compliance with all applicable provincial, territorial, and municipal legislation, regulations, and bylaws, including zoning restrictions, fire and electrical safety requirements, and waste management requirements. At this step, Health Canada may request additional information that is relevant to the application.
	-	Algae cell mixing method and rate	-	Minimized cultivation costs
Step 3	Security Clearance: Once the screening of an application is complete, the security clearance forms for key personnel will be sent for processing. At this point, the Minister for Health will conduct criminal record checks and will review the relevant background of key personnel to assess whether the applicant poses a risk to the integrity of the control of the production and distribution of cannabis under the CDSA. The amount of time required to conduct mandatory security checks varies with each application.
	-	PH and temperature	-	Computer controlled process
Step 4	Review: Once all security clearances are obtained, an application will be thoroughly reviewed to validate the information provided. Given the extensive review process, applicants are generally required to communicate with Health Canada multiple times to clarify elements of their application. Health Canada may also request additional information. A detailed review and assessment of physical security plans will be conducted at this stage. Applicants must meet a minimum of a level 7 (as defined in the Directive on Physical Security Requirements for Controlled Substances - Licensed Dealers Security Requirements for the Storage Of Controlled Substances) to be considered for a licence. It is a requirement that physical security comply with the Directive.
	-	Nutrients delivery ratio	-	Consistent nutrient composition
	-	A Proprietary liquefied CO₂ technology that resolves the problems associated with widely used CO₂ diffusers (bubblers)	-	Computer controlled O2/N2/CO₂
			-	Continuous production 24/7 process without maintenance interruption

2518

2. Space

	Once Health Canada is satisfied that an application is ready for a pre-licence inspection, they will contact the applicant and identify information that needs to be confirmed before a pre- licence inspection can be scheduled. This includes, but may not be limited to, confirming how the applicant has indicated in their application that they would comply with Part 1, Division 1, Subdivision C (Security Measures) of the ACMPR.

Step 5	Pre-Licence Inspection: When Health Canada is satisfied of the prior steps and when the applicant has confirmed that the site has been fully built and security measures are in place, a Pre-Licence Inspection will be scheduled. The inspection may cover, but is not limited to: Security Measures, Good Production Practices, Packaging, Labelling and Shipping, Registration, and Record Keeping. The purpose of the inspection is to verify that the information submitted to Health Canada is accurate and to assess compliance with the applicable sections of the ACMPR prior to licence approval. Any identified deficiencies will be communicated to the applicant and must be addressed prior to a licence being issued.

Step 6	Licensing: Next, the results of the Pre-Licence Inspection are reviewed along with all of the information submitted by the applicant and any other additional relevant information. If it is determined that the issuance of the licence is not likely to create risks to public health, safety or security, including the risk of cannabis being diverted to an illicit market or use, and there are no other grounds for refusing the application, a licence will be issued. Health Canada has introduced a graduated licensing process. Upon approval, applicants will first be issued a production licence. This will enable Health Canada inspectors to confirm that the first batch of marijuana produced meets the production standards and requirements outlined in the ACMPR. The Licensed Producer’s first crop of marijuana will be inspected to establish whether the marijuana meets the Licensed Producer's specified quality control standards and the Good Production Practices set out in Subdivision D of the ACMPR. Only once Health Canada is satisfied the Licensed Producer meets the requirements of the ACMPR will a licence be amended to allow sale to the public.

Small production space requirements		Benefits – need to think in 3 dimensions
-	Stacks of shallow cultivation trays	-	Efficient use of space (volume not just area)
-	Compact light source (maximum absorption)	-	Minimize capital and operating cost
-	Combined CO 2 and nutrient supply system	-	Easy process component access
-	Recyclable media (water + minerals)	-	Automatic in-situ process control
-	Compact mixing and temperature control	-	Algae is harvested at the bottom, the water is cleaned and re-circulated for reuse
-	In-situ harvesting process
-	Maximum heating and cooling efficiencies to facilitate optimal growing conditions

ACMPR Licences

3.The Cultivation ~~Energy~~Licence, ~~Requirements~~ if received, will allow the Company to:

~~Algae~~● ~~Dynamics~~possess, ~~Solutions~~produce, ~~Benefits~~provide, -ship, ~~Algae~~deliver, ~~Dynamics~~transport ~~uses~~and adestroy ~~proprietary~~dried ~~design~~cannabis ~~taking~~or ~~advantage~~cannabis ofoil ~~gravity~~● -possess, ~~Extremely~~produce, ~~efficient~~and ~~use~~destroy ofcannabis ~~energy~~in -its ~~Algae~~natural ~~biomass~~form, ~~solution~~other ~~flows~~than ~~down~~marijuana ~~through~~or ~~the~~cannabis ~~tank~~oil, ~~with~~for ~~optional~~the ~~conditions~~purpose ~~throughout~~of ~~the~~producing ~~trays~~cannabis -oil ~~Fewer~~● ~~moving~~possess ~~parts~~and ~~reduces~~destroy ~~energy~~cannabis, ~~labor~~other ~~and~~than ~~maintenance~~marijuana ~~cost~~or -cannabis ~~Use~~oil, for the purpose of ~~LED~~conducting ~~lighting~~in ~~system~~vitro ~~provides~~testing ~~additional~~that ~~energy~~is ~~efficiency~~necessary to determine the cannabinoid content of marijuana or cannabis oil

26The Sales Licence, if received, will allow the Company to sell dried marijuana and cannabis oil to:

	●	a client of the Company or an individual who is responsible for the client

	●	a hospital employee, if the purpose is in connection with their employment

	●	another Licensed Producer

	●	a Licensed Dealer

	●	the Minister of Health

	●	a person to whom an exemption relating to the substance has been granted under section 56 of the Controlled Drugs and Substances Act (CDSA)

The Cultivation Licence will also allow the Company to apply for an import permit to import dried marijuana cannabis as described by the ACMPR. The Cultivation Licence will also allow the Company to apply for an export permit to export dried marijuana or cannabis other than marijuana or cannabis oil, for the purpose of conducting in vitro testing

that is necessary to determine the cannabinoid content of marijuana or cannabis oil. Last, the Cultivation Licence will allow the Company to ship dried marijuana or cannabis oil to a health care practitioner in the case referred to in subparagraph 130(1)(f)(iii) of the ACMPR.

The ACMPR also provide for licenses and import permits relating to fresh marijuana. The Licences, if received, will not include this permission until applied for separately and approved by Health Canada.

The ACMPR provides that cannabis in its natural form, other than marijuana or cannabis oil, for the purpose of producing cannabis oil, may be provided, shipped, delivered or transported if it was obtained or produced for that purpose.

Statutory Reporting Requirements

With respect to the management and administration of the Company, the ACMPR will require that:

	(a)	In order to confirm any information submitted in support of an application for a licence or an amendment or renewal of a licence, an inspector may, at a time during normal business hours and with the reasonable assistance of the Company, inspect the site in respect of which the application was made.

	(b)	If the Company experiences a theft of cannabis or an unusual waste or disappearance of cannabis that cannot be explained on the basis of normally accepted business activities, the Company must report the occurrence to a member of a police force within 24 hours after becoming aware of it and provide a written report to the Minister within 10 days after becoming aware of the occurrence.

	(c)	The Company apply for and obtain the Minister’s approval before making a change involving the replacement or the addition of (i) the senior person in charge, (ii) the responsible person in charge and, if applicable, the alternate responsible person in charge, (iii) an officer or director, or (iv) an individual authorized to place an order for cannabis on behalf of the licensed producer.

	(d)	The Minister be notified not later than five days after the event, if a person ceases to be an officer or director of the Company.

	(e)	The Minister be notified not later than the next business day if the responsible person in charge of the Company ceases to carry out their duties and there is no person designated as an alternate responsible person in charge.

	(f)	The Company notify the Minister, within five days after such change, of any change to the method used for keeping records or the telephone number, the facsimile number, or the email address for the Company’s site or each building within the site where the activities are conducted under the Cultivation Licence or the Sales Licence.

With respect to future clients of the Company and proposed products sold by the Company if granted the Licences, the ACMPR requires that:

	(a)	In respect of fresh or dried marijuana or cannabis oil sold by the Company, the Minister be provided with a case report for each serious adverse reaction to the substance within 15 days after the day on which the Licensed Producer becomes aware of the reaction.

	(b)	The Company annually prepare and maintain a summary report that contains a concise and critical analysis of all adverse reactions to fresh or dried marijuana or cannabis oil sold by the Company that have occurred during the previous 12 months (the serious adverse reaction reports and annual summary reports must be retained for a period of 25 years after the day on which they were made).

	(c)	The Company report any new dried marijuana equivalency factor determined under section 79 of the ACMPR, and the method used to determine it, at least 10 days before the Company sells fresh cannabis, dried marijuana or cannabis oil, in respect of which the label referred to in section 84 or 88 of the ACMPR indicates the new factor, to a client.

	(d)	The Company, if provided with the given name, surname, date of birth and gender of an individual by a member of a Canadian police force who requests information in the course of an investigation under the CDSA or the ACMPR, verify in a reasonable manner that the person requesting the information is a member of a Canadian police force. If the person is verified as a member of a Canadian police force, the Company must provide as soon as feasible, within 72 hours after receiving the request, the following information to that Canadian police force:

	(i)	an indication of whether or not the individual is one of the Company’s clients or an individual who is responsible for one of the Company’s clients,

	(ii)	in the case of a Company client, whether the client is registered with the Minister under Part 2 of the ACMPR and, if so, whether the client’s registration with the producer is for the purpose of obtaining an interim supply of fresh or dried marijuana or cannabis oil, marijuana plants or seeds, or both, and

	(iii)	the daily quantity of dried marijuana that is specified in the medical document supporting the client’s registration or that is specified in that individual’s registration with the Minister made under Part 2 of the ACMPR.

(e)

The Company provide the Minister with any information that the Minister may require in respect of the records, documents and information referred to in Division 2 of the ACMPR, in the form and at the times that the Minister specifies.

Reporting Requirements from the Licences

In addition to the above general reporting requirements of the ACMPR, the Licences, if received, will require that the Company report the following additional information to the Office of Controlled Substances of Health Canada on a monthly basis, unless otherwise stated:

	(a)	The total amount of dried marijuana (kg) tested, approved and ready for sale, produced by the Company during the reporting period.

	(b)	The total amount of dried marijuana (kg) transferred to the Company from other Licensed Producers during the reporting period.

	(c)	The total amount of dried marijuana (kg) sold by the Company during the reporting period to (i) registered clients, (ii) other Licensed Producers, (iii) Licensed Dealers, and (iv) other clients.

	(d)	The total number of marijuana plants sold during the reporting period.

	(e)	The number of clients of the Company at the end of the reporting period, including only those clients whose registrations were valid on the last day of the reporting period, and the total number new clients of the Company registered during the reporting period.

	(f)	The number of clients who attempted to register with the Company during the reporting period, but could not be registered, regardless of the reason.

	(g)	The number of clients who placed orders or tried to place orders with the Company that could not be filled during the reporting period, regardless of the reason.

	(h)	The total amount of the following that the Company has in stock on the final day of the reporting period (i) number of harvested plants in the drying process, (ii) cannabis (kg) that has been dried but not tested, (iii) cannabis (kg) that has been dried and tested but not approved for sale, (iv) cannabis (kg) that has been dried, tested, approved and ready for sale, (v) cannabis (kg) held as samples, (vi) number of marijuana plants identified as ready to be destroyed, (vii) dried marijuana (kg) identified as ready to be destroyed, and (ix) number of live marijuana plants.

	(i)	The total amount of dried marijuana (kg) that the Company imported and exported during the reporting period.

	(j)	The total amount of dried marijuana (g) lost and/or stolen during the reporting period.

	(k)	The total amount of dried marijuana (g) destroyed during the reporting period, specifying the reason(s) and amount(s) of each (e.g., contaminated, past expiration date, recalled).

	(l)	The total amount of waste marijuana (e.g., plants, leaves, twigs) destroyed during the reporting period (g).

	(m)	The total number of shipments from the Company to the following in each province or territory during the reporting period (i) registered clients, (ii) other Licensed Producers, (iii) Licensed Dealers, and (iv) other clients.

	(n)	The average and median daily amounts of dried marijuana (g) supported by healthcare practitioners to be used by the Company’s registered clients during the reporting period for all clients whose registrations were valid on the last day of the reporting period.

	(o)	The average and median amounts of dried marijuana (g) shipped to the Company’s registered clients during the reporting period.

	(p)	The 10 highest and ten lowest amounts of dried marijuana shipped to registered clients during the reporting period.

	(q)	The total number of shipments of dried marijuana to registered clients categorized into 10-gram ranges increasing in size from 0 to 10 g to 141 to 150 g.

	(r)	A list of all healthcare practitioners who provided a medical document for a registered client in the reporting period, the location of the healthcare practitioner and the number of medical documents the healthcare practitioner signed during the reporting period.

	(s)	The amount of dried marijuana (kg) that the Company expects to produce during each month of the upcoming three months.

	(t)	The amount of dried marijuana (kg) that the Company expects to have in inventory during each month of the upcoming three months.

ITEM 1A. RISK FACTORS.

~~RISK~~You should ~~FACTORS~~carefully consider the risks described below together with all of the other information included in our public filings before making an investment decision with regard to our securities. The statements contained in or incorporated into this Prospectus that are not historic facts are forward- looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward- looking statements. While the risks described below are the ones we believe are most important for you to consider, these risks are not the only ones that we face. If any of the following events described in these risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common shares could decline, and you may lose all or part of your investment.

You should carefully consider the risks described below together with all of the other information included in our public filings before making an investment decision with regard to our securities. The statements contained in or incorporated into this Annual Report on Form 10-K that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. While the risks described below are the ones we believe are most important for you to consider, these risks are not the only ones that we face. If any of the following events described in these risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common shares could decline, and you may lose all or part of your investment.

General Risk Factors

We have a limited operating history and number of commercialized products, have incurred significant losses to date and anticipate continuing to incur losses in the future, and we may not achieve or maintain profitability. As a result, our financial statements contain a "“going concern"” explanatory paragraph.

We are an early stage company with a limited operating history, and we have only recently begun to commercialize our products. WeThe ~~have~~Company incurred ~~operating~~a ~~losses~~net ~~since~~loss ~~our~~of ~~inception~~$2,585,661 for inthe ~~October~~year ~~2008~~ended March 31, ~~and~~2017 we(March 31, 2016 - $1,913,995). We expect losses to continue tountil ~~incur~~we ~~operating~~get ~~losses~~access ~~for~~to capital to implement the ~~foreseeable~~business ~~future~~plan. AtAs of March 31, ~~2016,~~2017 wethe Company had ana ~~accumulated~~working capital deficit of $3852,~~723,368.~~514 ~~For the years ended~~ (March 31, 2016 ~~and 2015~~765,356). Net wecash ~~had~~used aby ~~net~~operations ~~loss~~for ~~attributable~~the toyear ~~common~~ended ~~shareholders~~March of31, 2017 is $1341,~~913~~945 (March 31,~~995,~~ ~~and~~2016 $1209,~~087,289, respectively~~919). As a result, the financial statements of the Company include an explanatory paragraph stating that there is substantial doubt that the Company will continue as a going concern. If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able to achieve profitability in the near future or at all, which may depress our stock price.

Our products are in the early stages of commercialization, and our business may fail if we are not able to successfully generate significant revenues from these products.

Our future success will depend in part on our ability to commercialize the product candidates we are developing. Successful development of our product candidates will require significant additional investment, including costs associated with research and development, completing field trials and obtaining regulatory approval, as well as the ability to manufacture our products in large quantities at acceptable costs while also preserving high product quality. Difficulties often encountered in scaling up production include problems involving production yields, quality control and assurance, shortage of qualified personnel, production costs and process controls. In addition, we are subject to inherent risks associated with new products and technologies. These risks include the possibility that any product candidate may:

● be found unsafe; ● be ineffective or less effective than anticipated; ● fail to receive necessary regulatory approvals; ● be difficult to competitively price relative to alternative methods of production of Chlorella and Omega-3; ● be difficult or impossible to manufacture on an economically viable scale; ● be subject to supply chain constraints for raw materials; ● fail to be developed and accepted by the market prior to the successful marketing of similar products by competitors; ● be impossible to market because it infringes on the proprietary rights of third parties; or ● be too expensive for commercial use.

2723

●Furthermore, the ~~fail~~Company’s toproduct ~~receive~~candidates ~~necessary~~in ~~regulatory~~its ~~approvals; ● be difficult to competitively price relative to alternative methods of production of Chlorella and Omega~~algae-3;related ●businesses bemay ~~difficult or impossible to manufacture on an economically viable scale; ●~~ be ~~subject~~adversely toaffected ~~supply chain constraints for raw materials; ● fail to be developed and accepted~~ by the ~~market~~devotion ~~prior to the successful marketing~~ of ~~similar~~capital ~~products~~and resources ~~by competitors; ● be impossible~~ to ~~market~~its ~~because~~cannabis ~~it infringes on the proprietary rights of third parties; or ● be too expensive for commercial use~~initiative.

Failure to achieve expected manufacturing yields for our products could negatively impact our operating results.

Low yields may result from process design, development stage or process technology failures. We do not know whether a yield problem exists until our products are manufactured based on our design. When a yield issue is identified, the product is analyzed and tested to determine the cause. As a result, yield deficiencies may not be identified until well into the production process. We have limited experience producing our products at commercial scale, and we will not succeed if we cannot maintain or decrease our production costs and effectively scale our technology and manufacturing processes.

We have limited experience in marketing and selling our products and will need to expand our sales and marketing infrastructure.

We currently have limited sales and marketing experience and capabilities. We will need to further develop our sales and marketing capabilities in order to successfully commercialize the products we are developing, which may involve substantial costs. There can be no assurance that the members of our sales and marketing team will successfully compete against the sales and marketing teams of our current and future competitors, many of which may have more established relationships with distributors and growers. Our inability to recruit, train and retain sales and marketing personnel or their inability to effectively market and sell the products we are developing could impair our ability to gain market acceptance of our products and cause our sales to suffer.

If we are unable to maintain and further establish successful relations with third-party distributors, or they do not focus adequate resources on selling our products or are unsuccessful in selling them to end users, we may not achieve significant sales of our products.

Our future revenue growth will depend in large part on our success in establishing and maintaining this sales and distribution channel. If our distributors are unable to sell our products, or receive negative feedback from end users, they may not continue to purchase or market our products.

In addition, there can be no assurance that our distributors will focus adequate resources on selling our products to end users or will be successful in selling them. Many of our potential distributors are in the business of distributing and sometimes manufacturing other, possibly competing, products. As a result, these distributors may perceive our products as a threat to various product lines currently being distributed or manufactured by them. In addition, these distributors may earn higher margins by selling competing products or combinations of competing products. If we are unable to establish or maintain successful relationships with independent distributors, we will need to further develop our own sales and distribution capabilities, which would be expensive and time-consuming and the success of which would be uncertain.

We rely on the experience and expertise of our senior management team and other key personnel, and if we are unable to recruit or retain qualified personnel, our development and commercialization efforts may be significantly delayed.

We depend heavily on the principal members of our management, particularly Richard Rusiniak, our co-founder and Chief Executive Officer, and Paul Ramsay, our co- founder and President, the loss of whose services might significantly delay or prevent the achievement of our business objectives. We do not maintain key-man insurance on their lives.

As we expand our operations, we will need to hire additional qualified research and development and management personnel to succeed. The process of hiring, training and successfully integrating qualified personnel into our operation is a lengthy and expensive one. The market for qualified personnel is very competitive because of the limited number of people available with the necessary technical skills and understanding of our technology and anticipated products. Our failure to hire and retain qualified personnel could impair our ability to meet our research and development and business objectives and adversely affect our results of operations and financial condition.

We also have relationships with scientific collaborators at academic and other institutions, some of whom conduct research at our request or assist us in formulating our research and development strategy. These scientific collaborators are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. We have limited control over the activities of these scientific collaborators and can generally expect these individuals to devote only limited amounts of time to our activities. The inability of any of these persons to devote sufficient time and resources to our programs could harm our business. In addition, these collaborators may have arrangements with other companies to assist those companies in developing technologies that may compete with our products.

Our intellectual property is integral to our business. If we are unable to protect our patents and proprietary rights, our business could be adversely affected.

Our success depends in part on our ability to obtain and maintain patent and other proprietary rights protection for our technologies and products in the United States and other countries. If we are unable to obtain or maintain these protections, we may not be able to prevent third parties from using our proprietary rights. 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. As of ~~March~~September 311, 2016, we had one U.S. patent allowed, ~~two~~one U.S. provisional patent ~~applications~~application submitted and one Canadian patent pending and we anticipate filing additional patent applications in the medium term.

The patent position of biotechnology and biochemical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems and costs in protecting our proprietary rights in these foreign countries.

Our patents may be challenged, narrowed, invalidated or circumvented. In addition, our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products or provide us with any competitive advantage. We are not certain that our future patent applications will be issued. Moreover, our competitors could challenge or circumvent our patents or pending patent applications. It is also not possible to patent and protect all knowledge and know-how associated with our products so there may be areas that are not protected such as certain formulations and manufacturing processes. Costly and time- consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Intellectual property litigation could cause us to spend substantial resources and could distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development, sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.

We have taken measures to protect our trade secrets and know-how, including the use of confidentiality agreements with our employees, consultants, advisors and third-party manufacturers. It is possible that these agreements may be breached and that any remedies for a breach will not make us whole. In addition, some courts inside and outside of the United States are less willing or unwilling to protect trade secrets. We generally control and limit access to, and the distribution of, our product documentation and other proprietary information. Despite our efforts to protect these proprietary rights, our trade secret-protected know-how could fall into the public domain, unauthorized parties may copy aspects of our process and obtain and use information that we regard as proprietary. We also cannot guarantee that other parties will not independently develop our ~~knowhow~~know how or otherwise obtain access to our technologies.

Third parties may misappropriate our algae strains.

Third parties, including contract manufacturers, often have custody or control of our algae strains. If our algae strains were stolen, misappropriated or reverse engineered, they could be used by other parties who may be able to reproduce the algae strains for their own commercial gain. If this were to occur, it would be difficult for us to challenge and prevent this type of use, especially in countries with limited intellectual property protection.

Other companies may claim that we infringe their intellectual property or proprietary rights, which could cause us to incur significant expenses or prevent us from selling our products.

Our success depends in part on our ability to operate without infringing the patents and proprietary rights of third parties. Product development is inherently uncertain in a rapidly evolving technological environment such as ours in which there may be numerous patent applications pending, many of which are confidential when filed, with regard to similar technologies. Patents issued to third parties may contain claims that conflict with our patents and that may place restrictions on the commercial viability of our products and technologies. Third parties could assert infringement claims against us in the future. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products, product candidates and technology. We may not be aware of all such third-party intellectual property rights potentially relevant to our products and product candidates.

Any litigation, adversarial proceeding or proceeding before governmental authorities regarding intellectual property rights, regardless of its outcome, would probably be costly and require significant time and attention of our key management and technical personnel. Litigation, adversarial proceedings or proceedings before governmental authorities could also force us to:

●	stop or delay using our proprietary technology;

●	stop or delay selling, manufacturing or using products that incorporate the challenged intellectual property;

●	pay damages; and/or

●	enter into licensing or royalty agreements which, if available at all, may only be available on unfavorable terms.

Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

If we fail to maintain and successfully manage our existing, or enter into new, strategic collaborations and other relationships, we may not be able to expand commercial development and sales of many of our products.

Our ability to enter into, maintain and manage collaborations and other relationships in our markets is fundamental to the success of our business. We may not be successful in entering into such arrangements with third parties for the sale and marketing of our products. Any failure to enter into new strategic arrangements on favorable terms or to maintain or manage our existing strategic arrangements could delay or hinder our ability to develop and commercialize our ingredients and could increase our costs of development and commercialization.

We may be exposed to product liability claims, which could harm our business.

The manufacture and sale of food additives and health products is regulated by various local, state, provincial federal and foreign environmental and public health agencies. The costs of remediation or product liability could materially adversely affect our future quarterly or annual operating results.

We may be held liable for, or incur costs to settle, liability claims if any products we develop, or any products that use or incorporate any of our technologies, cause injury or are found unsuitable during product testing, manufacturing, marketing, sale or use. These risks exist even with respect to products that have received, or may in the future receive, regulatory approval, registration or clearance for commercial use. We cannot guarantee that we will be able to avoid product liability exposure.

As part of the initial implementation process we will be putting in place product liability insurance at levels we believe will be sufficient and consistent with industry standards for companies at our stage of development. We cannot guarantee that our product liability insurance iswill be adequate and, at any time, it is possible that this insurance coverage may not be available on commercially reasonable terms or at all. A product liability claim could result in liability to us greater than our assets or insurance coverage. Moreover, even if we have adequate insurance coverage, product liability claims or recalls could result in negative publicity or force us to devote significant time and attention to those matters, which could harm our business.

We could be harmed by data loss or other security breaches

As a result of certain of our direct to consumer services being web-based and the fact that we will process, store, and transmit data, including personal information, for our customers, failure to prevent or mitigate data loss or other security breaches, including breaches of our vendors’’ technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us, and otherwise harm our business. We use third party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. Although we have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third party vendor, such measures cannot provide absolute security.

We face risks related to system interruption and lack of redundancy

We may experience occasional system interruptions and delays that make our websites and services unavailable or slow to respond and prevent us from efficiently fulfilling orders, which may reduce our net sales and the attractiveness of our products and services. If we are unable to continually add software and hardware, effectively upgrade our systems and network infrastructure, and take other steps to improve the efficiency of our systems, it could cause system interruptions or delays and adversely affect our operating results.

Our computer and communications systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses, physical or electronic break-ins, and similar events or disruptions. Any of these events could cause system interruption, delays, and loss of critical data, and could prevent us from accepting and fulfilling customer orders, which could make our product and service offerings less attractive and subject us to liability. Our systems are not fully redundant and our disaster recovery planning may not be sufficient. In addition, we may have inadequate insurance coverage to compensate for any related losses. Any of these events could damage our reputation and be expensive to remedy.

Our business is subject to various governmental regulations, and compliance with these regulations may cause us to incur significant expenses. If we fail to maintain compliance with applicable regulations, we may be forced to recall products and cease their manufacture and distribution, which could subject us to civil or criminal penalties.

The complex legal and regulatory environment exposes us to compliance and litigation costs and risks that could materially affect our operations and financial results. These laws and regulations may change, sometimes significantly, as a result of political or economic events. They include environmental laws and regulations, tax laws and regulations, import and export laws and regulations, government contracting laws and regulations, labor and employment laws and regulations, securities and exchange laws and regulations, and other laws such as the Foreign Corrupt Practices Act. In addition, proposed laws and regulations in these and other areas could affect the cost of our business operations. We face the risk of changes in both domestic and foreign laws regarding trade, potential loss of proprietary information due to piracy, misappropriation or foreign laws that may be less protective of our intellectual property rights. Violations of any of these laws and regulations could subject us to criminal or civil enforcement actions, any of which could have a material adverse effect on our business, financial condition or results of operations.

Risks related to the Company’s Cannabis-Related Business

The direction our cannabis initiative is uncertain and may not yield commercial results.

We recently announced a new initiative to explore the potential opportunities in the Canadian cannabis market for the Company’s technologies. As of the date of this Report on Form 10-K the Company’s initiatives are at a preliminary stage and ultimate implementation will at the onset be dependent upon entering into research and development partnerships with academic institutions interested in pursuing the potential benefits of combining algae and cannabis and obtaining the funding necessary to pursue such research, as well as obtaining the funding necessary to continue continuing operations. While the Company is pursuing research and development and funding opportunities, there can be no assurance that such pursuit will be successful, or that any research and development efforts will result in commercially saleable products.

The Company has made substantial commitments to research collaborations with its university partners but no commercial products may result.

A central focus of the Company’s cannabis initiative is its research collaborations with Western University and the University of Waterloo. Under the applicable agreements to the Company has agreed to fund specified research into the potential of algae and cannabis to work in combination to treat cancer and depression-related diseases, and will have the opportunity to exclusively license any intellectual property developed from such research. However, the progress of scientific discovery is uncertain and there can be no assurance that any commercial products will result from such research.

The Company is Not a Licensed Producer under the ACMPR and may not get the requisite licenses to carry out its cannabis initiative

Initially, the Company intends to conduct its cannabis-related activities through other licensed producers such as Bonify, with which it has a letter of intent. However, the Company eventually intends to apply to Health Canada to become a licensed producer under the Access to Cannabis for Medical Purposes Regulations (Canada) (“ACMPR”) issued pursuant to the Controlled Drugs and Substances Act (Canada) that would enable it to process and sell Medical Marijuana directly to patients across Canada. The Company has not yet applied for the licenses and there is no guarantee that the Company will become a Licensed Producer. Health Canada has received many applications and only a small fraction has been approved to date. Furthermore, the timing and success of the Company at the various steps in the licensing process is beyond the Company’s control and the sole discretion thereof lies with Health Canada. The Company’s ability to process, store and sell Medical Marijuana in Canada is dependent on receiving a Sales license from Health Canada and there can be no assurance that the Company will obtain such licenses. In the event that it is unable to become a licensed producer it will be dependent upon others to conduct its cannabis-related activities or it will be required to curtail operations.

Even if the Company is successful in obtaining the Sales license, such licenses will be subject to ongoing compliance and reporting requirements. Failure to comply with the requirements of the licenses or any failure to maintain the licenses would have a material adverse impact on the business, financial condition and operating results of the Company. Although the Company believes that we will meet the requirements of the ACMPR, there can be no guarantee that Health Canada will grant these licenses. Should Health Canada not grant the licenses, the business, financial condition and operating results of the Company would be materially adversely affected. To the extent such licenses are not obtained, the Company may be curtailed or prohibited from its proposed production of Medical Marijuana or from proceeding with the development of its operations as currently proposed.

The Company’s cannabis-related business is subject to additional regulatory risks.

The Company operates in a new industry which is highly regulated and is in a market that is very competitive and evolving rapidly. The Company’s ability to grow, store and sell Medical Marijuana in Canada is dependent on the licenses from Health Canada and the need to maintain the licenses in good standing. Failure to comply with the requirements of the licenses or any failure to maintain these licenses would have a material adverse impact on the business, financial condition and operating results of the Company.

The Company will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with regulations may result in additional costs for corrective measures, penalties or in restrictions on the Company’s operations. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to the Company’s operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on the business, financial condition and operating results of the Company.

The industry is subject to extensive controls and regulations, which may significantly affect the financial condition of market participants. The marketability of any product may be affected by numerous factors that are beyond the Company’s control and which cannot be predicted, such as changes to government regulations, including those relating to taxes and other government levies which may be imposed. Changes in government levies, including taxes, could reduce the Company’s earnings and could make future capital investments or the Company’s operations uneconomical. The industry is also subject to numerous legal challenges, which may significantly affect the financial condition of market participants and which cannot be reliably predicted.

The regulatory environment for medical marijuana companies is rapidly-changing.

The Company’s proposed operations are subject to various laws, regulations and guidelines relating to the manufacture, management, packaging/labelling, advertising, sale, transportation, storage and disposal of Medical Marijuana but also including laws and regulations relating to drug, controlled substances, health and safety, the conduct of operations and the protection of the environment. Changes to such laws, regulations and guidelines due to matters beyond the control of the Company may cause adverse effects to its operations.

The Company endeavors to comply with all relevant laws, regulations and guidelines. To the Company’s knowledge, it is in compliance or in the process of being assessed for compliance with all such laws, regulations and guidelines as described elsewhere in this Form 10-K.

On February 24, 2016, the Federal Court of Canada issued the Allard Decision, declaring that the MMPR, as it was drafted, is unconstitutional in violation of the plaintiffs’ rights under section 7 of the Charter of Rights and Freedoms. The declaration of invalidity was suspended for six months to allow the Government of Canada to amend or issue new regulations. On March 21, 2014 the Federal Court of Canada issued an order affecting the repeal of the MMAR and the application of certain portions of the MMPR which are inconsistent with the MMAR in response to a motion brought by the plaintiffs in the Allard Decision. On August 24, 2016, the ACMPR came into force, replacing the MMPR as the regulations governing Canada’s Medical Marijuana regime which permits patients to produce a limited amount of cannabis for their own medical purposes or to designate a person to produce a limited amount of cannabis. This ACMPR could significantly reduce the addressable market for the Company’s proposed products and could materially and adversely affect the business, financial condition and results of operations of the Company.

On October 19, 2015, the Liberal Party was elected and obtained a majority government in Canada. The Liberal Party has made electoral commitments to legalize, regulate and tax recreational cannabis use in Canada. On April 20, 2016, the Liberal Party made a commitment to introduce legislation to meet their electoral commitments by the spring of 2017. On June 30, 2016, the Government of Canada launched the Task Force on Marijuana Legalization and Regulation and a public consultation for the creation of a new legislative system with respect to the legalization of cannabis (see the discussion paper entitled “Toward the Legalization, Regulation and Restriction of Access to

Marijuana” (“Discussion Paper”) (http://news.gc.ca/web/article-en.do?nid=1092399&tp=1), which sets out the objectives of the new system and identifies specific issues and options for which the Government is seeking comment). After taking consultations until August 29, 2016, the Task Force prepared and tabled their report on December 13, 2016. The report outlines a framework for a new system to legalize, regulate and restrict access to cannabis. The report contains recommendations to federal, provincial, territorial and municipal governments on how to promote and protect public health and safety, particularly among young Canadians. The advice presented in the Task Force’s report will be considered by the Government of Canada as it proceeds to develop legislation for the legalization of cannabis. The Government of Canada has introduced Bill-45 (Cannabis Act) which is an Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts. The impact of any such new legislative system on the Medical Marijuana industry and the Company’s business plan and operations is uncertain.

Risks related to the Common Shares

Because we will likely issue additional Common Shares, investment in the Company could be subject to substantial dilution.

We anticipate ~~have~~that anall ~~equity~~or ~~line~~at ofleast ~~credit~~some ~~with~~of ~~GHS~~our ~~Investments~~future funding, ~~LLC~~if ~~(“GHS”)~~any, ~~which~~will ~~assumed~~be in the ~~obligations~~form ~~under~~of ~~our~~ equity ~~purchase~~financing ~~agreement~~from ~~with~~the RYsale ~~Capital~~of ~~LLC~~our Common ~~(the “EPA”)~~Shares. At anIf ~~assumed~~we ~~purchase~~do ~~price~~sell ofmore ~~US$0.504~~Common ~~(equal~~Shares, toinvestors’’ ~~80%~~investment ofin the ~~closing~~Company ~~bid~~will ~~price~~likely ofbe ~~our Common Shares of US$0~~diluted.63 onDilution is ~~June~~the ~~29,~~difference ~~2016),~~between wewhat ~~will~~you ~~not~~pay befor ~~able~~your toshares ~~receive~~and upthe tonet ~~US$750,000~~tangible inbook ~~gross~~value ~~proceeds,~~per ~~assuming~~share ~~the~~immediately ~~sale~~after of the ~~maximum~~additional shares ~~amount~~are ~~pursuant~~sold toby ~~the EPA~~us. At ~~this~~If ~~assumed~~dilution ~~purchase price~~occurs, ~~the~~any ~~maximum~~investment toin bethe ~~received~~Company’s ~~under~~Common ~~the~~Shares ~~EPA~~could isseriously ~~US$201,600~~decline in value.

In addition, we anticipate that all or at least some of our future funding, if any, will be in the form of equity financing from the sale of our Common Shares. If we do sell more Common Shares, investors' investment in the Company will likely be diluted. Dilution is the difference between what you pay for your shares and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in the Company's Common Shares could seriously decline in value.

GHS will pay less than the then-prevailing market price for our Common Shares.

The Common Shares to be issued to GHS pursuant to the EPA will be purchased at a 20% discount to the lowest closing bid price of our Common Shares during the ten (10) consecutive trading days immediately after GHS receives our notice of sale. GHS has a financial incentive to sell our Common Shares immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If GHS sells the shares, the price of our Common Shares could decrease. If our share price decreases, GHS may have a further incentive to sell our Common Shares that it holds. These sales may have a further impact on our share price.

Your ownership interest may be diluted and the value of our Common Shares may decline by exercising the put right pursuant to the EPA.

Pursuant to the EPA, when we deem it necessary, we may raise capital through the private sale of our Common Shares to GHS at a price equal to a discount to the lowest closing bid price of the Common Shares for the ten (10) consecutive trading days after GHS receives our notice of sale. Because the put price is lower than the prevailing market price of our Common Shares, to the extent that the put right is exercised, your ownership interest may be diluted. Furthermore, in our agreement with GHS we have agreed to “true-up” the effective purchase price of their shares if the price of our Common Shares declines following our exercise of our put rights.

We are registering an aggregate of 400,000 Common Shares to be issued under the EPA. The sales of such shares could depress the market price of our Common Shares.

We are registering an aggregate of 400,000 Common Shares under the registration statement of which this prospectus is a part, pursuant to the EPA. Notwithstanding GHS’s ownership limitation, the 400,000 shares would represent approximately 4.0% of our Common Shares outstanding immediately after our exercise of the put right under the EPA. The sale of these shares into the public market by GHS could depress the market price of our Common Shares.

We may not have access to the full amount available under the EPA.

Our ability to draw down funds and sell shares under the EPA requires that our resale registration statement be declared effective and continue to be effective. This registration statement registers the resale of 400,000 shares issuable under the EPA, and our ability to sell any shares issuable under the EPA is subject to our ability to have this registration statement registering the resale of these shares declared effective. Even if we are successful in causing this registration statement registering the resale of some or all of the shares issuable under the EPA to be declared effective by the SEC in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, the number of shares we can put to GHS is limited by the trading volume of our Common Shares and if there isn’t sufficient trading volume we may not be able to sell shares under the EPA. Accordingly, because our ability to draw down any amounts under the EPA is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of US$750,000 under the EPA. As such, we cannot make any guarantee that we will be successful in accessing the full amount under the EPA.

Certain restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of our issuance of shares in connection with the EPA, and as such, GHS may sell a large number of shares, resulting in substantial dilution to the value of shares held by existing shareholders.

GHS has agreed, subject to certain exceptions listed in the EPA, to refrain from holding an amount of shares which would result in GHS or its affiliates owning more than 4.99% of the then-outstanding shares of our Common Shares at any one time. These restrictions, however, do not prevent GHS from selling shares of Common Shares received in connection with a put, and then receiving additional shares of Common Shares in connection with a subsequent put. In this way, GHS could sell more than 4.99% of the outstanding Common Shares in a relatively short time frame while never holding more than 4.99% at one time.

Penny stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker'’s or dealer'’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.31

InThe broker-dealer ~~addition,~~also ~~the~~must ~~penny~~provide, ~~stock rules require that~~ prior to aeffecting any transaction in a penny stock ~~not otherwise exempt from those rules~~, the ~~broker-dealer~~customer ~~must~~with ~~make~~ (a) ~~special~~bid ~~written~~and ~~determination~~offer ~~that~~quotations for the penny stock; is(b) athe ~~suitable~~compensation ~~investment~~of ~~for~~ the ~~purchaser~~broker-dealer and ~~receive~~its ~~the~~salesperson ~~purchaser's~~in ~~written~~the ~~acknowledgment~~transaction; of(c) the ~~receipt~~number of ashares to ~~risk~~which ~~disclosure~~such ~~statement~~bid and ask prices apply, aor ~~written~~other ~~agreement~~comparable asinformation relating to ~~transactions~~the ~~involving~~depth ~~penny~~and ~~stocks,~~liquidity of the market for such stock; and (d) a ~~signed~~monthly ~~and~~account ~~dated~~statement ~~copy~~showing the market value of aeach ~~written~~penny ~~suitability~~stock ~~statement~~held in the customer’s account.

~~These~~In addition, ~~disclosure~~the ~~requirements~~penny ~~may~~stock ~~have~~rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer ~~effect~~must ofmake ~~reducing~~a special written determination that the ~~trading~~penny ~~activity~~stock is a suitable investment for ~~our~~the ~~common~~purchaser ~~stock.~~and ~~Therefore~~receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, ~~stockholders~~a ~~may~~written ~~have~~agreement ~~difficulty~~as ~~selling~~to ~~our~~transactions involving ~~securities~~penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common shares. Therefore, shareholders may have difficulty selling our securities.

The Company has no current plans to pay dividends on its Common Shares.

The Company does not anticipate paying any cash dividends in the foreseeable future. If the Company incurs indebtedness in the future to fund its future growth, its ability to pay dividends may be further restricted by the terms of such indebtedness.

Because a small number of existing shareholders own a large percentage of the Company'’s voting ~~stock~~shares, you will have minimal influence over shareholder decisions.

Existing management has significant ~~stock~~share ownership in the Company and will retain control of the Company in the future. As a result of such ownership concentration, these individuals will have significant influence over the management and affairs of the Company and its business. It will also exert considerable, ongoing influence over matters subject to shareholder approval, including the election of directors and significant corporate transactions, such as a merger, sale of assets or other business combination or sale of the Company. This concentration of ownership may have the effect of delaying, deferring, or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, even if such a transaction would benefit other shareholders.

If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors'’’ views of us and, as a result, the value of our common shares.

Pursuant to Section 404 of the Sarbanes-Oxley Act, our management will be required to report upon the effectiveness of our internal control over financial reporting beginning with the annual report for our fiscal year ending March 31, 2016. When and if we are a "“large accelerated filer"” or an "“accelerated filer"” and are no longer an "“emerging growth company,"” each as defined in the Exchange Act, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. However, for so long as we remain an emerging growth company, we intend to take advantage of an exemption available to emerging growth companies from these auditor attestation requirements. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. To comply with the requirements of being a reporting company under the Exchange Act, we will need to upgrade our systems including information technology; implement additional financial and management controls, reporting systems, and procedures; and hire additional accounting and finance staff. If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting, and the trading price of our common shares may decline.

3432

We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our common shares less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act and are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, ~~only~~three ~~two~~ years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "“Management'’s Discussion and Analysis of Financial Condition and Results of Operations"” disclosure, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in ~~this~~its Form 10-K and our other periodic reports and proxy statements, exemptions from the requirements of holding non-binding advisory votes on executive compensation and seeking shareholder approval of any golden parachute payments not previously approved and not being required to adopt certain accounting standards until those standards would otherwise apply to private companies. We could be an emerging growth company until the last day of the fiscal year following the fifth anniversary of our initial offering in November 2014, although circumstances could cause us to lose that status earlier, including if we become a large accelerated filer (in which case we will cease to be an emerging company as of the date we become a large accelerated filer, which, generally, would occur if, at the end of a fiscal year, among other things, the market value of our common ~~stock~~ shares that is held by non-affiliates exceeds USD$700 million as of the last business day of our most recently completed second fiscal quarter), if we have total annual gross revenue of USD$1.0 billion or more during any fiscal year (in which cases we would no longer be an emerging growth company as of March 31 of such fiscal year), or if we issue more than USD$1.0 billion in non-convertible debt during any three year period before that time (in which case we would cease to be an emerging growth company immediately). Even after we no longer qualify as an emerging growth company, we may still qualify as a "“smaller reporting company," ” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common ~~stock~~shares and our share price may be more volatile.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited because we are incorporated under Canadian law, we conduct substantially all of our operations in Canada and most of our directors and all of our executive officers reside outside the United States.

We are incorporated in Canada and conduct substantially all of our operations in Canada. Most of our directors and all of our executive officers reside outside the United States and a substantial portion of their assets are located outside of the United States. As a result, it may not be possible for investors to enforce, outside the United States, judgments against the Company obtained in the United States in any such actions, including actions predicated upon the civil liability provisions of the United States federal and state securities laws. In addition, certain of the directors and officers of the Company are residents of Canada or other jurisdictions outside of the United States, and all or a substantial portion of the assets of those directors and officers are or may be located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon those persons, or to enforce against them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of United States federal and state securities laws.

3533

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Public Market for Common Shares

Since January 4, 2016, our Common Shares have traded on the OTCQB operated by OTC Markets under the symbol “ADYNF”. From September 17, 2015 until January 5, 2016 our shares traded on OTC Pink. The table below lists the high and low closing prices per share of our Common Shares from the date our shares were first traded on September 17, 2015, as quoted on OTC Markets. Prior to September 17, 2015, there was no public market for our Common Shares.

Quarter Ended	High		Low
September 30, 2015	$	1.62	$	1.60
December 31, 2015	$	1.72	$	1.59
March 31, 2016	$	1.74	$	0.10
June 30, 2016	$	1.00	$	0.12
September 30, 2016	$	0.75	$	0.30
December 31, 2016	$	0.61	$	0.15
March 31, 2017	$	0.62	$	0.0001
June 30, 2017	$	0.3099	$	0.09

On August ~~June 29~~11, ~~2016~~2017 the closing bid of our Common Shares on the OTCQB was $0.6206 per share.

Holders

We had approximately 37 record holders of our Common Shares as of ~~June~~August 2911, ~~2016~~2017, according to the books of our transfer agent. The number of shareholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed; however, we estimate the total number of shareholders to be approximately 90190 to ~~100~~200.

3634

As of ~~June~~August 2911, ~~2016~~2017, there were 913,~~759~~337,~~425~~521 common shares of our common stock issued and outstanding.

Dividends

We currently intend to retain future earnings for the operation of our business. We have never declared or paid cash dividends on our common shares, and we do not anticipate paying any cash dividends in the foreseeable future.

In the event that a dividend is declared, common shareholders on the record date are entitled to share ratably in any dividends that may be declared from time to time on the common shares by our board of directors from funds legally available.

There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.

Securities Authorized for Issuance under Equity Compensation Plans

On December 11, 2014 our board of directors and majority shareholders approved the adoption of the Algae Dynamics Corp Stock Incentive Plan Algae Dynamics Corp Stock Incentive Plan (the “Equity Incentive Plan”).

The purpose of the Equity Incentive Plan is to foster and promote our long-term financial success and increase shareholder value by motivating performance through incentive compensation. The Equity Incentive Plan is intended to encourage participants to acquire and maintain ownership interests in our company and to attract and retain the services of talented individuals upon whose judgment and special efforts the successful conduct of our business is largely dependent.

The Equity Incentive Plan became effective upon its approval by the majority of shareholders on August 28, 2014. The Plan is a fixed stock option plan, under which the aggregate number of Common Shares which may be reserved for issuance in respect of all options, restricted stock awards and restricted stock unit awards under the Plan together with any options, restricted stock awards or restricted stock unit awards under any other employee stock option plans or other share compensation arrangements of the Corporation, shall not exceed 15% of the Corporation’s total issued and outstanding Common Shares. At March 31, ~~2016~~2017 there were 913,~~701~~337,~~051~~ 521 common shares issued and outstanding.

The Equity Incentive Plan provides for the granting of non-qualified share options, to our employees, officers, directors and consultants.

3735

Equity Compensation Plans as of March 31, ~~2016~~2017

	A		B		C
Category	Number of securities to be issued upon exercise of outstanding options		Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
	Number of				Number of securities remaining available for future issuance under equity
Equity compensation plans approved by security holders		930,000	$	2.05		525,158
Category	securities to be issued upon exercise of outstanding options		Weighted- average exercise price of outstanding options		compensation plans (excluding securities reflected in column (A))
Equity compensation plans approved by security holders		695,000	$	0.99		1,305,628
Equity compensation plans not approved by security holders		0		0		0
Total		~~930~~695,000	$	20.0599		~~525~~1,~~158~~305,628

Note 1 The stock option plan is based on 15% of the number of common shares (913,~~701~~337,~~051~~521) and the number on the table is as of March 31, ~~2016~~2017.

Recent Sales of Unregistered Securities

On June 6, 2014, the Company closed a private placement for gross proceeds of $647,860 of which $328,180 was received as at March 31, 2014 and reflected as equity to be issued. Pursuant to the private placement, the Company issued 556,118 units at $1.12 per unit for gross proceeds of $622,860 and 44,642 units at $0.56 per unit for gross proceeds of $25,000, with each unit comprised of one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant is exercisable at $1.68 per share within the first twelve months of the close of the private placement and $2.24 per share for the second twelve month period to expiration. Immediate family members of management subscribed for 57,000 units for gross proceeds of $63,840 pursuant to this private placement.

On October 22, 2014, a consultant was issued 6,700 units in settlement of debt owed in the amount of USD$10,050 ($11,256), each unit comprised of one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant is exercisable at USD$1.50 ($1.94) per share until October 22, 2016.

On November 24, 2014, the Company closed a further private placement for gross proceeds of $30,000. Pursuant to the private placement, the Company issued 17,700 units at USD$1.50 ($1.695) per unit for gross proceeds of $30,000, each unit comprising one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant is exercisable at USD$2.00 ($2.59) per share until November 30, 2016.

Additionally, on November 22, 2014, 25,000 common share purchase warrants were exercised at USD$0.04 ($0.046) per warrant for total cash proceeds of USD$1,000 ($1,113).

On June 25, 2015, 12,500 common share purchase warrants were exercised at USD$0.04 ($0.048) per warrant for total cash proceeds of USD$500 ($620).

On September 10, 2015, a consultant was issued 50,000 common shares for services rendered in the amount of $67,195, this amount has been recorded as professional fees on the statement of operations.

On November 5, 2015, 31,000 common share purchase warrants were exercised at USD$0.04 ($0.052) per warrant for total cash proceeds of USD$1,240 ($1,632).

On December 18, 2015, 51,600 common share purchase warrants were exercised at USD$0.04 ($0.054) per warrant for total cash proceeds of USD$2,064 ($2,834).

On December 22, 2015, 31,000 common share purchase warrants were exercised at USD$0.04 ($0.056) per warrant for total cash proceeds of USD$1,240 ($1,735).

On December 31, 2015, 48,400 common share purchase warrants were exercised at USD$0.04 ($0.055) per warrant for total cash proceeds of USD$1,936 ($2,683).

On December 31, 2015, a private placement was completed to issue 31,532 common shares at USD$1.11 ($1.54) per share for gross proceeds of USD$35,000 ($48,441). The shares were subscribed for by a family member of an officer.

On December 31, 2015, a consultant was issued 10,000 common shares for services rendered in the amount of USD$17,200 ($23,805). Another consultant was issued 93,000 common shares for services rendered in the amount of USD$159,960 ($221,385) (see Note 11), these amounts have been recorded as professional fees on the statement of operations.

On January 4, 2016, 31,000 common share purchase warrants were exercised at USD$0.04 ($0.056) per warrant for total cash proceeds of USD$1,240 ($1,732).

On February 17, 2016, a convertible loan plus accrued interest was converted into 29,609 common shares at USD$0.89 ($1.23 for total consideration of USD$26,500 ($36,419).

On February 25, 2016, 25,000 common share purchase warrants were exercised at USD$0.04 ($0.056) per warrant for total cash proceeds of USD$1,000 ($1,378).

~~Shares~~On May 15, 2016, 13,874 shares to be issued to a consulting firm were issued as common shares for services rendered in the amount of USD$22,500 ($31,140) during the year ended March 31, 2016. The amount was recorded as professional fees on the statement of operations during the year ended March 31, 2016.

On May ~~December~~18, 312016, ~~2015~~44,500 ~~the~~common ~~term loan was converted into~~ shares topurchase bewarrants ~~issued~~were exercised at aUSD$0.04 ~~value of~~ ($~~54,975~~0.052) ~~based~~per ~~upon~~warrant anfor ~~estimated~~total ~~fair~~cash ~~market~~proceeds ~~value~~ of USD$1~~.72~~,780 ($2~~.38~~,318) ~~per share at the time of conversion~~.

On May ~~December~~19, 312016, ~~2015~~the Company signed a letter of engagement with an agent in connection with proposed placements of up to US$10,000,000 ($13,427,000), ~~advances~~which ~~from~~included ~~related~~as ~~parties~~part ~~were~~of ~~converted~~the ~~into~~fee the issuance of 100,000 common shares toas bea ~~issued~~non-refundable retainer at a value of $~~117~~101,~~526~~579 based upon aan estimated fair market value of USD$10.7278 ($21.3802) per share at the time of ~~conversion~~the agreement. The amount of the retainer has been expensed to professional fees during the year ended March 31, 2017.

On December 31, 2015, the Company agreed to issue 45,000 compensatory shares to three officers of the Company with a fair market value of USD$1.72 ($2.38) per share for a total value of $107,123. This expense was recorded as stock based compensation on the statements of operations.37

On June ~~December~~22, 312016, ~~2015~~15,264 ashares ~~consulting~~to ~~firm~~be ~~was~~issued ~~granted~~to ~~13,874~~a ~~shares~~consulting tofirm bewere issued as common shares for services rendered in the amount of USD$22,500 ($3129,~~140~~185) during the year ended March 31, ~~these~~2016. ~~amounts~~The ~~have~~amount ~~been~~was recorded as professional fees on the statement of operations. ~~These~~during ~~shares~~the ~~were~~year ~~issued~~ended onMarch ~~May 18~~31, 2016.

On June ~~March 31~~30, 2016, a66,667 ~~consulting~~common ~~firm~~shares ~~was~~were ~~granted~~issued ~~15,264~~to ~~shares~~a toconsultant bein ~~issued~~settlement ~~for~~of ~~services~~a ~~rendered~~debt inat ~~the~~a ~~amount~~value of ~~USD~~$2264,~~500~~585 ~~($29,185),~~based ~~these~~upon ~~amounts~~an ~~have~~estimated fair ~~been~~market ~~recorded~~value asof ~~professional~~USD$0.75 ~~fees~~($0.97) onper share at the ~~statement~~time of ~~operations~~ issuance.

~~Subsequent~~On June 30, 2016, 250,000 common shares were issued to ~~March~~a 31consulting firm as a portion of the compensation for services initiated on June 24, 2016 at a value of $201,481 ~~the~~based ~~Company~~upon ~~entered~~an ~~into~~estimated ~~various~~fair ~~agreements~~market ~~pursuant~~value toof ~~which~~USD$0.62 it($0.81) ~~has~~per ~~committed~~share toat the date of issue. upThis toamount 1was expensed during the year ended March 31,~~100~~ 2017 as professional fees on the statements of operations. A second issuance of 250,000 common shares ofwas ~~the~~made ~~Company~~on to October 2417, 2016 at a value of $113,225 asbased ~~compensation~~upon ~~for~~an ~~services~~estimated tofair bemarket ~~rendered~~value of USD$0.35 ~~Within~~($0.45) ~~these~~per ~~agreements~~share at the ~~commitment~~date toof ~~Directors~~issue and ~~Executive~~the ~~Officers~~final ~~totals~~issuance of 250,000 common shares ~~and~~was ~~the~~made ~~other~~on ~~significant~~October ~~commitments~~18, ~~are~~2016 at toa ~~Tradersmasterpro.com~~value of $125,766 ~~Inc~~based ~~for~~upon ~~750,000~~an ~~shares~~estimated ~~and~~fair ~~Midtown~~market ~~Partners~~value &of CoUSD$0.,38 ~~LLC~~($0.50) ~~for~~per ~~100,000~~share ~~shares~~at the date of issue.

On July ~~May 4~~7, 2016, the ~~Board~~Company ~~approved~~committed ato ~~term~~issue ~~loan~~20,000 incommon ~~the~~shares ~~amount~~to ofa ~~$40,000~~consultant ~~for~~in ~~bridge~~settlement ~~financing~~of ~~with~~ a ~~relative~~debt ofat ~~one~~a value of ~~the~~$19,500 (USD$15,000) ~~officers~~based ofupon ~~the~~an ~~Company.~~estimated ~~The~~fair ~~terms~~market value of ~~the~~USD$0.75 ~~loan~~($0.97) ~~are~~per share on that itdate. isThese tocommon beshares ~~repaid~~were issued on ~~August~~October 2817, 2016 ~~at a 30% premium~~.

On December ~~May 18~~19, 2016, 4425,~~500~~000 ~~warrants~~stock options were exercised at ~~USD$0.04~~an (exercise price of $0.~~52)~~31 per common share for gross proceeds of ~~USD~~$17,~~780~~750. The ~~($2,164)~~proceeds were allocated to settle a debt with the consultant who exercised the stock options.

~~Since~~On December ~~inception~~29, we2016, ~~have~~a consulting firm was issued 978,~~759,425~~027 common shares tofor 46services ~~investors.~~rendered ~~The~~in ~~proceeds~~the ~~totaled~~amount of USD$~~771~~45,~~901~~000 ~~and~~($58,500), this ~~were~~amount ~~used~~has ~~for~~been ~~working~~recorded ~~capital~~as professional fees on the statement of operations.

On December 29, 2016, 117,465 shares to be issued were issued as common shares, 72,465 of these shares were committed to be issued during the year ended March 31, 2016 in settlement of debt and 45,000 of these shares were committed to be issued during the year ended March 31, 2016 as compensation to three members of management.

On December 29, 2016, an aggregate of 600,000 shares were issued to three members of management as compensation at a value of $485,458 based upon an estimated fair market value of USD$0.60 ($0.81) per share at the date of issue.

On December 29, 2016, 1,316,173 shares were issued to two officers and directors as consideration for conversion of shareholder advances and accounts payable.

On January 9, 2017, the Company entered into a three-month contract with an investor relations firm. The terms of the contract specified a cash payment of USD$10,000 ($13,427) and 50,000 shares of common shares which were issued on January 10, 2017 at a value of $27,000 ($35,733) based upon an estimated fair market value of USD$0.55 ($0.728) per share. The portion applicable to the 9 days in April 2017 has been recorded as a prepaid expense ($4,916) at March 31, 2017.

On January 10, 2017, 75,000 stock options were exercised at $0.31 per common share for total proceeds of $23,250. The proceeds were used to settle a debt with the consultant who exercised the stock options.

On March 22, 2017, an aggregate of 75,000 shares were issued to three members of management as compensation valued at $29,007 based upon an estimated fair market value of $0.39 (USD$0.29) per share at the date of commitment.

On March 21, 2017, 50,000 common shares purchase warrants were exercised at $0.053 (USD$0.04) on a cashless basis with 39,500 common shares being issued.

Since inception, we have issued 13,337,521 common shares to 46 investors. The total value of these shares issued totaled $4,313,931 and were used for working capital.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 and Regulation S promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

ITEM 6. SELECTED FINANCIAL DATA.

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, we are not required to provide the information required by this item.

3938

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in connection with the Company’s financial statements and related notes thereto, as included in this report.

The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements, as well as information relating to the plans of our current management.

Results of Operations and Going Concern

We incurred a net loss of $12,~~913~~585,~~995~~661 for the year ended March 31, ~~2016~~2017, (2016 ~~2015~~ - $1,~~087~~913,~~289~~995). We do not anticipate having a positive net income in the immediate future. Net cash used by operations for the year ended March 31, ~~2016~~2017 was $~~209~~341,~~919~~945. These financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company is in the development stage, in accordance with ASC 9:115 and has not yet realized profitable operations and has relied on non-operational sources to fund operations. In addition, as of March 31, ~~2016~~2017, the Company has a working capital deficiency of $~~765~~852,~~356~~514 (March 31, ~~2015~~2016 - $~~845~~765,~~406~~356) and has accumulated deficit of $36,~~723~~134,~~368~~491 (March 31, ~~2015~~2016 - $13,~~809~~723,~~373~~368). The Company’s ability to continue as a going concern is dependent on successfully executing its business plan, which includes the raising of additional funds. The company will continue to seek additional forms of debt or equity financing, but it cannot provide assurances that it will be successful in doing so. These circumstances raise substantial doubt as to the ability of the company to meet its obligations as they come due and accordingly, the appropriateness, ultimately, of the use of accounting principles applicable to a going concern. The accompanying financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

Results of Operations for the year ended March 31, ~~2016~~2017 compared to the year ended March 31, ~~2015~~2016 Operating Expenses

~~Operating~~The operating ~~Expenses~~expenses increased in 2017 ($2,585,661) versus 2016 ($1,921,210) by $664,451 as the Company continued to build the administrative infrastructure to support the development of a production facility.

The operating expenses increased in 2016 ($1,921,210) versus 2015 ($1,087,289) by $833,921 as the Company continued to build the administrative infrastructure to support the development of a production facility. By continuing this process extra membership fees were incurred in order to become DTCC full service eligible and the Company was approved to trade on the OTCQB markets. The senior management of the Company continued the program of not taking salaries but were granted stock options and shares with the expense being recognized in the stock based compensation.

Net Income (Loss)

We recognized a net loss of $12,~~913~~585,~~995~~661 for the year ended March 31, ~~2016~~2017 as compared to a net loss of $1,~~087~~913,~~289~~995 for the same period of ~~2015~~2016. Changes in net income (loss) are primarily attributable to changes in expenses, each of which is described above.

Liquidity and Capital Resources

Net cash used by operating activities was $~~209~~341,~~919~~945 and $~~252~~209,~~077~~919 for the years ended March 31, ~~2016~~2017 and ~~2015~~2016, respectively. The increase is mainly attributable to commencing the development of the demonstration production facility, the costs associated with raising new equity and the costs associated with becoming a public company.

We had negative working capital of $852,514 as of March 31, 2017 compared to $765,356 as of March 31, 2016. The current level of development activity necessitates a cash requirement of approximately $40,000 monthly.

We had negative working capital of $765,356 as of March 31, 2016 compared to $845,406 as of March 31, 2015. The current level of development activity necessitates a cash requirement of approximately $20,000 monthly.

We do not have any material commitments for capital expenditures. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financing in addition to the amount required to fund our present operation.

We continue to rely on advances and sale of equity to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurances that we will continue to be able to access advances and sell equity, without which we will not be able to continue operations. As a result of an equity line of credit and advances from members of management and their families, the Company has adequate capital resources to fund its operations through to the end of September on the assumption that the conditions precedent to draws on the equity line of credit are satisfied and that the trading volume in the Company’s shares is adequate to permit maximum draws under such equity line. The Company intends to commence a raise via private placement or direct offering to the public of equity in our Company as early as feasible in order to fund operations going forward.

The execution of the business plan has been put on hold until the appropriate commitments have been made for funding. In order to move forward the Company entered into an agency agreement with Midtown Partners LLC (a registered broker/dealer based in New York) as of May 19, 2016 with the objective being to raise up to $10 Million. The Company is projecting that $2 to $3 Million is required to implement the first phase of the business plan. The initial funding is expected to be comprised of a combination of debt and equity.39

The execution ~~financing~~of ~~will~~the ~~provide~~business ~~working~~plan ~~capital~~has ~~for~~been put on hold until the appropriate commitments have been made for funding. The Company has torecently ~~execute~~revised ~~its~~the ~~long~~business ~~term~~strategy as outlined in the business plan as(detailed ~~well~~in asITEM ~~facilitating~~1 Business) which positions the Company ~~initial~~to ~~development~~participate ofin the ~~branded~~developing ~~products strategy~~cannabis market within Canada and potentially external to Canada in jurisdictions which has legalized cannabis. ~~The~~In ~~launch~~order ofto process the ~~branded~~appropriate ~~product~~legal ~~strategy~~documents ~~will~~the ~~involve~~Company has retained the ~~implementation~~legal firm of anDentons Canada ~~awareness~~LLP ~~program~~to provide recommendations in dealing with the Canadian regulatory and financing environment for the ~~Company’s brand~~ cannabis market as well as ~~the establishment~~ ofissues anrelated ~~online~~to ~~ecommerce~~ongoing ~~distribution~~corporate ~~model~~ matters.

IfThe anticipated ~~the~~financing ~~funding from the private placement or direct offering is not available in a timely manner then management~~ will ~~continue~~provide ~~foregoing~~working ~~salaries~~capital ~~and~~for ~~operations will be scaled back to operate within~~ the ~~funds~~Company ~~available. In the normal course of business, management considers various alternatives~~ to ~~ensure~~execute ~~that the Company can meet some of~~ its ~~operating~~long ~~cash~~term ~~flow~~plan ~~requirements~~as ~~through~~well ~~financing activities, such~~ as ~~private~~facilitating ~~placements~~the initial development of ~~common~~extraction ~~shares, preferred share offerings and offerings~~ of ~~debt~~oil ~~and~~from ~~convertible~~cannabis ~~debt instruments~~ as well as through merger or acquisition opportunities. Management may also consider strategic alternatives, including strategic investments and divestitures. As future operations may be financed out of funds generated from financing activities, the ~~ability~~formulation ~~to do so is dependent on, among other factors, the overall state~~ of ~~capital~~products ~~markets~~as ~~and~~part ~~investor appetite for investments in the green technology industry and the Company’s securities in particular. Should the Company elect to satisfy its cash commitments through the issuance~~ of ~~securities, by way of either private placement or public offering or otherwise, there can be no assurance that~~ the ~~efforts~~sponsored toresearch ~~obtain~~programs with ~~such additional funding will be successful, or achieved on terms favorable to~~ the ~~Company~~Universities or its existing shareholders. If adequate funds are not available on favorable terms, the Company may have to reduce substantially or eliminate expenditures or obtain funds through other sources such as divestiture or monetization of ~~certain~~Waterloo ~~assets~~and orWestern ~~sublicensing (where permitted) of certain rights to certain of the Company’s technologies or products~~Ontario.

If the funding from the private placement or direct offering is not available in a timely manner then management will continue foregoing salaries and operations will be scaled back to operate within the funds available. In the normal course of business, management considers various alternatives to ensure that the Company can meet some of its operating cash flow requirements through financing activities, such as private placements of common shares, preferred share offerings and offerings of debt and convertible debt instruments as well as through merger or acquisition opportunities. Management may also consider strategic alternatives, including strategic investments and divestitures. As future operations may be financed out of funds generated from financing activities, the ability to do so is dependent on, among other factors, the overall state of capital markets and investor appetite for investments in the cannabis industry and the Company’s securities in particular. Should the Company elect to satisfy its cash commitments through the issuance of securities, by way of either private placement or public offering or otherwise, there can be no assurance that the efforts to obtain such additional funding will be successful, or achieved on terms favorable to the Company or its existing shareholders. If adequate funds are not available on favorable terms, the Company may have to reduce substantially or eliminate expenditures or obtain funds through other sources such as divestiture or monetization of certain assets or sublicensing (where permitted) of certain rights to certain of the Company’s technologies or products.

Additional Financing

Please see the section Recent Sales of Unregistered Securities.

As part of the engagement with Midtown Partners Group LLC the Company intends to raise up to USD$10 Million projected to take place over a 2 to 3 year period.

The Company additionally plans to undertake a funding application with the AgriInnovation Program (through the Canadian Department of Agriculture) for funding under a repayable loan program for up to $2 Million in matching funds.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Our principal capital resources have been through the subscription and issuance of common stock, although we have also used stockholder loans.

Going Concern

The accompanying financial statements have been prepared on a going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

As shown in the financial statements, the Company incurred a net operating loss of $12,~~913~~585,~~995~~661 for the year ended March 31, ~~2016~~2017, (~~2015~~2016 ~~Net~~- ~~Loss of~~ $1,~~087~~913,~~289~~995). The Company’s current liabilities exceed its current assets by $~~765~~852,~~356~~514 as of March 31, ~~2016~~2017.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis by raising additional funds through debt or equity financing. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Accordingly, our independent auditors included an explanatory paragraph in their report on the March 31, ~~2016~~2017 financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional notes and disclosure describing the circumstances that lead to this disclosure by our independent auditors.

Critical Accounting Policies

The financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) applied on a consistent basis. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

We have identified the policies below as critical to our business operations and the understanding of our financial statements. A complete discussion of our accounting policies is included in Notes 2 and 3 of the Notes to the Financial Statements.

Use of estimates

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.

Cash and Cash Equivalents

The company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Income Taxes

Please see note 1011 of the accompanying financial statements.

Fair Value of Financial Instruments

Please see ~~note~~Note 1314 of the accompanying financial statements.

Net Loss Per Common Share

Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per common share is $0.23 computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants. Potentially dilutive securities which were not included in diluted weighted average shares for the years ended March 31, ~~2016~~2017 and ~~2015~~2016 consist of outstanding options (~~930~~695,000 and ~~505~~930,000) respectively and outstanding warrants (~~709~~1,~~583~~197,500 and ~~940~~709,~~083~~583) respectively.

Stock-Based Compensation

Please see ~~note~~Note 9c10c of the accompanying financial statements.

Recent Accounting Pronouncements

InASU No. ~~June 2014~~2015-17, ~~the~~Income ~~Financial~~Taxes ~~Accounting Standards Board~~ (~~“FASB”~~Topic 740): ~~issued~~Balance ~~Accounting~~Sheet ~~Standards~~Classification ~~Update~~of ~~No.~~Deferred ~~2014-10~~Taxes, ~~“ASU~~was ~~2014-10”~~issued to ~~eliminate~~simplify ~~certain~~the ~~financial~~classification of ~~reporting~~deferred ~~requirements~~taxes ~~for~~on ~~development~~the ~~stage~~balance ~~entities~~sheet. The ~~amendments~~new inguidance ~~ASU~~would ~~2014-10~~require ~~remove~~that ~~the~~deferred ~~incremental~~taxes ~~financial~~be ~~reporting~~classified ~~requirements~~as ~~from~~non-current USassets and ~~GAAP~~liabilities ~~for~~based ~~development~~on ~~stage~~the ~~entities,~~tax ~~including~~paying ~~the~~jurisdiction. ~~presentation~~Application of ~~inception-to-date~~the ~~information~~standard, inwhich ~~the~~can ~~statements~~be ofapplied ~~income~~prospectively or retrospectively, is ~~cash~~required ~~flows~~for ~~and~~fiscal ~~shareholder~~years ~~equity~~beginning on or after December 15, 2016 and ~~disclosure~~for ofinterim ~~the~~periods ~~financial~~within ~~statements~~that asyear. ~~those~~The adoption of the amended guidance is not expected to have a ~~development~~material ~~stage~~impact ~~entity~~on the Company’s consolidated financial statements.

~~In June 2014, FASB issued Accounting Standards Update (“~~ASU”) ~~ASU~~ No. ~~2014~~2016-1201, ~~“Compensation~~Financial ~~– Stock Compensation~~ Instruments-Overall (~~Topic~~Subtopic ~~718~~825-10); ~~Accounting for Share~~-~~Based~~ ~~Payments~~Recognition ~~When~~and ~~the~~Measurement ~~Terms~~ of anFinancial ~~Award~~Assets ~~Provide~~and ~~That~~Financial aLiabilities, ~~Performance~~which ~~Target~~addresses ~~Could~~certain Beaspects of ~~Achieved~~recognition, ~~after~~measurement, ~~the~~presentation, ~~Requisite~~and ~~Service~~disclosure ~~Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms~~ of ~~the~~financial ~~award~~instruments. ~~provide~~Most ~~that~~notably, athis ~~performance~~new ~~target~~guidance ~~that~~requires ~~affects~~equity investments ~~vesting~~(except ~~could~~those beaccounted ~~achieved~~for ~~after~~under the ~~requisite~~equity ~~service~~method ~~period.~~of ~~The~~accounting ~~amendments~~or ~~require~~those that aresult ~~performance~~in ~~target~~consolidation ~~that~~of ~~affects vesting and that could be achieved after~~ the ~~requisite~~investee) to ~~service period~~ be ~~treated~~measured asat afair ~~performance~~value ~~condition.~~with Achanges ~~reporting~~in ~~entity~~fair ~~should~~value ~~apply~~recognized ~~existing guidance~~ in ~~Topic~~net ~~718 as it relates to awards with performance conditions that affect vesting to account for such awards~~income. ~~For~~This ~~all~~new ~~entities,~~guidance ~~the~~is ~~amendments in this ASU are~~ effective for annual reporting periods ~~and interim periods within those annual periods~~ beginning after December 15, ~~2015~~2017. The ~~Company~~guidance is ~~currently~~not ~~evaluating~~expected ~~the~~to ~~impact~~have ~~this~~a ~~guidance~~material ~~will~~impact ~~have~~ on ~~its~~the ~~financial~~Company’s financial statements.

InASU ~~April~~No. ~~2015~~2016-02, Leases (Topic 842), On February 25, 2016, the FASB issued ~~ASU~~a ~~2015-03,~~new ~~Interest~~standard -which ~~Imputation~~requires oflessees ~~Interest~~to ~~(Subtopic~~recognize ~~835~~almost all leases on their balance sheet as a right-~~30)~~of-use asset and a lease liability. ~~This~~The new guidance iswill require the asset and liability to ~~simplify~~be initially measured at the ~~presentation~~present value of ~~debt~~the ~~issuance~~lease ~~costs~~payments byin ~~recognizing~~the ~~debt~~statement ~~issuance~~of ~~costs~~financial ~~related~~position. toThe anew ~~debt~~guidance ~~liability~~will inalso require the ~~balance~~company ~~sheet~~to asrecognize ainterest expense ~~direct~~on ~~deduction~~the ~~from~~lease ~~that debt~~ liability ~~consistent~~separately ~~with~~from the ~~presentation~~amortization of the right-use-asset for finance leases and recognize a ~~debt~~single lease ~~discount.~~cost ~~The~~allocated ~~amendments~~on ina ~~this~~straight-line ~~update~~basis ~~are~~over ~~effective~~the lease term for ~~financial~~operating ~~statements~~leases, ~~issued~~in the statement of comprehensive income. The new standard is effective for fiscal years beginning after December 15, ~~2015~~2018, ~~and~~including interim periods within those fiscal years with early application permitted. The Company is currently evaluating ~~the~~this ~~impact~~guidance ofto determine the ~~new~~impact ~~requirements~~it may have on ~~its~~the Company’s financial statements.

InASU ~~February~~No. 2016-09, ~~the FASB issued ASU 2016~~Compensation-02Stock ~~Leases~~ Compensation (~~ASC~~Topic ~~842~~718),: ~~which~~Improvements ~~sets~~to ~~out~~Employee ~~the~~Share-Based ~~principles~~Payment ~~for~~Accounting. ~~the~~The ~~recognition,~~ASU ~~measurement,~~includes ~~presentation~~multiple ~~and~~provisions ~~disclosure~~intended ofto ~~leases~~simplify various ~~for~~aspects ~~both~~of ~~parties~~the toaccounting afor ~~contract~~share-based (ipayments.e. ~~lessees and lessors).~~ The ~~new~~areas ~~standard~~of ~~requires~~simplification ~~lessors~~in tothe ~~account~~update ~~for~~involve ~~leases~~several ~~using~~aspects of anaccounting ~~approach that is substantially equivalent to existing guidance~~ for ~~sales~~share-~~type~~based ~~leases~~payment transactions, ~~direct~~including ~~financing~~the ~~leases~~income ~~and~~tax ~~operating leases. The new standard requires lessees to apply a dual approach~~consequences, ~~classifying~~classification ~~leases~~of awards as either equity ~~finance~~ or ~~operating~~liabilities, ~~leases~~and ~~based~~classification on the ~~principle~~statement of ~~whether~~cash orflows, ~~not~~however, ~~the~~some ~~lease~~of isthe ~~effectively~~areas afor ~~financed~~simplification ~~purchase~~apply only byto ~~the~~non-public ~~lessee~~entities. This ~~classification~~guidance ~~will determine whether lease expense~~ is ~~recognized based on an~~ effective ~~interest~~for ~~method~~annual orperiods onbeginning aafter ~~straight~~December ~~line~~15, ~~basis~~2016, ~~over~~and ~~the~~interim ~~term~~periods within ofthose ~~the~~annual ~~lease~~periods. AEarly ~~lessee~~adoption is ~~also~~permitted ~~required to record a right-of-use asset and a lease liability~~ for ~~all~~any ~~leases~~entity ~~with~~in aany ~~term~~interim ~~of greater than 12 months regardless of their classification. Leases with a term of 12 months~~ or ~~less~~annual ~~will~~period, behowever, ~~accounted~~certain ~~for~~requirements apply ~~similar~~ to ~~existing guidance for operating leases today. ASC 842 supersedes~~ the ~~previous~~early ~~leases standard, ASC 840 Leases~~adoption. The ~~amendments~~guidance ~~in this update are effective for fiscal years beginning after December 15, 2018, which~~ is ~~our~~not ~~fiscal~~expected ~~2020,~~to ~~beginning~~have ona ~~April~~material ~~1, 2019. The Company is currently evaluating the~~ impact ~~this guidance will have~~ on ~~its~~the Company’s financial statements.

~~In March 2016, the FASB issued~~ ASU No. 2016-0915, ~~Compensation-Stock~~Statement ~~Compensation~~of Cash Flows (Topic ~~718~~ 230): ~~Improvements~~Classification toof ~~Employee~~Certain ~~Share-Based~~Cash ~~Payment~~Receipts ~~Accounting~~and Cash Payments. The ASU ~~includes~~provides ~~multiple~~clarity ~~provisions intended~~ to ~~simplify~~preparers ~~various~~on ~~aspects~~the treatment of ~~the~~eight specific ~~accounting~~items ~~for~~within ~~share-based~~an ~~payments.~~entity’s ~~The~~statement ~~amendments~~of incash ~~this~~flows. ~~update~~The ~~are~~guidance becomes effective for ~~annual~~all ~~periods~~public entities in fiscal years beginning after December 15, ~~2016~~2017, ~~which~~including isinterim ~~the~~periods ~~Company’s~~therein. ~~fiscal~~Early ~~2018,~~adoption ~~which~~of ~~will~~the ~~begin~~guidance, onincluding ~~April~~within 1an interim period, ~~2017~~is permitted. The ~~Company~~guidance is ~~currently~~not ~~evaluating~~expected ~~the~~to ~~impact~~have ofa ~~the~~material ~~new~~impact ~~requirements~~ on ~~its~~the Company’s financial statements.

~~Other~~ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU amends the scope of modification accounting ~~standards~~for ~~that~~share-based ~~have~~arrangements and ~~been~~provides ~~issued~~guidance oron ~~proposed~~the bytypes of changes to the ~~FASB~~terms or ~~other~~conditions ~~standards~~of share-~~setting~~based ~~bodies~~payment ~~that~~awards doto ~~not~~which ~~require~~an entity would be required to apply modification accounting under ASC 718. The guidance becomes effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption ~~until~~is apermitted, ~~future~~including adoption ~~date~~in ~~are~~any interim period. The guidance is not expected to have a material impact on the Company’s financial statements ~~upon adoption~~.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, we are not required to provide the information required by this item.

4542

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Algae Dynamics Corp.

~~Stockholders~~We have audited the accompanying balance sheets of Algae Dynamics Corp. as of March 31, 2017 and 2016, and the related statements of operations, stockholders’ deficiency, and cash flows for each of the years in the two year period ended March 31, 2017. Algae Dynamics Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We have audited the accompanying balance sheets of Algae Dynamics Corp. as of March 31, 2016 and 2015, and the related statements of operations, stockholders’ (deficiency), and cash flows for each of the years in the two year period ended March 31, 2016. Algae Dynamics Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Algae Dynamics Corp. as of March 31, ~~2016~~2017 and ~~2015~~2016, and the results of its operations and its cash flows for each of the years in the two year period ended March 31, ~~2016~~2017, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that Algae Dynamics Corp. will continue as a going concern. As discussed in Note 1 to the financial statements, Algae Dynamics Corp.’s operating losses, ~~and~~ negative working capital and an accumulated deficit as at March 31, ~~2016~~2017 raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

UHY McGOVERN, HURLEY, ~~CUNNINGHAM,~~ LLP Chartered Professional Accountants Licensed Public Accountants Toronto, Canada August 11, 2017

~~Toronto, Canada~~43

June 29, 2016

ALGAE DYNAMICS CORP.

Balance Sheets

(Stated in Canadian Dollars)

	As at March 31,			As at March 31,
	2016			2015
	2017			2016
ASSETS
Current Assets
Cash	$	~~173~~87		$	~~3,084~~173
Prepaid expenses		1432,~~752~~878			514,~~519~~752
Amounts receivable from officer (Note 12)		21,064			29,967
Amounts receivable from officer (Note 13)		-			21,064
Amounts receivable, net		811,~~002~~963			108,~~046~~002
Total Current Assets		4344,~~991~~928			4843,~~616~~991
Equipment and leasehold improvements (Note 4)		65,252			77,500
Equipment and leasehold improvements, net (Note 4)		47,828			65,252
Intangible assets (Note 5)		-			15,970
Total Assets	$	92,756		$	109,243
Total Assets	$	109,243		$	142,086
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities (Note 12)	$	397,878		$	161,877
Accounts payable and accrued liabilities (Note 13)	$	286,792		$	397,878
Advances from shareholders and related parties (Note 6)		~~383~~22,~~990~~347			~~367~~383,~~267~~990
Warrant liability (Note 9b)		27,479			364,878
Promissory Note (Note 8a)		16,456			-
Total Current Liabilities		809,347			894,022
Term loan (Note 7)		48,894			-
Convertible Note (Note 8b)		26,076			-
Derivative liability (Note 9)		260,677			-
Warrant liability (Note 10b)		236,200			27,479
Total Current Liabilities		897,442			809,347
Going Concern (Note 1)
Commitments and Contingencies (Note 12)
STOCKHOLDERS' (DEFICIENCY)
Common stock (Note 9a), no par value, unlimited amount
Common stock (Note 10a), no par value, unlimited amount authorized, 13,337,521 issued and outstanding as of March 31, 2017, (March 31, 2016 - 9,701,051)		4,313,931			1,466,352
authorized, 9,701,051 issued and outstanding
Additional paid in capital (Note 10c)		1,016,324			1,216,963
as of March 31, 2016, (2015 - 9,256,410)		1,466,352			542,323
Equity to be issued (Note 10a)		-			339,949
Additional paid in capital (Note 9c)		1,026,765			324,916
Accumulated deficit		(6,134,941	)		(3,723,368	)
Warrants (Note 9b)		190,198			190,198
Total Stockholders' (Deficiency)		(804,686	)		(700,104	)
Equity to be issued (Note 9a)		339,949			-
Total Liabilities and Stockholders' (Deficiency)	$	92,756		$	109,243
Accumulated deficit		(3,723,368	)		(1,809,373	)
Total Stockholders' (Deficiency)		(700,104	)		(751,936	)
Total Liabilities and Stockholders' (Deficiency)	$	109,243		$	142,086

Going Concern (Note 1)

Commitments and Contingencies (Note 11)

These financial statements are approved by the Directors:

Signed “Cameron McDonald” Signed “Blair Mullin” Director Director

The accompanying notes are an integral part of these financial statements

4844

ALGAE DYNAMICS CORP.

Statements of Operations

(Stated in Canadian Dollars)

	For the			For the
	Year Ended			Year Ended
	March 31,			March 31,
	March 31, 2017			March 31, 2016
	2016			2015
OPERATING EXPENSES
Accretion expenses (Note 8)	$	12,563		$	-
Accretion expenses (Notes 7 and 8)	$	62,033		$	12,563
Application and membership fees		2312,~~394~~646			-23,394
Amortization expense (Note 4)		2017,~~198~~424			20,~~338~~198
Business development		13,901			25,145
Bad debt expense (Note 13)		17,656			-
Foreign exchange (loss)		1,616			-
Business development		7,715			13,901
Interest		26,792			-
Convertible debt financing (Notes 8 and 9)		113,225			-
Occupancy costs		32,012			41,470
Fair value change in derivative liability (Note 9)		7,359			-
Office and general		7,426			18,915
Foreign exchange loss		852			1,616
Professional fees (Notes 9a and 9b)		859,993			582,564
Impairment of intangible assets (Note 5)		-			15,970
Research and development		3,184			46,228
Interest		4,611			26,792
Stock based compensation (Note 9a and 9c)		808,972			324,916
Loss on settlement of debt (Notes 6, 10a and 13)		548,711			61,052
Telephone and internet services		14,511			14,802
Management fees		8,125			-
Travel		19,626			12,911
Occupancy costs		32,201			32,012
Extinguisment of debt (Notes 6 and 7)		61,052			-
Office and general		7,102			7,426
Impairment of intangible assets (Note 5)		15,970			-
Professional fees (Notes 10a, 10b, 10c and 14e)		1,193,944			859,993
Total Operating Expenses		1,921,210			1,087,289
Research and development		7,629			3,184
Operating Loss		1,921,210			1,087,289
Stock based compensation (Note 10c)		515,624			808,972
Deferred Income tax recovery (Note 10)		(7,215	)		-
Telephone and internet services		13,304			14,511
Net Loss for the Year	$	1,913,995		$	1,087,289
Travel		15,500			19,626
Net loss per common share -
Total Operating Expenses		2,585,661			1,921,210
basic and diluted	$	0.20		$	0.12
Net loss before income taxes		2,585,661			1,921,210
Weighted average common shares
Deferred income tax recovery		-			(7,215	)
outstanding - basic and diluted		9,389,903			9,238,710
Net Loss for the Year	$	2,585,661		$	1,913,995
Net loss per common share - basic and diluted	$	0.23		$	0.20
Weighted average common shares outstanding - basic and diluted		11,324,138			9,389,903

The accompanying notes are an integral part of these financial statements

4945

ALGAE DYNAMICS CORP.

Statements of Stockholders' Equity (Deficiency)

(Stated in Canadian Dollars)

	Common		Common						Additional
	Shares		Shares						Paid in			Equity to			Accumulated			Stockholders'
	Number		Amount			~~Warrants~~			Capital			be Issued			Deficit			(Deficiency)
March 31, 2014		8,606,250	$	100		$	-		$	-		$	328,180		$	(722,084	)	$	(393,804	)
March 31, 2015		9,256,410		542,323						515,114			-			(1,809,373	)		(751,936	)
Unit subscriptions issued (Note 9a)		625,160		689,116			-			-			(328,180	)					360,936
Warrants exercised (Note 10b)		230,500		12,614						-			-			-			12,614
Units issued
Warrant liability valuation transferred on exercise (Note 10b)		-		509,285						-			-			-			509,285
Valuation of warrants (Note 9b)		-		(171,308	)		171,308			-			-			-			-
Stock options (Note 10c)		-		-						701,849			-			-			701,849
Warrants granted for sevices (Note 9b)		-		-			19,290			-			-			-			19,290
Shares issued for cash (Note 10a)		31,532		48,441						-			-			-			48,441
Unit issue costs		-		(1,100	)		(400	)		-			-			-			(1,500	)
Shares issued for conversion of debt debt (Notes 8 and 10a)		29,609		41,305						-			172,501			-			213,806
Warrants exercised		25,000		1,113															1,113
Shares issued as compensation (Note 10a)		153,000		312,384						-			167,448			-			479,832
Warrant liability valuation transferred on exercise Stock options (Note 9c)		- -		32,675 -			- -			- 324,916			- -			- -			32,675 324,916
Net loss for the year		-		-						-			-			-			(1,913,995	)
Valuation of warrants classified as warrant liabiities		-		(8,273	)		-			-			-			-			(8,273	)
March 31, 2016		9,701,051		1,466,352						1,216,983			339,949			(3,723,368	)		(700,104	)
Net loss for the year		-		-			-			-			-			(1,087,289	)		(1,087,289	)
Warrants exercised
March 31, 2015		9,256,410	$	542,323		$	190,198		$	324,916		$	-		$	(1,809,373	)	$	(751,936	)
(Notes 10a and 10b)		84,000		57,639						-			-			-			57,639
Warrants exercised (Note 9b)		230,500		12,614			-			-			-			-			12,614
Warrants expired		-		-						(174,088)			-			174,088			-
Warrant liability valuation transferred on exercise (Note 9b)		-		509,285			-			-			-			-			509,285
Stock based compensation		720,000		621,697						1,049			(107,122	)		-			515,624
Stock options (Note 9c)		-		-			-			701,849			-			-			701,849
(Notes 10a and 10c)
Shares issued for cash Note (9a)		31,532		48,441			-			-			-			-			48,441
Options exercised		100,000		58,600						(27,600	)		-			-			31,000
Shares issued for conversion of debt (Notes 8 and 9a)		29,609		36,263			-			-			172,501			-			208,764
Shares issued for conversion of debt (Note 10a)		1,475,305		1,326,650									(172,501	)		-			1,154,149
Beneficial conversion feature		-		5,042			-			-			-			-			5,042
Shares issued to consultants as compensation for services rendered (Note 10a)		1,257,165		782,993						-			(60,326	)		-			722,667
Shares issued as compensation (Note 9a)		153,000		312,384			-			-			167,448			-			479,832
Net loss for the year		-		-						-			-			(2,585,661	)		(2,585,661	)
Net loss for the year		-		-			-			-			-			(1,913,995	)		(1,913,995	)
March 31, 2017		13,337,521	$	4,313,931					$	1,016,324		$	-		$	(6,134,941	)	$	(804,686	)
March 31, 2016		9,701,051	$	1,466,352		$	190,198		$	1,026,765		$	339,949		$	(3,723,368	)	$	(700,104	)

The accompanying notes are an integral part of these financial statements

5046

ALGAE DYNAMICS CORP.

Statements of Cash Flows

(Stated in Canadian Dollars)

	Year Ended			Year Ended
	March 31,			March 31,
	March 31, 2017			March 31, 2016
	2016			2015
Cash flows from operating activities
Net loss for the year	$	(1,913,995	)	$	(1,087,289	)
Net loss for the period	$	(2,585,661	)	$	(1,913,995	)
Adjustments to reconcile net income to net cash used in operating activities
Adjustments to reconcile net income to net cash used in operating activities:
Amortization		2017,~~198~~424			20,~~338~~198
Stock based compensation (Notes 9b and 9c)		1,353,336			733,486
Stock based compensation (Note 10c)		1,155,982			1,353,336
Units issued in settlement of debt (Note 9a)		-			11,256
Extinguishment of debt		544,066			61,052
Extinguishment of debt		61,052			-
Impairment of intangible assets		-			15,970
Impairment of intangible assets		15,970			-
Deferred income tax recovery		-			(7,215	)
Deferred income tax recovery		(7,215	)		-
Change in warrant liability (Note 10b)		(368,957	)		-
Accretion expense		12,563			-
Shares issued and to be issued for services (Note 10a)		722,668			-
Realized foreign exchange loss		3,669			-
Gain on settlement of debt		4,643
Accretion expense		62,032			12,563
Realized foreign exchange loss		-			3,669
Convertible debt financing		102,612			-
Change in operating assets and liabilities
Prepaid expenses		(918,~~233~~126	)		6(9,~~605~~233	)
Accounts receivable		1917,~~851~~103			~~(10~~19,~~820~~851	)
Accounts payable		~~233~~4,~~885~~269			74233,~~347~~885
Net cash flows used in operating activities		(~~209~~341,~~919~~945	)		(~~252~~209,~~077~~919	)
Cash flows from investing activities
Investment in equipment and leasehold improvements		-			(55,870	)
Investment in patents		-			(8,829	)
Net cash flows used in investing activities		-			(64,699	)
Cash flows from financing activities
Advances from shareholders		83159,~~665~~443			~~(94~~83,~~107~~665	)
Unit subscriptions received		-			349,680
Common shares issued		-			48,441
Unit issue costs		-			(1,500	)
Term loan proceeds		40,000			30,000
Common shares issued		48,441			-
Convertible notes		140,099			32,288
Term loan proceeds		30,000			-
Warrant exercise proceeds		2,317			12,614
Convertible note proceeds		32,288			-
Net cash flows from financing activities		341,859			207,008
Warrants exercised proceeds		12,614			1,113
Net change in cash		(86	)		(2,911	)
Net cash flows from financing activities		207,008			255,186
Cash position - beginning of year		173			3,084
Net change in cash		(2,911	)		(61,590	)
Cash position - end of year	$	87		$	173
Cash position - beginning of year		3,084			64,674
Cash position - end of year		173			3,084
Supplemental Information:
Income taxes paid		-			-
Interest paid		-			-
Common shares and shares to be issued, issued for conversion of debt (Notes 6, 7 and 8)		208,764			-
Common shares and shares to be issued,
issued for conversion of debt					208,764
Common shares issued for debt settlement		1,475,305			-

The accompanying notes are an integral part of these financial statements

5147

Algae Dynamics Corp. ~~(Formerly Converted Carbon Technologies Corp.)~~

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, ~~2016~~2017 and ~~2015~~2016

1.) Nature of the Business and Going Concern

Algae Dynamics Corp. (the “Company”) was incorporated under the Canada Business Corporations Act on October 7, 2008 as Converted Carbon of Canada Corp. On November 19, 2010, the Company amended its Articles of Incorporation to change its name to Converted Carbon Technologies Corp. and a further amendment was approved by the shareholders on August 28, 2014 to change the name to Algae Dynamics Corp.

The Company is aconducting ~~nutrient~~research ~~ingredient~~through ~~company~~sponsored ~~and~~research ~~has~~agreements ~~developed~~with atwo ~~scalable~~universities ~~Pure-BioSilo™~~to ~~for~~support ~~sanitary~~development ~~cultivation~~ of ~~microalgae~~health ~~targeted~~products utilizing tocannabis ~~the functional food~~ and ~~beverage~~algae ~~additives and supplement markets~~oil. The Company’s planned principal operations are the ~~design,~~development ~~engineering~~ and ~~manufacturing~~sale of ahealth ~~proprietary~~products, design ~~algae~~and ~~cultivation~~development ~~system for the high volume production~~ of ~~pure~~a ~~contaminant-free~~facility ~~algae~~to ~~biomass. The~~extract ~~Company~~botanical isoils, ~~currently~~and ~~conducting~~design, ~~research~~engineering and ~~development~~manufacturing ~~activities~~of toa ~~operationalize~~proprietary ~~certain~~algae cultivation ~~technology~~system ~~currently~~for in the ~~allowed~~high-volume ~~patent~~production ~~application~~of ~~stage, so it can produce~~ pure ~~contaminate~~contaminant-free algae biomass.

~~During~~In May ~~the year ended March 31~~2016, ~~2014,~~ the Company ~~secured~~signed a ~~research~~Letter ~~facility in Mississauga, Ontario, which houses all~~ of ~~its~~Engagement ~~employees~~with ~~and~~Midtown ~~research~~Partners ~~and~~& ~~development~~Co, ~~activities. The~~LLC ~~Company~~to israise ~~also in the process of raising~~ additional equity capital to support the ~~completion~~implementation of its ~~development~~business ~~activities~~plan; an addendum to ~~begin~~this ~~production~~agreement ofwas ~~pure~~signed ~~contaminate-free~~on ~~algae~~January ~~biomass~~17, as2017. ~~soon~~See asNote ~~possible.~~12

The Company filed a Form S-1 ~~registration~~Registration Statement with the U.S Securities and Exchange Commission (SEC) as an initial registration of common shares. The registration was declared effective by the SEC on November 21, 2014. The Company’s stock began trading on September 17, 2015.

The Company’s activities are subject to significant risks and uncertainties, including failing to obtain patents and failing to secure additional funding to operationalize the Company’s current technology before another company develops similar technology.

These financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company is in the development stage and has not yet realized profitable operations and has relied on non-operational sources to fund operations. The Company has suffered recurring losses and additional future losses are anticipated as the Company has not yet been able to generate revenue. In addition, as of March 31, ~~2016~~2017, the Company has a working capital deficiency of $~~765~~852,~~356~~514 (~~2015~~March 31, 2016 - $~~845~~765,~~406~~356) and an accumulated deficit of $36,~~723~~134,~~368~~941 (~~2015~~March 31, 2016 - $13,~~809~~723,~~373~~368). The Company’s ability to continue as a going concern is dependent on successfully executing its business plan, which includes the raising of additional funds. The Company will continue to seek additional forms of debt or equity financing, but it cannot provide assurances that it will be successful in doing so. These circumstances raise substantial doubt as to the ability of the Company to meet its obligations as they come due and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

5248

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

2.) Presentation of Financial Statements

Basis of Presentation

The financial statements have been prepared in accordance with U.S Generally Accepted Accounting Principles (“US GAAP”). All adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows as of March 31, ~~2016~~2017 have been included.

The Company’s financial statements are prepared using the accrual basis of accounting in accordance with US GAAP and the Company’s functional and reporting currency is the Canadian dollar.

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10 “ASU 2014-10” to eliminate certain financial reporting requirements for development stage entities. The amendments in ASU 2014-10 remove the incremental financial reporting requirements from US GAAP for development stage entities, including the presentation of inception-to-date information in the statements of income, cash flows and shareholder equity, and disclosure of the financial statements as those of a development stage entity. The Company has chosen to early adopt these amendments effective for its fiscal year ended March 31, 2013 and onwards.

Use of Estimates and Assumptions

The preparation of the financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could materially differ from these estimates. The significant areas requiring the use of management estimates are related to provision for doubtful accounts, accrued liabilities, contingencies, the valuation of deferred taxes, stock based compensation, warrants, convertible debt and intangible assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ materially from those estimates.

3.) Summary of Significant Accounting Policies

Going Concern Consideration

Effective April 1, 2016, the Company adopted ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), which requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management’s evaluations are based on relevant conditions and events that are known and reasonably to be knowable as of August 11, 2017. Based on the following, management believes that it is probable that management will be unable to meet its obligations as they come due within one year that the financial statements are issued.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

3.) Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, and all highly liquid debt instruments purchased with an original maturity of three months or less. As at March 31, ~~2016~~2017 and ~~2015~~2016 there were no cash equivalents.

Prepaid Expenses

Prepaid expenses consist of services paid, for which the Company has not yet received the benefit.

3.) Summary of Significant Accounting Policies (continued)

Equipment and Leasehold Improvements

Equipment and leasehold improvements are stated at cost less accumulated ~~amortization~~depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. 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 can be measured reliably. The carrying amount of an asset is derecognized when replaced.

Repairs and maintenance costs are charged to the statements of operations, during the year in which they are incurred.

~~Amortization~~ Depreciation is provided for over the estimated useful life of the asset as follows:

Computer equipment 30% on a declining balance

Computer equipment		30% on a declining balance
Production equipment		20% on a declining balance

Production equipment 20% on a declining balance

Leasehold improvements are amortized over the term of the lease or useful life of the improvements, whichever is shorter, which is currently 5 years.

Useful lives and residual values are reviewed and adjusted, if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The cost and accumulated ~~amortization~~depreciation of assets retired or sold are removed from the respective accounts and any gain or loss is recognized in operations.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

3.) Summary of Significant Accounting Policies (continued)

Intangible Assets

Intangible assets are comprised of patents. Patents represent capitalized legal costs incurred in connection with applications for patents which have a probable future economic benefit. In-process patents are not amortized. All patents subject to ~~amortization~~depreciation are amortized on a straight line basis over antheir estimated useful life. The Company regularly evaluates patents and patent applications for impairment or abandonment, at which point the Company charges the remaining net book value to expenses.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying amount exceeds the fair value, is recognized if the carrying amount exceeds estimated undiscounted future cash flows.

3.) Summary of Significant Accounting Policies (continued)

Research and Development

Research and development costs include costs directly attributable to the conduct of research and development programs, including the cost of consulting fees, materials, supplies, and the maintenance of research equipment. All costs associated with research and development are expensed as incurred. The approved refundable portion of tax credits are netted against the related expenses. Non-refundable investment tax credits are recorded in the period when reasonable assurance exists that the Company has complied with the terms and conditions required for approval of the tax credit and it is more likely than not that the Company will realize the benefits of these tax credits against the deferred taxes. Refundable investment tax credits are recorded in the period when reasonable assurance exists that the Company has complied with the terms and conditions required for approval of the tax credit and it is more likely than not that the Company will collect it.

Stock-based Compensation

The Company uses the fair value based method of accounting for all its stock-based compensation in accordance with FASB Accounting Standards Codification ("“ASC"”) ASC 718 “Compensation – Stock Compensation”. The estimated fair value of the options and warrants that are ultimately expected to vest based on performance related conditions, as well as the options and warrants that are expected to vest based on future service, is recorded over the instrument’s requisite service period and charged to stock-based compensation. In determining the amount of options and warrants that are expected to vest, the Company takes into account, voluntary termination behavior as well as trends of actual option and warrant forfeitures. Stock options and warrants which are indexed to a factor which is not a market, performance or service condition, in addition to the Company’s share price, are classified as liabilities and re-measured at each reporting date based on the Black-Scholes option pricing model with a charge to operations, until the date of settlement.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

3.) Summary of Significant Accounting Policies (continued)

Income Taxes

Income taxes are accounted for under the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect of a change in income tax rates on deferred tax liabilities and assets is recognized in income in the period in which the change occurs. Deferred tax assets are recognized to the extent that they are considered more likely than not to be realized.

FASB issued ASC 740-10 “Accounting for Uncertainty in Income Taxes”. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

3.) Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments

ASC 820 “Fair Value Measurement” defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices that are observable for the asset or liability or indirectly; and

Level 3 – inputs that are not based on observable market data.

The carrying amounts of the Company’s financial instruments including cash, amounts receivable, accounts payable and accrued liabilities, promissory note, term loans, convertible note and advances from shareholders approximate their fair values due to their short-term nature. Management is of the opinion that the Company is not exposed to significant interest, credit or currency risks from these financial instruments.

The Company’s equity-linked financial instruments reflected as warrant liability on the balance sheet represent financial liabilities classified as Level 3 as per ASU 2009-05. As required by the guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value of the warrant liability which is not traded in an active market has been determined using the Black-Scholes option pricing model based on assumptions that are not supported by observable market conditions.52

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

3.) Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments (continued)

The Company’s equity-linked financial instruments reflected as warrant liability on the balance sheet represent financial liabilities classified as Level 3 as per ASU 2009-05. As required by the guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair values of the warrant liability and derivative liability which are not traded in an active market have been determined using the Black-Scholes option pricing model based on assumptions that are not supported by observable market conditions.

Derivative Financial Instruments

The Company evaluates all of its agreements to determine if the financial instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Foreign Currency Transactions and Translation

Monetary assets and liabilities are translated into Canadian dollars, which is the functional currency of the Company, at the year-end exchange rate, while foreign currency expenses are translated at the exchange rate in effect on the date of the transaction. The resultant gains or losses are included in the statement of operations. Non-monetary items are translated at historical rates.

Loss per Share

Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated using the treasury stock method and reflects the potential dilution of securities by including warrants and contingently issuable shares, if any, in the weighted average number of common shares outstanding for a year, if dilutive. In a loss year, dilutive common shares are excluded from the loss per share calculation as the effect would be anti-dilutive. Accordingly, for the years ended March 31, ~~2016~~2017 and ~~2015~~2016, the basic loss per share was equal to diluted loss per share as there were no dilutive securities.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

3.) Summary of Significant Accounting Policies (continued)

Comprehensive Income (Loss)

ASC 220 “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The net loss is equivalent to the comprehensive loss for the periods presented.

3.) Summary of Significant Accounting Policies (continued)

New Accounting Pronouncements

~~In June 2014, FASB issued Accounting Standards Update (“~~ASU~~”) ASU~~ No. ~~2014~~2015-1217, ~~“Compensation~~Income –Taxes ~~Stock Compensation~~ (Topic ~~718~~740);: ~~Accounting~~Balance ~~for~~Sheet ~~Share-Based~~Classification ~~Payments When the Terms~~ of anDeferred ~~Award~~Taxes, ~~Provide~~was ~~That~~issued ~~a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply~~ to ~~all~~simplify ~~reporting entities that grant their employees share-based payments in which~~ the ~~terms~~ classification of ~~the~~deferred ~~award~~taxes ~~provide~~on ~~that a performance target that affects vesting could be achieved after~~ the ~~requisite~~balance ~~service period~~sheet. The ~~amendments~~new guidance would require that adeferred ~~performance~~taxes ~~target~~be ~~that~~classified ~~affects~~as ~~vesting~~non-current assets and ~~that~~liabilities ~~could~~based beon ~~achieved after~~ the ~~requisite~~tax ~~service~~paying ~~period be treated as a performance condition~~jurisdiction. AApplication ~~reporting~~of ~~entity~~the ~~should~~standard, ~~apply~~which ~~existing~~can ~~guidance~~be inapplied ~~Topic~~prospectively ~~718~~or asretrospectively, is itrequired ~~relates~~for tofiscal ~~awards~~years ~~with~~beginning ~~performance~~on ~~conditions~~or ~~that~~after ~~affect~~December ~~vesting to account for such awards. For all entities~~15, ~~the~~2016 ~~amendments~~and ~~in this ASU are effective~~ for ~~annual periods and~~ interim periods within ~~those~~that ~~annual~~year. ~~periods~~The ~~beginning~~adoption ~~after~~of the ~~December~~amended ~~15,~~guidance ~~2015. The Company~~ is ~~currently~~not ~~evaluating~~expected ~~the~~to ~~impact~~have ~~this~~a ~~guidance~~material ~~will~~impact ~~have~~ on ~~its~~the Company’s financial statements.

InASU No. ~~April 2015~~2016-01, ~~the~~Financial ~~FASB~~Instruments-Overall ~~issued~~(Subtopic ~~ASU~~825-10) ~~2015~~-~~03,~~ ~~Interest~~Recognition -and ~~Imputation~~Measurement of ~~Interest~~Financial ~~(Subtopic~~Assets ~~835-30).~~and ~~This~~Financial ~~guidance~~Liabilities, which isaddresses tocertain ~~simplify~~aspects ~~the~~of recognition, measurement, presentation, ~~of debt issuance~~and ~~costs~~disclosure byof ~~recognizing~~financial ~~debt~~instruments. ~~issuance~~Most ~~costs~~notably, this ~~related~~new toguidance arequires ~~debt liability~~equity ininvestments ~~the~~(except ~~balance~~those ~~sheet~~accounted asfor aunder ~~direct~~the ~~deduction~~equity ~~from~~method ~~that~~of ~~debt~~accounting ~~liability~~or ~~consistent~~those ~~with~~that result ~~the~~in ~~presentation~~consolidation of athe ~~debt discount.~~investee) ~~The~~to ~~amendments~~be inmeasured ~~this~~at ~~update~~fair ~~are~~value ~~effective~~with ~~for~~changes ~~financial~~in ~~statements~~fair ~~issued~~value ~~for~~recognized ~~fiscal~~in ~~years~~net ~~beginning~~income. ~~after~~This new ~~December~~guidance ~~15,~~is ~~2015,~~effective ~~and~~for ~~interim~~annual reporting periods ~~within~~beginning ~~those~~after ~~fiscal~~December ~~years~~15, 2017. The ~~Company~~guidance is ~~currently~~not ~~evaluating~~expected ~~the~~to ~~impact~~have a ofmaterial ~~the~~impact ~~new requirements~~ on ~~its~~the Company’s financial statements.

~~In February 2016, the FASB issued~~ ASU No. 2016-02, Leases (~~ASC~~Topic 842), ~~which~~On ~~sets~~February ~~out the principles for the recognition~~25, ~~measurement~~2016, ~~presentation~~the ~~and~~FASB ~~disclosure~~issued ~~of leases for both parties to~~ a ~~contract (i.e. lessees and lessors). The~~ new standard which requires ~~lessors~~lessees to ~~account~~recognize ~~for~~almost all leases ~~using~~on antheir ~~approach~~balance ~~that~~sheet isas ~~substantially~~a ~~equivalent to existing guidance for sales~~right-~~type~~of-use ~~leases,~~asset ~~direct financing leases~~ and ~~operating~~a ~~leases~~lease liability. The new ~~standard~~guidance ~~requires~~will ~~lessees~~require tothe ~~apply~~asset aand ~~dual~~liability to ~~approach,~~be ~~classifying~~initially ~~leases~~measured asat ~~either finance or operating leases based on~~ the ~~principle~~present value of ~~whether or not~~ the lease ispayments ~~effectively~~in athe ~~financed~~statement ~~purchase~~of byfinancial ~~the lessee~~position. ~~This~~The ~~classification~~new guidance will also ~~determine~~require ~~whether~~the ~~lease~~company ~~expense~~to isrecognize ~~recognized based on an effective~~ interest ~~method~~expense or on athe ~~straight~~lease ~~line~~liability ~~basis~~separately ~~over~~from the ~~term~~amortization of the ~~lease. A lessee is also required to record a~~ right-~~of-~~use -asset ~~and a lease liability~~ for ~~all~~finance leases ~~with~~and recognize a ~~term~~single oflease ~~greater~~cost ~~than~~allocated 12on ~~months~~a ~~regardless~~straight-line ofbasis ~~their~~over ~~classification.~~the ~~Leases~~lease ~~with a~~ term ~~of 12 months or less will be accounted~~ for ~~similar to existing guidance for~~ operating leases, in ~~today. ASC 842 supersedes~~ the ~~previous~~statement ~~leases~~of ~~standard,~~comprehensive ~~ASC 840 Leases~~income. The ~~amendments~~new instandard ~~this~~is ~~update are~~ effective for fiscal years beginning after December 15, 2018, ~~which~~including interim isperiods ~~our~~within those fiscal ~~2020,~~years ~~beginning~~with onearly ~~April~~application ~~1, 2019~~permitted. The Company is currently evaluating this guidance to determine the impact ~~this~~it ~~guidance~~may ~~will~~ have on ~~its~~the Company’s financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The amendments in this update are effective for annual periods beginning after December 15, 2016, which is the Company’s fiscal 2018, which will begin on April 1, 2017. The Company is currently evaluating the impact of the new requirements on its financial statements.54

~~Other~~Algae Dynamics accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s financial statements upon adoptionCorp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

3.) Summary of Significant Accounting Policies (continued)

ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The areas of simplification in the update involve several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows, however, some of the areas for simplification apply only to non-public entities. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period, however, certain requirements apply to the early adoption. The guidance is not expected to have a material impact on the Company’s financial statements.

ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The ASU provides clarity to preparers on the treatment of eight specific items within an entity’s statement of cash flows. The guidance becomes effective for all public entities in fiscal years beginning after December 15, 2017, including interim periods therein. Early adoption of the guidance, including within an interim period, is permitted. The guidance is not expected to have a material impact on the Company’s financial statements.

ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU amends the scope of modification accounting for share-based arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. The guidance becomes effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The guidance is not expected to have a material impact on the Company’s financial statements.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

4.) Equipment and Leasehold Improvements

March 31, 2016

March 31, 2015

March 31, 2017

March 31, 2016

Accumulated

Cost

~~Amortization~~Depreciation

Cost

~~Amortization~~Depreciation

Computer equipment

3,558

2,~~089~~530

3,558

12,~~459~~089

Production equipment

67,367

2735,~~738~~663

67,367

1727,~~831~~738

Leasehold improvements

42,290

1827,~~136~~194

3342,~~649~~290

718,~~784~~136

Total

113,215

4765,~~963~~387

~~104~~113,~~574~~215

2747,~~074~~963

Net carrying amount

6547,~~252~~828

7765,~~500~~252

During the year ended March 31, ~~2016~~2017, the Company recorded total ~~amortization~~depreciation of $2017,~~198~~424 (~~2015~~2016 - $20,~~338~~198) which was recorded to ~~amortization~~ depreciation expense on the statements of operations.

5.) Intangible Assets

The Company has patents and patents pending with a cost of $Nil as atof March 31, ~~2016~~2017 (~~2015 - $15,970) that are not currently being amortized and accordingly, the Company did not record amortization expense relating to its intangible assets for the years ended March 31,~~ 2016 ~~and~~– ~~2015~~Nil). During the year ended March 31, ~~2016~~2017, the Company reported an impairment of $Nil (2016 - $15,970) with respect to its intangible assets.

6.) Advances from Shareholders and Related Parties

As at March 31, ~~2016~~2017, the Company had received cumulative net working capital advances in the amount of $~~383~~22,~~990~~347 (~~2015~~March -31, 2016 - $~~367~~383,~~267~~990) from two shareholders who are also officers and directors of the Company. ~~and~~During athe ~~related~~year ~~party~~ended ~~who~~March is31, a2017, ~~family member of one of~~ the two ~~officers. The advances from~~ shareholders ~~are~~converted ~~unsecured,~~advances ~~non-interest bearing~~ and accounts payable ~~upon~~of ~~demand. During~~$265,298 ~~the~~and ~~year~~$255,788 ~~ended~~into ~~March 31~~1, ~~2016~~316,173 ~~advances~~common shares of ~~$75,846~~the ~~(including~~Company. The ~~interest~~common ofshares ~~$8,721)~~ were ~~settled~~valued ~~with~~at 49$1,~~371~~065,152 ~~shares~~based toupon bean ~~issued~~estimated ~~valued~~fair atvalue (of USD$10.~~72)~~60 ($20.3881) per share ~~based~~at on the ~~quoted~~time ~~market~~of ~~value~~issuance. The ~~total~~difference ~~value~~between ofthe ~~consideration~~fair ~~provided~~market invalue ~~exchange~~of ~~for~~ the ~~extinguishment~~common ofshares ~~debt~~and ~~was~~the ~~$117,527,~~carrying ~~which~~value ~~resulted~~of inthe aadvances ~~loss~~from onshareholders ~~extinguishment~~and the ofamount ~~debt~~included ofin ~~$41,681,~~accounts ~~which~~payable was recorded onas ~~the~~a ~~statement~~loss ofon ~~operations. The~~extinguishment ~~advances~~of ~~from the~~ related party ~~are~~debt ~~unsecured,~~of ~~payable upon demand and bear interest at 20% per annum~~$544,066.

During the year ended March 31, 2016, advances of $75,846 were settled with 49,371 shares to be issued valued at (USD$1.72) $2.38 per share based on the quoted market value. The total value of consideration provided in exchange for the extinguishment of debt was $117,526, which resulted in a loss on extinguishment of debt of $41,681, which was recorded on the statement of operations.

The advances from shareholders are unsecured, payable upon demand and non-interest bearing.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

7.) Term Loan

On May 64, ~~2015~~2016, the Company agreed to a ~~one year~~ term loan ~~(maturing~~of ~~May 5~~$40,000 ~~2016)~~for bridge financing with a ~~family~~relative ~~member~~of one of anthe ~~officer~~officers of the Company. The loan ~~bore~~matures ~~interest~~on atAugust ~~12%~~28, ~~per~~2017 ~~annum~~and ~~paid~~the ~~quarterly. The~~terms ~~face~~specify ~~value~~a of30% ~~the~~premium ~~loan~~to ~~was~~be ~~$33,000~~paid at that time. The ~~carrying~~30% ~~value~~premium ofis ~~the~~recognized as ~~loan~~an ~~was~~expense ~~recorded~~over ~~net~~the ofterm ~~$3,000~~ of ~~transaction~~the ~~costs. The~~loan ~~term~~and ~~loan~~is ~~plus~~amortized on the ~~accrued~~statements ~~interest~~ of ~~$2,604~~operations. ~~was~~During ~~settled~~the onyear ~~December~~ended March 31, ~~2015~~2017 the ~~with~~Company ~~23,094~~recorded ~~shares~~accretion toexpense beof ~~issued~~$8,894 ~~valued~~(2016 at- ~~(USD~~$~~1.72~~nil) $2.38 ~~per~~The ~~share~~loan ~~based~~was oninitially ~~the~~scheduled ~~quoted~~to ~~market~~mature ~~value. The~~on ~~total~~August ~~value~~28, 2016 but an extension of ~~consideration~~three ~~provided~~months, infollowed ~~exchange~~by ~~for~~a ~~the~~second ~~extinguishment~~extension of ~~debt~~three ~~was~~months ~~$54,975,~~and ~~which~~followed ~~resulted~~by in a ~~loss~~further onextension ~~extinguishment~~to ~~of debt of $19~~November 30,~~371,~~ ~~which~~2017 was ~~recorded~~agreed onto with the ~~statement~~same ~~of operations~~terms.

8On May 6, 2015, the Company agreed to a one year term loan (maturing May 5, 2016) with a family member of an officer. The loan bore interest at 12% per annum paid quarterly. The face value of the loan was $33,000. The carrying value of the loan was recorded net of $3,000 of transaction costs. The term loan plus the accrued interest was settled on December 31, 2015 with 23,094 shares to be issued valued at (USD$1.72) ~~Convertible~~$2.38 ~~Note~~per share based on the quoted market value. The total value of consideration provided in exchange for the extinguishment of debt was $54,975, which resulted in a loss on extinguishment of debt of $19,371, which was recorded on the statement of operations for the fiscal year 2016.

~~On September 2, 2015, the Company entered into a convertible note with an arm’s length third party with a principal amount of USD$25,000 ($32,400)~~8. The convertible note matures on September 1, 2016 and accrues interest at the rate of 12% per annum. The convertible note is convertible at any time after six months, in whole or in part, at the holder’s option into common shares of the Company’s capital stock at a variable conversion price equal to a 45% discount from the lowest trading price in the twenty (20) Convertible trading days prior to the day that the holder requests conversion. The beneficial conversion feature was recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital in accordance with ASC 470-20. The intrinsic value at issuance was $27,227.

~~The issuance of convertible debt with~~ (a) Promissory ~~beneficial~~Note conversion feature results in a tax basis difference. The recognition of deferred taxes for the temporary difference of the convertible debt with a beneficial conversion feature is recorded as an adjustment to additional paid-in capital. A deferred income tax liability of $7,215 was recognized upon the issuance of the convertible note.

~~The~~On February ~~discount~~14, to2017, the ~~carrying~~Company ~~value~~issued ofa ~~the~~promissory ~~convertible~~ note ~~was~~to ~~amortized~~Salamon asPartners aLLC ~~non-cash~~(“Salamon”) ~~interest~~an ~~expense~~arm’s ~~over~~length organization ~~the~~for ~~term~~a ofprincipal ~~the~~amount ~~convertible~~of ~~note~~USD$50,000 ~~using~~($65,350) ~~the~~at ~~effective~~12% ~~interest~~per ~~rate method~~annum. ~~During~~ ~~the~~The ~~year~~net ~~ended~~proceeds ~~March~~were 31USD$47,500 ~~2016,~~which consisted of the ~~Company~~principal ~~accreted $12~~amount,~~563~~ ~~(2015~~net -of ~~$Nil)~~transaction incost ~~non-cash~~of ~~accretion~~US$2,500. ~~expense~~The inprincipal ~~connection~~amount ~~with~~becomes ~~the~~due ~~convertible~~on ~~note~~August 15, ~~which~~2017. isThe ~~included~~outstanding amount inmay ~~accretion~~be ~~expense~~prepaid onat any time at the ~~statements~~option of ~~operations~~the Company. In the event of a prepayment the penalty rate shall be assessed as follows:

i.) if the prepayment occurs within 60 days of the loan issuance, the prepayment penalty will equal twenty-five (25%) of the principal amount prepaid

ii.) If the prepayment occurs within 60 to 90 days of the loan issuance, the prepayment penalty will equal thirty percent (30%) of the principal amount prepaid

iii.) If the prepayment occurs within 90 to 120 days of the loan, the prepayment penalty will equal thirty-five (35%) of the principal amount.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

8.) Convertible (continued)

(a) Promissory Note (continued)

The holder of the note may, after a period of 180 days, at its sole option, convert the outstanding principal balance and accrued interest of 12% per annum, into the Company’s common shares at a market closing bid discount of 50% if converting at less than 5 days of the average trading volume, 60% if converting at more than 5 days of the average trading volume and 65% if converting at more than 10 days of the average trading volume at maturity.

Due to the variable conversion price associated with this promissory note and the fact that the conversion price is denominated in US dollars whereas the functional currency is the Canadian dollar, the Company has determined that the conversion feature is considered a derivative liability. The value of the embedded conversion feature at the date of issuance was estimated to be $135,510 (2016 - $Nil), which was recorded as a derivative liability as of the date of issuance. The debt discount is being amortized over the term of the promissory note.

The Company used the Black-Scholes option pricing model with the following assumptions to estimate the fair value of the derivative liability at the date of issuance:

	February 14, 2017
Stock Price	$	0.27 USD
Risk free rate		0.80	%
Expected volatility		196	%
Conversion/Exercise price	$	0.095 USD
Expected dividend rate		0	%
Expected life (in years)		0.5

The Company’s computation of expected volatility is based on the quoted market close price of the Company’s shares over the period equal to the expected life of the promissory note. The Company’s computation of expected life is calculated using the contractual life.

The discount to the carrying value of the promissory note is being amortized as a non-cash interest expense over the term of the promissory note using the effective interest rate method, at a rate of 213%. During the year ended March 31, 2017, the Company accreted $16,456 (2016 - $Nil) in non-cash accretion expense in connection with the promissory note, which is included in accretion expense on the statements of operations.

~~8.)~~Algae Dynamics ~~Convertible Note (continued)~~Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

8.) Convertible (continued)

(b) Securities Purchase Agreement and Convertible Note

On November 18, 2016, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with GHS Investments, LLC (“GHS”). The Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, GHS shall purchase from the Company a senior convertible note with a principal amount of USD$56,500 ($76,382) for a purchase price of USD$50,000 ($67,595).

The convertible note matures upon the earlier of successfully raising of at least USD$200,000 or August 18, 2017 and accrues interest at the rate of 10% per annum. The convertible note is convertible following ninety (90) days of the execution of the note, in whole or in part, at GHS’ option into common shares of the Company’s capital stock at a variable conversion price equal to a 38% discount from the lowest trading price in the twenty (20) trading days prior to the day that GHS requests conversion. At no time will GHS be entitled to convert any portion of the convertible note to the extent that after such conversion, GHS (together with its affiliates) would beneficially own more than 4.99% of the outstanding common shares, although GHS can modify this limit to 9.99% of the outstanding common shares.

The convertible note includes customary event of default provisions, and provides for a default interest rate of 20%. The Company has the right at any time prior to May 18, 2017 to redeem all, but not less than all, of the total outstanding amount then remaining under the convertible note in cash at a price ranging from 125% to 135% of the total amount of the convertible note then outstanding.

Due to the variable conversion price associated with this convertible note, the Company has determined that the conversion feature is considered a derivative liability. The embedded conversion feature at the date of issuance was estimated to be $117,807 (2016 $Nil), which was recorded as a derivative liability as of the date of issuance. The debt discount is being amortized over the term of the convertible note.

The Company used the Black-Scholes option pricing model with the following assumptions to measure the fair value of the derivative liability at the date of issuance:

	November 18, 2016
Stock Price	$	0.2 USD
Risk free rate		0.67	%
Expected volatility		218	%
Conversion/Exercise price	$	0.099 USD
Expected dividend rate		0	%
Expected term (in years)		0.75

The Company’s computation of expected volatility is based on the market close price of the Company over the period equal to the expected life of the convertible note. The Company’s computation of expected life is calculated using the contractual life.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

8.) Convertible (continued)

(b) Securities Purchase Agreement and Convertible Note (continued)

The discount to the carrying value of the convertible note is being amortized as a non-cash interest expense over the term of the convertible note using the effective interest rate method, at a rate of 144%. During the year ended March 31, 2017, the Company accreted $26,076 (2016 - $Nil) in non-cash accretion expense in connection with the convertible note, which is included in accretion expense on the statements of operations.

On September 2, 2015, the Company entered into a convertible note with an arm’s length third party with a principal amount of USD$25,000 ($32,400). The convertible note matured on September 1, 2016 and accrues interest at the rate of 12% per annum. The convertible note is convertible at any time after six months, in whole or in part, at the holder’s option into common shares of the Company’s capital stock at a variable conversion price equal to a 45% discount from the lowest trading price in the twenty (20) trading days prior to the day that the holder requests conversion. The discount to the carrying value of the convertible note was amortized as a noncash interest expense over the term of the convertible note using the effective interest rate method. During the year ended March 31, 2016, the Company accreted $12,563 (2015 $Nil) in noncash accretion expense in connection with the convertible note, which is included in accretion expense on the statements of operations.

The convertible loan plus the accrued interest was converted into 29,609 common shares on February 17, 2016 at a 45% discount to the market price (USD$0.89) $1.23 based on the terms of the convertible note.

~~9.) Capital Stock~~60

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

9.) Derivative Liability

The convertible notes discussed in Note 8 have variable conversion prices which results in the conversion feature being recorded as derivative liabilities.

The fair value of the derivative liabilities are recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability is recorded in the statement of operations.

The Company used the Black-Scholes option pricing model with the following weighted average assumptions to estimate the fair value of the derivative liability at March 31, 2017:

	March 31, 2017			March 31, 2016
Stock Price	$	0.23 USD			NA
Risk free rate		0.75	%		NA
Expected volatility		288	%		NA
Conversion/Exercise price	$	0.087 USD			NA
Expected dividend rate		0	%		NA
Expected life (in years)		0.38			NA

The following table represents the Company’s derivative liability activity for the years ended March 31, 2017 and 2016:

	Amount		Amount
	2017		2016
Derivative liabilities balance, beginning of year	$	-	$	-
Issuance of derivative liabilities during the year	$	253,318	$	-
Change in derivative liabilities during the year	$	7,359	$	-
Derivative liabilities balance, end of year	$	260,677	$	-

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock

(a) Common Shares

Authorized

The Company is authorized to issue an unlimited number of common shares with no par value.

Issued and Outstanding

Additionally, on November 22, 2014, 25,000 common share purchase warrants were exercised at USD$0.04 ($0.046) per warrant for total cash proceeds of USD$1,000 ($1,113).

On June 25, 2015, 12,500 common share purchase warrants were exercised at USD$0.04 ($0.048) per warrant for total cash proceeds of USD$500 ($620).

On September 10, 2015, a consultant was issued 50,000 common shares for services rendered in the amount of $67,195, this amount has been recorded as professional fees on the statement of operations.

9.) Capital Stock (continued)

(a) Common Shares (continued)

On November 5, 2015, 31,000 common share purchase warrants were exercised at USD$0.04 ($0.052) per warrant for total cash proceeds of USD$1,240 ($1,632).

On December 18, 2015, 51,600 common share purchase warrants were exercised at USD$0.04 ($0.054) per warrant for total cash proceeds of USD$2,064 ($2,834).

On December 22, 2015, 31,000 common share purchase warrants were exercised at USD$0.04 ($0.056) per warrant for total cash proceeds of USD$1,240 ($1,735).

On December 31, 2015, 48,400 common share purchase warrants were exercised at USD$0.04 ($0.055) per warrant for total cash proceeds of USD$1,936 ($2,683).

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(a) Common Shares (continued)

On January 4, 2016, 31,000 common share purchase warrants were exercised at USD$0.04 ($0.056) per warrant for total cash proceeds of USD$1,240 ($1,732).

On February 17, 2016, a convertible loan plus accrued interest was converted into 29,609 common shares at USD$0.89 ($1.23 for total consideration of USD$26,500 ($36,419).

On February 25, 2016, 25,000 common share purchase warrants were exercised at USD$0.04 ($0.056) per warrant for total cash proceeds of USD$1,000 ($1,378).

On May ~~December~~18, 312016, ~~2015~~44,500 ~~the~~common ~~term~~shares ~~loan~~purchase ~~described~~warrants inwere ~~Note~~exercised ~~7 was converted into shares to be issued~~ at aUSD$0.04 ~~value of~~ ($~~54,975~~0.052) ~~based~~per ~~upon~~warrant anfor ~~estimated~~total ~~fair~~cash ~~market~~proceeds ~~value~~ of USD$1~~.72~~ ,780 ($2~~.38~~,318) ~~per share at the time of conversion~~.

On May ~~December 31~~19, ~~2015~~2016, ~~advances~~the ~~from~~Company ~~related~~signed ~~parties~~a ~~described~~letter of engagement with an agent in ~~Note~~connection 6with ~~were~~proposed ~~converted~~placements ~~into~~of ~~shares~~up to beUS$10,000,000 ($13,427,000), ~~issued~~which included as part of the fee the issuance of 100,000 common shares as a non-refundable retainer at a value of $~~117~~101,~~526~~579 based upon aan estimated fair market value of USD$10.7278 ($21.3802) per share at the time of ~~conversion~~the agreement (See Note 12). The amount of the retainer has been expensed to professional fees during the year ended March 31, 2017.

On June ~~December~~22, 312016, ~~2015~~15,264 ~~the~~shares ~~Company agreed~~ to ~~issue~~be ~~45,000~~issued ~~compensatory~~to ~~shares~~a toconsulting ~~three~~firm ~~officers~~were ofissued ~~the~~as ~~Company~~common ~~with~~shares afor ~~fair~~services ~~market~~rendered ~~value~~in the amount of USD$~~1.72~~22,500 ($~~2.38~~29,185) ~~per~~during ~~share~~the ~~for~~year aended ~~total~~March ~~value of $107~~31,~~123~~ 2016. ~~This~~The ~~expense~~amount was recorded as ~~stock~~professional ~~based~~fees ~~compensation~~ on the ~~statements~~statement of operations during the year ended March 31, 2016.

On June ~~December 31~~30, ~~2015~~2016, ~~a consulting firm was granted 13~~66,~~874~~667 common shares towere be issued ~~for~~to ~~services~~a ~~rendered~~consultant in ~~the~~settlement ~~amount~~ of ~~USD$22,500~~a ~~($31,140),~~debt ~~these~~at ~~amounts~~a ~~have~~value ~~been~~of ~~recorded~~$64,585 asbased ~~professional~~upon ~~fees~~an onestimated fair ~~the~~market ~~statement~~value of ~~operations~~ USD$0.75 ~~These~~($0.97) ~~shares~~per ~~were~~share ~~issued~~at ~~subsequent~~the totime ~~March~~of ~~31, 2016~~issuance.

6063

~~9.)~~Algae Dynamics ~~Capital Stock (continued)~~Corp.

~~On March 31, 2016, a consulting firm was granted 15,264 shares~~ Notes to beFinancial ~~issued for services in the amount of USD$22,500 ($29,185). This amount has been recorded as professional fees on the statement of operations.~~Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(a) Common Shares (continued)

On June 30, 2016, 250,000 common shares were issued to a consulting firm as a portion of the compensation for services initiated on June 24, 2016 at a value of $201,481 based upon an estimated fair market value of USD$0.62 ($0.81) per share at the date of issue. This amount was expensed during the year ended March 31, 2017 as professional fees on the statements of operations. A second issuance of 250,000 common shares was made on October 17, 2016 at a value of $113,225 based upon an estimated fair market value of USD$0.35 ($0.45) per share at the date of issue and the final issuance of 250,000 common shares was made on October 18, 2016 at a value of $125,766 based upon an estimated fair market value of USD$0.38 ($0.50) per share at the date of issue.

On July 7, 2016, the Company committed to issue 20,000 common shares to a consultant in settlement of a debt at a value of $19,500 (USD$15,000) based upon an estimated fair market value of USD$0.75 ($0.97) per share on that date. These common shares were issued on October 17, 2016.

On December 19, 2016, 25,000 stock options were exercised at an exercise price of $0.31 per common share for gross proceeds of $7,750. The proceeds were allocated to settle a debt with the consultant who exercised the stock options.

On December 29, 2016, a consulting firm was issued 78,027 common shares for services rendered in the amount of USD$45,000 ($58,500), this amount has been recorded as professional fees on the statement of operations.

On December 29, 2016, 1,316,173 shares were issued to two officers and directors as consideration for conversion of shareholder advances and accounts payable. See Note 6.

On January 9, 2017, the Company entered into a three month contract with an investor relations firm. The terms of the contract specified a cash payment of USD$10,000 ($13,427) and 50,000 shares of common shares which were issued on January 10, 2017 at a value of $27,000 ($35,733) based upon an estimated fair market value of USD$0.55 ($0.728) per share. The portion applicable to the 9 days in April 2017 has been recorded as a prepaid expense ($4,916) at March 31, 2017.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(a) Common Shares (continued)

On March 21, 2017, 50,000 common shares purchase warrants were exercised at $0.053 (USD$0.04) on a cashless basis with 39,500 common shares being issued.

Equity to be issued

On April 18, 2016, the Company signed an agreement with a consultant pursuant to which it committed to issue 250,000 common shares of the Company as compensation for services to be rendered over a period of 5 months. Two directors and officers of the Company transferred 250,000 of their personal shares to the consultant and as such the Company has agreed to reimburse the directors and officers for these common shares transferred by issuance of common shares from treasury. The commitment was valued at $86,381 based upon an estimated fair market value of USD$0.27 ($0.35) per share at the date of issue and was expensed during year ended March 31, 2017 as professional fees on the statements of operations. On January 10, 2017, the 250,000 replacement shares were issued.

	Common shares to be issued 2017			Value ($) 2017			Common shares to be issued 2016		Value ($) 2016

Balance, opening		146,603			339,949			-		-
Equity to be issued as management compensation								45,000		107,123
Equity to be issued for services		250,000			86,381			29,138		60,325
Equity to be issued for settlement of debt								72,465		172,501
Equity to be issued, issued		(396,603	)		(426,330	)		-		-
Balance, closing		Nil			Nil			146,603		339,949

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(a) Common Shares (continued)

Equity Purchase Agreement (“EPA”)

On September 10, 2015 the Company entered into the EPA. The holder of the EPA is committed to purchase up to USD$750,000 worth of the Company’s common shares (the “Put Shares”) over the 12 -month term of the EPA. The Company paid to the holder of the EPA a commitment fee for entering into the EPA equal to 50,000 restricted common shares of the Company, valued at $67,195, based on the stock price in the most recent private placement as the Company’s shares had not yet begun to trade on a public market. The EPA expired in September 2016

From time to time over the EPA, commencing on the trading day immediately following the date on which the registration statement covering the resale of the Put Shares (the “Registration Statement”) is declared effective by the Securities and Exchange Commission (the ”“Commission”), the Company may, in its sole discretion, draw upon the EPA periodically during the term by the Company’s delivery to the holder of the EPA, a written notice requiring the holder to purchase a dollar amount in common shares (the “Draw Down Notice”). The shares issuable pursuant to a Draw Down Notice, when aggregated with the shares then held by the holder on the date of the draw down may not exceed the lessor of (i) 4.99% of the Company’s outstanding common shares, (ii) USD$62,500 in any 30 days period or (iii) 100% of the aggregate trading volume for the 10 trading days immediately preceding the date of the Draw Down Notice without the prior written consent of the holder. The purchase price per common share purchased under the EPA shall equal 65% of the lowest closing bid for the 10 days immediately preceding the date of the Draw Down Notice. The Registration Statement was filed with the Commission on October 1, 2015 and was declared effective by the Commission on March 3, 2016. See Note 14.

61of the Company’s outstanding common shares, (ii) USD$62,500 in any 30 days period or (iii) 100% of the aggregate trading volume for the 10 trading days immediately preceding the date of the Draw Down Notice without the prior written consent of the holder. The purchase price per common share purchased under the EPA shall equal 65% of the lowest closing bid for the 10 days immediately preceding the date of the Draw Down Notice. The Registration Statement was filed with the Commission on October 1, 2015 and was declared effective by the Commission on March 3, 2016.

9On June 23, 2016, the Company agreed in conjunction with RY Capital Group, LLC and GHS Investments, LLC to assign the EPA to GHS Investments, LLC. The changes made to the EPA included increasing the share purchase price per common share to 80% from 65% of the lowest closing bid for the 10 trading days immediately preceding the date of the draw down notice, increasing the upper limit on individual draws to USD$75,000 from USD$62,500 and including a true-up feature whereby if the lowest volume-weighted average price (“VWAP”) ~~Capital~~for ~~Stock~~the ten trading days following a draw down (~~continued~~the “Trading Period”) is less than 85% of the purchase price of the common shares issued in connection with a draw down, then the Company shall issue such additional common shares as maybe necessary to adjust the purchase price for such draw down to equal the VWAP during the Trading Period.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(b) Warrants

As at March 31, ~~2016~~2017, the following warrants were outstanding:

Expiration Date	Number of Warrants		Number of Warrants Exercisable		Weighted Average Exercise Price			Grant Date Fair Value Equity		Fair Values at March 31, 2016 of Vested Warrants - Liability
										Fair Value at
June 6, 2016*		300,383		300,383	$	2.24		$	170,908	$	-
										March 31, 2017
June 7, 2016*		5,000		5,000	$	1.12			3,180		-
			Number of		Weighted			Grant Date		of Vested
June 6, 2017		22,500		22,500	$	1.12			16,110		-
	Number of		Warrants		Average			Fair Value -		Warrants–
April 1, 2017		369,500		44,500	USD $0.04				-		26,744
Expiration Date	Warrants		Exercisable		Exercise Price			Equity		Liability
					$	(0.05	)
June 6, 2017*		22,500		22,500	$	1.12		$	16,110	$	-
October 22, 2016		3,350		3,350	USD $1.50				-		60
December 31, 2017		275,000		50,000	USD $	0.04			-
					$	(10.9505	)			$	13,900
November 30, 2016		8,850		8,850	USD $2.00				-		675
January 17, 2022		900,000		900,000	USD $	0.65
					$	(20.5987	)			$	222,300
		709,583		384,583	$	1.06		$	190,198	$	27,479
		1,197,500		972,500	$	0.68		$	16,110	$	236,200

* Expired unexercised subsequent to the year-ended March 31, ~~2016~~2017.

i) In connection with a private placement offering completed during the year ended March 31, 2015, the Company granted an aggregate of 300,383 share purchase warrants each exercisable into one common share at $1.68 during the first year and at $2.24 during the second year. The fair value of the warrants at the date of grant of $170,908 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; expected volatility of 173%; risk free interest rate of 1.06%; and expected term of 2 years. ii) In connection with a second private placement offering completed during the year ended March 31, 2015, the Company granted an aggregate of 8,850 share purchase warrants each exercisable into one common share at USD$2.00 ($2.59) until November 30, 2016. The fair value of the warrants at the date of grant of $6,213 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; expected volatility of 124%; risk free interest rate of 1.02%; and expected term of 2 years. iii) During the year ended March 31, 2015, the Company also issued 27,500 warrants of the Company valued at $19,290 for services rendered of which 22,500 warrants were granted to an officer of the Company. The compensation expense has been included in professional fees on the statements of operations. Each warrant entitles the holder to purchase one common share at an exercise price of $1.12 for a period ranging from 2.15 to 3 years after the date of issuance. The fair value of the warrants at the date of grant of $19,290 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; risk free interest rate of 1.14%; expected volatility of 182%; and expected term of 2.85 years.

i)	During the year ended March 31, 2015, the Company issued 27,500 warrants of the Company valued at $19,290 for services rendered of which 22,500 warrants were granted to an officer of the Company. Each warrant entitled the holder to purchase one common share at an exercise price of $1.12 for a period ranging from 2.15 to 3 years after the date of issuance. The fair value of the warrants at the date of grant of $19,290 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; risk free interest rate of 1.14%; expected volatility of 182%; and expected term of 2.85 years. The warrants were not exercised by the June 6, 2017 expiry date.

ii)	In connection with a consulting agreement with Connectus, Inc. (see Note 12), the Company granted 625,000 common share purchase warrants with each warrant entitling the grantee to acquire one common share in the capital of the Company at an exercise price of USD$0.04 ($0.054) at any time prior to April 1, 2017. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($335,675) raised in an offering, fully vesting upon USD$1,500,000 ($2,014,050) being raised. The fair value of the 625,000 warrants at the date of grant of $500,000 was estimated using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 159%; risk free interest rate of 1.25%; and expected term of 3 years. On December 27, 2016, the Company extended the agreement and the expiry date of the warrants to December 31, 2017. On January 23, 2017, the Company approved the vesting of 100,000 warrants of which 50,000 were exercised on March 21, 2017. This leaves a balance of 275,000 warrants remaining under the contract of which 50,000 were exerciseable at March 31, 2017.

6267

~~9.)~~Algae Dynamics ~~Capital Stock (continued)~~Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(b) Warrants

iii)

During the year ended March 31, 2017, the Company issued 900,000 warrants of the Company valued at $566,100 for services rendered. Each warrant entitled the holder to purchase one common share at an exercise price of USD$0.65 ($0.87) for a period of 5 years after the date of issuance. The fair value of the warrants at the date of grant of $566,100 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; risk free interest rate of 1.09%; expected volatility of 140%; and expected term of 5 years.

For the year ended March 31, 2017, the Company recorded $633,000 (2016 - $Nil) as compensation expense for warrants issued to a consultant for services, plus a market adjustment for the year ended March 31, 2017 of $368,957 (2016 - $171,655). This expense was recorded as professional fees on the statement of operations.

ASC 815 “Derivatives and Hedging” indicates that warrants with exercise prices denominated in a currency other than an entity’s functional currency should not be classified as equity. As a result, warrants with a USD exercise price have been treated as derivatives and recorded as liabilities carried at their fair value, with period-to-period changes in the fair value recorded as a gain or loss in the statements of operations.

The continuity of warrants for the years ended March 31, 2017 and 2016 is as follows:

	Number			Weighted Average
	of Warrants			Exercise Price
Balance, March 31, 2015		940,083		$	0.63
Exercised		(230,500	)	$	0.05
Balance, March 31, 2016		709,583			1.06
Issued		900,000		$	0.86
Exercised		(94,500	)	$	0.05
Expired, unexercised		(317,583	)	$	2.23
Balance, March 31, 2017		1,197,500		$	0.68

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(b) Warrants (continued)

	iv)	In connection with the unit issuance completed October 22, 2014 in settlement of debt, the Company granted 3,350 share purchase warrants exercisable into one common share at USD$1.50 ($1.95) per share for a period of 2 years from the date of issuance. The fair value of the warrants at the date of grant of $2,060 was estimated using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 123%; risk free interest rate of 0.99%; and expected term of 2 years.
	v)	In connection with a consulting agreement (see Note 11), the Company granted 625,000 common share purchase warrants with each warrant entitling the grantee to acquire one common share in the capital of the Company at an exercise price of USD$0.04 ($0.052) at any time prior to April 1, 2017. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($324,275) raised in an offering, fully vesting upon USD$1,500,000 ($1,945,650) being raised. The fair value of the 625,000 warrants at the date of grant of $500,000 was estimated using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 159%; risk free interest rate of 1.25%; and expected term of 3 years For the year ended March 31, 2016, the Company recorded $Nil (2015 - $240,000) as compensation expense for warrants issued to a consultant for services, plus a market adjustment for the year ended March 31, 2016 of $171,655 (2015 - $149,280). This expense was recorded as professional fees on the statement of operations.

As at March 31, 2017, the fair value of the 1,175,000 (2016 – 381,700) warrants exercisable in US dollars was $298,700 (2016 - $222,803) which was estimated using the Black-Scholes option pricing model based on the following weighted average assumptions:

ASC 815 "Derivatives and Hedging" indicates that warrants with exercise prices denominated in a currency other than an entity's functional currency should not be classified as equity. As a result, warrants with a USD exercise price have been treated as derivatives and recorded as liabilities carried at their fair value, with period-to-period changes in the fair value recorded as a gain or loss in the statements of operations.

	March 31, 2017			March 31, 2016
Expected dividend yield		0	%		0	%
Expected volatility		229	%		150	%
Risk free interest rate		1.03	%		0.54	%
Expected term		3.85 years			0.99 years

~~The~~Of this ~~continuity~~amount, of$236,200 ~~warrants~~(March ~~for~~31, ~~the~~2016 ~~years~~- ~~ended~~$27,479) was reflected as a liability as at March 31, ~~2015~~2017, ~~and~~representing ~~2016~~the percentage of the fair value of the warrants that is asequal ~~follows:~~to the percentage of the requisite service that has been rendered at March 31, 2017.

	Number of Warrants			Weighted Average Exercise Price
Balance, March 31, 2014		-		$	-
Granted		965,083			0.79
Exercised		(25,000	)		0.05
Balance, March 31, 2015		940,083			0.63
Exercised		(230,500	)		0.05
Balance, March 31, 2016		709,583		$	1.06

The warrant liability is classified as Level 3 within the fair value hierarchy (See Note 14). The Company’s computation of expected volatility during the years ended March 31, 2017 and 2016 is based on the market close price of comparable public entities over the period equal to the expected life of the warrants. The Company’s computation of expected life is calculated using the contractual life.

As at March 31, 2016, the fair value of the 381,700 (2015 – 612,200) warrants exercisable in US dollars, remaining after the exercise of 230,500 warrants (2015 – 25,000), was $222,803 (2015 - $786,403) which was estimated using the Black-Scholes option pricing model based on the following weighted average assumptions: expected dividend yield of 0% (2015 - 0%); expected volatility of 150% (2015 – 118%); risk-free interest rate of 0.54% (2015 – 0.52%) and expected term of 0.99 years (2015 – 2 years). Of this amount, $27,479 (2015 - $364,878) was reflected as a liability as at March 31, 2016, representing the percentage of the fair value of the warrants that is equal to the percentage of the requisite service that has been rendered at March 31, 2016.

The warrant liability is classified as Level 3 within the fair value hierarchy (See Note 13). The Company’s computation of expected volatility during the years ended March 31, 2016 and 2015 is based on the market close price of comparable public entities over the period equal to the expected life of the warrants. The Company’s computation of expected life is calculated using the contractual life.

9.) Capital Stock (continued)

(c) Stock-based compensation

The Company’s stock-based compensation program (the "“Plan"”) includes stock options in which some options vest based on continuous service. For those equity awards that vest based on continuous service, compensation expense is recorded over the service period from the date of grant.

The total number of options outstanding as at March 31, ~~2016~~2017 was ~~930~~695,000 (~~2015~~2016 – ~~505~~930,000). The weighted average grant date fair value of options granted during the year ended March 31, ~~2016~~2017 was $20.21 34 (~~2015~~2016 - $12.1821). The maximum number of options that may be issued under the ~~Plan~~plan is floating at an amount equivalent to 15% of the issued and outstanding common shares, or 12,~~455~~000,~~158~~628 as at March 31, ~~2016~~2017 (~~2015~~March 31, 2016 – 1,~~388~~455,~~461~~158). The total intrinsic value of options exercised during the years ended March 31, 2017 and 2016 was $43,636 and $nil. As of March 31, 2017, approximately $57,000 of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of approximately 1.49 years.

During the year ended March 31, 2015, 505,000 options were granted to officers, employees and consultants of the Company. The exercise price of these options is $1.73. Of this grant, 420,000 options vest as to one-third on the date of grant and one-third vest on each of the first anniversary and the second anniversary of the grant date; 60,000 options vest as to one quarter on the date of grant and one quarter vesting at 90 days, 180 days and 270 days from the grant date; and 25,000 options vested immediately. Since stock-based compensation is recognized only for those awards that are ultimately expected to vest, the Company has applied an estimated forfeiture rate (based on historical experience and projected employee turnover) to unvested awards for the purpose of calculating compensation expense. The grant date fair value of these options was estimated as $1.18 using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 144%; expected risk free interest rate of 1.39%; and expected term of 5 years.69

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(c) Stock-based compensation (continued)

During the year ended March 31, 2017, 525,000 options were granted to officers and consultants of the Company. The weighted average exercise price of these options is $0.37. Of this grant, 340,000 options vest as to one-third on the grant date and one-third on each of the first anniversary and the second anniversary of the grant date; 85,000 options vest as to one quarter on the date of grant and one quarter at 90 days, 180 days and 270 days from the grant date and 100,000 options vested immediately. Since stock-based compensation is recognized only for those awards that are ultimately expected to vest, the Company has applied an estimated forfeiture rate (based on historical experience and projected employee turnover) to unvested awards for the purpose of calculating compensation expense. The weighted average grant date fair value of these options was estimated as $0.34 using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; expected volatility of 154%; expected risk free interest rate of 0.76%; and expected term of 5 years. Of the stock options issued, 100,000 were issued to a consultant of the Company in settlement of debt of $31,000. The proceeds from the exercise of the stock options ($31,000) were applied against the balance outstanding.

During the year ended March 31, 2016, 425,000 options were granted to officers and consultants of the Company. The exercise price of these options is $2.43. Of this grant, 340,000 options vest as to one-third on the grant date and one-third vesting on each of the first anniversary and the second anniversary of the grant date; 85,000 options vest as to one quarter on the date of grant and one quarter vesting at 90 days, 180 days and 270 days from the grant date. Since stock-based compensation is recognized only for those awards that are ultimately expected to vest, the Company has applied an estimated forfeiture rate (based on historical experience and projected employee turnover) to unvested awards for the purpose of calculating compensation expense. The grant date fair value of these options was estimated as $2.21 using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 157%; expected risk free interest rate of 0.66%; and expected term of 5 years.

64The Company’s computation of expected volatility during the years ended March 31, 2017 and 2016 is based on the market close price of comparable public entities over the period equal to the expected life of the options. The Company’s computation of expected life is calculated using the contractual life.

~~9.) Capital~~The following ~~Stock~~table ~~(continued)~~provides the details of the total share-based payments expense during the years ended March 31, 2017 and 2016:

	March 31, 2017		March 31, 2016

Employees and directors share-based payments	$	342,257	$	602,521
Non-employee awards		51,976		99,328
Total	$	394,233	$	701,849

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

10.) Capital Stock (continued)

(c) Stock-based compensation (continued)

The Company’s computation of expected volatility during the years ended March 31, 2016 and 2015 is based on the market close price of comparable public entities over the period equal to the expected life of the options. The Company’s computation of expected life is calculated using the contractual life.

For the year ended March 31, 2016, the Company recorded $701,849 (2015 - $324,916) as Additional Paid in Capital for options issued to directors, officers and consultants based on continuous service. This expense was recorded as stock based compensation on the statements of operations. Additionally, for the year ended March 31, 2016, the Company recorded $372,709 (2015 – Nil) as professional fees for 153,000 common shares issued and 29,138 shares to be issued to consultants for services rendered. The expense was recorded as professional fees on the statements of operations.

The activities in options outstanding are as noted below:

	Number of Options Granted				Weighted Average Exercise Price
		Number of				Weighted Average
Balance, March 31, 2014		-				-
		Options				Exercise Price
Granted		505,000			$	1.73
Balance, March 31, 2015			505,000			$	1.73
Balance, March 31, 2015		505,000			$	1.73
Granted			425,000			$	2.43
Granted		425,000			$	2.43
Balance, March 31, 2016			930,000			$	2.05
Balance, March 31, 2016		930,000			$	2.05
Forfeited			(660,000	)		$	2.09
Granted			525,000			$	0.37
Exercised			(100,000	)		$	0.31
Balance, March 31, 2017			695,000			$	0.99

The following table presents information relating to stock options outstanding and exercisable at March 31, ~~2016~~2017.

~~Options Outstanding~~		Options Outstanding				Options Exercisable
Exercise Price		Number of Options		Weighted Average Remaining Contractual Life (Years)		Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
				Weighted						Weighted
$	1.73		505,000		3.70		398,333	$	1.73		3.70
				Average				Weighted		Average
$	2.43		425,000		4.75		134,583	$	2.43		4.75
				Remaining				Average		Remaining
$	2.05		930,000		4.05		532,916	$	1.91		3.97
Exercise		Number of		Contractual		Number of		Exercise		Contractual
	Price		Options		Life (Years)		Options		Price		Life (Years)
$	1.73		185,000		2.71		185,000	$	1.73		2.71
$	2.43		85,000		3.77		85,000	$	2.43		3.77
$	0.38		425,000		4.58		134,583	$	0.38		4.58
$	0.99		695,000		3.98		404,583	$	1.38		3.60

65For the year ended March 31, 2017, the Company recorded $394,233 (2016 - $701,849) as Additional Paid in Capital for options issued to directors, officers and consultants based on continuous service. This expense was recorded as stock based compensation on the statements of operations. For the year ended March 31, 2017, the Company recorded a recovery of $393,184 (2016 -$Nil) as a result of stock options forfeited by management, this amount has been netted against stock based compensation on the statements of operations. Additionally, for the year ended March 31, 2017, the Company recorded $782,993 (2016 - $372,709) as professional fees for services rendered related to common shares issued as retainers to consultants.

~~10.) Income Taxes~~71

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

11.) Income Taxes

The following table reconciles the income tax benefit at the Canadian statutory rate to income tax benefit at the Company’s effective tax rates.

	2016			2015
	2017			2016
Loss before income taxes	$	(12,~~921~~585,~~210~~661	)	$	(1,~~087~~921,~~289~~210	)
Statutory tax rate		26.5	%		26.5	%
Expected income tax (recovery)	$	(~~509~~685,000	)	$	(~~288~~509,000	)
Non-deductible items	$	~~143~~276,000		$	~~197~~143,000
Change in valuation allowance	$	~~358~~409,~~785~~000		$	91358,~~000~~785
Total income taxes (recovery)	$	~~(7,215~~-	)	$	-(7,215	)

Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities and their respective tax bases for financial reporting purposes. Deferred tax assets as at March 31, ~~2016~~2017 and ~~2015~~2016 are comprised of the following:

	2016			2015
	2017			2016
Net operating loss carry forwards	$	~~599~~961,000		$	~~242~~599,000
Equipment and leasehold improvements	$	3540,000		$	3035,000
Valuation allowance	$	(634,000	)	$	(272,000	)
Convertible notes		43,000			-
Valuation allowance		(1,044,000	)		(634,000	)
Net deferred tax asset	$	-		$	-

The Company has net operating loss carry forwards of approximately $23,~~262~~626,000 (~~2015~~2016 - $~~913~~2,262,000) which may be carried forward to apply against future year income for Canadian income tax purposes, subject to final determination by taxing authorities, expiring in the following years:

Expiry
2029	$	65,000
2030	$	83,000
2031	$	28,000
2032	$	81,000
2033	$	91,000
2034	$	242,000
2035	$	323,000
2016	$	1,349,000
2036		1,349,000
Total	$	2,262,000
2037		1,364,000
Total	$	3,626,000

66The deferred tax assets have not been recognized because at this stage of the Company’s development, it is not determined that future taxable profits will be available against which the Company can utilize such deferred tax assets. Tax years 2010 through 2017 remain open to examination by the taxing jurisdictions to which the Company is subject. The Company has not been notified by any taxing jurisdictions of any proposed or planned examination. The Company has non-refundable tax credits as at March 31, 2017 of $5,449 (2016 - $5,449) which expire in the year 2031.

1012.) Commitments ~~Income~~and ~~Taxes (continued)~~Contingencies

The Company ~~deferred~~entered ~~tax~~into ~~assets~~a ~~have~~five ~~not~~year ~~been~~operating ~~recognized~~lease ~~because~~for atoffice ~~this~~and ~~stage~~production offacilities. ~~the~~The ~~Company’s~~lease ~~development,~~commenced iton isDecember ~~not~~1, ~~determined~~2013 and ~~that~~expires ~~future~~on ~~taxable~~November ~~profits~~30, ~~will be available against which the Company can utilize such deferred tax assets~~2018. ~~Tax~~ ~~years~~The ~~2010~~base ~~through~~monthly ~~2016~~rental ~~remain~~is ~~open~~$1,390 toplus ~~examination by~~ the ~~taxing jurisdictions to which the~~ Company’s isestimated ~~subject. The~~portion ~~Company~~of ~~has~~property ~~not~~taxes and ~~been~~operating ~~notified~~expenses bywhich ~~any~~are ~~taxing~~currently ~~jurisdictions~~$847 ofper ~~any proposed or planned examination~~month. The ~~Company~~future ~~has~~commitments ~~non-refundable~~pursuant ~~tax~~to ~~credits~~this aslease ~~at March 31~~arrangement, ~~2016~~including property oftaxes ~~$5,449~~and ~~(2015~~operating -expenses ~~$5,449)~~for ~~which~~the ~~expire~~fiscal inperiods ~~the~~ending ~~year~~March ~~2031.~~31 are:

10.) Commitments and Contingencies

2018			$	26,844
2019			$	17,896

~~The~~For the ~~Company entered into a five (5)~~ year ~~operating~~ended ~~lease~~March ~~for office and production facilities. The lease commenced on December 1~~31, ~~2013 and expires on November 30~~2017, ~~2018. The~~occupancy ~~base~~costs ~~monthly~~related ~~rental is $1,362 plus the Company’s estimated portion of property taxes and operating expenses which are currently $810 per month. The future commitments pursuant~~ to this lease ~~arrangement~~were $26,390 ~~including~~(2016 ~~property~~– ~~taxes and operating expenses for the fiscal periods ending March 31 are:~~$26,015).

~~2017~~ On March 11, 2014, and as amended on July 18, September 3, 2014, September 5, 2014, December 31, 2015 and again on December 20, 2016, the Company entered into a consulting agreement with Connectus, Inc. (“Connectus”) to assist and advise the Company in matters concerning corporate finance and the Company’s current and proposed financing activities for the period commencing April 1, 2014 and ending December 31, 2014. Pursuant to this agreement, the Company agreed to issue to Connectus, 625,000 warrants of the Company. Each warrant is exercisable at USD$260.04 ($0.054) per share for a period of three years. Of the warrants granted,~~066~~ 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($335,675) raised in an offering, fully vesting upon USD$1,500,000 ($2,014,050) being raised. During the year ended March 31, 2015, the President of Connectus became a director of the Company. On December 31, 2015, the Company extended the contract to December 31, 2016. In consideration of the contract extension, the Company issued 93,000 common shares to Connectus as compensation, which has been recorded as professional fees on the statements of operations during the year ended March 31, 2016. On December 27, 2016, the Company extended the contract and expiry date of the warrants to December 31, 2017. On January 23, 2017 the Company approved the vesting of 100,000 warrants. Connectus assigned the warrants to Apollo Marketing, LLC.

~~2018 $26,400~~72

~~2019 $17,600~~Algae Dynamics Corp.

~~For the year ended March 31, 2016, occupancy costs related~~ Notes to ~~this~~Financial ~~lease were $26,015 (2015 – $25,732).~~Statements

On March 11, 2014, and as amended on July 18, September 3, 2014, September 5, 2014 and again on December 31, 2015, the Company entered into a consulting agreement with Connectus, Inc. to assist and advise the Company in matters concerning corporate finance and the Company’s current and proposed financing activities for the period commencing April 1, 2014 and ending December 31, 2014. On December 31, 2015, the Company extended the contract to December 31, 2016. In consideration of the contract extension, the Company issued 93,000 common shares to Connectus, Inc. as compensation, which has been recorded as professional fees on the statements of loss. Pursuant to this agreement, the Company agreed to issue to this consulting corporation (the “Consultant”), 625,000 warrants of the Company. Each warrant is exercisable at USD$0.04 ($0.052) per share for a period of three years. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($324,275) raised Stated in anCanadian ~~offering, fully vesting upon USD$1,500,000 ($1,945,650~~Dollars) ~~being raised. During the year ended March 31, 2015, the President of the Consultant became a director of the Company.~~

67March 31, 2017 and 2016

1112.) Commitments and Contingencies (continued)

On April 23, 2014, the Company entered into employment agreements with three officers of the Company effective July 1, 2014. The initial contracts contain minimum aggregate commitments of approximately $427,000 per year for three years and additional contingent payments of up to approximately $600,000 in aggregate upon the occurrence of a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these financial statements. If employment is terminated by the Company other than upon a change of control or for just cause, the officers will be entitled to an amount equal to twelve months compensation including benefits, which shall be increased by one month for each full year of service completed. The employment agreements were amended whereby any salary from the commencement of the employment agreements has been waived until such a time when the Company is able to raise additional financing. Salaries will be earned based upon the Company’s success in raising future capital in accordance with the following schedule:

Cumulative Funds Raised 1		Effective Monthly Salary %
$	100,000	10.0%	~~10.00~~	%
$	175,000	15.0%	~~15.00~~	%
$	250,000	25.0%	~~25.00~~	%
$	375,000	37.5%	~~37.50~~	%
$	500,000	50.0%	~~50.00~~	%
$	750,000	62.5%	~~62.50~~	%
$	1,000,000	75.0%	~~75.00~~	%
$	1,250,000	87.5%	~~87.50~~	%
$	1,500,000	100.0%	~~100.00~~	%

1 Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold. The 15% threshold was reached during the 2017 fiscal year and for the year ended March 31, 2017 a total of $8,125 was accrued and expensed on the statement of operations.

On May ~~September 24~~19, ~~2015~~2016, the Company signed a consulting agreement with an ~~investor~~agent ~~relations~~in ~~firm~~connection with ~~terms~~proposed ~~commencing~~placements ~~immediately~~of up to USD$10,000,000 ($13,427,000) in a combination of equity and ~~ending~~or ondebt ~~September~~of ~~30,~~the ~~2016~~Company for a term of one year. Consideration payable under the consulting agreement include a ~~monthly~~non-refundable ~~fee~~equity retainer of ~~USD$7~~100,~~500~~000 common shares of the Company (~~$9,728~~see Note 10), ~~payable~~a inplacement fee equal to 8% of the gross purchase price paid for equity of the Company, an administrative fee of 4% of the gross purchase price paid for equity, a ~~combination~~placement fee of ~~cash~~4% of the gross purchase price paid for non-convertible debt and ~~restricted~~warrants to purchase common shares of the Company equal to 8% of the number of shares of common stock issuable by the Company upon exercise or conversion of any and all securities issued at each closing. On January 10, 2017, the Company entered into an addendum to the agreement signed on May 19, 2016 which provided for a grant of 900,000 warrants at an exercise price of USD$0.65 ($0.86) for a period of five years with a cashless exercise option.

6873

~~12.) Related~~Algae Dynamics ~~Party Transactions~~Corp.

~~Included in accounts payable and accrued liabilities as at March 31, 2016 is $52,030 (2015 - $52,030) owing~~ Notes to ~~two~~Financial ~~directors who are also officers and significant shareholders of the Company for unpaid management fees. This balance is unsecured, non-interest bearing and due on demand.~~Statements

~~See also Notes 6, 7, 9~~(~~a),~~Stated in ~~9(b)~~Canadian ~~and 9(c~~Dollars)~~, 11 and 14.~~

~~Amounts receivable from officer as at~~ March 31, ~~2016~~2017 ~~of $21,064 (2015 - $29,967) is owing from a shareholder, who is also a director~~ and ~~officer of the Company for funds advanced under the employment agreement (See Note 11). The amount receivable is unsecured, non-interest bearing and repayable upon demand.~~2016

~~Management~~12.) Commitments ~~fees~~ and ~~consulting~~Contingencies ~~fees in the amount of $427,000~~ (~~2015 - $363,750~~continued) ~~were waived by the officers of the Company during the year ended March 31, 2016.~~

13On February 23, 2017 the Company entered into a 3 year sponsored research contract with the University of Waterloo commencing on April 1, 2017.~~) Financial~~ ~~Instruments~~Under the terms of the agreement the Company will contribute $130,000 upon start date of the project, $130,000 on completion of Year 1 and $130,000 on completion of Year 2, plus the Company will make an in-kind contribution valued at $70,000 in each of the 3 years. Any patents initiated by the Company from the sponsored research will be assigned to the Company and in return the Company will pay the researcher $10,000 per patent filed, $40,000 per patent issued by the U.S. patent office, $50,000 per product after the first commercial sale and $50,000 per product once the gross sales exceed $1,000,000. As of March 31, 2017, the Company has not made any payments pursuant to this agreement. Subsequent to March 31, 2017, the University of Waterloo issued an invoice for $130,000.

On March 13, 2017, the Company entered into a 4 year sponsored research contract with the University of Western Ontario commencing on April 1, 2017. Under the terms of the agreement the Company will contribute $210,000 upon execution of the agreement, $210,000 on completion of Year 1, $210,000 on completion of Year 2 and $210,000 on completion of Year 3, plus the Company will make an in-kind contribution valued at $62,500 in each of the 4 years. Any patents initiated by the Company from the sponsored research will be assigned to the Company and in return the Company will pay the researcher researcher $10,000 per patent filed, $40,000 per patent issued by the U.S. patent office, $50,000 per product after the first commercial sale and $50,000 per product once the gross sales exceed $1,000,000. As of March 31, 2017, the Company has not made any payments pursuant to this agreement. On July 25, 2017, the payment terms were amended. A payment of $50,000 was made on July 28, 2017. The remaining payments are as follows: $50,000 due on September 1, 2017 and December 1, 2017; $60,000 due on March 1, 2018; $52,500 quarterly starting on April 1, 2018 and ending on January 1, 2021.

On March 27, 2017 the Company entered into a 1-year agreement with Questrade, Inc. an Investment Dealer to provide guidance on the trading of the Company’s securities and guidance with respect to the promotion of the Company. The Company shall pay Questrade a monthly fee in an amount equal to USD$5,500 for consulting services rendered each month of the term.

See also Note 15.

13.) Related Party Transactions

Included in accounts payable and accrued liabilities as at March 31, 2017 is $8,125 (2016 - $52,030) owing to two directors who are also officers and significant shareholders of the Company for unpaid management fees. In December 2016, 1,316,173 common shares were issued to the two directors to satisfy the amount of the outstanding debt. See also Notes 6, 10(a), 10(c), and 12.

Amounts receivable from an officer as at March 31, 2017 of $17,656 (2016 - $21,064) is owing from a shareholder, who is also a director and officer of the Company for funds advanced under his employment agreement (See Note 12). The amount receivable is unsecured, non-interest bearing, repayable upon demand and $17,656 (2016 - $Nil) was offset by an allowance for doubtful accounts and expensed on the statements of operations for the year ended March 31, 2017.

Management fees and consulting fees in the amount of $418,875 (2015 - $427,000) were waived by the officers of the Company during the year ended March 31, 2017.

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

14.) Financial Instruments

(a) Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if its access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its financing activities and advances from shareholders. As at March 31, ~~2016~~2017, the Company had cash of $~~173~~87 (~~2015~~March 31, 2016 - $~~3,084~~173) to settle current liabilities of $~~809~~897,~~347~~442 (~~2015~~2016 - $~~894~~809,~~022~~347). All of the Company'’s financial liabilities other than the warrant liability of $236,200 (2016 - $27,479), the term loan of $48,894 (~~2015~~March 31, 2016 - $~~364~~nil),~~878~~ a convertible note of $26,076 (2016 - $nil) and a promissory note of $16,456 (March 31, 2016 - $nil) and derivative liability of $260,677 (2016 - $Nil) have contractual maturities of less than 30 days and are subject to normal trade terms. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity.

In the normal course of business, management considers various alternatives to ensure that the Company can meet some of its operating cash flow requirements through financing activities, such as private placements of common stock, preferred stock offerings and offerings of debt and convertible debt instruments as well as through merger or acquisition opportunities. Management may also consider strategic alternatives, including strategic investments and divestitures. As future operations may be financed out of funds generated from financing activities, the ability to do so is dependent on, among other factors, the overall state of capital markets and investor appetite for investments in the green technology industry and the Company’s securities in particular. Should the Company elect to satisfy its cash commitments through the issuance of securities, by way of either private placement or public offering or otherwise, there can be no assurance that the efforts to obtain such additional funding will be successful, or achieved on terms favorable to the Company or its existing shareholders. If adequate funds are not available on favorable terms, the Company may have to reduce substantially or eliminate expenditures or obtain funds through other sources such as divestiture or monetization of certain assets or sublicensing (where permitted) of certain rights to certain of the Company’s technologies or products.

6975

~~13.)~~Algae Dynamics ~~Financial Instruments (continued)~~Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

14.) Financial Instruments (continued)

(b) Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Cash deposits with a major Canadian chartered bank are insured by the Canadian Deposit Insurance Corporation up to $100,000. As at March 31, ~~2016~~ 2017, the Company held $~~173~~87 (~~2015~~2016 - $~~3,084~~173) with a major Canadian chartered bank.

(c) Foreign exchange risk

The Company principally operates within Canada. The Company’s functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. Management believes the foreign exchange risk derived from currency conversions is negligible and therefore does not hedge its foreign exchange risk. ~~See also Note 13 (e).~~

(d) Interest rate risk

As at March 31, ~~2016~~2017, the Company does not have any non-fixed interest-bearing debt. The Company invests any cash surplus to its operational needs in investment-grade short-term deposit certificates issued by highly rated Canadian banks. The Company periodically assesses the quality of its investments and is satisfied with the credit rating of the bank.

(e) Derivative liability – warrant liability

In connection with a consulting ~~agreement~~agreements, the Company granted warrants to purchase up to ~~625~~1,525,000 common shares of the Company as disclosed in Note 910(b). The warrants have an exercise price of USD$0.04 ($0.~~052~~054) for Connectus warrants and USD$0. 65 ($0.85) for Midtown warrants. The Connectus warrants are exercisable at any time prior to ~~April~~December 131, 2017, and the Midtown warrants are exercisable at any time prior to January 16, 2022. The warrants are accounted for as derivative liabilities because the exercise price is denominated in a currency other than the Company’s functional currency.

In connection with the settlement of a vendor’s account, the Company granted warrants to purchase up to 3,350 common shares of the Company. The warrants have an exercise price of USD$1.50 ($1.95). The warrants are exercisable at any time prior to October 22, 2016. The warrants are accounted for as derivative liabilities because the exercise price is denominated in a currency other than the Company’s functional currency.

	Fair Value at		Fair Value Measurement Using
	March 31, 2017		Level 1		Level 2		Level 3
Derivative liability – Warrants	$	236,200	$	-	$	-	$	236,200

In connection with a private placement, the Company granted warrants to purchase up to 8,850 common shares of the Company. The warrants have an exercise price of USD$2.00 ($2.59). The warrants are exercisable at any time prior to November 30, 2016. The warrants are accounted for as derivative liabilities because the exercise price is denominated in a currency other that the Company’s functional currency.76

70Algae Dynamics Corp.

~~13.)~~Notes to Financial ~~Instruments (continued)~~Statements

~~The~~(Stated in ~~table~~Canadian ~~below summarizes the fair value of the Company’s financial liabilities measured at fair value:~~Dollars)

	Fair Value at
	March 31,		Fair Value Measurement Using
	2016		Level 1		Level 2		Level 3
Derivative liability – Warrants	$	27,479	$	-	$	-	$	27,479

March 31, 2017 and 2016

~~The~~14.) Financial ~~table~~Instruments ~~below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities~~ (~~warrant derivative liability~~continued) ~~for the periods ended March 31, 2016 and 2015:~~

	March 31,			March 31,
	2016			2015
Balance at beginning of year	$	364,878		$	-
Additions to derivative instruments, recognized in earnings as professional fees (Note 9(b))		-		$	240,000
Additions to derivative instruments as a result of issuance in settlement of debt (Note 9(b))		-		$	2,060
Additions to derivative instruments as a result of issuance of units (Note 9(b))		-		$	6,213
Derivative instruments exercised	$	(509,054	)	$	(32,675	)
Change in fair market value, recognized in operations as professional fees	$	171,655		$	149,280
Balance at end of year	$	27,479		$	364,878

Derivative liability – warrant liability (continued)

~~These~~The table ~~instruments~~below ~~were~~sets ~~valued~~forth ~~using pricing models that incorporate the price of~~ a ~~share~~summary of ~~common~~changes ~~stock~~in ~~(based upon~~ the ~~price~~fair ~~of the most recent private placement), expected volatility, risk free rate, expected dividend rate and expected estimated life. The Company estimated the~~ value of the ~~warrants~~Company’s ~~using~~Level ~~the~~3 ~~Black-Scholes~~financial ~~model. There were no transfers of assets or~~ liabilities ~~between~~(warrant ~~Level~~derivative liability) 1,for ~~Level 2, or Level 3 during~~ the years ended March 31, ~~2016~~2017 and ~~2015.~~March 31, 2016:

The following are the key weighted average assumptions used in connection with the estimation of fair value as at March 31, 2016:

	Year ended March 31, 2017			Year ended March 31,2016
Balance at beginning of year	$	27,479		$	364,878
Derivative instruments granted or vested		633,000
Derivative instruments exercised		(55,321	)		(509,054	)
Change in fair market value, recognized in operations as professional fees		(368,958	)		171,655
Balance at end of year	$	236,200		$	27,479

	March 31,
	2016
Number of shares underlying the warrants		381,700
Fair market value of the stock	$	0.65
Exercise price	USD$0.10 ($0.1275)
Expected volatility		150	%
Risk-free interest rate		0.54	%
Expected dividend yield		0	%
Expected warrant life (years)		0.99

These instruments were valued using pricing models that incorporate the price of a share of common stock, expected volatility, risk free rate, expected dividend rate and expected estimated life. The Company estimated the value of the warrants using the Black-Scholes model. There were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 during the years ended March 31, 2017 and March 31, 2016.

71The following are the key weighted average assumptions used in connection with the estimation of fair value as at March 31, 2017:

13.) Subsequent Events

	March 31, 2017			March 31, 2016
Number of shares underlying the warrants		1,175,000			381,700
Fair market value of the stock	$	0.3061		$	0.65
Exercise price		USD$0.5($0.68	)		USD$0.10($0.13	)
Expected volatility		229	%		150	%
Risk-free interest rate		1.03	%		0.54	%
Expected dividend yield		0	%		0	%
Expected warrant life (years)		3.85			0.99

Subsequent to March 31, 2016, the Company entered into various agreements pursuant to which it has committed to issue up to 1,100,000 common shares of the Company to October 24, 2016, as compensation for services to be rendered. Within these agreements the commitment to Directors and Executive Officers totals 250,000 shares and the other significant commitments are to Tradersmasterpro.com, Inc for 750,000 shares and Midtown Partners & Co., LLC for 100,000 shares.77

OnAlgae Dynamics ~~May 4, 2016 the Board approved a term loan in the amount of $40,000 for bridge financing with a relative of one of the officers of the Company~~Corp. ~~The terms of the loan are that it is to be repaid on August 28, 2016 at a 30% premium.~~

OnNotes to ~~May~~Financial ~~18, 2016, 44,500 warrants were exercised at USD$0.04 ($0.52) for gross proceeds of USD$1,780 ($2,164).~~Statements

On June 23, 2016, the Company agreed in conjunction with RY Capital Group, LLC and GHS Investments, LLC to assign the EPA to GHS Investments, LLC. The changes made to the EPA include increasing the share purchase price per common share to 80% from 65% of the lowest closing bid for the 10 days immediately preceding the date of the draw down notice, increasing the upper limit on individual draws to USD$75,000 from USD$62,500 and including a True-Up feature whereby if the lowest volume-weighted average price (~~“VWAP”) for the ten trading days following a draw down (the ‘Trading Period”) is less than 85% of the purchase price of the common shares issued~~ Stated in ~~connection~~Canadian ~~with a draw down, then the Company shall issue such additional common shares as maybe necessary to adjust the purchase price for such draw down to equal the VWAP during the Trading Period.~~Dollars)

~~See Note 9(b) regarding expiration of warrants subsequent to~~ March 31, 2017 and 2016.

72(f) Derivative liability – conversion options

In connection with the Salamon promissory note and the GHS convertible note (Note 8(a) and (b)), the Company has determined that the conversion features are considered derivative liabilities due to the variable conversion prices associated with the notes and the fact that the conversion price is denominated in US dollars whereas the functional currency of the Company is the Canadian dollar.

	Fair Value at		Fair Value Measurement Using
	March 31, 2017		Level 1		Level 2		Level 3
Derivative liability – conversion options	$	260,677	$	-	$	-	$	260,677

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (convertible note derivative liability) for the years ended March 31, 2017 and March 31, 2016:

	Year ended March 31, 2017		Year ended March 31, 2016
Balance at beginning of year	$	Nil	$	-
Derivative instruments issued		253,318		-
Change in fair market value, recognized in operations as fair value change in derivative liability		7,359		-
Balance at end of year	$	260,677	$	-

These instruments were valued using pricing models that incorporate the price of a share of common stock, expected volatility, risk free rate, expected dividend rate and expected estimated life. The Company estimated the value of the conversion options using the Black-Scholes model. There were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 during the year ended March 31, 2017 and March 31, 2016.

The following are the key weighted average assumptions used in connection with the estimation of fair value as at March 31, 2017:

	March 31, 2017			March 31, 2016
Stock Price	$	0.23 USD		$	-
Exercise price	$	0.087 USD			-
Expected volatility		188	%		-
Risk-free interest rate		0.75	%		-
Expected dividend yield		0	%		-
Expected term (years)		0.38			-

Algae Dynamics Corp.

Notes to Financial Statements

(Stated in Canadian Dollars)

March 31, 2017 and 2016

15.) Subsequent Events

On April 9, 2017 the Company signed a 12 month consulting agreement effective April 15, 2017 with an arm’s length organization, The Eversull Group Inc,. to provide financial public relations, investor, shareholder, press relations and capital search consulting services. Terms of the agreement include the provision of 100,000 restricted shares annually, a minimum monthly retainer of USD$ 2,000 plus a 3% introduction fee for all sources of funding introduced by The Eversull Group Inc. and accepted by the Company.

On April 19, 2017, the Company announced the formation of a joint venture corporation with Avanti Rx Analytics Inc. (ARA) called ADC Biomedical Corp (BIO). The Company would own 96% of the joint venture and ARA would own 4%. It is the intention of the joint venture for BIO to be the preferred purchaser from ARA of all BIO’s and the Company’s products containing algae, hemp oil and cannabis extracted oils. The term of the agreement will continue for a period of 3 years.

On May 8, 2017, the Company signed a consulting agreement with Carter, Terry & Company in connection with the proposed raising of capital in a combination of equity and/or debt of the Company for a term of two years. Consideration payable under the consulting agreement includes a non-refundable equity retainer of 150,000 restricted shares of the Company, a placement fee equal to 10% of the gross proceeds raised less than USD$1,000,000 8% for gross funds raised in excess of USD$1,000,000, plus the equivalent amount of restricted shares equal to 4% of the capital raised divided by the closing price of the stock on the date of close for a period of two years.

Subsequent to March 31, 2017, the Company commenced a private placement of up to USD$500,000 of one-year 12% convertible notes (the “Notes”). The Notes are convertible at the option of the holder into common shares of the Company at a price of USD$0.20 per share, and are subject to mandatory conversion if the volume-weighted trading price of the common shares is greater than USD$1.00 per share for twenty consecutive trading days so long as the underlying shares may be resold in compliance with the registration requirements of the Securities Act of 1933, as amended. In addition to the issuance of the Notes, the Company shall issue to the holders 100,000 three-year common share purchase warrants with an exercise price of USD$0.50 for each USD$25,000 principal amount of Notes purchased. Furthermore, the Company shall issue pro rata to the purchasers of the first USD$100,000 of Notes in the Offering an aggregate of 200,000 common shares as a commitment fee. As of August 11, 2017. the Company had issued USD$100,000 of the Notes.

See Note 10(b) regarding the expiration of warrants subsequent to March 31, 2017.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures.

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of March 31, ~~2016~~2017, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, ~~2016~~2017, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described below.

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management identified the following three material weaknesses that have caused management to conclude that, as of March 31, ~~2016~~2017, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the period ending March 31, 2016. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.80

2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

	1.	We have developed documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the period ending March 31, 2017. We plan to progressively implement the written policies and procedures commencing in the immediate future. However, until all of the internal controls and procedures are fully implemented there will continue to be some weaknesses in the system.

	2.	We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Based on the current magnitude of our operations at the present time, it is impractical to employ sufficient staff to fully address the separation of duties issue. As the business plan is implemented and additional staff is required, we will be able to and intend to address this identified weakness.

	3.	Effective controls over the control environment have not been fully implemented. Specifically, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors has only one independent member. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. As the expansion plans are implemented, we intend to communicate our accounting policies and procedures to our employees.

	4	We did not maintain sufficient personnel with an appropriate level of technical accounting knowledge, experience and training in the application of GAAP commensurate with our complexity and our financial accounting and reporting requirements. This control deficiency is pervasive in nature. Further, there is a reasonable possibility that material misstatements of the financial statements including disclosures will not be prevented or detected on a timely basis as a result. As a result of the material weaknesses identified above, our internal control over financial reporting was not effective as of March 31, 2017.

73The Company has initiated a program to address the above weaknesses, specifically the Company has implemented a Code of Business Ethics and Conduct policy, an Equal Opportunity policy, a Freedom from Harassment policy, a Substance Abuse policy, a Whistleblower policy and a Fraud policy. While segregation of duties is very difficult in a small company the Company has an internal policy that all major expenditures are collectively approved by the CEO, President and CFO. In addition, the Company has constituted an Audit Committee, consisting of two non-management directors with the Independent Director as the Chair.

3. Effective controls over the control environment have not been fully implemented. Specifically management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors has only one independent member. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

The Company has initiated a program to address these weaknesses, specifically the Company has implemented a Code of Business Ethics and Conduct policy, Equal Opportunity policy, Freedom from Harassment policy, Substance Abuse policy and a Whistleblower policy. In addition, the Company has constituted an Audit Committee, consisting of two non-management directors with the Independent Director as the Chair.

To address the material weaknesses identified, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

ToAs part ~~remediate~~of the ~~material~~implementation ~~weakness~~strategy infor ~~our~~the ~~documentation,~~expansion ~~evaluation and testing~~ of ~~internal~~the ~~controls~~Company we additionally plan to engage a third-party firm to assist us inwith ~~remedying~~the ~~this~~development of any additional system required. We intend to remedy our material weakness ~~once~~with ~~resources~~regard ~~become~~to insufficient segregation of duties by hiring additional employees as funding becomes available to implement the business plan in order to segregate duties in a manner that establishes effective internal controls. All such required remedies are dependent on having the financial resources available to complete them.

WeThis Report ~~intend~~does tonot ~~remedy~~include ~~our~~an ~~material~~attestation ~~weakness~~report ~~with~~of ~~regard~~the toCompany’s ~~insufficient~~registered ~~segregation~~public ofaccounting ~~duties~~firm regarding internal control over financial reporting. Management's report was not subject to attestation by ~~hiring~~the ~~additional~~Company's ~~employees~~registered inpublic ~~order~~accounting firm pursuant to ~~segregate~~temporary ~~duties~~rules inof athe ~~manner~~Securities and Exchange Commission that ~~establishes~~permit ~~effective~~the ~~internal~~Company ~~controls~~to ~~once~~provide ~~resources~~only ~~become~~management's ~~available~~report in this annual report.

Changes in internal controls.

No change in our system of internal control over financial reporting occurred during the period covered by this report, the year ended March 31, ~~2016~~2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:

Name	Position Held with the Company	Age		~~Date First Elected or Appointed~~	Date First Elected or Appointed
Paul Ramsay	President and Director	56	57	~~March 31, 2009~~	March 31, 2009
Richard Rusiniak	Chief Executive Officer and Director	67	68	~~March 31, 2009~~	March 31, 2009
Ross Eastley	Chief Financial Officer and Director	68	69	~~February 11, 2011~~	February 11, 2011
P. Blair Mullin	Director	62	63	~~August 28, 2014~~	August 28, 2014
W. Cameron McDonald	Director	50	51	~~August 28, 2014~~	August 28, 2014

Business Experience

The following is a brief account of the education and business experience during at least the past five years of our director and executive officer, indicating his principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Paul Ramsay (BBA) - Co-Founder, Chairman & President

Mr. Ramsay has served as President of the Company since its founding in 2008 (formally appointed March 31, 2009). He has over 25 years of business development and management experience. He was the Co-founder and former CEO and VP Business Development of Cymat Corp, (TSX: CYM) with a market valuation over $150 million upon his resignation in 2002. He was instrumental in securing the Stabilized Aluminum Foam (SAF) license from Alcan International Ltd. He successfully negotiated a $10 Million technology development program with Industry Canada (TPC). He participated in the completion of $25 million in financing with financial institutions. Mr. Ramsay also introduced and sold several newly developed products to major corporations.

Mr. Ramsay’s qualifications to serve of the Board include over 25 years of business experience and his experience as a founder, and seller, of companies, and his experience with the Company since its founding.

Richard Rusiniak (Mechanical Engineer) - Co-Founder, Director & CEO

Mr. Rusiniak has served as Chief Executive Officer of the Company since its founding in 2008 (formally appointed March 31, 2009). He has over 30 years of management, design and process experience. He was the Co- founder and former President, CFO, and CTO of Cymat Corp (TSX: CYM) with a market valuation over $150 million upon his resignation in 2002. He negotiated an Aluminum Foam Manufacturing licence with Alcan International Ltd., and successfully commercialized the technology. He prepared full documentation and completed a $10 Million technology development program with Industry Canada (TPC). He participated in the completion of $25 million in financing with financial institutions. From 1978 to 1988, he was project manager with Long Manufacturing, as well as The Ontario Research Foundation (Ortech). Projects on which he has consulted include NASA’s Zero Gravity Program, Atomic Energy of Canada’s Re-tubing Program and Hawker Siddeley’s Bi-Level GO Train Modularization.

Mr. Rusiniak’ s qualifications to serve on Algae Dynamics’ board of directors include his years of managerial experience and technology and engineering experience and his experience with the Company since its founding.

Ross Eastley (CA) – Director & CFO

Since 2009 (formally appointed February 11, 2011) Mr. Eastley has been the Chief Financial Officer of the Company. Prior to that, he was CEO for the Canadian Society of Immigration Consultants (CSIC) from 2006 – 2009. Mr. Eastley reported to a nine-member Board, responsible for strategic planning, corporate communications, initial regulatory functions, creation of the staffing structure and management of legal processes. Former V P/Controller for Brandon University.

Mr. Eastley’s qualifications to serve on the Board include his over 30 years of accounting and CFO experience in both private and public sector organizations as well as serving as an executive Board member on a number of Boards for in excess of 20 years.

P. Blair Mullin (BA, MBA) - Director

Mr. Mullin’s principal occupation during the past five years includes managing various funds and providing management consulting services including Managing Partner of Apollo Ventures, LLC, Aldercreek Capital LLC and Apollo Marketing LLC, which provide investment capital to emerging companies. He is also President & CEO of Connectus Inc., which provides advisory services to emerging companies. Previously, Mr. Mullin served as consultant to and then CFO of DRS Inc. from 2010 to 2012; as President & CEO of Samarium Group Corporation (now Samaranta Mining Corporation) from 2009 to 2010; as Chief Financial Officer of Zi Corporation from 2006 to 2009; as Chief Financial Officer of Homax Products Inc from 2005 to 2006; as Interim Vice President Finance of Yakima Products Inc. in 2005. From 2003 to 2005, Mr. Mullin served as consultant to numerous clients engaged in manufacturing. In addition, he was a Partner in Tatum Partners (later Tatum LLC), a national executive services firm, from 2003 to 2010. From 2001 to 2003, Mr. Mullin was President and CEO of Blair Mullin & Associates, Inc., a consulting firm. From 2000 to 2001, Mr. Mullin served as President and Chief Operating Officer of International DisplayWorks, Inc., which was a successor company to Morrow Snowboards, Inc., where he served as President and CFO from 1997 to 2000. Mr. Mullin holds an MBA from University of Western Ontario and BA from Wilfrid Laurier University, in Canada.

Mr. Mullin’s qualifications to serve on Algae Dynamics’ board of directors include his 25 years of managerial experience and his experience as chief financial officer of public and private companies, Mr. Mullin is the Board’s finance and accounting expert. Mr. Mullin also brings several years of public company corporate governance experience to the Board.

W. Cameron McDonald (BA, BSc, MBA, Finance & Accounting~~, CFA~~) - Director

Mr. McDonald ~~has~~is ~~since~~currently ~~2009~~the ~~been~~CEO ~~the~~of ~~founder~~Coldwater ~~and~~Fisheries ~~CEO~~Inc., ofa ~~Global~~leading ~~SeaFarms~~Canadian ~~Corporation~~aquaculture ~~which~~company. ~~went~~Prior ~~Public by~~to ~~way~~joining ofColdwater Fisheries Inc. in early 2015, Mr. McDonald was a ~~RTO~~founder onand ~~the~~executive ~~Canadian~~of ~~National~~Global ~~Stock~~SeaFarms ~~Exchange~~Corporation. ~~“CNSX”~~From 2004 to 2009, Mr. He McDonald was an Investment Banker with Canaccord Adams, ~~Montreal, Quebec~~ (now Canaccord Genuity) ~~from 2004 to 2009~~. He Canaccord was ~~part of~~ the number one ranked technology investment banking deal team in Canada in 2006 and 2007 ~~which~~with ~~had~~financings of over $500M ofon ~~Canaccord~~the ~~lead~~ TSX and AIM ~~IPOs~~capital ~~andover $500M of Canaccord follow-on public offerings~~markets. He ~~was advisory to an $110M Amex listed SPAC transaction – due diligence and transaction structuring~~Mr. He McDonald ~~was~~has ancompleted ~~Account~~the ~~Manager~~Chartered ~~with Business Development Bank of Canada from 1995 to 1998. Administered a portfolio of 40 companies. He is a Certified~~ Financial Analyst “CFA” program, and passed the Partners, Directors, and Officers Qualifying Exam in 2006.

Mr. McDonald’s qualifications to serve on the Company’s Board include his years of finance and management experience and his experience as a founder and CEO of Global SeaFarms Corporation.

Corporate Governance

We evaluate independence by the standards for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards for independent directors established by The New York Stock Exchange, Inc., the NASDAQ National Market, and the Securities and Exchange Commission.

7682

Subject to some exceptions, these standards generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company’s consolidated gross revenues.

Family Relationships

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

Involvement in Certain Legal Proceedings

None of our directors, executive officers, promoters or control persons has been involved in any events requiring disclosure under Item 401(f) of Regulation S-K.

Compensation Committee Interlocks and Insider Participation –

No interlocking relationship exists between our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past.

Nominations to the Board of Directors

Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the shareholders, diversity, and personal integrity and judgment.

In addition, directors must have time available to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.

In carrying out its responsibilities, the Board will consider candidates suggested by shareholders. If a shareholder wishes to formally place a candidate’s name in nomination, however, he or she must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for candidates to be evaluated by the proposed directors must be sent to the Board of Directors, c/o 37 – 4120 Ridgeway Drive, Mississauga, Ontario L5L 5S9

Board Leadership Structure and Role on Risk Oversight

Paul Ramsay currently serves as the Company’s President and Chairman. The Company determined this leadership structure was appropriate for the Company due to our small size and limited operations and resources. The Board of Directors will continue to evaluate the Company’s leadership structure and modify as appropriate based on the size, resources and operations of the Company.

Committees of the Board

The Board has constituted an Audit Committee consisting of two non-management directors, W. Cameron McDonald (Chair) and P. Blair Mullin. The full Board currently conducts the duties of the Compensation Committee and the Nominating Committee.

Audit Committee

The Audit Committee consists of W. Cameron McDonald and P. Blair Mullin, both non-management directors. Mr. Cameron was elected Chair and is an independent Director. Mr. Mullin is not deemed independent due to his consulting agreement with the Company.

ITEM 11. EXECUTIVE COMPENSATION.

The particulars of the compensation paid to the following persons:

(a) our President;

(a)	our President;

(b)	each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal years ended March 31, 2016 and 2015; and

(b) each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal years ended March 31, 2016 and 2015; and

who we will collectively refer to as the named executive officers of our Company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer whose total compensation did not exceed $100,000 for the respective fiscal year:

SUMMARY COMPENSATION TABLE
Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)		Option based Awards(4) ($)		Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)		Total ($)
Paul Ramsay,	2016	Nil	Nil	$	23,044	$	265,680	Nil	Nil	Nil		$	288,724
President and Director. (1)	2015	Nil	Nil		Nil	$	142,200	Nil	Nil	Nil		$	142,200
	2014	N/A	N/A		N/A		N/A	N/A	N/A	$	50,000	$	50,000
Richard Rusiniak,	2016	Nil	Nil	$	23,044	$	265,680	Nil	Nil	Nil		$	288,724
Chief Executive Officer and Director(2)	2015	Nil	Nil		Nil	$	142,200	Nil	Nil	Nil		$	142,200
	2014	Nil	Nil		Nil	Nil		Nil	Nil	$	50,000	$	50,000
Ross Eastley,	2016	Nil	Nil	$	23,044	$	221,400	Nil	Nil	Nil			244,444
Chief Financial Officer and Director(3)	2015	Nil	Nil		Nil	$	94,800	Nil	Nil	Nil		$	94,800
	2014	N/A	N/A		N/A		N/A	N/A	N/A	$	20,000	$	20,000

(1)	Mr. Ramsay was appointed the President and a Director of our company on March 31, 2009.
(2)	Mr. Rusiniak was appointed the Chief Executive Officer and a Director of our company on March 31, 2009.

SUMMARY COMPENSATION TABLE

(3)	Mr. Eastley was appointed the Chief Financial Officer and Director of our company on February 11, 2011.
Name and Principal Position		Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option based Awards(4) ($)		Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)		Total ($)
(4)	Calculated based on the Black-Scholes model at the grant date.
Paul Ramsay,			2017		Nil		Nil	$	171,525	$	22,575	Nil	Nil	$	3,025	$	197,125
			2016		Nil		Nil	$	23,044	$	265,680	Nil	Nil		Nil	$	288,724
President and Director. (1)			2015		Nil		Nil		Nil	$	142,200	Nil	Nil		Nil	$	142,200
			2014		N/A		N/A		N/A		N/A	N/A	N/A	$	50,000	$	50,000
Richard Rusiniak,			2017		Nil		Nil	$	171,525	$	22,575	Nil	Nil	$	3,025	$	197,125
			2016		Nil		Nil		23,044	$	265,680	Nil	Nil		Nil	$	288,724
Chief Executive Officer and			2015		Nil		Nil		Nil	$	142,200	Nil	Nil		Nil	$	142,200
Director(2)
			2014		Nil		Nil		Nil		Nil	Nil	Nil	$	50,000	$	50,000
Ross Eastley,			2017		Nil		Nil	$	171,525	$	18,813	Nil	Nil	$	2,074	$	192,412
			2016		Nil		Nil	$	23,044	$	221,400	Nil	Nil		Nil	$	244,444
Chief Financial Officer and			2015		Nil		Nil		Nil	$	94,800	Nil	Nil		Nil	$	94,800
Director(3)
			2014		N/A		N/A		N/A		N/A	N/A	N/A	$	20,000	$	20,000

(1)	Mr. Ramsay was appointed the President and a Director of our company on March 31, 2009.
(2)	Mr. Rusiniak was appointed the Chief Executive Officer and a Director of our company on March 31, 2009.
(3)	Mr. Eastley was appointed the Chief Financial Officer and Director of our company on February 11, 2011.
(4)	Calculated based on the Black-Scholes model at the grant date.

Other than as disclosed below, there are no compensatory plans or arrangements with respect to our executive officers resulting from their resignation, retirement or other termination of employment or from a change of control.

Paul Ramsay – Employment Agreement as amended changing the salary effectiveness start time.

On March 17, 2014, we entered into an amended employment agreement with Paul Ramsay (the "“Ramsay Employment Agreement"”), effective in accordance with the schedule for salary effectiveness which follows, this amended the terms of the initial Employment Agreement between Mr. Ramsay and the Company that became effective on July 1, 2014.

The salary is $120,000 per annum, an annual car allowance of $9,000, a contribution to a RRSP to the maximum allowed contribution not to exceed $30,000 per year plus being able to participate in the benefits program made generally available to the Company Employees and Executives.

Schedule for Salary Effectiveness in accordance with the amendment

Cumulative Funds Raised 1		Effective Monthly Salary %	~~Effective Monthly Salary %~~
1.)	$100,000		10.0%
1.) $100,000			10.0	%
2.)	$175,000		15.0%
2.) $175,000			15.0	%
3.)	$250,000		25.0%
3.) $250,000			25.0	%
4.)	$375,000		37.5%
4.) $375,000			37.5	%
5.)	$500,000		50.0%
5.) $500,000			50.0	%
6.)	$750,000		62.5%
6.) $750,000			62.5	%
7.)	$1,000,000		75.0%
7.) $1,000,000			75.0	%
8.)	$1,250,000		87.5%
8.) $1,250,000			87.5	%
9.)	$1,500,000		100.0%
9.) $1,500,000			100.0	%

1 Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold.

1	Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold. The 15% threshold was reached during the 2017 fiscal year.

2	Termination as a result of change in control then Mr. Ramsay shall be entitled to an amount equal to (12) months compensation plus one additional month for each full year of service, 100% salary is $120,000 per annum, an annual car allowance of $9,000, a contribution to a RRSP to the maximum allowed contribution not to exceed $30,000 per year plus being able to participate in the benefit programs made generally available to the Company Employees and Executives.

2 Termination as a result of change in control then Mr. Ramsay shall be entitled to an amount equal to (12) months compensation plus one additional month for each full year of service, 100% salary is $120,000 per annum, an annual car allowance of $9,000, a contribution to a RRSP to the maximum allowed contribution not to exceed $30,000 per year plus being able to participate in the benefit programs made generally available to the Company Employees and Executives.

Richard Rusiniak – Employment Agreement as amended changing the salary effectiveness start time.

On March 17, 2014, we entered into an amended employment agreement with Richard Rusiniak (the "“Rusiniak Employment Agreement"”), effective in accordance with the schedule for salary effectiveness which follows, this amended the terms of the initial Employment Agreement between Mr. Rusiniak and the Company that became effective on July 1, 2014.

7985

Schedule for Salary Effectiveness in accordance with the amendment

Cumulative Funds Raised 1		Effective Monthly Salary %	~~Effective Monthly Salary %~~
1.)	$100,000		10.0%
1.) $100,000			10.0	%
2.)	$175,000		15.0%
2.) $175,000			15.0	%
3.)	$250,000		25.0%
3.) $250,000			25.0	%
4.)	$375,000		37.5%
4.) $375,000			37.5	%
5.)	$500,000		50.0%
5.) $500,000			50.0	%
6.)	$750,000		62.5%
6.) $750,000			62.5	%
7.)	$1,000,000		75.0%
7.) $1,000,000			75.0	%
8.)	$1,250,000		87.5%
8.) $1,250,000			87.5	%
9.)	$1,500,000		100.0%
9.) $1,500,000			100.0	%

1 Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold.

1	Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold. The 15% threshold was reached during the 2017 fiscal year.

2	Termination as a result of change in control then Mr. Rusiniak shall be entitled to an amount equal to (12) months compensation plus one additional month for each full year of service.

2 Termination as a result of change in control then Mr. Rusiniak shall be entitled to an amount equal to (12) months compensation plus one additional month for each full year of service.

Ross Eastley – Employment Agreement as amended changing the salary effectiveness start time.

On March 17, 2014, we entered into an amended employment agreement with Ross Eastley (the "“Eastley Employment Agreement"”), effective in accordance with the schedule for salary effectiveness which follows, this amended the terms of the initial Employment Agreement between Mr. Eastley and the Company that became effective on July 1, 2014.

The salary is $100,000 per annum, an annual car allowance of $9,000, plus being able to participate in the benefits program made generally available to the Company Employees and Executives.

Schedule for Salary Effectiveness in accordance with the amendment

Cumulative Funds Raised 1		Effective Monthly Salary %	~~Effective Monthly Salary %~~
1.)	$100,000		10.0%
1.) $100,000			10.0	%
2.)	$175,000		15.0%
2.) $175,000			15.0	%
3.)	$250,000		25.0%
3.) $250,000			25.0	%
4.)	$375,000		37.5%
4.) $375,000			37.5	%
5.)	$500,000		50.0%
5.) $500,000			50.0	%
6.)	$750,000		62.5%
6.) $750,000			62.5	%
7.)	$1,000,000		75.0%
7.) $1,000,000			75.0	%
8.)	$1,250,000		87.5%
8.) $1,250,000			87.5	%
9.)	$1,500,000		100.0%
9.) $1,500,000			100.0	%

1 Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold.

1	Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold. The 15% threshold was reached during the 2017 fiscal year.

2	Termination as a result of change in control then Mr. Eastley shall be entitled to an amount equal to (12) months compensation plus one additional month for each full year of service.

~~2 Termination as a result of change in control then Mr. Eastley shall be entitled to an amount equal to (12) months compensation plus one additional month for each full year of service.~~86

Outstanding Equity Awards at Fiscal Year-End

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

~~Option Awards~~

Option Awards

~~Stock Awards~~

Stock Awards

Name (a)

Number of Securities Underlying Exercisable options (#) (b)

Number of Securities Underlying Un-exercisable Options (#) (c)

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)

Weighted Average Option Exercise Price ($) (e)

Weighted Average Option Expiration Date ($) (f)

Number of Shares or Units of Stock that have not Vested (#) (g)

Market Value of Shares of Units of Stock that Have not Vested ($) (h)

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#) (i)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights that have not Vested ($) (j)

Equity

Paul Ramsay

120,000

2.05

Note 1

Nil

N/A

Nil

N/A

Incentive

Richard Rusiniak

120,000

2.05

Note 1

Nil

N/A

Nil

N/A

Equity Incentive

Plan Awards:

Ross Eastley

86,667

93,333

2.05

Note 1

Nil

N/A

Nil

N/A

Equity Incentive

Plan Awards: Number of

Market or Payout Value of

Number of

Number of Securities

Plan Awards: Number of Securities

weighted

Number of Shares or Units of

Market Value of Shares of Units of

Unearned Shares, Units or Other

Unearned Shares, Units or other

Securities Underlying

Underlying Un-

Underlying Unexercised

Option

Average Option

Stock that

Rights that

Exercisable

exercisable

Unearned

Exercise

Expiration

have not

Have not

have not

options

Options

Price

Date

Vested

Name

(#)

($)

(#)

($)

(#)

($)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

Paul Ramsay

40,000

80,000

0.38

Note 1

Nil

N/A

Nil

N/A

Richard Rusiniak

40,000

80,000

0.38

Note 1

Nil

N/A

Nil

N/A

Ross Eastley

33,333

66,667

0.38

Note 1

Nil

N/A

Nil

N/A

1. If the Optionee’s employment with the company terminates, the Option that has become exercisable pursuant to the vesting schedule shall continue to be exercisable, to the extent it is exercisable on the date such employment terminated, for ninety (90) days after such termination, but in no event after the date the Option otherwise terminates. The Option that has not become exercisable of Optionee’s employment with the Company shall be revoked. The Optionees forfeited all previous options (vested and unvested) awarded previously by the Company on January 4, 2016 and December 11, 2014.

Options Grants in the Fiscal Year Ended March 31, ~~2016~~2017

There were no stock options exercised during the fiscal year ended March 31, ~~2016~~2017 and the stock options granted and held by our executive officers at the end of the fiscal year ended March 31, ~~2016~~2017 is in accordance with the following table.

8187

EXECUTIVE OFFICERS COMPENSATION

Name

Fees Earned Or Paid in Cash ($)

Stock Award ($)

Option Award ($)

Non-Equity Incentive Plan Compensation ($)

Nonqualified Deferred Compensation Earnings ($)

All Other Compensation ($) (2)

Total ($)

Paul Ramsay

Nil

$23,044

$265,680(1)

Nil

$288,724

Richard Rusiniak

Nil

$23,044

$265,680(1)

Nil

$288,724

Ross Eastley

Nil

$23,044

$221,400(2)

Nil

$244,444

EXECUTIVE OFFICERS COMPENSATION

(1) Pursuant to a Stock incentive plan adopted at the Annual Meeting of the Shareholders on August 28, 2014 the Board approved the allocation of 120,000 stock options to Mr. Paul Ramsay and Mr. Rusiniak as Executive Officers of the Company. The allocation was approved by the Board on January 4, 2016 at an exercise price of $2.43. The options vest as to one third on the date of grant and one third vesting on January 4, 2016 and one third vesting on January 4, 2017. If the Optionee’s employment with the company terminates, the Option that has become exercisable pursuant to the vesting schedule shall continue to be exercisable, to the extent it is exercisable on the date such employment terminated, for ninety (90) days after such termination, but in no event after the date the Option otherwise terminates. The Option that has not become exercisable of Optionee’s employment with the Company shall be revoked.

	Fees Earned						Non-Equity	Nonqualified Deferred
	Or Paid in Cash	Stock Award		Option Award			Incentive Plan Compensation	Compensation Earnings	All Other Compensation	Total
Name	($)	($)		($)			($)	($)	($)(2)	($)
Paul Ramsay	Nil	$	171,525	$	22,575	(1)	Nil	Nil	$3,025	$	197,125
Richard Rusiniak	Nil	$	171,525	$	22,575	(1)	Nil	Nil	$3,025	$	197,125
Ross Eastley	Nil	$	171,525	$	18,813	(2)	Nil	Nil	$,2074	$	192,412

(2) Pursuant to a Stock incentive plan adopted at the Annual Meeting of the Shareholders on August 28, 2014 the Board approved the allocation of 100,000 stock options to Mr. Eastley as an Executive Officer of the Company. The allocation was approved by the Board on January 4, 2016 at an exercise price of $2.43. The options vest as to one third on the date of grant and one third vesting on January 4, 2016 and one third vesting on January 4, 2017. If the Optionee’s employment with the company terminates, the Option that has become exercisable pursuant to the vesting schedule shall continue to be exercisable, to the extent it is exercisable on the date such employment terminated, for ninety (90) days after such termination, but in no event after the date the Option otherwise terminates. The Option that has not become exercisable of Optionee’s employment with the Company shall be revoked.

(1)	Pursuant to a Stock incentive plan adopted at the Annual Meeting of the Shareholders on August 28, 2014 the Board approved the allocation of 120,000 stock options to Mr. Paul Ramsay and Mr. Rusiniak as Executive Officers of the Company. The allocation was approved by the Board on October 28, 2016 at an exercise price of $0.38. The options vest as to one third on the date of grant and one third vesting on October 28, 2017 and one third vesting on October 28, 2018. If the Optionee’s employment with the company terminates, the Option that has become exercisable pursuant to the vesting schedule shall continue to be exercisable, to the extent it is exercisable on the date such employment terminated, for ninety (90) days after such termination, but in no event after the date the Option otherwise terminates. The Option that has not become exercisable of Optionee’s employment with the Company shall be revoked.

(2)	Pursuant to a Stock incentive plan adopted at the Annual Meeting of the Shareholders on August 28, 2014 the Board approved the allocation of 100,000 stock options to Mr. Eastley as an Executive Officer of the Company. The allocation was approved by the Board on October 28, 2016 at an exercise price of $0.38. The options vest as to one third on the date of grant and one third vesting on October 28, 2017 and one third vesting on October 28, 2018. If the Optionee’s employment with the company terminates, the Option that has become exercisable pursuant to the vesting schedule shall continue to be exercisable, to the extent it is exercisable on the date such employment terminated, for ninety (90) days after such termination, but in no event after the date the Option otherwise terminates. The Option that has not become exercisable of Optionee’s employment with the Company shall be revoked.

8288

Re-pricing of Options/SARS

We did not re-price any options previously granted to our executive officers during the fiscal years ended March 31, ~~2016~~2017 and ~~2015~~2016.

Director Compensation

Directors of our company may be paid for their expenses incurred in attending each meeting of the directors. In addition to expenses, directors may be paid a sum for attending each meeting of the directors or may receive a stated salary as director. No payment precludes any director from serving our company in any other capacity and being compensated for such service. Members of special or standing committees may be allowed similar reimbursement and compensation for attending committee meetings. During the fiscal year ended March 31, ~~2016~~2017, we did not pay any compensation other than the grant of stock options to our directors as disclosed in this 10-K filing, or pursuant to our consulting agreement with Connectus of which P. Blair Mullin is the President.

8389

DIRECTOR COMPENSATION

Name

Fees Earned Or Paid in Cash ($)

Stock Award ($)

Option Award ($)

Non-Equity Incentive Plan Compensation ($)

Nonqualified Deferred Compensation Earnings ($)

All Other Compensation ($)

Total ($)

P. Blair Mullin

Nil

66,420(1&2)

Nil

66,420

W. Cameron McDonald

Nil

66,420(1)

Nil

66,420

DIRECTOR COMPENSATION

(1) Pursuant to a Stock incentive plan adopted at the Annual Meeting of the Shareholders on August 28, 2014 the Board approved the allocation of 30,000 stock options to Blair Mullin and Cameron McDonald as Directors of the Company. The allocation was approved by the Board on January 4, 2016 at an exercise price of $2.43. The options vest as to one quarter on the date of grant and one quarter vesting at 90 days, 180 days and 270 days from the grant date, the expiry date for the options is five years from the date of the grant.

Name

Fees Earned Or

Paid in Cash
($)

Stock Award

($)

Option Award

($)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings

($)

All Other

Compensation

($)

Total
($)

P. Blair Mullin

Nil

8,865

(1&2)

Nil

8,865

W. Cameron McDonald

Nil

8,865

(1)

Nil

8,865

(2) On March 11, 2014, and as amended on July 18, September 3, 2014, September 5, 2014 and again on December 31, 2015, the Company entered into a consulting agreement with Connectus, Inc. to assist and advise the Company in matters concerning corporate finance and the Company’s current and proposed financing activities for the period commencing April 1, 2014 and ending December 31, 2014. On December 31, 2015, the Company extended the contract to December 31, 2016. In consideration of the contract extension, the Company issued 93,000 common shares to Connectus, Inc. as compensation, which has been recorded as professional fees on the statements of operations. Pursuant to this agreement, the Company agreed to issue to this consulting corporation (the “Consultant”), 625,000 warrants of the Company. Each warrant is exercisable at USD$0.04 ($0.055) per share for a period of three years. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($324,275) raised in an offering, fully vesting upon USD$1,500,000 ($1,945,650) being raised. During the year ended March 31, 2015, the President (P. Blair Mullin) of the Consultant became a director of the Company.

(1)	Pursuant to a Stock incentive plan adopted at the Annual Meeting of the Shareholders on August 28, 2014 the Board approved the allocation of 30,000 stock options to Blair Mullin and Cameron McDonald as Directors of the Company. The allocation was approved by the Board on October 28, 2016 at an exercise price of $0.38. The options vest as to one quarter on the date of grant and one quarter vesting at 90 days, 180 days and 270 days from the grant date, the expiry date for the options is five years from the date of the grant.

(2)	On March 11, 2014, and as amended on July 18, September 3, 2014, September 5, 2014 and again on December 31, 2015 and 2016, the Company entered into a consulting agreement with Connectus, Inc. to assist and advise the Company in matters concerning corporate finance and the Company’s current and proposed financing activities for the period commencing April 1, 2014 and ending December 31, 2014. On December 27, 2016, the Company extended the contract to December 31, 2017. In consideration of the contract extension, the Company vested 100,000 warrants from the unvested warrants to Connectus, Inc. as compensation, which has been recorded as professional fees on the statements of operations. Pursuant to this agreement, the Company agreed to issue to this consulting corporation (the “Consultant”), 625,000 warrants of the Company. Each warrant is exercisable at USD$0.04 ($0.055) per share for a period of three years. Of the warrants granted, 300,000 vested on September 3, 2014 and 100,000 vested on December 27, 2016 with the unvested portion vesting pro-rata for each USD$250,000 ($324,275) raised in an offering, fully vesting upon USD$1,500,000 ($1,945,650) being raised. During the year ended March 31, 2015, the President (P. Blair Mullin) of the Consultant became a director of the Company.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.

8490

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

Potential Payments Upon Termination or Change-in-Control

Cumulative Funds Raised 1	Effective Monthly Salary %
$100,000	~~10.0%~~	10.0	%
$175,000	~~15.0%~~	15.0	%
$250,000	~~25.0%~~	25.0	%
$375,000	~~37.5%~~	37.5	%
$500,000	~~50.0%~~	50.0	%
$750,000	~~62.5%~~	62.5	%
$1,000,000	~~75.0%~~	75.0	%
$1,250,000	~~87.5%~~	87.5	%
$1,500,000	~~100.0%~~	100.0	%

1	Cumulative funds raised is inclusive of all sources including without limitation capital raised, grants received, revenue recorded, debt raised, and assets sold.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth, as of June 29, 2016, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Class(1)
Paul Ramsay President and Director Suite 1005, 58 Marine Parade Drive, Toronto, Ontario, Canada M8V 4G1		4,415,883		28.81	%

Richard Rusiniak Suite 1601, 2285 Lake Shore, Building A, Toronto, Ontario, Canada M8V 3X9		4,579,904		29.88	%

Ross Eastley Suite 1103, 99 Harbour Square Toronto, Ontario, Canada M5J 2H2		337,871		2.20	%

P. Blair Mullin Director 7185 Joshua Rd. Oak Hill, CA 92344		179,500		1.17	%

W. Cameron McDonald # 18 – 5010 Sherbrooke Street West Westmont, Quebec Canada H3Z 1H4		90,000		0.59	%

Directors and Executive Officers as a Group(1)		9,603,158		62.66	%

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Class(1)
Paul Ramsay		4,012,980		39.38	%
President and Director
Suite 1005, 58 Marine Parade Drive,
Toronto, Ontario, Canada M8V 4G1
Richard Rusiniak		4,020,611		39.45	%
Suite 1601, 2285 Lake Shore, Building A,
Toronto, Ontario, Canada M8V 3X9
Ross Eastley		315,501		3.10	%
Suite 1103, 99 Harbour Square
Toronto, Ontario, Canada M5J 2H2
P. Blair Mullin		217,567		2.13	%
Director
7185 Joshua Rd.
Oak Hill, CA 92344
W. Cameron McDonald		52,500		0.52	%
# 18 – 5010 Sherbrooke Street West
Westmont, Quebec
Canada H3Z 1H4
Directors and Executive Officers as a Group(1)		8,619,159		84.58	%

(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on June 2930, ~~2016~~2017. As of March 31, ~~2016~~2017, there were 913,~~701~~337,~~051~~521 shares of our company’s common stock issued and outstanding.

Change in Control

We are not aware of any arrangement that might result in a change in control of our company in the future.

8692

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Except as disclosed below, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.

As at March 31, ~~2016~~2017, the Company had received cumulative working capital advances in the amount of $~~383~~22,~~990~~347 (~~2015~~2016 - $~~367~~383,~~267~~990) from two shareholders who are also officers and directors of the Company. These advances are unsecured, non-interest bearing and payable upon demand. During the year ended March 31, 2017, the two shareholders converted advances of $265,298 and $255,788 of accounts payable into 1,316,173 common shares of the Company. The common shares were valued at $1,065,152 based upon an estimated fair value of USD$0.60 ($0.81) per share at the time of issuance. The difference between the fair market value of the common shares and the carrying value of the advances from shareholders and the amount included in accounts payable was recorded as a loss on extinguishment of related party debt of $544,066.

On March 11, 2014, and as amended on July 18, September 3, 2014, September 5, 2014, December 31, 2015 and again on December 3120, ~~2015~~2016, the Company entered into a consulting agreement with Connectus, Inc. (~~the~~ “~~Consultant"~~Connectus”) to assist and advise the Company in matters concerning corporate finance and the Company’s current and proposed financing activities for the period commencing April 1, 2014 and ending December 31, 2014. Pursuant to this agreement, the Company agreed to issue to ~~the Consultant~~Connectus, 625,000 warrants of the Company. Each warrant is exercisable at USD$0.04 ($0.~~055~~054) per share for a period of three years. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($~~324~~335,~~275~~675) raised in an offering, fully vesting upon USD$1,500,000 ($12,~~945~~014,~~650~~050) being raised. During the year ended March 31, 2015, the President of ~~the~~Connectus ~~Consultant~~ became a director of the Company. On December 31, 2015, the Company extended the contract to December 31, 2016. In consideration of the contract extension, the Company issued 93,000 common shares to Connectus, ~~Inc.~~ as compensation, which has been recorded as professional fees on the statements of operations during the year ended March 31, 2016. On December 27, 2016, the Company extended the contract and expiry date of the warrants to December 31, 2017 and Connectus assigned the warrants to Apollo Marketing, LLC. On January 23, 2017, the Company approved the vesting of 100,000 warrants of which 50,000 were exercised on March 21, 2017. This leaves a balance of 275,000 warrants remaining under the contract of which 50,000 were exercisable at March 31, 2017.

Included in accounts payable and accrued liabilities as at March 31, ~~2016~~2017 is $528,~~030~~125 (~~2015~~2016 - $52,030) owing to two directors who are also officers and significant shareholders of the Company for unpaid management fees. This balance is unsecured, non-interest bearing and due on demand.

Amounts receivable from a shareholder as at March 31, ~~2016~~2017 of $2117,~~064~~656 (~~2015~~2016 - $2921,~~967~~064) is owing from a shareholder, who is also a director and officer of the Company for funds advanced under his employment agreement. The amount receivable is unsecured, non-interest bearing and repayable upon demand.

~~During fiscal 2016 (and thereafter)~~Review, Approval ~~members of our management including our CEO, Richard Rusiniak, our President, Paul Ramsay, and P. Blair Mullin, one of our directors, have personally~~ or ~~through~~other ~~their~~transactions ~~companies~~with ~~have~~family ~~made payments to third parties on the Company's behalf, principally to consultants which have provided financial advisory services to the Company. In order to reimburse these~~ members of– ~~management~~loans, ~~the~~debt ~~Company committed in June 2016 to issue 125~~conversion,~~000~~ ~~restricted~~private ~~common shares to each of Messrs. Rusiniak and Ramsay~~placement, ~~and~~ratification ~~66,667 restricted common shares to Mr. Mullin in satisfaction~~ of atransactions with ~~$50,000~~related ~~payable recorded in the March 2016 financial statements.~~persons

Review, Approval or other transactions, transactions with family members – loans, debt conversion, private placement, ratification of transactions with related persons

We have adopted a Code of Business Ethics and Conduct and we rely on our board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company.

8793

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table shows the fees paid or accrued by us for the audit and other services provided by McGovern, Hurley, Cunningham, LLP for the fiscal periods shown.

	Fiscal Year Ended March 31, 2016		Fiscal Year Ended March 31, 2015
	Fiscal Year Ended March 31, 2017		Fiscal Year Ended March 31, 2016
Audit Fees	$	4573,~~500~~450	$	4145,~~000~~500
Audit Related Fees	$	0	$	0
Tax Fees	$	0	$	0
All Other Fees	$	~~8,600~~0	$	188,~~500~~600
Total	$	5473,~~100~~450	$	5954,~~500~~100

Audit fees

Audit fees consist of fees recorded for professional services rendered for the audit of the Company’s financial statements and services that are normally provided in connection with statutory and regulatory filings.

Audit-Related Fees

Audit-related fees are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not under “Audit Fees”.

Tax Fees

The Company does not engage its principal accountant to assist with the preparation or review of the Company’s annual tax filings. All other Fees

All other Fees

All other fees consist of fees recorded for professional services rendered for the Form S-1.

The Audit Committee has been recently constituted and will pre-approve all audit and non-audit services to be performed by the independent registered public accounting firm in accordance with the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended. The Board pre-approved 100% of the audit, audit-related and tax services performed by the independent registered public accounting firm for the fiscal year ended March 31, ~~2016~~2017 and ~~2015~~2016. The percentage of hours expended on the principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employee was 0%.

8894

PART IV

ITEM 15. EXHIBITS.

The following documents are filed as part of this Annual Report on Form 10-K:

Exhibits:

Exhibit No.		Description
3.1(a)		Articles of Incorporation (incorporated by reference from Exhibit 3.1(a) to our Registration Statement on Form S-1 filed on November 19, 2014).
3.1(b)		Articles of Amendment to Change the Corporation Name (incorporated by reference from Exhibit 3.1(b) to our Registration Statement on Form S-11filed ~~filed~~ on November 19, 2014).
3.1(c)		Articles of Amendment to Eliminate Share Transfer Restrictions and effect Reverse Stock Split (incorporated by reference to Exhibit 3.1(c) from our Registration Statement on Form S-1 filed on November 19, 2014).
4.1		Bylaws (incorporated by reference from Exhibit 3.2 to our Registration Statement on Form S-1 filed on November 19, 2014).
4.2		Specimen Stock certificate (incorporated by reference from Exhibit 4.1 to our Registration Statement on Form S-1 filed on November 19, 2014).
10.1		Employment Agreement with Richard Rusiniak (incorporated by reference from Exhibit 10.1 to our Registration Statement on Form S-1 filed on November 19, 2014).
10.2		Employment agreement with Paul Ramsay (incorporated by reference from Exhibit 10.2 to our Registration Statement on Form S-1 filed on November 19, 2014).
10.3		Employment Agreement with Ross Eastley (incorporated by reference from Exhibit 10.3 to our Registration Statement on Form S-1 filed on November 19, 2014).
10.4		Amendment to Employment Agreements with Richard Rusiniak, Paul Ramsay and Ross Eastley
10.5		Lease agreement dated October 29, 2013 with 2725312 Canada Inc. (incorporated by reference from Exhibit 10.4 to our Registration Statement on Form S-1 filed on November 19, 2014).
10.6(a)		Advisory Agreement with Connectus Inc. dated March 11, 2014, as amended (incorporated by reference from Exhibit 10.6(a) to our Registration Statement on Form S-1 filed on November 19, 2014).
10.6(b)		Amendment to Advisory Agreement with Connectus (incorporated by reference from Exhibit 10.6(b) to our Registration Statement on Form S-1 filed on November 19, 2014).
10.7(c)		First Tranche Warrant (initially with Connectus, assigned to Apollo Marketing LLC) (incorporated by reference from Exhibit 10.6(c)) to our Registration Statement on Form S-1 filed on November 19, 2014).
10.7(d)		Second Tranche warrant (initially with Connectus, assigned to Apollo Marketing LLC) (incorporated by reference from Exhibit 10.6(d) to our Registration Statement on Form S-1 filed on November 19, 2014).
10.9(a)		Stock Incentive Plan-2014 (incorporated by reference from Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on February 18, 2015).
10.9(b)		Nonqualified Share Option Agreement with Richard Rusiniak (incorporated by reference from Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on February 18, 2015).
10.9(b)		Nonqualified Share Option Agreement with Paul Ramsay (incorporated by reference from Exhibit 10.3 to our Quarterly Report on Form 10-Q filed on February 18, 2015).
10.9(c)		Nonqualified Share Option Agreement with Ross Eastley (incorporated by reference from Exhibit 10.4 to our Quarterly Report on Form 10-Q filed on February 18, 2015).
10.9(d)		Nonqualified Share Option Agreement with P. Blair Mullin (incorporated by reference from Exhibit 10.5 to our Quarterly Report on Form 10-Q filed on February 18, 2015).
10.9(e)		Nonqualified Share Option Agreement with W. Cameron McDonald (incorporated by reference from Exhibit 10.5 to our Quarterly Report on Form 10- Q filed on February 18, 2015).
10.10(b)		Nonqualified Share Option Agreement with Sandra Easley (incorporated by reference from Exhibit 10.7 to our Quarterly Report on Form 10-Q filed on February 18, 2015).
10.14		Consulting Agreement with Trademasterpro (incorporated by reference from Exhibit 10.14 to our Registration Statement on Form S-1 filed on August 22, 2016).
11.1		Code of Business of Business Ethics and Conduct Policy (incorporated by reference from Exhibit 11.1 to our year End Report on Form 10-K on June 19, 2015).
11.2		Equal Employment Opportunity Policy incorporated by reference from Exhibit 11.2 to our year End Report on Form 10-K on June 19, 2015).
11.3		Freedom from Harassment Policy incorporated by reference from Exhibit 11.3 to our year End Report on Form 10-K on June 19, 2015).
11.4		Substance Abuse Policy incorporated by reference from Exhibit 11.4 to our year End Report on Form 10-K on June 19, 2015).
11.5		Whistleblower Policy incorporated by reference from Exhibit 11.5 to our year End Report on Form 10-K on June 19, 2015).
12.1		Assignment Agreement with RY Capital and GHS Investments, LLC (incorporated by reference to Form 8-K filed June 28, 2016.)
12.2*		Extension of Connectus Agreement
12.3*		Consulting Agreement with Tradrerspresss.com
12.3		Consulting Agreement with Tradrerspresss.com
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*filed herewith.

8995

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ALGAE DYNAMICS CORP.
Date: July 5, 2016	By:	/s/ Richard Rusiniak
Date: August 14, 2017	By:	/s/ Richard Rusiniak
		Richard Rusiniak
		Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Paul Ramsay	President and Director	July 5, 2016
Paul Ramsay
/s/ Richard Rusiniak	Chief Executive Officer and	July 5, 2016
Richard Rusiniak
/s/ Ross Eastley	Chief Financial Officer and Director	July 5, 2016
Ross Eastley
/s/ Blair Mullin	Director	July 5, 2016
Blair Mullin
/s/ Cameron McDonald	Director	July 5, 2016
Cameron McDonald

Cameron McDonald

Signature	Title	Date

/s/ Paul Ramsay	President and Director	August 14, 2017
Paul Ramsay

/s/ Richard Rusiniak	Chief Executive Officer and	August 14, 2017
Richard Rusiniak

/s/ Ross Eastley	Chief Financial Officer and Director	August 14, 2017
Ross Eastley

/s/ Blair Mullin	Director	August 14, 2017
Blair Mullin

/s/ Cameron McDonald	Director	August 14, 2017
Cameron McDonald

Filing Compare · CanaQuest Medical Corp.