UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended August 31, ~~2018~~2019

[ ] 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 001-34911

NOTOX TECHNOLOGIES CORP.

(Exact name of registrant as specified in its charter)

Nevada		None
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

95 Mural Street, Suite 600 Richmond Hill, Ontario, Canada		L4B 3G2
(Address of principal executive offices)		(Zip Code)

(519) 421-1900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

~~N/A N/A~~ Title of each class Trading symbol(s) Name of each exchange on which registered N/A N/A N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 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 [ ] No [X]

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes [ ] No [ ]

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~is ~~filers~~a ~~pursuant~~large toaccelerated ~~Item~~filer, ~~405~~an ofaccelerated ~~Regulation~~filer, Sa non-Kaccelerated ~~(§229.405~~filer, ofa ~~this~~smaller ~~chapter) is not~~reporting ~~contained herein~~company, ~~and~~or ~~will~~an ~~not~~emerging begrowth ~~contained,~~company. toSee the ~~best~~definitions of ~~registrant’s~~“large ~~knowledge~~accelerated filer”, in“accelerated ~~definitive~~filer”, “smaller ~~proxy~~reporting orcompany” ~~information~~and ~~statements incorporated~~“emerging bygrowth ~~reference~~company” in ~~Part~~Rule ~~III~~12b-2 of ~~this~~the ~~Form~~Exchange ~~10-K or any amendment to this Form 10-K~~Act. ~~[X]~~

~~Indicate by~~Large ~~check mark whether the registrant is a large~~ accelerated filer, an[ ~~accelerated~~] ~~filer,~~Accelerated ~~a non-accelerated~~ filer, a[ ~~smaller~~] ~~reporting company, or an emerging growth company. See the definitions of “large~~ Non-accelerated filer,” ~~“accelerated~~[X] ~~filer”, “smaller~~Smaller reporting company” ~~and~~[X] ~~“emerging~~Emerging growth company” ~~in Rule 12b-2 of the Exchange Act.~~[X]

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

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

~~State~~Yes ~~the~~[ ] ~~aggregate~~No market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $14,312,401.70, based on 7,532,843 shares of common stock and a price of $1.90 per share[X]

~~Indicate~~State the ~~number~~aggregate market value of ~~shares~~the ~~outstanding~~voting ofand ~~each~~non-voting ofcommon equity held by non-affiliates computed by reference to the ~~registrant’s~~price at ~~classes~~which the common equity was last sold, or the average bid and asked price of such common ~~stock~~equity, as of the ~~latest~~last ~~practicable~~business ~~date.~~day 57of the registrant’s most recently completed second fiscal quarter. $20,~~545~~893,440, based on 7,625,343 asshares of ~~December~~common ~~14,~~stock and ~~2018~~a price of $2.74 per share

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 57,625,343 as of November 29, 2019

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K (this “Report”) contains forward-looking statements. The forward-looking statements are contained principally in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Report. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates”, “believes”, “seeks”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “would” and similar expressions intended to identify forward-looking statements. 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. Such statements may include, but are not limited to, information related to: anticipated operating results; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this Report. You should read this Report and the documents that we reference and file or furnish as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

PRESENTATION OF INFORMATION

Except as otherwise indicated by the context, references in this Report to “we”, “us” and “our” are to the combined business of Notox Technologies Corp. (formerly, Tropic International Inc.) and its consolidated subsidiaries. In this Report, the phrase the “Company” refers to Rockford Minerals Inc. prior to June 28, 2013.

This Report includes our audited consolidated financial statements as at and for the years ended August 31, ~~2018~~2019 and ~~2017~~2018. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All financial information in this Report is presented in Canadian dollars, unless otherwise indicated, and should be read in conjunction with our audited consolidated financial statements and the notes thereto included in this Report.

As disclosed in our current report on Form 8-K dated July 3, 2013, on June 28, 2013 (the “Closing Date”), we completed a share exchange with Tropic Spa Inc., an Ontario corporation (“Tropic Spa”), 1894632 Ontario Inc., an Ontario corporation (“Subco”), and certain of the shareholders of Tropic Spa (collectively, the “Tropic Spa Shareholders”), pursuant to which we acquired 78,030,877 common shares, or approximately 78% of the issued and outstanding shares, of Tropic Spa in exchange for the issuance of 78,030,877 preferred shares of Subco, our wholly owned subsidiary, to the Tropic Spa Shareholders on a one-for-one basis (the “Share Exchange”). Each preferred share of Subco is exchangeable into one share of our common stock at the option of the holder thereof, subject to certain restrictions. As a result of the Share Exchange, Tropic Spa became our majority-owned subsidiary and the former shareholders of Tropic Spa became holders of the preferred shares of Subco, a company that has only one issued and outstanding common share which is held by us. The transaction was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein Tropic Spa is considered the acquirer for accounting and financial reporting purposes. Our consolidated financial statements are therefore, in substance, those of Tropic Spa.

Also, as disclosed in our current report on Form 8-K dated July 14, 2016, on June 13, 2016 (the “Notox Closing Date”) we completed a share exchange with Notox Bioscience Inc., a Nevada corporation (“Notox”), and all the shareholders of Notox (collectively, the “Notox Shareholders”) pursuant to which we acquired all the issued and outstanding shares of Notox from the Notox Shareholders in exchange for the issuance of 100,000,000 restricted shares of our common stock to the Notox Shareholders on a 1,000-for-one basis (the “Notox Share Exchange”). In connection with the Notox Share Exchange, Notox acquired 100% of the right, title and interest in and to an exclusive license agreement dated December 1, 2012, as amended on July 30, 2013 (together, the “License Agreement”), with the Cleveland Clinic Foundation (the “Clinic”) held by Zoran Holding Corporation, a private Ontario corporation (“ZHC”), Notox became our wholly-owned subsidiary, and the Notox Shareholders acquired approximately 89% of our issued and outstanding common stock (52.5% on a fully-exchanged basis). The transaction represented an asset acquisition and was therefore accounted for under the asset acquisition method.

Finally, on August 25, 2016, we completed a reverse split of our issued and outstanding common stock at the ratio of one (1) new share for every two (2) existing shares and caused Subco to do the same. All share and per share amounts have been adjusted to reflect the reverse split except as otherwise indicated.

TABLE OF CONTENTS

PART I
Item 1. Business	4
Item 1.	Business	4
Item 1A. Risk Factors	18
Item 1A.	Risk Factors	16
Item 1B. Unresolved Staff Comments	18
Item 1B.	Unresolved Staff Comments	16
Item 2. Properties	18
Item 2.	Properties	16
Item 3. Legal Proceedings	18
Item 3.	Legal Proceedings	16
Item 4. Mine Safety Disclosures	18
Item 4.	Mine Safety Disclosures	16
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6. Selected Financial Data	21
Item 6.	Selected Financial Data	19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	26
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 8. Financial Statements and Supplementary Data	26
Item 8.	Financial Statements and Supplementary Data	24
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9A. Controls and Procedures	27
Item 9A.	Controls and Procedures	25
Item 9B. Other Information	27
Item 9B.	Other Information	25
PART III
Item 10. Directors, Executive Officers and Corporate Governance	28
Item 10.	Directors, Executive Officers and Corporate Governance	26
Item 11. Executive Compensation	31
Item 11.	Executive Compensation	29
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	32
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
Item 13. Certain Relationships and Related Transactions, and Director Independence	34
Item 13.	Certain Relationships and Related Transactions, and Director Independence	32
Item 14. Principal Accounting Fees and Services	36
Item 14.	Principal Accounting Fees and Services	34
PART IV
Item 15. Exhibits, Financial Statement Schedules	37
Item 15.	Exhibits, Financial Statement Schedules	35
SIGNATURES	39
Item 16.	Form 10-K Summary	35
SIGNATURES		36

PART I

Item 1. Business

Business Overview

We are a company in the business of developing and commercializing innovative technologies. Through Notox, we own 100% of the right, title and interest in and to the License Agreement with the Clinic formerly held by ZHC. The License Agreement grants us the exclusive license to certain patented intellectual property of the Clinic relating to the treatment of a neuromuscular defect developed by Dr. Frank Papay, MD, FACS Chairman Dermatology and Plastic Surgery Institute, Cleveland Clinic, and in particular, the ability to produce, sell, improve and modernize products that incorporate such intellectual property in the fields of aesthetics, drug free pain management, body contouring and perspiration control. We plan to develop this intellectual property into the world’s first credible and healthier non-toxic alternative to Botox, which is a commercial form of the botulinum toxin protein used primarily for medical and cosmetic purposes.

Through Tropic Spa, ~~our~~we ~~goal~~have isfinalized tothe ~~market~~design ~~unique~~of ~~commercial~~a personal tanning ~~systems~~product ~~designed~~and ~~primarily~~applied for ~~spas~~and acquired patents for it in the United States (the “US Patent”), ~~gyms~~Canada, Australia and ~~clinics,~~China. asThe ~~well~~product as consists of a ~~personal~~unique tanning ~~solution~~system designed for spas, gyms, clinics and convenient home use that delivers a full-body application and eliminates the harmful health effects associated with traditional tanning beds., ~~The~~and ~~primary~~in ~~effect~~particular, is exposure to ultraviolet (UV) radiation,. ~~and~~We ~~the consequences~~are ofcurrently ~~such~~seeking ~~exposure~~to ~~have been well-documented by numerous organizations, including the American Cancer Society and the~~establish ~~Canadian~~licensing ~~Cancer~~opportunities ~~Society.~~for ~~They~~Tropic ~~generally~~Spa’s ~~include~~intellectual anproperty, ~~increase~~but inhave ~~the~~not ~~risk~~entered ofinto ~~contracting~~any ~~both~~formal ~~melanoma~~arrangements ~~and non-melanoma skin cancers~~ as ~~well as structural damage to~~ of the ~~skin~~date ~~that can result in what dermatologists call “photoageing”, or premature wrinkles, freckles, leathery texture and a loss~~ of ~~elasticity~~this Report.

To date, we have finalized the design of our personal tanning product and applied for and acquired patents for it in the United States (the “US Patent”), Canada, Australia and China. We have also prepared our product for market, completed two phases of test marketing initiatives, and are currently exploring potential avenues for launching the product on a worldwide scale.

Our Corporate History and Background

We were incorporated as “Rockford Minerals Inc.” under the laws of the State of Nevada on October 29, 2007. From our inception until the closing of the Share Exchange, we sought to be a producer of gold and silver ore, and of other precious metals. On July 19, 2008, we acquired an undeveloped mining claim called the Rockford Lode Mining Claim located in Clark County, Nevada, for which we paid $12,000, including the cost of a geological report prepared by Sookochoff Consultants Inc. and Laurence Sookochoff, P. Eng., as a consulting geologist, for the purpose of recommending an exploration program. Due to lack of capital, we did not commence any phase of the exploration program recommended in the geological report.

On August 24, 2010, we filed a certificate of amendment with the Nevada Secretary of State to increase our authorized capital from 10,000,000 shares of common stock to 100,000,000, each with a par value of $0.001 per share. On April 17, 2013, we filed a certificate of amendment with the Nevada Secretary of State to increase our authorized capital from 100,000,000 shares of common stock to 300,000,000, each with a par value of $0.001 per share.

On June 24, 2013, we purchased one common share of Subco and one common share of 1894631 Ontario Inc., an Ontario corporation (“Callco”), from Gregory J. Neely, our former President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director. Both of these companies were incorporated on April 15, 2013 in anticipation of completing the Share Exchange, and became our wholly owned subsidiaries as a result of the share purchases.

Prior to the closing of the Share Exchange, we had not generated any revenue and our operations were primarily limited to capital formation, organization and development of our business plan. As a result of the Share Exchange, we ceased our prior operations and, through Tropic Spa, began to operate as a company that manufactures and sells home mist tanning units with a patent-protected feature.

In order to more accurately reflect our new business operations, on December 6, 2013, we changed our name from “Rockford Minerals Inc.” to “Tropic International Inc.” as a result of a merger with our wholly-owned subsidiary that was incorporated solely to effect the name change.

Tropic Spa was incorporated under the laws of the Province Ontario on September 17, 2007. Its operations to date have consisted of business formation, strategic development, test marketing, technology development and capital raising activities. Its website is www.tropicspatan.com.4

OnTropic Spa was incorporated under the laws of the Province Ontario on September 17, 2007. On April 11, 2013 and in anticipation of completing the Share Exchange, Tropic Spa completed a vertical amalgamation with 1893211 Ontario Inc., an Ontario corporation and its wholly owned subsidiary. The amalgamation was approved by the directors of each of Tropic Spa and 1893211 Ontario Inc., and was completed for the sole purpose of merging the two corporations and carrying on as one entity.

Acquisition of Tropic Spa

On the Closing Date, we entered into a share exchange agreement (the “Exchange Agreement”) with Subco, Tropic Spa and the Tropic Spa Shareholders pursuant to which we acquired approximately 78% of the outstanding capital stock of Tropic Spa in exchange for the issuance of 78,030,877 (39,015,439 post-split) preferred shares of Subco to the Tropic Spa Shareholders. The shares issued to the Tropic Spa Shareholders pursuant to the Share Exchange constituted 100% of Subco’s issued and outstanding preferred shares as of and immediately after the consummation of the Share Exchange. Each one preferred share of Subco (each, an “Exchangeable Share”) is exchangeable into one share of our common stock at the option of the holder thereof, subject to the following restrictions:

	●	the holders of such preferred shares may not, without the written consent of Subco, exchange, sell or otherwise dispose of, directly or indirectly, any of their preferred shares until the six month anniversary of the Closing Date;

	●	within 30 days of that time, and provided Tropic Spa has generated at least $1,000,000 in gross revenue during the preceding six month period, Subco shall permit the holders of such preferred shares to require Subco to redeem an aggregate of 1% of its then-outstanding preferred shares on a pro rata basis; and

	●	within 30 days of each six month anniversary of the Closing Date until June 30, 2015, on which date all restrictions on such preferred shares shall automatically expire unless extended by the approval of the holders thereof, Subco shall grant the holders of its preferred shares a permission identical to the one described above.

The foregoing restrictions do not apply to any exchange, sale or other disposition of the preferred shares of Subco by the holder thereof:

	●	to a person over which such holder exercises sole voting and investment control;

	●	upon such holder’s death by will or intestacy; or

	●	as a distribution solely to members, partners or stockholders of such holder, if the holder is a corporation, partnership or other organization.

The foregoing description of the preferred shares of Subco is qualified in its entirety by reference to the complete text of the rights, privileges, restrictions and conditions attached to such preferred shares (the “Exchangeable Share Provisions”), included as Appendix I to the Exchange Agreement filed as Exhibit 10.1 to our current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on July 3, 2013.

As a result of the Share Exchange, Tropic Spa became our majority-owned subsidiary and John Marmora, the sole officer and director of Tropic Spa, acquired the right to become our principal stockholder by exchanging the Exchangeable Shares he received on the Closing Date for shares of our common stock. The Share Exchange was accounted for as a reverse merger/recapitalization effected through a share exchange, with Tropic Spa as the accounting acquirer and the Company as the accounting acquiree. Unless the context suggests otherwise, when we refer in this Report to business and financial information for periods prior to the consummation of the Share Exchange, we are referring to the business and financial information of Tropic Spa.

In connection with the Share Exchange and on the Closing Date, Gregory J. Neely submitted his resignation as our President, Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer; John Marmora was appointed by our Board of Directors to fill the resulting vacancies; Mr. Marmora was appointed as our Chief Executive Officer and a director; Mr. Neely submitted his resignation as the President, Secretary, Treasurer and sole director of Subco and Callco, and Mr. Marmora was appointed to fill the resulting vacancies. On November 29, 2013, Mr. Neely also resigned as our director.

As a result of the Share Exchange, Tropic Spa became our majority-owned subsidiary and we assumed the business and operations of Tropic Spa.

As a condition of the closing of the Exchange Agreement, we also entered into the following agreements on the Closing Date:

	●	a Support Agreement with Subco and Callco (the “Support Agreement”); and

	●	a Voting and Exchange Trust Agreement with Subco, Callco and John Marmora (the “Trustee”), our new President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and director (the “Trust Agreement”).

The structure of the Share Exchange was determined largely based on the potential tax implications for the Tropic Spa shareholders of exchanging their common shares of Tropic Spa, an Ontario corporation, for shares of our common stock. Under s. 85(1) of the Income Tax Act (Canada), a tax-deferred “rollover” is not available where shares of a Canadian corporation are exchanged for shares of a United States corporation and, as a result, we created Subco, also an Ontario corporation, for the purpose of allowing those shareholders who elected to participate in the Share Exchange to do so on a tax-deferred “rollover” basis (i.e., by allowing them to defer any capital gain that would accrue upon the exchange of their common shares of Tropic Spa for shares of our common stock). This was achieved by issuing exchangeable preferred shares of Subco to the holders of Tropic Spa’s common shares on the Closing Date.

Callco, our wholly owned subsidiary, was formed solely for the purpose of avoiding a Canadian deemed dividend withholding tax payable on a dividend or other distribution of Subco to us to the extent that such a dividend or other distribution exceeds the paid-up capital of Subco. However, in order for this to take place Callco must become the holder of the one issued and outstanding common share of Subco that we currently hold, since it would then permit the dividend or other distribution to pass through Callco before being distributed to us.

On February 17, 2015, we entered into an amendment to the Exchange Agreement (the “Amendment Agreement”) with Subco, Tropic Spa and the Tropic Spa Shareholders in order to correct a few administrative errors in the Exchange Agreement and provide for the post-closing execution of the Exchange Agreement by those shareholders of Tropic Spa who were not original signatories thereto. The complete text of the Amendment Agreement is filed as Exhibit 10.2 to our current report on Form 8-K filed with the SEC on February 19, 2015.

Also on February 17, 2015, the Tropic Spa Shareholders approved certain changes to the rights, privileges, restrictions and conditions attached to the preferred shares of Subco described above by consent in writing. Of these, the only material change was the deletion of the “June 30, 2015” date in section 5(b) and its replacement with “June 30, 2017”.

On August 24, 2016 and pursuant to the Exchange Agreement, as amended, we acquired a further 21,672,623 common shares, or approximately 21.5% of the issued and outstanding shares, of Tropic Spa in exchange for the issuance of 21,672,623 (10,836,312 post-split) preferred shares of Subco to certain of the shareholders of Tropic Spa. As a result, we now own 99,703,500 common shares of Tropic Spa, or approximately 99.7% of that company’s issued and outstanding capital stock.

On February 22, 2017, the holders of 69.53% of the issued and outstanding preferred shares of Subco approved a change to the rights, privileges, restrictions and conditions attached to such shares by consent in writing in order to delete the “June 30, 2017” date in section 5(b) and replace it with “December 31, 2018”. This date represents the date on which all restrictions attached to the preferred shares will automatically expire unless extended by the approval of the holders thereof, and effectively meant that those shares could be exchanged into shares of our common stock for an additional 18 months, subject to certain limited exceptions.

On December 27, 2018, the holders of 68.91% of the issued and outstanding preferred shares of Subco approved a further extension to the “December 31, 2018” date referenced above to “December 31, 2020”.

Support Agreement

The Support Agreement provides and establishes a procedure whereby we are required to take certain actions and make certain payments and deliveries in connection with the satisfaction of the obligations of Callco and/or Subco under the Exchangeable Share Provisions. As described in the Exchangeable Share Provisions, Subco is required to deliver shares of our common stock to a holder of Exchangeable Shares upon the liquidation or insolvency of Subco, upon the redemption of Exchangeable Shares by Subco, and upon the exercise of the retraction or exchange right by such holder. The Exchangeable Share Provisions also require Subco to pay dividends on the Exchangeable Shares that are equivalent to any dividends that are paid on shares of our common stock.

The Support Agreement provides commercial certainty and is in the interests of the holders of Exchangeable Shares because it creates enforceable contractual rights of Subco against us so that in all relevant circumstances Subco is in a position to acquire the necessary shares of our common stock, and finance any dividend payments equivalent to dividends paid on shares of our common stock, in order to satisfy Subco’s obligations under the Exchangeable Share Provisions. In that respect, the Support Agreement includes certain covenants made by us, including that we will:

	●	not declare or pay a dividend on shares of our common stock unless Subco can simultaneously pay the same dividend on the Exchangeable Shares;

	●	ensure that Subco has a sufficient number of shares of our common stock in the event of the liquidation or insolvency of Subco to satisfy all retraction or exchange requests or redemptions of Exchangeable Shares; and

	●	as the sole holder of common shares of Subco, not cause Subco to be liquidated or dissolved.

In general, the Support Agreement ensures that the obligations of Subco are backstopped by covenants made by us or any successor to us. It will remain in effect until no Exchangeable Shares (or securities or rights convertible into or exchangeable for Exchangeable Shares) are held by any person other than us or any of our affiliates (in other words, until all the Exchangeable Shares have been exchanged into shares of our common stock).

Trust Agreement

The Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of our common stock are exercisable by the registered holders (the “Beneficiaries”) of the Exchangeable Shares, other than those Exchangeable Shares held by us or our affiliates, through the Trustee. The Trustee holds legal title to a special voting share (the “Special Voting Share”) to which voting rights are attached for the benefit of the Beneficiaries.

The Special Voting Share confers on the Trustee the number of votes equal to the number of outstanding Exchangeable Shares, other than Exchangeable Shares held by us or our affiliates, on all matters on which the holders of shares of our common stock are entitled to vote. Under the Trust Agreement, the Trustee is required to hold the Special Voting Share as trustee solely for the use and benefit of the Beneficiaries and has no power or authority to sell, transfer, vote or otherwise deal with the Special Voting Share.

The Trust Agreement provides a mechanism under which a Beneficiary may instruct the Trustee regarding how to vote the votes conferred by the Special Voting Share relating to such Beneficiary’s Exchangeable Shares. This mechanism ensures that Beneficiaries have a complete bundle of rights that collectively is equivalent to the rights each Beneficiary would have if it owned shares of our common stock directly, and is exercised by Beneficiaries providing written instructions to the Trustee following the mailing of any communications by us to the holders of our common stock as well as the holders of Exchangeable Shares.

For commercial reasons, it is in the interests of a holder of Exchangeable Shares to obtain additional protection with respect to its ability to exercise retraction or exchange rights in the event of the liquidation or insolvency of us or Subco. As a result, the Trust Agreement also grants such holders “insolvency put rights”, including the right to automatically exchange their Exchangeable Shares for shares of our common stock upon the occurrence of certain events.

The right of a Beneficiary to exercise any voting rights in respect of the Exchangeable Shares held by such Beneficiary will cease immediately upon the exercise of any exchange right, automatic exchange, retraction or redemption of Exchangeable Shares for shares of our common stock, or the liquidation, dissolution or winding-up of Subco.

The foregoing description of the Exchange Agreement, including the Support Agreement and the Trust Agreement, includes a summary of all the material provisions but is qualified in its entirety by reference to the complete text of the Exchange Agreement filed as Exhibit 10.1 to our current report on Form 8-K filed with the SEC on July 3, 2013.

Acquisition of Notox

On June 6, 2016, we entered into a share exchange agreement (the “Notox Exchange Agreement”) with Notox and the Notox Shareholders pursuant to which we agreed to acquire 100% of the outstanding capital stock of Notox in exchange for the issuance of 100,000,000 (50,000,000 post-split) restricted shares of our common stock to the Notox Shareholders. On the Notox Closing Date, the closing of the Notox Share Exchange Agreement occurred, at which time Notox acquired 100% of the right, title and interest in and to the License Agreement, we issued the 100,000,000 restricted shares described above to the Notox Shareholders, and Notox became our wholly owned subsidiary.

Pursuant to a stock restriction agreement dated as of the Notox Closing Date, the shares we issued to the Notox Shareholders are subject to restrictions similar to those attached to the preferred shares of Subco. In particular, the Notox Shareholders ~~may~~could not sell, transfer or otherwise dispose of their shares until June 30, 2017, subject to certain limited exceptions.

Notox was incorporated on May 31, 2016 for the primary purpose of acquiring an interest in and to the License Agreement. As such, the Notox Share Exchange represented an asset acquisition and was accounted for under the asset acquisition method.

In connection with the Notox Share Exchange and on the Notox Closing Date, John Marmora submitted his resignation as our Chief Executive Officer and Zoran Konević, the sole officer and director of both Notox and ZHC, and one of the Notox Shareholders, was appointed to fill the resulting vacancy. On the Closing Date, Mr. Konević was also appointed as our director.

As a result of the Notox Share Exchange, we are now a holding company operating through both Tropic Spa and Notox.

The foregoing description of the Notox Exchange Agreement includes a summary of all the material provisions but is qualified in its entirety by reference to the complete text of the Notox Exchange Agreement filed as Exhibit 10.3 to our current report on Form 8-K filed with the SEC on June 13, 2016.

Reverse Split

On August 25, 2016, we completed a reverse split of our issued and outstanding common stock at the ratio of one (1) new share for every two (2) existing shares and caused Subco to do the same.

RFTS Proposal

On February 20, 2017, ~~we caused~~ Notox toentered ~~enter~~ into a radio frequency treatment system (“RFTS”) proposal (the “Proposal”) with RBC Medical Innovations of Lenexa, Kansas (“RBC”) to develop the technology licensed by Notox. Under the Proposal, RBC is responsible for completing the design and production of the two main RTFS components, a generator console and a disposable treatment probe.

The material terms of the Proposal called for RBC to produce commercial-equivalent consoles and probes for use by Notox in human trials during the fourth quarter of 2017; test the consoles and probes for the purpose of providing technical data for ~~FDA~~Food and Drug Administration (“FDA”) Section 510(k) and CE marking submissions; and perform volume production of the components. In exchange for these services, Notox agreed to pay RBC according to a staged, fixed-fee approach that includes a $56,000 initial payment, to be followed by two similarly-sized payments prior to the completion of the planning stage. The cost to complete the second (design and testing) and third (manufacturing transfer) stages are expected to be considerably more expensive, with exact numbers to be confirmed only upon the conclusion of the previous stage. In general, however, we plan to budget $1,750,000 to bring the console to market, plus up to $800,000 in order to develop the probe in a process to be led by RBC.

Over the past 12 months and for a variety of reasons, we decided to postpone the development of the Notox technology under the Proposal; however, we plan to continue pursuing the technology’s development with RBC or another FDA-certified service provider during the current fiscal year.

Name Change

On October 9, 2018, the holders of a majority of our issued and outstanding common stock on a fully-converted basis approved the following corporate actions:

	●	a name change from Tropic International Inc. to Notox Technologies Corp. (the “Name Change”);

	●	an authorized capital increase from 300,000,000 shares of common stock, par value $0.001, to 500,000,000 shares of common stock, par value $0.001 (the “Authorized Capital Increase”); and

	●	an update to our existing bylaws by amending and restating them in their entirety to, among other things, reflect the Name Change (the “Bylaw Amendment”).

On November 19, 2018, we filed a Certificate of Amendment with the Nevada Secretary of State in order to effect the Name Change and Authorized Capital Increase. Generally speaking, the purpose of the Authorized Capital Increase was to reorganize our capital structure, which management believes will better position us to attract financing, while the purpose of the Bylaw Amendment was to modernize our bylaws and make them more comprehensive.

Products

Notox

The Notox product was designed to be a non-poisonous, less expensive, longer lasting alternative to Botox^®, which is a commercial form of the botulinum toxin protein manufactured by Allergan, Plc, a large publicly-traded pharmaceutical corporation, and used primarily for medical and cosmetic purposes. Notox is designed to achieve the same effects as Botox^® for cosmetic procedures, drug-free pain management, migraine and perspiration control, but at a healthier level.

Botulinum toxin is a neurotoxic protein that is most commonly associated with the disease botulism; however, there are actually seven types of the toxin, two of which are used commercially and medically to, among other things, treat muscle spasms and diseases characterized by overactive muscle. When locally administered, the toxin is capable of spreading from the injection site to other areas of the body, a potentially fatal consequence. Disclaimers for this and other negative side effects can be found on the packaging for Botox^® and seen/heard in Allergan’s advertisements for the product.

In cosmetic applications, botulinum toxin is generally considered safe and effective for reducing facial wrinkles; however, this may be due to the fact that the long-term effects of using the protein are not widely studied . It is injected into the muscles under wrinkles causing those muscles to relax, which results in the smoothing of the overlying skin. Following treatment, this smoothing is usually visible within days, is at its height after two weeks, and diminishes 3-4 months later as the treated muscles gradually regain function and return to their former appearance. Muscles can be treated repeatedly in order to maintain the smoothed appearance.

Notox is best understood as an electronic form of Botox^®, in that it is intended to generate the benefits of using the drug without introducing the potentially harmful side effects that toxic chemicals can produce. The Notox system consists of two parts: a treatment probe or needle, and a unit that includes a hand piece and a generator. The generator is responsible for creating an electric current that is administered through the hand piece along with a saline solution. The needle, which is also the patented feature of the system, is attached to the hand piece and is used to inject the electric current and saline solution into the targeted nerve of the treatment recipient.

The saline solution’s purpose is to assist with the accuracy of the current while simultaneously cooling the treatment area. The result is that the targeted nerve is ablated or incapacitated in much the same way as it would be by using Botox^®.

We anticipate that Notox will provide a number of advantages over its similarly-named competitor as follows:

● it will eliminate the potential morbidity and long-term effects of injecting botulinum toxin that an individual’s body must process and discard; ● treatments will be more precise and significantly less expensive; ● the effects of a Notox treatment will last much longer than a Botox® treatment – up to 12 months vs,. 3-4 months; and ● the probability of damaging the tissue surrounding the target area will be reduced.

The design of the treatment probe or needle is covered by U.S. Patent No. 8,512,715 “Apparatus and Method for Treating a Neuromuscular Defect” dated December 30, 2014. It is a continuation of U.S. Patent Application No. 12/541,221, filed on August 14, 2009, which claims priority from U.S. Provisional Patent Application No. 61/089,015, filed on August 14, 2008.

It is important to note that the Clinic has already conducted successful animal trials using an early Notox system prototype, the results of which were published in October 2013 edition of the Journal of Plastic and Reconstructive Surgery, Volume 132, Issue 4S-1, pp. 142-143. In addition, the Clinic has performed cadaver studies that generally demonstrated sensitive tissue would not be damaged using Notox.

During the second quarter of 2017, we completed further cadaver studies with the Clinic’s participation for the purpose of ensuring that our needle prototype would produce the desired effect around the human eyes and forehead. Those studies were led by Dr. Papay and carried out by some of the Clinic’s key experts in the field, and generally satisfied our expectations with regard to the product.

In a September 2016 report, Global Industry Analysts, Inc. (“GIA”) estimated that the worldwide market for botulinum toxin would reach US$4.3 billion by 2018. This represents less than 15% of the estimated $29 billion global market for cosmetic, plastic surgery and pain management solutions. In its report, GIA suggested that the market for botulinum toxin would be stimulated by the sustained dominance of existing options, technological advances, rising product approvals and the increasing popularity of anti-aging products. It is our goal to capture a piece of this market by completing the design, testing and manufacturing of the Notox unit and treatment probe, undertaking the necessary human trials and FDA Section 510(k) clearance process, and successfully commercializing the system.

During the third and fourth quarters of 2019, we successfully completed the design of the hand piece portion of the Notox unit. It was our intention to design a unique form that would differ from the existing ones in the aesthetic market, a sensitivity that stems from the fact that the hand piece is the only part of the Notox unit that is both visible to patients and physically held by administrators during the Notox procedure. The designed form of the hand piece is ergonomic and user-friendly for both short- and long-term use. We believe that the design is potentially patentable and will explore that possibility in the coming months.

Home Mist Tanning System

Our home mist tanning system ~~delivers~~is capable of delivering a full-body application in 12 seconds resulting in a tan that develops gradually over a period of five to eight hours and lasts from between five and eight days. The packages we ~~market~~previously ~~contain~~marketed contained everything an individual ~~needs~~ would need to complete 10 full-body tans in the comfort of their own home.

Our tanning system was designed for home use to provide users with a salon quality tan. It consists of an application unit, a tanning kit and a pre-tan kit. The tanning kit includes our proprietary tanning solution, which is a clear fluid with a slight yellow tinge that contains a blend of DHA or dihydroxyacetone (a chemical approved by the ~~Food and Drug Administration (the “~~FDA”) for use in the cosmetics industry), skin moisturizers and conditioners. DHA is a color additive that darkens the skin by reacting with amino acids in the skin’s surface. To be clear, ~~however,~~ the FDA’s approval of DHA is restricted to external applications only; the agency advises against inhaling, ingesting or applying DHA to the lips and eye areas; and the use of DHA in tanning booths, including misting devices, as an all-over spray has not been approved by the FDA since safety data to support its use has not been submitted to the agency for review and evaluation.

Our proprietary tanning solution is packaged into specially designed cosmetic bladders and housed in aerosol cans, which allows users to dispense it directly with no cross-contamination of propellant or any other material. In addition to six 2.6oz cans of the solution, the tanning kit contains a spray applicator and one touch-up can, while the pre-tan kit contains exfoliating wipes or gloves (selected by the user at the time of purchase), plastic head and foot covers and plastic protective gloves.

Our system may affect persons of different sizes in different manners since the amount of tanning solution dispensed from each of the unique, non-clogging mist nozzles on the unit cannot be user-adjusted. The nozzles are manufactured using a plastic injection molding process in order to ensure that they all perform in an identical fashion and are designed to emit a consistent amount of solution. As a result, during each tanning cycle the nozzles dispense a total of approximately 1.6oz of tanning solution from the cosmetic bladders. Due to this consistency, the recommend minimum and maximum user heights for our units are 4’5” and 6”, respectively. We have not made any provisions to accommodate users who fall outside of this height range, since we believe that such persons only represent an extremely small proportion of our potential customer base.

Our application unit has been engineered to apply our tanning solution evenly through unique, non-clogging mist nozzles and deliver a sufficient amount of the solution in 12 seconds to provide full body coverage. Over-spray is minimal or nonexistent, and the cordless design of the unit allows it to be used in multiple locations and deliver multiple applications on a single lithium ion battery charge. Each unit contains an internal counter that indicates when there is only enough tanning solution remaining to complete two tans, and consists of a simple design that allows for the easy removal and replacement of the solution.

Constructed of lightweight durable plastic in a neutral tone, the application units are visually appealing, compact in size and come fully assembled, requiring only a primary battery charge of approximately four hours to begin the tanning process. The units also include a unique adjustable hanger bracket that permits simple height adjustments and both visual cues and audible electronic tones that provide important information to users as follows:

	●	when the start/stop button on the unit is pushed, the light-emitting diode (LED) on the unit flashes the color blue for 10 seconds;

	●	if no further action is taken by a user during the 10-second period, the unit automatically powers down; however, if the user again pushes the start/stop button, the unit emits an audible beep signalling that the tanning spray will be activated in six seconds;

	●	at the end of the six seconds, the unit emits an “up-tone” sound and begins to mist;

	●	during the 12 second tanning cycle, the unit emits an audible beep every three seconds in order to orient the user and suggest that they rotate 90 degrees in each three-second period (for a total of 360 degrees in 12 seconds);

	●	following the fourth audible beep, the unit emits a “down-tone” to signal the conclusion of the tanning cycle; and

	●	finally, when the reset button is pushed, the unit emits an audible beep to signal that the unit’s tan count has been reset to 10 tans.

The lithium ion battery included with each application unit can be fully recharged in approximately eight hours once fully depleted through a conventional North American wall socket. The batteries are provided to us by an electronics supplier based in Toronto, Ontario, Canada, who acquires them from a manufacturer in China. We do not have an agreement in place with the supplier regarding the purchase and sale of specified quantities of batteries; instead, we purchase them on an as-needed basis using conventional means.

Our application unit has been certified by QPS Evaluation Services, Inc. (“QPS”), a nationally and internationally accredited third-party testing, certification and field evaluation body, under certificate number LR1209. This certification provides an increased assurance of quality and safety to consumers by demonstrating that the unit has been tested to and meets the requirements of applicable Canadian and Unites States standards, since QPS’s labels and marks are accepted as equals to those of the Canadian Standards Association and Underwriters Laboratories.

Because we are committed to supplying products of superior quality and design, we provide a limited one year warranty on our application units. If a unit stops operating due to defects in materials or workmanship during this time, we will either repair or replace it for free.

In addition to the application units, we also sell tanning solution kit refills that take less than five minutes to replace. Each tanning solution kit refill contains six 2.6oz cans, which is a sufficient amount of our proprietary solution to provide 10 full-body tans. To the best of our knowledge, empty cans of our tanning solution can be recycled in the same manner as conventional aerosol cans in all jurisdictions that offer recycling alternatives to conventional waste collection.

We currently sell our home mist tanning system for the base price of $300 and our tanning solution kit refills for $100, each plus applicable shipping and handling. The complete system also includes an operating manual, instructional DVD and simple power adapter.

Proposed Acquisition

On July 19, 2019, we entered into binding letter of intent (the “LOI”) with Xthetica Inc. (“Xthetica”), a private Ontario, Canada corporation, pursuant to which we agreed to acquire all of the issued and outstanding capital stock of Xthetica Inc. (“NewCo”), a newly incorporated Nevada corporation owned by the sole shareholder of Xthetica, from that shareholder in exchange for an aggregate of 10,000,000 restricted shares of our common stock and warrants to purchase 10,000,000 restricted shares of our common stock, in each case issuable over a period of three years.

~~Industry~~NewCo ~~Overview~~was recently formed for the purpose of acquiring 100% of the right, title and ~~Competition~~interest in and to certain assets owned by Xthetica (collectively, the “Assets”), including Xthetica’s rights and obligations under a series of distribution agreements with manufacturers of medical aesthetics products, access to all of Xthetica’s current inventory for the purpose of selling the same, and the goodwill of Xthetica. The effective date of the Asset acquisition is expected to be July 1, 2019.

~~There~~Pursuant ~~are~~to ~~currently~~the ~~many~~LOI, ~~products~~the onparties ~~the~~agreed ~~market~~to ~~geared~~work ~~towards~~together ~~providing~~to ~~users~~determine ~~with~~the aappropriate ~~sunless~~structure ~~tan.~~for ~~These~~the ~~include~~proposed ~~bronzers,~~transaction ~~gels,~~(the ~~foams~~“Transaction”), ~~and~~which ~~lotions,~~will ~~all~~be ofgoverned ~~which~~by ~~can~~a ~~vary~~definitive ~~dramatically~~agreement that set outs in ~~both~~full ~~quality~~the ~~and~~terms ~~price~~of the Transaction. ~~Based~~The ondefinitive ~~the~~agreement was ~~research~~expected weto ~~have~~be ~~conducted,~~executed iton isor ~~our belief~~before ~~that~~August ~~these~~15, ~~products~~2019, ~~can~~with bethe ~~quite~~closing ~~messy~~date ~~and~~of ~~often~~the ~~yield~~Transaction ~~unreliable~~no ~~results.~~later ~~Recently,~~than ~~airbrush~~30 days thereafter (or ~~spray~~such ~~tanning~~other ~~products for~~date ~~home~~as ~~use~~the ~~have~~parties ~~gained~~may aagree ~~foothold~~upon in ~~the~~writing). ~~market~~Due to a variety of circumstances, ~~but~~many ~~anecdotal~~of ~~evidence~~which ~~suggests~~were ~~that~~beyond ~~these~~our control, ~~products~~the ~~can~~definitive beagreement ~~tricky~~has tonot ~~apply evenly~~yet ~~and~~been ~~can~~executed; ~~discolor~~however, ~~and~~we ~~streak~~continue ~~the~~to ~~skin~~work ifdiligently ~~not~~with ~~used~~Xthetica ~~properly.~~and ~~There~~its ~~are~~sole shareholder ~~also~~to amove ~~small~~the ~~number~~Transaction offorward, ~~medical~~and ~~sunless~~in ~~tanning~~fact ~~alternatives~~advanced approximately $86, ~~but~~000 ~~the~~to ~~market~~Xthetica ~~for~~during ~~these~~the isfourth ~~extremely~~quarter of ~~limited~~our fiscal year.

~~Given~~The ~~the~~shares ~~uncertainty~~and ~~associated~~warrants ~~with~~issuable ~~applying~~by orthe ~~using~~Company ~~many sunless tanning products, consumers have gravitated~~ to the ~~salon~~sole orshareholder ~~spa in search~~ of ~~natural~~Xthetica ~~looking~~or ~~results.~~his ~~The~~assigns ~~most~~are ~~popular~~anticipated ~~method of obtaining a sunless tan at these establishments that doesn’t include exposure~~ to ~~harmful ultraviolet (UV) rays is through a spray tan. However, this is generally understood to~~ be aissued ~~costly~~as ~~pursuit, especially over the long term.~~follows:

~~A summary~~(a) of1,000,000 ~~the~~shares ~~various~~and ~~options~~1,000,000 iswarrants ~~provided~~on ~~below~~or before December 31, 2019; (b) 3,000,000 shares and 3,000,000 warrants on or before December 31, 2020; and (c) 6,000,000 shares and 6,000,000 warrants on or before December 31, 2021.

~~Bronzers~~Each share is expected to be issued at a deemed price per share equal to the value of our common stock on the OTCQB (or such other stock exchange or quotation medium on which the shares are then trading) on the date of issuance, while each warrant will be exercisable ~~Gels~~into one share of our common stock at a price of US$1.40 per share for a period of three (3) years from the date of issuance, subject ~~Foams~~to standard adjustments for stock splits, stock dividends and ~~Lotions~~the like.

~~Bronzers,~~The ~~gels,~~LOI ~~foams~~also ~~and~~requires ~~lotions~~us ~~generally~~to ~~cost~~cause ~~between~~a ~~$12~~new ~~and~~wholly ~~$65~~owned ~~per~~subsidiary ~~bottle.~~to ~~Apart~~enter ~~from~~into ~~bronzers,~~employment ~~each~~or ofconsulting ~~these~~agreements ~~products~~in ~~uses~~form ~~DHA~~and orsubstance ~~dihydroxyacetone~~acceptable ~~as an active ingredient in order~~ to ~~create~~Xthetica with a ~~reaction~~maximum ~~between~~of ~~the~~seven ~~product~~(7) ~~and~~individuals ~~dead~~recommended ~~skin cells~~ to ~~obtain~~us ~~darker looking~~by ~~skin~~Xthetica. In ~~our~~furtherance ~~opinion,~~of ~~bronzers,~~this ~~gels~~goal, ~~foam~~we incorporated ~~and~~Xthetica ~~lotions~~Canada ~~can~~Inc. ~~often~~(“Xthetica beCanada”), ~~difficult~~a toCanadian ~~apply~~federal ~~evenly~~corporation, ~~especially~~as inour ~~hard-to-reach~~wholly owned subsidiary ~~places,~~on asJuly ~~they~~7, ~~require~~2019. ~~users~~The toparticulars ~~apply~~of the ~~product~~employment ~~onto~~and ~~their~~consulting ~~body~~arrangements, ~~using~~including ~~their~~the ~~hands.~~compensation ~~They~~payable ~~frequently~~by ~~streak~~us ~~and discolor the~~(through ~~skin~~Xthetica ifCanada) ~~applied~~to ~~incorrectly~~the individuals, asare ~~well~~currently asbeing ~~leave~~negotiated ~~the~~in ~~hands~~good ~~and~~faith ~~nails~~by ofus, ~~users~~Xthetica ~~with~~and anthe ~~undesirable~~applicable ~~orange~~individuals, and ~~hue.~~the ~~Gloves~~LOI ~~can~~specifically ~~help~~grants ~~but~~ us the ~~products~~right ~~often stick~~ to ~~them~~solicit and ~~create~~engage anthose ~~uneven result~~persons.

~~Lotions~~The ~~can~~LOI ~~provide~~includes a ~~more~~number ~~satisfying~~of ~~application~~closing ~~than gels~~conditions, ~~but~~including ~~because~~the completion of ~~the~~satisfactory ~~moisturizing~~due ~~properties~~diligence, ~~often~~the ~~added~~completion toof ~~these~~the ~~products~~assignment ~~they~~of ~~can~~the ~~also~~Assets ~~clog~~by ~~pores~~Xthetica ~~which~~to ~~may~~NewCo ~~not~~or beXthetica ~~suitable~~Canada, ~~for~~and ~~users~~the ~~with~~satisfactory ~~sensitive~~review ~~skin~~by orthe ~~who~~parties ~~are~~of ~~acne-prone.~~the ~~Lotions~~tax ~~also~~and ~~take~~securities ~~a longer~~implications ~~time~~of tothe ~~dry and users must wear loose clothing until they have properly dried~~Transaction.

~~Bronzers~~Upon ~~are~~the ~~simply~~completion aof ~~short~~the ~~term~~Transaction, ~~solution for a glow. They exist in gel form but often consist~~ of awhich ~~powder~~there tois beno ~~applied~~guarantee, ~~with~~NewCo awill ~~makeup brush.~~become Ifour ~~applied~~wholly ~~incorrectly~~owned weoperating ~~believe that bronzers can look too dark and they also have the drawback of sometimes rubbing off on clothes~~subsidiary.

Prominent manufacturers of bronzers, gels, foams and lotions include Banana Boat, Jergens, Hawaiian Tropic and L’Oréal.

Medical Alternatives

There are two drugs available on the market related to sunless tanning. The first of these is canthaxanthin, a colorant commonly used as a food dye. Though the FDA and Heath Canada have approved canthaxanthin as a color additive in foods (see the FDA’s “More on Tanning Products” Safety and Regulatory Information page and Health Canada’s Natural Health Products Ingredients Database), it has not been approved for use as a sunless tanning pill since consumption of large amounts has been linked to liver injury and canthaxanthin retinopathy, a form of retina discoloration.

The second drug is called Melanotan II and is also known as the “Barbie drug”. Basically, it is an injectable that mimics melanin in skin. Although widely available, according to the Canadian Cancer Society both the FDA and Heath Canada have warned the public that the drug has not been tested and should be avoided until further research has been completed to test its possible side effects.

Home Use Airbrushing

Several options have been developed over time for home use airbrushing. Temptu manufactures a portable airbrushing unit that retails for US$305, with each refill costing US$45 per tanning pod. The unit was designed to tan only the face, but we believe many consumers also use it to tan their entire body. Based on our research, we understand that two tanning pods are required for such a tan, which would therefore cost a consumer $90 for one fully-body tan.

Luminess Tan is another manufacturer of airbrush tanning products. It sells a small portable unit for home tanning use that costs US$159 for a starter pack and US$32 for two 1.5oz bottle refills. In our opinion, the primary drawback of the Luminess Tan unit is that consumers need to have a steady hand to apply the product properly and may require a second person to apply it in hard-to-reach areas. We have also been informed that the company’s application wand may become clogged with frequent use.

St. Tropez, Model Co. and Victoria’s Secret, among others, have recently entered the growing “spray tan in a can” market. Their products come in mist form, but without experience we believe that consumers run the risk of leaving streaks from applying them incorrectly. It can also be difficult to access certain parts of the body with sprays, such as the back, and over-spraying can lead to an uneven tan. Users of these products must also keep the nozzle approximately six inches from their skin in order to maintain an even application. “Spray tan in a can” can cost anywhere from US$12 to US$40 per unit.

The SheerTan Sunless Tanning wand provides an attractive option for hard-to-reach areas such as the back. To use the product, consumers must insert the mist into the wand and then move the wand around their body. The wand is bulky and can therefore be challenging to manoeuvre, but the cost is appealing at US$40 for the starter set. However, the price of refills is comparable to others at US$50 for a set of four.

Home Use Spray Tanning

Similar to airbrushing, spray tanning provides consumers with the ability to tan their entire body without having to refill the machines quite as often. Despite our research and industry knowledge, we are not aware of any independent reports or market analysis focused on this specific segment of the sunless tanning market; however, to the best of our knowledge and belief there is only one spray machine available in the Canadian and United States home use market that is somewhat comparable to ours: the ShowerTan system manufactured by RNJ Enterprizes, LLC.

The ShowerTan system is a portable unit that must be used in the shower. The starter unit retails for US$345 and the refills are priced at US$45 for four single-use bottles. In order to use the system, consumers also need to purchase CO2 tanning cartridges at a cost of $23 for 10 cartridges and add both the tanning solution and cartridges to the unit. We believe that the use of CO2 cartridges poses a potential hazard to consumers, and we designed our home mist tanning system differently as a result. ShowerTan also offers bronzing drops to mix into its solution for tan customization purposes.

In our opinion and based on the market research we have conducted, the ShowerTan machine has an industrial feel, is rather bulky and is visually intimidating because of its complexity. In addition, the unit must be cleaned after each use, which adds to the time required to obtain consistent tanning results.

Salon Airbrushing and Spray Tanning

Spray tans and airbrush tans are similar; however, with an airbrush tan a salon or spa technician applies the tanning solution and with a spray tan the consumer enters a private booth and is then sprayed by a machine to obtain a natural looking tan. Although there is little room for error, spray tanning has proven to be consistent and produce reliable results. Unfortunately, the cost can be high as one session from a professional salon or spa generally ranges from $40-120 plus the cost of a touch-up kit. To maintain a tan, a consumer would need to repeat the process every five to 14 days depending on his or her skin and the extent of exfoliation prior to tanning. In urban centers, the cost of professional spray tan maintenance can add up to over $1,000 per year.

With salon airbrushing and spray tanning, privacy can also be an issue since more bashful consumers may be uncomfortable disrobing in a strange place to receive an application. Time must also be considered, as many salons require an appointment and consumers therefore need to plan ahead and organize their schedule. For salon-based sunless tanning alternatives, time and money are the most important factors to consider.

The market for sunless tanning products is highly competitive with respect to performance, quality and price. We anticipate that we will directly compete with those competitors whom we identified above, as well as with other local and regional manufacturers. We may also compete with artificial sunbed tanning establishments and manufacturers and suppliers of similar products and services; however, we do not consider these direct competitors because their processes involve exposing the skin to harmful ultraviolet (UV) rays.

In the future, we also may face further competition from new market entrants and possible alliances between existing competitors. Some of our competitors have, or may have, greater financial, marketing and other resources. As a result, competitors may be able to respond more quickly to new or emerging trends and changes in technology, benefit from greater purchasing economies, offer more aggressive pricing to customers or devote greater resources to the promotion of their products than we are capable of accomplishing. There can be no assurance that we will be able to successfully compete in the future with such competitors, and the failure to successfully compete could have an adverse effect on our operating results.

Marketing Plan

As described above, we currently compete with several companies offering a number of different sunless tanning products. We believe the opportunity exists for us to take advantage of the very broad sunless tanning market by emphasizing the benefits of our home mist tanning system in relation to the products offered by our competitors. In this respect, we plan to focus our marketing efforts on the following competitive advantages:

● the speed with which our system can provide a full-body tan application; ● the convenience of being able to use our system in the comfort of your home; ● the quality of our proprietary tanning solution; ● the evenness with which our application unit distributes the tanning solution; and ● the simplicity of the application unit’s design and its corresponding ease-of-use.

We have not yet begun to fully implement a marketing plan. However, we have completed two phases of test marketing: one in Canada and another in the United States. These are the countries in which we expect to concentrate our operations, and both phases involved the production and airing of a basic infomercial and a coordinated introductory social media campaign. We decided to undertake these initiatives for the primary purpose of collecting data about our target markets in anticipation of formally launching the product at a time and with the cost to be determined.

Suppliers

In addition to the supplier of our lithium ion batteries described in the “Products” section, above, we have developed relationships with two other companies that manufacture the plastic components of our application units and our proprietary tanning solution, respectively. Both of these manufacturers are located in the metropolitan area around Toronto, Ontario, Canada and, although we do not have formal supply agreements in place with them, we are able to purchase sufficient component quantities from them to fulfill demand for our products on an as-needed basis using conventional purchase orders.

Intellectual Property

License Agreement

As described elsewhere in this Report, on June 13, 2016 we completed the Notox Share Exchange and acquired 100% of the right, title and interest in and to the License Agreement with the Clinic formerly held by ZHC. The License Agreement grants us the exclusive license to certain intellectual property of the Clinic, including (i) U.S. Patent No. 8,920,816 “Apparatus and Method for Treating a Neuromuscular Defect” and associated foreign filings in various countries, (ii) improvement patents for which we elect in writing to include in the License Agreement, and (iii) foreign equivalents of any of the foregoing, and all patents issued therefrom and extensions of the same, including reissues and re-examinations. In addition, the License Agreement grants us the exclusive license to such proprietary information, trade secrets and tangible research property as is necessary to use the patent materials in the field of aesthetics and pain. Under the License Agreement, such information, secrets and property must (a) have been developed by Frank Papay, MD, (b) have been in existence as of December 1, 2012, (c) not be subject to the rights of any third parties or research sponsor restrictions, and (d) be owned by the Clinic.

The effective date of the License Agreement is December 1, 2012; on July 30, 2013 it was amended to incorporate a revised technology timeline, and it is valid until the expiration of the last to expire of certain patents. Pursuant to the License Agreement, we are required to pay the Clinic a royalty based on the sale of certain products, a milestone payment upon first commercial sale of the first such product and a percentage of any sublicensing revenues. In the month in which our cumulative gross revenues reach a specified amount, we must reimburse the Clinic for all incurred and to be incurred patent expenses to a specified amount. Royalties and other payments are payable quarterly.

On September 26, 2017, the License Agreement was amended a second time to, among other things: (i) clarify certain vague terms of the License Agreement; (ii) include us as a party for the purpose of guaranteeing the due and prompt payment and performance of all covenants, agreements, obligations and liabilities of Notox; (iii) record the Clinic’s explicit consent to the assignment from ZHC to Notox; (iv) extend the deadline for achieving the first commercial milestone (the submission of regulatory filings to applicable authorities) from November 30, 2017 to November 30, 2019; and (v) establish a second commercial milestone (the completion of at least one commercial sale within nine months of receiving regulatory approval). The effective date of the amendment was July 1, 2016.

Notox’s failure to achieve either of the foregoing milestones by the required dates, without satisfactory justification, will constitute a material breach of the License Agreement, as amended, giving the Clinic the right, but not the obligation, to convert the agreement to a non-exclusive license or terminate the agreement altogether. In addition, within 30 days of Notox’s receipt of initial regulatory approval, Notox is required to reimburse the Clinic for at least US$115,495 in patenting costs incurred as of July 1, 2016. All such costs incurred by the Clinic after that date will, at the Clinic’s option, either be paid directly by Notox or by the Clinic with the Clinic invoicing Notox, provided that Notox has no obligation to pay or reimburse the Clinic until after that regulatory approval has been obtained. Upon the termination or expiration of the License Agreement, all accrued and unreimbursed patenting costs become immediately due and payable by Notox to the Clinic. As of August 31, ~~2018~~2019, all accrued and unreimbursed patenting costs totalled $~~227~~264,~~707~~113 (US$~~174~~198,~~421~~640).

16We are currently working with the Clinic on completing an amendment to the License Agreement to extend the November 30, 2019 milestone deadline referenced above, and expect to finalize that no later than March 31, 2020.

Tanning System

Our home mist tanning system is currently protected by U.S. Patent No. 7,594,593, ~~Canadian~~which ~~Patent No. 2,685,941, Australian Patent No. 2012227220 and Chinese patent No. 2323059. A summary of those patents and patent applications~~ is ~~provided~~described below.

Type	Name	Region	Number	Date
Patent	Apparatus for Spray Application of a Sunless Tanning Product	United States	7,594,593	January 17, 2006 (Filed) / September 29, 2009 (Issued)
Patent	Apparatus for Spray Application of a Sunless Tanning Product	Canada	2,685,941	April 5, 2007 (Filed) / June 21, 2016 (Granted and Issued)
Patent	Automated Mist Tanning Apparatus	Australia	2012227220	September 24, 2012 (Filed) / October 16, 2014 (Granted)
Patent	Automated Mist Tanning Apparatus	China	2323059	February 1, 2013 (Filed) / December 28, 2016 (Granted)

Our United States Patent is a “utility patent”, which in general terms protects the way an article is used and works. A “design patent”, on the other hand, protects the way an article looks. Other primary distinguishing features between the two types of patents are as follows: the term of a “utility patent” is 20 years measured from the filing date, whereas the term of a “design patent” is 14 years measured from the grant date; the holder of a “utility patent” are required to pay maintenance fees whereas the holder of a “design patent” is not; and the holder of a “utility patent” is able to file an international application naming various countries under the Patent Cooperation Treaty (PCT), whereas the holder of a “design patent” is not.

We also ~~own~~previously ~~the~~held ~~copyright~~Canadian, inAustralian ~~the~~and ~~contents~~Chinese ofpatents ~~our~~regarding ~~website,~~ the ~~rights to the www.tropicspatan.com Internet domain name~~system, ~~and~~but wewere ~~guard the~~recently ~~composition~~informed ~~of our proprietary tanning solution as a trade secret. Other than~~ that, wethose ~~do not own any intellectual property~~patents ~~and~~had welapsed ~~have~~or ~~not filed for any protection of our trademark~~expired.

We also own the copyright in the contents of our website and we guard the composition of our proprietary tanning solution as a trade secret. Other than that, we do not own any intellectual property and we have not filed for any protection of our trademarks.

Employees

As of the date of this Report, we do not have any full time or part time employees. We currently rely on the efforts of ~~John~~Zoran ~~Marmora~~Konević and ~~Zoran~~John ~~Konević~~Marmora, our principal executive officers and directors, to manage our operations, as well as members of our informal advisory board and personnel at the Clinic to assist us in navigating certain technical and regulatory hurdles. In the future, we plan to hire workers on a contract basis from time to time as the need arises.

Government Regulations

Since we are only beginning to develop the intellectual property we acquired under the License Agreement, as amended, we do not believe that any government regulations will affect our operations in that regard until we are able to complete the design of the Notox unit and treatment probe.

~~Legislation~~In terms of our tanning system, legislation regarding sunless tanning in both the United States and Canada has consistently focused on the harm posed to consumers, and minors in particular, as a result of exposure to UV rays at indoor tanning facilities. Research indicates that high risk exposure happens more commonly in teens and that blistering sunburns and overexposure during childhood greatly increase the chances of developing skin cancer later in life. Because sun (and UV) exposure in childhood and the teenage years can be so damaging, policymakers in ~~some~~ many states and provinces have decided to regulate minors’ use of tanning devices (like tanning beds, booths and sunlamps). ~~Currently California~~Some counties and ~~Vermont~~cities ~~ban~~also ~~the~~regulate their use. ofIn ~~tanning~~addition, ~~beds~~most ~~for~~states ~~all~~and ~~minors~~provinces at ~~under~~least ~~18,~~require ~~and~~operators atof ~~least~~indoor 33tanning ~~states~~facilities ~~regulate~~to ~~the~~implement ~~use~~time oflimitations on tanning ~~facilities~~ bybeds ~~minors.~~to ~~Some~~the ~~counties~~manufacturer’s maximum ~~and~~exposure ~~cities~~recommendation ~~also~~and ~~regulate~~to ~~the~~provide ~~use~~eye ofprotection ~~tanning~~to ~~devices~~customers.

Legislators in various states and provinces are also currently debating bills that propose to ban indoor tanning for youth under the age of 18, and in some cases 14. Others have enacted laws that require in-person parental or guardian permission in order for a minor to use such facilities. Finally, most states and provinces at least require operators of indoor tanning facilities to implement time limitations on tanning beds to the manufacturer’s maximum exposure recommendation and to provide eye protection to customers.15

17The consequence of these regulations is that consumers are effectively being legislated away from using sunless tanning products or services that involve UV light exposure, leaving a gap in the market. The amount of negative publicity surrounding the laws has also contributed to a search by consumers for healthy tanning alternatives that provide consistent results.

~~The~~We ~~consequence~~are ofalso ~~these~~required ~~regulations~~to iscomply ~~that~~with ~~consumers~~environmental ~~are~~laws ~~effectively~~regarding ~~being~~the ~~legislated~~manufacturing ~~away~~of ~~from~~our ~~using~~proprietary ~~sunless~~ tanning ~~products~~solution. orHowever, ~~services~~we ~~that~~do ~~involve~~not UVanticipate ~~light~~incurring ~~exposure,~~any ~~leaving~~costs aor ~~gap~~effects inrelating ~~the~~to ~~market~~this ~~that~~since we are ~~aiming~~not tocurrently ~~fill.~~manufacturing ~~The~~the ~~amount~~solution ~~of negative publicity~~and ~~surrounding~~ the ~~new~~process ~~laws~~required ~~has also contributed~~ to aproduce ~~search~~the bysolution ~~consumers for healthy tanning alternatives that provide consistent~~ results, ~~and~~in weno ~~believe~~chemical ~~we are therefore well~~by-~~positioned~~products toand ~~capture~~minimal ~~a sizeable share of the rapidly-evolving sunless tanning market~~waste.

WeSince ~~are~~our ~~also~~proprietary ~~required~~tanning solution contains DHA, it is subject to ~~comply~~the ~~with~~United ~~environmental~~States ~~laws~~Federal ~~regarding~~Food, Drug, and Cosmetic Act (the ~~manufacturing~~“FD&C Act”) and the purview of ~~our~~the ~~proprietary~~FDA. ~~tanning~~Section ~~solution~~721 ~~and~~of the ~~recycling~~ FD&C Act authorizes the regulation of color additives, including their uses and restrictions, and DHA is listed in the ~~aerosol~~regulations ~~cans~~as ~~that~~a ~~contain~~color additive for use in imparting color to the ~~solution~~human body. However, weits dousage ~~not~~is ~~anticipate~~restricted ~~incurring~~to ~~any~~external ~~costs~~application, oras ~~effects~~is ~~relating~~its touse ~~either~~ by the FDA, since the ~~manufacturing~~FDA ~~process~~has ~~required~~not received safety data that would allow it to ~~produce~~consider ~~our~~approving ~~tanning~~DHA ~~solution~~for ~~results~~use inon noother ~~chemical~~exposure ~~by-products~~routes ~~and~~such ~~minimal~~as ~~waste~~the lips, the area of the eye or any ~~and~~body ~~our~~surface ~~customers~~covered ~~are~~by ~~responsible~~a ~~for~~mucous ~~recycling~~membrane. ~~the~~This ~~aerosol~~includes ~~cans~~the ~~through~~use ~~their~~of ~~local~~DHA ~~household~~through ~~recycling~~misting ~~program~~tanning devices.

In addition, since our proprietary tanning solution contains DHA, it is subject to the United States Federal Food, Drug, and Cosmetic Act (the “FD&C Act”) and the purview of the FDA. Section 721 of the FD&C Act authorizes the regulation of color additives, including their uses and restrictions, and DHA is listed in the regulations as a color additive for use in imparting color to the human body. However, its usage is restricted to external application, as is its use by the FDA, since the FDA has not received safety data that would allow it to consider approving DHA for use on other exposure routes such as the lips, the area of the eye or any body surface covered by a mucous membrane. This includes the use of DHA through misting tanning devices. Since it may be difficult for consumers to avoid exposure to DHA in a manner for which the chemical is not approved, we may receive requests by our customers to provide protection for their eyes and mucous membranes as part of any home mist tanning package, and we will consider such requests as the need arises.

Item 1A. Risk Factors

Not required.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Our executive office is located at 95 Mural Street, Suite 600, Richmond Hill, Ontario, Canada L4B 3G2. We ~~have~~currently ~~leased~~lease this space at a cost of approximately $~~21,000~~500 per ~~year~~month plus applicable taxes ~~since August 31, 2017~~.

We believe that this property is generally suitable to meet our needs for the foreseeable future; however, we will continue to seek additional space as needed to satisfy our growth.

Item 3. Legal Proceedings

We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers or any of our subsidiaries, threatened against or affecting us, our common stock, any of our subsidiaries or our officers or directors of those of our subsidiaries’ in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 4. Mine Safety Disclosures

Not applicable.

1816

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

General

As of the date of this Report, we have 57,~~545~~625,343 shares of common stock issued and outstanding ~~and outstanding warrants to purchase 635,000 shares of our common stock at prices ranging from US$0~~.80 ~~to US$1.40.~~ In addition, Subco has 50,601,750 preferred shares issued and outstanding, each of which is exchangeable into one share of our common stock in accordance with the rights, privileges, restrictions and conditions attached to such preferred shares.

We do not have any outstanding warrants, options or other securities convertible into shares of our common stock.

Market Information

Our common stock is not traded on any exchange; however, it is quoted on the ~~OTC Bulletin Board and~~ OTCQB under the symbol “NTOX”. ~~OTC~~ ~~Bulletin Board and~~ OTCQB securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, ~~OTC Bulletin Board and~~ OTCQB securities transactions are conducted through a telephone and computer network connecting dealers. ~~OTC Bulletin Board and~~ OTCQB issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

Trading in stocks quoted on the ~~OTC Bulletin Board and~~ OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. There is no assurance that there will be a market for our common stock in the future.

Our common stock became eligible for quotation on the OTC Bulletin Board on June 18, 2014 and the OTCQB on September 3, 2014. The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The high and low bid quotations of our common stock for the periods indicated below are as follows:

OTCQB
Quarter Ended	High (US$)		Low (US$)
August 31, 2019		4.50		2.70
May 31, 2019		2.74		2.74
February 28, 2019		5.00		1.98
November 30, 2018		2.00		1.98
August 31, 2018		2.00		2.00
May 31, 2018		2.60		1.45
February 28, 2018		1.90		1.50
November 30, 2017		2.00		0.60
August 31, 2017		2.60		0.55
May 31, 2017		2.60		2.60
February 28, 2017		2.60		2.60
November 30, 2016		2.60		1.25

Holders

As of the date of this Report, there are approximately 6062 holders of record of our common stock.

Dividends

The Exchangeable Share Provisions require Subco to pay dividends on the Exchangeable Shares that are equivalent to any dividends that we pay on shares of our common stock. The Support Agreement provides commercial certainty for the holders of Exchangeable Shares in this regard since it creates enforceable contractual rights of Subco against us so that in all relevant circumstances Subco is in a position to acquire the necessary shares of our common stock, and finance any dividend payments equivalent to dividends we decide to pay on shares of our common stock, in order to satisfy Subco’s obligations under the Exchangeable Share Provisions. The Support Agreement therefore includes, among other things, a covenant made by us that we will not declare or pay a dividend on shares of our common stock unless Subco can simultaneously pay the same dividend on the Exchangeable Shares.

We have not declared or paid any dividends on our common stock and, despite the language in the Exchangeable Share Provisions and the Support Agreement, we do not expect to declare or pay any such dividends for the foreseeable future. Any future decisions regarding dividends will be made by our Board of Directors. We currently intend to retain and use any future earnings for the development and expansion of our business. Our Board of Directors has complete discretion regarding the payment of dividends, and even if our Board of Directors decides to pay dividends, the form, frequency and amount will depend on our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant.

Penny Stock

Our common stock is subject to the provisions of Section 15(g) of the Exchange Act and Rule 15g-9 thereunder, commonly referred to as the “penny stock rule”. Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny stock to be any equity security that has a market price less than US$5.00 per share, subject to certain exceptions. We are subject to the SEC’s penny stock rules.

Since our common stock is deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice requirements on broker-dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited investors” are generally persons with assets in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 together with their spouse. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of securities and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document prepared by the SEC relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for penny stocks held in an account and information to the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealer to trade and/or maintain a market in our common stock and may affect the ability of our stockholders to sell their shares.

Securities Authorized for Issuance under Equity Compensation Plans

As of the date of this Report, we do not have any compensation plans under which our equity securities are authorized for issuance. We intend to adopt an equity compensation plan in which our directors, officers, employees and consultants will be eligible to participate. However, no formal steps have yet been taken to adopt such a plan.

2018

Recent Sales of Unregistered Securities

On ~~November~~July 273, ~~2018~~2019, we issued and sold 12an aggregate of 80,~~500~~000 shares of common stock to one non-U.S. investor ~~upon~~and ~~the~~one ~~exercise~~U.S. ~~of warrants at~~investor at a price of US$01.8000 per share in exchange for gross proceeds of US$1080,000.

~~The~~These shares were offered and sold in a private ~~transaction~~transactions in reliance upon the ~~exemption~~exemptions from registration provided by ~~Rule~~Section ~~903 of~~4(a)(2) ~~Regulation~~of ~~S promulgated under~~ the Securities Act of 1933, as amended (the “Securities Act”), and Rule 903 of Regulation S promulgated under the Securities Act. Our reliance on ~~Rule~~Section 4(a)(2) was based on the fact that there was only one U.S. investor and the issuance was an isolated private transaction by us which did not involve a public offering. Our reliance on Rule 903 of Regulation S was based on the fact that the non-U.S. investor was not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S, that the investor acquired the ~~units~~securities for investment purposes for ~~his~~its own ~~respective~~ account and not as a nominee or agent, and not with a view to the resale or distribution thereof, and that the investor understood that the ~~shares~~ securities may not be sold or otherwise disposed of without registration under the Securities Act and any applicable state securities laws, or an applicable exemption or exemptions therefrom.

Other than as described above or as disclosed in previous quarterly reports on Form 10-Q or current reports on Form 8-K, we did not issue any equity securities that were not registered under the Securities Act during the fiscal year ended August 31, ~~2018~~2019.

Purchases of Equity Securities by the Issuer and “Affiliated Purchasers”

We did not purchase any shares of our common stock or other securities during the year ended August 31, ~~2018~~2019.

Item 6. Selected Financial Data

Not required.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our results of operations and financial condition has been derived from and should be read in conjunction with our audited consolidated financial statements and the related notes thereto that appear elsewhere in this Report, as well as Item 1 and the “Presentation of Information” section that appears at the beginning of this Report.

Overview

We are a company in the business of developing and commercializing innovative technologies. Through Notox, we own 100% of the right, title and interest in and to the License Agreement with the Clinic formerly held by ZHC, and through Tropic Spa, ~~our~~we ~~goal~~are ~~is to~~seeking ~~market~~to ~~unique~~establish ~~commercial~~licensing ~~tanning~~opportunities ~~systems designed primarily~~ for ~~spas,~~certain ~~gyms~~intellectual ~~and~~property ~~clinics,~~associated aswith ~~well as~~ a personal tanning ~~solution designed for convenient home use~~system. To date, we have finalized the design of our personal tanning product and applied for and acquired patents in the United States, Canada, Australia and China. We have also prepared our product for market, completed two phases of test marketing initiatives, and are currently exploring potential avenues for launching the product on a worldwide scale.

Results of Operations

Revenue

We did not generate any revenue during the years ended August 31, ~~2018~~2019 or ~~2017~~2018.

Production Costs

During the year ended August 31, ~~2018~~2019, we incurred production costs of $~~216~~219,~~617~~537, which was equal to our gross loss for the period. During the year ended August 31, ~~2017~~2018, we incurred production costs of $1216,~~064~~617,~~118,~~ which was also equal to our gross loss for the period. Our production costs during both years were attributable to a combination of amortization of the License Agreement ($187,466 in each year), ~~production-related~~patenting ~~consulting~~costs ~~fees~~ ($232,~~820~~071 in the current year vs. $2721,~~700~~201 in the prior year), ~~depreciation~~production-related consulting fees ($~~5,129~~Nil in the current year vs. $82,~~550~~820 in the prior year), ~~patenting~~depreciation ~~costs~~ ($~~21,201~~Nil in the current year vs. $~~197~~5,~~765~~129 in the prior year) and a writedown of inventory ($1Nil in the current year vs. $~~122,101~~1 in the prior year). In addition, during the prior year we incurred $376,423 in amortization related to the US Patent, $143,153 in design and production costs attributable to the Proposal and $960 in materials and supplies.

2119

Expenses

During the year ended August 31, ~~2018~~2019, we incurred $~~803~~753,~~456~~472 in total general and administrative expenses, compared to $~~615~~803,~~208~~ 456 in such expenses during the year ended August 31, ~~2017~~2018.

Our expenses during the year ended August 31, ~~2018~~2019, consisted of $~~384~~338,~~829~~429 in management-related consulting fees, $~~167~~209,~~123~~596 in ~~interest~~ interest on the license assignment fee payable to ZKC, $~~105~~108,~~744~~591 in professional fees, $~~25,918 in rent, $~~24,~~016~~655 in trust and filing fees, $1213,~~407~~ 202 in ~~office and miscellaneous expenses~~rent, $1012,~~549~~059 in interest on advances from related parties/shareholders, $68,~~331~~166 in ~~travel~~ office and ~~entertainment~~miscellaneous expenses, and $12,~~653~~ 790 in ~~patent~~travel ~~maintenance fees~~ and ~~$447~~entertainment ~~in marketing~~ expenses, plus a foreign exchange loss of $6435,~~439~~984.

During the prior year, our expenses included $~~507~~384,~~004~~829 in management-related consulting fees, $82167,~~873~~123 in ~~professional~~interest ~~fees,~~on ~~$23,000~~the inlicense assignment ~~travel~~fee ~~and~~payable ~~entertainment~~to ~~expenses~~ZKC, $22105,~~056~~744 in ~~office~~professional ~~and~~fees, ~~miscellaneous~~$25,918 ~~expenses~~in rent, $1324,~~367~~016 in trust and filing fees, $12,~~950~~854 in office and miscellaneous ~~rent~~expenses, $1110,~~351~~549 in interest on advances from related parties/shareholders, $76,~~666~~331 in ~~patent~~travel ~~maintenance~~and ~~fees,~~entertainment ~~$2,248 in marketing~~ expenses and $~~732~~ 1,653 in ~~investor~~patent ~~relations~~maintenance ~~expenses~~fees, asplus ~~offset by~~ a ~~$68,039~~ foreign exchange ~~gain~~loss of $64,439.

Apart from the $~~122~~46,~~175~~400 decrease in our management-related consulting fees between the two years, the $~~167~~42,~~123~~473 increase in interest on the license assignment fee we accrued during the current year, and the change in our foreign exchange gain~~/loss~~, our expenses were ~~relatively~~ relatively consistent from year-to-year.

The significant management-related consulting fees we incurred over both years were paid to our principal executive officers and one consultant (during a portion of the prior year only) who provided management-related services to us and is also a major shareholder.

Other Items

During the year ended August 31, ~~2018~~2019, we incurred a $4920,~~755~~749 writedown of ~~amounts~~sales tax receivable and agenerated $296,~~068~~972 ~~loss on the disposal of equipment, which was partially offset by a recovery of inventory written down~~ in ~~the~~other ~~amount of $1,996~~income. During the same year, we also incurred a $~~286~~351,~~075~~741 gain on the revaluation of warrants to purchase shares of our common stock, most of which was associated with the expiry of certain of the warrants.

During the prior year, we incurred a ~~patent~~$49,755 writedown inof ~~the~~sales ~~amount~~tax ofreceivable and a $329,~~381,362~~068 ~~associated~~loss ~~with~~on the ~~U.S.,~~disposal ~~Australian~~of equipment, ~~Canadian and~~which ~~Chinese~~was ~~patents,~~partially asoffset ~~well~~by as a ~~$20,332~~recovery ~~writedown~~ of ~~amounts~~inventory ~~receivable.~~written ~~These~~down ~~were~~in ~~offset~~the toamount ~~some~~of ~~extent~~$1,996. byWe also incurred a $9286,~~333~~075 gain ~~associated with~~on the revaluation of ~~certain then-outstanding~~ warrants to purchase shares of our common stock, most of which was again associated with the expiry of certain of the warrants.

Net Loss

During the year ended August 31, ~~2018~~2019, we incurred a net loss and comprehensive loss of $~~810~~635,~~825~~045 and a net loss per shares of $0.01. During the prior year, we experienced a net loss and comprehensive loss of $5810,~~071,687,~~825 ~~approximately 2/3 of which was attributable to the patent writedown described above,~~ and a net loss per share of $0.0901.

Liquidity and Capital Resources

As of August 31, ~~2018~~2019, we had $514,~~664~~843 in cash, $~~102~~136,~~013~~593 in current assets, $1,~~226~~160,~~816~~449 in total assets, $3,~~305~~731,~~974~~708 in current liabilities, $3,~~533~~987,~~681~~469 in total liabilities and a working capital deficiency of $3,~~203~~586,~~961~~763. As of that date, we also had an accumulated deficit of $1112,~~783~~418,~~486~~531.

During the year ended August 31, ~~2018~~2019, we spent $~~112~~154,~~045~~860 in net cash on operating activities, compared to $~~592~~109,~~051~~494 in net cash spending on operating activities during the prior year. The ~~81%~~increase ~~decrease~~ in our cash spending on operating activities during the fiscal year ended August 31, ~~2018~~2019 was primarily attributable to certain changes in our assets and liabilities during ~~our~~the ~~most recently completed fiscal~~ year, the most significant of which ~~by far~~ was the $~~507~~389,~~090~~876 increase in our accounts payable and accrued liabilities from year-to-year.

We spent $nil and $665,878 in cash on investing activities during the years ended August 31, 2018 and 2017, respectively. Substantially the entire amount in the prior year was attributable to the License Agreement.20

~~During~~We ~~the~~spent ~~year ended August 31, 2018, we received~~ $54153,~~565~~519 in net cash ~~from~~on ~~financing~~investing activities, ~~including~~during ~~$51,000 in advances from related parties/shareholders and $10,000 in stock subscriptions, less $6,435 in stock issue costs. During~~ the ~~prior~~ year, weended ~~received $1~~August 31,~~176,355~~ ~~cash from financing activities~~2019, including $~~838~~86,~~674~~519 in ~~stock~~advances ~~subscriptions~~to Xthetica and $~~395~~67,~~580~~000 in ~~proceeds~~net ~~from~~payments on the ~~issuance of~~license ~~our~~assignment ~~common~~fee ~~stock,~~payable ~~less~~to ~~$19,899~~ZKC. inWe ~~stock~~did ~~issue~~not ~~costs~~spend ~~and~~any ~~$38,000~~net incash ~~advances~~on ~~that~~investing weactivities during ~~repaid~~the toprior ~~related parties and shareholders~~year.

During the year ended August 31, ~~2018~~2019, ~~our~~we received $317,558 in net cash ~~decreased~~from byfinancing activities, including $57251,~~480~~692 ~~due~~in stock tosubscriptions aand ~~combination~~$114,890 in proceeds from the issuance of our ~~operating~~common stock, less $49,024 in advances that we repaid to related parties and shareholders. During the prior year, we received $52,014 in net cash from financing activities, including $51,000 in advances from related parties/shareholders and $10,000 in stock subscriptions, less $6,435 in stock issue costs and $2,551 in proceeds from the exercise of warrants.

During the year ended August 31, 2019, our cash increased by $9,179 due to a combination of our operating, investing and financing activities.

Plan of Operations

Our plan of operations over the next 12 months is to continue the process initiated by ZHC to design, manufacture and commercialize the Notox system and its features. We expect to work closely with the Clinic in this regard, and anticipate that we will require at least US$45,~~675~~025,000 to carry out our plan, as follows:

Description	Amount (US$)
Design, testing and prototyping the Notox unit (including $111,200 in milestone payments to RBC)		600,000
Design, testing and prototyping the Notox treatment probe		1,400,000
Acquisition costs payable to ZHC		~~450~~800,000
Human trial expenses		950,000
FDA Section 510(k) notification costs and CE marking expenses		750,000
Marketing and inventory expenses		525,000
Total		45,~~675~~025,000

In addition, over the next 12 months our plan of operations through Tropic Spa is to create licensing opportunities for Tropic Spa’s intellectual property, and in particular, its US, Canadian, Australian and Chinese patents. We plan to target existing and highly-recognized brands in the tanning industry, both locally and internationally, that may be drawn to Tropic Spa’s technology in order to better serve their existing customers and enhance their competitive advantage. We do not anticipate spending any specific amounts for this purpose, as the creation of such opportunities will be covered by our general and administrative expenses described below.

We expect to incur the following general and administrative expenses over the next 12 months. These expenses are reasonably consistent with those from prior periods, as adjusted to reflect the expected increase in our operations and the costs of maintaining our status as a public company.

Description	Amount ($)
Professional fees and filing fees		120,000
Management-related consulting fees		333,000
Rent (including utilities)		30,000
Travel and entertainment expenses		25,000
Office and miscellaneous expenses		25,000
Total		533,000

We do not currently have sufficient funds to carry out our entire plan of operations, so we intend to meet the balance of our cash requirements for the next 12 months through a combination of debt financing and equity financing through private placements. Currently we are active in contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements; however, we do not currently have any agreements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings. If we are unsuccessful in obtaining sufficient funds through our capital raising efforts, we may review other financing options, although we cannot provide any assurance that any such options will be available to us or on terms reasonably acceptable to us. Further, if we are unable to secure any additional financing then we plan to reduce the amount that we spend on our operations, including management-related consulting fees and other general and administrative expenses, so as not to exceed the capital resources available to us.

Critical Accounting Policies

Intangible Assets

Patents

The US Patent is recorded at the value attributed to the shares issued by Tropic Spa in connection with its acquisition less accumulated amortization and impairment writedowns. The US Patent was issued on September 29, 2009 and is effective until September 29, 2026. The Australian, Canadian and Chinese Patents are recorded at the application costs incurred less accumulated amortization and impairment writedowns. The Australian Patent was issued on October 16, 2014 and is effective until April 5, 2027. The Canadian Patent was issued on June 21, 2016 and is effective until April 5, 2027. The Chinese Patent was issued on December 28, 2016 and is effective until February 1, 2033. Upon expiration, the patents can be extended subject to certain changes required to secure the extension. Although the effects of obsolescence, demand, competition and other economic factors (such as stability of the industry, technological advances and legislative action that results in an uncertain or changing regulatory environment) can have an adverse effect on the industry and saleability of patented products, management is not currently aware of any known adverse factors that will affect the patents in the future.

Costs incurred for patents which are in the process of being completed will be amortized over the life of the patent when the patent is issued.

At the time that the patents were issued, we did not believe that there were any limits to how long the Home Mist Tanning units could sell in the ~~market place~~marketplace. Accordingly, management had determined that the best estimate of the useful lives of the US, Australian, Canadian and Chinese Patents were 17, 13, 11 and 16 years, respectively. AtDuring ~~this~~the ~~time~~year ended August 31, we2017 domanagement was not ~~believe~~in ~~that~~a position to be able to estimate the future cash flows attributable to the patents ~~will have~~with aany ~~residual~~degree ~~value~~of atcertainty. Accordingly, the ~~end~~patents ofwere ~~their~~written ~~useful~~down ~~lives~~to a nominal amount of $4.

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

The technology licensed by Notox is a platform that provides us access to four large market segments or verticals (derma, pain, body and headache) that include the fields of aesthetics, drug-free pain management, body contouring and perspiration control. Based on management’s experience, it takes approximately two years to fully develop each vertical, with each vertical being developed in sequence. Accordingly, management’s best estimate of the amortization period for the License Agreement is eight years.

Amortization and Impairment

Definite-lived intangible assets are required to be amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or utilized. Management was not able to determine with any amount of certainty the number of Home Mist Tanning units that would be sold over the useful lives of the patents. Accordingly, the patents were being amortized on a straight-line basis over the period of their useful lives. The License Agreement is being amortized over eight years based on management’s best estimate of the time required to develop the four verticals as explained above.

Intangible assets subject to amortization are required to be reviewed for impairment. An impairment loss must be recognized if the intangible asset’s carrying amount is not recoverable and the carrying amount exceeds fair value. We apply the following three-step process to identify, recognize and measure impairment of intangible assets:

	●	Consider whether indicators of impairment are present indicating that the intangible assets’ carrying amount might not be recoverable;
	●	If indicators are present, perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the intangible assets to their carrying amounts; and
	●	If the undiscounted cash flows used in the recoverability test are less than the intangible assets’ carrying amount, determine the intangible assets’ fair value and recognize an impairment loss if the carrying amount exceeds fair value.

Because of the unique nature of a patent and a license agreement, income-producing definite-lived intangible assets, the calculation of cash flows can be very difficult to estimate. In this case, the estimated cash flows reflect the direct revenue expected to be generated by the License Agreement as well as an allocation of expenses.

Foreign Currency

Our functional currency and the functional currency of our subsidiaries is the Canadian dollar. Our consolidated financial statements are presented in Canadian dollars.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the loss in the period in which they arise.

Stock Purchase Warrants

When we undertake a private placement, we may issue units comprised of our common stock and warrants to acquire our common stock. Warrants with a strike price denominated in our functional currency (the Canadian dollar) are considered to be indexed to our stock and are classified as equity. Warrants with a strike price denominated in a currency other than our functional currency are considered not to be indexed to our stock and are classified as a liability. Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. Warrants classified as a liability are initially measured at fair value with changes in fair value recorded in profit or loss in each reporting period.

Off-Balance Sheet Arrangements

We do not have any 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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 8. Financial Statements and Supplementary Data

Notox Technologies Corp.

Consolidated Financial Statements

Year Ended August 31, ~~2018~~2019

(Expressed in Canadian dollars)

	Index

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets	F-2

Consolidated Statements of Loss and Comprehensive Loss	F-3

Consolidated Statements of Cash Flows	F-4

Consolidated Statement of Stockholders’ Equity	F-5

Notes to the Consolidated Financial Statements	F-6

2624

~~REPORT~~Report OFof ~~INDEPENDENT~~Independent ~~REGISTERED~~Registered ~~PUBLIC~~Public ~~ACCOUNTING~~Accounting ~~FIRM~~Firm

To the ~~Stockholders~~Shareholders and ~~the Board of~~ Directors of ~~Notox Technologies Corp. (formerly Tropic International Inc.)~~

~~Opinion~~Notox onTechnologies ~~the Financial Statements~~Corp.

WeOpinion ~~have~~on ~~audited~~ the ~~accompanying~~Consolidated ~~consolidated~~Financial balance sheets of Notox Technologies Corp. (formerly Tropic International Inc.) (the “Company”) as of August 31, 2018 and 2017, the related consolidated statements of loss and comprehensive loss, stockholders’ equity (deficiency) and cash flows for each of the three years in the period ended August 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2018, in conformity with U.S. generally accepted accounting principles.Statements

We have audited the accompanying consolidated balance sheet of Notox Technologies Corp. (the “Company”), as of August 31, 2019, and the related consolidated statements of loss and comprehensive loss, cash flows and stockholders’ deficiency for the year ended August 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Notox Technologies Corp. as of August 31, 2019, and the results of its operations and its cash flows for the year ended August 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has ~~had~~suffered arecurring ~~deficit~~losses ~~since~~from ~~inception~~operations and has ~~working~~a net capital ~~and~~deficiency ~~stockholders’ deficiencies~~ that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over ~~financial~~ financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material ~~misstatement~~misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting ~~principles~~ principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~CHARTERED~~We ~~PROFESSIONAL~~have ~~ACCOUNTANTS~~served as the Company’s auditor since 2019.

We“DAVIDSON ~~have~~& ~~served~~COMPANY ~~as the Company’s auditor since 2010.~~LLP”

Vancouver, Canada Chartered Professional Accountants

~~December~~November 1229, ~~2018~~2019

F-1

NOTOX TECHNOLOGIES CORP. ~~(FORMERLY TROPIC INTERNATIONAL INC.)~~

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN CANADIAN DOLLARS)

	August 31, 2018			August 31, 2017
	August 31, 2019			August 31, 2018
ASSETS
Current assets:
Cash	$	514,~~664~~843		$	635,~~144~~664
Amounts receivable		726,~~301~~584			~~84,290~~6
Inventory (Note 8)		—			1
Sales tax receivable		94,726			72,295
Prepaid expenses		2420,~~048~~440			2824,~~624~~048
Total current assets		~~102~~136,~~013~~593			~~176~~102,~~059~~013
Equipment, net (Note 7)		—			34,197
Advances – Xthetica (Note 15)		86,519			—
Patents, net (Note 8)		4			4
Patents, net		4			4
License agreement, net (Notes 3 and 9)		1,124,799			1,312,265
License agreement, net (Note 4)		937,333			1,124,799
Total assets	$	1,~~226~~160,~~816~~449		$	1,~~522~~226,~~525~~816
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities:
Accounts payable and accrued liabilities (Notes 10 and 11)	$	1,582,691		$	1,075,601
Accounts payable and accrued liabilities (Note 5)	$	1,972,567		$	1,582,691
Advances from related parties/shareholders (Notes 11 and 12)		477,509			415,960
Advances from related parties/shareholders (Notes 6 and 7)		444,760			477,509
License assignment fee and accrued interest payable (Notes 3 and 13)		882,257			683,212
License assignment fee and accrued interest payable (Note 8)		1,042,561			882,257
Stock purchase warrants (Notes 4 and 15)		353,517			297,378
Stock purchase warrants (Note 10)		1,776			353,517
Stock subscribed (Note 15)		10,000			838,674
Stock subscribed in advance (Note 10)		261,692			10,000
Total current liabilities		3,~~305~~723,~~974~~356			3,~~310~~305,~~825~~974
Due to the Clinic (Note 3)		227,707			197,765
Due to the Clinic (Note 4)		264,113			227,707
		3,533,681			3,508,590
		3,987,469			3,533,681
Stockholders’ deficiency (Note 15):
Stockholders’ deficiency (Note 10):
Common stock		1,~~018~~133,~~256~~146			~~526~~1,~~182~~018,256
Additional paid-in capital		8,458,365			8,~~460~~458,~~414~~365
Deficit		(11,783,486	)		(10,972,661	)
Accumulated Deficit		(12,418,531	)		(11,783,486	)
Total stockholders’ deficiency		(2,~~306~~827,~~865~~020	)		(12,~~986~~306,~~065~~865	)
Total liabilities and stockholders’ deficiency	$	1,~~226~~160,~~816~~449		$	1,~~522~~226,~~525~~816

Contingent liability (Note 1914)

Subsequent event (Note 15)

See accompanying notes to the consolidated financial statements.

F-2

NOTOX TECHNOLOGIES CORP. ~~(FORMERLY TROPIC INTERNATIONAL INC.)~~

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(EXPRESSED IN CANADIAN DOLLARS)

	Years Ended August 31,
	For the Year Ended August 31,
	2018			2017			2016
	2019			2018
Revenue:
Sales	$	—		$	—		$	~~863~~
Production costs:
Amortization – license agreement (Note 9)		187,466			187,466			—
Amortization – license agreement (Note 4)		187,466			187,466
Amortization – patent (Note 8)		—			376,423			374,228
Consulting fees – production		—			2,820
Consulting fees – production		2,820			27,700			31,200
Depreciation		—			5,129
Depreciation (Note 7)		5,129			8,550			10,687
Patenting costs – the Clinic		32,071			21,201
Design and production – NRFTS		—			143,153			—
Write-down of inventory		—			1
Materials and supplies		—			960			10,071
Total production costs		219,537			216,617
Patenting costs – the Clinic (Note 3)		21,201			197,765			—
Gross loss		(219,537	)		(216,617	)
Writedown of inventory (Note 8)		1			122,101			365
General and administration:
Total production costs		216,617			1,064,118			426,551
Consulting fees – management (Note 6)		338,429			384,829
Gross loss		(216,617	)		(1,064,118	)		(425,688	)
Interest on advances from related parties/shareholders (Notes 6 and 7)		12,059			10,549
General and administration:
Interest on license assignment fee payable (Note 8)		209,596			167,123
Consulting fees – management (Note 11)		384,829			507,004			422,706
Loss on foreign exchange		35,984			64,439
Interest on advances from related parties/shareholders (Notes 11 and 12)		10,549			11,351			12,434
Office and miscellaneous		8,166			12,854
Interest on license assignment fee payable (Note 13)		167,123			—			—
Patent maintenance fees		—			1,653
Investor relations		—			732			—
Professional fees		108,591			105,744
Loss (gain) on foreign exchange		64,439			(68,039	)		3,558
Rent		13,202			25,918
Marketing		447			2,248			9,007
Travel and entertainment		2,790			6,331
Office and miscellaneous		12,407			22,056			21,934
Trust and filing fees		24,655			24,016
Patent maintenance fees		1,653			7,666			—
Total general and administration		753,472			803,456
Professional fees		105,744			82,873			81,929
Loss before other items and income taxes		(973,009	)		(1,020,073	)
Rent		25,918			12,950			13,200
Other items:
Travel and entertainment		6,331			23,000			12,417
Other income		6,972			—
Trust and filing fees		24,016			13,367			20,627
Gain on revaluation of derivative liabilities (Note 10)		351,741			286,075
Total general and administration		803,456			615,208			597,812
Write-down of receivables		(20,749	)		(49,755	)
Loss before other items and income taxes		(1,020,073	)		(1,679,326	)		(1,023,500	)
Loss on disposal of equipment		—			(29,068	)
Other items:
Recovery of inventory written down		—			1,996
Gain on revaluation of warrants		286,075			9,333			—
Loss before income taxes		(635,045	)		(810,825	)
Writedown of amounts receivable		(49,755	)		(20,332	)		—
Income taxes (Note 13)		—			—
Loss on disposal of equipment (Note 7)		(29,068	)		—			—
Loss and comprehensive loss	$	(635,045	)		(810,825	)
Recovery of inventory written down		1,996			—			—
Loss per share – basic and diluted	$	(0.01	)	$	(0.01	)
Writedown of patents (Note 8)		—			(3,381,362	)		(6,793	)
Weighted-average number of shares outstanding – basic and diluted		57,563,463			57,520,185
Loss before income taxes		(810,825	)		(5,071,687	)		(1,030,293	)
Income taxes		—			—			—
Net loss and comprehensive loss	$	(810,825	)	$	(5,071,687	)	$	(1,030,293	)
Net loss per share – basic and diluted (Note 5)	$	(0.01	)	$	(0.09	)	$	(0.06	)
Weighted-average number of shares outstanding		57,520,185			56,606,971			16,924,423

See accompanying notes to the consolidated financial statements.

F-3

NOTOX TECHNOLOGIES CORP. ~~(FORMERLY TROPIC INTERNATIONAL INC.)~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN CANADIAN DOLLARS)

	Years Ended August 31,
	For the Year Ended August 31,
	2018			2017			2016
	2019			2018
Cash Flows Used In Operating Activities
Cash Flows From Operating Activities
Net loss	$	(810,825	)	$	(5,071,687	)	$	(1,030,293	)
Loss	$	(635,045	)	$	(810,825	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization – license agreement		187,466			187,466			—
Amortization - license agreement		187,466			187,466
Amortization – patent		—			376,423			374,228
Depreciation		—			5,129
Depreciation		5,129			8,550			10,687
Unrealized foreign exchange on advances from related parties/shareholders		4,216			—
Unrealized foreign exchange on license assignment fee payable		2817,~~285~~708			—31,922			—
Unrealized foreign exchange on license assignment fee payable interest payable		3,637			—			—
Unrealized foreign exchange and expense on due to Clinic		4,335			8,741
Unrealized foreign exchange on due to the Clinic		8,741			—			—
Write-down of inventory		—			1
Writedown of amounts receivable		49,755			20,332			—
Write-down of receivables		20,749			49,755
Writedown of inventory		1			122,101			365
Interest accrued on advances from related parties/shareholders		12,059			10,549
Loss on disposal of equipment		29,068			—
Interest accrued on license assignment fee payable		209,596			167,123
Writedown of patents		—			3,381,362			6,793
Write-off of equipment		—			29,068
Gain on revaluation of warrants		(286,075	)		(9,333	)		—
Gain on revaluation of derivative liabilities		(351,741	)		(283,524	)
Changes in assets and liabilities:
Amounts receivable		(376,~~766~~578	)		(~~28,884~~6	)		~~(72,057~~	)
Inventory		—			216			8,019
Sales tax receivable		(43,180	)		(37,760	)
Prepaid expenses		43,~~576~~608			~~(25~~4,~~324~~576	)		—
Accounts payable and accrued liabilities		~~507~~389,~~090~~876			~~237~~507,~~611~~090			~~520,658~~
Due to the Clinic		2132,~~201~~071			~~197~~21,~~765~~201			—
Interest accrued on advances from related parties/shareholders		10,549			11,351			12,434
Net cash used in operating activities		(154,860	)		(109,494	)
Interest accrued on license assignment fee payable		167,123			—			—
Cash Flows From Investing Activities
Net cash used in operating activities		(112,045	)		(592,051	)		(169,166	)
Advances to Xthetica		(86,519	)		—
Cash Flows Used In Investing Activities
Payments on license assignment fee, net		(67,000	)		—
Patent costs		—			(2,090	)		(14,949	)
Net cash used in investing activities		(153,519	)		—
License agreement		—			(663,788	)		—
Cash Flows From Financing Activities
Cash transferred upon acquisition of Notox		—			—			131
Proceeds from private placements		104,890			—
Net cash used in investing activities		—			(665,878	)		(14,818	)
Stock issue costs		—			(6,435	)
Cash Flows Provided By Financing Activities
Stock subscribed in advance		261,692			10,000
Proceeds from issuance of common stock		—			395,580			—
Advances from related parties/shareholders, net		(49,024	)		51,000
Stock issue costs		(6,435	)		(19,899	)		—
Proceeds from exercise of warrant		—			(2,551	)
Stock subscriptions received		10,000			838,674			315,366
Net cash provided by financing activities		317,558			52,014
Advances from related parties/shareholders		51,000			—			5,000
Increase in cash during the year		9,179			(57,480	)
Repayment of advances from related parties/shareholders		—			(38,000	)		—
Cash, beginning of year		5,664			63,144
Net cash provided by financing activities		54,565			1,176,355			320,366
Cash, end of year	$	14,843		$	5,664
Increase (decrease) in cash during the year		(57,480	)		(81,574	)		136,382
Supplementary Cash Flow Information:
Cash, beginning of year		63,144			144,718			8,336
Interest paid		—			—
Cash, end of year	$	5,664		$	63,144		$	144,718
Taxes paid	$	—		$	—

Supplementary Information:

On November 2, 2016, the Company issued 15,000 finder’s stock purchase warrants valued at $8,742. See Note 15.

On November 23, 2016, the Company incurred a license assignment fee payable in the amount of $1,347,000 (US$1,000,000) relating to the acquisition of the License Agreement from ZHC. See Note 3.

The gross proceeds of $838,674 relating to the stock issued on September 21, 2017 were reported as stock subscribed at August 31, 2017. See Note 15.

On September 7, 2017, the Company issued 5,000 finder’s stock purchase warrants valued at $2,581. See Note 15.

See accompanying notes to the consolidated financial statements.

F-4

NOTOX TECHNOLOGIES CORP. ~~(FORMERLY TROPIC INTERNATIONAL INC.)~~

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ ~~EQUITY (~~DEFICIENCY)

(EXPRESSED IN CANADIAN DOLLARS)

	Common Stock								Additional						Total stockholders’
	* Common Stock		Amount			Stock subscribed			paid-in capital			Deficit			equity (deficiency)
Balance at August 31, 2015		6,132,073	$	12,612		$	30,000		$	8,431,728		$	(4,870,681	)	$	3,603,659
Stock subscribed		—		—			315,366			—			—			315,366
Stock issued for asset acquisition (Note 3)		50,000,000		127,920			—			—			—			127,920
Net loss		—		—			—			—			(1,030,293	)		(1,030,293	)
Balance at August 31, 2016		56,132,073		140,532			345,366			8,431,728			(5,900,974	)		3,016,652
Stock issued for cash		760,770		414,291			(345,366	)		28,686			—			97,611
Stock issue costs – cash		—		(19,899	)		—			—			—			(19,899	)
Stock issue costs – finder’s warrants		—		(8,742	)		—			—			—			(8,742	)
Net loss		—		—			—			—			(5,071,687	)		(5,071,687	)
Balance at August 31, 2017		56,892,843		526,182			—			8,460,414			(10,972,661	)		(1,986,065	)
Stock issued for cash		630,000		491,041			—			—			—			491,041
Stock issue costs – cash		—		(6,435	)		—			—			—			(6,435	)
Stock issue costs – finder’s warrants		—		(2,581	)		—			—			—			(2,581	)
Warrants exercised		10,000		10,049			—			(2,049	)		—			8,000
Net loss		—		—			—			—			(810,825	)		(810,825	)
Balance at August 31, 2018		57,532,843	$	1,018,256		$	—		$	8,458,365		$	(11,783,486	)	$	(2,306,865	)

(UNAUDITED)

* The above presentation reflects a 1:2 reverse split of the Company’s common stock on August 25, 2016. See Note 15.

	Common Stock					Additional paid-in						Total stockholders’
	Share		Amount			capital			Deficit			deficiency
Balance at August 31, 2017		56,892,843	$	526,182		$	8,460,414		$	(10,972,661	)	$	(1,986,065	)
Stock issued for cash		630,000		491,041			—			—			491,041
Stock issue costs – cash		—		(6,435	)		—			—			(6,435	)
Stock issue costs – finder’s warrants		—		(2,581	)		—			—			(2,581	)
Warrants exercised		10,000		10,049			(2,049	)		—			8,000
Loss		—		—			—			(810,825	)		(810,825	)
Balance at August 31, 2018		57,532,843	$	1,018,256		$	8,458,365		$	(11,783,486	)	$	(2,306,865	)
Shares issued for warrants exercised in the prior year		12,500		10,000			—			—			10,000
Stock issued for cash		80,000		104,890			—			—			104,890
Loss		—		—			—			(635,045	)		(635,045	)
Balance at August 31, 2019		57,625,343	$	1,133,146		$	8,458,365		$	(12,418,531	)	$	(2,827,020	)

See accompanying notes to the consolidated financial statements.

F-5

NOTOX TECHNOLOGIES CORP. ~~(FORMERLY TROPIC INTERNATIONAL INC.)~~

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

1. Company Overview ~~and~~for ~~Basis~~the ofYear ~~Presentation~~Ended August 31, 2019

Nature and History of Operations

Notox Technologies Corp. (~~formerly Tropic International Inc.) (~~the “Company”) was incorporated under the laws of the state of Nevada on October 29, 2007. The Company has transitioned into developing, commercializing and promoting its patented Notox aesthetic and drug free pain management platform. The Company’s ~~was~~goals are to market a ~~natural~~credible, ~~resource~~non-toxic ~~exploration~~alternative ~~company~~to ~~with~~Botox anand ~~objective~~subsequently develop other features of ~~acquiring~~its Notox technology such as drug-free pain management, ~~exploring and~~body countering, ifskin ~~warranted~~tightening and ~~feasible,~~anti-perspiration. ~~developing~~In ~~natural~~addition, the ~~resource~~Company ~~properties.~~is ~~Activities~~seeking ~~during~~to ~~the~~build ~~exploration~~its ~~stage~~distribution ~~included~~capabilities ~~developing the~~for ~~business~~other ~~plan~~medical and ~~raising~~aesthetic ~~capital~~products around the world.

On June 2813, ~~2013~~2016, the Company completed aan ~~reverse~~asset ~~takeover~~acquisition transaction ~~(see Note 2)~~ with ~~Tropic~~Notox ~~Spa~~Bioscience Inc. (“~~TSI~~Notox”), a ~~company~~private ~~that~~Nevada ~~manufactures~~corporation ~~and~~incorporated ~~sells~~on ~~Home~~May ~~Mist~~31, ~~Tanning~~2016 ~~units~~for ~~that~~the ~~deliver~~purpose aof ~~full-body~~acquiring ~~application.~~100% ~~As a result~~ of ~~this~~the ~~transaction~~right, ~~the Company~~title ~~became~~and ainterest ~~holding~~in ~~company~~and ~~operating~~to ~~through~~an exclusive ~~TSI.~~license ~~Upon the closing of the share exchange~~ agreement ~~described below,~~ (the ~~Company~~ ~~changed~~“License ~~its~~Agreement”) ~~fiscal~~with ~~year~~The ~~end~~Cleveland ~~from~~Clinic ~~October~~Foundation ~~31 to August 31 to coincide with~~ (the ~~fiscal~~“Clinic”), an ~~year~~Ohio ~~end~~not-for-profit ~~of TSI~~corporation.

On December 627, ~~2013,~~2018 the ~~Company~~expiration ~~changed~~date ~~its~~for ~~name~~the topreferred ~~Tropic~~shares ~~International Inc. as a result~~ of a1894632 ~~merger~~Ontario ~~with~~Inc. a(“Subco”), ~~wholly-owned~~was ~~subsidiary~~extended to ~~incorporated~~December ~~solely~~31, to2020. ~~effect~~The ~~the~~initial ~~name~~expiration ~~change.~~date Onwas ~~November~~part ~~19,~~of ~~2018,~~amendment to the ~~Company~~initial ~~again~~Exchange ~~changed~~Agreement ~~its~~signed ~~name~~on toFebruary ~~Notox Technologies~~17, ~~Corp~~2015. ~~See Note 20.~~

OnGoing ~~September 3, 2014, the Company’s shares became eligible for quotation on the OTCQB under the symbol TRPO.~~Concern

OnAs ~~June~~reflected ~~13,~~in ~~2016~~the accompanying consolidated financial statements, the Company ~~completed~~has ana ~~asset~~deficit ~~acquisition~~of ~~transaction~~$12,418,531 (~~see~~August ~~Note~~31, 32018 - $11,783,486) ~~with~~since ~~Notox~~inception, ~~Bioscience~~a ~~Inc.~~working capital deficiency of $3,586,763 (~~“Notox”)~~August 31, a ~~private~~2018 ~~Nevada~~- ~~corporation~~$3,203,961) ~~incorporated~~and ona ~~May~~stockholders’ deficiency of $2,827,020 (August 31, ~~2016~~2018 ~~for~~- ~~the~~$2,306,865). ~~purpose~~This ofraises ~~acquiring~~substantial ~~100%~~doubt about its ability to continue as a going concern. The ability of the ~~right,~~Company ~~title~~to ~~and~~continue ~~interest~~as ~~in and~~a going concern is dependent on its ability to anraise ~~exclusive~~additional ~~license~~capital and ~~agreement~~to ~~(the~~implement ~~“License~~its ~~Agreement”)~~business ~~with~~plan. The ~~Cleveland~~accompanying ~~Clinic~~consolidated ~~Foundation~~financial ~~(the~~statements ~~“Clinic”), an~~do ~~Ohio~~ not~~-for-profit~~ ~~corporation.~~include Asany aadjustments ~~result~~that ofmight be ~~this~~necessary ~~transaction,~~if the Company is aunable ~~holding~~to ~~company~~continue ~~operating~~as ~~through~~a ~~both~~going ~~TSI and Notox~~concern.

On November 19, 2007, TSI obtained the rights to the Home Mist Tanning system and the application for and acquisition of a United States Patent “Apparatus for Spray Application of a Sunless Tanning Product” (the “US Patent”). As of March 11, 2013, the total value assigned to the carrying value of the US Patent was $6,342,279.

On October 16, 2014, the Company, through TSI, obtained an Australian patent (the “Australian Patent”), incurring application costs of $4,976. On June 21, 2016, the Company, through TSI, obtained a Canadian patent (the “Canadian Patent”), incurring application costs of $17,406. On December 28, 2016, the Company, through TSI, obtained a Chinese patent (the “Chinese Patent”), incurring application costs of $5,806. Costs incurred are recorded as intangible assets. On August 31, 2017, the net carrying amount of the patents was written down to a nominal amount of $4 (see Note 8).

As reflected in the accompanying consolidated financial statements, the Company has a deficit of $11,783,486 (August 31, 2017 - $10,972,661) since inception, a working capital deficiency of $3,203,961 (August 31, 2017 - $3,134,766) and a stockholders’ deficiency of $2,306,865 (August 31, 2017 - $1,986,065). This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to raise additional capital and to implement its business plan. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management has evaluated the Company’s ability to continue as a going concern by assessing its ability to meet its obligations as they become due within one year from the date of issue of the financial statements. Management’s assessment included the following factors:

● The Company’s financial condition as at the date of issue of the financial statements; ● The Company’s actual or anticipated conditional and unconditional obligations due within one year from the date of issue of the financial statements; ● The funds necessary to maintain the Company’s operations considering its current financial condition, obligations and other expected cash flows; and ● Other conditions and events that may affect the Company’s ability to meet its obligations within one year from the date of issue of the financial statements.

The Company’s CEO and President have committed to providing financing if and when necessary to fund the operating expenses for the year ended August 31, 2020.

Basis of presentation and measurement

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in Canadian Dollars (“CAD”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position have been reflected herein.

The audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated.

F-6

NOTOX TECHNOLOGIES CORP. ~~(FORMERLY TROPIC INTERNATIONAL INC.)~~

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

12. ~~Company~~Summary ~~Overview and Basis~~ of ~~Presentation~~Significant ~~(cont’d)~~Accounting Policies

● The Company’s actual or anticipated conditional and unconditional obligations due within one year from the date of issue of the financial statements; ● The funds necessary to maintain the Company’s operations considering its current financial condition, obligations and other expected cash flows; and ● Other conditions and events that may affect the Company’s ability to meet its obligations within one year from the date of issue of the financial statements.

The Company’s operating expenses are estimated to be approximately $100,000 per year. As at August 31, 2018, the Company’s current cash liabilities total approximately $2,942,000 (August 31, 2017 - $2,175,000). Of this amount, approximately $2,607,000 – accounts payable and accrued liabilities ($1,248,000), advances from related parties/shareholders ($477,000) and license assignment fee payable ($882,000) – is payable to related parties and/or major shareholders who have not and will not require payment until such time as sufficient cash flow is available. To the extent the remaining $335,000 cannot be deferred and sufficient equity financing has not been raised to make the payment required, management will advance funds to the Company, if appropriate.

The Company’s CEO and President have committed to providing financing if and when necessary to fund the Company’s estimated $100,000 cash operating expenses for the year ended August 31, 2019.

2. Reverse Takeover

On June 28, 2013 (the “Closing Date”), the Company, its wholly-owned subsidiary 1894632 Ontario Inc. (“Subco”) and TSI entered into a share exchange agreement (the “Exchange Agreement”) with certain of the shareholders of TSI (the “Selling Shareholders”) pursuant to which the Company acquired 39,015,439 common shares, or approximately 78% of the issued and outstanding shares, of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. Each one preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to the following restrictions:

● The Selling Shareholders required the written consent of Subco to exchange, sell or otherwise dispose of, directly or indirectly, any of their preferred shares of Subco until the six month anniversary of the Closing Date; ● Within 30 days of that time, and provided TSI generated at least $1,000,000 in gross revenue during the preceding six month period, Subco permitted the Selling Shareholders to require Subco to redeem an aggregate of 1% of its then-outstanding preferred shares on a pro-rata basis; and ● Within 30 days of each six month anniversary of the Closing Date until June 30, 2015, on which date all restrictions on the preferred shares automatically expired unless extended by the Selling Shareholders, Subco granted the holders of its preferred shares a permission identical to the one above.

Upon the closing of the Exchange Agreement, the sole officer and director of TSI became the sole officer and a director of the Company and the Company adopted the business plan of TSI.

As a result of the share exchange, the Selling Shareholders controlled approximately 87% of the issued and outstanding common shares of the Company on a fully-exchanged basis as of the Closing Date. The Exchange Agreement represented a reverse takeover and was therefore accounted for under the acquisition method with TSI as the accounting acquirer and continuing entity for accounting and financial reporting purposes and the Company as the legal parent being the acquiree. There was no active market to reliably determine fair value of the consideration other than the value of the identifiable assets acquired. Therefore, the purchase price allocation of the acquisition was based on the fair value of the net liabilities acquired which was charged to additional paid-in-capital.

F-7

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

2. Reverse Takeover (cont’d)

The fair values of assets acquired and liabilities assumed were as follows:

Cash	$	1,774
Subscriptions receivable		10
Accounts payable and accrued liabilities		(32,488	)
Loan payable to TSI		(25,454	)
Net liabilities acquired	$	(56,158	)

On February 17, 2015, the Company, Subco, TSI and the Selling Shareholders entered into an amendment to the Exchange Agreement in order to correct certain administrative errors in the Exchange Agreement and provide for the post-closing execution of the Exchange Agreement by those shareholders of TSI who were not original signatories thereto. In addition, the Selling Shareholders approved certain changes to the rights, privileges, restrictions and conditions attached to the preferred shares of Subco by consent in writing. This included extending the automatic expiration date in respect of the preferred shares of Subco from June 30, 2015 to June 30, 2017. On February 22, 2017, this automatic expiration date was further extended to December 31, 2018.

3. Asset Acquisition and License Agreement

On June 13, 2016 (the “Second Closing Date”), the Company, Notox and the shareholders of Notox (the “Notox Shareholders”) entered into a share exchange agreement (the “Share Exchange Agreement”) pursuant to which the Company acquired 100% of the issued and outstanding common stock of Notox from the Notox Shareholders in exchange for the issuance of 50,000,000 shares of the Company’s common stock.

On the Second Closing Date, Notox and Zoran Holding Corporation (“ZHC”), a private Ontario corporation, entered into an assignment agreement (the “Assignment Agreement”) pursuant to which ZHC irrevocably assigned 100% of its right, title and interest in and to the License Agreement, as amended, to Notox. Also on the Second Closing Date, the sole officer and director of Notox and ZHC became a director and officer of the Company.

On November 23, 2016, the Company, Notox and the Notox Shareholders entered into an amendment to the Share Exchange Agreement in order to clarify certain sections in the Share Exchange Agreement, to provide for an assignment fee and to describe how the Company will use the proceeds of any equity financing completed after the Second Closing Date. In consideration for inducing ZHC to enter into the Assignment Agreement, the Company agreed to pay an aggregate of US$1,000,000 to ZKC in the form of a one-time assignment fee. See Note 13.

On December 1, 2012, ZHC and the Clinic entered into the License Agreement whereby the Clinic granted ZHC an exclusive worldwide license and a non-exclusive worldwide license in the field of aesthetics and pain to make, use, offer to sell, sell and import certain products throughout the term of the License Agreement. The term continues until the expiration of the last to expire of certain patents. The License Agreement was amended on July 30, 2013 and July 1, 2016. Pursuant to the License Agreement, as amended, Notox is the licensee under the License Agreement and is solely responsible for making all regulatory filings and securing regulatory approval for the products covered by the License Agreement. The Clinic will receive a royalty based on the sale of certain products, a milestone payment within 30 days following the first commercial sale of such products and a percentage of any sublicensing revenues. Royalties and other payments are payable quarterly. Notox is required to achieve two commercial milestones: regulatory filings submitted to regulatory authorities by November 30, 2019 and first commercial sale within nine months following regulatory approval. Failure to achieve these milestones, without satisfactory justification, constitutes a material breach of the License Agreement giving the Clinic the right, but not the obligation, to convert the License Agreement to a non-exclusive license or terminate the License Agreement. The Clinic has the right to verify Notox’s compliance with the License Agreement.

F-8

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

3. Asset Acquisition and License Agreement (cont’d)

Within 30 days following Notox’s receipt of the first regulatory approval, Notox is required to reimburse the Clinic for current patenting costs. All patenting costs, patent office fees and outside patent counsel costs will, at the Clinic’s option, either be paid directly by Notox or by the Clinic with the Clinic invoicing Notox, provided that Notox has no obligation to pay or reimburse the Clinic until after first regulatory approval has been obtained. Upon termination or expiration of the License Agreement, all accrued and unreimbursed patenting costs become immediately due and payable to the Clinic. As of August 31, 2018, all accrued and unreimbursed patenting costs totalled US$174,421 ($227,707) (August 31, 2017 - US$157,758 ($197,765)).

As a result of the share exchange and on the Second Closing Date, the Notox Shareholders controlled approximately 89% of the issued and outstanding common stock of the Company (52.5% on a fully-exchanged basis) and Notox became a wholly-owned subsidiary of the Company. Notox did not meet the definition (inputs, processes and outputs criteria) of a business. The Share Exchange Agreement represented an asset acquisition and was therefore accounted for under the asset acquisition method.

Acquired intangible assets are recognized and initially measured based on their fair value plus transaction costs incurred as part of the acquisition. There was no active market to reliably determine the fair value of the License Agreement acquired. Therefore, the fair value of the License Agreement was based on the par value of the common stock exchanged by the Company.

The fair value and gross carrying value of the License Agreement is as follows:

License Agreement	$	133,212
Cash		131
Accrued liabilities		(5,423	)
Capital stock exchanged (50,000,000 shares at US$0.002 per share)	$	127,920

Fair value of License Agreement	$	133,212
Acquisition costs		19,519
Assignment fee (US$1,000,000)		1,347,000
Gross carrying value of License Agreement	$	1,499,731

See Note 9.

4. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of the Company, Tropic Spa International (“TSI”), Notox, 1894632 Ontario Inc. (“Subco”), and 1894631 Ontario Inc., the Company’s subsidiaries. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Company 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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to ~~equipment,~~ fair values of intangible assets, useful lives of intangible assets and the likelihood of ~~realization~~ realization of its deferred tax assets. The Company bases its estimates on assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

F-9

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

4. Summary of Significant Accounting Policies (cont’d)

Concentration of Risk

The financial instrument which potentially subjects the Company to a concentration of credit risk is cash, amounts receivable, sales tax receivable, and advances to Xthetica. The Company places its cash in an account with a high credit quality financial institution.

Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies. There have been no material changes to the Company’s significant accounting policies that are disclosed in the consolidated financial statements and notes thereto during the ~~period~~year ended August 31, ~~2018~~2019.

Inventory

Inventory is stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of inventory exceeds its market value, a provision is made currently for the difference between the cost and market value.

Equipment, Net

Equipment is stated at cost, net of accumulated depreciation. Equipment is depreciated over the estimated useful life of the asset. Mould equipment is depreciated at 20% on a declining-balance basis. The website was depreciated on a straight-line basis over five years. One-half of these rates are used in the year of acquisition. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost of assets disposed of and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.

Intangible Assets

Patents

The US Patent is recorded at the value attributed to the shares issued by TSI in connection with its acquisition less accumulated amortization and impairment ~~writedowns~~write-downs. The US Patent was issued on September 29, 2009 and is effective until September 29, 2026. The Australian, Canadian and Chinese Patents are recorded at the application costs incurred less accumulated amortization and impairment ~~writedowns~~write-downs. The Australian Patent was issued on October 16, 2014 and is effective until April 5, 2027. The Canadian Patent was issued on June 21, 2016 and is effective until April 5, 2027. The Chinese Patent was issued on December 28, 2016 and is effective until February 1, 2033. Upon expiration, the patents can be extended subject to certain changes required to secure the extension. Although the effects of obsolescence, demand, competition and other economic factors (such as stability of the industry, technological advances and legislative action that results in an uncertain or changing regulatory environment) can have an adverse effect on the industry and saleability of patented products, management is not currently aware of any known adverse factors that will affect the patents in the future.

Costs incurred for patents which are in the process of being completed will be amortized over the life of the patent when the patent is issued.

~~F-10~~At the time that the patents were issued, the Company did not believe that there were any limits to how long the Home Mist Tanning units could sell in the market place. Accordingly, management had determined that the best estimates of useful lives of the US, Australian, Canadian and Chinese Patents were 17, 13, 11 and 16 years, respectively. During the year ended August 31, 2017 management was not in a position to be able to estimate the future cash flows attributable to the patents with any degree of certainty. Accordingly, the patents were written down to a nominal amount of $4.

~~NOTOX~~Subsequent ~~TECHNOLOGIES~~to ~~CORP.~~August ~~(FORMERLY~~31, ~~TROPIC~~2019, ~~INTERNATIONAL~~the ~~INC~~Company was notified that the Canadian, Australian and Chinese patents had lapsed or expired.)

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization and impairment write-downs. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

F-7

NOTOX TECHNOLOGIES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

4. Summary of Significant Accounting Policies (cont’d)

At the time that the patents were issued, the Company did not believe that there were any limits to how long the Home Mist Tanning units could sell in the market place. Accordingly, management had determined that the best estimates of useful lives of the US, Australian, Canadian and Chinese Patents were 17, 13, 11 and 16 years, respectively. At this time, the Company does not believe that the patents will have a residual value at the end of their useful lives.

License Agreement

The License Agreement is recorded at estimated fair value plus acquisition costs less accumulated amortization and impairment writedowns. The term of the License Agreement continues until the expiration of the last to expire of the Licensed Patents (as defined in the License Agreement). All costs related to the development of the licensed technology are expensed as incurred.

The technology licensed by Notox is a platform that provides the Company access to four large market segments or verticals (derma, pain, body and headache) that include the fields of aesthetics, drug-free pain management, body contouring and perspiration control. Based on management’s experience, it takes approximately two years to fully develop each vertical, with each vertical being developed in sequence. Accordingly, management’s best estimate of the amortization period for the License Agreement is eight years.

Amortization and Impairment

Intangible assets subject to amortization are required to be reviewed for impairment. An impairment loss must be recognized if the intangible asset’s carrying amount is not recoverable and the carrying amount exceeds fair value. The Company applies the following three-step process to identify, recognize and measure impairment of intangible assets:

●	Consider whether indicators of impairment are present indicating that the intangible assets’ carrying amount might not be recoverable;
●	If indicators are present, perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the intangible assets to their carrying amounts; and
●	If the undiscounted cash flows used in the recoverability test are less than the intangible assets’ carrying amount, determine the intangible assets’ fair value and recognize an impairment loss if the carrying amount exceeds fair value.

Leases

The Company currently rents premises ~~pursuant~~classified as a short-term lease as the length of the lease is only 12 months. Therefore, the Company does not need to apply ASC 842 lease recognition and measurement requirements, and the lease is treated as an operating lease.

F-11

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

4. Summary of Significant Accounting Policies (cont’d)

Impairment of Long-Lived Assets

Long-lived assets, including ~~equipment and~~ intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated. Recoverability of assets to be held and used is measured by a comparison of the ~~carrying~~ carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by it. If the carrying amount of of the asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value.

Stock Purchase Warrants

When the Company undertakes a private placement, it may issue units comprised of common stock of the Company and warrants to acquire common stock of the Company. Warrants with a strike price denominated in the Company’s functional currency (the Canadian dollar) are considered to be indexed to the Company’s stock and are classified as equity. Warrants with a strike price denominated in a currency other than the Company’s functional currency are considered not to be indexed to the Company’s stock and are classified as a liability. Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. Warrants classified as a liability are initially measured at fair value with changes in fair value recorded in profit or loss in each reporting period.

F-8

NOTOX TECHNOLOGIES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

Production Costs

Production costs consist of patent and license agreement amortization, production consulting fees, equipment depreciation, design and production costs, materials and supplies and patenting costs.

Advertising Costs

The Company charges all advertising and marketing costs to expense in the period incurred.

Income Taxes

Deferred income tax is accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income and expense items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. At this time, the Company is not able to project future taxable income over the periods in which the deferred tax assets are deductible and, accordingly, management is not able to determine if it is more likely than not that the Company will realize the benefits of these deductible differences.

Fair Value of Financial Instruments

Carrying values of cash, receivables, accounts payable and accrued liabilities, advances from related parties/shareholders, license assignment fee and accrued interest payable and stock subscribed approximate fair value because of the short-term nature of these items. ~~Amounts~~The ~~receivable~~fair ~~consists~~value ~~primarily~~ of ~~Harmonized~~stock ~~Sales~~purchase ~~Tax~~warrants ~~(“HST”)~~is ~~receivable~~determined ~~from~~using ~~the~~Level ~~Government~~3 ofinputs ~~Canada.~~in ~~HST~~the isBlack-Scholes ~~not a financial instrument~~model.

F-12

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

4. Summary of Significant Accounting Policies (cont’d)

Foreign Currency

The functional currency of the Company and its subsidiaries is the Canadian dollar. The accompanying consolidated financial statements are presented in Canadian dollars.

5. Loss per ~~Per~~ Share – basic and diluted

The ~~following~~Company ~~table~~has ~~sets~~adopted ~~forth~~the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” loss per share. Basic loss per share includes no dilution and is computed by dividing net loss available to common stockholders by the ~~computation~~weighted average number of common shares outstanding for the year. Diluted loss per share: reflect the potential dilution of securities that could share in the earnings of an entity. Diluted loss per share exclude all potentially dilutive shares if their effect is anti-dilutive. There were no potentially dilutive shares outstanding as at August 31, 2019 and 2018.

	For the Years Ended August 31,
	2018			2017			2016
Net loss per share:
Net loss	$	(810,825	)	$	(5,071,687	)	$	(1,030,293	)
Weighted-average shares outstanding:
Common stock		57,532,843			56,892,843			56,132,073
Number of shares used in per share computations		57,520,185			56,606,971			16,924,423
Loss per share	$	(0.01	)	$	(0.09	)	$	(0.06	)

F-9

6.NOTOX ~~Fair~~TECHNOLOGIES ~~Value Measurements~~CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

3. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 – Unobservable inputs that are supported by little or no market activity, which require management judgment or estimation.

The Company measures its financial instruments at fair value.

~~The~~4. ~~carrying~~License ~~value~~Agreement, ~~of cash deposits is a reasonable estimate of its fair value due to the short maturity of the financial instrument.~~Net

~~The~~On ~~Company’s~~December ~~stock~~1, ~~purchase~~2012, ~~warrants~~Zoran Holding Corporation (“ZHC”) and the Clinic entered into the License Agreement whereby the Clinic granted ZHC an exclusive worldwide license in the field of aesthetics and pain to make, use, offer to sell, sell and import certain products throughout the term of the License Agreement. Royalties and other payments are ~~measured~~payable atquarterly. ~~fair~~Notox ~~value~~is onrequired to achieve two commercial milestones: first commercial sale within nine months following regulatory approval, and regulatory filings submitted to regulatory authorities by November 30, 2019. The Clinic and Notox are working towards the definitive agreement that would extend the above date, to a ~~recurring~~new ~~basis~~date, based on the clear development milestones and schedule to be agreed upon not later than March 31, 2020.

FAs of August 31, 2019, all accrued and unreimbursed patenting costs totaled $264,113 (August 31, 2018 -13 $227,707). Failure to achieve these milestones, without satisfactory justification, constitutes a material breach of the License Agreement giving the Clinic the right, but not the obligation, to convert the License Agreement to a non-exclusive license or terminate the License Agreement. The Clinic has the right to verify Notox’s compliance with the License Agreement.

~~NOTOX~~Pursuant ~~TECHNOLOGIES~~to ~~CORP.~~above, ~~(FORMERLY~~the ~~TROPIC~~gross ~~INTERNATIONAL~~carrying ~~INC.)~~value of the License Agreement is as follows:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

	August 31, 2019
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	562,398	$	937,333

(EXPRESSED IN CANADIAN DOLLARS)

7. Equipment, Net

Equipment, at cost, consisted of:

	August 31, 2018			August 31, 2017
Mould equipment	$	155,300		$	155,300
Website		28,875			28,875
Equipment at cost		184,175			184,175
Accumulated depreciation		(155,107	)		(149,978	)
Loss on disposal of equipment		(29,068	)		—
Equipment, net	$	—		$	34,197

Depreciation was $5,129 and $8,550 for the years ended August 31, 2018 and 2017, respectively.

8. Patents, Net

The following tables provide information regarding the patents:

	August 31, 2018
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Writedowns		Net carrying amount
United States Patent	$	6,342,279	$	2,984,602	$	3,357,676	$	1
Australian Patent		4,976		1,145		3,830		1
Canadian Patent		17,406		2,024		15,381		1
Chinese Patent		5,806		1,330		4,475		1
Patents abandoned		6,793		—		6,793		—
	$	6,377,260	$	2,989,101	$	3,388,155	$	4

Also see Note 1.

During the year ended August 31, 2017, management identified the following indicators of impairment indicating that the patents’ carrying amounts might not be recoverable:

● The inability to raise sufficient equity financing to implement its strategic plan; and ● Operating and cash flow losses since the Company completed the development of the US, Australian, Canadian and Chinese patents.

F-14

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

8. Patents, Net (cont’d)

During fiscal 2017, management was in the process of changing its focus in respect of the marketing and sale of tanning units and associated products. Management’s intention was to license commercial tanning units for use in stores and spas in the United States, to sell personal tanning units internationally and to supply the spray tan solution for those units. Ultimately, management was not in a position to be able to estimate the future cash flows attributable to the patents with any degree of certainty. Accordingly, the patents were written down to a nominal amount of $4 at August 31, 2017.

In connection with the writedown of the patents, the fact that there had been minimal sales and no comparable products on the market to use as a point of reference, management was not able to determine whether inventory was stated at the lower of cost or market. Accordingly, inventory was written down to a nominal amount of $1 at August 31, 2017.

During the year ended August 31, 2018, the Company discontinued its pursuit of the marketing and sale of the tanning units and associated products. Accordingly, inventory was written off at August 31, 2018.

9. License Agreement, Net

August 31, 2018

Gross carrying amount

Accumulated amortization

Net carrying amount

License Agreement

1,499,731

374,932

1,124,799

	August 31, 2017
	Gross carrying amount		Accumulated amortization		Net carrying amount
License Agreement	$	1,499,731	$	187,466	$	1,312,265

As of August 31, 2019, amortization expense on the License Agreement for the next five years was expected to be as follows:

As of August 31, 2018, amortization expense on the License Agreement for the next six years was expected to be as follows:

	Amount
Year ending:
2020	$	187,466
2021		187,466
2022		187,466
2023		187,466
2024		187,469
Total	$	937,333

	Amount
Year ending:
2019	$	187,466
2020		187,466
2021		187,466
2022		187,466
2023		187,466
2024		187,469
Total	$	1,124,799

F-10

~~The~~NOTOX ~~Company~~TECHNOLOGIES ~~has transitioned away from the manufacturing and marketing of Home Mist Tanning units to the designing, developing and marketing of technology for the treatment of neuromuscular defects, named Notox~~CORP. The Company is currently in the design and prototype development stages and its objective is the completion of clinical testing trials for the purpose of obtaining Food and Drug Administration (“FDA”) 510(k) approval. Pursuant to the License Agreement, the Company is required to submit regulatory filings by November 30, 2019. During the current year, the Company was focused on in-depth market research for the purpose of understanding the global market for its technology, designing its brand and internal and external communications protocol to effectively communicate its vision to strategic partners, clinics and patients. The Company has prepared a five-year proforma projection of the undiscounted future cash flows attributable to the License Agreement, with the first year commencing upon completion of the design and receiving the FDA 510(k) approval. The Company’s CEO and President have committed to providing financing if and when necessary to fund the operating expenses until September 30, 2019.

F-15

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

95. ~~License~~Accounts ~~Agreement,~~Payable ~~Net~~and ~~(cont’d)~~Accrued Liabilities

Also see Notes 1, 3 and 4.

10. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of:

	August 31, 2018		August 31, 2017
	August 31, 2019		August 31, 2018
Trade payables	$	1,~~412~~193,~~277~~429	$	~~929~~1,~~855~~412,277
Vendor accruals		~~170~~779,~~414~~138		~~145~~170,~~746~~414
Accounts payable and accrued liabilities	$	1,~~582~~972,~~691~~567	$	1,~~075~~582,~~601~~691

116. Related Party Transactions and balances

The ~~following~~Company’s ~~amounts~~transactions with related parties were ~~payable~~carried toout on normal commercial terms and in the course of the Company’s business. Other than disclosed elsewhere in the Company’s consolidated financial statements, related ~~parties~~party transactions are as follows:

● At August 31, 2018, the Company owed $232,000 in advances payable to the President of the Company (2017 - $232,000). These advances are unsecured and bear interest at 3% per annum. Of this amount, $219,500 is due on demand and $12,500 has no repayment terms. Accrued interest payable to the President totaled $32,538 at August 31, 2018 (2017 - $25,578). ● At August 31, 2018, the Company owed $51,000 (2017 - $nil) in advances payable to the CEO of the Company. This balance bears no interest and has no repayment terms. ● At August 31, 2018, the Company owed $15,737 (2017 - $5,329) to the President of the Company for reimbursable expenses incurred on the Company’s behalf. ● At August 31, 2018, the Company owed $438,935 ($181,070 and US$197,522) (2017 - $271,984 ($181,070 and US$72,522)) in consulting fees to a ~~company controlled by the President of the Company. ● At August 31, 2018, the Company owed $245,564 (US$188,100~~) Related ~~(2017~~party - $79,102 (US$63,100)) in consulting fees to a company controlled by the CEO of the Company. ● At August 31, 2018, the Company owed $330,688 ($181,070 and US$114,606) (2017 - $259,448 ($181,070 and US$62,522)) in consulting fees to a company controlled by a major shareholder of the Company. ● At August 31, 2018, the Company owed $nil (2017 - $nil) in shareholder advances and $nil (2017 - $761) in accrued interest on these advances to the same major shareholder. ● At August 31, 2018, the Company owed $75,000 (2017 - $75,000) in consulting fees to a company controlled by the Company’s former CFO.balances

~~During~~Advances ~~the~~from ~~year ended August 31, 2018, the Company had the following transactions with~~ related parties include:

● The President of the Company advanced $nil during the year ended August 31, 2018 (2017 - $nil). Interest expense of $6,960 was accrued on advances payable to the President of the Company during the year ended August 31, 2018 (2017 - $7,000).

	●	At August 31, 2019, the Company owed $232,000 (August 31, 2018 - $232,000) in advances payable to the President of the Company. These advances are unsecured and bear interest at 3% per annum. Accrued interest payable to the President totaled $39,498 at August 31, 2019 (August 31, 2018 - $32,538).

	●	At August 31, 2019, the Company is owed $8,609 (August 31, 2018 - the Company owed $51,000) in advances receivable by the CEO of the Company. This balance bears no interest and has no repayment terms.

~~F-16~~Accounts payable and accrued liabilities include:

~~NOTOX TECHNOLOGIES~~● ~~CORP~~At August 31, 2019, the Company owed $658,022 (August 31, 2018 - $438,935) in consulting fees to a company controlled by the President of the Company. ● At August 31, 2019, the Company owed $470,381 (~~FORMERLY~~August ~~TROPIC~~31, ~~INTERNATIONAL~~2018 ~~INC~~- $245,564) in consulting fees to a company controlled by the CEO of the Company. ● At August 31, 2019, the Company owed $353,246 (August 31, 2018 - $330,688) in consulting fees to a company controlled by a major shareholder of the Company.

b) Related party transactions

During the year ended August 31, 2019, the Company had the following transactions with related parties:

	●	Consulting fees expense of $159,452 (August 31, 2018 - $159,674) in connection with the services provided by a company controlled by the President of the Company.

	●	Consulting fees expense of $166,132 (August 31, 2018 - $159,674) in connection with the services provided by a company controlled by the CEO of the Company.

	●	Consulting fees expense of $nil (August 31, 2018 - $65,481) in connection with the services provided by a company controlled by a major shareholder of the Company.

	●	Interest expense of $6,960 (August 31, 2018 - $13,721) in connection with advances owing to the President and other shareholders of the Company.

7. Advances from Shareholders

Advances payable to shareholders totaled $145,000 at August 31, 2019 (August 31, 2018 - $145,000). These advances are unsecured and bear interest at 3% per annum, with no specific repayment terms. Interest expense of $4,350 was incurred on these advances during the year ended August 31, 2019 (August 31, 2018 - $3,589). As at August 31, 2019 accrued interest payable to shareholders totaled $21,321 (August 31, 2018 - $16,971).

8. License assignment fee and accrued interest payable

Pursuant to the amendment to the Share Exchange Agreement, the Company will pay an aggregate of US$1,000,000 to Zoran K Corporation, a private Ontario corporation (“ZKC”) in the form of a one-time assignment fee. The assignment fee payable is repayable in monthly instalments of US$50,000 beginning on October 1, 2016. Upon completion of any equity financing pursuant to which the Company raises gross proceeds of at least US$1,000,000, the outstanding balance is to be repaid in full.

F-11

NOTOX TECHNOLOGIES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

11Since September 1, 2017, interest of 24% per annum, compounding annually, has been accrued on the outstanding balance payable. Interest ~~Related~~expense ~~Party~~of ~~Transactions~~US$288,667 (~~cont’d~~$384,133) was accrued on the balance payable as at August 31, 2019. At August 31, 2019, the balance of the license assignment fee payable and interest payable to ZKC was US$783,667 ($1,042,561) (August 31, 2018 - US$675,800 ($882,257)). See Note 4.

~~● The CEO of the Company advanced $51,000 during the year ended August 31, 2018 (2017 - $nil)~~9. These advances are unsecured, bear no interest and have no repayment terms. ● Consulting fees paid or accrued as payable to a company controlled by the President of the Company were $159,674 (US$125,000), $163,466 (US$125,000) and $136,665 ($102,870 and US$26,040) for the years ended August 31, 2018, 2017 and 2016, respectively. ● Consulting fees paid or accrued as payable to a company controlled by the CEO of the Company were $159,674 (US$125,000), $163,466 (US$125,000) and $67,509 (US$56,040) for the years ended August 31, 2018, 2017 and 2016, respectively. ● Consulting fees paid or accrued as payable to a company controlled by a major shareholder of the Company were $65,481 (US$52,083), $163,466 (US$125,000) and $136,665 ($102,870 and US$26,040) for the years ended August 31, 2018, 2017 and 2016, respectively. Commitments

~~All~~On ~~transactions~~June ~~with~~13, ~~related~~2016, ~~parties~~the ~~occurred~~Company inentered into consulting agreements with 1040614 Ontario Ltd. (the ~~normal~~“1040614 ~~course~~Agreement”), MCM ofConsulting ~~business~~(the “MCM Agreement”) and ~~were~~ZKC ~~measured~~(the at“ZKC Agreement”). Pursuant to the ~~exchange~~1040614 ~~amount~~Agreement, MCM, ~~which~~through ~~was~~its principal, performs general consulting services on behalf of the Company. Pursuant to the MCM Agreement, the sole proprietor acts in the ~~amount~~capacity of ~~consideration~~President ~~agreed~~of ~~upon~~the ~~between~~Company. ~~management~~Pursuant ~~and~~to the ~~related~~ZKC ~~parties~~Agreement, ZKC, through its principal, acts in the capacity of CEO of the Company. Each consulting agreement is for a period of 10 years, with successive automatic renewal periods of two years until terminated. Pursuant to these consulting agreements, each consultant is entitled to receive the following compensation:

Also see Notes 3, 12, 13 and 14.

12. Advances from Shareholders

Advances payable to shareholders totaled $145,000 at August 31, 2018 (2017 - $145,000). These advances are unsecured and bear interest at 3% per annum. There are no repayment terms. Interest expense of $3,589 was accrued on these advances during the year ended August 31, 2018 (2017 - $4,351). Accrued interest payable to shareholders totaled $16,971 at August 31, 2018 (2017 - $13,382).

13. License Assignment Fee Payable

Pursuant to the amendment to the Share Exchange Agreement, the Company agreed to pay an aggregate of US$1,000,000 to ZKC in the form of a one-time assignment fee. The assignment fee is payable in monthly instalments of US$50,000 beginning on October 1, 2016. Upon completion of any equity financing pursuant to which the Company raises gross proceeds of at least US$1,000,000, the outstanding balance is to be repaid in full.

Since September 1, 2017, interest of 24% per annum, compounding annually, has been accrued on the outstanding balance payable. Interest expense of US$130,800 ($167,123) was accrued on the balance payable during the year ended August 31, 2018 (2017 - $nil). At August 31, 2018, the balance of the license assignment fee payable and interest payable to ZKC was US$675,800 ($882,257) (August 31, 2017 - US$545,000 ($683,212)). See Note 3.

14. Commitments

On November 16, 2015, the Company entered into a consulting agreement (the “ECC Agreement”) with Edgewater Consulting Corp., a private Ontario corporation (“ECC”). Pursuant to the ECC Agreement, ECC, through its principal, acted in the capacity of CFO of the Company. The ECC Agreement was terminated effective November 10, 2016. A signing bonus of 750,000 exchangeable preferred shares of Subco was issued on August 24, 2016. As at August 31, 2018, ECC is entitled to $75,000 (August 31, 2017 - $75,000) in accrued remuneration.

On December 1, 2015, the Company entered into consulting agreements with 1040614 Ontario Ltd., a private Ontario corporation (the “Old 1040614 Agreement”), and MCM Consulting, an Ontario sole proprietorship (the “Old MCM Agreement”, and together with the Old 1040614 Agreement, the “Old Agreements”). Pursuant to the Old 1040614 Agreement, the company, through its principal, performed various services related to business development, strategic planning and capital-raising for the Company.

F-17

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

14. Commitments (cont’d)

Pursuant to the Old MCM Agreement, the sole proprietor acted in the capacity of CEO of the Company. On June 13, 2016, the Old 1040614 and MCM Agreements were terminated and replaced by the 1040614 and MCM Agreements (see below). As at August 31, 2018, 1040614 and MCM are each entitled to $80,770 (August 31, 2017 - $80,770) in accrued remuneration in respect of the Old Agreements.

On February 4, 2016, the Company entered into a consulting agreement (the “Old ZKC Agreement”) with Zoran K Corporation, a private Ontario corporation (“ZKC”). Pursuant to the Old ZKC Agreement, ZKC, through its principal, acted in the capacity of the Company’s exclusive sales, marketing and product development agent. On June 13, 2016, the Old ZKC Agreement was terminated and replaced by the ZKC Agreement (see below). As at August 31, 2018, there is no remuneration payable (August 31, 2017 - $nil) by the Company under the Old ZKC Agreement.

On June 13, 2016, the Company entered into consulting agreements with 1040614 Ontario Ltd. (the “1040614 Agreement”), MCM Consulting (the “MCM Agreement”) and ZKC (the “ZKC Agreement”).

Pursuant to the 1040614 Agreement, the company, through its principal, performs general consulting services on behalf of the Company. Pursuant to the MCM Agreement, the sole proprietor acts in the capacity of President of the Company. Pursuant to the ZKC Agreement, ZKC, through its principal, acts in the capacity of CEO of the Company. Each consulting agreement is for a period of 10 years, with successive automatic renewal periods of two years until terminated. Pursuant to these consulting agreements, each consultant is entitled to receive the following compensation:

	●	Remuneration – an aggregate of US$125,000 per annum plus HST on a bi-monthly basis;
	●	EPS Bonus – when the Company generates earnings per share of $0.05, plus any multiple thereof, the Company shall issue the consultant 1,000,000 shares of the Company’s common stock and pay the consultant US$250,000 plus HST;
	●	Change of Control Bonus – immediately prior to the completion of a change of control (as defined in these consulting agreements) the Company shall issue the consultant an aggregate of 20,000,000 shares of the Company’s common stock; and
	●	Additional Bonus – the company may from time to time pay the consultant one or more bonuses as determined by the Board of Directors at its sole discretion.

Effective February 3, 2018, the Company terminated the 1040614 Agreement.

OnAs at August 31, ~~2018~~2019, the Company renewed its premises lease for another year beginning on ~~September~~April 1, ~~2018~~2019 for a$5,520 ~~rental~~plus ofHST ~~$21,000~~per annum for ~~the~~a ~~year~~period ~~plus~~of ~~HST~~twelve months.

1510. Stockholders’ Deficiency

AsAuthorized ~~at August 31, 2018, the Company was authorized to issue 300,000,000 (August 31, 2017 - 300,000,000) shares of common~~ stock ~~at a par value of $US0.001. See Note 20.~~

OnAs at August 2531, ~~2016~~2019, the Company ~~completed~~was aauthorized ~~reverse~~to ~~split~~issue of500,000,000 ~~the~~(August ~~Company’s~~31, ~~common~~2018 ~~stock~~- at300,000,000) ~~the~~shares ~~ratio~~ of ~~one~~common ~~new~~stock ~~share for every~~at ~~two~~a ~~existing~~par ~~shares.~~value ~~All~~of ~~share and per share amounts have been adjusted to reflect this reverse split~~US$0.001.

AtOn ~~August~~October 319, 2018, the Company’s ~~had~~shareholders ~~57,532,843~~and ~~shares~~directors approved a change of ~~common~~the ~~stock~~Company’s ~~legally~~name ~~issued~~from Tropic International Inc. to Notox Technologies Corp. and ~~outstanding~~an ~~(2017~~increase -in 56the Company’s authorized common stock to 500,~~892~~000,~~843~~000 shares). The name change and authorized common stock increase were effected November 19, 2018.

FAt August 31, 2019, the Company had 57,625,343 shares of common stock legally issued and outstanding (2018 -18 57,532,843). Of those shares, 50,993,270 were restricted and 6,632,073 were unrestricted.

~~NOTOX~~On ~~TECHNOLOGIES~~June ~~CORP~~28, 2013, pursuant to the reverse takeover transaction with TSI, the Company acquired 39,015,439 common shares of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to certain of the shareholders of TSI on a one-for-one basis. As ~~(FORMERLY~~a ~~TROPIC~~result ~~INTERNATIONAL~~of ~~INC~~the transaction, TSI became the Company’s majority-owned subsidiary.) Each preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to certain restrictions. As at August 31, 2019 and August 31, 2018, none of the preferred shares had been exchanged.

~~NOTES~~On TOAugust ~~THE~~24, ~~CONSOLIDATED~~2016, ~~FINANCIAL~~a ~~STATEMENTS~~further 21,672,623 common shares of TSI were exchanged for 10,836,312 preferred shares of Subco.

~~(EXPRESSED~~Share ~~IN CANADIAN DOLLARS)~~issuances

15. Stockholders’ Deficiency (cont’d)

On June 28, 2013, pursuant to the Exchange Agreement, the Company acquired 39,015,439 common shares of TSI in exchange for the issuance of 39,015,439 preferred shares of Subco to the Selling Shareholders on a one-for-one basis. As a result of the Exchange Agreement, TSI became the Company’s majority-owned subsidiary. Each preferred share of Subco is exchangeable into one share of the Company’s common stock at the option of the holder subject to certain restrictions. As at August 31, 2018 and 2017, none of the preferred shares had been exchanged.

As a condition of the closing of the Exchange Agreement, the Company also entered into a Support Agreement and a Voting and Exchange Trust Agreement on the Closing Date. The Support Agreement ensures that the obligations of Subco remain effective until all of the preferred shares have been exchanged. The Voting and Exchange Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of the Company’s common stock are exercisable by the registered holders of the preferred shares of Subco. The Trustee (as defined in the Voting and Exchange Trust Agreement) holds legal title to a Special Voting Share to which voting rights are attached for the benefit of those shareholders. The Trustee holds the Special Voting Share solely for the use and benefit of the those shareholders.

Common Stock Issuances

During the year ended August 31, 2018, the Company completed the following common stock transactions:

	●	On September 21, 2017, the Company closed a US dollar financing pursuant to which the Company issued 630,000 units at US$1.00 per unit for gross proceeds of $830,674 (US$630,000), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until September 7, 2019. $491,041 was allocated to common stock and $339,633 was allocated to stock purchase warrants. The Company paid cash finder’s fees of $6,435 (US$5,000) and issued 5,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until July 17, 2019, valued at $2,581 and credited to stock purchase warrants.
	●	On September 21, 2017, the Company issued 10,000 shares of common stock at $0.80 per share for gross proceeds of $8,000 pursuant to the exercise of warrants during the year ended August 31, 2017. $2,049 of the gross proceeds received that was allocated to these warrants has been deducted from additional paid-in capital.

●

On September 21, 2017, the Company closed a US dollar financing pursuant to which the Company issued 630,000 units at US$1.00 per unit for gross proceeds of $830,674, with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share until September 7, 2019. $491,041 was allocated to common stock and $339,633 was allocated to stock purchase warrants. The Company paid cash finder’s fees of $6,435 and issued 5,000 finder’s stock purchase warrants exercisable at US$1.40 per warrant share until July 17, 2019, valued at $2,581 and credited to stock purchase warrants.

~~At August~~● 31On September 21, 2017, the Company issued 10,000 shares of common stock at $0.80 per share for gross proceeds ~~received~~ of $~~838~~8,~~674~~000 ~~for~~pursuant to the ~~financings~~exercise ~~that~~of ~~closed~~warrants ~~September~~during 7,the ~~2017~~year ~~and~~ended ~~September~~August 2131, 2017 ~~were~~. ~~reported~~$2,049 asof ~~stock~~the ~~subscribed~~gross proceeds received that was allocated to these warrants has been deducted from additional paid-in capital.

~~During the year ended August 31, 2017, the Company completed the following common stock transactions:~~F-12

●NOTOX TECHNOLOGIES ~~On October 31, 2016, the Company closed a concurrent Canadian and US dollar financing as follows:~~CORP.

o Canadian financing – the Company issued 140,000 units at $0.50 per unit for gross proceeds of $70,000, with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of $0.80 per share until October 31, 2018. $41,314 was allocated to common stock and $28,686 was allocated to additional paid-in capital. US financing – the Company issued 220,770 units at US$0.50 per unit for gross proceeds of $146,716 (US$110,385), with each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$0.80 per share until October 31, 2018. $86,027 was allocated to common stock and $60,689 was allocated to stock purchase warrants.

F-19

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

~~15.~~During ~~Stockholders’~~the ~~Deficiency~~year ~~(cont’d)~~ended August 31, 2019, the Company completed the following common stock transactions:

● OnDuring ~~November 2, 2016,~~ the ~~Company~~previous ~~closed~~year aended USAugust ~~dollar financing pursuant to which the Company issued 400~~31,~~000~~ ~~units at US$1.00 per unit for gross proceeds of $524~~2018,~~230~~ ~~(US~~$~~400~~10,000), ~~with~~in ~~each~~stock ~~unit~~subscriptions ~~consisting~~was ofreceived ~~one~~pursuant ~~share~~to of the ~~Company’s~~exercise ~~common stock and one warrant to purchase one share~~ of ~~common~~12,500 ~~stock~~warrants ~~exercisable~~ at a price of US$10.4080 per share ~~until~~in ~~November~~February 2, 2018. ~~$286,950 was allocated to common stock and $237,280 was allocated to stock purchase warrants.~~ The ~~Company~~shares ~~paid~~were ~~cash finder’s fees of $19,899 and~~ issued ~~15,000~~in ~~finder’s~~November ~~stock purchase warrants exercisable at US$1.40 per warrant share until September 28,~~ 2018~~, valued at $8,742 and credited to stock purchase warrants~~.

~~Stock Subscribed~~● On July 3, 2019, the Company issued 80,000 shares of common stock through a private placement with a fair value of $104,890 at a price of U$1.00 per share.

~~During~~Stock ~~the~~subscribed ~~year ended August 31, 2018, $10,000~~ in ~~stock subscriptions was received pursuant to the exercise of 12,500 warrants at a price of $0.80 per share in February 2018. This stock remained subscribed for as at August 31, 2018.~~advance

During the year ended August 31, ~~2017~~2019, ~~$838,674~~the (Company received proceeds of $8261,~~000~~692 ~~and~~ (US$~~630~~195,000) inas ~~stock~~consideration ~~subscriptions~~for ~~was~~unit and ~~received~~share ~~pursuant~~private toplacements, ~~individual~~and ~~private placements~~the exercise of 6,250 warrants. ~~These~~The ~~subscriptions~~units/shares were ~~for~~not aissued ~~total~~as of: August 31, 2019 and have therefore been classified as a liability.

	●	10,000 shares of common stock of the Company at a price of $0.80 per share pursuant to the exercise of stock purchase warrants. These shares were issued on September 21, 2017.
	●	630,000 units of the Company at a price of US$1.00 per unit. Each unit consists of one share of the Company’s common stock and one warrant to purchase one share of common stock exercisable at a price of US$1.40 per share for a period of 24 months from the closing date of the financing. These units were issued on September 7, 2017.

Stock Purchase Warrants

The continuity of Canadian dollar denominated stock purchase warrants for the ~~year~~six months ended August 31, ~~2018~~2019 is as follows:

Expiry Date		Price				August 31, 2017				Issued				Exercised				August 31, 2018				Issued				Expired				August 31, 2019
October 31, 2018		$	0.80				130,000				—				(12,500	)			117,500				—				(117,500	)			—

At August 31, ~~2018~~2019, the weighted-average remaining contractual life of Canadian dollar warrants outstanding was 0.1700 years (August 31, ~~2017~~2018 - 10.17).

~~F-20~~The continuity of US dollar denominated stock purchase warrants for the year ended August 31, 2019 is as follows:

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

Expiry Date	Price US$		August 31, 2017		Issued		August 31, 2018		Exercised*			Issued		Expired			August 31, 2019
September 30, 2018 – Finder		1.40		15,000		—		15,000		—			—		(15,000	)		—
October 31, 2018		0.80		220,770		—		220,770		(6,250	)		—		(214,520	)		—
November 2, 2018		1.40		400,000		—		400,000		—			—		(400,000	)		—
July 17, 2019 – Finder		1.40		—		5,000		5,000		—			—		(5,000	)		—
September 7, 2019		1.40		—		630,000		630,000		—			—		—			630,000
				635,770		635,000		1,270,770		(6,250	)		—		(634,520	)		630,000

*warrants exercised during the year ended August 31, 2019 have not yet issued shares.

At August 31, 2019, the stock purchase warrants were fair valued at $1,776 (August 31, 2018 – $353,517) and the weighted-average remaining contractual life of US dollar warrants outstanding was 0.02 years (August 31, 2018 – 0.59 years). During the year ended August 31, 2019, the Company recognized a gain on revaluation of $351,741 (August 31, 2018 - 286,075)

F-13

NOTOX TECHNOLOGIES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

~~15.~~The ~~Stockholders’~~Company ~~Deficiency~~used ~~(cont~~the Black-Scholes Option Pricing Model to determine the fair values of unit warrants and finder’d)s warrants issued pursuant to private placements during the years ended August 31, 2019 and 2018 with the following assumptions:

The continuity of US dollar denominated stock purchase warrants for the year ended August 31, 2018 is as follows:

	August 31, 2019			August 31, 2018
Expected dividend yield		0.00	%		0.00	%
Risk-free interest rate		1.78	%		1.47% - 2.04	%
Expected stock price volatility		100.00	%		100.00	%
Expected life of warrants		0.02 years			0.08 – 2 years

Expiry Date	Price		August 31, 2017		Issued		Exercised		August 31, 2018
September 30, 2018 – Finder		US$1.40		15,000		—		—		15,000
October 31, 2018		US$0.80		220,770		—		—		220,770
November 2, 2018		US$1.40		400,000		—		—		400,000
July 17, 2019 – Finder		US$1.40		—		5,000		—		5,000
September 7, 2019		US$1.40		—		630,000		—		630,000
				635,770		635,000		—		1,270,770

11. Risks and Uncertainties

At August 31, 2018, the weighted-average remaining contractual life of US dollar warrants outstanding was 0.59 years (August 31, 2017 - 1.17 years).

The Company used the Black-Scholes Option Pricing Model to determine the fair values of unit warrants and finder’s warrants issued pursuant to private placements during the years ended August 31, 2018 and 2017 with the following assumptions:

	August 31, 2018			August 31, 2017
Expected dividend yield		0.00	%		0.00	%
Risk-free interest rate		1.47% - 2.04	%		0.54% - 0.55	%
Expected stock price volatility		100.00	%		100.00	%
Expected life of warrants		0.08 – 2 years			2 years

See Notes 4 and 20.

16. Taxes

Income tax expense differs from the amounts computed by applying the statutory income tax rate to net loss before income taxes as follows:

	Year Ended August 31,
	2018			2017			2016
Net loss before income taxes	$	(810,825	)	$	(5,071,687	)	$	(1,030,293	)
Tax rate		(1	)		(2	)		(2	)
Calculated income tax recovery		(199,277	)		(1,391,061	)		(273,260	)
Adjustment for deductible and non-deductible amounts		(77,794	)		1,130,327			48,858
Unrecognized benefit of non-capital losses		277,071			260,734			224,402
Income tax recovery	$	—		$	—		$	—

	(1)	Canada – 26.50%; United States – 21%
	(2)	Canada – 26.50%; United States – 34%

F-21

NOTOX TECHNOLOGIES CORP. (FORMERLY TROPIC INTERNATIONAL INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

16. Taxes (cont’d)

Deferred Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Significant components of the Company’s deferred tax assets are as follows:

	August 31, 2018			August 31, 2017
Deferred tax assets:
Net operating loss carryforwards	$	2,029,000		$	1,784,000
Temporary deductible differences (net)		753,000			834,000
		2,782,000			2,618,000
Valuation allowance		(2,782,000	)		(2,618,000	)
Net deferred tax assets	$	—		$	—

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. A valuation allowance was established based upon management’s inability to determine whether sufficient future profits will be generated.

The Company has approximately $7,844,000 of United States and Canadian net operating loss and non-capital loss carryforwards expiring from 2024 to 2038.

17. Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect its future operating results and cause actual results to vary materially from expectations include, but are not limited to: current economic conditions; the Company’s degree of success in securing regulatory approval and marketing products developed pursuant to the License Agreement; increasing competition; and dependence on its existing management and key personnel.

1812. Accounting Pronouncements

~~The~~In ~~Financial~~April ~~Accounting~~2019, ~~Standards~~the ~~Board (“~~FASB”) issued ~~the~~ASU ~~following~~2019-04, ~~Accounting~~“Codification ~~Standard~~Improvements ~~Updates~~to ~~(“ASUs”)~~Topic 326, Financial Instruments – Credit Losses, ~~that~~Topic ~~may~~815, beDerivatives ofand ~~relevance~~Hedging, and Topic 825, Financial Instruments”, to introduce amendments which will affect the recognition ~~Company~~and measurement of financial instruments, including derivatives and hedging. ~~The~~Only ~~Company~~Topic 4 is ~~currently~~effective ~~assessing~~for ~~the~~fiscal years ~~impact~~beginning ~~that~~after ~~the~~December ~~adoption~~15, of2019, ~~these~~and ~~ASUs~~interim periods within those fiscal years. The Company is evaluating the impact this standard will have on ~~its~~the Company’s financial statements ~~and related disclosures~~.

	●	February 2017 – ASU No. 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” clarifies the scope of asset derecognition guidance and accounting for the partial sale of non-financial assets, as well as provides guidance for recognizing gains and losses from the transfer of non-financial assets in contracts with non-customers. The amendments in this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company expects the impact of adoption of this ASU to be minimal.
	●	September 2017 – ASU No. 2017-13, “Leases (Topic 842)” provides the requirements of financial accounting and reporting for lessees and lessors and establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease under Accounting Standards Codification 842, Leases. The amendments in this ASU are effective for reporting periods beginning after December 15, 2019. The Company will be required to recognize a right-of-use asset and a lease liability for its office lease.

In March 2019, the FASB issued ASU 2019-01, “Leases (Topic 842)”, to introduce amendments which will affect all lessors that are not manufactures or dealers, and those which are depository and lending entities. The amendments in this update amend Topic 842, and are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently in the process of evaluating the effects of this pronouncement on the consolidated financial statements.

FIn August 2018, the FASB issued ASU 2018-2213, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company will be evaluating the impact this standard will have on the Company’s financial statements.

~~NOTOX~~13. ~~TECHNOLOGIES~~Income ~~CORP. (FORMERLY TROPIC INTERNATIONAL INC.)~~Taxes

The provision for income taxes differs from that computed at combined corporate tax rate of approximately 26% as follows:

Income tax recovery

	August 31, 2019			August 31, 2018
Net Loss	$	(635,045	)	$	(810,825	)
Expected income tax recovery		(165,112	)		(199,277	)
Non-deductible differences		232,440			(77,794	)
Other temporary difference		(190,840	)		—
Change in valuation allowance		123,512			277,071
	$	—		$	—

F-14

NOTOX TECHNOLOGIES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN CANADIAN DOLLARS)

~~19.~~Deferred ~~Contingent~~tax ~~Liability~~assets

Pursuant to the Exchange Agreement, as amended, the Company may be required to acquire up to 296,500 common shares of TSI, being those TSI shares still outstanding, in exchange for 148,250 preferred shares of Subco on a one-for-two basis. Such preferred shares would then be exchangeable on the same basis as the approximately 50 million Subco preferred shares currently outstanding (see Notes 2 and 15). On August 24, 2016, 21,672,623 common shares of TSI were exchanged for 10,836,312 preferred shares of Subco.

	August 31, 2019			August 31, 2018
Non-capital loss carry forwards	$	3,222,279		$	2,029,000
Other temporary differences		192,660			753,000
Change in valuation allowances		(3,414,939	)		(2,782,000	)
	$	—		$	—

20Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. A valuation allowance ~~Subsequent~~was ~~Events~~established based upon management’s inability to determine whether sufficient future profits will be generated.

~~The~~As ~~following~~of ~~warrants~~August ~~expired~~31, ~~unexercised~~2019, ~~subsequent~~and 2018 the Company has approximately $11,258,939 and $7,844,000, respectively, of non-capital losses available to ~~year~~offset ~~end:~~future taxable income. These losses will expire between 2024 to 2039.

~~● 15,000 finder warrants to purchase one share of common stock exercisable at a price of US$1~~14.40 Contingent per share expired unexercised September 30, 2018; ● 220,770 warrants to purchase one share of common stock exercisable at a price of US$0.80 per share and 117,500 warrants to purchase one share of common stock exercisable at a price of $0.80 per share expired unexercised October 31, 2018; and ● 400,000 warrants to purchase one share of common stock exercisable at a price of US$1.40 per share expired unexercised November 2, 2018.Liability

~~The~~Pursuant ~~Company’s~~to ~~CEO~~the ~~advanced~~reverse ~~$20,000~~takeover totransaction with TSI, the Company inmay ~~September~~be ~~2018~~required ~~and~~to aacquire ~~further~~up $5to 296,~~000~~500 tocommon ~~the~~shares ~~Company~~of TSI, being those TSI shares still outstanding, in ~~October~~exchange ~~2018~~for 148,250 preferred shares of Subco on a one-for-two basis. ~~These~~Such preferred shares ~~advances~~would ~~bear~~then nobe ~~interest~~exchangeable ~~and~~on ~~have~~the nosame ~~repayment~~basis ~~terms~~as the 49,851,751 Subco preferred shares currently outstanding. See Note 10.

~~On October 9, 2018, the Company’s shareholders and directors approved a change of the Company’s name from Tropic International Inc~~15. ~~to Notox Technologies Corp. and an increase in the Company’s authorized capital from 300,000,000 shares of common stock~~ toSubsequent ~~500,000,000 shares of common stock . The name change and authorized capital increase were effected on November 19, 2018.~~Event

~~F-23~~The Company’s management has evaluated subsequent events up to November 29, 2019, the date the consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has determined that there have been events that have occurred that would require a disclosure in the consolidated financial statements.

(i)

On July 19, 2019, the Company entered into a binding letter of intent (“LOI”) to acquire the shares of Xthetica Inc. (“Xthetica”), a private Ontario corporation in the business of distributing, marketing and selling a variety of medical aesthetics products, for the issuance of 10,000,000 units, which includes one common share and one warrant each. The Company has not yet entered into a binding definitive agreement which will supersede the LOI in its entirety and govern the completion of the transaction. As at August 31, 2019, the Company has advanced $86,519 to Xthetica. Subsequent to August 31, 2019, the Company has advanced or paid expenses on behalf of Xthetica of $108,488 and received amounts of $186,000 from Xthetica.

F-15

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

As of the end of the period covered by this Report, management, with the participation of our Chief Executive and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, management concluded that our disclosure controls and procedures were not effective due to certain deficiencies in our internal control over financial reporting.

Internal Control over Financial Reporting

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Under the supervision of our Chief Executive Officer and Chief Financial Officer, our management conducted an assessment of the effectiveness of our internal control over financial reporting as of August 31, ~~2018~~2019 using the criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that a reasonable possibility exists that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The deficiencies described below constitute, both individually and in the aggregate, a material weakness given their potential impact on our financial reporting and internal control over financial reporting.

In its assessment of the effectiveness of our internal control over financial reporting as of August 31, ~~2018~~2019, management determined that there were deficiencies that constitute, both individually and in the aggregate, a material weakness. These deficiencies include the fact that we have no audit committee, traditionally have had no independent directors, and do not have a system in place to review and monitor internal control over financial reporting.

Management is currently evaluating remediation plans for the deficiencies and will implement changes as time and financial resources allow.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

2725

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

As of the date of this Report, the names, ages and positions of our executive officers and directors are as follows:

Name	Age	Position
John Marmora	65	President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director
Zoran Konević	61	Chief Executive Officer, Director
Zoran Konević	59	Chief Executive Officer, Director
John Marmora	66	President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

Zoran Konević – Chief Executive Officer, Director

Mr. Konević was appointed as our Chief Executive Officer and director on June 13, 2016. He is an independent consultant who, through his various holding companies, has been investing in early stage businesses in a variety of industries for over 30 years. Those industries range from manufacturing and technology to licensing and bioscience. In addition to providing capital, Mr. Konević’s participation has included creating strategic marketing themes, securing distribution channels and using international relations to benefit the subject entities.

John Marmora – President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

Mr. Marmora was appointed as our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director on the Closing Date. On November 16, 2015, he resigned as our Chief Financial Officer and Principal Accounting Officer, but was reappointed to those positions on November 10, 2016. Mr. Marmora has served as the President, Secretary, Treasurer and sole director of Tropic Spa since its inception on September 17, 2007.

Mr. Marmora has more than three decades of operational and management experience in a wide variety of industries. In 2003, he founded MCM Consulting, a sole proprietorship that manufactured and marketed a sunless tanning system, and since that time, he has been involved in the development, manufacturing and marketing of the patented sunless tanning system currently owned by Tropic Spa.

From 1977 to 1983, Mr. Marmora served as the President of Celmar Productions Inc., an award-winning company in the business of writing and producing jingles for commercial radio and television. Following that, he acted as the President of Erotico Music Inc., a music company that wrote and produced international commercial recordings and managed recording artists, from 1990 to 2004. During this period, Mr. Marmora engaged in the negotiation of multimillion-dollar contracts on behalf of the company’s clients with record labels such as Universal Music and Arista Records (a wholly owned subsidiary of Sony Music Entertainment). Over the course of his music career, he earned several notable awards for work on various recordings, including the 2002 SOCAN Songwriter of the Year Award (Pop Music) and a 2004 Juno for Instrumental Album of the Year.

Zoran Konević – Chief Executive Officer, Director

Neither Mr. Marmora nor Mr. Konević has been a director of any company with a class of securities registered pursuant to section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to the requirements of section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940, during the past five years.

2826

Corporate Governance

Our business and affairs are managed under the direction of our Board of Directors, which currently consists of Mr. ~~Marmora~~Konević and Mr. ~~Konević~~ Marmora.

Term of Office

Our directors are elected to serve until our next annual meeting of stockholders and until their successors have been elected and qualified. Our officers are appointed to serve until the meeting of our Board of Directors following the next annual meeting of our stockholders and until their successors have been elected and qualified.

Board Committees

We do not have an audit, nominating or compensation committee. We intend, however, to establish an audit committee and a compensation committee of our Board of Directors in the future. We envision that the audit committee will be primarily responsible for reviewing the services performed by our auditors and evaluating our accounting policies and our system of internal controls. The compensation committee will be primarily responsible for reviewing and approving our salary and benefits policies (including stock options) and other compensation of our executive officers.

Significant Employees

Other than our executive officers, we do not expect any other individuals to make a significant contribution to our business.

Family Relationships

There are no family relationships among our directors or executive officers or persons nominated or chosen by us to become directors or executive officers.

Legal Proceedings

None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past 10 years:

	●	any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

	●	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

	●	being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

	●	being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;

	●	being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any law or regulation prohibiting mail or wire fraud or fraud in connection with any business activity;

2927

	●	being the subject of, or a party to, any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation or any law or regulation respecting financial institutions or insurance companies; or

	●	being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any stock, commodities or derivatives exchange or other self-regulatory organization.

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Code of Ethics

We have not yet adopted a code of ethics because we have not yet finalized the content of such a code.

Management Agreements

On November 16, 2015, we entered into a consulting agreement with a corporation controlled by Azmatali Mehrali, our former Chief Financial Officer and Principal Accounting Officer, pursuant to which, among other things, we agreed to cause Subco to issue an aggregate of 1,500,000 exchangeable preferred shares to Mr. Mehrali’s corporation over two years, all of which could be rescinded in certain limited circumstances. In addition, the consulting agreement provided that we would pay Mr. Mehrali’s corporation fees of $100,000 per year plus applicable taxes upon raising an aggregate of $500,000 in gross proceeds from the sale of debt or equity securities, and grant that corporation a bonus tied to our earnings per share results in any fiscal year during the term of the agreement. On August 24, 2016, we caused Subco to issue 750,000 of the foregoing exchangeable preferred shares to Mr. Mehrali’s corporation and as at August 31, ~~2018~~2019, we owed to $75,000 in accrued remuneration to the corporation. Effective November 10, 2016, this agreement was terminated.

On December 1, 2015, we entered into consulting agreements with 1040614 Ontario Ltd., a private Ontario corporation (“1040614”) and MCM Consulting, an Ontario sole proprietorship (“MCM”). Pursuant to those agreements, 1040614, through its principal, performed various services related to business development, strategic planning and capital-raising for us and MCM, through its sole proprietor, John Marmora, our office and director, acted as our Chief Executive Officer. On June 13, 2016, those agreements were terminated and replaced by new consulting agreements.

On February 4, 2016, we entered into a consulting agreement with Zoran K Corporation, a private Ontario corporation (“ZKC”). Pursuant to that agreement, ZKC, through its principal, Zoran Konević, acted as our exclusive sales, marketing and product development agent. On June 13, 2016, the agreement was terminated and replaced by a new consulting agreement.

On June 13, 2016, we entered into new consulting agreements with 1040614 (the “1040614 Agreement”), MCM (the “MCM Agreement”) and ZKC (the “ZKC Agreement”). Pursuant to the 1040614 Agreement, 1040614, through its principal, performs general consulting services on our behalf; pursuant to the MCM Agreement, MCM, through Mr. Marmora, acts as our President; and pursuant to the ZKC Agreement, ZKC, through Mr. Konević, acts as our Chief Executive Officer. Each consulting agreement is for a period of 10 years, with successive automatic renewal periods of two years until terminated. Pursuant to these consulting agreements, each consultant is entitled to receive the following compensation:

● Remuneration – an aggregate of US$125,000 per annum plus applicable taxes on a bi-monthly basis; ● EPS Bonus – when we generate earnings per share of US$0.05, plus any multiple thereof, we are required issue the consultant 1,000,000 shares of our common stock and pay the consultant US$250,000 plus applicable taxes; ● Change of Control Bonus – immediately prior to the completion of a change of control (as defined in these consulting agreements) we are required to issue the consultant an aggregate of 20,000,000 shares of our common stock; and ● Additional Bonus – we may from time to time pay the consultant one or more bonuses as determined by our Board of Directors at its sole discretion.

	●	EPS Bonus – when we generate earnings per share of US$0.05, plus any multiple thereof, we are required issue the consultant 1,000,000 shares of our common stock and pay the consultant US$250,000 plus applicable taxes;
	●	Change of Control Bonus – immediately prior to the completion of a change of control (as defined in these consulting agreements) we are required to issue the consultant an aggregate of 20,000,000 shares of our common stock; and
	●	Additional Bonus – we may from time to time pay the consultant one or more bonuses as determined by our Board of Directors at its sole discretion.

Section 16(a) Beneficial Ownership Compliance Reporting

Section 16(a) of the Exchange Act requires a company’s directors and officers, and persons who own more than 10% of any class of a company’s equity securities which are registered under Section 12 of the Exchange Act, to file with the SEC reports of ownership on Form 3 and reports of changes in ownership on Forms 4 and 5. Such officers, directors and 10% stockholders are also required to furnish the company with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us and on written representations from certain reporting persons as August 31, ~~2018~~2019, we ~~do not~~ believe that all Section 16(a) reports applicable to our officers, directors and 10% stockholders with respect to our fiscal year ended ~~August~~ August 31, ~~2018~~2019 have not been filed.

Item 11. Executive Compensation

Summary Compensation Table

The following sets forth information with respect to the compensation awarded or paid to John Marmora, our President, Chief Financial Officer, Secretary, Treasurer and director, and Zoran Konević, our Chief Executive Officer and director, for all services rendered in all capacities to us and our subsidiaries over the past two fiscal years. We do not have any other executive officers and no other individual received total compensation from us in excess of US$100,000 during those years. Pursuant to Item 402(a)(5) of Regulation S-K we have omitted certain columns from the table since there was no compensation awarded to, earned by or paid to these individuals required to be reported in such columns in either year.

Name and Principal Position	Year Ended August 31		Salary ($)		Total ($)
John Marmora, President (1)		2018		159,674		159,674
Zoran Konević, Chief Executive Officer (1)		2019		166,186		166,186
		2017		163,466		163,466
		2018		159,674		159,674
Zoran Konević, Chief Executive Officer (2)		2018		159,674		159,674
John Marmora, President (2)		2019		166,186		166,186
		2017		163,466		163,466
		2018		159,674		159,674

(1)

~~John~~Zoran ~~Marmora~~Konević was appointed as our ~~President,~~ Chief Executive Officer, ~~Secretary, Treasurer~~ and director on ~~the~~June ~~Closing Date~~13, has served as the President, Secretary, Treasurer and sole director of Tropic Spa since the company’s inception on September 17, 2007, and was our Chief Financial Officer and Principal Accounting Officer from the Closing Date until November 16, 2015. On November 10, 2016~~, Mr~~. ~~Marmora was reappointed as our Chief Financial Officer and Principal Accounting Officer.~~

(2)

~~Zoran~~John ~~Konević~~Marmora was appointed as our President, Chief Executive Officer, Secretary, Treasurer and director on ~~June~~the 13Closing Date, has served as the President, Secretary, Treasurer and sole director of Tropic Spa since the company’s inception on September 17, 2007, and was our Chief Financial Officer and Principal Accounting Officer from the Closing Date until November 16, 2015. On November 10, 2016, Mr. Marmora was reappointed as our Chief Financial Officer and Principal Accounting Officer.

3129

Outstanding Equity Awards at Fiscal Year-End

As of August 31, ~~2018~~2019, we did not have any outstanding equity awards.

Benefit Plans

We do not have any pension plan, profit sharing plan or similar plan for the benefit of our officers, directors or employees. However, we may establish such plans in the future.

Director Compensation

We have not compensated any of our directors for their service on the Board of Directors. Management directors are not compensated for their service as directors; however, they may receive compensation for their services as employees or consultants. The compensation received by our management directors is shown in the “Summary Compensation Table” above.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding our common stock beneficially owned as of the date of this Report for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each of our officers and directors and (iii) our officers and directors as a group. A person is considered to beneficially own any shares over which such person, directly or indirectly, exercises sole or shared voting or investment power, or over which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our officers and directors is exercised solely by the beneficial owner thereof.

For the purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of our common stock that such person has the right to acquire within 60 days. For the purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percent of Class (1)		Total Voting Power (2)
Common Stock	~~John~~Zoran ~~Marmora~~Konević (3) 95123 ~~Mural~~Commerce ~~Street~~Valley Drive East, Suite ~~600~~333 ~~Richmond Hill~~Thornhill, Ontario, Canada ~~L4B~~L3T ~~3G2~~7W8		1630,~~046~~000,~~689~~000	~~(4)~~		2152.81		1427.8
Common Stock	~~Zoran~~John ~~Konević~~Marmora (54) ~~123~~95 ~~Commerce~~Mural ~~Valley Drive East~~Street, Suite ~~333~~600 ~~Thornhill~~Richmond Hill, Ontario, Canada ~~L3T~~L4B ~~7W8~~3G2		3019,~~000~~346,~~000~~678	(5)		5226.13		2717.89
All Officers and Directors as a Group			4649,~~046~~346,~~689~~678			7378.94		4245.67
Special Voting Shares (6)	John Marmora (34) 95 Mural Street, Suite 600 Richmond Hill, Ontario, Canada L4B 3G2		1			100		-
All Officers and Directors as a Group			1			100		-
Common Stock	Gerry Racicot PO Box 1041, 345691 Quaker Street Norwich, Ontario, Canada N0J 1P0		2016,~~000~~700,~~000~~011			3422.85		1815.54

(1)	Based on 57,625,343 shares of our common stock issued and outstanding as of the date hereof as well as the exchange of all preferred shares of Subco owned by the applicable holder into shares of our common stock. For clarity, the percentage ownership does not reflect the exchange of preferred shares of Subco into shares of our common stock by any person other than the applicable holder.

(2)	Based on the exchange of all 50,601,750 issued and outstanding preferred shares of Subco for shares of our common stock.

(3)	Zoran Konević is our Chief Executive Officer and director.

(4)	John Marmora is our President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director, is the Trustee under the Trust Agreement, and is the only person who possesses the right to exchange preferred shares of Subco for shares of our common stock within 60 days, since any such exchange can only be completed with the written consent of Subco.

(5)	Includes 3,299,989 shares of our common stock and 16,046,689 preferred shares of Subco, each of which exchangeable into one share of our common stock. Pursuant to the Exchangeable Share Provisions, the applicable holder may not exercise investment power over either the shares of our common stock or the preferred shares of Subco until a redemption has occurred, but may exercise voting power over the shares of our common stock through the operation of the Trust Agreement.

(6)	The Special Voting Share confers on the Trustee the number of votes equal to the number of outstanding preferred shares of Subco, other than such shares held by us or our affiliates, on all matters on which the holders of shares of our common stock are entitled to vote.

(1)	Based on 57,545,343 shares of our common stock issued and outstanding as of the date hereof as well as the exchange of all preferred shares of Subco owned by the applicable holder into shares of our common stock. For clarity, the percentage ownership does not reflect the exchange of preferred shares of Subco into shares of our common stock by any person other than the applicable holder.
(2)	Based on the exchange of all 50,601,750 issued and outstanding preferred shares of Subco for shares of our common stock.
(3)	John Marmora is our President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director, is the Trustee under the Trust Agreement, and is the only person who possesses the right to exchange preferred shares of Subco for shares of our common stock within 60 days, since any such exchange can only be completed with the written consent of Subco.
(4)	Includes only shares of our common stock issuable upon the exchange of preferred shares of Subco. Pursuant to the Exchangeable Share Provisions, the applicable holder may not exercise investment power over either the shares of our common stock or the preferred shares of Subco until a redemption has occurred, but may exercise voting power over the shares of our common stock through the operation of the Trust Agreement.
(5)	Zoran Konević is our Chief Executive Officer and director.
(6)	The Special Voting Share confers on the Trustee the number of votes equal to the number of outstanding preferred shares of Subco, other than such shares held by us or our affiliates, on all matters on which the holders of shares of our common stock are entitled to vote.

Trust Agreement

As described in the “Business” section of this Report, the Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of our common stock are exercisable by the registered holders (the “Beneficiaries”) of the preferred shares of Subco (the “Exchangeable Shares”), other than those Exchangeable Shares held by us or our affiliates, through the trustee, John Marmora, who is also one of our principal executive officers and directors (the “Trustee”). The Trustee’s address is included in the table above, and he holds legal title to a special voting share (the “Special Voting Share”) to which voting rights are attached for the benefit of the Beneficiaries.

3331

The foregoing description of the Trust Agreement is qualified in its entirety by reference to the complete text of the Trust Agreement include as Appendix 3 to the Exchange Agreement filed as Exhibit 10.1 to our current report on Form 8-K filed with the SEC on July 3, 2013.

Changes in Control

As of the date of this Report, we are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in our control.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The following includes a summary of transactions since September 1, ~~2015~~2016, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds US$120,000 and in which any related person had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

● ~~During~~At ~~the year ended~~ August 31, ~~2018~~2019, ~~John~~Zoran ~~Marmora~~Konević, our ~~President,~~ Chief ~~Financial~~Executive Officer, ~~Principal Accounting Officer, Secretary, Treasurer~~ and director, ~~advanced~~owed us $~~nil~~8,609 (~~2017~~2018 - we owed $~~nil~~51,000). This balance bears no interest and has no repayment terms. ● At August 31, ~~2018~~2019, advances payable to Mr. Marmora totaled $232,000 (~~2017~~2018 - $232,000). These advances are unsecured and bear interest at 3% per annum. Of this amount, $219,500 is due on demand and $12,500 has no repayment terms. ~~During the year ended August 31, 2018, interest expense of $6,960 (2017 - $7,000) was accrued on these advances.~~ Accrued interest payable to Mr. Marmora totaled $3239,~~538~~498 at August 31, ~~2018~~2019 (~~2017~~2018 - $2532,~~578~~538). ● ~~During~~For the ~~year~~years ended August 31, ~~2018~~2019, ~~Zoran~~2018 ~~Konević, our Chief Executive Officer~~ and ~~director~~2017, ~~advanced~~consulting usfees ~~$51,000~~paid ~~(2017~~or -accrued ~~$nil).~~as ~~These~~payable ~~advances~~to ~~are~~MCM ~~unsecured~~Consulting, ~~bear~~a nosole ~~interest~~proprietorship ~~and~~controlled ~~have~~by noMr. ~~repayment~~Marmora ~~terms.~~(“MCM”), Atwere ~~August~~$166,132 31(US$125,000), ~~2018~~$159,674 ~~advances payable to Mr. Konević totalled~~ (US$51125,000) ~~(2017~~and -$163,466 (US$~~nil~~125,000), respectively. ● For the years ended August 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, consulting fees paid or accrued as payable to ~~MCM~~Zoran ~~Consulting~~K Corporation, a ~~sole~~company ~~proprietorship~~ controlled by ~~Mr.~~Zoran ~~Marmora~~Konević, our Chief Executive Officer and director (~~MCM~~“ZKC”), were $~~159~~166,~~674~~132 (US$125,000), $~~163~~159,~~466~~674 (US$125,000) and $~~136~~163,~~665~~466 (~~$102,870 and~~ US$26125,~~040~~000)~~, respectively~~.

3432

● For the years ended August 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, consulting fees ~~paid or~~ accrued as payable to ~~Zoran K Corporation,~~ a company controlled by ~~Zoran~~a ~~Konević,~~major ~~our~~shareholder ~~Chief Executive Officer and director (“ZKC”)~~ were $~~159~~Nil,~~674~~ ~~(US~~$~~125~~65,~~000),~~481 ~~$163,466~~ (US$~~125~~52,~~000~~803) and $67163,~~509~~466 (US$56125,~~040~~000), respectively. ● ~~For~~At ~~the years ended~~ August 31, ~~2018~~2019, ~~2017~~we ~~and~~owed ~~2016, consulting fees accrued as payable to a company controlled by a major shareholder were~~ $651,481,649 (US$52842,~~803~~107), ~~$163,466~~ (~~US$125,000)~~2018 ~~and~~- $~~136~~1,~~665 ($102~~105,~~870~~924 ~~and~~ (US$26565,~~040~~257),) ~~respectively.~~in ~~● For the years ended August 31, 2018, 2017 and 2016,~~ consulting fees ~~accrued as payable~~ to ~~Edgewater~~MCM, ~~Consulting~~ZKC ~~Corp.,~~and a company controlled by ~~Azmatali~~a ~~Mehrali,~~major ~~our former Chief Financial Officer and Principal Accounting Officer (“Edgewater”), were $nil, $nil and $75,000, respectively~~shareholder. ● At August 31, ~~2018~~2019, we owed $~~438~~658,~~935~~022 ($181,070 and US$~~197~~358,~~522~~800) (~~2017~~2018 - $~~271~~438,~~984~~935 ($181,070 and US$72197,522)) in consulting fees to MCM. ● At August 31, ~~2018~~2019, we owed $~~15,737~~Nil (2017 - $515,~~329~~737) to Mr. Marmora for reimbursable expenses incurred on our behalf. ● At August 31, ~~2018~~2019, we owed $~~245~~470,~~564~~381 (US$~~188~~353,~~100~~803) (~~2017~~2018 - $79245,~~102~~564 (US$63188,100)) in consulting fees to ZKC. ● At August 31, ~~2018~~2019, we owed $~~330~~352,~~688~~246 ($181,070 and US$114,606) (~~2017~~2018 - $~~259~~330,~~448~~688 ($181,070 and US$62114,~~522~~608)) in consulting fees to a company controlled by a major shareholder. At August 31, 2018, we also owed $nil (2017 - $nil) in shareholder advances and $nil (2017 - $761) in accrued interest on these advances to the same major shareholder. ● At August 31, 2018, we owed $75,000 (2017 - $75,000) in consulting fees to Edgewater.

Other than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of those persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of US$120,000 or 1% of the average of our total assets for the last two fiscal years.

Director Independence

Because our common stock is not currently listed on a national securities exchange, we currently use the definition in NASDAQ Listing Rule 5605(a)(2) for determining director independence, which provides that an “independent director” is a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

	●	the director is, or at any time during the past three years was, an employee of the company;
	●	the director or a family member of the director accepted any compensation from the company in excess of US$120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

	●	the director is, or at any time during the past three years was, an employee of the company;

	●	the director or a family member of the director accepted any compensation from the company in excess of US$120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

	●	a family member of the director is, or at any time during the past three years was, an executive officer of the company;

	●	the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or US$200,000, whichever is greater (subject to certain exclusions);

	●	the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or

	●	the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

3533

● a family member of the director is, or at any time during the past three years was, an executive officer of the company; ● the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or US$200,000, whichever is greater (subject to certain exclusions); ● the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or ● the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

We have determined that our directors do not meet this definition of independence due to the fact that they are also our executive officers.

We do not currently have a separately designated audit, nominating or compensation committee.

Item 14. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table sets forth the fees for professional ~~audit~~ services ~~and~~rendered ~~the~~by ~~fees~~our ~~billed~~current ~~for~~auditors, ~~other~~Davidson ~~services~~& ~~rendered~~Company byLLP, and our former auditors, DeVisser Gray LLP, in connection with the audit of our financial statements for the years ended August 31, 2019 ~~2018~~ and ~~2017~~2018, respectively, as well as reviews of our interim financial statements, services provided in connection with our statutory and regulatory filings or engagements, and any other fees billed for services rendered by our auditors during these periods.

	Year Ended August 31, 2018 ($)		Year Ended August 31, 2017 ($)
	Year Ended August 31, 2019 ($)		Year Ended August 31, 2018 ($)
Audit fees		4340,~~100~~000		4543,~~909~~100
Audit-related fees		-		-
Tax fees		~~1,300~~-		21,~~700~~300
All other fees		-		-
Total		4440,~~400~~000		4844,~~609~~400

In the above table, “audit fees” are fees billed by our auditors for services provided in auditing our annual financial statements, reviewing our quarterly financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements. “Audit-related fees” are fees not included in audit fees that are billed by our auditors for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. “Tax fees” are fees billed by our auditors for professional services rendered for tax compliance, advice and planning. “All other fees” are fees billed by our auditors for products and services not included in the foregoing categories.

Policy on Pre-Approval

Our Board of Directors pre-approves all services provided by our auditors. All of the above services and fees were reviewed and approved by the Board either before or after the respective services were rendered.

3634

PART IV

Item 15. Exhibits

The following documents are filed as a part of this Report.

Exhibit Number		Exhibit Description
3(i).1		Articles of Incorporation filed with the Nevada Secretary of State on October 29, 2007 (1)
3(i).2		Certificate of Amendment filed with the Nevada Secretary of State on August 24, 2010 (1)
3(i).3		Certificate of Amendment filed with the Nevada Secretary of State on April 17, 2013 (2)
3(i).4		Articles of Merger filed with the Nevada Secretary of State on December 6, 2013 (3)
3(i).5		Certificate of Amendment filed with the Nevada Secretary of State on November 19, 2018 (4)
3(ii).1		By-Laws (1)
3(ii).2		Amended and Restated By-Laws (5)
10.1		Share Exchange Agreement dated June 28, 2013 with 1894632 Ontario Inc., Tropic Spa Inc. and the shareholders of Tropic Spa Inc. (56)
10.2		Amendment to Share Exchange Agreement dated February 17, 2015 with 1894632 Ontario Inc., Tropic Spa Inc. and the shareholders of Tropic Spa Inc. (67)
10.3		Share Exchange Agreement dated June 6, 2016 with Notox Bioscience and the shareholders of Notox Bioscience Inc. (78)
10.4		Amendment to Share Exchange Agreement dated November 23, 2016 with Notox Bioscience Inc. and the shareholders of Notox Bioscience Inc. (89)
21		1894631 Ontario Inc. (Ontario, Canada), 1894632 Ontario Inc. (Ontario, Canada), Notox Bioscience Inc. (Nevada), Tropic Spa Inc. (Ontario, Canada)
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Presentation Linkbase

(1)	Incorporated by reference from our registration statement on Form 10, filed with the SEC on October 15, 2010.

(2)	Incorporated by reference from our quarterly report on Form 10-Q, filed with the SEC on June 20, 2013.

(3)	Incorporated by reference from our annual report on Form 10-K, filed with the SEC on December 9, 2013.

(4)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on November 26, 2018.

(5)	Incorporated by reference from our annual report on Form 10-K, filed with the SEC on December 14, 2018.

(6)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on July 3, 2013.

(7)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on February 19, 2015.

(8)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on June 13, 2016.

(9)	Incorporated by reference from our quarterly report on Form 10-Q, filed with the SEC on January 19, 2017.

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Presentation Linkbase

Item 16. Form 10-K Summary

(1)	Incorporated by reference from our registration statement on Form 10, filed with the SEC on October 15, 2010.
(2)	Incorporated by reference from our quarterly report on Form 10-Q, filed with the SEC on June 20, 2013.
(3)	Incorporated by reference from our annual report on Form 10-K, filed with the SEC on December 9, 2013.
(4)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on November 26, 2018
(5)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on July 3, 2013.
(6)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on February 19, 2015.
(7)	Incorporated by reference from our current report on Form 8-K, filed with the SEC on June 13, 2016.
(8)	Incorporated by reference from our quarterly report on Form 10-Q, filed with the SEC on January 19, 2017.

Not required.

3835

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.

Dated: December 14, 2018	NOTOX TECHNOLOGIES CORP.
Dated: November 29, 2019	NOTOX TECHNOLOGIES CORP.
	By:	/s/ John Marmora
		John Marmora
		President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, 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/ John Marmora	President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director	~~December~~November 1429, ~~2018~~2019
John Marmora
/s/ Zoran Konević	Chief Executive Officer, Director	~~December~~November 1429, ~~2018~~2019
Zoran Konević

3936

Filing Compare · NOTOX TECHNOLOGIES CORP.