ii

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CELL MEDX CORP.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN US DOLLARS)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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CELL MEDX CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(EXPRESSED IN US DOLLARS)

(Unaudited)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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CELL MEDX CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

(EXPRESSED IN US DOLLARS)

(Unaudited)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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CELL MEDX CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN US DOLLARS)

(Unaudited)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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CELL MEDX CORP.

NOTES TO THE UNAUDITED INTERIM

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOVEMBER 30, 2018

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Cell MedX Corp. (the “Company”) was incorporated under the laws of the State of Nevada. On April 26, 2016, the Company formed a subsidiary, Cell MedX (Canada) Corp. (“Cell MedX Canada”) under the laws of the province of British Columbia.

The Company is in an early development stage focusing on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general wellness and alleviate complications associated with medical conditions including, but not limited to, diabetes, Parkinson’s disease, and high blood pressure.

Unaudited Interim Financial Statements

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended May 31, 2018, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited consolidated financial statements should be read in conjunction with those audited consolidated financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended November 30, 2018, are not necessarily indicative of the results that may be expected for the year ending May 31, 2019.

Going concern

The accompanying unaudited interim consolidated condensed financial statements have been prepared assuming the Company will continue as a going concern. As of November 30, 2018, the Company has not achieved profitable operations and has accumulated a deficit of $6,421,823. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that the Company will be able to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock.

NOTE 2 - RELATED PARTY TRANSACTIONS

Amounts due to related parties, other than notes payable to related parties (Note 7) at November 30, 2018 and May 31, 2018:

These amounts are unsecured, due on demand and bear no interest.

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During the six-month periods ended November 30, 2018 and 2017, the Company had the following transactions with related parties:

NOTE 3 - INVENTORY

As at November 30, 2018, the inventory consisted of supplies held for resale valued at $13,694 (May 31, 2018 - $10,793) and work in progress, which was associated with manufacturing of eBalance devices, valued at $46,093 (May 31, 2018 - $Nil).

NOTE 4 - OTHER CURRENT ASSETS

As at November 30, 2018, other current assets consisted of $2,572 in prepaid expenses (May 31, 2018 - $23,915) and $6,644 in receivables associated with GST Cell MedX Canada paid on the taxable supplies (May 31, 2018 - $2,351).

NOTE 5 - EQUIPMENT

Amortization schedule for the equipment at November 30, 2018 and May 31, 2018:

NOTE 6 - UNEARNED REVENUE

As at May 31, 2018, the Company recorded $301,277 (May 31, 2018 - $51,585) in unearned revenue for deposits, of which $250,000 represented a refundable deposit for exclusive worldwide distribution rights the Company received from an arms-length party under the terms of the letter of intent (the “LOI”) the Company signed on September 10, 2018.

NOTE 7 - NOTES AND ADVANCES PAYABLE

The tables below summarize the short-term loans and advances outstanding as at November 30, 2018 and May 31, 2018:

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(1) Former Related Party Loans Payable

During the six-month period ended November 30, 2018, the Company entered into three separate unsecure loan agreements with Mr. Richard Jeffs, our shareholder, for a total of $23,029 (CAD$30,000) (May 31, 2018 - $34,840):

(2) Advances Payable

During the six-month period ended November 30, 2018, the Company borrowed $28,871 from unrelated parties. The advances are non-interest bearing, unsecured and payable on demand.

Interest Expense

During the six-month period ended November 30, 2018, the Company recorded $4,790 (2017 - $8,241) in interest expense associated with its liabilities under the notes and advances payable.

NOTE 8 - SHARE CAPITAL

Options

The changes in the number of stock options outstanding during the six-month period ended November 30, 2018, and for the year ended May 31, 2018 are as follows:

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Details of options outstanding and exercisable as at November 30, 2018, are as follows:

At November 30, 2018, the weighted average remaining contractual life of the stock options outstanding was 2.45 years.

Warrants

The changes in the number of warrants outstanding during the six-month period ended November 30, 2018, and for the year ended May 31, 2018 are as follows:

Details of warrants outstanding as at November 30, 2018, are as follows:

At November 30, 2018, the weighted average life and price of the warrants was 2.64 years and $0.83, respectively.

NOTE 9 - SUBSEQUENT EVENT

Subsequent to November 30, 2018, the Company entered into a credit line agreement (the “Agreement”) with Mr. Jeffs (the “Lender”), for an unsecured line of credit of up to $250,000 (the “Credit Line”) of which $100,000 was advanced to the Company on December 20, 2018. The funds advanced under the Credit Line accumulate interest at a rate of 6% per annum compounded monthly.

In consideration for the Credit Line the Company issued to the Lender non-transferable share purchase warrants (the “Warrants”) to purchase up to 5,000,000 shares exercisable at $0.05 per share and expiring on December 27, 2021. The Warrants vest at a rate of 20 warrants for every $1 drawn on the Credit Line, with 2,000,000 warrants having vested on the grant date.

In addition, in recognition of $124,148 previously advanced by the Lender, the Company issued to the Lender non-transferable share purchase warrants (the “Additional Warrants”) to purchase up to 2,482,960 shares exercisable at $0.05 per share and expiring on December 27, 2021. The Additional Warrants vested at the time of grant.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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

The discussion provided in this Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2018, filed with the United States Securities and Exchange Commission (the “SEC”) on September 13, 2018.

Overview

We were incorporated as Plandel Resources, Inc. under the laws of the State of Nevada on March 19, 2010. On March 24, 2014, we changed our name to Sports Asylum, Inc. and on September 30, 2014, we changed our name to Cell MedX Corp. to reflect our current business direction.

On November 25, 2014, we completed the acquisition of a proprietary method for the application of bioelectric signaling to treat diabetes and related ailments (the “eBalance Technology”).  With our acquisition of the eBalance Technology, we have shifted our business direction to the discovery, development, and commercialization of therapeutic and non-therapeutic products that promote general wellness and alleviate complications associated with medical conditions including, but not limited to, diabetes, Parkinson’s disease, and high blood pressure.

On April 26, 2016, we formed a subsidiary, Cell MedX (Canada) Corp., (the “Subsidiary”) under the laws of the Province of British Columbia, in anticipation of increased business activity in Canada. As of the day of this Quarterly Report on Form 10-Q, the Subsidiary is engaged in manufacturing and further development of eBalance Technology.

Recent Corporate Developments

The following corporate developments occurred during the quarter ended November 30, 2018, and up to the date of the filing of this report:

Letter of Intent for Worldwide Distribution Rights

On September 10, 2018, we entered into a non-binding letter of intent (the “LOI”) with Live Current Media, Inc. (“LIVC”), an arms-length party, for worldwide distribution rights of eBalance devices for home-based usage.

Pursuant to the LOI, we agreed to enter into negotiations with LIVC aiming at obtaining a definitive agreement within a 90-day period.  LIVC advanced us $250,000 as a deposit for exclusive worldwide distribution rights (the “Deposit”). If we do not reach a definitive agreement within contemplated 90 days of the execution of the LOI, the deposit will be treated as a non-interest bearing advance payable on demand.

On December 10, 2018, we extended the LOI for an additional 90-day period on the same terms as previously agreed upon.

Royalty Agreements

On September 6, 2018, we entered into an intellectual property royalty agreement (the “IP Royalty Agreement”), whereby we agreed to acquire certain additional developments and improvements for our eBalance devices that were developed by the IP Vendor in exchange for a perpetual royalty of USD$350 or CAD$350 for each device sold, distributed or licensed whether through a distributor, sales representative or directly by us. We agreed that the currency of the royalty payments would depend on the currency the revenue is generated in.

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On September 6, 2018, we entered into an additional royalty agreement with Richard Jeffs, our shareholder (the “Royalty Agreement”). Under the Royalty Agreement, we agreed to pay Mr. Jeffs, in perpetuity, a 10% royalty on the revenue we receive from any distributors or end-users introduced to us by Mr. Jeffs.

Update on the Current Status of eBalance Devices

At the beginning of December 2018, we completed manufacturing of our first 100 Canadian-built eBalance devices. Upon receiving our Certificate of Conformity from LabTest Certification Inc., qualifying the eBalance devices as Class A (professional use) and Class B (in-home use), we collaborated with our production facility operated by NDS Electronic Solutions Inc. (“NDS”) in order to manufacture the eBalance devices. The new Canadian-built eBalance devices are manufactured in accordance with the design specifications and stringent standards imposed by the Company. The eBalance devices were certified to CSA, CE and UL standards for electrical safety and emission standards, and are eligible to bear the LabTest Certification Mark with adjacent indicators “C” and “US”.

The Company is expecting that majority of the eBalance devices manufactured in December will be used for promotional and introductory material. However, the Company is also expecting to start its commercial activity in January of 2019.

Credit Line Agreement

On December 27, 2018, we entered into an agreement with Mr. Richard Jeffs (the “Lender”), the Company’s shareholder (the “Agreement”), for an unsecured line of credit of up to $250,000 (the “Credit Line”) of which $100,000 was advanced to the Company on December 20, 2018.

Under the Agreement, we may borrow against the Credit Line and repay any portion of the amount borrowed at any time. The funds advanced under the Credit Line accumulate interest at a rate of 6% per annum. In consideration for the Credit Line, we issued to the Lender non-transferable share purchase warrants (the “Warrants”) to purchase up to 5,000,000 shares of our common stock exercisable at $0.05 per share and expiring on December 27, 2021. The Warrants vest at a rate of 20 warrants for every $1 drawn on the Credit Line, with 2,000,000 warrants having vested on the grant date of the Warrants on account of $100,000 advance noted above.

In addition, in recognition of $124,148 previously advanced by the Lender, we issued to the Lender non-transferable share purchase warrants (the “Additional Warrants”) to purchase up to 2,482,960 shares exercisable at $0.05 per share and expiring on December 27, 2021. The Additional Warrants vested at the time of grant.

We are planning to use the funds available under the Credit Line for working capital and to increase the current inventory of eBalance devices to facilitate our move toward commercialization.

Results of Operations for the Three and Six Months Ended November 30, 2018, and 2017

Our operating results for the three and six months ended November 30, 2018, and 2017, and the changes in the operating results between those periods are summarized in the table below.

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Revenues

We did not generate any revenue during the three and six months ended November 30, 2018, and 2017. Due to the current concentration on research and development of our eBalance Technology and devices based on this technology, and to a small market share, we do not expect to have significant operating revenue in the near future.

Operating Expenses

During the three-month period ended November 30, 2018, our operating expenses decreased by 31%, or $56,194 from $181,063 incurred during the three months ended November 30, 2017, to $124,869 incurred during the three months ended November 30, 2018. The decrease was mainly associated with a $38,324 reduction in our amortization expense, which decreased from $38,434 at November 30, 2017, to $110 at November 30, 2018; the decrease resulted from us fully expensing our equipment at May 31, 2018. In addition to the reduced amortization, our research and development and general and administrative fees decreased by $7,858 and $9,138, respectively, and our stock-based compensation decreased by $6,130. These reductions were in part offset by increases to our consulting fees, which increased by $5,256, from $61,422 at November 30, 2017, to $66,678 at November 30, 2018.

During the six-month period ended November 30, 2018, our operating expenses decreased by 63.6% from $1,006,424 incurred during the six months ended November 30, 2017, to $366,192 incurred during the six months ended November 30, 2018. The most significant changes were as follows:

·

During the six-month period ended November 30, 2018, our consulting fees decreased by $514,243, from $644,881 we incurred during the six-month period ended November 30, 2017, to $130,638 we incurred during the six months ended November 30, 2018. Larger consulting fees during the six-month period ended November 30, 2017, were associated with a fair market value of the options to acquire up to 1,750,000 shares of our common stock we granted to our consultants for business development services. We did not grant any stock options to consultants during the six-month period ended November 30, 2018.

·

Our research and development fees for the six-month period ended November 30, 2018, increased by $94,373, from $88,994 we incurred during the six-month period ended November 30, 2017, to $183,367 we incurred during the six months ended November 30, 2018. The higher research and development fees during the six-month period ended November 30, 2018, resulted mainly from $140,460 (CAD$185,000) we incurred to Western Robotics Ltd., whom we engaged to assist us with enhancement and further re-designing of our eBalance Pro wellness devices.

·

Our stock-based compensation for the six-month period ended November 30, 2018, decreased by $106,931, as we did not have any transactions that would have resulted in equity compensation. During the comparative six-month period ended November 30, 2017, our stock-based compensation was $106,931 and included $89,556 in fair market value of the options to acquire up to 300,000 shares of our common stock we granted to Ms. Silina pursuant to the stock option agreement with her, and $17,375 in fair market value of the options to acquire up to 2,400,000 shares of our common stock we granted to Dr. Sanderson, our former Chief Medical Officer.  

·

Our general and administrative fees for the six-month period ended November 30, 2018, decreased by $35,984, or 40.9%, from $88,061 we incurred during the six-month period ended November 30, 2017, to $52,077 we incurred during the six months ended November 30, 2018. The largest factor that contributed to this change was associated with fluctuations in foreign exchange rates, which resulted in $1,257 loss we recorded during the six-month period ended November 30, 2018, as compared to $18,622 loss we recorded during the six-month period ended November 30, 2017. Other factors that affected our general and administrative fees were professional fees of $182 (2017 - $9,971), filing and regulatory fees of $13,237 (2017 - $12,788), office expenses of $2,809 (2017 - $5,537), accounting and audit fees of $770 (2017 - $4,250), and travel and entertainment expenses of $3,518 (2017 - $6,313).

·

Our amortization expenses, decreased by $77,447, from $77,557 we recorded for the six-month period ended November 30, 2017, to $110 we recorded for the six-month period ended November 30, 2018. The decrease was associated with our decision to fully expense the equipment we acquired in the prior years, as the Company did not expect to receive a future benefit from the equipment.

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Other Items

·

During the six-month period ended November 30, 2018, we accrued $4,790 (2017 - $8,241) in interest associated with the outstanding notes payable. Of this interest, $4,294 (2017 - $3,170) was accrued on the notes payable we issued to Mr. Jeffs, our shareholder.

Liquidity and Capital Resources

Working Capital

As of November 30, 2018, we had a cash balance of $24,377, a working capital deficit of $1,438,826 and cash flows used in operations of $63,434 for the period then ended. During the six-month period ended November 30, 2018, we funded our operations with $23,029 (CAD$30,000) we received from Mr. Jeffs, our shareholder, $23,975 (CAD$31,200) we received from an unrelated lender and $28,871 we borrowed from unrelated parties as short-term, non-interest bearing advances.

We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the period ended November 30, 2018. The amount of cash we have generated from our operations to date is significantly less than our current debt obligations. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under these notes and advances payable, or to service our other debt obligations. If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that we will be able to continue as a going concern.

Cash Flows

Net Cash Used in Operating Activities

Net cash used in operating activities during the six months ended November 30, 2018, was $63,434. This cash was primarily used to cover our cash operating expenses of $368,483, to increase our inventory by $3,240, work in progress by $46,832, and to decrease our accrued liabilities by $13,107. These uses of cash were offset by increases in our accounts payable and amounts due to related parties of $75,053 and $26,352, respectively, by $16,823 increase to our current assets and $250,000 increase in unearned revenue associated with a deposit we received under the LOI with Live Current Media, Inc.

Net cash used in operating activities during the six months ended November 30, 2017, was $333,204. This cash was primarily used to cover our cash operating expenses of $294,402, to increase our inventory by $6,017, work in progress recorded as part of inventory by $15,116, and current assets by $99,028. The cash used for current assets included $97,010 (CAD$125,000) we paid under our Development Agreement to enhance our eBalance Pro Wellness device. In addition, we used our cash to reduce our accrued liabilities by $74,719. These uses of cash were offset by increases in our accounts payable and amounts due to related parties of $66,244 and $30,246, and $59,588 in unearned revenue associated with a deposit we received on eBalance distribution contract.

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Non-cash transactions

During the six months ended November 30, 2018, our net loss was affected by the following expenses that did not have any impact on cash used in operations:

·

$4,790 in interest we accrued on the outstanding notes payable. Of this interest, $4,294 was accrued on the notes payable we issued to Mr. Jeffs, our shareholder;

·

$387 in financing fees associated with notes payable we issued to Mr. Jeffs;

·

$110 in amortization on new equipment we acquired for our manufacturing operations, and

·

$2,788 in unrealized foreign exchange, which resulted from fluctuations of the Canadian dollar and European Euro-denominated transactions.

During the six months ended November 30, 2017, our net loss was affected by the following expenses that did not have any impact on cash used in operations:

·

$106,931 in stock-based compensation, of which $89,556 was associated with the fair value of the options to purchase up to 300,000 shares of our common stock we granted to Ms. Silina, our CFO, as compensation for her services; and $17,375 was associated with the fair value of the options to purchase up to 2,400,000 shares of our common stock we granted to Dr. Sanderson, our Chief Medical Officer;

·

$522,407 in fair value of the option to acquire up to 1,750,000 shares our common stock we issued for consulting services;

·

$8,241 in interest we accrued on the outstanding notes payable. Of this interest, $3,170 was accrued on the notes payable we issued to Mr. Jeffs, our shareholder;

·

$77,557 in amortization expense we recorded on the equipment we use in our research of the eBalance Technology; and

·

$5,127 in unrealized foreign exchange, which resulted from fluctuations of the Canadian dollar and European Euro-denominated transactions.

Net Cash Provided by Financing Activities

During the six months ended November 30, 2018, we borrowed a total of  $23,029 (CAD$30,000) from our shareholder. Of this amount CAD$20,000 in principal bear interest at 12% per annum, compounded monthly, are unsecured and payable on demand; and CAD$10,000 was advanced as a non-interest bearing short-term loan, which was payable within 14 days from the grant. We have not repaid this loan when due, and therefore it is payable on demand. In addition, we borrowed $23,975 (CAD$31,200) from an unrelated party. The loan bears interest at 6% per annum and is compounded monthly.  During the same period, we borrowed a total of $28,871 from unrelated parties under non-interest bearing advances which are payable on demand.

During the six-month period ended November 30, 2017, we borrowed a total of $19,318 (CAD$25,000) from our shareholder and $6,000 from an unrelated party. The loans are unsecured, payable on demand and bear interest at 6% per annum, compounded monthly. In addition to the loans, we received $370,000 from subscriptions to the units of our common stock under the Offering, which we closed on October 12, 2017. During the same period we repaid net of $22,704 in non-interest bearing advances with an unrelated party.

On September 15, 2017, we received a notice from Mr. Jeffs that he had assigned the rights to $7,984 due to him under the demand notes payable and $54,516 due to him under the Term Loan to two unaffiliated parties. The assignees notified the Company of their intention to convert the debt acquired by them from Mr. Jeffs into the shares of the Company’s common stock as part of the proposed debt restructuring initiative (the “Debt Restructuring”), which we completed on October 12, 2017.

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Net Cash Used in Investing Activities

During the six months ended November 30, 2018, we spent $1,915 acquiring equipment for the manufacturing of our eBalance devices. We did not have any investing activities during the six months ended November 30, 2017.

Going Concern

The notes to our unaudited interim consolidated financial statements as at November 30, 2018, disclose our uncertain ability to continue as a going concern. Our current business operations are in an early development stage, and as such, we were able to generate only minimal revenue from the operations. Our research and development plans, as well as our commercialization efforts of the eBalance devices in the near future, will require large capital expenditures, which we are planning to mitigate through equity or debt financing, or by requiring upfront deposits from our potential distributors, once we begin commercial production of our eBalance devices.

We have accumulated a deficit of $6,421,823 since inception, and increased sales will be required to fund and support our operations. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. Our audited consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern and therefore be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. We have applied our critical accounting policies and estimation methods consistently.

Changes in and Disagreements with Accountants on Accounting Procedures and Financial Disclosure

None.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

None

Item 4. Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These controls and procedures 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 Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2018. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed within the time periods specified in Securities and Exchange Commission’s rules and forms due to lack of segregation of duties.

During the quarter ended November 30, 2018, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There is a high degree of risk associated with investing in our securities.  Prospective investors should carefully read this Quarterly Report on Form 10-Q and consider the following risk factors when deciding whether to purchase our securities.

The risk factors outlined below are some of the known, substantial, material and potential risks that could adversely affect our business, financial condition, operating results, and common share value. We cannot assure that we will successfully address these or any unknown risks and a failure to do so can have a negative impact on your investment.  We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also impair or adversely affect our business, financial condition or results of operation.

Risks Associated with our Company and our Industry

We operate in a highly competitive market. We face competition from large, well established medical device manufacturers and pharmaceutical companies in the market for treating and managing diabetes and related ailments.  Many of these companies are very well accepted by health practitioners and have significant resources, and we may not be able to compete effectively.

The market for devices and therapies for treating and managing diabetes and related ailments is intensely competitive, subject to rapid change and significantly affected by new product introductions. We compete indirectly with large pharmaceutical and medical device companies, such as Bayer Corp., Becton Dickinson Corp., LifeScan Inc., a division of Johnson & Johnson, MediSense Inc., and TheraSense Inc. These competitors’ products are based on traditional healthcare model and are well accepted by health practitioners and patients. If these companies decide to penetrate our target market they could threaten our position in the market.

We are subject to numerous governmental regulations which can increase our costs of developing our eBalance Technology and products based on this technology.

Our products may be subject to rigorous regulation by the FDA, Health Canada, and numerous international, supranational, federal, and state authorities. The process of obtaining regulatory approvals to market a medical device can be costly and time-consuming, and approvals might not be granted for future products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for, our products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues, and substantial additional costs. In addition, we can give no assurance that we will remain in compliance with applicable FDA, Health Canada, and other regulatory requirements once we receive an approval or marketing authorization for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, and advertising and post-marketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns.

Changes in the health care regulatory environment may adversely affect our business.

A number of the provisions of the U.S. Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and its amendments changed access to health care products and services and established new fees for the medical device industry. Future rulemaking could increase rebates, reduce prices or the rate of price increases for health care products and services, or require additional reporting and disclosure. We cannot predict the timing or impact of any future rulemaking.

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Competitors' intellectual property may prevent us from selling our products or have a material adverse effect on our future profitability and financial condition.

Competitors may claim that our Technology infringes upon their intellectual property. Resolving an intellectual property infringement claim can be costly and time-consuming and may require us to enter into license agreements. We cannot guarantee that we would be able to obtain license agreements on commercially reasonable terms. A successful claim of patent or other intellectual property infringement could subject us to significant damages or an injunction preventing the manufacture, sale or use of our product. Any of these events could have a material adverse effect on our profitability and financial condition.

Our research and development efforts may not result in the development of commercially successful products based on our eBalance Technology, which may hinder our profitability and future growth.

Our eBalance Technology is currently in the research and development stage as are our planned products incorporating this technology.  To develop commercially marketable products, we will be required to commit substantial efforts, funds, and other resources to research and development. A high rate of failure is inherent in the research and development of new products and technologies. We must make substantial ongoing expenditures without any assurance that our efforts will be commercially successful. Failure can occur at any point in the process, including after investment of significant funds. Planned products may fail to reach the market or may only have limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or infringement of the intellectual property rights of others.

Even if we successfully develop marketable products or commercially develop our current technology, we may be quickly rendered obsolete by changing customer preferences, changing industry standards, or competitors' innovations.

Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursement. We cannot state with certainty when or whether we will be launching our products under development, whether we will be able to develop, license, or otherwise acquire new products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause our products to become obsolete, causing our revenues and operating results to suffer.

New products and technological advances by our competitors may negatively affect our results of operations.

Our products face intense competition from our competitors. Competitors' products may be safer, more effective, more effectively marketed or sold, or have lower prices or superior performance features than our products. We cannot predict with certainty the timing or impact of the introduction of competitors' products.

Significant safety concerns could arise for our products, which could have a material adverse effect on our revenues and financial condition.

Healthcare products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If new safety issues are reported, we may be required to amend the conditions of use for a product. For example, we may be required to provide additional warnings on a product's label or narrow its approved intended use, either of which could reduce the product's market acceptance. If serious safety issues arise with our product, sales of the product could be halted by us or by regulatory authorities. Safety issues affecting suppliers' or competitors' products also may reduce the market acceptance of our products.

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Inability to attract and maintain key personnel may cause our business to fail.

Success depends on the acquisition of key personnel.  We will have to compete with other companies both within and outside the healthcare industry to recruit and retain competent employees and consultants.  If we cannot maintain qualified personnel to meet the needs of our anticipated growth, we could face material adverse effects on our business and financial condition.

To date we have generated only minimal revenues.  If we cannot increase our revenues to start generating profits, our investors may lose their entire investment.

We need to acquire additional financing, or our business will fail.

We must obtain additional capital, or our business will fail. To continue development of our eBalance Technology and to complete clinical trials, we must secure more funds. Currently, we have very limited resources and have already accumulated a net loss. Financing may be subject to numerous factors including investor sentiment, acceptance of our technology and so on.  We currently have no arrangements for additional financing.  We may also have to borrow large sums of money that require substantial capital and interest payments.

Risks related to our stock

We expect to raise additional capital through the offering of more shares, which will result in dilution to our current shareholders.

Raising additional capital through future offerings of common stock is expected to be necessary for our Company to continue.  However, there is no guarantee that we will be successful in raising additional capital. Issuance of additional stock will increase the total number of shares issued and outstanding resulting in a decrease in the percentage interest held by each of our shareholders.

There is a limited market for our common stock meaning that our shareholders may not be able to resell their shares.

Our common stock currently has a limited market which may restrict shareholders’ ability to resell their stock or use their stock as collateral. Thus, the shareholders may have to sell their shares privately which may prove very difficult. Private sales are more difficult and often give lower than anticipated prices.

Should a larger public market develop for our stock, future sales of shares may negatively affect their market price.

Even if a larger market develops, the shares may be sparsely traded and have wide share price fluctuations. Liquidity may be low despite there being a market, making it difficult to get a return on the investment. The price also depends on potential investor’s feelings regarding the results of our operations, the competition of other companies’ shares, our ability to generate future revenues, and market perception about future of microcurrent technologies.

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Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.

Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

·

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

·

contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of securities laws;

·

contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

·

contains a toll-free telephone number for inquiries on disciplinary actions;

·

defines significant terms in the disclosure document or the conduct of trading in penny stocks; and

·

contains such other information and is in such form, including language, type, size, and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

We have not paid nor anticipate paying cash dividends on our common stock.

We have not declared any dividends on our common stock during the past two fiscal years or at any time in our history.  The Nevada Revised Statutes (the “NRS”), provide certain limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

(a)

we would not be able to pay our debts as they become due in the usual course of business; or

(b)

except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution.

We do not expect to declare any dividends in the foreseeable future as we expect to spend any funds legally available for the payment of dividends on the development of our business.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On December 27, 2018, the Company issued to Mr. Richard Jeffs (the “Lender”) non-transferable share purchase warrants (the “Warrants”) to purchase up to 5,000,000 shares of Cell MedX’s common stock exercisable at US$0.05 per share and expiring on December 27, 2021. The Warrants were issued as consideration for the line of credit Mr. Jeffs made available to the Company under the Agreement for Credit Line, as more specifically described in  the Part I, Item 2, Recent Corporate Developments section of this Quarterly Report on Form 10-Q. The Warrants vest at a rate of 20 warrants for every $1 drawn on the Credit Line, with 2,000,000 warrants having vested on the grant date of the Warrants on account of $100,000 advance issued on December 20, 2018.

In addition, in recognition of $124,148 previously advanced by the Lender in series of separate loan agreements, the Company issued to the Lender non-transferable share purchase warrants (the “Additional Warrants”) to purchase up to 2,482,960 shares exercisable at $0.05 per share and expiring on December 21, 2021. The Additional Warrants vested at the time of grant.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

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21

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(1)

Filed as an exhibit to the Company’s Registration Statement on Form S-1 filed with SEC on July 13, 2010

(2)

Filed as an exhibit to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed with SEC on October 13, 2010

(3)

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with SEC on August 26, 2014

(4)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on September 5, 2014

(5)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 9, 2014

(6)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on October 17, 2014

(7)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 3, 2014

(8)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 18, 2014

(9)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 3, 2014

(10)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 13, 2015

(11)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2015

(12)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2016

(13)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 15, 2015

(14)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 9, 2016

(15)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2016

(16)

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 13, 2016

(17)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on September 29, 2016

(18)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2017

(19)

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on August 29, 2017

(20)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 17, 2017

(21)

Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 16, 2018

(22)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 5, 2017.

(23)

Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 13, 2018.

(24)

Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 31, 2018.

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SIGNATURES

Pursuant to the requirements 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.

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