Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

OR

For the fiscal year ended December 31, 20172018

OR

OR

Commission file number 000-30087

EMPOWER CLINICS INC. (formerly ADIRA ENERGY LTD.)
(Exact name of Registrant specified in its charter)

CANADA
(Jurisdiction of incorporation or organization)

400-570 Granville918-1030 West Georgia Street
Vancouver BC
Canada V6E 2Y3V6C 3P1
(Address of principal executive offices)

Contact Person: Craig SnyderSteven McAuley
Address: 400-570 Granville918-1030 West Georgia Street
Vancouver BC
Canada V6C 3P1V6E 2Y3
Email: c.snyder@empoweclinics.coms.mcauley@empowerclinics.com
Telephone: (206) 718-3288(604) 789-2146
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

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

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

COMMON SHARES
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

The number of outstanding shares of the Company’s only class of capital or common stock as at December 31, 20172018 was 17,112,02277,847,598 common shares.

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

Yes ☐                  No ☒

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

Yes ☐                  No ☒

Indicate by check mark whether 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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒                  No ☐

Indicate by check mark whether Registrant has submitted electronically, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐                  Accelerated filer ☐

Non-accelerated filer ☒                   Emerging growth company ☐

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

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

If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow:

Item 17 ☐                  Item 18 ☐

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

Yes ☒                  No ☐                 No☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by checkmark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

YES ☐                  NO ☐

Our financial reporting may be subject to weaknessesChange in internal controls.Laws, Regulations and Guidelines.

Internal controls over financial reportingThe Company operates in an industry that is not recognized as a legal industry by the US Federal government.

The Company operates a growing network of physician-staffed medical cannabis clinics with a primary focus on enabling patients to improve and protect their health. These clinics operate in those states where the medicinal use of cannabis produces is permitted.

Beyond its primary public service business, the Company also garners royalties from the sale of proprietary medical cannabis products manufactured, dispensed, and delivered by third party channel partners. The Company will be dependent on its third party clients and channel partners for the success of this aspect of its business.

The Company’s operations are procedures designedsubject to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use,a variety of laws, regulations and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respectguidelines relating to the reliabilitymanufacture, management, transportation, storage and disposal of medical cannabis and also including laws and regulations relating to health and safety, privacy and the conduct of operations. While to the knowledge of the Company's management, the Company is currently in compliance with all such laws, changes to such laws, regulations and guidelines due to matters beyond the control of the Company may cause adverse effects to the Company's operations and the financial reportingcondition of the Company.

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

We cannot be certain that current expected expenditures and completion/testing programs will be realized.Market Risks.

We believe thatThe Company’s securities will trade on public markets and the costs usedtrading value thereof is determined by the evaluations, perceptions and sentiments of both individual investors and the investment community taken as a whole. Such evaluations, perceptions and sentiments are subject to prepare internal budgets are reasonable; however, there are assumptions, uncertainties,change, both in short term time horizons and risk that may cause our allocated fundslonger term time horizons. An adverse change in investor evaluations, perceptions and sentiments could have a material adverse outcome on the Company and its securities.

Price Risks.

Cannabis is a per well basisdeveloping market, likely subject to changevolatile and possibly declining prices year over year, as a result of havingincreased competition. Because medical cannabis products are a newly commercialized and regulated industry, historical price data is either not available or not predictive of future price levels. There may be downward pressure on the average prices for medical cannabis products and that price volatility might not be favorable to alter certain activities from those originally proposed or programmedthe Company. Pricing will depend on the number of patients who gain physician approval to reduce and mitigate uncertainties and risks. These assumptions, uncertainties, and risks are inherentpurchase medical cannabis. An adverse change in the completion and testing of wells and can include but are not limited to: pipe failure, casing collapse, unusualcannabis prices, or unexpected formation pressure, environmental hazards, and other operating or production risk intrinsic in oil and/or gas activities. Any ofinvestors’ beliefs about trends in those prices, could have a material adverse outcome on the above may cause a delay in our completion programCompany and its ability to determine reserve potential.

securities.

We may no effectively manager the cannabis business of SMAART currently carried on in the United States..Financing Risks.

there are uncertainties surrounding the Resulting Issuer carryingThe Company will be dependent on the existing medical cannabis businessraising capital through a combination of SMAART currently carried on in the United States. Currently, there are 29 states of the United States, including the District of Columbia, that have laws debt and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely, under the Controlled Substance Act (the “CSA”), the policies and regulations of the Federal government and its agencies are that cannabis has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited. Unless and until Congress amends the CSA with respect to medical marijuana, as to the timing or scope of any such potential amendments thereequity offerings. There can be no assurance there isthat the capital markets will remain favorable in the future, and/or that the Company will be able to raise the financing needed to continue its business at favorable terms, or at all. Restrictions on the Company’s ability to finance could have a risk that federal authorities may enforce current federal law,material adverse outcome on the Company and we may be deemed to be producing, cultivating or dispensing marijuana in violation of federal law or we may be deemed to be facilitating the selling or distribution of drug paraphernalia in violation of federal law with respect to our current or proposed business operations. Active enforcement of the current federal regulatory position on cannabis may thus indirectly and adversely affect the Resulting Issuer’s future cash flows, earnings, results of operations and financial condition.its securities.

The risk of strict enforcement of the CSA in light of Congressional activity, judicial holdings and stated federal policy remains uncertain.

We have agreed to indemnify our directors against liabilities incurred by them as directors.

We have agreed to indemnify our directors from and against all costs, charges and expenses reasonably incurred by them in respect of any civil, criminal or administrative action or proceeding to which they are made a party or with which they are threatened by reason of being or having been a director of Adira, provided that (a) they have acted honestly and in good faith with a view to the best interests of Adira; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, they had reasonable grounds for believing that their conduct was lawful. This indemnity may reduce the likelihood of derivative litigation against our directors and may discourage or deter our shareholders from suing the directors.

Key Personnel Risks.

The Company’s efforts are dependent to a large degree on the skills and experience of certain of its key personnel, including the board of directors. The Company does not maintain “key man” insurance policies on these individuals. Should the availability of these persons’ skills and experience be in any way reduced or curtailed, this could have a material adverse outcome on the Company and its securities.

Competition.

There is potential that the Company will face intense competition from other companies, some of which can be expected to have more financial resources, industry, manufacturing and marketing experience than the Company. Additionally, there is potential that the industry will undergo consolidation, creating larger companies that may have increased geographic scope and other economies of scale. Increased competition by larger, better-financed competitors with geographic or other structural advantages could materially and adversely affect the business, financial condition and results of operations of the Company.

To remain competitive, the Company will require a continued level of investment in research and development, marketing, sales and client support. The Company may not have sufficient resources to maintain research and development, marketing, sales and client support efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations of the Company.

History of Net Losses; Accumulated Deficit; Lack of Revenue from Operations.

The Company has incurred net losses to date. The Company may continue to incur losses. There is no certainty that the Company will operate profitably or provide a return on investment in the future.

Uninsurable risks.

The Company may become subject to liability for events, against which it cannot insure or against which it may elect not to insure. Such events could result in substantial damage to property and personal injury. The payment of any such liabilities may have a material, adverse effect on the Company's financial position.

Financial Instruments & Other Instruments.

The Company’s financial instruments consist of cash, accounts payable and accrued liabilities and due to related parties, convertible debt and loans payable. Cash is classified as fair value through profit or loss and recorded at fair value. Accounts payable and accrued liabilities, due to related parties and shareholder’s loan are classified as other current liabilities. The fair value of cash, accounts payable and accrued liabilities, and due to related parties are equal to their carrying value due to their short-term maturity. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

The fair value of arms-length financial instruments approximates their carrying value due to the relatively short-term to maturity.

Risks Associated with Our Business

The consummation of our proposed acquisition of SMAART is subject to a number of contingencies and cannot be assured.

Our proposed acquisition of SMAART is contemplated by a non-binding letter of intent, and the transaction is subject to a number of conditions typical in a transaction of this nature, including without limitation, the approval by at least 66 2/3% of the votes cast by Adira shareholders at a special meeting of Adira shareholders to approve the transaction and the approval of the TSXV (and/or any other Canadian stock exchange on which the Resulting Issuer may seek listing). There is no assurance that our acquisition of SMAART will proceed. We have no other business prospects at this time, and if we are not successful in completing our proposed acquisition of SMAART, our Company may be left with inadequate resources to seek out and evaluate other opportunities.

Assuming we are successful in consummating our acquisition of SMAART, our future success will be dependent on additional states legalizing medical marijuana.

Assuming we are successful in consummating our acquisition of SMAART, ourOur future success will depend on the continued development of the medical marijuana market, and on our ability to penetrate that market. According to the Marijuana Policy Project, a pro-legalization group, medical marijuana is legal in 29 states and Washington, D.C., Puerto Rico and Guam. However, continued development of the medical marijuana market is dependent upon continued legislative authorization of marijuana at the state level for medical purposes and, in certain states, including Oregon, based on the specifics of the legislation passed in that state, on local governments authorizing a sufficient number of dispensaries. Any number of factors could slow or halt the progress. Further, progress, while encouraging, is not assured and the process normally encounters set-backs before achieving success. While there may be ample public support for legislative proposal, key support must be created in the legislative committee or a bill may never advance to a vote. Numerous factors impact the legislative process. Any one of these factors could slow or halt the progress and adoption of marijuana for medical purposes, which would limit the market for our products and negatively impact our business and revenues.

The alternative medicine industry faces strong opposition.

It is believed by many that well-funded, significant businesses may have a strong economic opposition to the medical marijuana industry as currently formed. We believe that the pharmaceutical industry clearly does not want to cede control of any compound that could become a strong selling drug. For example, medical marijuana will likely adversely impact the existing market for Marinol, the current “marijuana pill” sold by mainstream pharmaceutical companies. Further, the medical marijuana industry could face a material threat from the pharmaceutical industry should marijuana displace other drugs or simply encroach upon the pharmaceutical industry’s market share for compounds such as marijuana and its component parts. The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses the funding of the medical marijuana movement. Any inroads the pharmaceutical industry makes in halting or rolling back the medical marijuana movement could have a detrimental impact on the market for our products and thus on our business, operations and financial condition.

Marijuana remains illegal under U.S. federal law.

Marijuana remains illegal under U.S. federal law. It is a Schedule-I controlled substance. Even in those jurisdictions in which the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law. The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes. Therefore, federal law criminalizing the use of marijuana trumps state laws that legalize its use for medicinal purposes.

According to the Marijuana Policy Project, a pro-legalization group, medical marijuana is legal in 29 states and Washington, D.C., Puerto Rico and Guam. In addition, eight states and the District of Columbia have legalized recreational cannabis use. In 2013, the U.S. Department of Justice issued a memorandum (commonly referred to as the “Cole Memorandum”) to the U.S. Attorneys offices (federal prosecutors) directing that federal prosecution of individuals and businesses that rigorously comply with state regulatory provisions in states that have strictly-regulated legalized medical or recreational cannabis programs be given low priority. This federal policy was reinforced by the passage of a federal omnibus spending bill in 2014 (the “2014 Spending Bill”) that included the so-called Rohrabacher–Farr amendment which prohibits the use of federal funds to interfere in the implementation of state laws legalizing cannabis and state medical marijuana laws. The Department of Justice, which encompasses the Drug Enforcement Agency, was subject to the 2014 Spending Bill.

The Rohrabacher–Farr amendment remained in the federal omnibus spending bill for the 2016 fiscal year that was signed into law by President Obama on December 18, 2015. In September 2016, the amendment was included in a short-term spending bill passed by Congress and signed into law, which allowed it to remain in effect through December 9, 2016 when it was again renewed pursuant to a further short-term spending bill until April 28, 2017.

The 2014 Spending Bill has been cited as evidence of the development of bi-partisan support in the U.S. Congress for legalizing the use of cannabis. However, it remains unclear whether the federal government will eventually repeal the federal prohibition on cannabis, and there is no assurance that the Rohrabacher–Farr amendment will be extended past April 28, 2017. Political and regulatory risks also exist due to the recent election of Donald Trump to the U.S. Presidency, and the appointment of Sen. Jeff Sessions to the post of Attorney General with effect from February 9, 2017. Mr. Trump’s positions regarding marijuana are remain unclear. However, Sen. Sessions has been a consistent opponent of marijuana legalization efforts throughout his political career, and has publicly commented that the Justice Department will commit to enforcing federal laws on marijuana in an “appropriate way”. It remains unclear what stance the Department of Justice under the new administration might take toward legalization efforts in U.S. states, but federal enforcement of the Controlled Substances Act and other applicable laws is possible.

We may have difficulty accessing the service of U.S. banks.

As discussed above, the use of marijuana is illegal under federal law. Therefore, if we are successful in consummating our acquisition of SMAART, there is a compelling argument that U.S. banks would not be able to accept for deposit funds from the drug trade and therefore would not be able to do business with our Company. On February 14, 2014 the U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) released guidance to banks “clarifying Bank Secrecy Act expectations for financial institutions seeking to provide services to marijuana-related businesses.” Under these guidelines, financial institutions must submit a “suspicious activity report” (“SAR”) as required by federal money laundering laws. These marijuana related SARs are divided into three categories: marijuana limited, marijuana priority, and marijuana terminated, based on the financial institution’s belief that the marijuana business follows state law, is operating out of compliance with state law, or where the banking relationship has been terminated. In the United States, a bill has been tabled in Congress to grant banks and other financial institutions immunity from federal criminal prosecution for servicing marijuana-related businesses if the underlying marijuana business follows state law. This bill has not been passed and there can be no assurance with that it will be passed in its current form or at all.

In addition, U.S. Rep. Jared Polis (D-CO) has recently re-introduced proposed legislation in Congress that contemplates, among other things, the removal of marijuana from the Controlled Substance Act schedules and regulate it like alcohol.

While these are positive developments in this regard, there can be no assurance this legislation will be successful, that even with the FinCEN guidance that banks will decide to do business with medical marijuana retailers, or that in the absence of actual legislation state and federal banking regulators will not strictly enforce current prohibitions on banks handling funds generated from an activity that is illegal under federal law. If, in the future, we are unable to open accounts and otherwise use the service of U.S. banks, our ability to carry on business in the United States may become untenable.

Our Company is organized under the laws of Canada.

Our Company is a Canadian corporation governed by the Canada Business Corporations Act and as such, its corporate structure, the rights and obligations of shareholders and its corporate bodies may be different from those of the home countries of international investors. Furthermore, non-Canadian residents may find it more difficult and costly to exercise shareholder rights. International investors may also find it costly and difficult to effect service of process and enforce their civil liabilities against us or some of our directors, controlling persons and officers.

We may be treated as a U.S. corporation and taxed by the U.S. on our worldwide income.

We continued from Nevada to Canada in 2008. Such continuance is for corporate purposes a migration of us from Nevada to Canada. Transactions whereby a U.S. corporation migrates to a foreign jurisdiction are considered by the U.S. Congress to be a potential abuse of the U.S. tax rules because thereafter the foreign entity is not subject to U.S. tax on its worldwide income. As a result, Section 7874(b) of the Internal Revenue Code of 1986, as amended, was enacted to address this potential abuse. Section 7874(b) provides generally that a corporation that migrates from the U.S. will nonetheless remain subject to U.S. tax on its worldwide income unless the migrating entity has substantial business activities in the foreign country in which it is migrating when compared to its total business activities.

If Section 7874(b) were to apply to our migration from Nevada to Canada, it would cause us to be subject to U.S. federal income taxation on our worldwide income. Section 7874(b) of the Code will apply to our migration unless we had substantial business activities in Canada when compared to our total business activities at the time of our migration.

Based on the fact that substantially all of our activities were taking place in Canada and all of our assets were located in Canada at the time of our migration, we have taken the position that we had substantial business activity in Canada in relation to our worldwide activities at the time of the migration and that Section 7874(b) did not apply to cause us, after the migration, to be subject to U.S. federal income tax on our worldwide income. There is limited guidance as to what “substantial business activity” is “when compared to our worldwide activities.” Accordingly, the position adopted by us may be challenged by the U.S. tax authorities with the result that we may be subject to U.S. federal income taxes on our worldwide activities. In addition to U.S. federal income taxes, were Section 7874(b) to apply to us, we could be subject to penalties for failure to file U.S. federal income tax returns, late fees and interest on past due taxes. Furthermore, if Section 7874(b) were to apply to us, our non-U.S. shareholders may be subject to adverse U.S. federal income tax consequences such as the assessment of U.S. federal income withholding taxes on dividends paid by us. Each shareholder should consult its own tax advisor regarding the foregoing rules.

Risks Associated with our Common Shares

The market price of the common shares of our corporation may be volatile

The market price of our common shares may experience significant volatility. Numerous factors, including many over which we have no control, may have a significant impact on the market price of our common shares including, among other things: regulatory developments in target markets affecting us, our customers or our competitors; actual or anticipated fluctuations in our quarterly operating results; changes in financial estimates or other material comments by securities analysts relating to us, our competitors or the industry in general; announcements by other companies in the industry relating to their operations, strategic initiatives, financial condition or financial performance or to the industry in general; announcements of acquisitions or consolidations involving industry competitors or industry suppliers; addition or departure of our executive officers; and sales or perceived sales of additional common shares of Adira.Empower. In addition, the stock market in recent years has experienced extreme price and trading volume fluctuations that often have been unrelated or disproportionate to the operating performance of individual companies. These broad market fluctuations may adversely affect the price of the common shares of AdiraEmpower regardless of our operating performance. There can be no assurance that an active market for the Common Sharescommon shares will be established or persist and the share price may decline.

We are now considered a shell company; as such our stock cannot be sold pursuant to Rule 144 at this time.

We are now a shell company as defined in Rule 405 under the Securities Act. As such, pursuant to Rule 144(i) under the Securities Act, our shares will not be able to be sold pursuant to Rule 144 until we cease to be considered a shell company and twelve months have elapsed from the date we have filed adequate information (Form 10 information) with the SEC disclosing that we are not longer a shell company.

The value of securities issued by us might be affected by matters not related to our operating performance.

The value of securities issued by us may be affected by matters not related to our operating performance or underlying value for reasons that include the following: general economic conditions in Canada, the US Israel and globally; industry conditions, including fluctuations in the price of oil and natural gas;cannabis flower; governmental regulation of the oil and gas industry, including environmental regulation;cannabis industry; fluctuation in foreign exchange or interest rates; liabilities inherent in oil and natural gas operations; geological, technical, drilling and processing problems; assuming we achieve production, unanticipated operating events which can reduce production or cause production to be shut-in or delayed; failure to obtain industry partner and other third party consents and approvals, when required; stock market volatility and market valuations; competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel; the need to obtain required approvals from regulatory authorities; worldwide supplies and prices of and demand for natural gascannabis flower and oil;derivatives; political conditions and developments in Israel, Canada, the US, and globally; political conditions in natural gas and oil producing regions; revenue and operating results failing to meet expectations in any particular period; investor perception of the oil and gascannabis industry; limited trading volume of our common shares; change in environmental and other governmental regulations; announcements relating to our business or the business of our competitors; our liquidity; and our ability to raise additional funds.

In the past, companies that have experienced volatility in their value have been the subject of securities class action litigation. We might become involved in securities class action litigation in the future. Such litigation often results in substantial costs and diversion of management’s attention and resources and could have a material adverse effect on our business, financial condition and results of operation.

An investment in our Company will likely be diluted.

We may issue a substantial number of our common shares without investor approval to raise additional financing and we may consolidate the current outstanding common shares. Any such issuance or consolidation of our securities in the future could reduce an investor’s ownership percentage and voting rights in us and further dilute the value of your investment.

If we are a “passive foreign investment company” at any time that a U.S. shareholder holds our common shares, such U.S. shareholder may be subject to adverse U.S. federal income tax consequences

Acquiring, holding or disposing of our common shares may have tax consequences under the laws of Canada and the United States that are not disclosed in this Form 20-F. In particular, potential investors that are U.S. taxpayers should be aware that we may be considered a “passive foreign investment company” (a “PFIC”) under Section 1297(a) of the U.S. Internal Revenue Code (the “Code”) with respect to U.S. shareholders. A non-U.S. corporation is classified as a PFIC under the Code for each tax year in which (i) 75% or more of its gross income is passive income (as defined for U.S. federal income tax purposes) or (ii) on average for such tax year, 50% or more (by value) of its assets either produces or is held for the production of passive income. The tax rules applicable to PFICs are very complex and, in some cases, uncertain. Each U.S. investor should consult its own tax advisor with respect to such rules. If our Company is a PFIC for any year during a U.S. taxpayer’s holding period, then such taxpayer may be required to treat any gain recognized by such person upon a sale or disposition of our common shares as ordinary (rather than capital) income, and any resulting U.S. federal income tax may be increased by an interest charge. Rules similar to those applicable to dispositions will generally apply to certain amounts treated as “excess distributions” in respect of the common shares.

We do not expect to pay dividends for the foreseeable future.

We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their Common Shares,common shares, and shareholders may be unable to sell their common shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our Common Shares.common shares. Prospective investors seeking or needing dividend income or liquidity should not purchase our Common Shares.common shares.

We are a Canadian corporation existing under the Canada Business Corporations Act (the “CBCA”) which conducts business as an oil and gas explorationa medical cannabis clinic company with operations in the StateUnited States of Israel. We have been granted certain petroleum licenses from the State of Israel,America, as more particularly described below in Item 4B – “Business Overview”.

We presently do not have any oil and gas reserves, do not produce any oil or gas and do not earn any significant revenues.

A.       History and Development of the Company

Name

Our legal and commercial name is Adira Energy Ltd.Empower Clinics Inc.

Principal Office

Our principal office prior to the completion of the Transaction wasis located at 4101 Yonge Street, Suite 706, Toronto, Ontario, Canada, M2P 1N6. We are no located at 400-570 Granville918-1030 West Georgia Street, Vancouver BC V6C 3P1.V6E 2Y3.

Incorporation and Continuation

We are a Canadian corporation existing under the CBCA.

We were incorporated on February 20, 1997 under the name “Trans New Zealand Oil Company” by filing our Articles of Incorporation with the Secretary of State of Nevada. We changed our name to “AMG Oil Ltd.” on July 27, 1998. On December 17, 2009, we changed our name to “Adira Energy Ltd.” Our fiscal year end is December 31.

On November 25, 2008, our shareholders approved the change of our jurisdiction of incorporation from the State of Nevada to the Canadian federal jurisdiction under the CBCA by way of continuation. We completed the filing of our Articles of Conversion with the Nevada Secretary of State on November 25, 2008, and our Articles of Continuance were accepted for filing by Industry Canada effective November 27, 2008. The effect of these filings was to transfer our jurisdiction of incorporation from the State of Nevada to the Canadian federal jurisdiction under the CBCA. Copies of the Articles of Conversion, Articles of Continuance, Certificate of Continuance and By-Laws, are incorporated by reference into this Form 20-F as exhibits.

Our common shares are registered under Section 12(g) of the Exchange Act. Our current trading symbol on the OTC Bulletin Board (the “OTCBBOTCQB”) is “ADENF”“EPWCF” and our current trading symbol on the TSX Venture Exchange (the “TSXV”) is “ADL”. Our current trading symbol on the Canadian Securities Exchange (the “CSE”) is “EPW”“CBDT”. Our current trading symbol on the Frankfurt Stock Exchange is “8EC.F 8EC.MU, 8EC.SG”.

AcquisitionImportant Events in the Development of Adira Energythe Company’s Business

WeReverse Take-over

Empower was originally incorporated as a Nevada corporation on February 20, 1997 under the name “Trans New Zealand Oil Company". Its name was changed to “AMG Oil Ltd.” on July 27, 1998 and to Adira on December 17, 2009. On November 25, 2008, the Company’s shareholders approved the change of its jurisdiction of incorporation from the State of Nevada to a federally incorporated Canadian company pursuant to a continuation under the Canada Business Corporations Act, which was completed on November 27, 2008. On April 23, 2018, the Company completed the acquisition of Adira Energy,SMAART, which represented a company incorporated in the Province of Ontario, on August 31, 2009. As a result, we are now the owner of all the issued and outstanding shares of Adira Energy and we ceased to be a “shell company”, as defined in Rule 12b-2reverse takeover of the Exchange Act. The acquisition was completed pursuantCompany by SMAART, with SMAART as the accounting acquirer and the Company as the accounting acquiree. In connection with the reverse takeover, the Company changed its name to a securities exchange agreement dated August 4, 2009 among Adira, Adira EnergyEmpower, and Dennis Bennie, Ilan Diamond and Alan Friedman, as principal shareholders, and concurrent securities exchange agreements among Adira and each of the minority shareholders of Adira Energy. We issued an aggregate of 39,040,001 pre-Consolidationconsolidated its common shares toon the shareholdersbasis of Adira Energy as considerationone new common share for each 6.726254 old common shares. Prior to the acquisition of Adira Energy.SMAART, the Company was engaged in oil and gas exploration activities and following such acquisition the Company became engaged in its current business, being the operation of medical cannabis certification clinics and developer of hemp-based CBD products in the United States.

On December 2, 2010, our common shares commenced trading on the TSXV following approval of its listing in November 2010.Acquisition

Reporting Issuer Status under Canadian Securities LawsEffective April 30, 2019, the Company acquired 100% of the membership interest of Sun Valley Certification Clinics Holdings, LLC (“Sun Valley”), an Arizona Limited Liability Company (the “Acquisition”). Through its subsidiaries, Sun Valley operates a network of professional medical cannabis and pain management practices, with five clinics in Arizona, one clinic in Las Vegas, a tele-medicine platform serving California, and a fully developed franchise business model for the domestic cannabis industry. Subsidiaries include the following:

On February 1, 2006,-                Sun Valley Alternative Health Centers, LLC;

-                Sun Valley Alternative Health Centers West, LLC;

-                Sun Valley Alternative Health Centers NV, LLC;

-                Sun Valley Alternative Health Centers Tucson, LLC;

-                Sun Valley Alternative Health Centers Mesa, LLC; and

-                Sun Valley Certification Clinics Franchising, LLC

(each, a “Subsidiary” and, collectively the British Columbia Securities Commission granted our application to be designated as a reporting issuer under the Securities Act (British Columbia). Accordingly, we and our insiders became subject to the continuous disclosure requirements under the securities laws of the Province of British Columbia, Canada. We received final approval for listing on the TSXV on December 1, 2010, and on December 2, 2010, our common shares commenced trading on the TSXV. We are also a reporting issuer under the securities legislation of the provinces of Alberta and Ontario.“Subsidiaries”)

Capital Expenditures and Divestitures

During the year ended December 31, 2017,2018, we did not incur anyincurred $100,227 in capital expenditures.expenditures for the acquisition of property and equipment.

Takeover Offers

We are not aware of any indication of any public takeover offers by third parties in respect of our common shares during our last and current financial years.

B.       Business Overview

We were formerly an oil and gas exploration company focused on early-stage exploration in the State of Israel. During 2015 Oil and Gas Offshore Israel licenses in which we held options, all expired, and we determined that we should terminate our oil and gas exploration business as of December 31, 2015. As a result, we became a shell company. As discussed above, we Completed the Transaction with Smart on April 27, 2018.

On June 12, 2015 SMAART, Holdings Inc., through its wholly owned subsidiary Empower Healthcare Corp, purchased all of the assets of Presto Quality Care Corporation (“Presto”Presto”), an Oregon company that had owned and operated the business currently carried on by SMAART. The consideration for the purchase was the assumption by SMAART of a note payable by Presto to Bayview Equities Ltd. in the amount of $550,000 plus accrued interest of $35,893.

Summary of clinics:

On April 30, 2019, the then fledglingCompany acquired 100% of the membership interest of Sun Valley, an Arizona Limited Liability Company. Through its Subsidiaries, Sun Valley operates a network of professional medical cannabis market. The Grants Passand pain management practices, with five clinics in Arizona, one clinic was opened in 2009 as was the RiversideLas Vegas, a tele-medicine platform serving California, clinic which was recently closed. The Bend, Oregon clinic was opened by Ricky Gilliland, the current manager, in 2011 while the Spokane, Washington clinic was opened in January, 2010. In addition, the travelling clinics stared operating in various locations from 2003 onwards and were designed to service the small markets that could not sustain a full-time clinic. All the clinics were start-ups and run by local advocatesfully developed franchise business model for the medicinal benefits of Cannabis. Local offices were sourced and clinics were held for between one to three, days a week, eventually being held for six days a week in Portland. The initial marketing was mainly word of mouth. The clinics were staffed by doctors or registered nurses.domestic cannabis industry.

The Empower team of six doctors and one nurse have over 115 years of collective medical experience with 40 years of combined medical cannabis experience. In addition, they written over 12 books and published over 300 articles on medical cannabis. Empower’s doctors are recruited through a variety of methods including referral, recruiting and outreach. Currently doctors are paid on competitive hourly contracts which provide maximum flexibility for both the clinics and doctors personal schedule. Hourly rates may be different base on state, required doctor training and education and relevant experience levels. The respective qualifications of these doctors are as follows:

Dr. Jack McCue. A graduate of Harvard University and Case Western Reserve University Schools of Medicine, Dr. McCue did his residency training at Johns Hopkins and Harvard in internal medicine and geriatrics. He has traveled the world and worked with patients and other medical professionals in a science-based blending of traditional medical treatment and appropriate use of cannabis. As a distinguished and award-winning physician, Dr. McCue has written 14 books and over 300 articles, in addition to speaking internationally at conferences on many topics including the informed use of medical cannabis. Dr. Shaun Hedmann. Dr. Hedmann completed his medical training at Johns Hopkins in Baltimore MD, Baylor in Houston TX and Brown University in Providence RI and before accepting a position with Kaiser Permanente where he practiced Cardiology for 25 years. He has been involved with patients and their need for medical cannabis for nearly 6 years and appreciates the depth and breath of debilitating conditions that impact their lives.

Dr. David Dodge. Dr. Dodge is a retired pathologist and nuclear medicine doctor in Portland, Oregon. He received his medical degree from Washington University School of Medicine in St. Louis and served as staff pathologist at Providence Medical Center for more than 20 years. He has helped Oregon cannabis patients at Empower Clinics since 2003.

Dr. Leorra Britvan. Dr. Britvan is a board certified internal medicine physician. She studied medicine at University of Southern California Medical School and trained at Harbor- UCLA for internal medicine. Most of her professional career includes working as an Hospitalist in both California and Oregon for the past twenty years--caring for patients from admission in the emergency room to stay in hospital. She has been evaluating patients for medical cannabis treatment since 2015.

Dr. David Lemmon. Dr. Lemmon is a Naturopathic Physician with expertise in natural, nutritional, and plant-based medicine. He received his Doctorate from the National College of Natural Medicine in Portland, Oregon. He has been studying the benefits and uses of medicinal plants including Cannabis for over 15 years.

Dr. Heather Krantz. Dr. Krantz is an obstetrician-gynecologist in Bend, Oregon. She received her medical degree from University of Kansas School of Medicine and has been in practice for more than 20 years.

Effects of Government Regulations

See Item 3D - “Risk Factors”.

C.       Organizational Structure

Our executive offices located at 918-1030 West Georgia Street, Vancouver BC V6E 2Y3.

Steven McAuley, our Chairman and CEO has significant experience in managing and growing public companies.

During the fiscal years ended December 31, 2018, and 2017, all of our operating activities were in the United States of America.

There is potential that the Company will face intense competition from other companies, some of which can be expected to have more financial resources, industry, manufacturing and marketing experience than the Company. Additionally, there is potential that the industry will undergo consolidation, creating larger companies that may have increased geographic scope and other economies of scale. Increased competition by larger, better-financed competitors with geographic or other structural advantages could materially and adversely affect the business, financial condition and results of operations of the Company.

To remain competitive, the Company will require a continued level of investment in research and development, marketing, sales and client support. The Company may not have sufficient resources to maintain research and development, marketing, sales and client support efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations of the Company.

The Company has over 165,000 patients and as such, we are not dependent upon a concentration of customers. The Company is not exposed to concentration of suppliers.

The following table sets out the current organizational structure of the Company and its significant subsidiaries, all wholly owned through SMAART Holdings Corp.:SMAART:

D.       Property, PlantSun Valley Acquisition on April 30, 2019 consisted of cash, common shares of the Company and Equipmenta promissory note having an aggregate value of $3,960,000 as summarized below:

(a)       Corporate Office

Our executive offices located at 400-570 Granville Street, Vancouver BC V6C 3P1.

(b)       Special Skill and Knowledge

Craig Snyder, our Chairman and CEO has significant experience in managing the SMAART business.

(c)       Foreign Operations

During the fiscal years ended December 31, 2015, and 2014, all of our oil and gas exploration activities were in the State of Israel. We terminated our oil and gas exploration business as of December 31, 2015.

During the year ended December 31, 2017, we have focused on advancing our proposed transaction with SMAART.

(d)       Competitive Conditions

Property and equipment is comprised of furniture and fixtures at the clinics and leasehold improvements to the Company’s clinics. The Company’s leases, all of which support clinic operations, are summarized below:

We

The Company intends to open a fully functioning hemp-based CBD extraction facility in Sandy, Oregon 2019. The 5,000 sq. ft. facility in Sandy, Oregon has now been secured through a 5-year lease agreement and preparations are underway to begin licensing and permit requirements to commence operations in 2019. Expenditures for the expansion are currently a shell company, and do not have exposure to any competitive conditions.

(e)       Dependence on Customers and Suppliers

We have no active business operations. As such, we are not dependent upon a concentration of customers or suppliers.

(f)       Environmental Protection and Policiesbeing discovered.

We currently do not have exposure to any environmental protection requirements and policies. In particular, we are now aware of any exposure to environmental protection requirements in relation to our discontinued oil and gas exploration activities.

The following is a discussion and analysis of our activities, consolidated results of operations and financial condition as of and for the year ended December 31, 2017.2018. It should be read in conjunction with our audited consolidated financial statements and related notes for the year ended December 31, 2017.2018. Our financial statements have been prepared in accordance with IFRS as issued by the IASB.

A.       Operating Results

Results of Operations

Consolidated results of operations for the year ended December 31, 2018 compared to the year ended December 31, 2017.

Clinic Revenues

Revenues were $1,091,386, compared to $1,507,050 during fiscal 2017 as the Company received 7,607 patients spending on average $143, compared to 9,705 patients spending on average $155 during fiscal 2017.

Currently the Company receives one revenue stream which is patient visits to existing clinics. The Company expects to expand that revenue stream as the Chicago clinic patient base grows and the Sollievo product brand is rolled out.

The Company has seen a decline in revenues from 2016 through to 2018 due to three factors. The introduction of recreational cannabis to Oregon, a reduction in marketing spend while we reposition our brand and its treatment through online, social and mobile upgrades and competitive introduction and pressure. The Company believes all three areas are being addressed effectively and will be reflected in future revenues.

Direct clinic expenses

Direct clinic expenses were $417,047, compared to $638,834 during fiscal 2017. These costs are a function of our doctor roster and clinic staff to run their clinics. The Company employs both medical doctors and nurses and clinic staff to run their clinics. The Company is currently adding doctors and nurses in the clinic operating areas thereby cutting down on medical travel expenses.

Operating expenses

Operating expenses were $2,517,681, compared to $2,037,008 during fiscal 2017, which is primarily due to additional staff and management being required since the acquisition of Adira. Specifically, salaries and benefits were $1,786,804, compared to $1,205,514 during fiscal 2017. Other significant components of the increases in operating expenses since fiscal 2016 include: rent of $272,768, in line with $267,272 during fiscal 2017; advertising and promotion of $306,799 compared to $171,814 during fiscal 2017; telecommunications of $97,028 compared to $nil during fiscal 2017; and other expenses of $54,282 compared to $392,408 during fiscal 2017.

Legal and professional fees

Legal and professional fees were $1,450,141, compared to $1,131,041 during fiscal 2017. The Company expects professional service fees to drop markedly over time as many are related to successful prior litigation or “one time” events such as the fees associated with the RTO that completed in April 2018.

Depreciation and amortization expense

Depreciation and amortization expense was $123,473, compared to $103,372 during fiscal 2017. This increase is in line with the increase in property and equipment during fiscal 2018.

Share-based payments

Share-based payments expense was $892,417, compared to $5,433 during fiscal 2017. The share-based payments expense was for the fair value of share options recognized as an expense during the year based on the fair valued determined the Black Scholes option pricing model valuation of share options granted during the years ended December 31, 2018 and 2017.

Listing fee

Listing fee expense was $1,308,808, compared to $nil during fiscal 2017, in connection with the Company’s acquisition with Adira. The listing fee expense is comprised of $614,415 share consideration, $365,871 legal and professional fees, and $328,522 of net liabilities acquired.

Accretion expense

Accretion expense was $241,521, compared to $667,373 during fiscal 2017. Accretion expense decreased due to the majority of convertible debentures converting during fiscal 2018.

Interest expense

Interest expense decreased to $126,375, compared to $186,001 during fiscal 2017, owing to a reduction in the amount of notes payable and convertible debenture liabilities outstanding.

Gain on debt settlement

Gain on debt settlement was $nil, compared to $106,360 during fiscal 2017 as a result of settlement of debt balances with debt holders during fiscal 2017.

(Gain) loss on change in fair value of warrant liability

The Company recorded a gain on the change in the fair value of the warrant liability of $1,598,425, compared to $nil during fiscal 2017. The share purchase warrants are required to be revalued at every quarter end given they are denominated in CDN$, while our functional currency is the US dollar; therefore, the fair value of the warrants outstanding are classified as a financial liability, which is remeasured to fair value at the end of each reporting period. The gain resulted from the decrease in the Company’s share price during Q4 2018, which is a variable in determining the fair value of the conversion option per the Black-Scholes valuation model.

Gain on change in fair value of conversion option

The Company recorded a gain on the change in the fair value of the conversion option of $890,136, compared to $nil during fiscal 2017. The conversion option is required to be revalued at every quarter end and the gain resulted from the decrease in the Company’s share price during Q4 2018, which is a variable in determining the fair value of the conversion option.

As a result of the Transaction, the fair value of the conversion options associated with the convertible debenture issuances during fiscal 2017 were deemed to be $nil as the convertible debentures outstanding on the date of the Transaction were all converted to common shares of the Company. Accordingly, the Company recognized a gain on change on change in fair value of conversion feature of $890,136 for fiscal 2018.

Impairment of asset held for sale

At December 31, 2018, the Company has listed the facility and land in Portland, Oregon for sale. Prior to their classification as assets held for sale, the land and facility in Portland were reported under property and equipment. The assets held for sale are included at the lower of their carrying value and their fair market value. The fair market value was based on a sales agreement dated January 17, 2019 whereby the Company will receive net proceeds of $127,972 after selling costs. An impairment loss of $57,072 has been recognized to reduce the asset’s carrying value to its fair market value.

Restructuring expense

Restructuring expense was $110,424, compared to $nil during fiscal 2017, in connection with the Company’s restructuring activities that commenced in Q4 2018.

Consolidated results of operations for the year ended December 31, 2017 compared to the year ended December 31, 2016.

General and Administrative ExpensesClinic Revenues

ForRevenues were $1,507,050 as the year ended December 31, 2017, general and administrative expenses amounted to $113 thousand asCompany received 7,607 patients spending on average $143, compared to $268 thousand for year ended December 31, 2016. The decrease in general and administrative expenses in 2017 resulted primarily from the continued significant reduction in compensation to officers of$2,134,857 during fiscal 2016 as the Company and cessation of all activities, expect for the completion of the Transaction.

Financing Income/Expense and Gainreceived 7,784 patients spending on Foreign Exchange

For the year ended December 31, 2017, gain on foreign exchange was Nil as compared to a gain of $8 thousand for the year ended December 31, 2016. The Company is exposed to financial risk related to the fluctuation of foreign exchange rates. Most of its monetary assets are held in Canadian, however, the Company inures expenditures in NIS, US Dollars and Canadian dollars. The Company has not hedged its exposure to currency fluctuations.

The gain on revaluation of warrant liability for the year ended December 31, 2017 was $38 as compares to $45 thousand for the year ended December 31, 2016 and results from the warrants issued in May 2015 that are denominated in Canadian dollars, while our functional currency is US dollars; therefore, the fair value of the warrants are classified as a financial liability which is re-measured to fair value at the end of each period. The changes in fair value are included in gain on revaluation of warrant liability.

Net Lossaverage $274.

The Company reportedhas seen a net lossdecline in revenues from 2016 through to 2018 due to three factors. The introduction of recreational cannabis to Oregon, a reduction in marketing spend while we reposition our brand and comprehensive loss for the year ended December 31, 2017 of $75 thousand as compared to $215 thousand for year ended December 31, 2016.its treatment through online, social and mobile upgrades and competitive introduction and pressure. The lossesCompany believes all three areas are being addressed effectively and will be reflected in 2017 and 2016 is as a result of the Company incurring general and administrative expenses with no corresponding income.future revenues.

Consolidated results of operations for the year ended December 31, 2016Direct clinic expenses

Direct clinic expenses were $638,834, compared to the year ended December 31, 2015.$718,108 during fiscal 2016. These costs are a function of our doctor roster and clinic staff to run their clinics. The Company employs both medical doctors and nurses and clinic staff to run their clinics.

General and Administrative ExpensesOperating expenses

For the year ended December 31, 2016, general and administrativeOperating expenses amounted to $268 thousand aswere $2,037,008, compared to $349 thousand for year ended December 31, 2015. The decrease in general$1,588,007 during fiscal 2016. Specifically, salaries and administrative expenses in 2015 resulted primarily frombenefits were $1,205,514, compared to $1,053,305 during fiscal 2016. Other significant reduction in compensation to officerscomponents of the increases in operating expenses since fiscal 2016 include: rent of $267,272 compared to 160,135 during fiscal 2016 as a result of additional locations being opened; advertising and promotion of $171,814 compared to $60,353 during fiscal 2016; telecommunications of $nil during compared to $88,485 during fiscal 2016; and other expenses of $392,408 compared to $225,729 during fiscal 2016.

Legal and professional fees

Legal and professional fees were $1,131,041, compared to $942,959 during fiscal 2016. The Company expects professional service fees to drop markedly over time as many are related to successful prior litigation or “one time” events such as the fees associated with the RTO that completed in April 2018.

Depreciation and a decreaseamortization expense

Depreciation and amortization expense was $103,372, compared to $120,768 during fiscal 2016. This increase is in rent.line with the Company’s amortization policies and change in fixed assets subject to depreciation.

Accretion expense

Accretion expense was $667,373, compared to $189,922 during fiscal 2016. This increase is due to the issuance of convertible notes payable and convertible debentures during fiscal 2017.

Interest expense

Interest expense increased to $186,001, compared to $83,705 during fiscal 2016, due to the issuance of notes payable and convertible debentures during fiscal 2017.

Gain on debt settlement of accounts payable and others payables

ForGain on debt settlement was $106,360, compared to $nil during fiscal 2016. The increase is the year ended December 31, 2015 the Company recorded a gain onresult of settlement of $25 thousand, arising from settlement agreements reacheddebt balances with suppliers.debt holders during fiscal 2017.

Financing Income/Expense and Gain on Foreign ExchangeImpairment of equipment

For the year ended December 31, 2016, gainGain on foreign exchangedebt settlement was $8 thousand as$nil, compared to a$14,500 during fiscal 2016. During Fiscal 2016 an impairment loss of $23 thousand for the year ended December 31, 2015. Our Company is exposed$14,500 was recognized to financial risk relatedreduce furniture and equipment carrying values to the fluctuation of foreign exchange rates. Most of our monetary assets are held in Canadian dollars; however, the Company inures expenditures in NIS, US Dollars and Canadian dollars. The Company has not hedged its exposure to currency fluctuations.their fair market value.

The gainImpairment of intangible assets

Gain on revaluation of warrant liability for the year ended December 31, 2016debt settlement was $45 thousand as$nil, compared to $78 thousand for the year ended December 31, 2015,$64,800 during fiscal 2016. During Fiscal 2016 an impairment loss of $64,800 was recognized to reduce trademarks, domain names and results from the warrants issued in May 2015 being denominated in Canadian dollars while our functional currency is US dollars. Themanagement software carrying values to their fair value of the warrants are classified as a financial liability which is re-measured to fair value at the end of each period. The changes in fair value are included in gain on revaluation of warrant liability.market value.

Net Profit

The Company reported a net loss and comprehensive loss for the year ended December 31, 2016 of $215 thousand as compared to $269 thousand for year ended December 31, 2015. The losses in 2016 and 2015 is as a result of the Company incurring general and administrative expenses with no corresponding income.

Inflation

During the years ended December 31, 2018, 2017 2016 and 2015,2016, inflation has not had a material impact on our operations.

Foreign Exchange Risk

We are exposedhave limited exposure to financial risk related to the fluctuation of foreign exchange rates. We operate in Israel,the U.S., most of our monetary assets are held in U.S. dollars and most of our expenditures are made in U.S. dollars. However, we also have expenditures in NIS and Canadian dollars.CDN$. We have not hedged our exposure to currency fluctuations.

B.       Liquidity and Capital Resources

Liquidity

Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with its financial liabilities and other contractual obligations. The Company’s strategy for managing liquidity is based on achieving positive cash flows from operations to internally fund operating and capital requirements.

Factors that may affect the Company’s liquidity are continuously monitored. These factors include the number of patient visits, average patient spend per visit, operating costs, capital costs, income tax refunds, foreign currency fluctuations, seasonality, market immaturity and a measurehighly fluid environment related to state and federal law passage and regulations.

In the event that the Company is adversely affected by any of these factors and, as a company’sresult, the operating cash flows are not sufficient to meet the Company’s working capital requirements there is no guarantee that the Company would be able to raise additional capital on acceptable terms to fund a potential cash shortfall. Consequently, the Company is subject to liquidity risk.

The Company will need to procure additional financing in order to fund its ongoing operation. The Company intends to obtain such financing through equity financing, and there can be no assurance that the Company can raise the required capital it needs to build and expand as expected, nor that the capital markets will fund the business of the Company. Without this additional financing, the Company may be unable to achieve positive cash flow and earnings as quickly as anticipated, these uncertainties cast a significant doubt about the Company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of common shares.continue as a going concern. 

We have an accumulated deficit of $34.4 million$9,369,941 as of December 31, 20172018 ($34,35,580,023 as at December 31, 2016)2017), and had negative cash flows from operations of $34 thousand$2,835,710 for the year ended December 31, 20172018 ($105 thousand1,587,760 for the year ended December 31, 2016)2017). We no longer hold any interests in any oil and gas exploration projects.

Year ended December 31, 20178 compared to year ended December 31, 20167

During the year ended December 31, 2018, the Company’s overall position of cash and cash equivalents increased by $157,668.

The Company’s net cash used in operating activities during the year ended December 31, 2018 was $2,835,710 as compared to $1,587,760 for the year ended December 31, 2017. This increase is primarily as a result of a decrease in revenues, an increase in operating expenses over fiscal 2017 as well as the listing fee that was incurred as part of the Transaction.

Cash used in investing activities during the year ended December 31, 2018 was $100,227 as compared $31,598 during the year ended December 31, 2017. This spending primary relates to property and equipment expenditures.

Cash provided by financing activities for the year ended December 31, 2018 was $3,093,604 as compared to $1,614,204 during the year ended December 31, 2017. The primary source of funding during both years was the issuance of common shares of the company.

Year ended December 31, 2017 compared to year ended December 31, 2016

During the year ended December 31, 2017, the Company’s overall position of cash and cash equivalents decreased by $5 thousand.$5,154.

The Company’s net cash used in operating activities during the year ended December 31, 2017 was $34 thousand$1,587,760 as compared to $105 thousand$523,827 for the year ended December 31, 2016. This decrease is primarily as a result of a decrease in revenues and an increase in accounts payable.operating expenses.

Cash used in investing activities during the year ended December 31, 2017 was $29 thousand$31,598 as compared $Nil$nil during the year ended December 31, 2016. The cash provided in 201 7relates primarilyThis spending primary relates to a repaymentproperty and equipment expenditures, none of a loan given to SMAART and the provision of a loan from SMAART to the Company.which was required during fiscal 2016

Cash provided by financing activities for the year ended December 31, 2017 was Nil$1,614,204 as compared to $Nil$522,075 during the year ended December 31, 2016. The primary source of funding during both years was the issuance of common shares of the company.

Year ended December 31, 2016 compared to year ended December 31, 2015

During the year ended December 31, 2016, the Company’s overall position of cash and cash equivalents decreased by $105 thousand.

The Company’s net cash used in operating activities during the year ended December 31, 2016 was $105 thousand as compared to $391 thousand for the year ended December 31, 2015. This decrease is primarily as a result of an increase in accounts payable.

Cash used in investing activities during the year ended December 31, 2016 was $Nil as compared $15 thousand during the year ended December 31, 2015. The use of cash in 2015 relates primarily to the granting of a loan receivable in the amount of $25 thousand to SMAART in contemplation of the Transaction, offset by the decrease of restricted cash during the year. SMAART repaid this loan subsequent to the year ended December 31, 2016.

Cash provided by financing activities for the year ended December 31, 2016 was $Nil as compared to $196 thousand during the year ended December 31, 2015. The cash provided in 2015 is as a result of the completion of a private placements of shares.

Year ended December 31, 2015 compared to year ended December 31, 2014

During the year ended December 31, 2015, the Company’s overall position of cash and cash equivalents decreased by $210 thousand.

The Company’s net cash used in operating activities during the year ended December 31, 2015 was $441 thousand as compared to $380 thousand for the year ended December 31, 2014. This increase is primarily as a result of a decrease in accounts payable.

Cash used in investing activities during the year ended December 31, 2015 was $15 thousand as compared to cash generated from investing activities of $37 thousand during the year ended December 31, 2014. The use of cash in 2015 relates primarily to the granting of a loan in the amount of $25 thousand to SMAART in contemplation of the Transaction, offset by the decrease of restricted cash during the same period.

Cash provided by financing activities for the year ended December 31, 2015 was $196 thousand as compared to $60 thousand during the year ended December 31, 2014. The cash provided in 2015 and 2014 is as a result of the completion of two separate private placements of shares.

There are no legal restrictions on transferring funds between Canada and Israel.

Capital Resources

At December 31, 2017,2018, the Company’s cash and cash equivalents were $14 thousandwas $157,668 (December 31, 20162017 - $19 thousand)$nil). The majority of this balance is being held in Canadian Dollars. OurCDN$. The Company had a working capital deficiency at December 31, 2017 was negative $329 thousand2018 of $3,070,900 as compared to negative $272 thousand$5,278,030 at December 31, 2016.2017. The Company decreasedimproved its working capital position over fiscal 2018 as a result of increase in accrued liabilities and decrease of current receivables. During 2017 a significant service provider has agreed to accept settle their accounts payable balancedrop in the amount $155 in return forconvertible debentures outstanding, which were converted into common shares to be issued as part of the SMAART transaction. On April 27,Company during fiscal 2018, The Company completedas well as a significant decrease in the Transaction and raised $2 million.conversion feature obligation associated with the convertible debentures.

Critical Accounting Policies and Estimates

Our results The preparation of operation and financial condition are based on ourthe Company’s consolidated financial statements which are presented in accordanceconformity with IFRS. Certain accounting principles require usIFRS requires management to make certain estimates judgments and assumptions. We believebased on assumptions about future events that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at that time. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and the disclosuredisclosures of contingent assets and liabilities as ofat the date of the financial statements as well asand the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. The significant accounting policies and estimates that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:reporting period.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively in the period in which the estimate is revised. Management has made the following critical judgements and estimates:

Share-based payment transactionsCritical judgements in applying accounting policies

Our employees and other service providers are entitled to remunerationCritical judgements made by management in applying the Company’s accounting policies, apart from those involving estimations, that have the most significant effect on the amounts recognized in the form of equity-settled share-based payment transactions.Company’s consolidated financial statements are as follows:

Functional currency

The cost of equity-settled transactions with employees is measured at the fair valuefunctional currency for each of the equity instruments granted at grant date. The fair valueCompany’s subsidiaries is determined using an appropriate pricing model. As for other service providers, the costcurrency of the transactionsprimary economic environment in which the respective entity operates; the Company has determined the functional currency of each entity to be the US dollar. Such determination involves certain judgements to identify the primary economic environment. The Company reconsiders the functional currency of its subsidiaries if there is measured ata change in events and/or conditions which determine the fair value of the goods or services received as consideration for equity instruments. In cases where the fair value of the goods or services received as consideration of equity instruments cannot be measured, they are measured by reference to the fair value of the equity instruments granted.primary economic environment.

The costAssessment of equity-settled transactions is recognized in profit or loss, together with a corresponding increase in equity, during the period which the performance and service conditions are to be satisfied, ending on the date on which the relevant employees become fully entitled to the award (the “vesting period”). The cumulative expense recognized for equity-settled transactions at the endindicators of each reporting period until the vesting date reflects the extent to which the vesting period has expired and our best estimate of the number of equity instruments that will ultimately vest. The expense or income recognized in profit or loss represents the movement in the cumulative expense recognized at the end of the reporting period. No expense is recognized for awards that do not ultimately vest.

If we modify the conditions on which equity-instruments were granted, an additional expense is recognized for any modification that increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee/other service provider at the modification date. If a grant of an equity instrument is cancelled, it is accounted for as if it had vested on the cancellation date, and any expense not yet recognized for the grant is recognized immediately. However, if a new grant replaces the cancelled grant and is identified as a replacement grant on the grant date, the cancelled and new grants are accounted for as a modification of the original grant, as described above.

Impairment of financial assetsimpairment

At the end of each reporting period, we assessthe Company assesses whether there is objective evidenceare any indicators, from external and internal sources of information, that an asset or cash generating unit (“CGU”) may be impaired, thereby requiring adjustment to the carrying value. The Company identified the sustained decrease in market capitalization as an indicator of impairment of a financial asset or group of financial assets carried at amortized cost.during the year ended December 31, 2018.

Objective evidenceAs a result of these impairment indicators, the Company assessed the intangible assets and assets held for sale CGUs for impairment and concluded the recoverable value of debt instrumentseach CGU was less than its carrying value and receivables existsan impairment loss was recognized on intangible assets and assets held for sale.

Revenue recognition as a result of oneadopting IFRS 15

Determination of performance obligations

The Company applied judgement to determine if a good or more eventsservice that has occurred afteris promised to a customer is distinct based on whether the initial recognitioncustomer can benefit from the good or service on its own or together with other readily available resources and whether the good or service is separately identifiable. Based on these criteria, the Company determined the primary performance obligation relating to its sales contracts is the delivery of service to its patients.

Transfer of control

Judgement is required to determine when transfer of control occurs relating to the sale of the assetCompany's services to its patients. Management based its assessment on a number of indicators of control, which include, but are not limited to whether the Company has present right of payment, and whether the physical possession of the goods, significant risks and rewards and legal title have been transferred to the customer.

Key sources of estimation uncertainty

Significant assumptions about the future and other major sources of estimation uncertainty at the end of the reporting period that loss event has an impactmay result in a material adjustment to the carrying amounts of the Company’s assets and liabilities are as follows:

Current and deferred taxes

The Company’s provision for income taxes is estimated based on the estimated future cash flows. Evidence of impairment may include indicationsexpected annual effective tax rates (and tax laws) that have been enacted or substantively enacted by the debtor is experiencing financial difficulties, including liquidity difficulty and default in interest or principal payments. The amountend of the loss recordedreporting period. The current and deferred components of income taxes are estimated based on forecasted movements in profittemporary differences.

Changes to the expected annual effective tax rate and differences between the actual and expected effective tax rate and between actual and forecasted movements in temporary differences will result in adjustments to the Company’s provision for income taxes in the period changes are made and/or differences are identified.

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from operations are based on patient visits are internally developed and reviewed by management. Weight is attached to tax planning opportunities that are within the Company’s control, and are feasible and implementable without significant obstacles.

The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and circumstances of the relevant tax position evaluated in light of all available evidence.

Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Company reassesses unrecognized income tax assets.

Equity-settled share-based payments

Share-based payments are measured at fair value. Options and warrants are measured using the Black-Scholes option pricing model based on estimated fair values of all share-based awards at the date of grant and are expensed to earnings or loss is measuredfrom operations over each award’s vesting period. The Black-Scholes option pricing model utilizes subjective assumptions such as the difference between the asset's carrying amountexpected price volatility and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred) discounted at the financial asset's original effective interest rate (the effective interest rate computed at initial recognition). If the financial asset has a variable interest rate, the discount rate is the current effective interest rate. The carrying amountexpected life of the asset is reduced through the use of an allowance account (see allowance for doubtful accounts above). In a subsequent period, the amount of the impairment loss is reversed if the recovery of the assetoption. Changes in these input assumptions can be related objectively to an event occurring after the impairment was recognized. The amount of the reversal, up to the amount of any previous impairment, is recorded in profit or loss.

Warrant liability

As the warrants have an exercise and presentation price denominated in Canadian dollars which differs from the Company’s functional currency they do not qualify for classification as equity. These warrants have been classified as warrant liability and are recorded initially atsignificantly affect the fair value estimate.

Contingencies

Due to the nature of the Company’s operations, various legal and revalued at each reporting date, usingtax matters can arise from time to time. In the Black-Scholes valuation method. Changesevent that management’s estimate of the future resolution of these matters’ changes, the Company will recognize the effects of the changes in fair value for each period are included in comprehensive profit and lossits consolidated financial statements for the period.period in which such changes occur.

C.       Research and Development, Patents and Licences

Not applicable.

D.       Trend Information

We are not aware of any trends 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.

E.       Off-Balance Sheet Arrangements

We doThe Company has not haveentered into any material off-balance sheet arrangements such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities, derivative financial obligations or arrangements with respect to any obligations under a variable interest equity arrangement. 

A summary of undiscounted liabilities and future operating commitments at December 31, 2018, are as follows: