Liminal BioSciences (LMNL) 20-F/A 2019 FY Annual report (foreign) (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

(Amendment No. 1)

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended December 31, 2019

OR

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

For the transition period from  to   

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report   

Commission file number: 001-39131

LIMINAL BIOSCIENCES INC.

(Exact name of Registrant as specified in its charter)

Canada

(Jurisdiction of incorporation or organization)

440 Armand-Frappier Boulevard, Suite 300

Laval, Québec

H7V 4B4

+1 450 781 0115

(address of principal executive offices)

Kenneth Galbraith

Chief Executive Officer

Liminal BioSciences Inc.

440 Armand-Frappier Boulevard,

Suite 300

Laval, Québec

H7V 4B4

Tel: +1 450 781 0115

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	LMNL	The Nasdaq Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act.None

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

Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of business covered by the annual report.

Common Shares, no par value: 23,313,164 common shares outstanding as of December 31, 2019

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 report is an annual or 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 the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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.  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

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

U.S. GAAP  ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board  ☒ Other  ☐

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  ☒

EXPLANATORY NOTE

Liminal BioSciences, Inc. (the “Company”) is filing this Amendment No. 1 on Form 20-F/A (this “Amendment”) to its Annual Report on Form 20-F for the fiscal year ended December 31, 2019 (the “Original Report”), which was originally filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2020, in response to a comment letter received from the SEC in connection with its review of the Original Report (the “Comment Letter”). In response to the Comment Letter, we have modified Part III, Item 17. “Financial Statements” in this Amendment to revise Ernst & Young LLP’s independent auditor’s report to reflect that the audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States). In addition, we are also revising (i) Part II, Item 16G, “Corporate Governance” in order to revise our disclosure pertaining to our home country corporate governance practices and (ii) Part III, Item 19, “Exhibits” to include the certifications required by the Sarbanes-Oxley Act of 2002 in connection with the filing of this Amendment and other exhibits that were omitted from the Original Report.

This Amendment does not include the entire Form 20-F. Except as described in this Explanatory Note, this Amendment does not amend any other information set forth in the Original Report, and the Company has not updated disclosures to reflect any events that occurred subsequent to March 20, 2020.

i

TABLE OF CONTENTS

			PAGE
PART II
Item 16G	Corporate Governance		1
PART III
Item 17.		Financial Statements		2
Item 19.		Exhibits		2

PART II

Item 16G.Corporate Governance.

As a “foreign private issuer,” as defined by the SEC, we are permitted to follow home country corporate governance practices, instead of certain corporate governance practices required by the Nasdaq for U.S. domestic issuers. While we intend to follow most Nasdaq corporate governance listing standards, we intend to follow Canadian corporate governance practices of in lieu of Nasdaq corporate governance listing standards as follows:

• Exemption from quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under Canadian law. In accordance with generally accepted business practice, our by-laws provide alternative quorum requirements that are generally applicable to meetings of shareholders.

• Exemption from the requirement to obtain shareholder approval for certain issuances of securities pursuant to Nasdaq Rule 5635, including in connection with an acquisition of the stock or assets of another company.

• Exemption from requirement to adopt a formal written audit committee charter specifying the items enumerated in Nasdaq Rule 5605(c)(1). Under Nasdaq Rule 5605(c)(1), an audit committee must be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged. Our audit committee charter provides that the auditors be appointed by, and their compensation be approved by, our board of directors and be ratified by our shareholders, as required under Canadian law.

Although we currently intend to comply with the Nasdaq corporate governance rules applicable other than as noted above, we may in the future decide to use the foreign private issuer exemption with respect to some or all the other Nasdaq corporate governance rules.

We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act, the rules adopted by the SEC and the Nasdaq corporate governance rules and listing standards.

As a foreign private issuer, our directors and senior management are not subject to short-swing profit and insider trading reporting obligations under Section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under Section 13 of the Exchange Act and related SEC rules.

1

PART III

Item 17.Financial Statements.

See pages F-1 through F-63 of this Annual Report on Form 20-F/A.

Item 19.Exhibits.

		Incorporated by Reference
Exhibit	Description	Schedule/ Form	File Number	Exhibit	File Date
1.1	Articles of Incorporation of Liminal BioSciences Inc., as amended, as currently in effect.	Form S-8	333-235692	4.1	12/23/2019
1.2	By-Law No. 1 of Liminal BioSciences Inc., as amended and currently in effect.	Form S-8	333-235692	4.2	12/23/2019
1.3	By-Law No. 2 of Liminal BioSciences Inc., as currently in effect.	Form S-8	333-235692	4.3	12/23/2019
1.4	By-Law No. 3 of Liminal BioSciences Inc., as currently in effect.	Form S-8	333-235692	4.4	12/23/2019
2.1	Description of Securities	Form 20-F	001-39131	2.1	03/20/2020
4.1	Registration Rights Agreement, dated April 23, 2019	Form 40-F	001-39131	99.69	11/12/2019
4.2	Amendment and Waiver to Registration Right Agreement, dated March 17, 2020	Form 20-F	001-39131	4.2	03/20/2020
4.3†	Amended and Restated Stock Option Plan, dated May 10, 2017	Form 40-F	001-39131	99.59	11/12/2019
4.4†	Amended and Restated Stock Option Plan, dated June 7, 2018	Form 40-F	001-39131	99.61	11/12/2019
4.5†	Restricted Share Unit Plan, dated May 6, 2009	Form 40-F	001-39131	99.60	11/12/2019
4.6†	Restricted Share Unit Plan, dated May 9, 2018	Form 40-F	001-39131	99.62	11/12/2019
4.7†	Omnibus Incentive Plan, dated May 7, 2019	Form 40-F	001-39131	99.125	11/12/2019
4.8†	Spin-Off Shareholder Rights Plan Agreement between Prometic Life Sciences Inc., Computershare Trust Company of Canada, Prometic Biosciences Inc., Prometic Bioproduction Inc. and Prometic Biotherapeutics Inc., dated March 22, 2018	Form 40-F	001-39131	99.64	11/12/2019
4.9†	Shareholder Rights Plan Agreement between Prometic Life Sciences Inc. and Computershare Trust Company of Canada, dated March 22, 2018	Form 40-F	001-39131	99.65	11/12/2019
4.10	Third Omnibus Amendment Agreement between Structured Alpha LP, Prometic Life Sciences Inc., Prometic Biotherapeutics Inc., Prometic Bioseparations Ltd, Prometic Biosciences Inc., Prometic Bioproduction Inc., NantPro Biosciences, LLC, Prometic Plasma Resources Inc., Prometic Pharma SMT Holdings Limited, Prometic Pharma SMT Limited, Prometic Biotherapeutics Ltd, Telesta Therapeutics Inc. and Prometic Plasma Resources (USA) Inc., dated November 14, 2018	Form 40-F	001-39131	99.66	11/12/2019
4.11	Private Placement Subscription Agreement, dated April 15, 2019	Form 40-F	001-39131	99.67	11/12/2019
4.12	Board Observation Rights and Director Nomination Agreement, dated April 23, 2019	Form 40-F	001-39131	99.68	11/12/2019

2

		Incorporated by Reference
Exhibit	Description	Schedule/ Form	File Number	Exhibit	File Date
4.13	Restructuring Agreement between Structured Alpha LP, Prometic Life Sciences Inc., Prometic Biotherapeutics Inc., Prometic Bioseparations Ltd, Prometic Biosciences Inc., Prometic Bioproduction Inc., NantPro Biosciences, LLC, Prometic Plasma Resources Inc., Prometic Pharma SMT Holdings Limited, Prometic Pharma SMT Limited, Prometic Biotherapeutics Ltd, Telesta Therapeutics Inc. and Prometic Plasma Resources (USA) Inc., dated April 15, 2019	Form 40-F	001-39131	99.70	11/12/2019
4.14	Private Placement Subscription Agreement, dated April 15, 2019	Form 40-F	001-39131	99.71	11/12/2019
4.15	Consolidated Loan Agreement between Structured Alpha LP, Prometic Life Sciences Inc., Prometic Biotherapeutics Inc., Prometic Bioseparations Ltd, Prometic Biosciences Inc., Prometic Bioproduction Inc., NantPro Biosciences, LLC, Prometic Plasma Resources Inc., Prometic Pharma SMT Holdings Limited, Prometic Pharma SMT Limited, Prometic Biotherapeutics Ltd, Telesta Therapeutics Inc. and Prometic Plasma Resources (USA) Inc., dated April 23, 2019	Form 40-F	001-39131	99.72	11/12/2019
4.16	Share Purchase Agreement, among Liminal BioSciences Inc. and Gamma Biosciences GP LLC, dated November 3, 2019	Form 6-K	001-39131	99.1	11/18/2019
4.17	First Amendment to the Consolidated Loan Agreement between Structured Alpha LP, Liminal BioSciences Inc., Prometic BioTherapeutics Inc., Liminal R&D BioSciences Inc., Prometic Bioproduction Inc., NantPro Biosciences, LLC, Prometic Plasma Resources Inc., Liminal BioSciences Holdings Limited, Liminal BioSciences Limited, Prometic Biotherapeutics Ltd, Telesta Therapeutics Inc. and Prometic Plasma Resources (USA) Inc., dated November 11, 2019	Form 6-K	001-39131	99.5	11/18/2019
4.18#	Agreement PBI-1101, PBI-1402, among Prometic Biosciences Inc., Innovon Pharmaceuticals Inc., Pierre Laurin and Prometic Life Sciences Inc., dated October 17, 2001	Form 20-F	001-39131	4.18	03/20/2020
4.19#*	Assignment Agreement, among Prometic Biosciences Inc., Innovon Pharmaceuticals Inc., Pierre Laurin and Prometic Life Sciences Inc., dated May 23, 2012
4.20#*	Amendment to Entente PBI-1101, PBI–1402, among Prometic Biosciences Inc., Innovon Pharmaceuticals Inc., Pierre Laurin and Prometic Life Sciences Inc., dated December 14, 2015
4.21*	Consent and Acknowledgment, among Prometic Biosciences Inc., Innovon Pharmaceuticals Inc., Pierre Laurin and Prometic Pharma SMT Limited, dated December 14, 2015
4.22#*	Plasma Purchase Agreement between Prometic Plasma Resources Inc. and Interstate Blood Bank, Inc., dated November 6, 2015
4.23#*	Amendment No. 1 to Plasma Purchase Agreement between Prometic Plasma Resources Inc. and Interstate Blood Bank, Inc., dated February 8, 2019
4.24#	Amended and Restated License Agreement PPPS Process between Prometic Life Sciences Inc. and Hematech Biotherapeutics Inc., dated May 7, 2012	Form 20-F	001-39131	4.23	03/20/2020
4.25#*	Amendment No. 1 to Amended and Restated License Agreement PPPS Process between Prometic Life Sciences Inc. and Hematech Biotherapeutics Inc., dated December 16, 2016
4.26#	Master Services Agreement between Prometic Life Sciences Inc. and Cangene Corporation doing business as Emergent BioSolutions, dated May 15, 2015	Form 20-F	001-39131	4.25	03/20/2020

3

		Incorporated by Reference
Exhibit	Description	Schedule/ Form	File Number	Exhibit	File Date
4.27	Royalty Stream Purchase Agreement, among Prometic Life Sciences Inc., Prometic Pharma SMT Limited, Prometic Biosciences Inc. and each of their affiliates and Structured Alpha LP, dated April 30, 2018	Form 20-F	001-39131	4.26	03/20/2020
4.28#*	Absorbent Supply Agreement, among Prometic Bioseparations Ltd and Prometic Bioproduction Inc., dated June 18, 2019
4.29#*	Plasma Purchase Agreement between Prometic Plasma Resources Inc. and Biotest Pharmaceuticals Corporation, dated June 26, 2017
4.30*	Notice of Assignment of Plasma Purchase Agreement, between Biotest Pharmaceuticals Corporation and Grifols Worldwide Operations Limited, dated December 10, 2018
4.31#*	Amendment No. 1 to Plasma Purchase Agreement between Prometic Plasma Resources Inc. and Grifols Worldwide Operations Limited, dated December 31, 2018
4.32#*	Amendment No. 2 to Plasma Purchase Agreement between Prometic Plasma Resources Inc. and Grifols Worldwide Operations Limited, dated November 11, 2019
4.33#*	Amended and Restated Contract Manufacturing Agreement between Prometic Life Sciences Inc. and Hematech Biotherapeutics Inc., dated May 7, 2012
8.1	List of subsidiaries of the Registrant	Form 20-F	001-39131	8.1	03/20/2020
12.1*	Certification by the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	Certification by the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**	Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**	Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Consent of PricewaterhouseCoopers LLP
15.2*	Consent of Ernst & Young LLP
15.3	Letter of PricewaterhouseCoopers LLP dated March 20, 2020 regarding change in the Registrant’s independent registered public accounting firm.	Form 20-F	001-39131	15.3	03/20/2020
15.4	Letter of Ernst & Young LLP dated March 20, 2020 regarding change in the Registrant’s independent registered public accounting firm.	Form 20-F	001-39131	15.4	03/20/2020
101.INS	XBRL Instance Document	Form 20-F	001-39131	101.INS	03/20/2020
101.SCH	XBRL Taxonomy Extension Schema Document	Form 20-F	001-39131	101.SCH	03/20/2020
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Form 20-F	001-39131	101.CAL	03/20/2020
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Form 20-F	001-39131	101.LAB	03/20/2020
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Form 20-F	001-39131	101.PRE	03/20/2020
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Form 20-F	001-39131	101.DEF	03/20/2020

4

*		Filed herewith.
**		Furnished herewith.
†	Indicates a management contract or any compensatory plan, contract or arrangement.
#	Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would likely cause competitive harm to Liminal BioSciences Inc. if publicly disclosed.

5

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Liminal BioSciences Inc.

/s/ Kenneth Galbraith

Name: Kenneth Galbraith

Title: Chief Executive Officer

(Principal Executive Officer)

Date: August 4, 2020

6

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
	Page
Liminal BioSciences Inc.
For the Years Ended December 31, 2019, 2018 and 2017
Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Financial Position	F-5
Consolidated Statements of Operations	F-6
Consolidated Statements of Comprehensive Loss	F-7
Consolidated Statements of Changes in Equity	F-8
Consolidated Statement of Cash Flows	F-9
Notes to Consolidated Financial Statements	F-10

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and the Shareholders of Liminal BioSciences Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Liminal BioSciences Inc. and its subsidiaries (together, the Company) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited the adjustments to retrospectively present the weighted average number of shares outstanding used in the calculation of basic and diluted EPS, the basic and diluted EPS as at December 31, 2017 following the share consolidation that occurred on July 5, 2019 as described in Note 1 and the adjustments to reflect the discontinued operations described in Note 5. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2017 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2017 consolidated financial statements taken as a whole.

Change in Accounting Principle

As discussed in Note 4 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinion

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

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

PricewaterhouseCoopers LLP

1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1

T: +1 514 205 5000, F: +1 514 876 1502

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

F-2

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

/s/ PricewaterhouseCoopers LLP

Montreal, Canada

March 20, 2020

We have served as the Company's auditor since 2019.

F-3

Report of independent registered public accounting firm

To the shareholders and the board of directors of

Prometic Life Sciences Inc.

Opinion on the consolidated financial statements

We have audited, before the effects of the adjustments to retrospectively present the weighted average number of shares outstanding used in the calculation of basic and diluted EPS, the basic and diluted EPS as at December 31, 2017 following the share consolidation that occurred on July 5, 2019, as described in Note 1, and the adjustments to reflect the discontinued operations described in Note 5 to the 2019 consolidated financial statements, the consolidated statements of operations, comprehensive loss, changes in equity and cash flows of Prometic Life Sciences Inc. (the “Company”), for the year ended December 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively present the weighted average number of shares outstanding used in the calculation of basic and diluted EPS, the basic and diluted EPS as at December 31, 2017 following the share consolidation that occurred on July 5, 2019, as described in Note 1, and the adjustments to reflect the discontinued operations described in Note 5 to the 2019 consolidated financial statements, present fairly, in all material respects, the consolidated financial performance of the Company and its consolidated cash flows for the year ended December 31, 2017, in conformity with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board.

Basis for opinion

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

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

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

We have served as the Company’s auditor since 2010. In 2019, we became the predecessor auditor.

/s/ Ernst & Young LLP

Montreal, Canada

March 27, 2018

F-4

LIMINAL BIOSCIENCES INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of Canadian dollars)

At December 31	2019			2018
ASSETS (note 16)
Current assets
Cash and cash equivalents	$	61,285		$	7,389
Accounts receivable (note 6)		4,086			11,882
Income tax receivable		9,214			8,091
Inventories (note 7)		7,532			12,028
Prepaids		12,733			1,452
Total current assets		94,850			40,842
Long-term income tax receivable		-			117
Other long-term assets (note 8)		1,170			411
Capital assets (note 9)		21,471			41,113
Right-of-use assets (note 10)		33,254			-
Intangible assets (note 11)		13,846			19,803
Deferred tax assets (note 26)		507			606
Total assets	$	165,098		$	102,892
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities (note 13)	$	22,808		$	31,855
Deferred revenues		-			507
Current portion of lease liabilities (note 14)		8,290			-
Warrant liability (note 15)		-			157
Current portion of long-term debt (note 16)		165			3,211
Total current liabilities		31,263			35,730
Long-term portion of deferred revenues		-			170
Long-term portion of lease liabilities (note 14)		29,947			-
Long-term portion of operating and finance lease inducements    and obligations (note 17)		-			1,850
Other long-term liabilities (note 18)		285			5,695
Long-term debt (note 16)		8,669			122,593
Total liabilities	$	70,164		$	166,038
EQUITY
Share capital (note 19a)	$	932,951		$	583,117
Contributed surplus (note 19b)		43,532			21,923
Warrants (note 19c)		95,856			95,296
Accumulated other comprehensive loss		(3,099	)		(1,252	)
Deficit		(967,051	)		(755,688	)
Equity (deficiency) attributable to owners of the parent		102,189			(56,604	)
Non-controlling interests (note 20)		(7,255	)		(6,542	)
Total equity (deficiency)		94,934			(63,146	)
Total liabilities and equity	$	165,098		$	102,892

Commitments (note 31), Subsequent events (note 33)

The accompanying notes are an integral part of the consolidated financial statements.

F-5

LIMINAL BIOSCIENCES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of Canadian dollars except for per share amounts)

Years ended December 31	2019			2018			2017
Revenues (note 22)	$	4,904		$	24,633		$	22,313
Expenses
Cost of sales and other production expenses (note 7)		2,763			25,707			3,689
Research and development expenses (note 23a)		75,114			84,858			93,523
Administration, selling and marketing expenses		45,283			29,448			29,563
Bad debt expense (note 22)		-			-			20,491
Loss (gain) on foreign exchange		(1,451	)		4,696			(781	)
Finance costs (note 23b)		14,056			22,041			7,889
Loss (gain) on extinguishments of liabilities (notes 16,19)		92,374			(33,626	)		4,191
Change in fair value of financial instruments measured at fair    value through profit or loss (note 15)		(1,140	)		1,000			-
Impairment losses (note 25)		12,366			149,952			-
Share of losses of an associate (note 12)		-			22			-
Net loss from continuing operations before taxes	$	(234,461	)	$	(259,465	)	$	(136,252	)
Income tax recovery on continuing operations (note 26)		(237	)		(19,637	)		(14,302	)
Net loss from continuing operations	$	(234,224	)	$	(239,828	)	$	(121,950	)
Discontinued operations, net of taxes
Gain on sale of subsidiaries (note 5)		26,346			-			-
Net income from discontinued operations (note 5)		1,125			1,932			1,914
Net loss	$	(206,753	)	$	(237,896	)	$	(120,036	)
Net income (loss) attributable to:
Non-controlling interests - continuing operations (note 20)	$	(1,044	)	$	(42,530	)	$	(10,305	)
Owners of the parent
- Continuing operations		(233,180	)		(197,298	)		(111,645	)
- Discontinued operations		27,471			1,932			1,914
	$	(205,709	)	$	(195,366	)	$	(109,731	)
Net loss	$	(206,753	)	$	(237,896	)	$	(120,036	)
Income (loss) per share
Attributable to the owners of the parent basic and diluted    (note 27):
From continuing operations	$	(14.52	)	$	(238.28	)	$	(140.26	)
From discontinued operations		1.71			2.33			2.40
Total loss per share	$	(12.81	)	$	(235.95	)	$	(137.85	)
Weighted average number of outstanding shares    (in thousands) (note 27)		16,062			828			796

The accompanying notes are an integral part of the consolidated financial statements.

F-6

LIMINAL BIOSCIENCES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of Canadian dollars)

Years ended December 31	2019			2018			2017
Net Loss	$	(206,753	)	$	(237,896	)	$	(120,036	)
Other comprehensive income (loss)
Items that may be subsequently reclassified to profit    and loss:
Exchange differences on translation of foreign operations    from continuing operations		294			(462	)		(344	)
Exchange differences on translation of foreign operations    from discontinued operations (note 5)		(692	)		832			686
Reclassification of exchange differences on translation of    foreign operations sold to consolidated statement of    operations (note 5)		(1,449	)		-			-
Total other comprehensive income (loss)	$	(1,847	)	$	370		$	342
Total comprehensive loss	$	(208,600	)	$	(237,526	)	$	(119,694	)
Total comprehensive income (loss) attributable to:
Non-controlling interests	$	(1,044	)	$	(42,530	)	$	(10,305	)
Owners of the parent
- Continuing operations		(232,886	)		(197,760	)		(111,989	)
- Discontinued operations		25,330			2,764			2,600
Total comprehensive loss	$	(208,600	)	$	(237,526	)	$	(119,694	)

The accompanying notes are an integral part of the consolidated financial statements.

F-7

LIMINAL BIOSCIENCES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of Canadian dollars)

	Equity (deficiency) attributable to owners of the parent
	Share capital		Contributed surplus			Warrants			Foreign currency translation reserve			Deficit			Total			Non- controlling interests			Total equity (deficiency)
	$		$			$			$			$			$			$			$
Balance at January 1, 2017		480,237		12,919			64,201			(1,964	)		(423,026	)		132,367			26,976			159,343
Net loss		-		-			-			-			(109,731	)		(109,731	)		(10,305	)		(120,036	)
Foreign currency translation reserve		-		-			-			342			-			342			-			342
Issuance of shares (note 19a)		61,450		-			-			-			-			61,450			-			61,450
Share-based payments expense (note 19b)		-		8,662			-			-			-			8,662			-			8,662
Exercise of stock options (note 19b)		811		(330	)		-			-			-			481			-			481
Shares issued pursuant to restricted share unit    plan (note 19b)		5,058		(5,058	)		-			-			-			-			-			-
Exercise of future investment rights		27,594		-			(6,542	)		-			-			21,052			-			21,052
Issuance of warrants (note 19c)		-		-			16,285			-			-			16,285			-			16,285
Share and warrant issuance cost (note 19a,c)		-		-			-			-			(4,148	)		(4,148	)		-			(4,148	)
Effect of funding arrangements on non-controlling    interest (note 20)		-		-			-			-			(4,776	)		(4,776	)		4,776			-
Balance at December 31, 2017		575,150		16,193			73,944			(1,622	)		(541,681	)		121,984			21,447			143,431
Impact of adopting IFRS 9 (note 4a)		-		-			-			-			110			110			-			110
Balance at January 1, 2018 - restated		575,150		16,193			73,944			(1,622	)		(541,571	)		122,094			21,447			143,541
Net loss		-		-			-			-			(195,366	)		(195,366	)		(42,530	)		(237,896	)
Foreign currency translation reserve		-		-			-			370			-			370			-			370
Issuance of shares (note 19a)		6,340		-			-			-			-			6,340			-			6,340
Share-based payments expense (note 19b)		-		6,722			-			-			-			6,722			-			6,722
Exercise of stock options (note 19b)		1,073		(438	)		-			-			-			635			-			635
Shares issued pursuant to restricted share unit     plan (note 19b)		554		(554	)		-			-			-			-			-			-
Issuance of warrants (note 19c)		-		-			21,352			-			-			21,352			-			21,352
Share and warrant issuance cost		-		-			-			-			(581	)		(581	)		-			(581	)
Effect of changes in the ownership of a subsidiary and    funding arrangements on non-controlling    interests (note 20)		-		-			-			-			(18,170	)		(18,170	)		14,541			(3,629	)
Balance at December 31, 2018		583,117		21,923			95,296			(1,252	)		(755,688	)		(56,604	)		(6,542	)		(63,146	)
Net loss		-		-			-			-			(205,709	)		(205,709	)		(1,044	)		(206,753	)
Foreign currency translation reserve		-		-			-			(398	)		-			(398	)		-			(398	)
Reclassification of exchange differences on translation of    foreign operations to consolidated statement of    operations (note 5)		-		-			-			(1,449	)		-			(1,449	)		-			(1,449	)
Issuance of shares (note 19a)		349,834		-			-			-			-			349,834			-			349,834
Share-based payments expense (note 19b)		-		22,030			-			-			-			22,030			-			22,030
Share-based compensation paid in cash    (note 19b)		-		(421	)		-			-			-			(421	)		-			(421	)
Issuance of warrants (note 19c)		-		-			560			-			-			560			-			560
Share issuance cost (note 19a)		-		-			-			-			(5,323	)		(5,323	)		-			(5,323	)
Effect of funding arrangements on non-controlling     interests (note 20)		-		-			-			-			(331	)		(331	)		331			-
Balance at December 31, 2019		932,951		43,532			95,856			(3,099	)		(967,051	)		102,189			(7,255	)		94,934

The accompanying notes are an integral part of the consolidated financial statements

F-8

LIMINAL BIOSCIENCES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of Canadian dollars)

Years ended December 31	2019			2018			2017
Cash flows used in operating activities
Net loss from continuing operations for the year	$	(234,224	)	$	(239,828	)	$	(121,950	)
Net income from discontinued operations for the year		27,471			1,932			1,914
Adjustments to reconcile net loss to cash flows used in    operating activities:
Finance costs and foreign exchange		12,809			25,282			8,787
Change in operating and finance lease inducements and obligations		-			2,565			2,391
Carrying value of capital and intangible assets disposed		196			513			563
Share of losses of an associate (note 12)		-			22			-
Gain on sale of subsidiaries (note 5)		(26,346	)		-			-
Change in fair value of financial instruments measured at    fair value through profit or loss (note 15)		(1,140	)		1,000			-
Impairment losses (note 25)		12,366			149,952			-
Loss (gain) on extinguishments of liabilities (notes 16, 19a)		92,374			(33,626	)		4,191
Deferred income taxes (note 26)		87			(13,815	)		(11,587	)
Share-based payments expense (note 19b)		21,609			6,722			8,662
Depreciation of capital assets (note 9)		3,734			4,086			3,632
Depreciation of right-of-use assets (note 10)		4,913			-			-
Amortization of intangible assets (note 11)		1,259			1,372			944
		(84,892	)		(93,823	)		(102,453	)
Change in non-cash working capital items		(14,498	)		11,369			(20,120	)
	$	(99,390	)	$	(82,454	)	$	(122,573	)
Cash flows from financing activities
Proceeds from share issuances (note 19a)		118,785			751			53,125
Proceeds from debt and warrant issuances (notes 16, 19c)		19,859			79,105			50,717
Repayment of principal on long-term debt (note 16)		(988	)		(3,184	)		(3,454	)
Repayment of interest on long-term debt (note 16)		(3,540	)		(3,934	)		(163	)
Exercise of options (note 19b)		-			635			481
Exercise of future investment rights		-			-			21,052
Payments of principal on lease liabilities (note 14)		(7,563	)		-			-
Payment of interest on lease liabilities (note 14)		(1,767	)		-			-
Debt, share and warrants issuance costs		(6,867	)		(970	)		(4,306	)
Payments of principal under finance leases		-			(245	)		-
	$	117,919		$	72,158		$	117,452
Cash flows from (used in) investing activities
Additions to capital assets		(2,741	)		(3,786	)		(7,688	)
Additions to intangible assets		(1,703	)		(1,342	)		(2,395	)
Proceeds from sale of discontinued operations business, net of cash    divested		43,958			-			-
Transaction costs paid relating to the sale of discontinued operations    business		(4,228	)		-			-
Proceeds from the sale of marketable securities and    short-term investments					-			11,063
Acquisition of convertible debt		-			(955	)		-
Additions to other long-term assets					-			(63	)
Release of restricted cash		65			-			-
Interest received		745			224			202
	$	36,096		$	(5,859	)	$	1,119
Net change in cash and cash equivalents during the year		54,625			(16,155	)		(4,002	)
Net effect of currency exchange rate on cash and cash equivalents		(729	)		378			(638	)
Cash and cash equivalents, beginning of year		7,389			23,166			27,806
Cash and cash equivalents, end of year	$	61,285		$	7,389		$	23,166
Comprising of:
Cash		41,761			7,389			23,166
Cash equivalents		19,524			-			-
	$	61,285		$	7,389		$	23,166

Cash flows from discontinued operations presented in note 5

The accompanying notes are an integral part of the consolidated financial statements.

F-9

LIMINAL BIOSCIENCES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019

(In thousands of Canadian dollars, except for per share amounts)

1. Nature of operations

Liminal BioSciences Inc. (“Liminal” or the “Company”) is incorporated under the Canada Business Corporations Act and is a publicly traded clinical stage biotechnology company (NASDAQ & TSX symbol: LMNL) focused on discovering, developing and commercializing novel treatments for patients suffering from diseases related to fibrosis, including respiratory, liver and kidney diseases that have high unmet medical need. Liminal has a deep understanding of certain biological targets and pathways that have been implicated in the fibrotic process, including fatty acid receptors such as G-protein-coupled receptor 40, or GPR40, and G-protein-coupled receptor 84, or GPR84, and peroxisome proliferator-activated receptors, or PPARs.

Liminal’s lead small molecule segment product candidate, fezagepras (PBI 4050), is currently being developed for the treatment of respiratory diseases and for the treatment of Alström Syndrome. The plasma‑derived therapeutics segment leverages Liminal’s experience in bioseparation technologies used to isolate and purify biopharmaceuticals from human plasma. With respect to this second platform, the Company is focused on the development of its plasma-derived product candidate Ryplazim® (plasminogen) (“Ryplazim®”).

On July 5, 2019, the Company performed a one thousand-to-one share consolidation of the its common shares, stock options, restricted share units and warrants. The quantities and per unit prices presented in these audited annual consolidated financial statements have been retroactively adjusted to give effect to the share consolidation.

On October 7, 2019, the Company formerly named Prometic Life Sciences Inc. changed its name to Liminal BioSciences Inc. and the Company’s TSX stock symbol changed from PLI to LMNL.

On November 24, 2019 the Company sold the majority of its bioseparations business to a third party. These activities are presented as discontinued operations in the annual consolidated financial statements. Details on this transaction and the results from discontinued operations are disclosed in note 5. The prior period results from discontinued operations have been reclassified and presented in the consolidated statements of operations.

The Company’s head office is located at 440, Boul. Armand-Frappier, suite 300, Laval, Québec, Canada, H7V 4B4. Liminal has Research and Development (“R&D”) facilities in Canada, the U.K. and the U.S. and manufacturing facilities in Canada.

Structured Alpha LP (“SALP”) has been Liminal’s majority and controlling shareholder since the debt restructuring on April 23, 2019 (note 13) and is considered Liminal’s parent entity for accounting purposes. Thomvest Asset Management Ltd. is the general partner of SALP and the ultimate controlling parent, for accounting purposes, of Liminal is The 2003 TIL Settlement. Prior to this date, Liminal did not have a controlling parent.

The consolidated financial statements for the year ended December 31, 2019 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (”IASB”) on a going concern basis, which presumes the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the ordinary course of business.

The financial condition of the Company improved significantly since April 2019 following the completion of several transactions including the debt restructuring, and the proceeds from the sale of the bioseparations operations, resulting in a cash and cash equivalent position of $61,285 at December 31, 2019. The Company has a positive working capital position, i.e. the current assets net of current liabilities, of $63,587 at December 31, 2019. The Company also has access to a line of credit of up to $30,298 (note 29) as at December 31, 2019, as a result of a loan agreement with SALP signed November 11, 2019. As at March 20, 2020, following the receipt of additional payment for the sales of the bioseparations operations, the amount available to be drawn was reduced to $29,123.

F-10

Despite the improved liquidity situation, Liminal is an R&D stage enterprise and until the Company can generate a sufficient amount of product revenue to finance its cash requirements, management expects, as required, to finance future cash needs primarily through a combination of public or private equity offerings, debt financings, strategic collaborations, business and asset divestitures, and grant funding.

2. Significant accounting policies

Statement of compliance

These consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB and were approved by the Board of Directors on March 20, 2020.

Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis, except for the convertible debt, equity investments and the warrant liability which have been measured at fair value. Certain assets may be carried at their net realizable value or at their recoverable amount if they have been subject to impairment.

Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional currency.

Basis of consolidation

The consolidated financial statements include the accounts of Liminal BioSciences Inc., and those of its subsidiaries. The Company’s subsidiaries at December 31, 2019, 2018 and 2017 are as follows:

Name of subsidiary	Segment activity	Place of incorporation and operation	Proportion of ownership interest held by group
			2019	2018	2017
Liminal R&D BioSciences Inc.    (formerly Prometic Biosciences Inc.)	Small molecule therapeutics	Quebec, Canada	100%	100%	100%
Prometic Bioproduction Inc.	Plasma-derived therapeutics	Quebec, Canada	100%	100%	87%
Prometic Bioseparations Ltd	Discontinued operations	Isle of Man, British Isles	nil	100%	100%
Prometic Biotherapeutics Inc.	Plasma-derived therapeutics	Delaware, U.S.	100%	100%	100%
Prometic Biotherapeutics Ltd	Plasma-derived therapeutics	Cambridge, United Kingdom	100%	100%	100%
Prometic Biotherapeutics B.V.	Plasma-derived therapeutics	Amsterdam, Netherlands	100%	N/A	N/A
Prometic Manufacturing Inc.	Discontinued operations	Quebec, Canada	nil	100%	100%
Pathogen Removal and Diagnostic    Technologies Inc.	Corporate	Delaware, U.S.	77%	77%	77%
NantPro Biosciences, LLC	Plasma-derived therapeutics	Delaware, U.S.	73%	73%	73%
Prometic Plasma Resources Inc.	Plasma-derived therapeutics	Winnipeg, Canada	100%	100%	100%
Prometic Plasma Resources USA Inc.	Plasma-derived therapeutics	Delaware, U.S.	100%	100%	N/A
Liminal BioSciences Holdings Limited    (formerly Prometic Pharma SMT    Holdings Limited)	Small molecule therapeutics	Cambridge, United Kingdom	100%	100%	100%
Liminal BioSciences Limited (formerly    Prometic Pharma SMT Limited)	Small molecule therapeutics	Cambridge, United Kingdom	100%	100%	100%
Prometic Pharma SMT B.V	Small molecule therapeutics	Amsterdam, Netherlands	100%	N/A	N/A
Telesta Therapeutics Inc.	Plasma-derived therapeutics	Quebec, Canada	100%	100%	100%

The Company consolidates investees when, based on the evaluation of the substance of the relationship with the Company, it concludes that it controls the investees. The Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

F-11

When a subsidiary is not wholly-owned the Company recognizes the non-controlling interests’ share of the net assets and results of operations in the subsidiary. When the proportion of the equity held by non-controlling interests’ changes without resulting in a change of control, the carrying amount of the controlling and non-controlling interest are adjusted to reflect the changes in their relative interests in the subsidiary. In these situations, the Company recognizes directly in equity the effect of the change in ownership of a subsidiary on the non-controlling interests. Similarly, after recognizing its share of the operating losses, the non-controlling interest is adjusted for its share of the equity contribution made by Liminal that does not modify the interest held by either party. The offset to this adjustment is recorded in the deficit. The effect of these transactions is presented in the consolidated statement of changes in equity.

Financial instruments

Recognition and derecognition

Financial instruments are recognized in the consolidated statement of financial position when the Company becomes a party to the contractual obligations of the instrument. On initial recognition, financial instruments are recognized at their fair value plus, in the case of financial instruments not at fair value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition or issue of financial instruments. Financial assets are subsequently derecognized when payment is received in cash or other financial assets or if the debtor is discharged of its liability.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing liability is replaced by another from the same creditor on substantially different terms, or the terms of the liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated statement of operations.

Classification

Subsequent to initial recognition, financial instruments are measured according to the category to which they are classified. Financial instruments are measured at amortized cost unless they are classified as fair value through other comprehensive income (“FVOCI”), classified as FVPL or designated as FVPL, in which case they are subsequently measured at fair value.  

The classification of financial asset debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Assets that are held to collect contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVOCI instead of FVPL. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVPL.

Currently, the Company classifies cash, cash equivalents, trade receivables, other receivables, restricted cash, and long-term deposits as financial assets measured at amortized cost and trade payables, wages and benefits payable, settlement fee payable, royalty payment obligations, license acquisition payment obligations, other employee benefit liabilities, other long-term liabilities and long-term debt as financial liabilities measured at amortized cost.

The Company previously held investments in equity instruments and convertible debt that it classified as financial assets at FVPL and a warrant liability classified as a financial liability at FVPL.

F-12

Impairment of financial assets

The expected credit losses associated with its debt instruments carried at amortized cost is assessed on a forward-looking basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the receivables.

Cash equivalents

Cash and cash equivalents comprise deposits in banks and highly liquid investments having an original maturity of 90 days or less when issued.

Financial instrument accounting policy used before the adoption of IFRS 9, Financial instruments (“IFRS 9”) on January 1, 2018

Prior to January 1, 2018, the Company applied IAS 39 Financial instruments. The accounting policy and classification of the financial instruments applied under that standard is detailed in the following paragraphs.

i) Financial assets and financial liabilities at fair value through profit and loss

Cash, marketable securities and restricted cash are respectively classified as fair value through profit and loss. They are measured at fair value and changes in fair value are recognized in the consolidated statements of operations. Directly related transaction costs are recognized in the consolidated statements of operations.

ii) Loans and receivables

Cash equivalents, short-term investments, trade receivables, other receivables and long-term receivables are classified as loans and receivables. They are initially recognized at fair value and subsequently carried at amortized cost using the effective interest method.

iii) Available-for-sale financial assets

Investments in common or preferred shares of private companies are classified as available-for-sale and are measured at cost since their fair value cannot be measured reliably.

iv) Financial liabilities

Trade payable, wages and severances payable, other employee benefit liabilities, settlement fee payable, royalty payment obligation, other long-term liabilities, advance on revenues from a supply agreement and long-term debt are classified as other financial liabilities. They are measured at amortized cost using the effective interest method.

Credit facility fees are recorded in deferred financing cost and are amortized into finance cost over the term of the Credit Facility.

Impairment of investments

When there has been a significant or prolonged decline in the value of an investment, the investment is written down to recognize the loss.

Inventories

Inventories of raw materials, work in progress and finished goods are valued at the lower of cost and net realizable value. Cost is determined on a first in, first out basis. The cost of manufactured inventories comprises all costs that are directly attributable to the manufacturing process, such as raw materials, direct labour and manufacturing overhead based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated selling costs except for raw materials for which it is determined using replacement cost.

F-13

Capital assets

Capital assets are recorded at cost less any government assistance, accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as described below.

Capital asset			Period
Buildings and improvements		20 years
Leasehold improvements	The lower of the lease term and the useful life
Production and laboratory equipment		5 - 20 years
Furniture		5 - 10 years
Computer equipment		3 - 5 years
Assets held under financing leases *	The lower of the lease term and the useful life

* Assets held under financing leases are presented as part of capital assets prior to the adoption of IFRS 16, Leases and since January 1, 2019 are included under Right-of-use assets (note 10).

The estimated useful lives, residual values and depreciation methods are reviewed annually with the effect of any changes in estimates accounted for on a prospective basis. The gain or loss arising on the disposal or retirement of a capital asset is determined as the difference between the sales proceeds and its carrying amount and is recognized in profit or loss.

Government assistance

Government assistance programs, including investment tax credits on research and development expenses, are reflected as reductions to the cost of the assets or to the expenses to which they relate and are recognized when there is reasonable assurance that the assistance will be received and all attached conditions are complied with.

Right-of-use (“ROU”) assets

The Company recognizes a right-of-use asset at the commencement date of a lease which is when the date at which the underlying asset is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use asset is depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

Intangible Assets

Intangible assets include acquired rights such as licenses for product manufacturing and commercialization, donor lists, external patent costs and software costs. They are carried at cost less accumulated amortization. Amortization commences when the intangible asset is available for use and is calculated over the estimated useful lives of the intangible assets acquired using the straight-line method. The maximum period used for each category of intangible asset are presented in the table below. The estimated useful lives and amortization method are reviewed annually, with the effect of any changes in estimates being accounted for on a prospective basis. The amortization expense is recognized in the consolidated statement of operations in the expense category consistent with the function of the intangible assets.

Intangible asset	Period
Licenses and other rights	30 years
Donor lists	10 years
Patents	20 years
Software	5 years

Impairment of tangible and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If

F-14

impairment indicators exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. For intangible assets not yet available for use, an impairment test is performed annually at November 30, until amortization commences, whether or not there are impairment indicators. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit (CGU) which represents the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets, groups of assets or CGUs to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, the corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.

The recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

An impairment loss is recognized when the carrying amount of an asset or a CGU exceeds its recoverable amount by the amount of this excess. An impairment loss is recognized immediately in profit or loss in the period during which the loss is incurred. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount; on reversal of an impairment loss, the increased carrying amount does not exceed the carrying amount that would have been determined had an impairment loss not been recognized for the asset or CGU in prior periods. A reversal of an impairment loss is recognized immediately in profit or loss.

Investment in an associate

Investments in associates are accounted for using the equity method. An associate is an entity over which the Company has significant influence. Under the equity method, the investment in the associate is carried on the consolidated statement of financial position at cost plus post acquisition changes in the Company’s share of net assets of the associate.

The consolidated statement of operations reflects the Company’s share of the results of operations of the associate.

If the Company’s share of cumulative losses of an associate equal or exceeds its interest in the associate, the Company discontinues recognizing its share of further losses. After the interest in an associate is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Company resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.

At each balance sheet date, management considers whether there is objective evidence of impairment in associates. If there is such evidence, management determines the amount of impairment to record, if any, in relation to the associate.

When the level of influence over an associate changes either following a loss of significant influence over the associate, or the obtaining of control over the associate or when an investment in a financial asset accounted for under IFRS 9 becomes subject to significant influence, the Company measures and recognizes its investment at its fair value. Any difference between the carrying amount of the associate at the time of the change in influence and the fair value of the investment, and proceeds from disposal if any, is recognized in profit or loss.

F-15

Lease liabilities

At the commencement date of a lease, the Company recognizes a lease liability measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of a lease liability is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of a lease liability is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment whether the underlying asset will be purchased.

The Company applies the short-term lease recognition exemption to leases of 12 months or less, as well as the lease of low-value assets recognition exemption i.e. leases with a value below seven dollars. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.

Prior to the adoption of IFRS 16, Leases on January 1, 2019 (note 3), as a lessor, the Company only recognized finance lease obligations while operating leases obligations were only disclosed.

Revenue recognition

To determine revenue recognition for contracts with customers, Liminal performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The five-step model is only applied to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer. At contract inception, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The transaction price that is allocated to the respective performance obligation is recognized as revenue when (or as) the performance obligation is satisfied.

Sale of goods

Revenue from sale of goods is recognized when the terms of a contract with a customer have been satisfied. This occurs when:

• The control over the product has been transferred to the customer; and

• The product is received by the customer or transfer of title to the customer occurs upon shipment.

Following delivery, the customer bears the risks of obsolescence and loss in relation to the goods. Revenue is recognized based on the price specified in the contract, net of estimated sales discounts and returns.

Rendering of services

Revenues from contracted services are generally recognized as the performance obligations are satisfied over time, and the related expenditures are incurred pursuant to the terms of the agreement. Contract revenue is recognized on a percentage of completion basis based on key milestones contained within the contract.

Unbilled revenues and deferred revenues

If the Company has recognized revenues but has not issued an invoice, the entitlement is recognized as a contract asset and is presented in the statement of financial position as unbilled revenues. When the amounts are invoiced, then the amounts are transferred into trade receivables. If the Company has received payments prior to satisfying its performance obligation, the obligation is recognized as a contract liability and is presented in the consolidated statement of financial position as deferred revenues.

F-16

Licensing fees and milestone payments

Under IFRS 15, the Company determines whether the Company's promise to grant a license provides its customer with either a right to access the Company’s intellectual property ("IP") or a right to use the Company’s IP. A license will provide a right to access the intellectual property if there is significant development of the intellectual property expected in the future whereas for a right to use, the intellectual property is to be used in the condition it is at the time the license is signed. Revenue from a license that provides a customer the right to use the Company’s IP is recognized at a point in time when the transfers to the licensee is completed and the license period begins. When a license provides access to the Company's IP over a license term, the performance obligation is satisfied over time and, therefore, revenue is recognized over the term of the license arrangement. Milestone payments are immediately recognized as licensing revenue when the condition is met, if the milestone is not a condition to future deliverables and collectability is reasonably assured. Otherwise, they are recognized over the remaining term of the agreement or the performance period.

Rental revenue

The Company accounts for the lease or sub-lease with its tenant as an operating lease when the Company has not transferred substantially all of the risks and benefits of ownership of its property or leased property. Revenue recognition under an operating lease commences when the tenant has a right to use the leased asset, and the total amount of contractual rent to be received from the operating lease is recognized on a straight-line basis over the term of the lease. Rental revenue also includes recoveries of operating expenses and property taxes.

Revenue recognition accounting policy used before the adoption of IFRS 15, Revenue from contracts with customers (“IFRS 15”) on January 1, 2018

The Company earns revenues from research and development services, license and milestone fees, sale of goods and leasing arrangements, which may include multiple elements. The individual elements of each agreement are divided into separate units of accounting, if certain criteria are met. The applicable revenue recognition method is then applied to each unit. Otherwise, the applicable revenue recognition criteria are applied to combined elements as a single unit of accounting.

Rendering of services

Revenues from research and development services are recognized using the proportional performance method. Under this method, revenues are recognized proportionally with the degree of completion of the services under the contract when it is probable that the economic benefits will flow to the Company and revenue and costs associated with the transaction can be measured reliably.

Licensing fees and milestone payments

Certain license fees are comprised of up-front fees and milestone payments. Up-front fees are recognized over the estimated term during which the Company maintains substantive obligations. Milestone payments are recognized as revenue when the milestone is achieved, customer acceptance is obtained, and the customer is obligated to make performance payments. Certain license arrangements require no continuing involvement by the Company. Non-refundable license fees are recognized as revenue when the Company has no further involvement or obligation to perform under the arrangement, the fee is fixed or determinable and collection of the amount is reasonably assured.

Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

• the Company has transferred to the customer the significant risks and rewards of ownership of the goods;

• the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the entity; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

F-17

Revenue is reduced for estimated customer returns and other similar allowances. Amounts received in advance of meeting the revenue recognition criteria are recorded as deferred revenue on the consolidated statements of financial position.

Rental revenue

The Company accounts for the lease with its tenant as an operating lease when the Company has not transferred substantially all of the risks and benefits of ownership of its property. Revenue recognition under an operating lease commences when the tenant has a right to use the leased asset, and the total amount of contractual rent to be received from the operating lease is recognized on a straight-line basis over the term of the lease. Rental revenue also includes recoveries of operating expenses and property taxes.

Research and development expenses

Expenditure on research activities is recognized as an expense in the period during which it is incurred. An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale;

• the intention to complete the intangible asset and use or sell it;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefits;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the ability to measure reliably the expenditures attributable to the intangible asset during its development.

To date, the Company has not capitalized any development costs.

Research and development expenses presented in the consolidated statement of operations comprise the costs to manufacture the plasma-derived product candidates used in pre-clinical tests and clinical trials. It also includes the cost of product candidates used in our small molecule clinical trials such as PBI-4050, external consultants supporting the clinical trials and pre-clinical tests, employee compensation and other operating expenses involved in research and development activities.

Foreign currency translation

Transactions and balances

Transactions in foreign currencies are initially recorded by the Company and its entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date. All differences are taken to the consolidated statement of operations. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates when the initial transactions took place.

Group companies

The assets and liabilities of foreign operations are translated into Canadian dollars at the rate of exchange prevailing at the reporting date and their statements of operations are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on the translation are recognized in other comprehensive loss. On disposal of a foreign operation, the component of other comprehensive loss relating to that particular foreign operation is reclassified from the consolidated statement of comprehensive loss to the consolidated statement of operations as part of the gain or loss on the disposal of the foreign operation.

Income taxes

The Company uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities are recognized in the consolidated statement of financial position for the future tax consequences attributable to differences between the consolidated financial statements carrying values of existing assets and liabilities and their respective income tax bases. Deferred income tax assets and liabilities are measured using income tax rates expected to apply when the assets are realized or the liabilities are settled. The effect of a change in

F-18

income tax rates is recognized in the year during which these rates change. Deferred income tax assets are recognized to the extent that it is probable that future tax profits will allow the deferred tax assets to be recovered. When uncertainties exist over income tax treatments, the Company applies the guidance in IFRIC 23, Uncertainty over income tax treatments when evaluating its income tax provisions.

Share-based payments

The Company has a stock option plan and a restricted share unit plan. The fair value of stock options granted is determined at the grant date using the Black-Scholes option pricing model and is expensed over the vesting period of the options. Awards with graded vesting are considered to be multiple awards for fair value measurement. The fair value of Restricted Share Units (“RSU”) is determined using the market value of the Company’s shares on the grant date. The expense associated with RSU awards that vest over time are recognized over the vesting period. When the vesting of RSU is dependent on meeting performance targets as well as a service requirement, the Company will estimate the outcome of the performance targets to determine the expense to recognize over the vesting period, and revise those estimates until the final outcome is determined. An estimate of the number of awards that are expected to be forfeited is also made at the time of grant and revised periodically if actual forfeitures differ from those estimates.

The Company’s policy is to issue new shares upon the exercise of stock options and the release of RSU for which conditions have been met.

Assets held for sale and discontinued operations

The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Such non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and their fair value less cost to sell. Costs to sell are the incremental costs directly attributable to the sale, excluding finance costs and income tax expense. Such assets are only presented as held for sale when the sale is highly probable and the assets or disposal group are available for immediate sale in their present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the sale will be withdrawn. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Capital assets included as part of the assets held for sale are not depreciated once classified as held for sale. Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position.

The results of discontinued operations are presented net of tax in the consolidated statement of operations. Incremental cost related to the disposition and income taxes are allocated to discontinued operations. The discontinued operations also include the gain or loss on the disposal, which will also include the reclassification of historical exchange differences on translation of foreign operations sold. The results of discontinued operations exclude the allocation of the corporate finance costs and general corporate overheads in the forms of management fees if those costs will continue to be incurred by Liminal following the disposition. The prior period results from discontinued operations have been reclassified and presented in the consolidated statements of operations.

Earnings per share (EPS)

The Company presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year adjusted for any bonus element. Diluted EPS is determined by adjusting the weighted average number of common shares outstanding for the effects of all dilutive potential common shares, which comprise warrants, stock options and RSU. For the years ended December 31, 2019, 2018 and 2017, all warrants, stock options and RSU were anti-dilutive since the Company reported net losses.

Share and warrant issue expenses

The Company records share and warrant issue expenses as an increase to the deficit.

F-19

3. Significant accounting judgements and estimation uncertainty

The preparation of these consolidated financial statements requires the use of judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures. The uncertainty that is often inherent in estimates and assumptions could result in material adjustments to assets or liabilities affected in future periods.

Significant judgments

Going concern - In assessing whether the going concern assumption is appropriate and whether there are material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern, management must estimate future cash flows for a period of at least twelve months following the end of the reporting period by considering relevant available information about the future. Management has considered a wide range of factors relating to expected cash inflows such as whether the Company will earn licensing and milestone revenues, obtain regulatory approval for commercialization of product candidates and potential sources of debt and equity financing available to it. Management has also estimated expected cash outflows such as operating and capital expenditures and debt repayment schedules, including the ability to delay uncommitted expenditures. These cash flow estimates are subject to uncertainty.

Accounting for loan modifications–When the terms of a loan are modified, management must evaluate whether the terms of the loan are substantially different in order to determine the accounting treatment. If they are considered to be substantially different, the modification will be accounted for as a derecognition of the carrying value of the pre-modified loan and the recognition of a new loan at its fair value. Otherwise, the changes will be treated as a modification which will result in adjusting the carrying amount to the present value of the modified cash flows using the original effective interest rate of the loan instrument. In assessing whether the terms of a loan are substantially different, management performs a quantitative analysis of the changes in the cash flows under the previous agreement and the new agreement and also considers other modifications that have no cash flow impact. In the context of the simultaneous modification to the terms of several loans with the same lender, management uses judgment to determine if the cash flow analysis should be performed on the loans in aggregate or individually. Judgment is also used to evaluate the relative importance of additional rights given to the lender such as additional Board of Director seats and the extension of the term of the security compared to the quantitative analysis.

Revenue recognition–The Company enters into revenue agreements from time to time which provide, among other payments, up-front and milestone payments in exchange for licenses and other access to intellectual property. It may also enter into several agreements simultaneously that are different in nature such as license agreements, R&D services, supply and manufacturing agreements. In determining the appropriate method for recognizing revenues in a given contract, management may be required to apply significant judgment including the identification of performance obligations.

Determining whether performance obligations are distinct involves evaluating whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer. Once the distinct performance obligations are identified, management must then determine if each performance obligation is satisfied at a point in time or over time. For license agreements, this requires management to assess the level of advancement of the intellectual property being licensed.

Functional currency –The functional currency of foreign subsidiaries is reviewed on an ongoing basis to assess if changes in the underlying transactions, events and conditions have resulted in a change. During the years ended December 31, 2019, 2018 and 2017 no changes were deemed necessary. This assessment is also performed for new subsidiaries. When assessing the functional currency of a foreign subsidiary, management’s judgment is applied in order to determine, amongst other things, the primary economic environment in which an entity operates, the currency in which the activities are funded and the degree of autonomy of the foreign subsidiary from the reporting entity in its operations and financially. Judgment is also applied in determining whether the inter-company loans denominated in foreign currencies form part of the parent Company’s net investment in the foreign subsidiary. Considering such loans as part of the net investment in the foreign subsidiary results in foreign currency translation gains or losses from the translation of these loans being recorded in other comprehensive loss instead of the consolidated statement of operations.

F-20

Estimates and assumptions

Fair value of financial instruments–The individual fair values attributed to the different components of a financing transaction, are determined using valuation techniques. Management uses judgment to select the methods used to determine certain inputs/assumptions used in the models and the models used to perform the fair value calculations in order to determine, 1) the values attributed to each component of a transaction at the time of their issuance, 2) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis and 3) the fair value of financial instruments subsequently carried at amortized cost. When the determination of the fair value of a new loan is required, discounted cash flow techniques which includes inputs that are not based on observable market data and inputs that are derived from observable market data are used. When determining the appropriate discount rates to use, Management seeks comparable interest rates where available. If unavailable, it uses those considered appropriate for the risk profile of a Company in the industry.

The fair value estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.

Leases - The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain that this option will not be exercised.

The Company has the option, under some of its leases to lease the assets for additional terms of up to fifteen years. Judgement is applied in evaluating whether it is reasonably certain that the Company will exercise the option to renew. That is, all relevant factors that create an economic incentive for it to exercise the renewal are considered. After the commencement date, the lease term is reassessed if there is a significant event or change in circumstances that is within the Company’s control and affects its ability to exercise (or not to exercise) the option to renew.

The renewal period is included as part of the lease term for a manufacturing plant lease since the Company estimated it is reasonably certain to exercise due to the importance of this asset to its operations, the limited availability on the market of a similar asset with similar rental terms and the related cost of moving the production equipment to another facility.

Uncertainty over income tax treatments - R&D tax credits for the current period and prior periods are measured at the amount the Company expects to recover, based on its best estimate and judgment, of the amounts it expects to receive from the tax authorities as at the reporting date, either in the form of income tax refunds or refundable grants. However, there are uncertainties as to the interpretation of the tax legislation and regulations, in particular regarding what constitutes eligible R&D activities and expenditures, as well the amount and timing of recovery of these tax credits. In order to determine whether the expenses it incurs are eligible for R&D tax credits, the Company must use judgment and apply to complex techniques, which makes the recovery of tax credits uncertain. As a result, there may be a significant difference between the estimated timing and amount recognized in the consolidated financial statements in respect of tax credits receivable and the actual amount of tax credits received as a result of the tax administrations' review of matters that were subject to interpretation. The amounts recognized in the consolidated financial statements are based on the best estimates of the Company and in its best possible judgment, as noted above.

Assessing the recoverable amount of long-lived assets - The Company evaluates the recoverable value of long-lived assets when indicators of impairment arise or as part of the annual impairment test, if they are intangible assets not yet available for use.  The recoverable value is the higher of the value in use and the fair value less cost to sell.

Long-lived assets include capital assets and intangible assets such as licenses and other rights and some of these rights are considered not available for use.

When calculating the value in use, Management must make estimates and assumptions regarding the estimated future cash flows and their timing including the amount and timing of the capital expenditure investments necessary to increase manufacturing capacities, to bring the facilities to Good Manufacturing Practices (“GMP”) standards, timing of production capacities coming on-line, production costs, ongoing research and clinical trial expenses, market penetration and selling prices for the Company’s product candidates, if approved, and, the date of approval of the product candidates for commercial sale, if any. The future cash flows are estimated using a five-year projection of cash flows before taxes which are based on the most recent budgets and forecasts

F-21

available to the Company. If the projections include revenues in the fifth year, then this year is extrapolated, using an expected annual growth rate. The estimated cash flows are then discounted to their net present value using a pre-tax discount rate that includes a risk premium specific to the line of business.

When calculating the fair value less cost to sell of an asset or a group of assets for which selling price information for comparable assets are not readily available, Management also must make assumptions regarding the value it may recuperate from its sale.

During the year ended December 31, 2019 and 2018, as a result of strategic decisions made by the Company on the areas where it would focus its resources, several impairments recorded on intangible assets (note 25).

Expense recognition of restricted share units– The RSU expense recognized for RSU in which the performance conditions have not yet been met, is based on an estimation of the probability of successful achievement of a number of performance conditions, many of which depend on research, regulatory process and business development outcomes which are difficult to predict, as well as the timing of their achievement. The final expense is only determinable when the outcome is known.

Valuation of deferred income tax assets– To determine the extent to which deferred income tax assets can be recognized, management estimates the amount of probable future taxable profits that will be available against which deductible temporary differences and unused tax losses can be utilized. Management exercises judgment to determine the extent to which realization of future taxable benefits is probable, considering the history of taxable profits, budgets and forecasts and availability of tax strategies.

4. Change in standards, interpretations and accounting policies

a) Adoption of new accounting standards

The accounting policies used in these annual consolidated financial statements are consistent with those applied by the Company in its December 31, 2018 and 2017 audited annual consolidated financial statements except for the amendments to certain accounting standards which are relevant to the Company and were adopted by the Company as of January 1, 2018 and January 1, 2019 as described below.

IFRS 9, Financial Instruments

IFRS 9 replaces the provisions of IAS 39, Financial Instruments – Recognition and Measurement and provides guidance on the recognition, classification and measurement of financial assets and financial liabilities, the derecognition of financial instruments, impairment of financial assets and hedge accounting.

The Corporation adopted IFRS 9 as of January 1, 2018 and the new standard has been applied retrospectively in accordance with the transitional provisions of IFRS 9. The following table presents the carrying amount of financial assets held by Liminal at December 31, 2017 and their measurement category under IAS 39 and the new model under IFRS 9.

	IAS 39			IFRS 9
	Measurement	Carrying		Measurement	Carrying
	category	amount		category	amount
Cash and cash equivalents	FVPL	$	23,166	Amortized cost	$	23,166
Trade receivables	Amortized cost		1,796	Amortized cost		1,796
Other receivables	Amortized cost		397	Amortized cost		397
Restricted cash	FVPL		226	Amortized cost		226
Long-term receivables	Amortized cost		1,856	Amortized cost		1,856
Equity investments	Cost		1,228	FVPL		1,228
Convertible debt	Cost		87	FVPL		87

F-22

There has been no impact caused by the new classification of financial assets under IFRS 9. The classification of all financial liabilities at amortized cost remains unchanged as well as their measurement resulting from their classification.

Under IFRS 9, modifications to financial assets and financial liabilities, shall be accounted for by recalculating the present value of the modified contractual cashflows at the original effective interest rate and the adjustment shall be recognized as a gain or loss in profit or loss. Under IAS 39, the impact of modifications was recognized prospectively over the remaining term of the debt.

The adoption of the accounting for modifications under the new standard has resulted in the restatement of the opening deficit and the long-term debt at January 1, 2018 as follows:

Deficit	$	110
Long-term debt		(110	)

IFRS 15, Revenue from contracts with customers

IFRS 15 replaces IAS 11, Construction Contracts, and IAS 18, Revenue and related interpretations and represents a new single model for recognition of revenue from contracts with customers. The model features a five-step analysis of transactions to determine the nature of an entity’s obligation to perform and whether, how much, and when revenue is recognized.

The Corporation adopted IFRS 15 as of January 1, 2018 and the new standard has been applied retrospectively using the modified retrospective approach, where prior periods are not restated and the cumulative effect of initially applying this standard is recognized in the opening deficit balance on January 1, 2018. The Corporation has also availed itself of the following practical expedients:

• the standard was applied retrospectively only to contracts that were not completed on January 1, 2018; and

• for contracts that were modified before January 1, 2018, the Corporation analyzed the effects of all modifications when identifying whether performance obligations were satisfied, determining the transaction price and allocating the transaction price to the satisfied or unsatisfied performance obligations.

There has been no impact of the adoption of IFRS 15 as at January 1, 2018 and for the year end December 31, 2018.

IFRIC 22, Foreign Currency Transactions and Advance Consideration (“IFRIC 22”)

IFRIC 22 addresses how to determine the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) and on the derecognition of a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. The Corporation adopted IFRIC 22 retrospectively on January 1, 2018. The adoption of the standard did not have a significant impact on the financial statements.

IFRS 16, Leases (“IFRS 16”)

IFRS 16 replaces IAS 17, Leases (“IAS 17”). IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is less than 12 months, or the underlying asset has a low value. IFRS 16 substantially carries forward the lessor accounting in IAS 17 with the distinction between operating leases and finance leases being retained.

Effective January 1, 2019, the Company adopted IFRS 16 using the modified retrospective approach and accordingly the information presented for 2018 has not been restated. The cumulative effect of initially applying the standard is recognized at the date of initial application. The current and long-term portions of operating and finance lease inducements and obligations presented in the statement of financial position at December 31, 2018, reflect the accounting treatment under IAS 17 and related interpretations.

The Company elected to use the transitional practical expedient allowing the standard to be applied only to contracts that were previously identified as leases under IAS 17 and IFRIC 4, Determining whether an arrangement contains a lease at the date of initial application. The Company applied the definition of a lease under IFRS 16 to contracts entered into or changed on or after January 1, 2019.

F-23

The Company also elected to record right-of-use assets for leases previously classified as operating leases under IAS 17 based on the corresponding lease liability, adjusted for prepaids or liabilities existing at the date of the transition that relate to the lease. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted average discount rate applied to the total lease liabilities recognized on transition was 18.54%. For leases that were previously classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at the date of adoption was established as the carrying amount of the lease asset classified in capital assets and the finance lease obligation at December 31, 2018. These assets and liabilities are grouped under right-of-use assets and lease liabilities as of January 1, 2019 and IFRS 16 applies to these leases as of that date.

In addition, the Company elected to apply the practical expedient to account for leases for which the lease term ends within 12 months of the date of initial application as short-term leases for which it is not required to recognize a right-of-use asset and a corresponding lease liability. The Company also elected to not apply IFRS 16 when the underlying asset in a lease is of low value.

The Company has elected, for the class of assets related to the lease of building space, not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.

The table below shows which line items of the consolidated financial statements were affected by the adoption of IFRS 16 and the impact. There was no net impact on the deficit.

			Adjustments
	As reported as at		for the transition			Balance as at
	December 31, 2018		to IFRS 16			January 1, 2019
Assets
Prepaids	$	1,452	$	(84	)	$	1,368
Capital assets (note 9)		41,113		(1,043	)		40,070
Right-of-use assets (note 10)		-		39,149			39,149
Liabilities
Accounts payable and accrued liabilities (note 13)	$	31,855	$	(2,499	)	$	29,356
Current portion of lease liabilities (note 14)		-		8,575			8,575
Long-term portion of lease liabilities (note 14)		-		34,126			34,126
Long-term portion of operating and finance lease inducements and    obligations (note 17)		1,850		(1,850	)		-
Other long-term liabilities (note 18)		5,695		(330	)		5,365

Prior to adopting IFRS 16, the total minimum operating lease commitments as at December 31, 2018 were $74,977. The decrease between the total of the minimum lease payments set out in Note 29 of the audited annual consolidated financial statements for the year ended December 31, 2018 and the total lease liabilities recognized on adoption of $42,701 was principally due to the effect of discounting on the minimum lease payments. The amount also decreased slightly due to the fact that certain costs that are contractually committed under lease contracts, but which do not qualify to be accounted for as a lease liability, such as variable lease payments not tied to an index or rate, were previously included in the lease commitment table whereas they are not included in the calculation of the lease liabilities. These impacts were partially offset by the inclusion of lease payments beyond minimum commitments relating to reasonably certain renewal periods that had not yet been exercised as at December 31, 2018 which effect is to increase the liability. Right-of-use assets at transition have been measured at an amount equal to the corresponding lease liabilities, adjusted for any prepaid or accrued rent relating to that lease.

The consolidated statement of operations for the year ended December 31, 2019 was impacted by the adoption of IFRS 16 as the recording of depreciation of the right-of-use assets continues to be recorded in the same financial statement line items as it was previously while the implicit financing component of leasing agreements is now recorded under finance costs. The impact is not simply in the form of a reclassification but also in terms of measurement, which are very much affected by the discount rates used and whether the Company has included renewal periods when calculating the lease liability.

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The consolidated cash flow statement for the year ended December 31, 2019 was also impacted since the cash flows attributable to the lease component of the lease agreements are now shown as payments of principal and interest on lease liabilities which are now part of cash flows from financing activities.

IFRIC 23, Uncertainty over income tax treatments (“IFRIC 23”)

IFRIC 23 clarifies how the recognition and measurement requirements of IAS 12 – Income Taxes are applied where there is uncertainty over income tax treatments. The Interpretation is effective for annual periods beginning on or after January 1, 2019 and was adopted by the Company on that date. The Company assessed the impact of this Interpretation and concluded that it had no impact on the amounts recorded in its consolidated statements of financial position on the date of adoption.

b) New Standards and interpretations not yet adopted

There are currently no new standards or interpretations not yet in effect that the Company reasonably expects would have an impact on its consolidated financial statements.

5. Discontinued operations

On November 25, 2019, the Company sold two subsidiaries in its bioseparations segment, representing the majority of its bioseparations operations and all of the bioseparations revenues. This transaction fits as part of the Company’s goal to monetize non-core assets as it focuses its resources on the small molecules segment. This disposal has been presented as discontinued operations with the revenues and costs relating to ceased activities being reclassified and presented retrospectively in the consolidated statements of operations, statements of comprehensive loss, statements of cash flows and notes to the financial statements as discontinued operations.

Gain on the sale of the subsidiaries

Fair value of the consideration received and receivable:	$	51,927
Less:
Carrying amount of net assets sold		(22,015	)
Transaction costs		(5,015	)
Reclassification of foreign currency translation reserve from other comprehensive    income into the statement of operations		1,449
Gain on sale of subsidiaries (income tax $nil)	$	26,346

In the event the operations sold achieve certain performance criteria during the period January 1, 2020 to December 31, 2023 as specified in the sale agreement, cash consideration of up to $22,309 (£13,000,000) may be receivable. An additional amount of $4,290 (£2,500,000) may also become receivable depending on the achievement of certain events. At the time of the sale, the fair value of the contingent consideration was determined to be $nil as its receipt is dependent on future target achievement that is out of the Company’s influence and is primarily dependent on the growth of operations. As of December 31, 2019, the Company received $50,752 and the remaining $1,175 was received subsequent to the period end.

F-25

Results and cash flows from discontinued operations

The results and the cash flows from discontinued operations for the years ended December 31, 2018 and 2017 and for the period from January 1, 2019 until November 24, 2019, the date of the sale, are presented in the following tables:

	November 24,			December 31,			December 31,
Period ended	2019			2018			2017
Revenues	$	22,499		$	22,741		$	16,802
Expenses
Cost of sales and other production expenses		11,347			12,295			6,460
Research and development expenses		5,926			6,808			6,869
Administration, selling and marketing expenses		3,387			2,084			1,878
Loss (gain) on foreign exchange		(64	)		(15	)		55
Finance costs		737			19			76
Net income before income taxes	$	1,166		$	1,550		$	1,464
Income tax expense (recovery):
Current		65			(382	)		(474	)
Deferred		(24	)		-			24
Total income tax expense (recovery)		41			(382	)		(450	)
Net income from discontinued operations	$	1,125		$	1,932		$	1,914
Gain on sale of discontinued operations net of tax of $nil		26,346			-			-
Discontinued operations, net of taxes	$	27,471		$	1,932		$	1,914

	November 24,			December 31,			December 31,
Years ended	2019			2018			2017
Cash flows from operating activities	$	6,327		$	1,379		$	2,189
Cash flows used in financing activities		(866	)		-			-
Cash flows from (used in) investing activities*		39,690			(1,752	)		(2,115	)
Net change in cash during the year	$	45,151		$	(373	)	$	74
Net effect of currency exchange rate on cash		54			41			32
Net increase(decrease) in cash generated by    discontinued operations	$	45,205		$	(332	)	$	106

*Cash flows from investing activities for the period ended November 24, 2019 include the proceeds from the sale of the discontinued operations business (net of the cash disposed), of $43,958 and transaction costs paid relating to the sale of the discontinued operations business of $4,228.

F-26

The carrying amounts of assets and liabilities sold are as follows:

Cash	$	6,794
Accounts receivable		1,148
Inventories		8,313
Prepaids		236
Other long-term assets		48
Capital assets		8,483
Right-of-use assets		3,300
Intangible assets		370
Deferred tax assets		12
Total assets	$	28,704
Accounts payable and accrued liabilities		2,163
Deferred revenue		370
Current portion of lease liabilities		809
Long-term portion of deferred revenues		87
Long-term portion of lease liabilities		3,260
Total liabilities	$	6,689
Net assets sold	$	22,015

6. Accounts receivable

	December 31,		December 31,
	2019		2018
Trade receivables	$	44	$	7,051
Tax credits and government grants receivable		1,546		3,737
Sales taxes receivable		863		774
Other receivables		1,633		320
	$	4,086	$	11,882

7. Inventories

	December 31,		December 31,
	2019		2018
Raw materials	$	7,175	$	5,428
Work in progress		-		3,740
Finished goods		357		2,860
	$	7,532	$	12,028

Inventories sold in the amount of $2,315, $23,136 and $1,353 were recognized as cost of sales and other production expenses from continuing operations, and $10,126, $10,295 and $5,241 from discontinued operations during the years ended December 31, 2019, 2018 and 2017 respectively. Inventory write‑downs of $163, $2,028 and $nil, from continuing operations and $642, $981 and $246 from discontinued operations, also included in cost of sales and other production expenses, were recorded during the years ended December 31, 2019, 2018 and 2017 respectively.

F-27

8. Other long-term assets

	December 31,		December 31,
	2019		2018
Restricted cash (a)	$	169	$	245
Long-term deposits		143		142
Tax credits receivable		858		-
Other		-		24
	$	1,170	$	411

a) Restricted Cash

Restricted cash is composed of a guaranteed investment certificate, bearing interest at 0.35% per annum (at December 31, 2018, bearing interest at 0.35%), pledged as collateral for a letter of credit to a landlord which automatically renews until the end of the lease.

9. Capital assets

						Production			Furniture and
	Land and		Leasehold			and laboratory			computer
	Buildings		improvements			equipment			equipment			Total
Cost
Balance at January 1, 2018	$	4,539	$	12,824		$	36,787		$	3,555		$	57,705
Additions		28		2,977			2,396			279			5,680
Disposals		-		-			(452	)		(58	)		(510	)
Effect of foreign exchange differences		-		233			154			10			397
Balance at December 31, 2018	$	4,567	$	16,034		$	38,885		$	3,786		$	63,272
Impact of adopting IFRS 16 1)		-		-			(1,170	)		-			(1,170	)
Balance at January 1, 2019		4,567		16,034			37,715			3,786			62,102
Additions		-		61			712			202			975
Disposals		-		(5	)		(109	)		(14	)		(128	)
Sold - discontinued operations (note 5)		-		(7,307	)		(5,774	)		(744	)		(13,825	)
Effect of foreign exchange differences		-		(225	)		(127	)		(7	)		(359	)
Balance at December 31, 2019	$	4,567	$	8,558		$	32,417		$	3,223		$	48,765
Accumulated depreciation
Balance at January 1, 2018	$	219	$	3,726		$	6,962		$	1,544		$	12,451
Depreciation expense		195		641			2,511			739			4,086
Disposals		-		-			(146	)		(36	)		(182	)
Impairments (note 25)		-		-			5,689			-			5,689
Effect of foreign exchange differences		-		54			55			6			115
Balance at December 31, 2018	$	414	$	4,421		$	15,071		$	2,253		$	22,159
Impact of adopting IFRS 16 1)		-		-			(127	)		-			(127	)
Balance at January 1, 2019		414		4,421			14,944			2,253			22,032
Depreciation expense		195		786			2,136			617			3,734
Disposals		-		(2	)		(106	)		(14	)		(122	)
Impairments (note 25)		-		559			6,408			103			7,070
Sold - discontinued operations (note 5)		-		(2,297	)		(2,550	)		(495	)		(5,342	)
Effect of foreign exchange differences		-		(38	)		(36	)		(4	)		(78	)
Balance at December 31, 2019	$	609	$	3,429		$	20,796		$	2,460		$	27,294
Carrying amounts
At December 31, 2019	$	3,958	$	5,129		$	11,621		$	763		$	21,471
At January 1, 2019		4,153		11,613			22,771			1,533			40,070
At December 31, 2018		4,153		11,613			23,814			1,533			41,113

F-28

¹⁾ The balance of fixed assets capitalized as finance lease assets under IAS 17 where transferred to right-of-use assets upon adoption of IFRS 16 (note 4).

The depreciation expense for the year ending December 31, 2017 was $3,632.

As at December 31, 2019, there are $2,352 and $nil of production and laboratory equipment and leasehold improvements, respectively, net of government grants, that are not yet available for use and for which depreciation has not started ($8,322 and $6,610 as of December 31, 2018).

Certain investments in equipment are eligible for government grants. The government grants receivable are recorded in the same period as the eligible additions and are credited against the capital asset addition. During the year ended December 31, 2019, the Company recognized $694 ($2 during the year ended December 31, 2018) in government grants.

Impairment losses of $7,070 were recorded on capital assets during the year ended December 31, 2019 ($5,689 during the year ended December 31, 2018, $nil in 2017). Details of these impairments are provided in note 25.

10. Right-of-use assets

				Production
				and laboratory
	Buildings			equipment			Other		Total
Cost
Transfer from capital assets on adoption of    IFRS 16 (note 9)	$	-		$	1,170		$	-	$	1,170
Initial recognition of assets under operating    leases on adoption of IFRS 16		37,552			460			94		38,106
Balance at January 1, 2019		37,552			1,630			94		39,276
Additions		2,331			-			49		2,380
Remeasurement of the lease liability		36			-			-		36
Sold - discontinued operations (note 5)		(3,586	)		-			-		(3,586	)
Effect of foreign exchange differences		(99	)		-			-		(99	)
Balance at December 31, 2019	$	36,234		$	1,630		$	143	$	38,007
Accumulated depreciation
Transfer from capital assets on adoption of    IFRS 16 (note 9)	$	-		$	127		$	-	$	127
Balance at January 1, 2019		-			127			-		127
Depreciation expense		4,274			592			47		4,913
Sold - discontinued operations (note 5)		(286	)		-			-		(286	)
Effect of foreign exchange differences		-			(1	)		-		(1	)
Balance at December 31, 2019	$	3,988		$	718		$	47	$	4,753
Carrying amounts
At December 31, 2019	$	32,246		$	912		$	96	$	33,254
At January 1, 2019		37,552			1,503			94		39,149

F-29

11. Intangible assets

	Licenses and other rights			Patents			Software			Total
Cost
Balance at January 1, 2018	$	154,572		$	6,346		$	2,213		$	163,131
Additions		5,512			639			1,145			7,296
Disposals		-			(332	)		(68	)		(400	)
Effect of foreign exchange differences		698			344			(4	)		1,038
Balance at December 31, 2018	$	160,782		$	6,997		$	3,286		$	171,065
Additions		-			728			467			1,195
Sold - discontinued operations (note 5)		(2,505	)		(842	)		(47	)		(3,394	)
Disposals		-			(524	)		(39	)		(563	)
Effect of foreign exchange differences		(9	)		(50	)		(19	)		(78	)
Balance at December 31, 2019	$	158,268		$	6,309		$	3,648		$	168,225
Accumulated amortization
Balance at January 1, 2018	$	3,497		$	2,250		$	737		$	6,484
Amortization expense		556			448			368			1,372
Disposals		-			(177	)		(38	)		(215	)
Impairments		142,609			-			-			142,609
Effect of foreign exchange differences		694			317			1			1,012
Balance at December 31, 2018	$	147,356		$	2,838		$	1,068		$	151,262
Amortization expense		410			403			446			1,259
Disposals		-			(364	)		(9	)		(373	)
Impairments (note 25)		4,528			761			7			5,296
Sold - discontinued operations (note 5)		(2,418	)		(570	)		(36	)		(3,024	)
Effect of foreign exchange differences		(6	)		(29	)		(6	)		(41	)
Balance at December 31, 2019	$	149,870		$	3,039		$	1,470		$	154,379
Carrying amounts
At December 31, 2019	$	8,398		$	3,270		$	2,178		$	13,846
At December 31, 2018		13,426			4,159			2,218			19,803

Intangible assets include $7,106 pertaining to the reacquired right from a licensee; these rights are not yet available for use and consequently their amortization has not commenced (note 18a,ii).

An impairment loss of $5,296 was recorded on certain licenses and patents during the year ended December 31, 2019 ($142,609 during the year ended December 31, 2018, $nil in 2017) (note 25).

The amortization expense for the year ended December 31, 2017 was $944.

On January 29, 2018, the Company acquired two licenses. The first license, valued at $1,743, was paid for by the issuance of warrants (note 19c). The second license was purchased for an equivalent of US$3 million; US$1 million on the date of the transaction, and another US$1 million on both the first and second anniversary of the transaction, to be settled in common shares of the Company (see note 18b for the license acquisition payment obligation and note 19a for the shares issued on the transaction date). The value attributed to the second license, based on the value recorded for the initial equity issued and the value of the payment obligation at the date of the transaction is $3,769. The estimated useful life of the first and second license is 10 years and 20 years, respectively.

F-30

12. Investment in an associate

At each reporting period, the Company assesses whether it has significant influence over its investments.

During the quarter ended September 30, 2018, the Company concluded it exerted significant influence over ProThera Biologics, Inc. (“ProThera”), a company headquartered in Rhode Island, U.S.A., since August 15, 2018. As such, ProThera became an associate as well as a related party from that date and consequently, the equity investment in ProThera was accounted for using the equity method (note 2), and the transactions between the Company and its associate were disclosed in the consolidated financial statements as of December 31, 2018.

ProThera is a biotherapeutics company developing methods for using Inter-alpha Inhibitor Proteins (“IaIP”) to treat severe inflammation associated with infection, trauma and disease. The Company entered into research and development agreements as well as a license agreement with ProThera in 2015 to develop, manufacture and market IaIP for the treatment of two indications. As of December 31, 2018, Liminal held 15.2% of the outstanding common shares of Prothera having a historical cost of $1,204. It also held an investment in convertible debt of ProThera. At December 31, 2018, the Company had invested $1,181 (US$ 866,000) in convertible debt of Prothera Biologics Inc. The convertible debt was convertible at the option of the issuer or the holder into preferred shares of ProThera, denominated in U.S. dollars and earning interest at 8.0% per annum, to be received at the date of maturity which is January 3, 2020.

As required when significant influence over an investment is obtained, the investment must be measured at fair value as of the date it became an associate. A fair value approach was applied by management in developing preliminary estimates of the identifiable assets and liabilities of ProThera. These fair value assessments require management to make significant estimates and assumptions as well as applying judgment in selecting the appropriate valuation techniques, building valuation models, and compiling, preparing and validating this information. When publishing its third quarter results at September 30, 2018, certain aspects of the valuation were not finalized, namely the valuation of the intangible assets and therefore the amounts recognized were based on the preliminary results.

During the fourth quarter of 2018, following changes to the Company’s strategic plans, an impairment of the investment in the associate, in the amount of $1,182 was recognized (note 25).

On January 3, 2019, the principal of the loan and the interest outstanding at December 31, 2018 held by Liminal were converted into preferred shares of ProThera by the issuer.

In February 2019, the Company decided that it was no longer part of its strategy to pursue the development of Inter-alpha Inhibitor proteins and undertook discussions with ProThera Biologics, Inc. (“ProThera”) to terminate the various corporate and commercial agreements it had in place with ProThera. The Company determined that, from that point on, it no longer had significant influence over ProThera and therefore changed its accounting for its investment in ProThera’s common shares as an investment in an associate to that of a financial asset at fair value through profit and loss. The fair value of such financial asset was evaluated at $nil at that time. Any transactions between the Company and ProThera as of that date are no longer considered as a related party transaction. During December 2019, Liminal transferred the preferred shares it held back to ProThera in consideration for the termination of the agreement.

F-31

Changes in the carrying amount of the investment in an associate from the date it was initially recognized as an associate on August 15, 2018 to December 31, 2018 are as follows:

Loss and comprehensive loss of an associate from    August 15 to December 31, 2018	$	144
Share of losses of an associate		22
Historical cost of the investment in an associate		1,204
Less:
Share of losses of an associate		22
Impairment on investment in an associate    (note 25)		1,182
Carrying amount of the investment in an    associate as at December 31, 2018	$	-

13. Accounts payable and accrued liabilities

	December 31, 2019		December 31, 2018
Trade payables	$	10,496	$	21,097
Wages and benefits payable		5,593		1,975
Current portion of operating and finance lease    inducements and obligations (note 17)		-		5,844
Current portion of settlement fee payable		-		102
Current portion of royalty payment obligations    (note 18)		3,043		68
Current portion of license acquisition payment    obligation (note 18)		1,302		1,363
Current portion of other employee benefit liabilities    (note 18)		2,374		1,406
	$	22,808	$	31,855

14. Lease liabilities

The transactions affecting the lease liabilities during the year ended December 31, 2019 were as follows:

Transfer of finance leases from operating and finance lease inducements and obligations	$	846
Initial recognition of lease liabilities under operating leases on adoption of IFRS 16		41,855
Balance at January 1, 2019	$	42,701
Additions		2,823
Interest expense		7,068
Payments		(9,330	)
Derecognized - discontinued operations (note 5)		(4,069	)
Effect of foreign exchange differences		(956	)
Balance at December 31, 2019	$	38,237
Less current portion of lease liabilities		8,290
Long-term portion of lease liabilities	$	29,947

Interest expense on lease liabilities for the year ended December 31, 2019 was $7,068 and is included as part of finance costs in the consolidated statement of operations.

F-32

15. Warrant liability

As consideration for the modification of the terms of the loan agreements on November 14, 2018, the Company had a commitment to issue warrants (“Warrants #9”) to the holder of the long-term debt on or before March 20, 2019. The exact number of warrants to be issued was based on the number of warrants necessary to increase the ownership of the holder of the long-term debt to 19.99% on a fully diluted basis at the date of issuance.

On February 22, 2019, the Company further amended the fourth loan agreement with the addition of two tranches, one of US$10 million and another one of US$5 million, that were drawn on February 22, 2019 and March 22, 2019 respectively. As consideration for the modification to the fourth loan agreement, the Company amended the terms applicable at the time of issuance of Warrants #9 to reduce the originally agreed exercise price from $1,000.00 to $156.36 per preferred share and to issue the Warrants #9 concurrently with the modification. Accordingly, the Company issued 19,402 warrants on February 22, 2019. Each warrant entitles the holder to acquire one preferred share (note 19c) at a price of $156.36 per preferred share and expires on February 22, 2027. The Warrants #9 did not meet the definition of an equity instrument since the underlying preferred shares qualify as a liability instrument, and therefore they were accounted for as a financial instrument carried at fair value through profit or loss.

The change in fair value of the warrant liability between December 31, 2018, when it was valued at $157 and prior to its modification on February 22, 2019, in the amount of $218 was recorded in the consolidated statement of operations. The Company recorded the increase in fair value of the warrants of $1,137 resulting from the reduction of the exercise price of Warrants #9 on February 22, 2019 against the two additional tranches of the credit facility, treating the increase as financing fees. The change in fair value of the warrant liability between February 22, 2019, after the modification, and March 31, 2019 was an increase of $11 and a decrease in fair value of $1,369 (a gain) between March 31, 2019 to April 23, 2019. Both variations were recorded in the consolidated statements of operations. The estimated fair value of these warrants at April 23, 2019 was $153.

As part of the debt restructuring agreement entered into on April 23, 2019 (note 16), all the outstanding warrants belonging to the holder of the debt, including the Warrants #9, were cancelled and replaced by new warrants (note 19c). The cancellation and the issuance of new warrants was treated as a modification. Following this modification, the Warrants #9 no longer meet the definition of a liability instrument and the Company reclassified the fair value of the Warrants #9 as of April 23, 2019 of $153 from warrant liability to warrants classified as equity.

The fair value of Warrants #9 on the various dates was calculated using a Black-Scholes option pricing model with the assumptions provided in the table below. In order to estimate the fair value of the underlying preferred share, the Company used the market price of Liminal’s common shares at the measurement date, discounted for the fact that the preferred shares are illiquid. The value of the discount was calculated using a European put option model to sell a common share of Liminal at the price of $1,000.00 or $156.36 per share in 20 years.

	April 23,			February 22,			December 31,
	2019			2019			2018
Underlying preferred share fair value		32.43			152.15			130.00
Number of warrants issued		19,402			19,402			14,088
Volatility		55.6	%		48.1	%		44.5	%
Risk-free interest rate		1.66	%		1.84	%		2.82	%
Remaining life until expiry		7.8			8.0			7.9
Expected dividend rate		-			-			-

F-33

16. Long-term debt

The transactions during the year ended December 31, 2019 and 2018 and the carrying value of the long-term debt at December 31, 2019 and 2018 were as follows:

	2019			2018
Balance at January 1	$	125,804		$	87,020
Impact of adoption of IFRS 9		-			(110	)
Stated and accreted interest		7,874			18,856
Drawdown on Credit Facility		18,677			71,721
Repayment of principal through share issuance		(141,536	)		-
Repayment of principal with cash		(988	)		(3,184	)
Repayment of stated interest		(3,540	)		(3,934	)
Foreign exchange revaluation on Credit Facility    balance		(1,311	)		5,425
Reduction of the face value of the second OID    loan by $3,917		-			(2,639	)
Extinguishment of loans following a debt    modification		(4,667	)		(155,055	)
Recognition of loans following a debt modification		8,521			107,704
Balance at December 31	$	8,834		$	125,804

At December 31, 2019 and 2018, the carrying amount of the debt comprised the following loans:

	December 31,			December 31,
	2019			2018
Loan with the parent (formerly Third OID loan) having    a principal of $10,000 maturing on April 23, 2024    with an effective interest rate of 15,05% 1)	$	8,669		$	-
Non-interest bearing government term loan having a    principal amount of $165 repayable in equal    monthly installments of $82 until January 31, 2020    with an effective interest rate of 8.8%		165			1,111
First OID loan having a face value of 63,273 maturing    on September 30, 2024 with an effective interest    rate of 20.06%		-			27,221
Second OID loan having a face value of $17,694    maturing on September 30, 2024 with an effective    interest rate of 20.06%		-			7,612
Third OID loan having a face value of $31,370    maturing on September 30, 2024 with an effective    interest rate of 20.06%		-			13,495
US dollars Credit Facility draws, expiring on    September 30, 2024 bearing stated interest    of 8.5% per annum (effective interest rate    of 18.87%)		-			76,365
	$	8,834		$	125,804
Less current portion of long-term debt		(165	)		(3,211	)
Long-term portion of long-term debt	$	8,669		$	122,593

¹⁾ The Loan with the parent is secured by all the assets of the Company and requires that certain covenants be respected including maintaining an adjusted working capital ratio. The OID loans and US dollars Credit Facility that were extinguished on April 23, 2019 had similar conditions.

F-34

On February 22, 2019, the Company amended the fourth loan agreement (“Credit Facility”) with the addition of two tranches of US$10 million and US$5 million which the Company drew on February 22 and March 22, 2019 respectively. Those two tranches bear interest at an annual rate of 8.5% payable quarterly. Concurrently with the amendment, the Company agreed to reduce the exercise price of Warrants #9 from $1,000.00 to $156.36 per preferred share and to immediately issue those warrants (note 15). The incremental fair value of the warrant liability of $1,137 due to this change was recognized as deferred financing fees related to the additional two tranches received. The Company recorded the credit facility draws on February 22, 2019 and March 22, 2019 at their fair value at the transaction date less the associated transaction costs and financing fees of $45 and $1,137, respectively, for a net amount of $18,677.

On April 23, 2019, the Company entered into a debt restructuring agreement with the long-term debt holder whereby the entirety of the principal on the Credit Facility plus a portion of the interest due, the entirety of the First and Second Original Issue Discount (“OID”) loans and the majority of the Third OID loan would be repaid by Liminal by the issuance of common shares, at a conversion price, rounded to the nearest two decimals, of $15.21 per common share. Consequently, the US$95 million of principal plus interest due on the Credit Facility was reduced to $663 and the aggregate face value of the three OID loans was reduced by $99,552 to $10,000 with the remaining balance of the Third OID loan modified into an interest-bearing loan at a stated interest of 10% payable quarterly. This resulted in the reduction of the long-term debt recorded on the consolidated statement of financial position by $141,536. The Company issued 15,050,312 common shares on that date which were recorded in share capital at a value of $228,915. The difference between the carrying amount of the debt converted into common shares and the increase in the value of the share capital is recognized as a loss on extinguishment of a loan of $87,379. The balance of interest due on the credit facility of $663 was paid in cash.

Since November 14, 2018, all transactions with SALP are considered related party transactions; however, following the issuance of the common shares to SALP as a result of the debt restructuring, SALP obtained control over the Company and since then, is Liminal’s controlling parent.

Pursuant to the debt restructuring, the Company cancelled the warrants previously held by SALP and replaced them with new warrants having an exercise price rounded to the nearest two decimals of $15.21 per common share, expiring on April 23, 2027 (note 19c). The incremental fair value of the replacement warrants was recognized in warrants equity and as part of the loss on the debt extinguishment together with the legal fees incurred to finalize all the related legal agreements.

The modification in terms of the remaining balance of the Third OID loan of $10,000 was accounted for as an extinguishment of the long-term debt and the re-issuance of a new interest-bearing loan (“Loan with the parent”). The difference between the carrying amount of the loan extinguished of $4,667 and the $8,521 recognized as the fair value of the new loan with the parent was recorded as a loss on debt extinguishment of $3,854. The fair value of the modified loan was determined using a discounted cash flow model with a market interest rate of 15.1%.

As a result of this transaction and the extinguishments of liabilities that occurred earlier in the beginning of 2019 following payments made to suppliers by the issuance of equity (note 19a), the consolidated statement of operations for the year ended December 31, 2019, includes a loss on extinguishment of liabilities of $92,374 detailed as follows:

Loss on extinguishment of liabilities due to April 23, 2019 loan modification
Comprising the following elements:
Debt to equity conversion	$	87,379
Expensing of financing fees on loan extinguishment		653
Extinguishment of previous loan		(4,667	)
Recognition of modified loan		8,521
Expensing of increase in the fair value of the warrants (note 19c)		408
Loss on extinguishment of liabilities due to April 23, 2019 loan modification	$	92,294
Loss on extinguishment of liabilities to suppliers (note 19a)		80
Loss on extinguishments of liabilities	$	92,374

F-35

As at December 31, 2019, the Company was in compliance with all of its covenants under its long-term debt agreement.

2018

In November 2017, the Company entered into a Credit Facility agreement bearing interest of 8.5% per annum expiring on November 30, 2019. The Credit Facility comprised two US$40 million tranches which became available to draw down once certain conditions were met. The drawdowns on the available tranches were limited to US$10 million per month.

As part of the agreement, the Company issued 54,000 warrants on November 30, 2017 (“Warrants #7”) to the holder of the long-term debt in consideration for the Credit Facility. Further details concerning the warrants are provided in note 19c. At each drawdown, the value of the proceeds drawn are allocated to the debt and the warrants classified as equity based on their fair value.

A royalty agreement between the Company and holder of long-term debt became effective upon drawing on the second tranche of the Credit Facility and then was subsequently modified as part of the loan modification discussed below. The proceeds to be received upon the first three draws on the second US$40 million tranche was increased from US$10.0 million to US$11.5 million to include the consideration paid by the holder for the royalty commitment (note 31).

In 2018, the Company drew on the remaining US$60 million available on the Credit Facility throughout the year, bringing the cumulative draws from US$20 million at December 31, 2017 to US$80 million at December 31, 2018.

The table below summarizes by quarter, the impact of the various drawdowns and the royalty proceeds on the consolidated financial statements:

					Allocation of Proceeds
Quarter	USD proceeds		CAD equivalent*		Debt *		Warrants *		Royalty liability*
Q1 2018		20,000,000		25,155,000		19,585,372		5,569,628		-
Q2 2018		11,500,000		14,768,300		12,881,631		1,886,669		-
Q3 2018		23,000,000		29,808,690		27,144,445		2,531,438		132,807
Q4 2018		10,000,000		13,280,100		12,109,314		1,170,786		-

*Exceptionally for this table Canadian dollars are not rounded to thousands of dollars.

For the August and September 2018 draws, the holder of the long-term debt used the set-off of principal right under the Original Issue Discount (“OID”) loan agreements to settle $3,917 (US$3 million) of the amounts due to the Company under the royalty agreement by reducing the face value of the second OID loan from $21,172 to $17,255. As a result, the cash proceeds received for those two draws were $25,892.

These transactions were accounted for as an extinguishment of a portion of the OID loan and the difference between the adjustment to the carrying value of the loan of $2,639 and the reduction in the face value of the OID loan of $3,917, was recorded as a loss on extinguishment of liabilities of $1,278.

On November 14, 2018, the Company and the holder of the debt modified the terms of the four loan agreements to extend the maturity date of the Credit Facility from November 30, 2019 to September 30, 2024 and all three OID loans from July 31, 2022 to September 30, 2024. Interest on amounts outstanding on the Credit Facility will continue to be payable quarterly at an annual rate of 8.5% during the period of the extension. As of July 31, 2022, the OID loans will be restructured into cash paying loans bearing interest at an annual rate of 10%, payable quarterly. The outstanding face values of the OID loans at that date will become the principal amounts of the restructured loans. As additional consideration for the extension of the maturity dates, Liminal agreed to cancel 100,117 existing warrants (Warrants #3 to 7) and issue replacement warrants to the holder of the long-term debt, bearing a term of 8 years and exercisable at a per share price equal to $1,000.00 (note 19c). The exact number of warrants to be granted will be set at a number that will result in the holder of the long-term debt having a 19.99% fully-diluted ownership level in Liminal upon issuance of the warrants, which

F-36

are to be issued no later than March 20, 2019. On November 30, 2018, Warrants #3 to 7 were cancelled and 128,057 warrants to purchase common shares (“Warrants #8”), representing a portion of the replacement warrants, were issued. At the end of the agreed upon measurement period for calculating the number of new warrants to be issued, Liminal will issue the remaining replacement warrant under a new series of warrants (“Warrants #9”), which will give the holder the right to acquire preferred shares (notes 15 and 19a). The holder of the long-term debt also obtained the Company’s best efforts to support the election of a second representative of the lender to the Board of directors of the Company, and the extension of the security to the royalty agreement.

Management assessed the changes made to the previous agreements and determined that the modification should be accounted for as an extinguishment of the previous loans and the recording of new loans at their fair value determined as of the date of the modification. The fair value of the modified loans, determined using a discounted cash flow model with a market interest rate of 20.1%, was $107,704. Any cost or fees incurred with this transaction were recognized as part of the gain on extinguishment, including legal fees incurred in the amount of $434 and the improvements to the terms of the warrants. To determine this value, the Company estimated the fair value of the vested warrants (Warrants #3 to 7) and the fair value of the new warrants, excluding the 6,000 warrants that were associated with the last draw on the Credit Facility that occurred on November 22, 2018. The incremental fair value was $8,778 of which $338 pertains to Warrants #9 (note 15).

In addition, the fees incurred in regards of the Credit Facility, that were previously recorded in the consolidated statement of financial position as other long-term assets and were being amortized and recognized in the consolidated statement of operations over the original term of the Credit Facility, were recognized as part of the gain on extinguishment for an amount of $3,245.

As a result of this transaction and the extinguishments of debt that occurred earlier in the year following the use of the set-off of principal right by the debt holder, the consolidated statement of operations for the year ended December 31, 2018, includes a gain on extinguishment of liabilities of $33,626 detailed as follows:

Gain on extinguishment of liabilities due to November 14, 2018 debt modification
Comprising the following elements:
Extinguishment of previous loans	$	(155,055	)
Expensing of deferred financing fees on Credit Facility		3,245
Recognition of modified loans		107,704
Expensing of increase in the fair value of the warrants		8,778
Warrants proceeds		(10	)
Expensing of legal fees incurred with the debt modification		434
Gain on extinguishment of liabilities due to November 14, 2018 debt modification	$	(34,904	)
Loss on extinguishment of liabilities due to set-off of principal		1,278
Gain on extinguishments of liabilities	$	(33,626	)

2017

In 2017, the holder of the long-term debt used the set-off of principal right under the loan agreements, to settle the amounts due to the Company, following its participation in a private placement for 5,045 common shares which occurred concurrently with the closing of a public offering of common shares on July 6, 2017.

As a result, the face value of the third OID loan was reduced by $8,577, from $39,170 to $30,593. The reduction of $8,577 is equivalent to the value of the shares issued at the agreed price of $1,700.00 concluded in connection with the private placement. This transaction was accounted for as an extinguishment of a portion of the OID loan and the difference between the adjustment to the carrying value of the loan of $4,134 and the amount recorded for the shares issued of $8,325 was recorded as a loss on extinguishment of a liabilities of $4,191.

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17. Operating and finance lease inducements and obligations

	December 31,
	2018
Finance lease obligations	$	818
Deferred operating lease inducements and obligations		6,876
	$	7,694
Less current portion of operating and finance lease inducements and obligations (note 13)		(5,844	)
	$	1,850

All operating and finance lease inducements and obligations were transferred to right-of-use assets following the adoption of IFRS 16 on January 1, 2019 (note 4a).

18. Other long-term liabilities

	December 31,			December 31,
	2019			2018
Royalty payment obligations (a)	$	3,148		$	3,077
License acquisition payment obligation (b)		1,302			2,726
Other employee benefit liabilities		2,554			2,399
Other long-term liabilities		-			330
	$	7,004		$	8,532
Less:
Current portion of royalty payment obligations (note 13)		(3,043	)		(68	)
Current portion of license acquisition payment obligation (note 13)		(1,302	)		(1,363	)
Current portion of other employee benefit liabilities (note 13)		(2,374	)		(1,406	)
	$	285		$	5,695

a) Royalty payment obligations

i) Royalty payment obligations to the holder of the long-term debt

During the second quarter of 2018, the Company signed a royalty agreement with the holder of the long-term debt at the same time as certain conditions pertaining to the second advance of the Credit Facility were modified. As a result of the agreement, the Company obtained the right to receive US$1.5 million milestone payments upon each draw of the second tranche of the Credit Facility in exchange for increasing royalty entitlements on future revenues relating to patents existing as of the date of the agreement of PBI-1402 and analogues, including PBI-4050. The agreement includes a minimum royalty payment of US$5,000 per quarter until approximately 2033 and a liability of $131 was recognized in the consolidated statement of financial position at December 31, 2019 representing the discounted value of the minimum royalty payments to be made until the expiry of the patents covered by the agreement, using a discount rate of 18.57% ($138 at December 31, 2018). In the case where royalties based on revenues became payable, the minimum royalty previously paid would be deducted from future remittances.

On November 14, 2018, as part of the debt modification agreement, the royalty rate was increased from 1.5% to 2% on future revenues relating to the specified patents and the right to receive the final US$1.5 million milestone payment was foregone.

F-38

ii) Royalty payment obligation for reacquired rights

As part of the consideration given by the Company in 2016 for the reacquisition of the rights to 50% of the worldwide profits pertaining to the sale of plasminogen for the treatment of plasminogen congenital deficiency which were previously granted to a licensee under a license agreement, the Company agreed to make royalty payments on the sales of plasminogen for congenital deficiency, using a rate of 5% up to a total of US$2.5 million. If by December 2020 the full royalty obligation has not been paid, the unpaid balance will become due. The Company has recognized a royalty payment obligation of $2,978 (US$2.3 million) in the consolidated statement of financial position at December 31, 2019 ($2,898; US$2.3 million at December 31, 2018), representing the discounted value of the expected royalty payments to be made until December 2020, using a discount rate of 9.2%.

b) Licence acquisition payment obligation

In consideration for acquiring a license in January 2018 (note 11), the Company agreed to pay an equivalent of US$3 million; US$1 million on the date of the transaction, and US$1 million on both the first and second anniversary of the transaction, to be settled in common shares of the Company. A $1,302 financial liability has been recognised as at December 31, 2019 for the last payment due in January 2020 ($2,726 at December 31, 2018).

19. Share capital and other equity instruments

On July 5, 2019, the Company performed a one thousand-to-one share consolidation of the its common shares, stock options, restricted share units and warrants. The quantities and per unit prices presented throughout the consolidated financial statements, including this note, have been retroactively adjusted to give effect to the share consolidation.

a) Share capital

Authorized and without par value

Common shares:unlimited number authorized, participating, carrying one vote per share, entitled to dividends.

Preferred shares: unlimited number authorized, issuable in one or more series.

- Series A preferred shares : unlimited number authorized, no par value, non-voting, ranking in priority to the common shares, entitled to the same dividends as the common shares, non-transferable, redeemable at the redemption amount offered for the common shares upon a change in control event.

The share capital issued and outstanding at December 31, 2019 and 2018 is as follows:

	December 31, 2019				December 31, 2018
	Number		Amount		Number		Amount
Issued common shares		23,313,164	$	932,951		720,306	$	583,517
Share purchase loan to a former officer		-		-		-		(400	)
Issued and fully paid common shares		23,313,164	$	932,951		720,306	$	583,117

F-39

Changes in the issued and outstanding common shares during the year ended December 31, 2019 and 2018 were as follows:

	2019				2018
	Number		Amount		Number		Amount
Balance - beginning of year		720,306	$	583,117		710,549	$	575,150
Issued to acquire assets		4,420		1,326		1,113		1,960
Issued to acquire non-controlling interest (note 20)		-		-		4,712		3,629
Exercise of stock options (note 19b)		-		-		1,677		1,073
Shares issued pursuant to a restricted share units    plan (note 19b)		-		-		310		554
Shares issued pursuant to debt restructuring		15,050,312		228,915		-		-
Shares issued for cash		7,536,654		118,648		1,945		751
Shares released from escrow		-		400		-		-
Shares issued in payment to suppliers		1,472		545		-		-
Balance - end of year		23,313,164	$	932,951		720,306	$	583,117

2019

In November 2018, the Company entered into an ”At-the-Market” (“ATM”) Equity Distribution Agreement (“EDA”) under which the Company is able, at its discretion and from time to time, subject to conditions in the EDA, to offer common shares through ATM issuances on the TSX or any other marketplace for aggregate proceeds not exceeding $31 million. This agreement provides that common shares are to be sold at market prices prevailing at the time of sale. The Company issued a total of 12,865 common shares at an average price of $327.55 per share under the ATM in January and February 2019, for aggregate gross proceeds of $4,214, less transaction costs of $248 recorded in deficit, for total net proceeds of $3,966. The use of the ATM facility was suspended concurrently with our Nasdaq registration.

On January 29, 2019, the Company issued 4,420 common shares in settlement of second payment due for the license acquisition payment obligation (note 18) and recorded $1,326 in share capital based on the market value of the shares on that date.

On February 25 and 27, 2019, the Company issued a total of 1,472 common shares in payment for amounts due to certain suppliers. This transaction was accounted for as an extinguishment of liabilities and the difference between the carrying value of the accounts payable of $465 and the amount recorded for the shares issued of $545, which were valued at the market price of the shares on their date of issuance, was recorded as a loss on extinguishment of liabilities of $80.

As part of the settlement agreement concluded in April 2019 with the former CEO of the Company, common shares held in escrow as security for a share purchase loan of $400 to the former CEO were released and the loan extinguished in exchange for the receipt of a payment of $137, representing the fair value of the shares at the time of the settlement.

On April 23, 2019, the Company issued 15,050,312 common shares as part of the debt restructuring (note 16). The shares issued in relation with the debt restructuring contained trading restrictions and accordingly, the Company determined that their quoted price did not fairly represent the value of the shares issued. As such, the issued shares were recorded at fair value using a market approach under a level 2 fair value measurement of $15.21 per share, resulting in a value of the shares issued of $228,915. The fair value was based on a share issuance for cash on the same date with a non-related party. The difference between the adjustment to the carrying value of the loan of $141,536 and the amount recorded for the shares issued of $228,915 was recorded as a loss on extinguishment of a loan of $87,379.

F-40

Concurrently with the debt restructuring, the Company closed two private placements for 4,931,161 common shares at a subscription price rounded to the nearest two decimals of $15.21 for gross proceeds of $75,000, less transaction costs of $4,802 recorded in deficit, for total net proceeds of $70,198. SALP’s participation in the private placement was for gross proceeds to the Company of $25,000.

In May 2019, the Company announced a Rights Offering to the holders of its common shares at the close of business on May 21, 2019 to subscribe for up to 20 additional common shares, for each share they held,  for a subscription price rounded to the nearest two decimals of $15.21 per common share. The Right Offering was subject to a proration to ensure that no more than $75,000 was raised. In June 2019, the Company issued 2,592,628 common shares for gross proceeds of $39,434 as part of the Right Offerings less transactions costs of $271 recorded in deficit, for total net proceeds of $39,163.

2018

On January 29, 2018, the Company issued 742 common shares in partial payment for the acquisition of a license (note 11) and 371 common shares to acquire an option to buy production equipment. Based on the $1760 share price on that date, the values attributed to the shares issued were $1,960.

On April 27, 2018, the Company reacquired the non-controlling shareholders’ 13% interest in Prometic Bioproduction Inc. in exchange for the issuance of 4,712 common shares of the Company. Based on the $770.00 share price on that date, the value attributed to the shares issued was $3,629 (note 19).

In the year ended December 31, 2018, the Company has issued a total of 1,945 common shares at an average price of $386.12 per share under the ATM for aggregate gross proceeds of $751, less transaction costs of $23 recorded in deficit, for total net proceeds of $728.

b) Contributed surplus (Share-based payments)

Stock options

The Company has established a stock option plan for its directors, officers, employees and service providers. The plan provides that the aggregate number of shares reserved for issuance at any time under the plan may not exceed 3,749,714 common shares and the maximum number of common shares, which may be reserved for issuance to any individual, may not exceed 5% of the outstanding common shares. The stock options issued under the plan may be exercised over a period not exceeding ten years from the date they were granted. All stock options granted since May 2017 have a contractual life of 10 years. Stock options issued prior to May 2017 had a life of five years.

The vesting period of the stock options varies from immediate vesting to vesting over a period not exceeding 6 years. Participants meeting certain service and age requirements may see the vesting of certain awards accelerate upon retirement. The vesting conditions are established by the Board of Directors on the grant date. The exercise price is based on the weighted average share price for the five business days prior to the grant.

F-41

Changes in the number of stock options outstanding during the years ended December 31, 2019, 2018 and 2017 were as follows:

	2019					2018					2017
				Weighted					Weighted					Weighted
				average					average					average
	Number			exercise price		Number			exercise price		Number			exercise price
Balance - beginning of year		21,625		$	1,464.49		14,256		$	1,782.70		14,220		$	1,406.24
Granted		2,218,810			33.13		10,837			755.97		3,720			1,993.06
Forfeited		(16,774	)		159.61		(377	)		1,933.34		(599	)		2,535.18
Exercised		-			-		(1,681	)		376.10		(3,081	)		155.03
Cancelled		(11,713	)		1,237.94		-			-		-			-
Expired		(2,084	)		1,176.20		(1,410	)		408.43		(4	)		127.50
Balance - end of year		2,209,864		$	38.72		21,625		$	1,464.49		14,256		$	1,782.70

2019

On January 24, 2019, 1,622 stock options were granted at an exercise price of $300.00 and vesting on December 31, 2019. On June 4, 2019, 1,794,224 stock options were granted to management at a strike price of $36.00 of which 248,825 stock options vested immediately and the remaining vest over a period up to six years. On June 19, 2019, 251,714 stock options were issued at a strike price of $27.00 of which 60,717 stock options vested immediately and the remaining vest over a period up to four years. On September 3, 2019, 71,250 stock options were issued at a strike price of $11.99 and on December 3, 2019, 100,000 stock options were issued at a strike price of $7.86, both of these grants having a vesting period of up to four years. The weighted average grant date fair value of the stock options issued in 2019 was $12.74.

In June and August 2019, the Company cancelled the options that were issued prior to June 2019, as the exercise price of these options were so above the market price at the time, that it was highly unlikely that they would ever be exercised. In compensation for their agreement to the cancellation, key management and employees, received the new options granted to them in June 2019 discussed above. Consequently, 11,084 stock options with a weighted average exercise price of $1,256.73 were cancelled. There was no exercise of stock options in 2019.

2018

During the year ended December 31, 2018, 10,837 stock options having a contractual term of 10 years and a vesting period of up to four years were granted.

During the year ended December 31, 2018, 1,681 stock options were exercised resulting in cash proceeds of $635 and a transfer from contributed surplus to share capital of $438. The weighted average share price on the date of exercise of the options during the year ended December 31, 2018 was $1,044.16.

2017

During the year ended December 31, 2017, 175 and 3,545 options having a contractual term of five and ten years, respectively, and a vesting period of up to four years were granted.

During the year ended December 31, 2017, 3,081 stock options were exercised resulting in cash proceeds of $481 and a transfer from contributed surplus to share capital of $330. The weighted average share price on the date of exercise of the stock options during the year ended December 31, 2017 was $1,713.31.

F-42

The Company uses the Black-Scholes option pricing model to calculate the fair value of options at the date of grant. The weighted average inputs into the model and the resulting grant date fair values during the years ended December 31, 2019, 2018 and 2017 were as follows:

	2019			2018			2017
Expected dividend rate		-			-			-
Expected volatility of share price		45.0	%		66.1	%		61.8	%
Risk-free interest rate		1.4	%		2.1	%		1.2	%
Expected life in years		7.2			7.9			6.7
Weighted average grant date fair value	$	12.74		$	221.64		$	1,181.38

At December 31, 2019, stock options issued and outstanding by range of exercise price are as follows:

				Weighted average
				remaining		Weighted				Weighted
Range of		Number		contractual life		average		Number		average
exercise price		outstanding		(in years)		exercise price		exercisable		exercise price
$7.86 - $27.00			407,788		9.6	$	19.68		74,705	$	27.00
$	36.00		1,794,224		9.4		36.00		311,605		36.00
$390.00 - 3,190.00			7,852		5.8		1647.67		6,490		1,758.22
			2,209,864		9.4	$	38.72		392,800	$	62.74

A share-based payment compensation expense of $12,212 was recorded for the stock options for the year ended December 31, 2019 ($3,372 and $3,436 for the year ended December 31, 2018 and 2017 respectively).

Restricted share units (“RSU”)

The Company has established an equity-settled restricted share units plan for executive officers of the Company, as part of its incentive program designed to align the interests of its executives with those of its shareholders, and in accordance with its Long-Term Incentive Plan. The vesting conditions are established by the Board of Directors on the grant date. Participants meeting certain service and age requirements may see the vesting of certain awards accelerate upon retirement. Each vested RSU gives the right to receive a common share.

Changes in the number of RSU outstanding during the years ended December 31, 2019, 2018 and 2017 were as follows:

	2019			2018			2017
Balance - beginning of year		18,299			9,799			9,237
Granted		12,564			10,329			7,449
Expired		-			(1,578	)		(3,157	)
Forfeited		(409	)		(19	)		(539	)
Released		-			(232	)		(3,191	)
Paid in cash		(8,396	)		-			-
Cancelled		(4,493	)		-			-
Balance - end of year		17,565			18,299			9,799

F-43

2019

On January 31, 2019, the Company granted 12,564 RSU at a grant price of $300.00 and a one-year vesting period. On May 30, 2019, the Company decided to vest the 12,564 RSU and the employees were given the choice to receive the then current value of the shares in cash or to receive the shares at a later date. As a result, 8,396 RSU were released and paid in cash resulting in a reduction to contributed surplus of $421.

On May 7, 2019 the 12,886 performance‑based RSU pertaining to the “2017-2019” cycle and the “2018-2020” cycle were modified by removing the performance conditions and converting them into time-vesting RSU. The quantity modified into time-vesting units was equivalent to the 100% achievement range whereby in the past, the outcome of the performance conditions could go from zero to 150%. Historically, the Company has always reported the quantity of RSU outstanding as the maximum number of shares that could be issued under the plan. This change resulted in the cancellation of 4,305 units.

At December 31, 2019, 13,262 vested RSU and 4,303 unvested RSU were outstanding. Share-based payments compensation expense of $9,818 was recorded during the year ended December 31, 2019.

2018

On December 4, 2018, the Company granted 10,329 RSU to management (the “2018-2020 RSU”) with a time period to meet the vesting conditions extending to December 31, 2020. The grant included 2,374 units that vest at a rate of 33.3% at the end of each year and become available for release at the time of vesting, and 7,955 units that have performance-based conditions with a scaling payout depending on performance (ranging from 0% to 150%). These 2018-2020 performance-based RSU have since been converted into time-vesting RSU at 100% in 2019 as mentioned above.

Share-based payments compensation expense of $3,350 was recorded during the year ended December 31, 2018.

2017

During 2017, the Board decided to replace 1,221 of the expired RSU with an equivalent number of RSU keeping the same vesting conditions but extending the evaluation period for the attainment of the objectives by one year to December 31, 2017. The replacement RSU were issued on April 11, 2017. This transaction was accounted for as a modification of the existing RSU that did not have an impact on the value of the RSU.

Share-based payments compensation expense of $5,226 was recorded during the year ended December 31, 2017.

On November 24, 2017, the Company granted 6,091 RSU to management (the “2017-2019 RSU”), with a time period to meet the vesting conditions extending to December 31, 2019. The grant included 1,083 units that vest at a rate of 33.3% at the end of each year and become available for release at the time of vesting, and 5,008 units that have performance-based conditions with a scaling payout depending on performance. These 2017‑2019 performance based RSU were subsequently converted into time vesting RSU in 2019, at 100% of target as mentioned above.

F-44

Share-based payments expense

The total share-based payments expense, comprising the above-mentioned expenses for stock options and RSU, has been included in the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 as indicated in the following table:

	2019		2018		2017
Cost of sales and other production expenses	$	107	$	299	$	370
Research and development expenses		7,137		2,295		4,150
Administration, selling and marketing expenses		14,786		4,128		4,142
	$	22,030	$	6,722	$	8,662

c) Warrants

The following table summarizes the changes in the number of warrants outstanding during the years ended December 31, 2019 and 2018:

	2019					2018
				Weighted					Weighted
				average					average
	Number			exercise price		Number			exercise price
Balance of warrants - beginning of year		153,611		$	1,028.35		121,671		$	2,109.21
Issued for cash		19,402			156.36		-			-
Issued to acquire assets		-			-		4,000			3,000.00
Cancelled - loan modification		(168,735	)		872.51		(100,117	)		2,384.42
Issued - loan modification		168,735			15.21		128,057			1,000.00
Expired		(278	)		6,390.00		-			-
Balance of warrants - end of year		172,735		$	84.33		153,611		$	1,028.35
Balance of warrants exercisable - end of year		170,735		$	50.17		149,611		$	975.64

2019

On February 22, 2019, pursuant to modifying the fourth loan agreement (note 16), the Company issued 19,402 warrants, Warrants #9, having an exercise price of $156.36. Warrants #9 do not meet the definition of an equity instrument since the underlying preferred shares qualify as a liability instrument, and therefore they must be accounted for as a financial instrument carried at fair value through profit or loss (note 15).

On April 23, 2019, as part of the debt restructuring (note 16), 168,735 warrants (Warrants #1, 2, 8 and 9) were cancelled and replaced with an equivalent number of new warrants, Warrants #10, that will be exercisable at an exercise price of $15.21 per common share and expire on April 23, 2027. The increase in the fair value of the replacement warrants compared to those cancelled was $408 at the date of the modification and was recorded in shareholders’ equity – warrants with the corresponding expense recorded as part of the loss on extinguishment of liabilities due to the debt restructuring.

F-45

2018

On November 30, 2017, pursuant to entering into a non-revolving credit facility agreement, the Company issued Warrants #7 to the holder of the long-term debt. Further details concerning the credit facility are provided in note 13. Warrants #7  consist of 54,000 warrants from which 10,000 warrants were exercisable as of the date of the agreement and the remaining 44,000 warrants become exercisable as and if the Company draws upon the credit facility in increments of US$10 million; 5,000 warrants become exercisable for each US$10 million drawn on the first US$40 million tranche of the credit facility and 6,000 warrants become exercisable for each US$10 million drawn on the second US$40 million tranche of the credit facility. Each warrant gives the holder the right to acquire one common share at an exercise price of $1,700.00. The warrants expire on June 30, 2026. Although the warrants are presented as issued in the warrant table above as of November 30, 2017, for accounting purposes, these warrants will be recognized and measured at the time they become exercisable.

As the Company drew an amount of US$10 million on the Credit Facility on each of January 22, February 23, April 30, August 2, September 21, and November 22, 2018, the amounts received were allocated to the debt and the Warrants #7 that vested upon the draw, based on their fair value at the time of the drawdown. The aggregate value of the proceeds attributed to the warrants that became exercisable on those dates was $11,159, which was recorded in equity.

On January 29, 2018, the Company issued 4,000 warrants to acquire common shares, as consideration for a license (note 11). The warrants have an exercise price of $3,000.00 per share and expire after five years. The first 2,000 warrants become exercisable after one year while the second 2,000 warrants become exercisable after two years. The fair value of the warrants and consequently the value of the license is $1,743 and was determined using a Black-Scholes option pricing model.

On November 14, 2018, an agreement was signed between the Company and the holder of the long-term debt to extend the maturity of the three OID loans and the Credit Facility (note 13). As part of the cost for the debt modification, the Company proceeded on November 30, 2018 to cancel 100,117 existing warrants (Warrants #3 to 7) and replace them with 128,057 new warrants (Warrants #8), each giving the holder the right to acquire one common share at an exercise price of $1000.00 per share, paid either in cash or in consideration of the lender’s cancellation of an equivalent amount of the face value of an OID loan. The warrants expire on November 30, 2026. A payment of $10 was received from the holder of the long-term debt as part of this transaction. The increase in the fair value of the replacement warrants compared to those cancelled was $8,440 at the date of the modification. This value in addition to the payment received was recorded in shareholders’ equity – warrants and the corresponding debit was recorded against the gain on extinguishment of liabilities relating to the debt modification.

The warrants outstanding as at December 31, 2019, their exercise price, expiry rate and the overall weighted average exercise price are as follows:

Number		Expiry date	Exercise price
	4,000	January 2023		3,000.00
	168,735	April 2027		15.21
	172,735		$	84.33

F-46

20. Non-controlling interests

The interests in the subsidiaries for which the Company holds or held less than 100% interest for the three-year period ended December 31, 2019 are as follows:

Name of subsidiary	Segment activity	Place of incorporation and operation	Proportion of ownership interest held by group
			2019			2018			2017
Prometic Bioproduction Inc.	Plasma-derived therapeutics	Quebec, Canada		100	%		100	%		87	%
Pathogen Removal and Diagnostic    Technologies Inc.	Corporate	Delaware, U.S.		77	%		77	%		77	%
NantPro Biosciences, LLC	Plasma-derived therapeutics	Delaware, U.S.		73	%		73	%		73	%

The non-controlling interest (“NCI”) in Prometic Bioproduction Inc.’s owned 13% of the common shares until April 2018, when the Company acquired these shares. Until that time, the NCI in Prometic Bioproduction Inc. was attributed its share of the operating results and the financial position of the entity.

Summarized financial information for the entities having a non-controlling interest at December 31, 2019, 2018 and 2017 is provided in the following tables. This information is based on amounts before inter-company eliminations.

2019

Summarized statement of financial position:

	PRDT			NantPro
Receivables (current)	$	9		$	-
Capital and intangible assets (long-term)		156			-
Trade and other payables (current)		(748	)		-
Intercompany loans and lease inducements and    obligations (long-term)		(15,956	)		-
Total equity (negative equity)	$	(16,539	)	$	-
Attributable to non-controlling interests	$	(7,255	)	$	-

Summarized statement of operations:

	PRDT			NantPro
Revenues or services rendered to other members    of the group	$	585		$	-
Cost of sales and production		(132	)		(1,213	)
Research and development expenses		(215	)		-
Administration and other expenses		(896	)		(13	)
Impairment loss		(129	)		-
Net loss and comprehensive loss	$	(787	)	$	(1,226	)
Attributable to non-controlling interests	$	(713	)	$	(331	)

F-47

2018

Summarized statement of financial position:

	PRDT			NantPro
Capital and intangible assets (long-term)	$	351		$	-
Trade and other payables (current)		(613	)		-
Intercompany loans (long-term)		(15,672	)		-
Total equity (negative equity)	$	(15,934	)	$	-
Attributable to non-controlling interests	$	(6,542	)	$	-

Summarized statement of operations:

	PRDT			NantPro
Revenues or services rendered to other members    of the group	$	839		$	-
Cost of sales and production		(190	)		(10,526	)
Research and development expenses		(179	)		(30	)
Administration and other expenses		(1,001	)		(131	)
Impairment loss		-			(141,025	)
Net loss and comprehensive loss	$	(531	)	$	(151,712	)
Attributable to non-controlling interests	$	(641	)	$	(40,962	)

2017

Summarized statement of financial position:

	PBP			PRDT			NantPro
Investment tax credits receivables and other current assets	$	13,250		$	-		$	-
Capital and intangible assets (long-term)		20,427			398			141,025
Trade and other payables (current)		(6,965	)		(417	)		-
Intercompany loans (long-term)		(120,789	)		(15,003	)		-
Total equity (negative equity)	$	(94,077	)	$	(15,022	)	$	141,025
Attributable to non-controlling interests	$	(10,722	)	$	(5,901	)	$	38,070

Summarized statement of operations:

	PBP			PRDT			NantPro
Revenues or services rendered to other members    of the group	$	3,712		$	181		$	-
Cost of sales and production		(1,635	)		-			-
Research and development expenses		(34,027	)		(335	)		(17,482	)
Administration and other expenses		(4,587	)		(957	)		(210	)
Net loss and comprehensive loss	$	(36,537	)	$	(1,111	)	$	(17,692	)
Attributable to non-controlling interests	$	(4,750	)	$	(779	)	$	(4,776	)

F-48

For all years presented, the losses allocated to the NCI in the consolidated statements of operations, per subsidiary are as follows:

	2019			2018			2017
Consolidated statements of operations:
Prometic Bioproduction Inc.	$	-		$	(927	)	$	(4,750	)
Pathogen Removal and Diagnostic    Technologies Inc.		(713	)		(641	)		(778	)
NantPro Biosciences, LLC		(331	)		(40,962	)		(4,777	)
Total non-controlling interests	$	(1,044	)	$	(42,530	)	$	(10,305	)

The NantPro Biosciences, LLC (“NantPro”) non-controlling interest’s share in the funding of the subsidiary by Liminal was $331 for the year ended December 31, 2019 ($2,892 for the year ended December 31, 2018 and $4,776 for the year ended December 31, 2017) and has been presented in the consolidated statements of changes in equity. The share of the NCI in the NantPro statement of financial position is $nil at December 31, 2019 and 2018.

The share of the NCI in Pathogen Diagnostic Technologies Inc. statement of financial position represents an asset on the Company’s consolidated statement of financial position of $7,255 and $6,542 at December 31, 2019 and 2018 respectively.

21. Capital disclosures

	2019			2018
Warrant liability	$	-		$	157
Finance lease obligations		-			818
Lease liabilities		38,237			-
Long-term debt		8,834			125,804
Total equity (deficiency)		94,934			(63,146	)
Cash and cash equivalents		(61,285	)		(7,389	)
Total capital	$	80,720		$	56,244

The Company’s objective in managing capital is to ensure sufficient liquidity to finance its research and development activities, administration, selling and marketing expenses, working capital and overall expenditures on capital and intangible assets. The Company makes every effort to manage its liquidity to minimize dilution to its shareholders, whenever possible. The Company is subject to one externally imposed capital requirement (note 16) and the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2018.

22. Revenues from continuing operations

	2019		2018		2017
Revenues from the sale of goods	$	4,734	$	23,874	$	1,469
Milestone and licensing revenues		-		-		19,724
Revenues from the rendering of services		34		260		120
Rental revenue		136		499		1,000
	$	4,904	$	24,633	$	22,313

All the rental revenues are generated from subleasing right-of-use assets.

F-49

In August 2017, the Company entered into a licensing agreement with a third-party in China and as a result, milestone and licensing revenues of $19,724 were recorded during the third quarter of 2017. The third party having not remitted funds associated with the license fee and initial milestone payment within the specified payment terms was consequently in breach of the agreement. As a result, the Company was in a position to exercise its contractual rights and opted to terminate the agreement in March 2018 thereby returning all the rights previously conferred under the license agreement back to Liminal. The Company wrote-off the accounts receivable to bad debt expense as at December 31, 2017 (note 32b).

23. Supplemental information regarding the consolidated statements of operations

Year ended December 31	2019			2018			2017
a) Government assistance included in research and development
Gross research and development expenses	$	75,686		$	94,841		$	101,946
Research and development tax credits		(572	)		(3,175	)		(1,554	)
	$	75,114		$	91,666		$	100,392
b) Finance costs
Interest accretion on long-term debt	$	7,874		$	18,856		$	7,686
Amortization of fees for Credit Facility		10			2,625			208
Other interest expense, transaction and bank fees		594			886			384
Interest expense on lease liabilities		7,068			-			-
Interest income		(753	)		(307	)		(313	)
	$	14,793		$	22,060		$	7,965
c) Employee compensation expense
Wages and salaries	$	48,846		$	46,775		$	44,211
Employer's benefits		8,263			8,377			8,556
Share-based payments expense		22,030			6,722			8,662
	$	79,139		$	61,874		$	61,429

24. Pension Plan

The Company maintains a defined contribution pension plan for its permanent employees. The Company matches the contributions made by employees who elect to participate in the plan up to a maximum percentage of their annual salary. The Company’s contributions recognized as an expense for the year ended December 31, 2019 amounted to $1,495 ($1,635 and $1,596 for the years ended December 31, 2018 and 2017 respectively).

25. Impairment losses

	2019		2018
Intangible assets (note 11)	$	5,296	$	142,609
Capital assets (note 9)		7,070		5,689
Option to purchase equipment		-		653
Investment in an associate (note 12)		-		1,182
Deferred revenue		-		(181	)
	$	12,366	$	149,952

There were no impairment losses in 2017.

F-50

2019

During the year, the Company, headed by its new Chief Executive Officer, or CEO, has been evaluating its intellectual property and the related market opportunities in the context of the Company’s financial situation and has made further decisions about the areas the Company will or will not pursue.

One of these decisions is to no longer pursue further indications relating to the human-plasma protein plasminogen. As such, the Company decided it would retain sufficient staff to complete and resubmit a Biological License Application (“BLA”) for congenital plasminogen deficiency and to build ongoing manufacturing supply, but then it would cease all R&D activities in the plasma-derived therapeutics segment not relating to Ryplazim^®. Because of this, the Company’s long-term production forecasts for plasminogen were reduced and it was decided that one of its planned manufacturing facilities and a technical transfer facility would no longer be required. The Company also intends to close its R&D facility in Rockville, MD by the end of 2020. Consequently, the capital and intangible assets in the Plasma-derived therapeutics segment that were no longer to be used as originally planned were reviewed for impairment and written-down to their net recoverable value determined as the fair value less cost of disposal using a market approach. The Company assessed the resale value of the property, plant and equipment, the licenses and patents, in their present condition, less cost of disposal and consequently, recorded an impairment of $7,070 and $4,535 on capital assets and intangible assets for the year ended December 31, 2019.

In reviewing its portfolio of compounds in the Small molecule therapeutics segment, the Company identified compounds that where not within the areas of fibrosis on which it intends to focus and evaluated the net recoverable value of those related patents as $nil, determined as the fair value less cost of disposal using a market approach. An impairment on intangible assets of $634 was recognized for the year ended December 31, 2019.

As a result of the bioseparations business sale, some intellectual property including patents retained by the company are no longer expected to be developed. The company evaluated the net recoverable value of those patents is $nil, using a fair value less cost of disposal using a market approach. An impairment on intangible assets of $127 was recognized for the year ended December 31, 2019.

2018

As a result of various events affecting the Company during 2018, including; 1) the delay of the commercial launch of Ryplazim^® following the identification by the FDA of a number of changes required in the Chemistry, Manufacturing and Controls (“CMC”) section of the BLA submission for congenital plasminogen deficiency, 2) the Company’s limited financial resources since the fourth quarter of 2018, which significantly delayed manufacturing expansion plans and resulted in the Company focusing its resources on the resubmission of the Ryplazim^® BLA; 3) the recognition of the larger than anticipated commercial opportunities for Ryplazim^®, and 4) the change in executive leadership in December 2018, the Company modified its strategic plans during the fourth quarter to focus all available plasma-derived therapeutic segment resources on the manufacturing and development of Ryplazim^®, for the treatment of congenital plasminogen deficiency and other indications.

These changes and their various impacts prompted Management to perform an impairment test of the IVIG cash generating unit, which includes assets such as the licenses held by NantPro and Prometic Biotherapeutics inc. amongst others, manufacturing equipment located at its Canadian manufacturing facilities and the CMO facility at December 31, 2018, and to review whether other assets pertaining to follow-on proteins might be impaired.

In regards to the IVIG CGU, the substantial work, time and investment required to complete a robust CMC package for IVIG prior to the BLA filing, the limited resources available to complete the CMC section and the reduction of the forecasted IVIG production capacity at all plants will significantly delay the commercialisation of IVIG compared to previous timelines and as a result, cash inflows beginning beyond 2023 were not considered in the determination of the value in use due to the inherent uncertainty in forecasting cash flows beyond a five year period. As a result, the value in use for the IVIG CGU was $nil. Management also evaluated the fair value less cost to sell and determined that this value would also approximate $nil.

F-51

Consequently, impairment losses for the carrying amounts of the NantPro license and a second license acquired in January 2018, giving the rights to use IVIG clinical data and the design plans for a plant with a production capacity in excess of current needs, of $141,025 and $1,584, respectively, were recorded.

The Company acquired an option to purchase equipment located in Europe in January 2018 whose purchase was settled by the issuance of common shares as described in note 19a. An impairment was subsequently recorded on the option to purchase equipment in the amount of $653 since the likelihood of exercising this option is low in view of the current manufacturing and production plans.

Finally, an impairment of $5,689 was recorded on IVIG production equipment, to reduce its value to the fair value less cost to sell. When performing the impairment test in the previous year, a pre-tax discount rate of 17.33% was used to calculate the value in use at November 30, 2017 equivalent to a post-tax discount rate of 11.87%.

Management also reviewed the carrying amount of its investment in ProThera, as this represents an investment in follow-on proteins the Company had acquired, since the resources for further advancement of these assets are currently limited due to the focus on Ryplazim^®.

The uncertainty of future cash flows for product candidates that have not yet commenced phase 1 trials was an important consideration is making these estimates. As a result, the Company recorded an impairment on its investment in an associate of $1,182 and the fair value of the investment in convertible debt was also reduced to $nil. The value in use and the fair value less cost to sell of the investment in an associate were estimated to approximate $nil, as was the fair value of the convertible debt.

Of the impairment losses recognized for the year ended December 31, 2018, $148,770 pertain to the plasma-derived therapeutics segment. The remainder of the impairment losses recognized did not belong to any segment.

26. Income taxes

The income tax recovery reported in the consolidated statement of operations for the years ended December 31, 2019, 2018 and 2017 are as follows:

	2019			2018			2017
Current income taxes	$	(348	)	$	(5,822	)	$	(2,691	)
Deferred income taxes		111			(13,815	)		(11,611	)
Income tax recovery from continuing operations		(237	)		(19,637	)		(14,302	)
Income taxes from discontinued operations (note 5)		41			(382	)		(450	)
Total income tax recovery	$	(196	)	$	(20,019	)	$	(14,752	)

F-52

The following table provides a reconciliation of the income tax recovery calculated at the combined statutory income tax rate to the income tax recovery for both continuing and discontinued operations, recognized in the consolidated statements of operations:

	2019			2018			2017
Net loss before tax from continuing operations	$	(234,461	)	$	(259,465	)	$	(136,252	)
Net income before tax from discontinued operations		27,512			1,550			1,464
Combined Canadian statutory income tax rate		26.6	%		26.7	%		26.8	%
Income tax at combined income tax rate		(55,048	)		(68,863	)		(36,123	)
Increase (decrease) in income taxes resulting from:
Unrecorded potential tax benefit arising from current-period losses    and other deductible temporary differences		31,962			29,693			35,568
Effect of tax rate differences in foreign subsidiaries		4,989			4,481			(2,513	)
Non-deductible or taxable items		(696	)		6,074			(1,132	)
Change in tax rate		1,609			242			(6,175	)
Write off of previously recognized tax losses		-			22,415			-
Non-deductible loss (taxable gain) on debt renegociation		24,572			(8,784	)		-
Recognition of previous years unrecognized deferred tax assets		-			-			(1,221	)
Research and development tax credit		(740	)		(5,072	)		(4,193	)
Foreign withholding tax		-			-			1,039
Non-taxable gain on disposition of subsidiary (note 5)		(6,903	)		-			-
Other		59			(205	)		(2	)
Income tax recovery	$	(196	)	$	(20,019	)	$	(14,752	)

The following table presents the nature of the deferred tax assets and liabilities that make up the deferred tax assets and deferred tax liabilities balance at December 31, 2019 and 2018.

	Intangible assets			R&D expenses			Losses			Other			Total
As at January 1, 2018     Deferred tax liabilities	$	27,481		$	(938	)	$	(12,160	)	$	21		$	14,404
Charged (credited) to profit or loss		(27,481	)		320			13,356			(9	)		(13,814	)
Charged (credited) to profit and loss    (foreign exchange)		-			-			(1,196	)		-			(1,196	)
As at December 31, 2018    Deferred tax assets	$	-		$	(618	)	$	-		$	12		$	(606	)
Charged (credited) to profit and loss		-			111			-			(24	)		87
Derecognized - discontinued operations (note 5)		-			-			-			12			12
As at December 31, 2019    - Deferred tax assets	$	-		$	(507	)	$	-			-		$	(507	)

F-53

Available temporary differences not recognized at December 31, 2019 and 2018 are as follows:

	2019		2018
Tax losses (non-capital)	$	416,816	$	461,123
Tax losses (capital)		-		36,951
Unused research and development expenses		115,491		86,255
Undeducted financing expenses		21,258		19,007
Interest expenses carried forward		5,358		7,433
Trade and other payable		4,022		1,579
Capital assets		4,673		1,753
Intangible assets		81,899		88,980
Start-up expense		4,569		4,290
Unrealized loss on exchange rate		6,612		-
Other		938		1,252
	$	661,636	$	708,623

At December 31, 2019, the Company has non-capital losses of $425,592 of which $416,816 are available to reduce future taxable income for which the benefits have not been recognized. These losses expire at various dates from 2027 to 2039 (except for the non-capital losses in the U.K. and U.S. losses that arose after 2017 which do not expire). The Company had capital losses of $36,951 which are no longer available since the refinancing transaction of April 23, 2019. At December 31, 2019, the Company also has unused research and development expenses of $117,403 of which $115,491 are available to reduce future taxable income for which the benefits have not been recognized. These deductible expenses can be carried forward indefinitely.

At December 31, 2019, the Company also had unused federal tax credits available to reduce future income tax in the amount of $10,800 expiring between 2023 and 2039. Those credits have not been recorded and no deferred income tax assets have been recognized in respect to those tax credits. Credits in an amount of $1,268 was recorded in the current taxation year to shelter an income tax expense for prior taxation years as well as the current year.

The unused non-capital losses expire as indicated in the table below:

	Canada				Foreign
At December 31, 2019	Federal		Provincial		Countries
Losses carried forward expiring in:
2027	$	3,510	$	3,495	$	4,877
2028		-		-		5,645
2029		76		76		2,716
2030		977		977		5,487
2031		855		855		6,518
2032		4,215		3,975		-
2033		8,761		8,261		-
2034		9,156		10,667		2,592
2035		30,273		22,668		13,368
2036		25,800		25,695		23,799
2037		36,165		36,156		32,763
2038		24,109		24,128		-
2039		38,591		38,589		-
	$	182,488	$	175,542	$	97,765
Not expiring - UK		-		-		94,805
Not expiring - US (post 2017)		-		-		50,538
	$	182,488	$	175,542	$	243,108

F-54

As a result of the discontinued operations, UK tax losses in an amount of $28,427 are no longer available to theCompany.

As a result of the conversion of the parent's debt into Liminal shares on April 23, 2019, more than 50% of the issued shares of Liminal were owned by a single shareholder at December 31, 2019. US tax rules impose restrictions that will impact how $246,708 of losses are available to shelter income in future taxation years. As a result of the US restrictions, approximately $114,283 of losses will no longer be available to the Company and are not presented in the available tax loss table presented above. The utilization of the remainder of the Company’s available U.S. tax losses included under foreign tax loss carryforwards above are subject to restrictions, and management is evaluating strategies to be able to benefit from them. The Company has $15,820 of U.S. tax loss carryforwards which arose after April 23, 2019 not subject to these limitations. A deferred tax asset has not been recognized for any loss carryforwards at December 31, 2019.   

27. Basic and diluted earnings per share

The Company presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for any bonus element.

The numbers for the average basic and diluted shares outstanding for all the periods presented in the consolidated statements of operations have been adjusted in order to reflect the effect of the bonus element of the Rights Offering that occurred in June 2019 and the share consolidation that took place on July 5, 2019 (note 19).

28. Segmented information

The Company has two operating segments at December 31, 2019 which are the small molecule therapeutics segment, and the plasma-derived therapeutics segment. In previous financial statements, the Company also presented results for the bioseparations segment but since the sale of the bioseparation business on November 25, 2019 (note 5), those operations are presented as discontinued operations in the consolidated statements of operations. Prior periods have been restated to present the existing segments at the reporting date.

Small molecule therapeutics: The segment is a small molecule drug discovery platform focused on discovering, developing and commercializing novel treatments for patients suffering from diseases related to fibrosis, including conditions of the lung, liver and kidney that have high unmet medical need. Our lead small product candidate, fezagepras (PBI 4050), is currently being developed for the treatment of respiratory diseases and for the treatment of Alström Syndrome.

Plasma-derived therapeutics: The segment develops manufacturing processes, based on Liminal’s own affinity chromatography technology, to provide efficient extraction and purification of therapeutic proteins from human plasma, the Plasma Protein Purification System (PPPSTM), a multi-product sequential purification process. With respect to this second platform, the Company is focused on the development of its plasma-derived product candidate Ryplazim^® (plasminogen) (“Ryplazim^®”).

The reconciliation to the consolidated statement of operations column includes the elimination of intercompany transactions between the segments and the remaining activities not included in the above segments. These expenses generally pertain to public entity reporting obligations, investor relations, financing and other corporate office activities.

The accounting policies of the segments are the same as the accounting policies of the Company. The operating segments results include intercompany transactions between the segments which are done in a manner similar to transactions with third parties.

F-55

a) Revenues and expenses by operating segments:

For the year ended December 31, 2019	Small molecule therapeutics			Plasma- derived therapeutics			Reconciliation to statement of operations			Total
Revenues	$	34		$	4,736		$	134		$	4,904
Cost of sales and other production expenses		-			2,633			130			2,763
Manufacturing and purchase cost of product    candidates used for R&D activities		132			37,107			(195	)		37,044
R&D - Other expenses		15,419			22,366			285			38,070
Administration, selling and marketing expenses		4,709			8,368			32,206			45,283
Segment loss	$	(20,226	)	$	(65,738	)	$	(32,292	)	$	(118,256	)
Gain on foreign exchange											(1,451	)
Finance costs											14,056
Loss on extinguishments of liabilities											92,374
Change in fair value of financial instruments    measured at fair value through profit or loss											(1,140	)
Impairment loss											12,366
Net loss before income taxes from continuing    operations										$	(234,461	)
Other information
Depreciation and amortization	$	779		$	7,400		$	679		$	8,858
Share-based payment expense		4,782			4,390			12,369			21,541

For the year ended December 31, 2018	Small molecule therapeutics			Plasma- derived therapeutics			Reconciliation to statement of operations			Total
Revenues	$	-		$	24,521		$	112		$	24,633
Cost of sales and other production expenses		-			25,297			410			25,707
Manufacturing and purchase cost of product    candidates used for R&D activities		1,692			37,107			(132	)		38,667
R&D - Other expenses		14,234			31,727			230			46,191
Administration, selling and marketing expenses		3,522			10,393			15,533			29,448
Segment loss	$	(19,448	)	$	(80,003	)	$	(15,929	)	$	(115,380	)
Loss on foreign exchange											4,696
Finance costs											22,041
Gain on extinguishments of liabilities											(33,626	)
Share of losses of an associate											22
Impairment losses											149,952
Change in fair value of financial instruments    measured at fair value through profit or loss											1,000
Net loss before income taxes from continuing    operations										$	(259,465	)
Other information
Depreciation and amortization	$	480		$	3,644		$	415		$	4,539
Share-based payment expense		1,270			1,524			3,606			6,400

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For the year ended December 31, 2017	Small molecule therapeutics			Plasma- derived therapeutics			Reconciliation to statement of operations			Total
Revenues	$	19,724		$	2,529		$	60		$	22,313
Cost of sales and other production expenses		-			4,014			(325	)		3,689
Manufacturing and purchase cost of product    candidates used for R&D activities		1,755			32,764			184			34,703
R&D - Other expenses		17,426			40,963			431			58,820
Administration, selling and marketing expenses		3,669			13,488			12,406			29,563
Bad debt expense		20,491			-			-			20,491
Segment loss	$	(23,617	)	$	(88,700	)	$	(12,636	)	$	(124,953	)
Loss (gain) on foreign exchange											(781	)
Finance costs											7,889
Loss (gain) on extinguishments of liabilities											4,191
Net loss before income taxes from continuing    operations										$	(136,252	)
Other information
Depreciation and amortization	$	428		$	2,880		$	361		$	3,669
Share-based payment expense		1,509			2,269			4,490			8,268

Information by geographic area

b) Capital, intangible and right-of-use assets by geographic area

	2019		2018
Canada	$	48,309	$	27,647
United States		3,141		19,287
United Kingdom		17,121		13,982
	$	68,571	$	60,916

c) Revenues by location from continuing operations

	2019		2018		2017
United States	$	3,023	$	22,854	$	120
Canada		1,881		1,519		2,469
China		-		-		19,724
Norway		-		260		-
	$	4,904	$	24,633	$	22,313

Revenues are attributed to countries based on the location of customers.

The Company derives significant revenues from certain customers. During the year ended December 31, 2019, there were two customers in the Plasma-derived therapeutics segment who accounted for 97% (62% and 35% respectively) of total revenue from continuing operations. For the year ended December 31, 2018, there were two customers in the Plasma-derived therapeutics segment who accounted for 93% (57% and 36% respectively) of total revenues for continuing operations. For the year ended December 31, 2017, there was one customer in the Small molecule therapeutics segment that accounted for 88% of total revenues from continuing operations.

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29. Related party transactions

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Company and other related parties are disclosed below and in other notes accordingly to the nature of the transactions. These transactions have been recorded at the exchange amount, meaning the amount agreed to between the parties.

Following the debt modification on November 14, 2018, the Company assessed whether SALP, the holder of the debt, had gained significant influence for accounting purposes, despite holding less than 20% of voting rights. The Company deemed that qualitative factors were significant enough to conclude that the holder of the debt had gained significant influence over the Company and had become a related party. SALP subsequently became Liminal’s parent Company following the debt restructuring completed on April 23, 2019.

All material transactions with SALP are disclosed in notes 15, 16, and 18a where the transactions are disclosed and otherwise in this note.

2019

The former CEO had a share purchase loan outstanding in the amount of $400 at December 31, 2018. The loan bore interest at prime plus 1% and had a maturity date of the earlier of (i) March 31, 2019 or (ii) 30 days preceding a targeted Nasdaq or New York Stock Exchange listing date of Liminal’s shares. As part of the settlement agreement concluded in April 2019 with the former CEO of the Company, common shares held in escrow as security for a share purchase loan of $400 to the former CEO were released and the loan extinguished in exchange for the receipt of a payment of $137, representing the fair value of the shares at the time of the settlement.

During the year ended December 31, 2019 the Company paid interest on the loan with its parent, SALP, in the amount of $7,831. The Company also recorded professional fee expenses, incurred by the parent and recharged to the Company, during the year ended December 31, 3019 of $469, all of which were paid as of December 31, 2019.

On November 11, 2019, the Company and SALP amended the April 23, 2019 loan agreement to include a non-revolving line of credit (“LOC”) with a limit of up to $75.0 million, bearing a stated interest of 10%, payable quarterly, and maturing on April 23, 2024. The LOC limit available to draw upon will be automatically reduced by the amounts of net proceeds generated, upon the occurrence of all or any of the following transactions; the sale of the bioseparations operations, a licensing transaction for its product candidate Ryplazim^® or equity raises. The Company’s ability to draw on the LOC expires May 11, 2021. As at December 31, 2019 following the sale of the bioseparations operations, the amount available to be drawn on the LOC is $30,298, of which $nil has been drawn as at December 31, 2019. As at March 19, 2020, following the receipt of additional payment for the sales of the bioseparations operations, the amount available to be drawn was reduced to $29,123.

During the year ended December 31, 2019 the Company recorded $47 of research and development expenses, relating to a consulting service agreement signed with one of its directors in 2019 of which $37 remains payable as at December 31, 2019.

2018

During the year ended December 31, 2018, the Company earned interest revenues on the share purchase loan in the amount of $19 and at December 31, 2018, the unpaid interest was $31.

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30. Compensation of key management personnel

The Company’s key management personnel comprise the external directors, officers and executives which included 28 individuals in 2019, 25 individuals in 2018 and 24 individuals in 2017. The remuneration of the key management personnel during the years ended December 31, 2019, 2018 and 2017 was as follows:

	2019		2018		2017
Current employee benefits1)	$	10,083	$	5,953	$	7,750
Pension costs		267		268		293
Share-based payments		16,842		3,685		6,515
Termination benefits		2,919		3,651		-
	$	30,111	$	13,557	$	14,558

¹⁾ Current employee benefits include salaries, bonuses, other employee benefits other than those listed in the table and director fees paid in cash.

31. Commitments

Royalties

SALP has a right to receive a 2% royalty on future revenues relating to patents existing as of the date of the agreement of PBI-1402 and analogues, including PBI-4050. The obligation under this royalty agreement is secured by all the assets of the Company until the expiry of the last patent anticipated in 2033.

In the normal course of business, the Company enters into license agreements for the market launching or commercialization of products. Under these licenses, including the ones mentioned above, the Company has committed to pay royalties ranging generally between 0.5% and 12.0% of net sales from products it commercializes and 3% of license revenues in regard to certain small molecule product candidates.

Other commitments

The Company signed a long-term manufacturing contract with a third party which provides the Company with additional manufacturing capacity (the “CMO contract”). In connection with this CMO contract, the Company has committed to a minimum annual spending of $7,000 for 2020 and $9,000  for 2021 to 2030 (the end of the initial term) which includes all expenditures under the contract. As of December 31, 2019, the remaining payment under the CMO contract was $98,921 or $48,734 after deduction of the minimum lease payments under the CMO contract recognized in the consolidated financial statements as a lease liability following the adoption of IFRS 16 (note 14). As at December 31, 2019, total commitment remaining under the CMO agreement that are not recognized in the lease liability are as follows:

	Within 1 year		2 - 5 years		Later than 5 years		Total
CMO operating expense commitment	$	3,464	$	20,761	$	24,509	$	48,734

F-59

The Company has entered into multiple plasma purchase agreements whereby it has committed to purchase varying volumes of plasma until December 31, 2022. As at December 31, 2019, the future purchase commitments are as follows:

2020	$	4,816
2021		14,604
2022		4,920
	$	24,340

32. Financial instruments and financial risk management

a)Fair value

The fair values of financial assets and financial liabilities for which fair value disclosure is required, together with the carrying amounts included in the statement of financial position, are as follows:

			2019				2018
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
Financial liabilities
Royalty payment obligation	$	3,148	$	3,148	$	3,077	$	2,685
License acquisition payment obligations		1,302		1,302		2,726		2,492
Long-term debt		8,834		8,834		125,804		112,914

The fair value of financial liabilities at December 31, 2019 was calculated using a discounted cash flow model via the market interest rate specific to the term of the debt instruments ranging from 8.83% to 15.05% (14.43% to 21.94% at December 31, 2018).

The fair value on the tax credits receivable approximated the carrying amount since the amounts recoverable are re-assessed each reporting period, with any variations recognized in the consolidated statement of operations.  

Fair value hierarchy

Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – valuation based on quoted prices observed in active markets for identical assets or liabilities.

Level 2 – valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – valuation techniques with significant unobservable market inputs.

A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

Cash, cash equivalents, and restricted cash are considered to be level 1 fair value measurements.

The long-term receivables, royalty payment obligation, license acquisition payment obligations, and long-term debt are level 2 measurements.

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The investment in convertible debt and the warrant liability are considered to be a level 3 measurements. Further discussion regarding assumptions used in determining their fair values are discussed in notes 15 and 25 respectively.

b)Financial risk management

The Company has exposure to credit risk, liquidity risk and market risk. The Company’s Board of Directors has the overall responsibility for the oversight of these risks and reviews the Company’s policies on an ongoing basis to ensure that these risks are appropriately managed.

Credit risk:

Credit risk is the risk of financial loss to the Company if a customer, partner or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s cash, investments, receivables and share purchase loan to a former officer. The carrying amount of the financial assets represents the maximum credit exposure.

The Company mitigates credit risk through its reviews of new customer’s credit history before extending credit and conducts regular reviews of its existing customers’ credit performance. We evaluate at each reporting period, the lifetime expected credit losses on our accounts receivable balances based on the age of the receivable, credit history of the customers and past collection experience.

Following the sale of its bioseparations business, the Company has limited product sales from its plasma-derived therapeutics segment and has such the Company’s exposure to customer credit risk is limited.

In August 2017, the Company entered into a licensing agreement with a third-party in China and as a result, milestone and licensing revenues of $19,724 were recorded during the third quarter. The third party having not remitted funds associated with the license fee and initial milestone payment within the specified payment terms was consequently in breach of the agreement. As a result, the Company was in a position to exercise its contractual rights and opted to terminate the agreement in March 2018 thereby returning all the rights previously conferred under the license agreement back to Liminal. The Company wrote-off the accounts receivable of $18,518 to bad debt expense and reversed the withholding taxes of $1,972 that was expected to be paid on this transaction as at December 31, 2017. The difference between the amount of revenue recognized and the bad debt amount is the withholding taxes that were recorded in deduction of the accounts receivable and the effect of the change in the CAD/£ exchange rate on the accounts receivable.

Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasts and actual cash flows. The Company’s current liquidity situation is discussed in note 1.

F-61

The following table presents the contractual maturities of the financial liabilities as of December 31, 2019:

			Contractual Cash flows
	Carrying amount		Payable within 1 year		1 - 4 years		5 years		Later than 5 years		Total
Accounts payable and accrued    liabilities 1)	$	22,808	$	22,808	$	-	$	-	$	-	$	22,808
Long-term portion of royalty    payment obligations		105		-		78		26		254		358
Lease liabilities		38,237		8,901		23,630		6,723		37,658		76,912
Long-term portion of other    employee benefit liabilities		180		-		180		-		-		180
Long-term debt 2)		8,834		1,176		3,025		10,314		-		14,515
	$	70,164	$	32,885	$	26,913	$	17,063	$	37,912	$	114,773

¹⁾ Short term portions of the royalty payment obligations and of other employee benefit liabilities are included in the account payable and accrued liabilities.

²⁾ Under the terms of the Loan with the parent (note 16), the holder of Warrants #10 may decide to cancel a portion of the principal value of the loan as payment upon the exercise of these warrants. The maximum repayment due on the loan has been included in the above table.

Market risk:

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company’s income or the value of its financial instruments.

i)Interest risk

The Company’s interest-bearing financial liabilities have fixed rates and as such, there is limited exposure to changes in interest payments as a result of interest rate risk.

ii)Foreign exchange risk:

The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company has operations in the U.S. and the U.K., and previously had operations in the Isle of Man (discontinued operations) and a portion of its expenses incurred are in U.S. dollars and in pounds sterling (£). Historically, the majority of the Company’s revenues have been in U.S. dollars and in £, continuing operations revenues are in U.S. dollars, which serve to mitigate a portion of the foreign exchange risk relating to the expenditures. Financial instruments that have exposed the Company to foreign exchange risk have been cash and cash equivalents, short-term investments, receivables, trade and other payables, lease liabilities, licence payment obligations and the amounts drawn on the credit facility. The Company manages foreign exchange risk by holding foreign currencies it received to support forecasted cash outflows in foreign currencies.

F-62

As at December 31, 2019 and 2018, the Company’s net exposure to currency risk through assets and liabilities denominated respectively in U.S. dollars and £ was as follows:

	2019						2018
	Amount			Equivalent in			Amount			Equivalent in
Exposure in US dollars	in U.S. dollar			full CDNdollar			in U.S, dollar			full CDN dollar
Cash and cash equivalents		26,032,017			33,883,273			2,600,253			3,544,145
Accounts receivable		159,604			207,741			2,718,508			3,705,326
Other long-term assets		45,428			59,129			51,127			69,686
Accounts payable and accrued liabilities		(7,209,564	)		(9,383,969	)		(9,006,635	)		(12,276,044	)
Lease liabilities		(22,426,384	)		(29,140,152	)		-			-
Other long-term liabilities		-			-			(3,126,476	)		(4,261,387	)
Finance lease obligations		-			-			(600,674	)		(818,719	)
Long-term debt		-			-			(81,601,614	)		(111,223,000	)
Net exposure		(3,398,899	)		(4,373,978	)		(88,965,511	)		(121,259,993	)

	2019						2018
	Amount			Equivalent in			Amount			Equivalent in
Exposure in pounds (£)	in £			full CDN dollar			in £			full CDN dollar
Cash and cash equivalents		279,840			480,233			729,732			1,266,596
Accounts receivable		713,078			1,223,713			6,837,168			11,867,272
Income tax receivable		5,369,467			9,214,542			-			-
Accounts payable and accrued liabilities		(971,763	)		(1,667,642	)		(1,535,107	)		(2,664,485	)
Lease liabilities		(350,783	)		(601,979	)		-			-
Net exposure		5,039,839			8,648,867			6,031,793			10,469,383

Based on the above net exposures as at December 31, 2019, and assuming that all other variables remain constant, a 10 % depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in a decrease or an increase of the consolidated net loss of approximately $437 while a 10 % depreciation or appreciation of the Canadian dollar against the £ would result in a decrease or an increase of the total comprehensive loss of approximately $865. The Company has not hedged its exposure to currency fluctuations.

33. Subsequent events

Consistent with its strategy to limit its involvement in the plasma-derived therapeutics segment to the development of Ryplazim^®, the Company decided to close its R&D facility in Rockville, MD by the end of the year and made the announcement to the employees during the first quarter of 2020. As a result of this decision, the Company will be recognizing, during the service period in 2020, an expense of approximately $1,952 (US$1.5 million) in the consolidated statement of operations representing the maximum termination benefits it has committed to pay the employees. In connection with this closure, the Company also recognized impairments on its capital assets related to this facility in 2019 (note 25).

On January 29, 2020, the Company issued 96,833 common shares as a consideration for the final payment for the licence acquired on January 29, 2018 (note 11).

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