Table of Contents. About Gemini MANAGEMENT S DISCUSSION & ANALYSIS (MD&A) Q1, 2017

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1 Q Report

2 MANAGEMENT S DISCUSSION & ANALYSIS (MD&A) Q1, 2017 Table of Contents About Gemini...1 First Quarter 2017 Results...2 Operations Review and Outlook...3 Quarterly Financial Information...3 Liquidity and Capital Resources...4 Financial Instruments and Business Risks...4 Business Risks and Critical Success Factors...5 Accounting Policy Changes...5 Critical Accounting Estimates...6 Non-IFRS Measures...7 Forward-Looking Information...8 The following management s discussion and analysis ( MD&A ) of the financial position and results of operations of Gemini Corporation ( Gemini or the Company ) has been prepared by Management and reviewed and approved by the Board of Directors of Gemini on May 25, The discussion and analysis is a review of the financial results of the Company prepared in accordance with International Accounting Standard ( IAS ) 34 Interim Financial Reporting as issued by the International Accounting Standards Board ( IASB ), which is within the framework of International Financial Reporting Standards ( IFRS ), which are also generally accepted accounting principles ( GAAP ) for publicly accountable enterprises in Canada. The MD&A s primary focus is a comparison of the financial performance for the three months ended March 31, 2017 to the three months ended March 31, 2016 and should be read in conjunction with the Company s annual audited consolidated financial statements and notes thereto for the years ended December 31, 2016 and 2015 ( Consolidated Financial Statements ). All amounts are presented in Canadian dollars, unless otherwise stated and all tabular amounts are in thousands of Canadian dollars, except share amounts or as otherwise noted. Certain comparative figures have been reclassified to conform to the MD&A presentation adopted for the current year. About Gemini Gemini operates as an integrated project solutions company focused on energy and industrial facilities. Gemini offers services on either a stand-alone basis or in combination, integrated to provide our clients with a single point of accountability. The Company is pleased to be celebrating its 35 th anniversary in Shares of Gemini trade on the TSX Venture Exchange under the symbol GKX. Through an all-in commitment from every individual in the Company, Gemini is determined to change and enhance the client perspective of how projects should be delivered. The Company is uniquely qualified to provide a full spectrum of modular and integrated project solutions, leveraging a philosophy and approach that directly aligns with its clients business objectives. Effective January 1, 2017, in conjunction with internal reorganizations and restructuring, the Company revised the way it monitors results which is based on delivering projects. The Company is capable of servicing its clients by delivering a single or multiple projects throughout the full life cycle of their assets: from asset acquisition, GEMINI CORPORATION 2017 Q1 REPORT /1

3 environmental and regulatory support, engineering, fabrication, construction, maintenance, turnarounds, decommissioning, reclamation and remediation. Tradespeople, professional engineers, environmental scientists and other technical staff are able to work independently or as part of an integrated project team to provide our clients with cost-effective solutions based on their unique project requirements. Gemini provides full project management to integrate any or all of our services. The Company s principal target markets are in the oil and gas sector, including heavy oil, oil sands, midstream and pipeline facilities, hydrocarbon processing, as well as power and other industrial sectors. The Company operates in western Canada and is headquartered in Calgary with offices in Ponoka and Fort Saskatchewan, Alberta and Fort St. John, British Columbia. The Ponoka fabrication facility is a 50 acre site suited to delivering approximately 240 modules/year (capable of standing 100 modules) with fabrication capacity to produce over 3,000 tonnes/year and over 650,000 diameter inches of pipe welding annually. This location also houses a paint booth capable of handling a full size Alberta modules on trailer for blasting and various coatings including paint and fireproofing. The Fort Saskatchewan facility is capable of producing an additional 30 modules per year on its 3.5 acre site. From the Fort St. John office, Gemini delivers environmental field services throughout northeast British Columbia and northwest Alberta to complement the environmental and regulatory services delivered out of the Calgary office. First Quarter 2017 Results Revenue ($ millions) Adjusted EBITDA ($ Gross Profit ($ millions) 2.7 millions) Q Q Q (0.8) (1.0) Net Loss ($ millions) Q Q Q Q Q Q Financial and Operational Highlights (2.6) Q Q Q (0.5) For the three months ended March 31, 2017, Gemini recorded revenue of $6.7 million, a decline of 78% or $30.8 million from the same period in The Ponoka fabrication facility was inactive during the first quarter due to lack of significant projects, compared to the same period last year where modules were being constructed related to the Alberta Northwest Upgrader and Fort Hills projects. Adjusted EBITDA for the three months ended March 31, 2017 was a loss of $2.6 million, compared to a loss of $0.8 million in the first quarter of Administrative expenses for the quarter decreased by $0.9 million, a reduction of 27% compared to the same period in This reduction is a result of significant cost cutting measures and restructuring undertaken in 2016, the impact of which are now being realized. Cash flow from operations was $0.5 million for the quarter. By comparison, Gemini s operations used $3.0 million of cash during the same period in Gemini ended the quarter with $1.8 million cash, up slightly from the year end cash balance of $1.6 million. On March 30, 2017, the Company signed a term sheet for a two year committed senior secured revolving credit facility of up to $14 million plus an accordion feature for an additional $4 million as needed. The new credit facility was finalized and put in place effective May 25, The Company completed a corporate amalgamation effective April 1, The amalgamation allows for the simplification of back office processes and realization of future cost savings and operating efficiencies. (1.8) (1.5) (2.7) GEMINI CORPORATION 2017 Q1 REPORT /2

4 Operations Review and Outlook The Company and industry adjusted to the reduced activity levels in 2016 and now Gemini is working to grow cash flow, personnel, project quality and capability, while competing fiercely for new business. The industry optimism that existed at the beginning of the year, based on improved economic activity, an increase in capital budgets and improved energy prices, has now given way to the sober realization that 2017 is recovering slower than anticipated. Today, the Company finds itself dealing with an environment where the lowest cost is the primary consideration when awarding new work. Requests for proposals and bidding activity remains high, however, the Company found it challenging to secure new work at profitable levels in the first quarter of the year, despite positive feedback on technical submissions and execution strategies. Having strengthened the balance sheet and secured a new credit facility, the Company will continue to balance the desire for work volume with a cautious risk management approach that seeks to avoid exposing the Company to financial loss by bidding unprofitable or excessively risky projects. Gemini continues to focus on business development, rigorous estimating and controls, operational excellence and execution processes to find innovative ways to bring value to clients and secure new backlog. Interestingly, many of the proposals and requests for pricing are also associated with work not expected to commence until 2018 as clients attempt to lock in today s low prices for next year s work. The Company is now expecting revenue for 2017 to be less than 2016, however, we expect activity to pick up during the second half of Gemini s fabrication shop in Ponoka has recently started to ramp up activity with key long-term customers. Environmental and maintenance services are also seeing increased activity, while construction activity levels in the Fort Saskatchewan region remain challenging. The Company experienced a higher than normal level of attrition in the first five months of 2017 and has decided to defer the replacement of all non-essential positions until backlog levels improve. On an annualized basis, approximately $2.1 million of salary costs have been eliminated through attrition and we expect to realize further savings in the second quarter. Processes have also been established to ramp back up quickly as necessary. The Company is confident that the quality and dedication of Gemini s personnel are best of class and our accessibility to the local workforce will allow us to bring on new personnel as required. While the economic environment for Gemini remains highly competitive, the Company continues to have confidence in the teams ability to secure new work with reasonable margins while maintaining the excellent execution standards and client satisfaction that was achieved in Gemini is fortunate to have solid, trusted relationships with a group of active, growth oriented clients that we value highly. Quarterly Financial Information The following table sets out our selected quarterly financial information for the eight most recent quarters: ($ 000 except per share data) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Revenue $6,718 $12,225 $22,129 $29,242 $30,821 $21,278 $46,055 $58,330 Gross profit (loss) (266) 4,241 6,258 2,942 2,278 4,008 (9,295) 325 Loss from operating activities (2,810) (818) (895) (1,697) (1,207) (3,682) (10,503) (3,325) Net loss (2,898) (1,058) (1,229) (1,865) (1,454) (3,763) (8,976) (2,677) Loss per share basic & diluted (0.04) (0.01) (0.02) (0.02) (0.02) (0.05) (0.12) (0.03) Adjusted EBITDA (2,595) 1,334 3,573 (779) (841) (1,062) (12,758) (2,983) Working capital 4,414 8,334 7,574 5,022 6,528 8,943 9,305 14,799 GEMINI CORPORATION 2017 Q1 REPORT /3

5 Liquidity and Capital Resources March 31, December 31, ($ 000) Working capital $4,414 $8,334 Total assets 16,932 23,089 Total equity 4,860 7,741 Working capital ratio 1.6 : : 1 Total liabilities to equity ratio 2.5 : : 1 The Company s working capital position of $4.4 million at March 31, 2017 has declined from $8.3 million at December 31, 2016 and has decreased slightly from 1.8:1 to 1.6:1. Letters of credit totalling $1.5 million were issued in favour of certain customers as at March 31, On May 25, 2017, the Company completed a new senior credit facility, providing for a $14.0 million senior secured revolving credit facility plus an accordion feature for an additional $4.0 million as needed, for a two year committed term. This new facility will provide sufficient working capital financing as workload activity increases as projected in the second half of Advances made under the revolving facility will be limited to the lesser of $14 million or an amount calculated monthly based on the value of the Company s trade receivables and work in progress. Financial covenants include: i) Total Funded Debt to Tangible Net Worth; ii) Fixed Charge Coverage Ratio; and iii) Working Capital Ratio. The Company expects to be in compliance with all covenants throughout 2017 based on its projections and outlook for the year. At March 31, 2017, the Company s outstanding capital was comprised of 76,882,832 common shares and at the date of this report the share count remains unchanged from this level. Financial Instruments and Business Risks The Company s financial instruments are primarily comprised of cash, trade and other accounts receivable, trade and other payables, finance lease liabilities and long-term liabilities. The Company s operations expose it to interest rate risk and industry credit risks. The Company manages these risks by operating in a manner that minimizes its exposures to the extent practical, as follows: Fair values The fair values of the Company s current financial instruments do not differ significantly from their carrying values due to their short-term maturities. Credit risk Significant portions of the Company s trade accounts receivable and work in progress are with clients in the energy industry and, as such, the Company is exposed to all the risks associated with that industry. However, the majority of these balances are from established clients with excellent creditworthiness, thereby reducing the credit risk substantially. Liquidity risk The timing of costs incurred on projects often do not align well with the receipt of payments from clients, which exposes the Company to liquidity risks. The new senior secured revolving credit facility will be used to manage this risk, although at times of rapid increases in activity this working capital financing can reach its upper limits. Interest rate risk The Company s short-term borrowings are subject to floating interest rates. The floating rate debt is subject to interest rate risk as the required cash flows to service the debt will fluctuate with changes in market rates. GEMINI CORPORATION 2017 Q1 REPORT /4

6 Business Risks and Critical Success Factors Various factors could cause our actual results to differ materially from the results anticipated by Management. The factors are described in more detail throughout this document. Readers are also encouraged to review the section of this MD&A entitled Forward-Looking Information. Cyclical Market The vast majority of Gemini s business is in the energy industry; therefore, the cyclical nature of this industry becomes an inherent risk for the Company. Fluctuating prices of oil, natural gas, and electricity can affect the cash flows of clients, which in turn, affect their service providers. The Company s quarterly and annual revenue and operating results may be subject to material fluctuations as a result of these factors. Human Resources Gemini s ability to attract and retain qualified personnel is a risk and an area of uncertainty because it is not possible to be assured of the continued availability of these individuals. Every effort is taken to mitigate this risk by retaining staff in anticipation of client demands, fostering a positive corporate culture, and offering a number of incentives including competitive compensation and benefits, training, and employee share ownership. Safety and Quality Control The safety of personnel and the quality of work performed by the Company are success factors that form the foundation of Gemini s reputation. As a service provider, a strong reputation is essential to preserving existing relationships and developing new business. Internal Control and Management Practices The development of internal control procedures, timely management practices, and robust project control methodologies are crucial to ensuring corporate performance and financial reporting integrity. Management s continuous improvement program is designed to manage growth through the addition of skilled personnel and financial resources and the implementation of enhanced internal controls and project controls. Client Mergers and Acquisitions The risk and uncertainty from mergers among energy and industrial companies, whether large or small, is ever present. In order to minimize this risk, the Company continues to take steps to add new clients and thereby broaden its client base. Financial Resources and Ability to Raise Capital The Company s working capital position is at the low end of the acceptable range to meet the operating needs of the organization. Due to the cyclical nature of the business, having sufficient financial resources to sustain the organization and its growth presents an element of risk. The Company signed a new credit facility effective May 25, 2017 that will provide the Company with improved terms and conditions to access working capital financing as needed. The new operating line is committed for a two year term and is structured with financial covenants that are achievable based on the Company s 2017 projections. Growth opportunities requiring capital would likely be financed through some combination of debt obtained through the Company s new primary lender and equity raised in the public market. Accounting Policy Changes A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January 1, 2017, which have no impact on the financial statements. GEMINI CORPORATION 2017 Q1 REPORT /5

7 Critical Accounting Estimates The preparation of the financial statements in conformity with IFRS requires Management to prepare estimates based on assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Estimates are evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results, and revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The Company s estimates pertain to various reported balances contained within the Consolidated Financial Statements. Accounts receivable are individually evaluated for collectability, and an allowance for doubtful accounts is established, where necessary. Goodwill and intangible assets are tested for impairment annually, or more frequently if events or circumstances indicate the asset might be impaired by estimating the future cash flows related to these assets. Warranty provisions are estimated based on a number of factors including the type and duration of warranty coverage, the nature of the product sold and in service and counter-warranty coverage available from the Company s suppliers. Provision for onerous contracts are based on determining the unavoidable cost of meeting the obligations under a contract exceeding the economic benefits expected to be derived from the contract. Long-term liabilities are initially recorded at fair value using a market-based discount rate. Share-based payments are determined using the Black-Scholes model for valuation, which entails the application of certain factors and estimates in arriving at the fair value of any stock options granted. The Black- Scholes model is also used for valuation in arriving at the fair value of any issued warrants. The Company applies the percentage-of-completion method of revenue recognition to determine revenue for certain fixed fee elements of projects in progress at the end of each reporting period. This methodology requires the use of estimates based on the historical knowledge and experience of Management, the specific circumstances of the project, and the anticipation of future events in order to determine factors such as the stage of project completion, future costs to be incurred to complete the project and an estimate of the final gross profit to be earned. The Company provides for estimated losses on incomplete contracts in the period in which such losses are determined. These estimates are continually evaluated and could change based on significant or unanticipated changes in future events; the cost and availability of labour; the cost, availability, and timing of the delivery of materials or components; or unexpected difficulties in the completion of a project. The Company considers a contract to be onerous when the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be derived from the contract. The determination of when to record a provision for an onerous contract is a complex process that involves management judgment about outcomes of future events and estimates concerning the nature, extent and timing of expected future cash flows and discount rates related to the contract. These estimates and judgements are based on historical experience and various assumptions that Management believes to be reasonable in the circumstances. Future events cannot be anticipated with certainty and, as such, these estimates and assumptions may change as additional evidence is gathered, new circumstances arise, or the Company s operating environment changes. GEMINI CORPORATION 2017 Q1 REPORT /6

8 Non-IFRS Measures Throughout this MD&A certain measures are used that are not recognized measures under IFRS. The measures used are backlog, working capital, working capital ratio, adjusted EBITDA, tangible net worth and total funded debt. These measures are used by our Management to assist in making operating decisions and assessing performance or in determining compliance with bank covenants. While the Company calculates these measures consistently from period to period, they likely will not be directly comparable to similar measures used by other companies because they do not have standardized meanings prescribed by IFRS. Please review the discussion of these measures below. Backlog means the total value of work that has not yet been completed that (a) is assessed by us as having high certainty of being performed by us by either the existence of a contract or work order specifying job scope, value and timing, or (b) has been awarded to us, as evidenced by an executed binding or non-binding letter of intent or agreement describing the general job scope, value and timing of such work and with the finalization of a formal contract respecting such work currently assessed by us as being reasonably assured. The Company provide no assurance that clients will not choose to defer or cancel their projects in the future. Working Capital is current assets less current liabilities. Working Capital Ratio is calculated by dividing total current assets by total current liabilities. Adjusted EBITDA is defined as net earnings/loss from operations before finance costs, income taxes, depreciation and amortization and non-recurring restructuring costs (including severance); plus non-cash charges such as impairment loss, share based compensation and onerous lease provisions; plus charges related to investing decisions that do not reflect ongoing operations such as gains/losses on assets, liabilities and investment dispositions. Adjusted EBITDA provides investors with information on profit/(loss) which excludes items that are significant but not reflective of our underlying operations for the period. While adjusted EBITDA is a common financial measure widely used by investors to facilitate an enterprise level valuation of an entity, it does not have a standardized definition prescribed by IFRS, and therefore, other issuers may calculate adjusted EBITDA differently. Tangible Net Worth is calculated as the aggregate of: shareholders equity, contributed surplus, retained earnings, shareholder and affiliated company loans plus onerous lease provisions less: intangible assets, goodwill and investments in or advances to affiliated companies. Total Funded Debt is calculated as all money borrowed or indebtedness represented by notes payable and drafts accepted representing extensions of credit plus bankers acceptances, letters of credit and letters of guarantee (excluding those for which security has been provided by the lender), all obligations as lessee under sale and leaseback transactions and capital leases and all subordinated debt. Fixed Charge Coverage Ratio is calculated as the ratio of adjusted EBITDA for any period of four successive fiscal quarters less all unfunded capital expenditures, permitted distributions and cash taxes, divided by the trailing four quarter scheduled principal and interest payments related to the Company s obligation to the lender on the debt facility. GEMINI CORPORATION 2017 Q1 REPORT /7

9 The following is a reconciliation of our net earnings to adjusted EBITDA for each of the periods presented in this MD&A: ($ 000) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Net loss (2,898) $(1,058) $(1,229) $(1,865) $(1,454) $(3,763) $(8,976) $(2,677) Add: Income tax recovery - - (27) (18) - (100) (1,638) (759) Loss before tax (2,898) (1,058) (1,256) (1,883) (1,454) (3,863) (10,614) (3,436) Add: Depreciation & amortization Impairment loss - - 3, , Share based compensation (65) (559) (147) Finance costs Restructuring Acquisition earn-out and retention Onerous lease provisions - 1, Fair value differential on longterm liability (1,698) - - Loss (gain) on disposal of assets - 5 (3) 11 (4) 298 (2,900) (29) Adjusted EBITDA (2,595) $1,334 $3,573 $(779) $(841) $(1,062) $(12,758) $(2,983) Forward-Looking Information This document contains certain forward-looking information and financial outlook based on Gemini s current expectations, estimates, projections and assumptions that were made by the Company in light of information available at the time the statement was made. Forward-looking information and financial outlook that address expectations or projections about the future, and other statements and information about the Company s strategy for growth, expected and future expenditures, costs, operating and financial results, future financing and capital activities are forward looking statements. Some forward-looking information and financial outlook are identified by the use of terms and phrases such as anticipate, achieve, estimate, expect, intend, plan, planned, and other similar terms and phrases. This forward-looking information and financial outlook speak only as of the date of this document and the Company does not undertake to publicly update this forward-looking information and financial outlook except in accordance with applicable securities laws. This forward-looking information and financial outlook include, among others: Anticipated compliance with bank covenants; Expectations regarding success of its cost control measures and restructuring efforts; Expectations regarding the Company s financial results, working capital levels, liquidity and profits; Our belief that the Company has sufficient capital resources and liquidity, and ability to generate ongoing cash flows to meet commitments, support operations, finance capital expenditures and support growth strategies; Our outlook on the business including, without limitation, those statements in the section entitled Outlook relating to backlog, earnings visibility, revenue and new contract awards; The Board s confidence in our ability to generate sufficient operating cash flows to support Management s business plans; The expectation that the Company will improve or maintain our business prospects or continue to grow revenue, earnings, profitability and backlog in any manner whatsoever including, without limitation, through margin expansion, organic growth, new project awards or productivity efficiencies; Expectations as to future general economic conditions and the impact those conditions may have on the Company and our businesses; and Our projected use of cash resources. GEMINI CORPORATION 2017 Q1 REPORT /8

10 The forward-looking information contained in this MD&A is made as of the date hereof and the Company undertake no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. Additional information regarding Gemini Corporation, including our current Annual Report and other required securities filings, is available on our website at and under Gemini s SEDAR profile at GEMINI CORPORATION 2017 Q1 REPORT /9

11 400, Avenue SW Calgary, Alberta T2P 3C8 T: F:

12 GEMINI CORPORATION Condensed Consolidated Interim Financial Statements March 31, 2017

13 GEMINI CORPORATION CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited in thousands of Canadian dollars) Notes As at March 31, 2017 As at December 31, 2016 ASSETS Current assets Cash $ 1,807 $ 1,597 Trade and other receivables 3 10,071 16,196 Prepaid expenses Investments 95 12,141 18,228 Property, plant and equipment 3,423 3,450 Deposits Intangible assets and goodwill 1,156 1,176 TOTAL ASSETS $ 16,932 $ 23,089 LIABILITIES Current liabilities Trade and other payables $ 3,543 $ 6,279 Unearned revenue 1,725 2,117 Current portion of provisions 943 1,032 Current portion of other long term liabilities 1, Current portion of finance lease liabilities ,727 9,894 Provisions 1,550 1,408 Other long term liabilities 2,502 3,668 Finance lease liabilities ,072 15,348 Contingencies 7 SHAREHOLDERS' EQUITY Share capital 5 15,026 15,026 Contributed surplus 2,823 2,806 Deficit (12,989) (10,091) 4,860 7,741 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 16,932 $ 23,089 See accompanying notes to the consolidated financial statements. Page 1 of 7

14 GEMINI CORPORATION CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS For the three months ended March 31, (Unaudited In thousands of Canadian dollars) Revenue $ 6,718 $ 30,821 Cost of revenue 6,984 28,543 Gross profit (loss) (266) 2,278 Administrative expenses 2,324 3,191 Depreciation and amortization Share based compensation expense 34 7 Loss from operating activities (2,810) (1,207) Finance costs Net loss and comprehensive loss $ (2,898) $ (1,454) Loss attributable to: Gemini shareholders $ (2,898) $ (1,390) Non controlling interests (64) $ (2,898) $ (1,454) Earnings per share: Basic and diluted $ (0.04) $ (0.02) See accompanying notes to the consolidated financial statements Page 2 of 7

15 GEMINI CORPORATION CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited In thousands of Canadian dollars) Share Capital Contributed Surplus Retained Earnings (Deficit) Non Controlling Interest Total Equity Balance, January 1, 2016 $ 15,026 $ 2,705 $ (4,371) $ (114) $ 13,246 Net loss for the period (1,390) (64) (1,454) Share based compensation 7 7 Balance, March 31, 2016 $ 15,026 $ 2,712 $ (5,761) $ (178) $ 11,799 Balance, January 1, 2017 $ 15,026 $ 2,806 $ (10,091) $ $ 7,741 Net loss for the period (2,898) (2,898) Share based compensation Balance, March 31, 2017 $ 15,026 $ 2,823 $ (12,989) $ $ 4,860 See accompanying notes to the consolidated financial statements Page 3 of 7

16 GEMINI CORPORATION CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS For the three months ended March 31, (Unaudited In thousands of Canadian dollars) Cash flows provided by (used in) operating activit Net loss $ (2,898) $ (1,454) Adjustments for: Depreciation and amortization Share based compensation 17 7 Gain on sale of property, plant and equipment (4) Change in long term liability (156) (446) Finance costs Unearned revenue (392) 238 (3,155) (1,363) Changes in non cash working capital: Trade and other receivables 6,125 (8,422) Prepaid expenses and deposits 95 (36) Trade and other payables (2,717) 6,904 Provisions 53 (149) 3,556 (1,703) 401 (3,066) Interest received (paid) 15 (128) Income taxes received 5 Total cash flows provided by (used in) operating activities 421 (3,194) Cash flows from financing activities Increase (decrease) in bank operating line 3,184 Increase (decrease) in loans and borrowings (3) Payment of long term liability (60) Payment of finance lease liabilities (107) (108) Increase in finance lease liabilities 48 Total cash flows provided by (used in) financing activities (167) 3,121 Cash flows from investing activities Acquisition of property, plant and equipment (139) (163) Acquisition of intangible assets (13) Proceeds from disposal of property, plant and equipment 11 Investments 95 Total cash flows provided by (used in) investing activities (44) (165) Total changes in cash 210 (238) Cash, beginning of period 1,597 Cash, end of period $ 1,807 $ (238) Page 4 of 7

17 1. REPORTING ENTITY Gemini Corporation ( the Company ) is incorporated in the province of Alberta, Canada. The Company, through its subsidiaries, carries on business as an integrated project construction company focused on energy and industrial facilities. It conducts business through limited partnerships and corporations including Gemini Field Solutions Limited Partnership, Gemini Engineered Solutions Limited Partnership, Gemec Services Limited Partnership and Gemini Environmental Solutions Ltd. The Company has one registered shareholder owning 47% of the outstanding common shares, which places this holder, Coril Holdings Ltd., in a position of effective control. The Company is publicly listed on the TSX Venture Exchange under the symbol GKX. These consolidated financial statements (these Statements ) include the accounts of the Company and those of its controlled subsidiaries presented in Canadian dollars. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance The Statements have been prepared in accordance with IAS 34, Interim Financial Reporting, and unless otherwise noted, use the same accounting policies and methods as those used in the Company s December 31, 2016 financial statements. The Statements do not include all of the information required for full annual financial statements. The Statements were authorized for release by the Board of Directors on May 25, (b) Basis of measurement Except as otherwise disclosed, the accounting policies described in the Company s consolidated financial statements for the year ended December 31, 2016 remain unchanged and should be referred to in reviewing these Statements. (c) Significant judgments and use of estimates Significant judgments and estimates are made by management with respect to accounting policies and the reported amounts contained in these Statements. Estimates are evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results, and revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant estimates and judgments used in the preparation of these financial statements are described in the Company s consolidated financial statements for the year ended December 31, TRADE AND OTHER RECEIVABLES March 31, 2017 December 31, 2016 Trade receivables $6,080 $13,373 Other receivables ,676 13,969 Construction contracts in progress 3,395 2,227 $10,071 $16,196 Page 5 of 7

18 At March 31, 2017, aggregate revenues recognized under construction contracts in progress amount to $19,828 (December 31, 2016 $19,524). In addition, trade receivables include holdbacks of $2,143 (December 31, 2016 $2,006) related to construction contracts in progress. The aging of trade and other receivables at the reporting date were as follows: March 31, 2017 December 31, 2016 Current $4,044 $8, to 60 days 517 4, to 90 days Greater than 90 days 1, ,676 13,969 Construction contracts in progress and other receivables 3,395 2,227 $10,071 $16,196 At March 31, 2017, an allowance of $23 (December 31, 2015 $23) has been recognized for potential uncollectible amounts. 4. BANK OPERATING LINE At March 31, 2017, $3,572 was available (December 31, 2016 $6,317) which was undrawn (December 31, 2016 undrawn). At March 31, 2017, the Company breached its tangible net worth covenant related to the bank operating line in place on that date. On May 25, 2017, the Company entered into a new two year committed senior secured revolving credit facility of up to $14.0 million plus an accordion feature for an additional $4.0 million as needed. The facility bears interest at the bank s prime plus 2% and is available subject to certain limitations based on accounts receivables and unbilled revenue. Financial covenants include: i) Total Funded Debt to Tangible Net Worth ratio of not more than 3.0:1; ii) Fixed Charge Coverage Ratio of no less than 1.15:1; and iii) Working Capital Ratio of no less than 1.15:1. 5. SHARE CAPITAL (a) Authorized: Unlimited number of voting common shares, with no par value. Unlimited number of non voting preferred shares, issuable in one or more series. The Board of Directors is authorized to fix the number of shares in each series and to determine the designation, rights, privileges and conditions attached to the shares. (b) Issued and outstanding: March 31, 2017 December 31, 2015 Quantity Amount Quantity Amount Common shares Balance, beginning and end of period 76,882,832 $15,026 76,882,832 $15,026 Page 6 of 7

19 6. RELATED PARTY TRANSACTIONS During the first three months of 2017, lease costs in the amount of $280 (2016 $124) were recorded to a wholly owned subsidiary of Coril Holdings Ltd. At March 31, 2017, no amounts were owed or owing to this related party (December 31, 2016 $23 was included in accounts payable). 7. CONTINGENCIES The Company, through its normal course of operations, is subject to various litigation and claims, the outcome of which are not determinable at this time. 8. OPERATING SEGMENTS Effective January 1, 2017, in conjunction with internal reorganizations and restructuring, the Company s chief operating decision maker (CODM), comprising the Company s President and CEO, CFO, and COO, revised the manner in which they monitored the Company s results. The CODM now monitors results based on quantitative project thresholds regardless of the nature of the underlying work performed, such as environmental, engineering and fabrication. Accordingly for reporting purposes the Company has determined it has one operating segment. The results for the three month period ended March 31, 2016 have been represented. Page 7 of 7