SILVER MAPLE VENTURES INC.

Transcription

1 AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED September 30, 2017 and 2016

2 Statements of Financial Position As at September 30, 2017 and 2016 Page INDEPENDENT AUDITOR S REPORT 1 FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Comprehensive Loss 3 Statements of Cash Flows 4 Statements of Changes in Equity

3 To the Shareholders of Silver Maple Ventures Inc.: INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of Silver Maple Ventures Inc., which comprise the statements of financial position as at September 30, 2017 and 2016, and the statements of comprehensive loss, cash flows and statements of changes in equity for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting framework as specified in National Instrument paragraph 3.2(3)(a) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Silver Maple Ventures Inc. as at September 30, 2017 and 2016, and its financial performance and its cash flows for the years then ended in accordance with the financial reporting framework as specified in National Instrument paragraph 3.2(3)(a). Emphasis of Matter We draw attention to Note 1 to the financial statements which describes the uncertainties related to the going concern assumption of Silver Maple Ventures Inc. Our opinion is not modified in respect of this matter. North Vancouver, British Columbia, Canada December 22, 2017 CHARTERED PROFESSIONAL ACCOUNTANTS 1

4 Statements of Financial Position As at September 30, 2017 and 2016 ASSETS Note (restated note 14) Current Assets Cash 98, ,279 Restricted Cash 405, ,837 Accounts receivable 47,039 8,665 Prepaid expenses and deposits , ,681 Intangible asset 4 44,741 59,654 Total Assets 597, ,335 LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued liabilities Cash held in escrow payable to issuers 9,10 46, ,583 64, ,837 Subordinated debt 9,10-21,000 Deferred revenue - 2, , ,570 Subordinated debt 9,10 46,000 46,000 Total Liabilities 497, ,570 Shareholders Equity Share capital 5 1,308, ,048 Reserves 5 364, ,584 Retained Earnings (1,573,387) (977,867) 99,120 88,765 Total Liabilities and Shareholders Equity 597, ,335 These financial statements were authorized for issue by the Board of Directors on December 22, Approved on behalf of the Board by: /s/ Peter-Paul Van Hoeken /s/ Peter Scarth, Director, Director The accompanying notes are an integral part of these consolidated financial statements 2

5 Statements of Comprehensive Loss Note (restated note 14) Revenue Commission Listings Government grant Other 88, , ,890 6,900 53,151 76,568 23,390 2,000 Total Revenue 405, ,109 Expenses Advertising and promotion Amortization Bad debt expense Consulting fees Employee salaries General and administrative Insurance Interest Investor ID verification IT expenses Office supplies Professional fees Regulatory filings Rent Seminars and conferences Shares issued for services rendered ,936 14,913 8,311 53, ,006 8,562 3,364 3,159 5,093 11,464 34,541 15,761 21,099 37,224 1,661-16,101 14,914-84, ,148 5,208 9,753 3,846 3,188 18,992 14,630 37,598 20,415 31,746 4,557 10,700 5 Stock based compensation 5 179, ,584 Travel 19,358 12,694 Total Expenses 1,000, ,287 Net comprehensive loss (595,520) (644,178) Loss per share: Basic Diluted 5 5 (0.05) (0.04) (0.06) (0.05) Weighted average number of shares outstanding: Basic Diluted ,702,531 15,708,570 10,807,741 12,488,522 The accompanying notes are an integral part of these consolidated financial statements 3

6 Statements of Cash Flows Note OPERATING ACTIVITIES (restated note 14) Net loss for the year (595,520) (644,178) Items not affecting cash Amortization 4 14,913 14,914 Shares issued for services rendered 5-10,700 Stock based compensation 5 179, ,584 (401,105) (433,980) Changes in non-cash working capital items: Increase in accounts receivable (38,374) (3,874) Decrease in prepaid expense - 3,326 Increase (decrease) in accounts payable (18,171) 47,965 Increase (decrease) in deferred revenue (2,219) 2,219 Cash used in operating activities (459,869) (384,344) INVESTING ACTIVITIES Intangible asset 4 - (34,343) Cash provided by investing activities - (34,343) FINANCING ACTIVITIES Issuance of common shares, net of share issue costs 5 426, ,706 Repayment of subordinated debt 9,10 (21,000) (4,000) Cash provided by financing activities 405, ,706 Decrease in cash (54,496) (11,981) Cash, beginning of year 153, ,260 Cash, end of year 98, ,279 Supplemental disclosures: Cash paid for interest 9,10 3,159 3,846 Non-cash transactions: Conversion of subordinated debt to common shares 5, 9,10 - (10,599) The accompanying notes are an integral part of these consolidated financial statements 4

7 Statements of Changes in Equity Share Capital Accumulated Note Number of Amounts Reserves Deficit Total Shares (restated note 14) (restated note 14) $ $ $ $ Balance at September 30, ,081, ,043 - (333,689) 116,354 Shares issued for cash 5 1,515, , ,779 Share issue costs 14 - (6,073) - - (6,073) Shares issued for services rendered 5 89,167 10, ,700 Shares issued on conversion of 5,9,10 33,121 10, ,599 subordinated debt Stock based compensation , ,584 Comprehensive loss (644,178) (644,178) Balance at September 30, ,719, , ,584 (977,867) 88,765 Shares issued for cash 5 1,353, , ,991 Share issue costs 5 - (5,618) - - (5,618) Stock based compensation , ,502 Comprehensive loss (595,520) (595,520) Balance at September 30, ,072,256 1,308, ,086 (1,573,387) 99,120 The accompanying notes are an integral part of these consolidated financial statements 5

8 1. NATURE OF OPERATIONS Silver Maple Ventures Inc. (the "Company") was incorporated under the Business Corporations Act of British Columbia on October 18, The Company is registered as an Exempt Market Dealer ( EMD ) in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and Nova Scotia. The Company proposes to raise funds by providing funding and investment services to accredited and nonaccredited investors via online platform and representative networks. Its corporate office is Mainland Street, Vancouver, BC, V6B 5L1. The Company's continuing operations under its current business model are dependent upon its ability to raise funds from investors and have only recently started to earn income from raising funds for its companies through its online platform. 2. BASIS OF PRESENTATION These financial statements are presented in Canadian dollars, and pursuant to the requirements specified in paragraph 3.2(3)(a) of National Instrument Acceptable Accounting Principles and Auditing Standards for financial statements delivered by registrants, has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. 3. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared on a historical cost basis except for financial instruments that have been measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. Financial Instruments i) Financial assets All financial assets are initially recorded at fair value and designated upon inception into one of the following four categories: held to maturity, available for sale, loans and receivables or at fair value through profit or loss ( FVTPL ). Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through earnings. The Company s cash and short-term investments are classified as financial assets at FVTPL. Financial assets classified as loans and receivables and held to maturity assets are measured at amortized cost. Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income or loss except for losses in value that are considered other than temporary which are recognized in earnings. Transactions costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset. ii) Financial liabilities All financial liabilities are initially recorded at fair value and designated upon inception as financial liabilities at FVTPL or other financial liabilities. Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. The Company s accounts payable and due to related parties are classified as other financial liabilities. 6

9 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments (continued) ii) Financial liabilities (continued) Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives are also classified as held for trading and recognized at fair value with changes in fair value recognized in earnings unless they are designated as effective hedging instruments. Fair value changes on financial liabilities classified as FVTPL are recognized in earnings. Cash and Cash Equivalents Cash and cash equivalents are classified as fair value through profit or loss and include short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. The Company places its deposits with financial institutions with high credit ratings. Restricted Cash The company holds investors investment amounts in a separate trust account until the closing date. As such, this cash is considered restricted for use by the company and the company does not have access to these funds. Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of comprehensive income. The Company records amortization of intangible assets on a straight-line basis over 5 years. Impairment At the end of each reporting period the carrying amounts of the Company s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of 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. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Share Capital The Company records proceeds from the issuance of its common shares as equity. Incremental costs directly attributable to the issue of new common shares are shown in equity as a deduction, net of tax, from the proceeds. Common shares issued for consideration other than cash are valued based on their market value at the date that shares are issued. 7

10 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Share Issue Costs Professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred financing costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred financing costs related to financing transactions that are not completed are charged to earnings. Share-based Payment Transactions The Company offers equity-settled share-based payments to directors, officers, employees and nonemployees. Share-based payments to employees and others providing similar services are measured at the estimated fair value of the instruments issued on the grant date and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The amount recognized as an expense is adjusted to reflect the number of awards expected to vest. The offset to the recorded cost is to equity settled share-based payments reserve. Equity-settled awards are not re-measured subsequent to the initial grant date. Consideration received on the exercise of stock options is recorded as share capital and the related equity settled share-based payments reserve is transferred to share capital. Charges for options that are forfeited before vesting are reversed from equity settled share-based payment reserve. The Company recognizes compensation expense for stock options awarded based on the fair value of the options at the grant date using the Black-Scholes option pricing model. The fair value of the options is amortized over the vesting period and is included in the Statement of Comprehensive Loss with a corresponding increase in equity. The amount recognized as an expense is adjusted to reflect the number of share options expected to eventually vest. Loss per Share The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share is based on the weighted average number of common shares and stock options outstanding at the beginning of or granted during the period, calculated using the treasury stock method. Under this method, the proceeds from the exercise of the options are assumed to be used to repurchase the Company s shares. The difference between the number of shares assumed purchased and the number of options assumed exercised is added to the actual number of shares outstanding to determine diluted shares outstanding for purposes of calculating diluted earnings per share. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive. Income Taxes Income tax expense is comprised of current and deferred tax components. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case the related tax is recognized in equity or other comprehensive income. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years. Deferred tax is recorded using the asset and liability method. Under this method, the Company calculates all temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the period end date. Deferred tax is calculated based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates that are expected to apply to the year of realization or settlement based on tax rates and laws enacted or substantively enacted at the period end date. 8

11 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes (continued) Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses and tax credits can be utilized. The carrying amount of deferred tax assets is reviewed at each statement of the financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Revenue Recognition Commission income is generally based on the Company s percentage of insurance premiums received in respect of the closing of insurance contracts. Commission income is recorded when the amount is determinable and collection is reasonably assured. Listings income is recognized when the related services have been provided, the amount is determinable and the collectability is reasonably assured. Other revenue and services are generally recognized as income when the related services have been provided, the amount is determinable and the collectability is reasonably assured. Government grant relates to funds received from the Industrial Research Assistance Program ( IRAP ). Government grant income is recognized in the period funds are received. Interest income is recognized as earned on an accrual basis. Significant Accounting Estimates and Judgments The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which affect the application of accounting policies and the reported amounts of assets, liabilities and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. Significant estimates include: the assumptions used in valuing options in share-based payment calculations the determination of deferred income tax assets and liabilities Critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements include the following: the determination of functional currency of the Company; the determination of revenue recognition policy. 9

12 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Provisions Provisions represent liabilities of the Company for which the amount or timing is uncertain. A provision is recognized when, as a result of a past event, the Company has a present obligation (legal or constructive) that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where appropriate, the future cash flow estimates are adjusted to reflect risks specific to the liability. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the consolidated statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount receivable can be measured reliably. New Accounting Standards Issued But Not Yet Effective Certain new standards, interpretations and amendments to existing standards have been issued by the IASB that are mandatory for future accounting periods. Some updates that are not applicable or are not consequential to the Company may have been excluded from the list below. The Company intends to adopt these standards when they become effective. IFRS 9, Financial Instruments, replaces the current standard IAS 39 Financial Instruments: Recognition and Measurement, replacing the current classification and measurement criteria for financial assets and liabilities to only two classification categories: amortized cost and fair value. This standard has a proposed effective date of January 1, The Company s financial assets and liabilities are simple in nature and accordingly the Company has determined that the adoption of this new standard will not have a significant effect on its financial statements. IFRS 15 Revenue from Contracts with Customers IFRS 15 is a new standard which provides guidance on accounting for revenue from contracts with customers. This standard has a proposed effective date of January 1, The Company does not have revenue from contracts with customers and accordingly has determined that the adoption of this new standard will have no effect on its financial statements. IFRS 16 Leases IFRS 16 is a new standard which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor. It introduces a single lessee accounting model that requires the recognition of all assets and liabilities arising from a lease. This standard has a proposed effective date of January 1, The Company is a lessee in respect of its office lease and this new standard will apply. However, the Company s leasing activity is incidental to its operations and the associated costs, and differences in their treatment arising under the new standard, are minor. Accordingly, the Company has determined that the adoption of this new standard will have a minor but not significant effect on its financial statements. 4. INTANGIBLE ASSET During the year ended September 30, 2017, the Company incurred costs of $nil (2016 $34,343) related to development of its online platform $ $ Cost 74,568 74,568 Accumulated amortization (29,827) (14,914) 44,741 59,654 10

13 5. SHARE CAPITAL AND RESERVES Authorized Share Capital The Company is authorized to issue an unlimited number of common shares without par value. All issued shares are fully paid. As of September 30, 2017, the total outstanding common shares is 13,072,256 ( ,719,062). In the prior year, the Company issued 89,167 common shares at a fair value of $0.12 per share and a total fair value of $10,700, which were compensation for services rendered. In the prior year, the Company issued 33,121 common shares at a fair value of $0.32 per share and a total fair value of $10,599 on the conversion of subordinated debt. In the prior year, the Company issued 681,760 common shares at a share price of $0.22 per share for cash proceeds of $150,000. In the prior year, the Company issued 833,682 common shares at a share price of $0.32 per share for cash proceeds of $266,779. In connection with the share issuances, the Company incurred $6,073 in share issue costs. During the year, the company issued 1,353,194 common shares at a share price of $0.32 per share for cash proceeds of $431,991. In connection with the share issuance, the Company incurred $5,618 in share issue costs. Share Purchase Option Compensation Plan The Company has a share purchase option plan approved that allows it to grant share purchase options, subject to regulatory terms and approval, to is officers, directors, employees and service providers. During the year, 665,809 options were granted with an exercise price of $0.32 per share. These options are subject to specific milestones being achieved, none of which were achieved as at September 30, All options expire 10 years after the date of issuance. The Company recognized stock based compensation expense of $179,502 ( $184,584). Number of Options Weighed average exercise price $ Outstanding at September 30, ,373, Granted 800, Outstanding at September 30, ,173, Granted 665, Outstanding at September 30, ,839,

14 5. SHARE CAPITAL AND RESERVES (continued) Share Purchase Option Compensation Plan (continued) A summary of the stock options outstanding and exercisable at September 30, 2017 is as follows: Exercise Price $ Number Outstanding and Exercisable Expiry Date ,625 June 30, ,250 July 31, ,750 August 31, ,250 September 30, ,000 October 31, ,938 November 30, ,313 December 31, ,750 January 31, ,706 February 28, ,500 March 31, ,850 April 30, ,000 May 31, ,150 June 30, ,150 July 31, ,150 August 31, ,150 September 30, ,788 October 31, ,150 November 30, ,150 December 31, ,950 January 31, ,500 February 28, ,500 March 31, ,500 April 30, ,000 May 31, ,000 June 30, ,000 July 31, ,215 August 31, ,000 September 30, ,839,285 The stock option reserve records items recognized as share-based compensation expense until such time that the stock options are exercised, at which time the corresponding amount will be transferred to share capital. If vested options expire unexercised or are forfeited, the amount recorded is transferred to deficit. 12

15 5. SHARE CAPITAL AND RESERVES (continued) Share Purchase Option Compensation Plan (continued) The following weighted-average assumptions were used for the Black-Scholes valuation of stock options granted: Risk-free interest rate 1.68% 1.46% Expected life of options (years) Annualized volatility 100% 100% Dividend rate 0.00% 0.00% Fair value per option $0.28 $ INCOME TAXES Tax laws and regulations are subject to interpretation and inherent uncertainty; therefore, management s assessments involve judgments, estimates and assumptions about current and future events. Although management believe these estimates and assumptions are reasonable and appropriate, the final determination could be materially different than that which is reflected in the Company s provision. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The amount of income tax expense shown in the statements of loss and comprehensive loss differs from the amounts obtained by applying statutory rates to the loss before provision for income taxes due to the following: $ $ Canadian statutory income tax rate 26.00% 26.00% Income tax recovery at statutory rate (154,835) (160,782) Effect on income taxes of: Non-deductible amounts 180, ,723 Change in unrecognized tax assets (25,776) (38,941) Income tax recovery - - The significant components of the Company s deferred income tax assets are as follows: $ $ Non-capital losses 414, ,758 Unrecognized deferred tax assets (414,908) (452,758) Deferred income tax assets - - As at September 30, 2017, the Company has Canadian non-capital loss carry forwards of $1,217,904 that may be available for tax purposes. The expiry dates of the losses are as follows: Expiry $ September 30, 2034 September 30, 2035 September 30, 2036 September 30, , , , ,908 1,217,903 13

16 7. FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS Fair values The fair values of the Company s financial assets and liabilities approximate their carrying amounts because of their current nature. Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy based on the degree to which the inputs used to determine the fair value are observable. The three levels of the fair value hierarchy are: Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Company s financial instruments consist of cash, short-term investments, accounts payable and due to related parties. Cash and short-term investments are designated as financial assets at fair value through profit and loss ( FVTPL ), and its accounts payable and due to related parties as other financial liabilities. The Company s financial assets measured at fair value on a recurring basis were calculated as follows: Balance at June 30, 2017 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Financial Assets: $ $ $ $ Cash 98,783 98, Restricted Cash 405, , Accounts receivable 47,039 47, Balance at September 30, 2016 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Financial Assets: $ $ $ $ Cash 153, , Restricted cash 198, , Accounts receivables 8,665 8, Currency Risk It is management s opinion that the Company is not exposed to significant currency risk as its short-term investments are all denominated in Canadian dollars. Interest Rate Risk Interest rate risk is the risk arising from the effect of changes in prevailing interest rates on the Company s financial instruments. The Company has minimal exposure to interest rates fluctuations on its cash and short-term investment balances due to current low market interest rates. 14

17 7. FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS (continued) Credit, Liquidity, and Market Risks Credit risks associated with cash are minimal as the Company deposits the majority of its cash with a large Canadian financial institution with high credit ratings. As the majority of the Company s receivables relates to taxes recoverable from governments, its credit risks associated with receivables are inherently managed and exposure to potential loss is assessed as minimal. Market risks associated with short-term investments are assessed as minimal as they are considered short-term in nature. The Company has the following financial liabilities : Carrying Amount Contractual Cash Flows Within 1 year Within 2 years Within 3 years As at September 30,2017 $ $ $ $ $ Accounts payable 46,343 (46,343) (46,343) Cash held in escrow payable to issuers 405,583 (405,583) (405,583) Subordinated debt 46,000 (46,000) - -. (46,000). Total 497,926 (497,926) (451,926) -. (46,000). Carrying Amount Contractual Cash Flows Within 1 year Within 2 years Within 3 years As at September 30,2016 $ $ $ $ $ Accounts payable 64,514 (64,514) (64,514) Cash held in escrow payable to issuers 198,837 (198,837) (198,837) Subordinated debt 67,000 (67,000) (21,000) (46,000) -. Total 330,351 (330,351) (284,351) (46,000) CAPITAL MANAGEMENT The Company s objectives for managing capital (defined as all components of shareholders equity) are to safeguard its ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders. The Company manages capital by issuing new shares or new debt. The Company will require additional capital to fund its planned expenditures for the following year. Pursuant to securities regulations, the Company is required to maintain a $50,000 working capital balance. 9. RELATED PARTY TRANSACTIONS AND BALANCES Details of outstanding balances with related parties including key management personnel are as follows: Subordinated debt corporate shareholder Subordinated debt individual related to director $ $ - 46,000 21,000 46,000 46,000 67,000 Included in interest expense is $3,159 ( $3,846) relating to interest on the above subordinated debt amounts. Accrued interest payable as at September 30, 2017 is $5,534 ( $3,825) and is included in accounts payable and accrued liabilities of $46,343 ( $64,514). In the prior year, the Company issued 33,121 common shares to a director at a fair value of $0.32 per share on the conversion of subordinated debt of $10,

18 10. SUBORDINATED DEBT Amount Annual Interest Rate Balance as at September 30, 2015 $ % Due Date Outstanding to corporate shareholder 21, December 31, 2016 Outstanding to individual related to director 46, November 30, 2017 Balance as at September 30, ,000 Outstanding to individual related to director 46, November 30, 2019 Balance as at September 30, ,000 Accrued interest payable as at September 30, 2017 is $5,534 ( $3,825) and is included in accounts payable and accrued liabilities of $46,343 ( $64,514). During the year, the Company repaid $21,000 ( $nil) in subordinated debt outstanding to a corporate shareholder. In the prior year the Company repaid $4,000 in subordinated debt outstanding to an individual related to a director. During the year, the Company revised the terms of the Promissory Note due to an individual related to a director for a due date of November 30, The promissory note of $46,000, excluding accrued interest, is subject to a subordination agreement, pursuant to National Instrument , so that the principal balance of the note is not included as a liability for capital requirement purposes in the calculation of excess working capital. The promissory note is classified under subordinated debt. 11. SEGMENTED REPORTING The Company s business as described in Note 1 is reported as one operating segment. 12. COMMTIMENTS The Company entered into a one year lease agreement for office space expiring January 31st, 2018 with a basic rent of $1,904 per month for a total commitment of $7,616 as of September 30, SUBSEQUENT EVENTS The Company has advanced its financing activities and has offered an additional 3,268,064 shares at $0.46 per share. As a result the financing will contribute up to an additional $1,503,010 of cash. As at the time of reporting, December 22, 2017, $200,000 of common shares had been subscribed. 16

19 14. RESTATEMENT During the 2017 fiscal year, the Company performed a detailed review of its expenditures. As a result of the review, management has determined that the Company s accounting for certain expenditures as presented in previously issued financial statements was not in accordance with IFRS. The impact of the above adjustments to revenue and the related tax impact are as follows: Year ended September 30, 2016 Previously reported Adjustment Restated Statement of financial position $ $ $ Accounts payable and accrued liabilities 32,654 31,860 64,514 Share capital 888,121 (6,073) 882,048 Accumulated deficit (952,080) (25,787) (977,867) Statement of Comprehensive Loss Professional fees 11,811 25,787 37,598 Net comprehensive loss (618,391) (25,787) (644,178) Statement of Cash Flows Net loss for the year (618,391) (25,787) (644,178) Increase (decrease) in accounts payable 16,105 31,860 47,965 Issuance of common shares, net of share issue costs 416,779 (6,073) 410,706 Statement of Changes in Equity Share issue costs - (6,073) (6,073) Accumulated deficit (952,080) (25,787) (977,867) 17