01 Quantum Inc. — Interim / Quarterly Report 2021

Mar 15, 2021

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01 Communique Laboratory Inc.

Interim Consolidated Financial Statements for the period ended January 31, 2021

(Unaudited)

TSX-V : ONE; OTCQB: OONEF

Dated: March 12, 2021

01 Communique Laboratory Inc. Interim Consolidated Statements of Financial Position (Unaudited)

	31-Jan-21 31-Oct-20
Assets Current assets Cash and cash equivalents Guaranteed investment certificate (note 4) Accounts receivable (note 2(a)) Prepaid expenses and other assets Plant and equipment (note 15) Total assets Liabilities and Shareholders' Deficit Current liabilities Accounts payable and accrued liabilities Deferred revenue Lease liability (note 12) CEBA loan payable (note 6) Shareholders' deficit Share capital (note 7(a)) Contributed surplus Warrants (note 7(c)) Deficit Contingencies Total liabilities and shareholders' deficit	$ 1,040,876 $ 962,337 60,000 60,000 149,836 202,974 20,754 25,343
	1,271,466 1,250,654 24,533 35,253
	$1,295,999 $1,285,907
	$ 151,549 $ 151,111 6,788 7,679 7,046 18,704
	165,383 177,494 60,000 -
	225,383 177,494 43,462,102 43,395,752 5,737,073 5,717,636 255,285 266,135 (48,383,844) (48,271,110)
	1,070,616 1,108,413
	$1,295,999 $1,285,907

See accompanying notes to unaudited interim consolidated financial statements

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01 Communique Laboratory Inc. Interim Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the 3 month periods ended January 31, 2021 and 2020

Revenue (note 13) Expenses: (note 14) Selling, general and administrative Research and development Withholding taxes	three months ended 31-Jan-21 31-Jan-20
	$ 213,262 $ 41,370 168,284 141,652 137,229 71,094 20,784 3,456
	326,297 216,202
Loss before accretion on liability component of debenture, interest, and other income Interest on debenture Accretion on liability portion of debenture	(113,035) (174,832) - 15,000 - 4,535
Loss before other income and expense	(113,035) (194,367)
Interest income Interest expense	576 725 275 750
Lossforthe period and comprehensiveloss	$ (112,734) $ (194,392)
Loss per common share (note 8) Basic Diluted Weighted average number of common shares (note Basic Diluted	$ (0.00) $ (0.00) $ (0.00) $ (0.00) 8) 91,793,701 80,235,472 91,793,701 80,235,472

See accompanying notes to unaudited interim consolidated financial statements

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01 Communique Laboratory Inc. Interim Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) For the 3 month periods ended January 31, 2021 and 2020

January 31, 2021	Total Number Share Contributed shareholders' of shares Capital Surplus Warrants Deficit deficit 91,393,973 $43,395,752 $5,717,636 $266,135 $(48,271,110) $1,108,413 (112,734) (112,734) 21,187 21,187 25,000 3,500 (1,750) 1,750 400,000 62,850 (10,850) 52,000 91,818,973 $43,462,102 $5,737,073 $255,285 $(48,383,844) $1,070,616
Balance October 31, 2020 Comprehensive loss for the period Stock based compensation expense (note 7(b)) Exercise of stock options (note 7(a)) Exercise of debenture warrants (note 7(a)) Balance, January 31, 2021

January 31, 2020	Number Share Contributed Compensation Total shareholders' of shares Capital Surplus Warrants Options Deficit deficit 80,235,472 $41,414,233 $5,668,916 $598,247 $ 99,200 $(47,613,942) $ 166,654 - - - - - (194,392) (194,392) - - - (4,762) - - (4,762) - - - 21,700 - - 21,700 - - 31,400 - - - 31,400 80,235,472$41,414,233 $5,700,316 $615,185 $ 99,200 $(47,808,334) $20,599
Balance October 31, 2019 Comprehensive loss for the period Cancellation of warrants Equity component of new debenture Stock based compensation expense (note 7(b)) Balance January 31, 2020

See accompanying notes to unaudited interim consolidated financial statements

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01 Communique Laboratory Inc. Interim Consolidated Statements of Cash Flows (Unaudited) For the 3 month periods ended January 31, 2021 and 2020

Cash provided by (used in): Operating activities: Comprehensive loss for the period Adjustments to reconcile loss for the period to net cash flows from operating activities: Depreciation of property and equipment Amortization of right-of-use asset Stock-based compensation expense Accretion on liability portion of debenture Change in non-cash working capital Financing activities: Exercise of stock options Exercise of debenture warrants Proceeds from CEBA loan Lease payments made Investing activities: Proceeds from guaranteed investment certificate Purchase of property and equipment Increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Cash and cash equivalents comprise: Cash	three months ended 31-Jan-21 31-Jan-20
	$ (112,734) $ (194,392) 1,850 1,493 11,061 11,061 21,187 31,400 - 4,535 57,274 (11,454)
	(21,362) (157,357) 1,750 - 52,000 - 60,000 - (11,658) (10,896)
	102,092 (10,896) 250,000 (2,191) (708)
	(2,191) 249,292 78,539 81,038 962,337 283,712
	$1,040,876 $ 364,751
	$ 1,040,876 $ 364,751

See accompanying notes to unaudited interim consolidated financial statements

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

Notice to reader of the interim consolidated financial statements

These unaudited interim condensed consolidated financial statements (“interim consolidated financial statements”) of 01 Communique Laboratory Inc. (the “Company”), which include the accompanying interim consolidated statement of financial position as at January 31, 2021 and the interim consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity and cash flows for the three month periods ended January 31, 2021 and 2020, are the responsibility of the Company’s management. These interim consolidated financial statements have not been audited or reviewed on behalf of the shareholders by the independent external auditors of the Company, McGovern Hurley LLP. The unaudited interim consolidated financial statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these financial statements in accordance with accounting principles generally accepted in Canada. These unaudited interim consolidated financial statements are prepared under International Financial Reporting Standards (“IFRS”) and reflect management’s best estimates and judgment based on information currently available.

01 Communique Laboratory Inc. (the "Company") was incorporated on October 7, 1992 under the laws of Ontario. The Company’s cybersecurity business unit focuses on its IronCAP™ patent-pending cryptographic system. The Company’s remote access business unit focuses on its I’m InTouch suite of secure remote access services and products. These consolidated financial statements are prepared under International Financial Reporting Standards ("IFRS") and reflect management's best estimates and judgment based on information currently available.

The Company's head office is located at 789 Don Mills Road, Suite 700, Toronto, Ontario M3C 1T5 and its common shares are traded on the TSX Venture Exchange ("TSX-V") under the symbol ONE and quoted on the OTCQB Market in the United States under the symbol OONEF.

(1) Significant accounting policies:

(a) Statement of compliance and basis of presentation:

These interim consolidated financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and on a basis consistent with the accounting policies disclosed in the Company’s annual audited consolidated financial statements for the year ended October 31, 2020. The accounting standards applied in these interim consolidated financial statements are based on IFRS issued and outstanding as of the date the Board of Directors authorized the financial statements for issue.

The interim consolidated financial statements were authorized for issue by the Board of Directors on March 12, 2021.

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, 01 Communique (GP) Inc. Intercompany transactions and balances are eliminated on consolidation.

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Generally, the Company has a shareholding of more than one half of the voting rights in its subsidiaries. The effects of potential voting rights that are currently exercisable are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are deconsolidated from the date control ceases. The financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

The consolidated financial statements have been prepared on the historical cost basis, except for certain items which may be accounted for at fair value as further discussed in subsequent notes, using the Significant accounting policies and measurement bases summarized below.

The consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

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

Presentation of the consolidated statements of financial position differentiates between current and non-current assets and liabilities. The consolidated statements of operations and comprehensive loss are presented using the functional classification for expenses.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. The Company has sustained substantial losses and negative cash flows from operations in recent years and its ability to continue as a going concern is dependent on the Company’s ability to generate future profitable operations and cash flows and/or obtain additional financing.

Should the Company not be able to generate sufficient cash flows to become profitable in the future and generate sufficient working capital to fund operations, it will become necessary to secure additional sources of financing. However, there can be no assurances that any such financing will be available to the Company on acceptable terms or at all. These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these consolidated financial statements.

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

(2) Financial instruments and financial risk management:

(a) Financial instruments:

The Company has classified its financial instruments as follows:

Financial assets: Financial assets, measured at amortized cost: Cash and cash equivalents Guaranteed investment certificate Accounts receivable Financial liabilities, recorded at amortized cost: Accounts payable and accrued liabilities Loan payable	31-Jan-21 $ 1,040,876 60,000 149,836 151,549 60,000	31-Oct-20
		$ 962,337 60,000 202,974 151,111 -

Accounts receivable are comprised of the following:

Trade receivables Investment tax credits receivable Other	31-Jan-21 $ 114,816 17,500 17,520 $149,836	31-Oct-20
		$ 166,322 17,500 19,152
		$202,974

(b) Financial risk management:

(i) Overview:

The Company has exposure to credit risk, liquidity risk and market risk. The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's policies on an ongoing basis.

(ii) Credit risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's accounts receivable. The carrying amount of financial assets represents the maximum credit exposure.

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

The Company's exposure to credit risk with its customers is influenced mainly by the individual characteristics of each customer. The Company generally does not require collateral for sales on credit. The Company closely monitors extensions of credit and has not experienced significant credit losses in the past. At January 31, 2021 and October 31, 2020, the Company had a nil balance in the allowance for doubtful accounts and had no material past due trade receivables.

The Company invests its cash with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations. The Company invests its cash in cash equivalents with Canadian chartered banks that are of high credit quality. Given these high credit ratings, the Company does not expect any counterparties to these cash equivalents to fail to meet their obligations.

(iii) Concentrations of credit risk:

There was one company that comprised 97% (2020 – 84%) of the Company’s total of revenue for the three months ended January 31, 2021. No other customers exceeded 10% of revenue during the current or prior periods. The customer comprising 97% (2019 – 84%) of revenue represents 76% (2019 – 100%) of accounts receivable as at January 31, 2021.

(iv) 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's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due. To the extent that the Company does not believe it has sufficient liquidity to meet these obligations, management will consider securing additional funds through equity or debt transactions.

However, the Company has sustained substantial losses in recent years and its ability to continue as a going concern is dependent on the Company's ability to generate future profitable operations and cash flows and/or obtain additional financing, which would be contingent upon market and other conditions in the future, which are beyond the Company's control.

At January 31, 2021, the Company had other financial assets consisting of cash and cash equivalents, guaranteed investment certificate and accounts receivable of $1,250,712 (October 31, 2020 - $1,225,311) and other financial liabilities of $211,549 (October 31, 2020 - $151,111), consisting of accounts payable and accrued liabilities and financial liabilities and a loan.

The Company manages its liquidity risk by continuously monitoring forecast and actual cash flows.

(v) Market risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk, interest rate risk and market price risk. The Company is exposed to currency risk and interest rate risk.

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

Currency risk:

Net monetary liabilities due in U.S. dollars include accounts payable of $20,450 (October 31, 2020 – $15,148), cash of $353,350 (October 31, 2020 - $179,571) and accounts receivable of $89,700 (October 31, 2020 - $126,001).

The Company reports its results in Canadian dollars. The Company markets its products in Canada, the United States ("U.S.") and other jurisdictions, including Japan. Sales to Japanese customers are primarily denominated in U.S. dollars. Substantially all of the Company's sales are in U.S. dollars. As a result, the Company is subject to currency risk from sales made in U.S. dollars. The Company does not hedge the risk related to fluctuations in the exchange rate between the U.S. and the Canadian dollar from the date of the sales transaction to the collection date due. As at January 31, 2021, the Company had net monetary assets due in U.S. dollars of $422,600 (October 31, 2020 - $261,600). An increase or decrease in the U.S. to Canadian dollar exchange rate by 10% as at January 31, 2021 would have resulted in a gain in the amount of $54,000 (October 31, 2020 - $38,3000) or a loss of $54,000 (October 31, 2020 - $38,300), respectively.

The Company has performed a sensitivity analysis for foreign exchange exposure over the three month period ended January 31, 2021. The analysis used a modeling technique that compares the U.S. dollar equivalent of all revenue and expenses incurred in U.S. dollars, at the actual exchange rate, to a hypothetical 10% movement in the foreign currency exchanges rates against the Canadian dollar, with all other variables held constant. Foreign currency exchanges rates used were based on the market rates in effect during the three month period ended January 31, 2021. The sensitivity analysis indicated that a hypothetical 10% movement in the foreign currency exchange rate from the Canadian dollar to the U.S. dollar would result in a decrease to the net loss for the three month period ended January 31, 2021. An increase or decrease in the U.S. to Canadian dollar exchange rate by 10% during the three month period ended January 31, 2021 would have resulted in a gain of $16,400 (2019 – loss of $2,200) or a loss of $16,400 (2019 – gain of $2,200) respectively. There can be no assurances that the above projected exchange rate change will materialize. Interest rate risk: The Company is exposed to interest rate risk on its fixed rate financial instruments. Fixed rate instruments subject the Company to fair value interest rate risk, as the fair value of the financial instrument fluctuates due to changes in market interest rates. Financial instruments subject to interest rate risk include demand deposits.

(vi) Fair values of financial instruments:

All financial instruments measured at fair value are categorized into one of three hierarchy levels, described below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:

Level 1 – Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets of liabilities.

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

Level 2 – Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 – Values based on prices or valuations techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

There are no financial instruments that are measured at fair value on a regular basis.

(4) Guaranteed Investment Certificate:

One year cashable guaranteed investment certificate (“GIC”) bearing interest at the rate of 1.4% per annum and maturing February 12, 2021. The amount of the GIC as at January 31, 2021 was $60,000 (October 31, 2020 - $60,000).

(5) Capital risk management:

The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund operations and discharge liabilities as they become due. Management performs regular reviews of its forecasted cash flow requirements to ensure cash flow needs are addressed.

The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company considers its capital to consist of shareholders’ equity.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no significant changes in the Company’s approach to capital management during the years ended October 31, 2020 and 2019.

The Company and its subsidiary are not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange (“TSXV”) which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required to maintain operations and cover general and administrative expenses for a period of 6 months. As at January 31, 2021, the Company believes it is compliant with the policies of the TSXV .

(6) Government Assistance:

The Canada Emergency Business Account (“CEBA”) provides interest-free bank loans, guaranteed by the government of Canada, of up to $60,000 to small businesses that qualify. The Company’s loan payable consists of a $60,000 CEBA loan that is interest free and repayable by December 31, 2022 with up to $20,000 of the loan being forgiven conditional upon the Company repaying the full amount due of $60,000 by maturity which is December 31. 2022.

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

The Canada Emergency Wage Subsidy ("CEWS") government program provides a wage subsidy of 75% for qualifying businesses. The purpose of the wage subsidy is to allow employers to re-hire workers that were previously laid off, and to continue to employ those who are already on payroll. For the three month period ended January 31, 2021, the Company has received approximately $13,000 as a wage subsidy under this program. This has been recognized in the consolidated statements of operations as a reduction to the related expenses.

(7) Share Capital:

• (a) Share capital authorized, issued and outstanding:

Authorized:

50,000 Series A preference shares Unlimited preference shares, issuable in series

Unlimited common shares

Issued: 91,818,973 common shares

The following details the changes in issued and outstanding common shares for the three month period ended January 31, 2021:

The following details the changes in January 31, 2021:	issued and outstanding common shares for the three
Balance, October 31, 2020 Exercise of stock options Exercise of debenture warrants Balance, January 31, 2021	Number Amount
	91,393,973 $ 43,395,752
	25,000 3,500 400,000 62,850
	91,818,973 $43,462,102

There were 25,000 stock options exercised pursuant to the Company’s stock option plan at an exercise price of $0.07.

There were 400,000 debenture warrants exercised for cash proceeds of $52,000. In addition, the fair value of the debenture warrants, as estimated on date of grant, was $10,850 which has been reclassified from warrants to share capital as a result of the exercise.

• (b) Employee stock option plan:

The Company maintains a share option plan (the "Plan") for the benefit of management, directors, officers, contractors and employees. The Plan is a "rolling" stock option plan, pursuant to which the maximum number of common shares that may be reserved for issuance under outstanding stock options will be 10% of the Company's issued and outstanding common shares, as constituted on the date of any grant of options under the Plan.

Options are granted under the Plan at the discretion of the Board of Directors at exercise prices determined as the trading prices of the Company's common shares on the TSX-V on the day preceding the effective date of

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

the grant. In general, options granted under the Plan vest over the period of up to a maximum of five years from the grant date and expire by no later than the fifth anniversary of the date of grant.

Changes in outstanding options were as follows:

Options outstanding, October 31, 2020 Granted Exercised Options outstanding, January 31, 2021	Weighted average Number exercise price
	5,085,000 $ 0.08
	200,000 $ 0.38 (25,000) $ 0.07
	5,260,000 $ 0.09

The following summarizes information with respect to the Company’s stock option plan as at January 31, 2021:

2021:
Range of exercise prices	Number Outstanding	Options Outstanding Options Exercisable Weighted Weighted Weighted average average Number average remaining life exercise price exercisable exercise price
$0.05 to $0.07 $0.08 to $0.10 $0.38 to $0.42	3,170,000 1,790,000 300,000	1.4 $0.06 3,170,000 $0.06 2.5 $0.10 1,490,000 $0.10 3.9 $0.39 - -
	5,260,000	1.9 $0.09 4,660,000 $0.07

The average grant date fair value of options granted during 2021 was $0.34. There were no stock options granted for the three month period ended January 31, 2020. The fair value of each option granted has been estimated on the date of grant using the Black-Scholes fair value option-pricing model with the following assumptions used for grants for the three period ended January 31, 2021: expected dividend yield of nil, expected volatility of 166%, weighted average risk-free interest rate of 1.5% and expected lives of four years. During the three month periods ended January 31, 2021, the Company recorded stock option expense for stock options granted in the current and previous periods of $21,187 (2020 - $31,400).

Warrants:

The following table details the changes in the share purchase warrants for the three months ended January 31, 2021:

Balance, October 31, 2020 Exercise of debenture warrants Balance, January 31, 2021	Weighted average Number Amount exercise price
	3,135,582 $ 266,135 $ 0.15 (400,000) (10,850) $ 0.13 2,735,582 $255,285 $ 0.15

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

The following table summarizes information about warrants outstanding at January 31, 2021:

			Weighted
			average	Weighted
			remaining	average
		Number	contractual life	exercise
	Exercise price	outstanding	(years)	price
Warrants issued on private
placement (note 7(c)(i))	$ 0.15	1,612,332	0.45	$ 0.15
Compensation warrants issued
on private placement
(note 7(c)(ii))	0.15	184,916	0.45	0.15
Warrants issued on settlement of
debenture (note 7(c)(iii)	0.35	100,000	1.65	0.35
Warrants issued on private
placement (note 7(c)(iv))	0.15	791,667	1.30	0.15
Compensation warrants issued
on private placement
(note 7(c)(v))	0.12	46,667	1.30	0.12
		2,735,582	0.67	$0.15

• (i) Each warrant entitles the holder to acquire one common share for $0.15 at any time prior to July 29, 2021.

• (ii) Each compensation warrant entitles the holder to acquire one common share for $0.15 at any time prior to July 29, 2021.

• (iii) Each warrant entitles the holder to acquire one common share for $0.35 at any time prior to April 24, 2021.

• (iv) Each warrant entitles the holder to acquire one common share for $0.15 at any time prior to May 29, 2022.

• (v) Each warrant entitles the holder to acquire one common share for $0.12 at any time prior to May 29, 2022.

(8) Loss per share:

The computations for basic and diluted income (loss) per share are as follows:

For the three months ended Profit (Loss) for the period Weighted average number of common shares outstanding Basic Diluted Income (loss) per common share Basic Diluted	31-January-21 $ (112,734) 91,793,701 91,793,701 $ (0.00) $ (0.00)	31-January-20 $ (194,392) 80,235,807 80,235,807 $ (0.00) $ (0.00)

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

As the Company is in a loss position for the three months ended January 31, 2021 and 2020, the inclusion of options and warrants in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation.

(9) Related Party Transactions:

The remuneration of directors and other key management personnel of the Company during the three month periods ended January 31, 2021 and 2020 were as follows:

Salaries Stock-based compensation	for the 3 months ending 31-Jan-21 31-Jan-20
	$ 55,000 $ 56,250 $ 6,750 $ 31,400

The Company’s President and CEO invoices the Company for his services that pertain to research and development pursuant to a contractor agreement. Fees paid under this agreement during the three month periods ended January 31, 2021 were $16,500 (2020 - $15,250), and have been included in research and development expenses and are disclosed in the salaries amounts in the above table. This transaction is in the normal course of operations and is measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. The President and CEO’s salary for the three months ended January 31, 2021 was $21,000 (2020 – 21,000).

(10) Change in non-cash operating working capital:

Change in non-cash working capital: Accounts receivable Prepaid expenses and other assets Accounts payable & accruals Deferred revenue	three months ending 31-Jan-21 31-Jan-20
	$ 53,138 $ 22,665 4,589 1,360 438 (35,174) (891) (305)
	$ 57,274 $ (11,454)

(11) Contractual Obligations and Contingencies:

The Company is engaged in legal actions from time to time arising in the ordinary course of business. None of these actions, individually or in the aggregate, is expected to have a material adverse effect on the consolidated financial position or results of operations.

On October 7, 2020 the Company entered into a non-binding agreement for a drawdown equity facility with a private equity firm. The agreement provides for equity private placement offerings up to $5,000,000 in units of the Company, with each unit consisting of one common share and one-half of one common share purchase warrant, to be conducted in drawdowns of up to $250,000 per tranche over a period of 24 months with the timing of each

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

tranche to be made by the Company at its sole discretion. The amount and terms of each tranche will be subject to the mutual agreement of the Company and the investor. As at January 31, 2021, no placements had been made.

In March 2020, the COVID-19 outbreak was declared a global pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy, capital markets and the Company's financial position cannot be reasonably estimated at this time. The Company is monitoring developments and will adapt its business plans accordingly. The actual and threatened spread of COVID-19 globally could adversely impact the Company's operations and ability to raise capital.

(12) Lease commitment:

The Company's head office, located at 789 Don Mills Road, Suite 700, Toronto, Ontario M3C 1T5, is leased and considered to be a right-of-use asset. The current lease commenced April 1, 2019 for a period of 24 months without a renewal provision. Lease payments (including the Company’s share of property taxes, operating costs, utilities and extra services) during the three months ended January 31, 2021 were $11,658 (2020- $10,896). Subsequent to the end of the quarter, on March 1, 2021, the lease was amended to extend the expiry date to March 31, 2024 – (see Note 16 Subsequent Event).

(13) Segmented Information:

Revenue attributable to geographical location based on the customer is as follows:

United States Canada Japan	For the three months ended 31-Jan-21 31-Jan-20
	$ 2,773 $ 4,507 2,649 2,298 207,840 34,565
	$213,262 $41,370

Substantially all of the Company’s identifiable assets as at January 31, 2021 and October 31, 2020 are located in Canada.

The significant categories of revenue recognized during the periods are as follows:

Royalty fees Development fees Subscription and maintenance fees	For the three months ended 31-Jan-21 31-Jan-20
	$ 76,640 $ 34,565 131,200 - 5,422 6,805
	$213,262 $41,370

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01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

(14) Operating expenses:

The Company presents a functional consolidated statement of operations and comprehensive income in which expenses are aggregated according to the function to which they relate. The Company has identified the major functions as selling, general and administrative expenses; and research and development expenses. The following table presents the expenses based on their nature:

for the three months ended 31-Jan-21	Selling, general Research and and administration development Total
Salaries, contractors, commissions and benefits Stock-based compensation Other operating expenses	$ 72,186 $ 119,132 $ 191,318 21,187 - 21,187 74,911 18,097 93,008
	$168,284 $137,229 $ 305,513

for the three months ended 31-Jan-20	Selling, general Research and and administration development Total
Salaries, contractors, commissions and benefits Stock-based compensation Other operating expenses	$ 63,417 $ 56,388 $ 119,805 31,400 - 31,400 46,835 14,706 61,541
	$141,652 $71,094 $212,746

(15) Property and Equipment:

As at January 31, 2021	Computer Communications Furniture and fixtures and leasehold Right of Use systems equipment improvements Asset Total
Cost Balance at October 31, 2020 Additions Balance at January 31, 2021 Depreciation Balance at October 31, 2020 Additions Balance at January 31, 2021 Carry amounts Balance at January 31, 2021 Balance at October31,2020	$ 554,441 $ 3,394 $ 95,299 $ 63,583 $ 716,717
	2,191 - - - 2,191
	$ 556,632 $ 3,394 $ 95,299 $ 63,583 $718,908
	$ 542,678 $ 537 $ 94,005 $ 44,244 $ 681,464
	1,765 85 - 11,061 12,911
	$ 544,443 $ 622 $ 94,005 $ 55,305 $ 694,375
	$ 12,189 $ 2,772 $ 1,294 $ 8,278 $ 24,533 $11,763 $2,857 $1,294 $19,339 $ 35,253

16

01 Communique Laboratory Inc. Notes to the consolidated financial statements (Unaudited) Three month periods ended January 31, 2021 and 2020

(16) Subsequent event:

On March 1, 2021 the Company signed an agreement to extend and amend the terms of the lease of its head office. The term of the lease was extended for a further period of three years, commencing April 1, 2021 and expiring March 21, 2024. There was no further right to renew or extend the term of the lease. The base rent payable, which excludes the Company’s share of property taxes, operating costs, utilities and extra services, is as follows:

Year 1. From April 1, 2021 to March 31, 2022, it is $18,750. Year 2. From April 1, 2022 to March 31, 2023, it is $19,562 and Year 3. From April 1, 2023 to March 31, 2024, it is $20,345.

01 COMMUNIQUE LABORATORY INC.

CORPORATE INFORMATION

DIRECTORS Andrew Cheung William A. Train President & CEO Chairman Private investor Gary Kissack Jane Yang Lawyer, Fogler, Rubinoff LLP Director

OFFICERS Andrew Cheung Brian Stringer President & CEO Chief Financial Officer

Gigi Loo Controller & Corporate Secretary

INVESTOR RELATIONS

e-mail to: investorrelations@01com.com

CORPORATE HEADQUARTERS

789 Don Mills Road Suite 700 Toronto, Ontario M3C 1T5

Phone: (905) 795-2888 Trading Symbols: Fax: (905) 795-0101 In Canada TSX-V: ONE www.01com.com In U.S. OTCQB: OONEF