01 Quantum Inc. — Interim / Quarterly Report 2022

Sep 15, 2022

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01 Communique Laboratory Inc.

Interim Consolidated Financial Statements for the period ended July 31, 2022

(Unaudited)

TSX-V : ONE; OTCQB: OONEF

Dated: September 14, 2022

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

	31-July-22 31-Oct-21
Assets Current assets Cash Accounts receivable (note 2(a)) Prepaid expenses and other assets Plant and equipment (note 13) Investment in Talent Summit (note 14) Total assets Liabilities and Shareholders' Deficit Current liabilities Accounts payable and accrued liabilities Deferred revenue Lease liability (note 10) Non-current liabilities Lease liability CEBA loan payable (note 4) Total liabilities Shareholders' deficit Share capital (note 5(a)) Contributed surplus Warrants (note 5(c)) Deficit Contingencies (note 9) Total liabilities and shareholders' deficit	$ 858,550 $ 994,924 128,459 205,527 31,136 31,743
	1,018,145 1,232,174 103,395 125,584 31,500 -
	$1,153,040 $1,357,758
	$ 247,588 $ 182,354 6,715 6,502 46,489 42,532
	300,792 231,388 31,098 66,915 40,000 40,000
	371,890 338,303 44,167,715 43,963,582 5,996,154 5,890,297 26,000 93,533 (49,408,719) (48,927,957)
	781,150 1,019,455
	$1,153,040 $1,357,758

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 and 9 month periods ended July 31, 2022 and 2021

Revenue Expenses: Selling, general and administrative Research and development Withholding taxes	three months ended 31-Jul-22 31-Jul-21 $ 236,002 $ 211,831 221,772 207,909 194,132 209,766 10,400 20,660	nine months ended 31-Jul-22 31-Jul-21
		$ 782,627 $ 722,324 650,056 570,400 559,893 485,871 51,523 70,651
	426,304 438,334	1,261,472 1,126,922
Loss before other income and expense Interest income Interest expense	(190,302) (226,503) 1,125 180 1,065 1,595	(478,845) (404,598) 1,770 751 3,687 2,431
Loss for theperiod and comprehensive loss	$ (190,242) $ (228,762)	$ (480,762) $ (406,278)
Loss per common share Basic Diluted Weighted average number of common shares Basic Diluted	$ (0.00) $ (0.00) $ (0.00) $ (0.00) 94,916,728 93,278,000 94,916,728 93,278,000	$ (0.01) $ (0.00) $ (0.01) $ (0.00) 94,607,495 92,246,000 94,607,495 92,246,000

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 9 month periods ended July 31, 2022 and 2021

July 31,2022	Total Number of Share Contributed Shareholders' shares Capital Surplus Warrants Deficit deficit
Balance October 31, 2021 Comprehensive loss for the period Stock based compensation expense (note 5 (b)) Exercise of stock options (note 5 b) Expiration of stock options (note 5 b) Exercise of warrants (note 5 c) Expiration of warrants (note 5 c) Balance, July 31, 2022	94,451,221 $ 43,963,582 $ 5,890,297 $ 93,533 $(48,927,957) $ 1,019,455 - - - - (480,762) (480,762) - -141,607 - - 141,607 200,000 27,000 (13,000) - - 14,000 - 22,750 (22,750) - - - 588,333 138,116 - (51,266) - 86,850 - 16,267 - (16,267) - -
	95,239,554 $44,167,715 $5,996,154 $26,000 $(49,408,719) $781,150

July 31,2021	Total Number of shares Share Capital Contributed Surplus Warrants Deficit Shareholders’ Equity
Balance October 31, 2020 Comprehensive loss for the period Stock based compensation expense Exercise of stock options Exercise of warrants Balance, July 31, 2021	91,393,973 $ 43,395,752 $ 5,717,636 $ 266,135 $(48,271,110) $ 1,108,413 - - - - (406,278) (406,278) - - 136,614 - - 136,614 860,000 73,640 (30,140) - - 43,500 2,197,248 494,189 - (172,603) - 321,586
	94,451,221 $43,963,581 $5,824,110 $93,532 $(48,677,388) $1,203,835

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 and 9 month periods ended July 31, 2022 and 2021

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 Change in non-cash working capital Financing activities: Exercise of stock options Exercise of warrants Exercise of debenture warrants Proceeds from loan Lease payments made Investing activities: Proceeds from guaranteed investment certificate Investment in Talent Summit Purchase of property and equipment Increase (decrease) in cash Cash, beginning of period Cash, end of period	three months ended 31-Jul-22 31-Jul-21 $ (190,242) $ (228,762) 1,086 1,777 11,398 11,219 53,782 70,850 43,660 96,870 (80,316) (48,046) 14,000 41,750 86,850 - - 269,587 - - (11,279) (11,338) 89,571 299,999 - - - - (80) (4,225) (80) (4,225) 9,175 247,728 849,375 914,057 $858,550 $1,161,785	nine months ended 31-Jul-22 31-Jul-21
		$ (480,762) $ (406,278) 5,111 5,431 33,836 34,298 141,607 136,614 143,102 (13,327)
		(157,106) (243,262) 14,000 43,500 86,850 - - 321,587 - 60,000 (32,866) (33,451)
		67,984 391,636 - 60,000 (31,500) - (15,752) (8,926)
		(47,252) 51,074 (136,374) 199,448 994,924 962,337
		$858,550 $1,161,785

See accompanying notes to unaudited interim consolidated financial statements

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

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 July 31, 2022 and the interim consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity and cash flows for the three and nine month periods ended July 31, 2022 and 2021, 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, 2021. 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 September 14, 2022.

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

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

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 noncurrent 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.

6

01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(2) Financial instruments and financial risk management:

(a) Financial instruments:

The Company has classified its financial instruments as follows:

	31-July-22	31-Oct-21
Financial assets:
Held-for-trading, measured at fare value:
Cash	$ 858,550	$ 994,924
Loans and receivables, recorded at cost:
Accounts receivable	128,459	205,507
Financial liabilities, recorded at amortized cost:
Accounts payable and accrued liabilities	247,588	182,354
Loan payable	40,000	40,000

Accounts receivable are comprised of the following:

	31-July-22 31-Oct-21
Trade receivables Investment tax credits receivable Other	$ 104,120 $ 158,073 - 25,000 24,339 22,434
	$128,459 $205,507

(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.

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 July 31, 2022 and October 31, 2021, 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

7

01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

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 were two companies that comprised 98% (2021 – 98%) and 98% (2021- 98%) of the Company’s total revenue for the three and nine months ended April 30, 2022 respectively. No other customers exceeded 10% of revenue during the current or prior periods. The customers comprising 98% (2021 – 98%) of revenue represents 100% (2021 – 100%) of accounts receivable as at July 31, 2022.

(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 July 31, 2022, the Company had financial assets consisting of cash and accounts receivable of $987,009 (October 31, 2021 - $1,200,431) and financial liabilities of $287,588 (October 31, 2021 - $222,354), consisting of accounts payable and accrued liabilities and the Canadian emergency business account loan payable.

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.

Currency risk:

Net monetary assets and liabilities due in U.S. dollars include accounts payable of $11,216 (October 31, 2021 – $23,030), cash of $389,200 (October 31, 2021 - $568,902) and accounts receivable of $80,600 (October 31, 2021 - $127,478).

The Company reports its results in Canadian dollars. The Company markets its products in Canada, the United States ("U.S.") and Asia/Pacific. Sales to Asian/Pacific 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

8

01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

exchange rate between the U.S. and the Canadian dollar from the date of the sales transaction to the collection date due. As at July 31, 2022, the Company had net monetary assets in U.S. dollars of $458,584 (October 31, 2021 - $673,351). An increase or decrease in the U.S. to Canadian dollar exchange rate by 10% as at July 31, 2022 would have resulted in a gain in the amount of $45,858 (October 31, 2021 - $83,500) or a loss of $45,858 (October 31, 2021 - $83,500), respectively.

The Company has performed a sensitivity analysis for foreign exchange exposure over the nine month period ended July 31, 2022. 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 nine month period ended July 31, 2022. 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 nine month period ended July 31, 2022. A decrease or increase in the U.S. to Canadian dollar exchange rate by 10% during the nine month period ended July 31, 2022 would have resulted in a reduction of the net loss of $49,000 (2021 – $60,000) or an increase in the net loss of $49,000 (2021 – $60,000) 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.

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.

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(3) 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 nine month period ended July 31, 2022.

The Company and its subsidiaries 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 July 31, 2022, the Company believes it is compliant with the policies of the TSXV .

(4) 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. Management has assessed that it is likely the Company would be able to repay the balance of the loans by December 31, 2022 and accordingly, the total forgivable amount of $20,000 was recorded as government assistance income in fiscal 2021.

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 nine month period ended July 31, 2021, the Company has received approximately $13,000 as a wage subsidy under this program (2022 – Nil). This has been recognized in the consolidated statements of operations as a reduction to the related expenses.

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(5) 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: 95,239,554 common shares

The change in issued and outstanding common shares for the nine month period ended July 31, 2022 are as follows:

s:
Balance, October 31, 2021 Exercise of warrants Exercise of stock options Warrants expired Stock options expired Balance, July 31, 2022	Number Amount
	94,451,221 $ 43,963,582
	588,333 138,116 200,000 27,000 - 16,267 - 22,750
	95,239,554 $44,167,715

• (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 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.

The following summarizes changes in outstanding options for the nine month period ended July 31, 2022.

Options Outstanding, October 31, 2021 Granted Exercised Expired Balance, July 31, 2022	Weighted average Number exercise price
	4,915,000 $ 0.14
	1,150,000 $ 0.16 (200,000) $ 0.07 (350,000) $ 0.07
	5,515,000 $ 0.15

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

The following summarizes information with respect to the Company’s stock option plan as at July 31, 2022:

Range of exercise prices	Options outstanding Weighted average Weighted remaining average Number contractual exercise outstanding life (years) price	Options exercisable Weighted average Number exercise exercisable price 1,785,000 $ 0.06 1,540,000 $ 0.10 620,000 $ 0.37 3,945,000 $ 0.13
$0.05 to $0.07 $0.10 to $0.14 $0.14 to $0.42	1,785,000 0.4 $ 0.06 2,440,000 2.2 $ 0.11 1,290,000 2.8 $ 0.34
	5,515,000 1.6 $ 0.15

The average grant date fair value of options granted during 2022 was $0.25 (2021 - $0.34). 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 nine month period ended July 31, 2022: expected dividend yield of nil (2021 – nil), expected volatility of 165% (2021 – 166%), weighted average risk-free interest rate of 2.0% (2021 – 1.5%) and expected lives of four years (2021 – four years). During the nine month period ended July 31, 2022, the Company recorded stock option expense for stock options granted in the current and previous periods of $141,607 (2021 - $136,614).

(c) Warrants:

The change in share purchase warrants for the nine months ended July 31, 2022 are as follows:

Balance, October 31, 2021 Exercise of warrants Warrants expired Balance, July 31, 2022	Number Amount 938,334 $ 93,533 (588,333) (51,266) (250,001) (16,267) 100,000 $26,000	Weighted average exercise price
		$ 0.15
		$ 0.15 $ 0.15
		$ 0.35

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

The following table summarizes information about warrants outstanding at July 31, 2022:

			Weighted
			average
			remaining	Weighted
	Exercise	Number	contractual life	average
	price	outstanding	(years)	exercise price
Warrants issued on settlement of
debenture (note 6(c)(i)	0.35	100,000	0.50	0.35

(i) Each warrant entitles the holder to acquire one common share for $0.35 at any time prior to October 14, 2022.

(6) Loss per share:

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

Loss for the period and comprehensive loss Loss per common share Basic Diluted Weighted average number of common shares Basic Diluted	three months ended 31-Jul-22 31-Jul-21 $ (190,242) $ (228,762) $ (0.00) $ (0.00) $ (0.00) $ (0.00) 94,916,728 93,278,000 94,916,728 93,278,000	nine months ended 31-Jul-22 31-Jul-21
		$ (480,762) $ (406,278) $ (0.01) $ (0.00) $ (0.01) $ (0.00) 94,607,495 92,246,000 94,607,495 92,246,000

As the Company is in a loss position for the three and nine months ended July 31, 2022 and 2021, 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.

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(7) Related party transactions:

The remuneration of directors and other key management personnel of the Company during the three and nine month periods ended July 31, 2022 and 2021 were as follows:

Salaries and contractor fees Stock based compensation	For the 3 months ending 31-July-22 30-July-21 $ 73,000 $ 55,000 51,813 37,037 $124,813 $92,037	For the 9 months ending 31-July-22 31-July-21
		$ 199,000 $ 165,000 138,654 47,239
		$337,654 $212,239

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 and nine month periods ended July 31, 2022 were $28,500 (2021 - $16,500) and $65,500 (2021 - $49,500) respectively, 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 and nine months ended July 31, 2022 was $21,000 (2021 – 21,000) and $63,000 (2021 - $42,000) respectively.

Salary and contractor fees included in the above table owing to directors and other key management personnel and so included in accounts payable and accrued liabilities at July 31, 2022 is $11,800 (2021 - $7,300). They are unsecured, non-interest bearing with no fixed terms of payment and were paid subsequent to the end of the periods.

(8) 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 ended 31-Jul-22 31-Jul-21 $ 18,093 $ 72,311 19,953 14,261 5,477 10,701 137 (403) $43,660 $ 96,870	nine months ended 31-Jul-22 31-Jul-21
		$ 77,048 $ (28,495) $ 607 (2,891) 65,234 17,073 213 986
		$143,102 $ (13,327)

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01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(9) 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 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 July 31, 2022, 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. To date the Company has been able to adapt its operations thereby minimizing the impact from the pandemic.

(10) 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. On March 1, 2021 the lease was amended with the expiry date extended to March 31, 2024 with no renewal term. Lease payments (including the Company’s share of property taxes, operating costs, utilities and extra services) during the three and nine month periods ended July 31, 2022 were $11,279 (2021$11,338) and $32,866 (2021 - $33,451) respectively.

The lease liability has been measured by discounting future lease payments at the incremental borrowing rate at March 1, 2021. The incremental borrowing rate applied was determined to be 5.0% per annum for the lease and represents the Company's best estimate of the rate of interest that it would expect to pay to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in the current economic environment. As a result, the Company recorded an increase in capital assets, right of use asset, of $134,634 and an increase in lease liability of $134,634. The carrying value included as part of property and equipment as at July 31, 2022 is $74,620. The lease liability has been broken down between current and non-current amounts. The current lease liability as at July 31, 2022 is $46,489 and the non-current lease liability is $31,098.

15

01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(11) Segmented information:

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

United States Canada Asia/Pacific	For the three months ended 31-Jul-22 31-Jul-21 $ 2,277 $ 3,814 1,725 1,415 232,000 206,602 $236,002 $211,831	For the nine months ended 31-Jul-22 31-Jul-21
		$ 7,488 $ 8,826 9,488 6,989 765,651 706,509
		$782,627 $722,324

Substantially all of the Company’s identifiable assets as at July 31, 2022 and October 31, 2021 are located in Canada.

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

Royalty and development fees Subscription fees	For the three months ended 31-Jul-22 31-Jul-21 $ 232,000 $ 206,602 4,002 5,229 $236,002$211,831	For the nine months ended 31-Jul-22 31-Jul-21 $ 765,651 $ 706,509 16,976 15,815
		$782,627 $722,324

16

01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(12) 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-Jul-22	Selling, general Research and and administration development Total
Salaries, contractors, commissions and benefits Stock-based compensation Other operating expenses	$ 70,966 $ 160,763 $ 231,729 53,782 - 53,782 97,024 33,369 130,393
	$221,772 $194,132 $415,904
for the three months ended 31-Jul-21	Selling, general Research and and administration development Total
Salaries, contractors, commissions and benefits Stock-based compensation Other operating expenses	$ 89,266 $ 178,003 $ 267,269 70,850 - 70,850 47,793 31,763 79,555
	$207,909 $209,766 $417,674
for the nine months ended 31-Jul-22	Selling, general Research and and administration development Total
Salaries, contractors, commissions and benefits Stock-based compensation Other operating expenses	$ 242,692 $ 472,061 $ 714,753 141,607 - 141,607 265,757 87,832 353,589
	$ 650,056 $ 559,893 $1,209,949
for the nine months ended 31-Jul-21	Selling, general Research and and administration development Total
Salaries, contractors, commissions and benefits Stock-based compensation Other operating expenses	$ 239,452 $ 404,791 $ 644,243 136,614 - 136,614 194,334 81,080 275,414
	$570,400 $485,871 $1,056,271

17

01 Communique Laboratory Inc. Notes to Interim Consolidated Financial Statements (Unaudited) For the 3 and 9 month periods ended July 31, 2022 and 2021

(13) Property and equipment:

As at July 31, 2022

			Furniture,
			fixtures and
	Computer	Communications	leasehold	Right of Use
	systems	equipment	improvements	Asset	Total
Cost:
Balance at October 31, 2021	$ 558,655	$ 3,394	$ 99,513	$ 134,634	$ 796,196
Additions	16,758	-	-	-	16,758
Dispositions	-	-	-	-	-
Balance at July31,2022	$575,413	$3,394	$99,513	$134,634	$812,954
Depreciation:
Balance at October 31, 2021	$ 544,941	$ 877	$ 98,616	$ 26,178	$ 670,612
Additions	5,111	-	-	33,836	38,947
Dispositions	-	-	-	-	-
Balance at July31,2022	$550,052	$877	$98,616	$60,014	$709,559
Carry amounts:
Balance at October 31, 2021	$ 13,714	$ 2,517	$ 897	$ 108,456	$ 125,584
Balance at July 31, 2022	$ 25,361	$ 2,517	$ 897	$ 74,620	$ 103,395

(14) Investment in Talent Summit:

The Company made a minority investment in Talent Summit, which has been recorded as an asset at the cost paid for the investment of $31,500.

The consortium which makes up Talent Summit is pursuing a new blockchain and development of a Proof-ofConcept (PoC) is underway. The PoC of this new venture is the first step towards protecting the de-centralized ecosystem. The Company is a technology partner of Talent Summit and is its Post-Quantum Cryptography (PQC) provider.

(15) Subsequent Event:

Subsequent to the end of the quarter, on September 7, 2022, a non-brokered financing was completed comprising of 562,500 units (the "Units") at a price of $0.20 per Unit for gross proceeds of $112,500.

Each Unit is comprised of one common share in the capital of the Company (each, a "Share") and one-half of one Share purchase warrant (each, a "Warrant"). Each whole Warrant entitles the holder to purchase one additional Share in the capital of the Company (each, a "Warrant Share") for a period of 24 months from the closing date at an exercise price of $0.35 per Warrant Share.

The proceeds from the issuance will be used for working capital purposes.

18

01 COMMUNIQUE LABORATORY INC.

CORPORATE INFORMATION

DIRECTORS Andrew Cheung President & CEO

William A. Train Chairman Private investor

Gary Kissack Lawyer, Fogler, Rubinoff LLP

Tyson Macaulay Director

OFFICERS Andrew Cheung President & CEO

Brian Stringer 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