Aether Global Innovations Corp. - Interim / Quarterly Report 2021

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INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2021 and 2020

(Expressed in Canadian Dollars)

PLYMOUTH ROCK TECHNOLOGIES INC.

(the “Company”)

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Management of the Company is responsible for the preparation of the accompanying unaudited interim condensed consolidated financial statements. The unaudited interim condensed consolidated financial statements have been prepared using accounting policies in compliance with International Financial Reporting Standards (“IFRS”) for the preparation of interim condensed financial statements and are in accordance with IAS 34 – Interim Financial Reporting.

The Company’s auditor has not performed a review of these interim condensed consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Professional Accountants for a review of interim financial statements by an entity’s auditor.

PLYMOUTH ROCK TECHNOLOGIES INC. Interim Condensed Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

		Unaudited	Unaudited		Audited
As at	Note	May 31, 2021		November 30, 2020
ASSETS
Current assets
Cash		$	706,697	$	24,713
Accounts receivable			-		2,786
Sales tax receivable			6,384		4,317
Inventories	2		4,627		19,695
Prepaid expenses	3		33,536		25,908
Due from related parties	7		-		2,500
Total current assets			751,244		79,919
Non-current assets
Equipment	4		154,387		66,818
Right of use asset	14		85,801		114,648
Total assets		$	991,432	$	261,385
LIABILITIES
Current liabilities
Accounts payable	6	$	263,159	$	242,278
Lease liability	14		34,980		34,105
Due to related parties	7		46,167		46,355
Total current liabilities			344,306		322,738
Non-current liabilities
Lease liability	14		66,084		90,735
Total liabilities			410,390		413,473
SHAREHOLDERS' EQUITY
Share capital	7, 10		9,694,680		7,376,763
Contributed surplus			2,099,164		1,298,487
Accumulated other comprehensive losses			54,019		65,790
Deficit			(11,266,281)		(8,893,128)
Total shareholders'equity (deficit)			581,042		(152,088)
Total liabilities and shareholders'equity (deficit)		$	991,432	$	261,385

Going concern – Note 1 Commitments – Note 13 Subsequent events – Note 17

These consolidated financial statements are authorized for issuance by the Board of Directors on July 26, 2021. Approved on behalf of the Board:

“Tim Crowhurst” “Angelos Kostopoulos”

Tim Crowhurst, Director Angelos Kostopoulos, Director

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

PLYMOUTH ROCK TECHNOLOGIES INC.

Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited - Expressed in Canadian dollars)

Six Months Ending May 31 Three Months Ending May 31	Six Months Ending May 31 Three Months Ending May 31	Six Months Ending May 31 Three Months Ending May 31	Six Months Ending May 31 Three Months Ending May 31	Six Months Ending May 31 Three Months Ending May 31	Six Months Ending May 31 Three Months Ending May 31
Note 2021 2020 2019			2021	2020	2019
Sales 16 $ 22,540 $ 24,983 $ - $ 2,942 $ 24,578 $ -
Cost of sales 18,875	11,644	-	1,523	11,604	-
Gross Profit 3,665 13,339 - 1,419 12,974 -

OPERATING EXPENSES
General and administrative 15 1,657,935	771,308	667,433	689,584	342,365	350,353
Selling 15 210,359	606,201	359,208	74,409	239,277	278,691
Research and development 15 495,945	70,487	-	318,330	102,726	-
Total expenses 2,364,239	1,447,996	1,026,641	1,082,323	684,368	629,044

OTHER INCOME (EXPENSES)
Interest income -	158	10,041	-	7	3,888
Interest expense (26)	-	(396)	(26)	-	(8)
Foreign exchange gain (loss) (13,093)	62,409	(3,740)	(5,078)	44,507	(1,159)
NET LOSS (2,373,693) (1,474,816) (1,020,736) (1,086,008) (626,880) (626,323)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation Gain /( loss) (11,771)	64,279	-	(16,056)	(41,427)	-

TOTAL COMPREHENSIVE LOSS $ (2,385,464) $ (1,410,537) $ (1,020,736) $ (1,102,064) $ (668,307) $ (626,323)

LOSS PER SHARE, Basic and Diluted $ (0.05)	$ (0.04)	$ (0.03)	$ (0.02)	$ (0.02)	$ (0.02)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, Basic
and Diluted 49,455,206	32,754,248	31,828,040 52,698,357 34,701,488 31,894,242

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

PLYMOUTH ROCK TECHNOLOGIES INC. Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit) (Unaudited - Expressed in Canadian dollars)

	Accumulated other comprehensive losses Contributed Surplus Deficit
Share capital (Note 10) Shares to be issued Number of shares Amount
		Total

Balance, November 30, 2018 31,761,300 $ 5,311,034 $-	$ 185,024 $ (1,602,085) $-	$ 3,893,973

Net loss for the period - - -	- (1,020,736) -	(1,020,736)
Shares issued for warrants exercised 315,300 127,620 -	- - -	127,620
Fair value of agents warrants exercised - 127,254 -	(127,254) - -	-
Balance, May 31, 2019 32,796,600 $ 5,565,908 -	57,770 (2,622,821) -	$3,000,857

Balance, November 30, 2019 32,796,600 $ 5,676,498 $ 22,811	$ 736,271 $ (5,968,892) $ 46,244	$ 512,932
Net loss for the period - - -	- (1,474,816) -	(1,474,816)
Foreign currency translation gain - - -	- - (64,279)	(64,279)
Private Placement (6,847,165) 1,027,075 -	- - -	1,027,075
Share issuance costs - (38,238) -	- - -	(38,238)
Stock-based compensation - - -	358,916 - -	358,916
Balance, May 31, 2020 39,643,765 $6,665,335 $ 22,811	$ 1,095,187 $ (7,443,708) $ (18,035)	$ (321,590)

Balance, November 30, 2020 42,762,264 $ 7,376,763 $-	$ 1,298,487 $ (8,893,128) $ 65,790	$ (152,088)

Net loss for the period - - -	- (2,373,693) -	(2,373,693)
Foreign currency translation gain - - -	- - (11,771)	(11,771)
Shares issued for warrants exercised 5,745,332 1,236,666 -	- - -	1,236,666
Fair value of warrants exercised - 35,040 -	(35,040) - -	-
Shares issued for options exercised 425,000 222,500 -	- - -	222,500
Fair value of options exercised - 158,106 -	(158,106) - -	-
Private placements 3,180,000 670,000 -	- - -	670,000
Fair value of broker warrants granted - (95,395) -	95,395 - -	-
Shares issued to finders 170,000 (34,000) -	- - -	(34,000)
Shares issued as compensation 500,000 125,000 -	- - -	125,000
Stock-based compensation - - -	898,428 - -	898,428

Balance, May 31, 2021 52,782,596 $ 9,694,680 $ -	$ 2,099,164 $(11,266,821) $54,019	$581,042

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

PLYMOUTH ROCK TECHNOLOGIES INC. Interim Condensed Consolidated Statements of Cash Flows

(Unaudited - Expressed in Canadian dollars)

	Six Months Ended
May 31, 2021	May 31, 2020 May 31, 2019

Cash Provided By (Used In)

Operating Activities

Net loss for the period $ (2,373,693)	$ (1,474,816) $ (1,020,736)

Items not affecting cash:
Stock based compensation 898,428	358,916 -
Amortization expense 18,368	1,054 859
Foreign exchange gain (loss) (11,771)	(64,279) 4,177
Interest accretion 7,992	- -
Interest expense 26	- 396
Consulting Fees 125,000	- -
Changes in non-cash working capital:
Sales tax receivable (2,067)	3,854 (2,755)
Accounts receivable 2,786	(9,482) -
Inventories 15,068	- -
Prepaid expenses (7,628)	77,004 (84,378)
Due from related parties 2,500	25,070 1,785
Due to related parties (188)	(4,535) 1,333
Accounts payable and accrued liabilities 20,881	(349) (1,529)
Deferred income liability -	75,835 -
Net cash used in operating activities (1,304,298)	(1,011,782) (1,100,848)

Investing Activities

Purchase of equipment (105,937)	- (14,173)
Development expenses on Intangible assets -	- (90,707)
Net cash provided by (used in) investing activities (105,937)	- (104,880)

Financing Activities

Common shares issued for cash, options and warrants exercised, net of share issuance costs 2,095,166	988,837 127,620
Lease payments (23,802)	- -
Loan payable -	- (51,580)
Net cash provided by financing activities 2,071,364	988,837 76,040

Increase (decrease) in cash 661,129	(22,891) (1,129,688)

Effect of foreign exchange rate changes on cash 20,855	- -
Cash, beginning of the period 24,713	583,119 2,743,694

Cash, end of the period $ 706,697	$ 560,228 $1,614,006

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN

Plymouth Rock Technologies Inc. (the “Company”) was incorporated under the Business Corporations Act of British Columbia on October 17, 2011. The head office, principal address and registered and records office of the Company are located at 206 – 1045 West 8[th] Avenue, Vancouver, B.C., V6H 1C3.

On March 10, 2016, the Company’s common shares commenced trading on the CSE. On January 8, 2019, the Company’s common shares commenced trading on the Frankfurt Stock Exchange in Germany under the Symbol: 4XA, WKN# - A2N8RH. Effective August 27, 2019, the Company’s common shares commenced trading on the OTC Markets Group (“OTCQB”) under the symbol: PLRTF.

On October 31, 2018, the Company completed its business acquisition of Plymouth Rock Technologies Inc. (Plymouth Rock USA) and changed its name from Alexandra Capital Corp. to Plymouth Rock Technologies Inc. with the new trading symbol “PRT” on November 1, 2018. As a result of the acquisition, the Company’s principal business activity through its subsidiary, Plymouth Rock USA, was changed to focus on developing technologies related to remotely detecting assault firearms and suicide bombs concealed on the person or a carry bag. The Company focuses on detection methods with and without the need for a checkpoint of the suspect who is being screened. The Company’s planned products encompass the very latest radar, imaging, and Unmanned Aerial System (“UAS”) technologies for quickly detecting, locating and identifying the presence of threats and for search and rescue missions for law enforcement.

On March 26, 2021, the Company incorporated a new subsidiary in United Kingdom, Plymouth Rock Technologies UK Limited (“PRT UK”). The purpose of PRT UK will be to augment the Company’s existing research and development of the X-1 and X-V for the US and EMEA markets. Many of the UK consultants of the company have since become direct employees as the company expands its operations globally.

Going Concern

The Company incurred a comprehensive loss of $2,385,464 for the period ended May 31, 2021, (May 31, 2020 - $1,410,537; May 31, 2019 - $1,020,736). As of May 31, 2021, the Company had a history of losses and an accumulated deficit of $11,266,821 (November 30, 2020 - $8,893,128).The ability of the Company to continue as a going concern is dependent on achieving profitable operations, commercializing its technologies, and obtaining the necessary financing in order to develop these technologies further. The outcome of these matters cannot be predicted at this time. The Company will continue to review the prospects of raising additional debt and equity financing to support its operations until such time that its operations become selfsustaining, to fund its research and development activities and to ensure the realization of its assets and discharge of its liabilities. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for future operations. These factors indicate that a material uncertainty exists that casts significant doubt on the Company’s ability to continue as a going concern.

The Company is not expected to be profitable during the ensuing twelve months, and therefore, must rely on securing additional funds from either issuance of debt or equity financing for cash consideration. During the period ended May 31, 2021, the Company received net cash proceeds of $2,095,166 (May 31, 2020 – $988,837) pursuant to financing activities. Management has been successful in raising capital through periodic private placements of the Company's common shares in the past, however there is no certainty that financing will be available in the future, or certainty that management’s planned actions to address this situation will be successful.

1. NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN (Continued)

These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future rather than a process of forced liquidation. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Such adjustments could be material.

In March 2020, the World Health Organization declared a global pandemic known as COVID-19. The expected impacts on global commerce are expected to be far reaching. Material uncertainties may come into existence that could influence management’s going concern assumption. The duration and impact of the COVID-19 outbreak is currently unknown and it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its subsidiary, in future periods, such as:

This will and has impacted demand and testing for the Company’s products and services in the near term and will and has impacted the Company’s supply chains.
It may and has also impacted the availability of external funding sources during this period.
the effect on labor availability due to the severity and the length of potential measures taken by governments to manage the spread of the disease.

Management continues to closely evaluate the impact of COVID-19 on the Company’s business.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

These interim condensed consolidated financial statements (“Financial Statements”) have been prepared using accounting policies consistent with IFRS as issued by the International Accounting Standard Board (“IASB”) and in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting, using accounting policies that the Company expects to adopt in its interim condensed consolidated financial statements for the period ended May 31, 2021. These interim condensed consolidated financial statements do not include all the information required for the annual consolidated financial statements and should be read in conjunction with the Company’s most recent audited consolidated financial statements for the year ended November 30, 2020, which are available on www.sedar.com.

These Financial Statements are authorized for issue by the Board of Directors on July 26, 2021.

These Financial Statements have been prepared on the historical cost basis. In addition, these Financial Statements have been prepared using the accrual basis of accounting.

These Financial Statements are presented in Canadian dollars, which is the Company’s functional currency. The functional currency of Plymouth Rock USA is U.S. Dollars. The functional currency of PRT UK is British Pound Sterling. The assets and liabilities of Plymouth Rock USA and PRT UK are translated into Canadian dollars at the rate of exchange prevailing at the reporting date and their income and expense items are translated at average exchange rates for the period. Exchange differences arising on the translation are recognized in other comprehensive income.

Significant accounting judgments, estimates and assumptions

The preparation of these Financial Statements in conformity with IFRS requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and reported amounts of income and expenses during the period. Actual results could differ from these estimates.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Significant accounting judgments, estimates and assumptions (continued)

Significant estimates used in preparing the Financial Statements include, but are not limited to the following:

(i) Deferred taxes

The calculation of deferred tax is based on the ability of the Company to generate future taxable income, the estimation of which is subject to significant uncertainty as to the amount and timing. The calculation of deferred tax is also based on assumptions, which are subject to uncertainty as to timing and which tax rates are expected to apply when temporary differences reverse. Deferred tax recorded is also subject to uncertainty regarding the magnitude on non-capital losses available for carry forward and of the balances in various tax pools as the corporate tax returns have not been prepared as of the date of financial statement preparation.

(ii) Share-based payments

The fair value of stock options and finders’ warrants issued are subject to the limitations of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the input of highly subjective assumptions, including the expected lift, volatility of share prices, risk-free rate and dividend yield, changes in subjective input assumptions can materially affect the fair value estimate.

(iii) Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model.

At November 30, 2019, Management was unable to project cash flows that can be generated from its CGUs and consequently, the intangible assets acquired and the goodwill generated from a previously completed business acquisition were determined to be impaired, therefore an impairment loss of $1,572,552 was charged for the 2019 year end. No impairment loss was recorded during the period ended May 31, 2021.

Significant judgments used in the preparation of these Financial Statements include, but are not limited to the following:

(i) Going concern

Management has applied judgements in the assessment of the Company's ability to continue as a going concern when preparing its Financial Statements for the period ended May 31, 2021. Management prepares the Financial Statements on a going concern basis unless management either intends to liquidate the entity or to cease trading or has no realistic alternative but to do so.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Significant accounting judgments, estimates and assumptions (continued)

(i) Going concern (continued)

In assessing whether the going concern assumption is appropriate, management accounts for all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period.

(ii) Business combinations

Determination of whether a set of assets acquired and liabilities assumed constitute the acquisition of a business or asset may require the Company to make certain judgments as to whether or not the assets acquired and liabilities assumed include the inputs, processes and outputs necessary to constitute a business as defined in IFRS 3 – Business Combinations. Based on an assessment of the relevant facts and circumstances, the Company concluded that the acquisition disclosed in Note 13 met the criteria for accounting as a business combination.

(iii) Intangible assets

Intangible assets can be capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. To determine if the future economic benefit is probable depends on the successful commercialization of its technologies and that in turn depends on the management’s judgement and knowledge. As at May 31, 2021, the development costs are not capitalized as management was unable to demonstrate the future economic benefits to be generated from the utilization of the associated expenditures.

Cash

Cash consists of amounts held in banks and highly liquid investments with limited interest and credit risk.

Consolidation

The Financial Statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances, transactions and any unrealized gains and losses arising from intercompany transactions, have been eliminated. The Company’s subsidiary is presented in the table below. Plymouth Rock USA was incorporated under the General Corporation Law of the State of Delaware on March 22, 2018. Plymouth Rock UK was incorporated under the General Corporation Law for England and Wales on March 26, 2021.

		Effective Economic
Entity	Country of Incorporation	Interest
Plymouth Rock Technologies Inc.	USA	100%
(“Plymouth Rock USA”)
Plymouth Rock Technologies Inc.	UK	100%
(“PRT UK”)

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2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Intangible assets

Intangible assets that are reflected in the consolidated statements of financial position consist of assets acquired through business combinations. Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost). An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Accordingly, the Company does not amortize these intangible assets, but reviews them for impairment, annually or more frequently if events or changes in circumstances indicate that the assets might be impaired.

Development costs for internally-generated intangible assets are capitalized when all of the following conditions are met:

technical feasibility can be demonstrated;
management has the intention to complete the intangible asset and use it;
management can demonstrate the ability to use the intangible asset;
it is probable that the intangible asset will generate future economic benefits;
the Company can demonstrate the availability of adequate technical, financial and other resources to complete the development and to use the intangible asset; and
costs attributable to the asset can be measured reliably.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditures are charged to the consolidated statements of loss and comprehensive loss in the period in which they are incurred.

Equipment

Recognition and measurement

On initial recognition, equipment is valued at cost, being the purchase price and directly attributable cost of acquisition or construction required to bring the asset to the location and condition necessary to be capable of operating in the manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing the items. The corresponding liability is recognized within provisions.

Equipment is subsequently measured at cost less accumulated depreciation, less any accumulated impairment losses.

When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

Gains and losses

Gains and losses on disposal of an item of equipment are determined by comparing the proceeds from disposal with the carrying amount and are recognized net within other income in profit or loss.

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2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Equipment (Continued)

Depreciation

Half of the normal depreciation is taken in the year of acquisition for equipment with declining balance method. The depreciation rates applicable to each category of property and equipment are as follows:

Computer equipment 55% declining balance Furniture 20% declining balance

Inventories

The Company values inventories at the lower of cost and net realizable value. Cost includes the costs of purchases net of vendor allowances plus other costs, such as transportation, that are directly incurred to bring the inventories to their present location and condition.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values at the date of acquisition, of assets transferred, liabilities incurred or assumed, and equity instruments issued by the Company. The acquiree’s identifiable assets and liabilities assumed are recognized at their fair value at the acquisition date. Acquisition related costs are recognized in profit or loss as incurred. The excess of the consideration over the fair value of the net identifiable assets and liabilities acquired is recorded as goodwill. Any gain on a bargain purchase is recorded in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. Any goodwill that arises is tested annually for impairment.

Share capital

The Company records proceeds from the issuance of its common shares as equity. Proceeds received on the issuance of units, consisting of common shares and warrants are allocated between the common share and warrant component. The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component.

The fair value of the common shares issued in the private placement was determined to be the more easily measurable component and were valued at their fair value, as determined by the closing quoted price on the issuance date. The remaining proceeds, if any, are allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. Management does not expect to record a value to the warrant in most equity issuances as unit private placements are commonly priced at market or at a permitted discount to market. If the warrants are issued as share issuance costs, the fair value of agent’s warrants are measured using the Black-Scholes option pricing model and recognized in equity as a deduction from the proceeds.

If the warrants are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in warrant reserve.

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.

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2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based payment

The Company recognizes share-based payment expense for the estimated fair value of equity-based instruments granted to both employees and non-employees. Compensation expense is recognized when the options are granted with the same amount being recorded as contributed surplus. The expense is determined using an option pricing model that accounts for the exercise price, the term of the option, the current share price, the expected volatility of the underlying shares, the expected dividend yield, and the risk-free interest rate for the term of the option. If the options are exercised, contributed surplus will be reduced by the applicable amount. Share-based payment calculations have no effect in the Company’s cash position.

Share purchase warrants

The Company bifurcates units consisting of common shares and share purchase warrants using the residual value approach whereby it first measures the common share component of the unit at fair value using market prices as input values and then allocates any residual amount to the warrant component of the unit. The residual value of the warrant component is credited to reserves. When warrants are exercised, the corresponding residual value is transferred from reserves to share capital. If the warrants are issued as share issuance costs, the fair value of agent’s warrants are measured using the Black-Scholes option pricing model and recognized in equity as a deduction from the proceeds.

Earnings (loss) per share

Basic earnings (loss) per share are calculated using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are calculated using the treasury stock method. This method assumes that common shares are issued for the exercise of options, warrants and convertible securities and that the assumed proceeds from the exercise of options, warrants and convertible securities are used to purchase common shares at the average market price during the period. The difference between the number of shares assumed issued and the number of shares assumed purchased is then added to the basic weighted average number of shares outstanding to determine the fully diluted number of common shares outstanding. No exercise or conversion is assumed during the periods in which a net loss is incurred as the effect is anti-dilutive.

Financial instruments

Financial assets

The Company recognizes financial assets when it becomes party to the contractual provisions of the

instrument. Financial assets are measured initially at their fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through profit or loss are expensed in profit or loss when incurred.

Subsequent to initial recognition, all financial assets are classified and subsequently measured at amortized cost. Interest income is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss. Financial assets measured at amortized cost are comprised of cash, accounts receivable and due from related parties.

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2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial assets (continued)

The Company reclassifies debt instruments only when its business model for managing those financial assets has changed. Reclassifications are applied prospectively from the reclassification date and any previously recognized gains, losses or interest are not restated.

The Company recognizes a loss allowance for the expected credit losses associated with its financial assets. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions and forecasts of future economic conditions.

The Company applies the simplified approach for accounts receivable that do not contain a significant financing component. Using the simplified approach, the Company records a loss allowance equal to the expected credit losses resulting from all possible default events over the assets’ contractual lifetime.

Financial assets are written off when the Company has no reasonable expectations of recovering all or any portion thereof.

The Company derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire.

Financial liabilities

The Company recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss.

Subsequent to initial recognition, all financial liabilities are measured at amortized cost using the effective interest rate method. Interest, gains, and losses relating to a financial liability are recognized in profit or loss. Financial liabilities measured at amortized cost are comprised of accounts payable, lease liability, and due to related parties.

The Company derecognizes a financial liability only when its contractual obligations are discharged, cancelled or expire.

Interest

Interest income and expense are recognized in profit or loss using the effective interest method.

The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments over the expected life of the financial instrument to the gross carrying amount of the financial asset or the amortized cost of the financial liability. The effective interest rate is calculated considering all contractual terms of the financial instruments, except for the expected credit losses of financial assets.

The ‘amortized cost’ of a financial asset or financial liability is the amount at which the instrument is measured on initial recognition minus principal repayments, plus or minus any cumulative amortization using the effective interest method of any difference between the initial amount and maturity amount and adjusted for any expected credit loss allowance. The ‘gross carrying amount’ of a financial asset is the amortized cost of a financial asset before adjusting for any expected credit losses.

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2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Interest (continued)

Interest income and expense is calculated by applying the effective interest rate to the gross carrying amount of the financial asset (when the asset is not credit-impaired) or the amortized cost of the financial liability.

Where a financial asset has become credit-impaired subsequent to initial recognition, interest income is calculated in subsequent periods by applying the effective interest method to the amortized cost of the financial asset. If the asset subsequently ceases to be credit-impaired, calculation of interest income reverts to the gross basis.

Offsetting

Financial assets and financial liabilities are offset, with the net amount presented in the statement of financial position, when, and only when, the Company has a current and legally enforceable right to set off the recognized amounts and intends either to settle on a net basis or realize the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRS, or when arising from a group of similar transactions if the resulting income and expenses are not material.

Goodwill

Goodwill is initially measured as the excess of the aggregate of the consideration transferred over the fair value of net identifiable assets acquired and liabilities assumed. Separately recognized goodwill is tested for impairment on an annual basis or when there is an indication of impairment. Impairment losses on goodwill are not reversed.

Revenue recognition

Revenue is recognized by applying the five-step model under IFRS 15. The Company recognizes revenue when, or as the goods or services are transferred to the control of the customer and performance obligations are satisfied. The Company’s revenue is comprised of sales of its radar systems, radar components and engineering design and development services. The Company’s revenue is recognized when control of the goods has been transferred, being when the goods are delivered to customers and when all performance obligations have been fulfilled. The amounts recognized as revenue represent the fair values of the considerations received or receivable from third parties on the sales of goods to customers, net of goods and services taxes and less returns, and discounts, at which time there are no conditions for the payment to become due other than the passage of time. For its engineering design and development services, revenue is recognized when the service has been rendered.

Government Grants

Government grants are recognized at fair value once there is reasonable assurance that the Company will comply with the conditions attached to the grants and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. A forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.

15 -

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes

Income tax is recognized in profit or loss except to the extent that it relates to equity items, in which case it is recognized in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded using the liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences do not result in deferred tax assets or liabilities: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting profit (loss) nor taxable profit (loss); and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. 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.

Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Parties are also considered to be related if they are subject to common control and related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Change in accounting policies

IFRS 16, Leases

The company adopted IFRS 16 effective December 1, 2019. IFRS 16 specifies how an entity will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is twelve months or less or the underlying asset has a low value. For leases where the Company is the lessee, it recognizes a right-of-use asset and a lease liability for its office premises leases previously classified as operating leases.

The Company chose to adopt the modified retrospective approach on transition to IFRS 16 and has chosen not to restate comparative information in accordance with the transitional provisions in IFRS 16. As a result, the comparative information continues to be presented in accordance with the Company’s previous accounting policies. The adoption of IFRS 16 resulted in the recognition of a right-of-use asset and a lease liability measured at the present value of the future lease payments on the consolidated statements of financial position. An amortization expense on the right-of-use asset and an interest expense on the lease liability has replaced the operating lease expense. IFRS 16 has changed the presentation of cash flows relating to leases in the Company’s consolidated statements of cash flows, however, it does not cause a difference in the amount of cash transferred between the parties of the lease. In accordance with the transition of IFRS 16, as at December 1, 2019 the Company recognized a right-of-use asset and lease liability of $152,864. When measuring lease liabilities, the Company’s incremental borrowing rate applied was 15% per annum.

16 -

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting standards, amendments and interpretations not yet effective

Certain new standards, interpretations and amendments to existing standards have been issued by the IASB or the IFRIC during the period but are not yet effective. Some updates that are not applicable or are not consequential to the Company may have been excluded from the list below.

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier adoption is permitted.

IFRIC 23 – Uncertainty over Income Tax Treatments – clarifies the accounting for uncertainties in income taxes. This Interpretation clarifies how to apply the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. In such a circumstance, an entity shall recognize and measure its current or deferred tax asset or liability applying the requirements in IAS 12 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined by applying this Interpretation. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier adoption is permitted.

These new and amended standards are not expected to have a material impact on the Company’s Financial Statements.

3. PREPAID EXPENSES

As at May 31, 2021 and November 30, 2020, the Company’s prepaid expenses consist of the following:

		2021	November	30, 2020
Advertising and Promotions	$	11,951	$	9,494
Rent		15,960		10,993
Others		5,625		5,421
	$	33,536	$	25,908

17 -

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

(Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

4. EQUIPMENT

			Demo
	Computer	Furniture	equipment	Total
	$	$	$	$
Cost:
Balance at November 30, 2019	1,726	12,455	-	14,181
Additions	-	-	44,364	44,364
Foreign currency translation adjustment	(42)	(304)	13,154	12,808
Balance at November 30, 2020	1,684	12,151	57,518	71,353
Additions	-	-	92,649	92,649
Foreign currency translation adjustment	(116)	(837)	(3,962)	(4,915)
Balance at May 31, 2021	1,568	11,314	146,205	159,087
Accumulated Depreciation:
Balance at November 30, 2019	473	1,244	-	1,717
Amortization	702	2,283	-	2,985
Foreign currency translation adjustment	(41)	(126)	-	(167)
Balance at November 30, 2020	1,134	3,401	-	4,535
Amortization	74	423		497
Foreign currency translation adjustment	(82)	(250)		(332)
Balance at May 31, 2021	1,126	3,574	-	4,700
Net Book Value:
At November 30, 2020	550	8,750	57,518	66,818
At May 31, 2021	442	7,740	146,205	154,387

The Company’s demo equipment is under construction as at May 31, 2021 and therefore, is not currently subject to depreciation.

18 -

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

5. INTANGIBLE ASSETS AND GOODWILL

The Company’s intangible assets were composed of the assets acquired from the business acquisition of Plymouth Rock USA (Note 13). The Company is in the process of developing and commercializing the following intangible assets: (1) A Millimeter Remote Imaging from Airborne Drone (“Drone X1 System”); (2) A compact microwave radar system for scanning shoe’s (“Shoe-Scanner”); and (3) Wi-Fi radar techniques for threat detection screening in Wi-Fi enabled zones in buildings and places, such as airports, shopping malls, schools and sports venues (“Wi-Ti”). These assets can remotely detect, locate and identify the presence of threats.

Drone X1 System Shoe- Scanner Wi-Ti Total	Drone X1 System Shoe- Scanner Wi-Ti Total
Balance at November 30, 2018 $ 868,547 $ - $ 372,234 $ 1,240,781 Additions - 30,000 - 30,000 Impairment (900,260) (29,592) (385,826) (1,315,678) Foreign currency translation adjustment 31,713 (408) 13,592 44,897
Balance at November 30, 2019, November 30, 2020 and May 31, 2021 $ -	$ - $ - $ -

For impairment testing purpose, the Company identified that each intangible asset is a separate cashgenerating unit (“CGU’). Management was unable to project cash flows that could be generated from each of the CGUs, and consequently an impairment loss to write-down the carrying amounts to $nil was recognized during the year ended November 30, 2019.

For impairment testing purposes, goodwill was allocated to the CGUs, and the entire goodwill balance was impaired during the year ended November 30, 2019 as management was unable to project cash flows that could be generated from each of the CGUs.

During the year ended November 30, 2019, the development costs of $399,720 were expensed as management was unable to demonstrate the future economic benefits to be generated from the utilization of the assets.

6. ACCOUNTS PAYABLE

As at May 31, 2021 and November 30, 2020, the Company’s accounts payable consist of the following:

	May 31, 2021	May 31, 2021	November 30, 2020
Professional fees	$	38,398	$ 74,178
Funds to be returned to investors		43,046	43,046
Advertising costs		11,951	5,164
Development costs		52,531	77,675
Others		117,232	42,215
	$	263,159	$242,278

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7. RELATED PARTY TRANSACTIONS AND BALANCES

Key management compensation

The amounts due to and from related parties are due to the directors and officers of the Company. The balances are unsecured, non-interest bearing and due on demand. These transactions are in the normal course of operations and have been valued in these consolidated financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Key management is comprised of directors and officers of the Company.

As at May 31, 2021, $46,167 (November 30, 2020 - $46,355) was due to directors and officers of the Company:

	May 31, 2021		November 30, 2020
Company controlled by CFO	$	4,500	$ 3,865
CEO of the Company		-	823
Director		41,667	41,667
	$	46,167	$46,355

As at May 31, 2021, $Nil (November 30, 2020 - $2,500) was due from directors and officers of the Company.

As at May 31, 2021, a $Nil (November 30, 2020 - $4,000) prepayment had been made to a company controlled by a director.

During the period ended May 31, 2021, 2020 and 2019, the Company entered into the following transactions with related parties:

	May 31, 2021	May 31, 2020	May 31, 2019
Management fees	$ 51,000	$ 54,250	$ 62,661
Consulting fees	125,000	17,996	14,534
Accounting fees	4,500	-	-
Rent	2,000	15,000	-
Stock-based compensation	345,160	190,524	-
Salaries and benefits to CEO	113,507	62,712	173,463
	$641,167	$ 340,482	$250,658

During the period ended May 31, 2021, accounting fees of $4,500 (2020 – $Nil) and rent of $2,000 (2020 - $15,000) were paid or accrued to a Company controlled by the CFO.

Consulting fees of $125,000 (2020 – $41,667) were paid or accrued in common shares to a Director.

During the period ended May 31, 2021, 500,000 shares valued at $125,000 were issued for consulting services to a director of the Company (Note 10) representing the period of October 1, 2020, to March 31, 2021.

20 -

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

(Unaudited – Prepared by Management)

(Expressed in Canadian Dollars)

7. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

Management fees consisted of the following:

May 31, 2021	May 31, 2020 May 31, 2019
Company controlled by Corporate Secretary $ 21,000	$ 26,250 $ 32,661
Company controlled by CFO 30,000	28,000 30,000
$51,000	$ 54,250 $ 62,661

During the period ended May 31, 2021, the Company had 1,725,000 stock options held by the CEO, CFO, the Corporate Secretary, and the Company’s directors. The amount recognized as expense for these options for the period ended May 31, 2021 is as follows:

	May	31, 2021		May31, 2020	May31, 2020
	Number of	Expense for the		Number of	Expense for the
	options held	period	(vested)	options held	period	(vested)
CEO	600,000	$	112,167	400,000	$	33,528
CFO	150,000		28,042	100,000		8,382
Corporate Secretary	150,000		28,042	100,000		8,382
Directors	825,000		176,909	750,000		140,232
	1,725,000	$	345,160	1,350,000	$	190,524

As at May 31, 2021, 1,687,500 options were vested, and stock-based compensation amounting to $898,428 was recognized in profit or loss; of which $345,160 were for the Company’s officers and directors as above (Note 10).

8. GOVERMENT ASSISTANCE RECEIVED

On May 4, 2020, the Company received a CARES Act Paycheck Protection Program Loan (“PPP Loan”) of USD$75,000. The PPP Loan bears interest at 1% per annum and is repayable monthly staring on December 4, 2020. The loan is forgivable if PRT USA meets the requirements outlined below.

i) The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 24-week period after the loan is made; and
ii) Employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee.

During the year ended November 30, 2020 it was determined that the Company met the requirements for loan forgiveness, and Company received notice of loan forgiveness on March 16, 2021, therefore there was no loan recognized. As such, the PPP Loan was treated as a government grant and was offset against operating expenses on the consolidated statement of loss and comprehensive loss for the year ended November 30, 2020.

21 -

9. CAPITAL MANAGEMENT

The Company considers its capital structure to include net residual equity of all assets, less liabilities. The Company’s objectives when managing capital are to (i) maintain financial flexibility in order to preserve its ability to meet financial obligations and continue as a going concern; (ii) maintain a capital structure that allows the Company to pursue the development of its projects and products; and (iii) optimize the use of its capital to provide an appropriate investment return to its shareholders commensurate with risk.

The Company’s financial strategy is formulated and adapted according to market conditions in order to maintain a flexible capital structure that is consistent with its objectives and the risk characteristics of its underlying assets. The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of its underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or acquire or dispose of assets.

10. SHARE CAPITAL

(a) Common Shares

Authorized: Unlimited number of common shares without par value

As at May 31, 2021, there were 52,782,596 common shares issued and outstanding (November 30, 2020 – 42,762,264).

During the period ended May 31, 2021:

On December 31, 2020, the Company issued 250,000 common shares were issued as compensation for consulting fees to a director (Note 7) valued at a total of $62,500.

On January 29, 2021, the Company issued 3,180,000 Units at $0.20 per unit for proceeds of $636,000. Each unit comprised one common share and one full non-transferable common share purchase warrant, with each warrant entitling the holder to purchase one additional common share at a price of $0.25 for five years The Company paid finders’ fees in the amount of $10,480, issued 170,000 common shares to finders, and issued 8% broker warrants in connection with some subscribers.

During the period ended May 31, 2021, the Company issued 100,000 common shares pursuant to the exercise of 100,000 stock options at $0.60 per share and 325,000 common shares pursuant to the exercise of 325,000 stock options at $0.50 per share.

During the period ended May 31, 2021, the Company issued 5,745,332 common shares pursuant to the exercise of 5,745,332 share purchase warrants at $0.20 to $0.50 per share.

On May 31, 2021, the Company issued 250,000 common shares were issued as compensation for consulting fees to a director (Note 7) valued at a total of $62,500.

During the year ended November 30, 2020:

On September 30, 2020, the Company issued 50,000 common shares pursuant to the exercise of 50,000 share purchase warrants at $0.20 per share.

On September 30, 2020, the Company issued 250,000 common shares were issued as compensation for consulting fees to a director (Note 7) valued at a total of $62,500.

22 -

10. SHARE CAPITAL (continued)

(a) Common Shares (continued)

On September 30, 2020, the Company issued an aggregate of 1,335,165 units at a price of CDN$0.30 per unit for gross proceeds of $400,550. Each Unit consists of one common share and one-half of one nontransferable common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to purchase one additional common share at a price of $0.50 for two years until September 30, 2022. The fair value of the warrants is determined to be $40,055.

On September 30, 2020, the Company issued 50,000 units at a fair value of $22,811 pursuant to the binding agreement with Aerowave Corporation as described in Note 14. Each Unit consists of one common share and one-half of one non-transferable common share purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to purchase one additional common share at a price of $0.50 for two years until September 30, 2022. The fair value of the warrants is determined to be $1,500.

On September 24, 2020, the Company issued 100,000 common shares pursuant to the exercise of 100,000 share purchase warrants at $0.20 per share.

On September 22, 2020, the Company issued 100,000 common shares pursuant to the exercise of 100,000 share purchase warrants at $0.20 per share.

On August 21, 2020, the Company issued 250,000 common shares were issued as compensation for consulting fees to a Director (Note 7) valued at a total of $62,500.

On August 13, 2020, the Company issued 483,334 common shares pursuant to the exercise of 483,334 share purchase warrants at $0.20 per share.

On July 3, 2020, the Company issued 500,000 common shares pursuant to the exercise of 500,000 share purchase warrants at $0.20 per share.

On May 15, 2020, the Company issued an aggregate of 3,718,831 units at a price of $0.15 per unit for gross proceeds of $557,825. Each unit consists of one common share in the capital of the Company and one whole transferable common share purchase warrant (a "Warrant"). Each whole Warrant is exercisable to acquire one common share at an exercise price of $0.20 per share until May 15, 2022.

On April 24, 2020, the Company issued an aggregate of 3,128,334 units at a price of $0.15 per unit for gross proceeds of $469,250. Each unit consists of one common share in the capital of the Company and one whole transferable common share purchase warrant (a "Warrant"). Each whole Warrant is exercisable to acquire one common share at an exercise price of $0.20 per share until April 24, 2022.

In connection with the April 24, 2020 and May 15, 2020 private placements, the Company paid $38,727 in share issuance costs.

On February 4, 2020, the Company arranged a non-brokered private placement financing of up to 10,000,000 units of securities at a price of $0.40 per unit for aggregate gross proceeds of up to $4,000,000 (the “Offering”). Each unit will be comprised of one common share and one-half of one nontransferable common share purchase warrant, with each whole warrant entitling the holder to purchase one additional common share at a price of $0.80 for two years from closing of the Offering. On March 16, 2020, due to the instability in the financial markets caused by the COVID-19 pandemic, the Company cancelled this private placement. And paid $4,400 to investors in connection with this cancelled private placement.

23 -

10. SHARE CAPITAL (continued)

(a) Common Shares (continued)

During the year ended November 30, 2019:

During the year ended November 30, 2019, the Company issued a total of 910,300 common shares for gross proceeds of $187,120 for 7,500 warrants exercised at a price of $0.60 per share, 307,800 warrants exercised at a price of $0.40 per share and 595,000 warrants exercised at a price of $0.10 per share. The Company also issued a total of 125,000 common shares for gross proceeds of $37,500 for 125,000 options exercised at a price of $0.30 per share.

As at May 31, 2021, the Company has 405,000 common shares (2020 – 810,000) held in escrow.

(b) Stock Options

On November 12, 2014 the Company adopted an incentive stock option plan (the “Option Plan”) which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees, and consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares in the capital of the Company at the time of granting of options.

During the period ended May 31, 2021:

On January 21, 2021, the Company granted 1,550,000 incentive stock options to directors, consultants, and employees with an exercise price of $0.75 per share for a period of five years from the date of grant. The fair value was estimated using the Black-Scholes pricing model with estimated, stock price of $0.75, volatility 100%, risk-free rate 0.43%, dividend yield 0%, and expected life of 5 years. With these assumptions, the fair value of options was determined to be $859,401, which will be expensed over the vesting period.

Stock-based compensation recognized in profit or loss for the period ended May 31, 2021 amounted to $898,428 (May 31, 2020 - $358,916).

Stock option transactions and the number of stock options outstanding as at May 31, 2021, November 30, 2020 and November 30, 2019 are summarized as follows:

ember 30, 2019 are summarized as	follows:
	Number of Weighted Average
	Options Exercise Price
Balance,November 30,2019	3,150,000 $ 0.30
Cancelled	(200,000) 0.60
Balance, November 30, 2020	2,950,000 0.58
Granted	1,550,000 0.75
Exercised	(425,000) 0.44
Balance, May 31, 2021	4,075,000 $0.65

24 -

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

(Unaudited – Prepared by Management)

(Expressed in Canadian Dollars)

10. SHARE CAPITAL (continued)

(b) Stock Options (continued)

				Weighted
				average	Weighted
		Numbers of	Numbers of	remaining	average
	Exercise	options	options	contractual	exercise
Expiry Date	Price	outstanding	exercisable	life (years)	price
	$				$
January 15, 2024	0.60	2,050,000	2,050,000	1.32	0.30
March 20, 2024	0.60	150,000	150,000	0.10	0.02
November 28, 2024	0.50	325,000	162,500	0.28	0.04
January 21, 2026	0.75	1,550,000	1,550,000	1.77	0.29
		4,075,000	993,750	3.47	0.65

During the period ended May 31, 2021:

On January 29, 2021, the Company granted 3,350,000 common share purchase warrants as part of a non-brokered private placement. Each warrant is exercisable to acquire one common share at an exercise price of $0.25 per share until January 29, 2026. During the period ended February 28, 2021, 100,000 warrants were exercised at $0.25 per share.

On January 29, 2021, the Company also granted 222,400 warrants to finders in connection with the Private Placement.

During the year ended November 30, 2020:

On September 30, 2020, the Company granted 692,583 common share purchase warrants as part of a non-brokered private placement and binding agreement with Aerowave Corporation. Each warrant is exercisable to acquire one common share at an exercise price of $0.50 per share until September 30, 2022. On February 28, 2021, 292,000 warrants were exercised at $0.50 per share.

On May 15, 2020, the Company granted 3,718,831 common share purchase warrants as part of a nonbrokered private placement. Each warrant is exercisable to acquire one common share at an exercise price of $0.20 per share until May 15, 2022. On February 28, 2021, 3,208,333 warrants were exercised at $0.20 per share.

On April 24, 2020, the Company granted 3,128,334 common share purchase warrants as part of a nonbrokered private placement. Each warrant is exercisable to acquire one common share at an exercise price of $0.20 per share until April 24, 2022. On February 28, 2021, 2,145,000 warrants were exercised at $0.20 per share.

25 -

10. SHARE CAPITAL (continued)

Share purchase warrant transactions and the number of share purchase warrants outstanding as at May 31, 2021, November 30, 2020 and November 30, 2019 are summarized as follows:

Number of Weighted Average	Number of Weighted Average
Warrants	Exercise Price
Balance, November 30, 2019 -	$ -
Warrants granted 7,539,748	0.90
Warrants exercised (1,233,334)	0.11
Balance, November 30, 2020 6,306,414	0.23
Warrants granted 3,572,400	0.22
Warrants exercised (5,745,333)	0.01
Balance, May 31, 2021 4,133,481	$ 0.27

Expiry Date Exercise Price Number of Warrants outstanding and exercisable	Weighted average remaining contractual life (years) Weighted average exercise price
$	$
April 24, 2022 0.20 -	- 0.00
May 15, 2022 0.20 160,499	0.04 0.01
September 30, 2022 0.50 400,582	0.13 0.05
January 29, 2026 0.25 3,572,400	4.03 0.22
4,133,481	4.20 0.27

11. FINANCIAL RISK MANAGEMENT

The Company’s financial assets consist of cash, and due from related parties. The estimated fair values of cash, subscription receivable, and due from related parties approximate their respective carrying values due to the short period to maturity.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

a. Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities;
b. Level 2 – inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
c. Level 3 – inputs that are not based on observable market data.

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11. FINANCIAL RISK MANAGEMENT (continued)

For the period ended May 31, 2021 and 2020, the fair value of the cash, accounts receivable, accounts payable, and due to and from related parties approximate the book value due to the short-term nature.

The Company is exposed to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of counterparty limits, controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company ensures, as far as reasonably possible, it will have sufficient capital in order to meet shortterm business requirements, after taking into account cash flows from operations and the Company’s holdings of cash. The Company believes that these sources will be sufficient to cover the likely short-term cash requirements.

The Company’s cash is currently invested in business accounts which is available on demand by the Company for its operations.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company has no significant interest rate risk due to the short-term nature of its interest generating assets.

Credit Risk

Credit risk is the risk of a loss when a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposure to credit risk is limited to its cash. The Company limits its exposure to credit risk by holding its cash in deposits with high credit quality Canadian financial institutions.

Foreign Currency Risk

The Company is exposed to foreign currency risk on fluctuations related to cash, leases, due from related parties and accounts payable and accrued liabilities that are denominated in US dollars. 10% fluctuations in the US dollar and UK Sterling Pound against the Canadian dollar have affected comprehensive loss for the year by approximately $13,064 (May 31, 2020 – $40,754).

12. SUPPLEMENTAL CASH FLOW INFORMATION

During the period ended May 31, 2021, 2020 and 2019, the Company has the following non-cash investing and financing activities:

	May 31, 2021	May 31, 2021	May 31, 2020	May 31, 2020	May 31, 2019	May 31, 2019
Non-cash financing activities:
Fair value of options granted and vested	$	898,428	$	358,916	$	-
Fair value of options exercised		158,106		-		-
Fair value of warrants granted		95,395		-		-
Fair value of warrants exercised		35,040		-		-
Non-cash investing activities:
Shares issued for consulting services	$	125,000	$	-	$	-

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13. COMMITMENTS

In November 2018, Plymouth Rock USA entered into two-year lease agreement for leased premises (Note 14) in Plymouth, Massachusetts, commencing December 1, 2018 and ending on November 30, 2020. On December 31, 2020, the Company renewed this lease agreement to November 30, 2023. The minimum base rent for the remaining lease term are: USD$3,005 (CAD$3,726) per month from December 1, 2019 to November 01, 2020; USD$3,095 (CAD$3,838) per month from December 1, 2020 to November 30, 2021; USD$3,188 (CAD$3,953) per month from December 1, 2021 to November 30, 2022; and USD$3,284 (CAD$4,072) per month from December 1, 2022 to November 30, 2023 (Note 14).

On April 1, 2020 the Company entered into an agreement with a Director of the Company to provide consulting services. In line with this, the Company shall pay $250,000 annually either through cash in 12 monthly installments at the end of each calendar month or through the issuance of 1,000,000 common shares of the Company in four equal quarterly installments, in arrears (Note 7).

On April 21, 2021, the Company signed a Letter of Intent (“LOI”) with an arm’s length party to buy all outstanding shares of Tetra Drones Ltd.(“Tetra Drones”). The share purchase agreement was signed subsequent to period end (Note 17). Under the LOI, the Company will pay the following: GBP35,000 (CAD$59,976) on June 11, 2021; GBP35,000 (CAD$59,976) on July 9, 2021; GBP140,000 (CAD$239,918) on November 6, 2021 and GBP140,000 (CAD$239,918) on March 6, 2022.The initial two payments were made subsequent to quarter end on due dates.

14. RIGHT-OF-USE ASSETS AND LEASE LIABILITY

Right-of-use Assets

The following is the continuity of the cost and accumulated depreciation of right-of-use assets, for the period ended May 31, 2021 and for the year ended November 30, 2020:

	As at May 31, 2021
Opening balance, December 1, 2019	$ -
Recognition upon adoption of IFRS 16	152,864
Amortization expense	(38,216)
Balance, November 30, 2020	$ 114,648
Amortization expense	(18,115)
Cumulative translation adjustment	(10,732)
Balance, May 31, 2021	$85,801

During the year ended November 30, 2020, the Company recognized right-of-use assets and corresponding lease liabilities upon the adoption of IFRS 16 related to its Massachusetts premises under lease (Note 13). The right-of-use building is depreciated on a straight-line basis over the terms of the underlying lease agreements.

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14. RIGHT-OF-USE ASSETS AND LEASE LIABILITY (continued)

Lease liability

The following is the continuity of lease liability, for the period ended May 31, 2021 and for the year ended November 30, 2020:

r 30, 2020:
	As at May 31, 2021
Opening balance, December 1, 2019	$ -
Recognition upon adoption of IFRS 16	152,864
Lease payments	(60,173)
Interest on lease liability	20,449
Balance, November 30, 2020	$ 113,140
Lease payments	(11,832)
Interest on lease liability	7,992
Cumulative translation adjustment	(8,236)
Balance, May 31, 2021	$ 101,064
Current Portion	$ 34,980
Long-termportion	$ 66,084

As at November 30, 2020, the minimum lease payments for the lease liabilities are as follows:

	As at May 31, 2021
Year ending:
2021	$ 35,372
2022	48,580
2023	50,043
	$ 133,994
Less: Interest expense on lease liabilities	(7,992)
Total present value of minimum lease payments	$ 126,002

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PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

(Unaudited – Prepared by Management)

(Expressed in Canadian Dollars)

15. BREAKDOWN OF EXPENSES

	Six Months Ending May 31
General and Administrative Expenses Note	2021 2020 2019
Accounting and audit fees 7	$ 25,646 $ 19,726 $ 30,469 18,368 1,499 859 129,332 33,239 127,688 75,623 71,746 26,200 14,987 6,045 2,373 7,992 - - 125,875 23,004 35,263 51,000 54,250 62,661 34,644 38,040 38,354 898,428 358,916 - 54,200 38,819 58,710 222,923 126,024 284,856
Amortization 4, 14
Consulting fees 7
General office expenses
Insurance
Interest and accretion 14
Legal fees
Management fees 7
Rent
Stock-based compensation 7, 10
Transfer agent and filing fees 10
Wages, salaries and benefits 7
Total	1,657,935 771,308 667,433

Research and Development Note 2021	2020	2019
Labor 4, 5 $ 410,005 $ 173,213 $ - Materials 85,940 - -
Total $ 495,945 $173,213 $-

Selling expenses consist of business development expenses amounting to $210,359 (2020 - $606,201; 2019 - $359,208).

16. SEGMENTED INFORMATION

The Company operates in one business segment, focusing on developing technologies as described in Note 1. With the acquisition of PRT USA, the Company’s principal business activity through its subsidiary was changed to focus on developing technologies related to remotely detecting assault firearms and suicide bombs concealed on the person or a carry bag. The Company now focuses on detection methods with and without the need for a checkpoint of the suspect who is being screened. The Company’s planned technologies encompass the very latest radar, imaging and Unmanned Aerial System (UAS) technologies for quickly detecting, locating and identifying the presence of threats and for search and rescue missions for law enforcement.

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16. SEGMENTED INFORMATION (continued)

The Company’s revenues were generated in the US and were mostly composed of sales of engineering design services and radar components to well-known US government agencies and prime contractors. All the long-lived assets are located in the U.S. as of May 31, 2021 and November 30, 2020. The following table summarizes the revenue by geographical location:

	Canada		USA	UK		Total
For the period ended May 31, 2021
Revenues	$	-	$ 22,540	$	-	$ 22,540
Gross Profit		-	3,665		-	3,665
For the period ended May 31, 2020
Revenues	$	-	$ 24,983	$	-	$ 24,983
Gross Profit		-	13,339		-	13,339

17. SUBSEQUENT EVENTS

On June 4, 2021, the Company completed its acquisition of Tetra Drones. The Company acquired all outstanding shares of Tetra Drones for a total consideration of GBP350,000 (CAD599,795).The Company will pay the following: GBP35,000 (CAD$59,976) on June 11, 2021; GBP35,000 (CAD$59,976) on July 9, 2021; GBP140,000 (CAD$239,918) on November 6, 2021 and GBP140,000 (CAD$239,918) on March 6, 2022.The initial two payments were made subsequent to quarter end on due dates.

On June 7, 2021, the Company has arranged private placement financing of up to 5,000,000 shares at a price of $0.40 per Unit for aggregate gross proceeds of up to $2,000,000. Finders' fees, payable in 7% cash and 7% b-warrants, may be payable on a portion of the transaction.

On June 10, 2021, the Company granted 150,000 incentive stock options to a consultant with an exercise price of $0.50 per share for a period of five years from the date of grant.

Subsequent to May 31, 2021, 34,240 warrants were exercised at a price of $0.25 per share.

On July 13, 2021 PRT entered into a contract for the sale and delivery of Unmanned Aircraft Systems (UAS) to the Durrell Wildlife Conservation Trust ("Durrell") to perform critical environmental operations in Madagascar.

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AI assistant

Aether Global Innovations Corp. — Interim / Quarterly Report 2021

46974_rns_2021-07-28_e8286751-02fa-45e8-9b7a-e1335d758106.pdf

PLYMOUTH ROCK TECHNOLOGIES INC.

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

PLYMOUTH ROCK TECHNOLOGIES INC. Interim Condensed Consolidated Statements of Financial Position

PLYMOUTH ROCK TECHNOLOGIES INC.

PLYMOUTH ROCK TECHNOLOGIES INC. Interim Condensed Consolidated Statements of Cash Flows

1. NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN

Going Concern

1. NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

Significant accounting judgments, estimates and assumptions

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Significant accounting judgments, estimates and assumptions (continued)

(i) Deferred taxes

(ii) Share-based payments

(iii) Impairment of non-financial assets

(i) Going concern

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Significant accounting judgments, estimates and assumptions (continued)

(i) Going concern (continued)

(ii) Business combinations

(iii) Intangible assets

Cash

Consolidation

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Intangible assets

Equipment

Recognition and measurement

Gains and losses

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Equipment (Continued)

Depreciation

Inventories

Business combinations

Share capital

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based payment

Share purchase warrants

Earnings (loss) per share

Financial instruments

Financial assets

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial assets (continued)

Financial liabilities

Interest

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Interest (continued)

Offsetting

Goodwill

Revenue recognition

Government Grants

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes

Related party transactions

Change in accounting policies

IFRS 16, Leases

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting standards, amendments and interpretations not yet effective

3. PREPAID EXPENSES

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

4. EQUIPMENT

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

5. INTANGIBLE ASSETS AND GOODWILL

6. ACCOUNTS PAYABLE

7. RELATED PARTY TRANSACTIONS AND BALANCES

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

7. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

8. GOVERMENT ASSISTANCE RECEIVED

9. CAPITAL MANAGEMENT

10. SHARE CAPITAL

During the period ended May 31, 2021:

During the year ended November 30, 2020:

10. SHARE CAPITAL (continued)

10. SHARE CAPITAL (continued)

During the year ended November 30, 2019:

During the period ended May 31, 2021:

PLYMOUTH ROCK TECHNOLOGIES INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As at and for the period ended May 31, 2021

Aether Global Innovations Corp. Interim / Quarterly Report 2021