Anacortes Mining Corp. — Interim / Quarterly Report 2020

Nov 17, 2020

First Light Capital Corp.

Condensed Interim Financial Statements

For the Three and Nine-Month Periods Ended September 30, 2020 and 2019

(Unaudited)

First Light Capital Corp. Condensed Interim Statements of Financial Position As at September 30, 2020 and December 31, 2019 (Expressed in Canadian dollars)

		September 30,
		2020	December 31, 2019
	Note	(Unaudited)	(Audited)
		$	$
ASSETS
Current assets
Cash		2,316,320	612,255
Total assets		2,316,320	612,255
LIABILITIES
Current liabilities
Accounts payable and accruedliabilities		20,281	19,224
Total liabilities		20,281	19,224
SHAREHOLDER’S EQUITY
Share capital	4	2,482,082	703,151
Reserves		43,571	45,871
Deficit		(229,614)	(155,991)
Totalequity		2,296,039	593,031
Total liabilities and equity		2,316,320	612,255

Nature and continuance of operations (Note 1)

Approved and authorized for issuance on behalf of the Board on November 12, 2020:

“James Currie” “Neil Alexander Currie”___ James Currie, Director Neil Alexander Currie, Director

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

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First Light Capital Corp. Condensed Interim Statements of Comprehensive Loss For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

	Three-Month	Three-Month	Three-Month	Three-Month	Three-Month	Nine-Month	Nine-Month	Nine-Month
	Period			Period		Period		Period
	Ended			Ended		Ended		Ended
	September		30,	September	30,	September	30,	September 30,
	2020			2019		2020		2019
	$			$		$		$
EXPENSES
Consulting fees			-		-		-	5,250
Filing fees		2,051			-	13,479		7,572
GST expenses			651		-	651		-
Office expenses			-		-		60	851
Professional fees		5,278		11,637		59,433		58,434
Share-based compensation			-		-		-	21,344
NET LOSS AND
COMPREHENSIVE LOSS		7,980		11,637		73,623		93,451
LOSS PER SHARE – Basic and
diluted	$	(0.00)		$ (0.00)		$ (0.01)		$ (0.09)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING	16,221,152			2,500,000		9,454,357		1,095,890

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

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First Light Capital Corp. Condensed Interim Statements of Changes in Equity For the Nine-Month Periods Ended September 30, 2020 and 2019

(Expressed in Canadian dollars) (Unaudited)

	Share Capital Number of Shares Amount Reserves Deficit **Total **
	$ $ $ $
Balance, December 31, 2018 Common shares issued for cash, net of issuance cost Share-based compensation Netlossforthe period	10,000,000 500,000 - (44,133) 455,867 2,500,000 206,431 18,569 - 225,000 - - 21,344 - 21,344 - - - (93,451) (93,451)
Balance,September 30,2019	12,500,000 706,431 39,913 (137,584) 608,760
Balance, December 31, 2019 Common shares issued for cash, net of issuance cost Common shares issued for warrant exercise Net loss for theperiod	12,500,000 703,151 45,871 (155,991) 593,031 18,000,000 1,772,031 - - 1,772,031 46,000 6,900 (2,300) - 4,600 - - - (73,623) (73,623)
Balance,September 30,2020	30,546,000 2,482,082 43,571 (229,614) 2,296,039

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

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First Light Capital Corp. Condensed Interim Statements of Cash Flows For the Nine-Month Periods Ended September 30, 2020 and September 30, 2019 (Expressed in Canadian dollars) (Unaudited)

	Nine-Month	Nine-Month
	Period Ended	Period Ended
	September 30,	September 30,
	2020	2019
	$	$
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss for the period	(73,623)	(93,451)
Non-cash item – Share-based compensation	(2,300)	21,344
Changes in non-cash working capital balances:
Prepaid expenses	-	6,000
Accounts payable and accruedliabilities	1,057	3,453
Net cash used in operating activities	(74,866)	(62,654)
FINANCING ACTIVITIES
Common shares issued for cash	1,806,900	250,000
Commonsharesissuance cost	(27,969)	(25,000)
Net cashprovided byfinancing activities	1,778,931	225,000
INCREASE (DECREASE) IN CASH	1,704,065	162,346
CASH,BEGINNING OF PERIOD	612,255	459,475
CASH,END OF PERIOD	2,316,320	621,821
SUPPLEMENTAL CASH DISCLOSURES
Interest paid	$ -	$ -
Income taxespaid	$-	$-

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

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First Light Capital Corp. Notes to the Condensed Interim Financial Statements For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

1. NATURE AND CONTINUANCE OF OPERATIONS

First Light Capital Corp. (the “Company”) was incorporated under the Business Corporations Act of British Columbia on March 15, 2018. The Company currently has no operating business and is a Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V” or “TSX Venture”) Policy 2.4. The Company completed its Initial Public Offering (“IPO”) on April 23, 2019 and its shares commenced trading on the TSX Venture Exchange on April 25, 2019 under the symbol XYZ.P. The principal business of the Company is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction (“QT”).

The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to the lesser of 30% of the gross proceeds realized by the Company in respect of the sale of its securities or $210,000, may be used for purposes other than evaluating businesses or assets. These restrictions apply until the completion of a QT by the Company as defined under the policies of the TSX Venture. The Company is required to complete its QT on or before two years from the date the Company receives regulatory approval as a Capital Pool Company being April 23, 2021.

The head office, principal address and registered office of the Company are located at 1090 - 510 Burrard Street, Vancouver, British Columbia, V6C 3B9.

These condensed interim financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to realize its assets and satisfy its liabilities in the normal course of business for the foreseeable future. On March 11, 2020, the outbreak of the novel strain of coronavirus specifically identified as “COVID-19” was declared a pandemic by the World Health Organization. The outbreak has resulted in governments worldwide enacting emergency measures to combat the spread of the virus which in turn have caused material disruption to business globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. No significant impact has been noted to the Company’s business during the nine-month period ended September 30, 2020. The management team is closely following the progression of COVID-19 and its potential impact on the Company.

2. BASIS OF PRESENTATION

a) Statement of Compliance

These condensed interim financial statements, have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, being IAS 34, Interim Financial Reporting. As a result, certain disclosures included in the annual financial statements prepared in accordance with IFRS have been condensed or omitted. Accordingly, these condensed interim financial statements should be read in conjunction with the Company’s audited annual financial statements for the year ended December 31, 2019. In preparation of these condensed interim financial statements, the Company has consistently applied the same accounting policies as disclosed in Note 2 to the audited annual financial statements for the year ended December 31, 2019.

These condensed interim financial statements were approved and authorized for issuance by the Board of Directors on November 12, 2020.

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First Light Capital Corp. Notes to the Condensed Interim Financial Statements For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

2. BASIS OF PRESENTATION (continued)

b) Use of Estimates and Judgments

The preparation of these interim financial statements in conformity with IFRS requires the Company’s management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Significant areas requiring the use of estimates include unrecognized deferred income tax assets. Actual results could differ from those estimates.

Judgments made by management include the factors used to determine the assessment of whether the going concern assumption is appropriate. The assessment of the going concern assumption requires management to take into account all available information about the future, which is at least, but is not limited to, 12 months from the end of the reporting period.

3. RELATED PARTY TRANSACTIONS

The Company considers the directors and officers of the Company as key management personnel. Key management compensation was $Nil for the three and nine-month periods ended September 30, 2020.

Key management compensation was $Nil and $21,344 for the three-month and nine-month periods ended September 30, 2019, and consisted of share-based compensation.

On July 15, 2020, James Currie, Director, President and Chief Executive Officer of First Light Capital Corp., acquired 1,200,000 common shares of the Company in a private placement in which the Company sold a total of 18,000,000 common shares (see Note 7). The 1,200,000 common shares are held in escrow as at September 30, 2020.

4. SHARE CAPITAL

• a) Authorized

Unlimited number of common shares without par value.

b) Issued

• During the nine month period ended September 30, 2020:

The Company issued 18,000,000 common shares on July 15, 2020 for gross proceeds of $1,800,000. The Company incurred share issuance costs of $27,969 cash in connection with the financing.

c) Escrow

In 2018, the Company entered into an escrow agreement, whereby 10,000,000 common shares will be held in escrow and are scheduled for release in accordance with the terms of the escrow agreement which were subject to customary escrow terms and are expected to be released upon the completion of the Qualifying Transaction. As at September 30, 2020, 11,200,000 common shares were held in escrow, including the 1,200,000 common shares described in Note 3.

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First Light Capital Corp. Notes to the Condensed Interim Financial Statements For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

4. SHARE CAPITAL (continued)

d) Stock options

On April 23, 2019, the Company granted an aggregate of 300,000 incentive stock options to its directors, officers and certain technical consultants, as outlined in the Prospectus of March 20, 2019. Each option is exercisable at a price of $0.10 per share for a period of five years and vested on the grant date. A continuity of options outstanding during the nine-month period ended September 30, 2020 is as follows:

	Number of	Weighted	Expiry date
	shares under	Average
	option	Exercise Price
Outstanding at December 31, 2019	300,000	$0.10	April 23, 2024
Granted	-	-
Exercised	-	-
Cancelled	-	-
Expired	-	-
Outstanding and exercisable at
September 30,2020	300,000	$0.10	April 23,2024

As at September 30, 2020, the stock options outstanding have a weighted average outstanding contractual life of 3.56 years.

The Company has adopted a stock option plan which provides that the board of directors of the Company may from time to time, in its discretion, and in accordance with Exchange requirements, grant to directors, officers and technical consultants to the Company, nontransferable options to purchase Common Shares, provided that the number of Common Shares reserved for issuance, together with any options issued to eligible charitable organizations, will not exceed 10% of the issued and outstanding Common Shares, exercisable for a period of up to ten years from the date of grant and until completion of the Qualifying Transaction, will not exceed 1,250,000 options (in the event of completion of the Minimum Offering) or 1,300,000 options (in the event of the completion of the Maximum Offering). Until the completion of the Qualifying Transaction, the number of Common Shares reserved for issuance to any individual director or officer will not exceed 5% of the issued and outstanding Common Shares and the number of Common Shares reserved for issuance to all technical consultants will not exceed 2% of the issued and outstanding Common Shares, each as at the closing of the Offering. No options may be granted to investor relations service providers and the exercise price cannot be less than the greater of the Offering share price and the Discounted Market Price. Options may be exercised the greater of 12 months after the Completion of the Qualifying Transaction and 90 days following cessation of the optionee’s position with the Company, provided that if the cessation of office, directorship, or technical consulting arrangement was by reason of death, the option may be exercised within a maximum period of one year after such death, subject to the expiry date of such option. Any Common Shares acquired pursuant to the exercise of options prior to the Completion of the Qualifying Transaction will be subject to escrow restrictions until the issuance of the Final Exchange Bulletin.

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First Light Capital Corp. Notes to the Condensed Interim Financial Statements For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

4. SHARE CAPITAL (continued)

e) Warrants

On August 10, 2020, 46,000 warrants were exercised for the purchase of 46,000 common shares of the Company at a price of $0.10 per share, for aggregate consideration of $4,600. A continuity of the warrants outstanding during the nine-month period ended September 30, 2020 is as follows:

	Number of shares	Weighted	Weighted Average
	issuable under	Average	Exercise Price
	Warrants	Remaining
		Contractual life
		in Years
Outstanding at December 31, 2019	250,000	1.31	$0.10
Granted	-		-
Exercised	(46,000)		$0.10
Cancelled	-		-
Expired	-		-
Outstanding and exercisable at September
30,2020	204,000	0.56	$0.10

5. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the general operations of the Company and facilitate the liquidity needs of its operations. The Board of Directors 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 defines capital to include all components of 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. The Company is not subject to externally imposed capital requirements.

6. FINANCIAL INSTRUMENTS AND FINANCIAL RISK

International Financial Reporting Standards 7, Financial Instruments: Disclosures , establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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First Light Capital Corp. Notes to the Condensed Interim Financial Statements For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

6. FINANCIAL INSTRUMENTS AND FINANCIAL RISK (continued)

Fair value of financial instruments

The Company’s financial instruments include cash and accounts payable. The carrying value of these instruments approximates their fair values due to the demand nature or short-term maturity of these instruments.

Financial assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statements of financial position as at September 30, 2020 are as follows:

	Fair Value Measurements Using	Fair Value Measurements Using
	Quoted Prices in	Significant
	Active Markets	Other	Significant
	For Identical	Observable	Unobservable	Balance
	Instruments	Inputs	Inputs	September 30,
	(Level 1)	(Level 2)	(Level 3)	2020
	$	$	$	$
Cash	2,316,320	-	-	2,316,320

Financial risk management objectives and policies

The risks associated with the Company’s financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

(i) Currency risk

The Company’s expenses are denominated in Canadian dollars. The Company’s corporate office is based in Canada and current exposure to exchange rate fluctuations is minimal.

The Company does not have any significant foreign currency denominated monetary assets or liabilities. The principal business of the Company is the identification and evaluation of assets or a business and once identified or evaluated, to negotiate an acquisition or participation in a business subject to receipt of shareholder approval and acceptance by regulatory authorities.

(ii) Interest rate risk

The Company is exposed to interest rate risk on the variable rate of interest earned on bank deposits. The interest rate risk on bank deposits is insignificant as the deposits are short ‐ term.

The Company has not entered into any derivative instruments to manage interest rate fluctuations.

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First Light Capital Corp. Notes to the Condensed Interim Financial Statements For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (Expressed in Canadian dollars) (Unaudited)

6. FINANCIAL INSTRUMENTS AND FINANCIAL RISK (continued)

(iii) Credit risk

Credit risk is the risk of loss associated with the counterparty’s inability to fulfill its payment obligations.

Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash. To minimize the credit risk, the Company places these instruments with a high quality financial institution.

(iv) Liquidity risk

In the management of liquidity risk of the Company, the Company maintains a balance between continuity of funding and the flexibility through the use of borrowings. Management closely monitors the liquidity position and expects to have adequate sources of funding to finance the Company’s projects and operations. As at September 30, 2020, the Company had contractual obligations of $20,281 consisting of accounts payable which are due within one year.

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