Auric Resources Corp. — Audit Report / Information 2019

Apr 3, 2020

RED ROCK CAPITAL CORP.

FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in Canadian Dollars)

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Red Rock Capital Corp.

Opinion

We have audited the financial statements of Red Rock Capital Corp. (the “Company”), which comprise the statements of financial position as at December 31, 2019 and 2018, and the statements of loss and comprehensive loss, cash flows and changes in equity for the years then ended and the related notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018 and the its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Other Information

Management is responsible for the other information, which comprises the information included in the Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

Our opinion on the financial statements does not cover the other information and do not and will not express any form of assurance conclusion thereon.

In connection with our audits of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indicators that the other information appears to be materially misstated.

We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors’ report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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INDEPENDENT AUDITORS’ REPORT

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditors’ report is Fernando J. Costa.

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CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, British Columbia April 3, 2020

RED ROCK CAPITAL CORP. Statements of Financial Position As at December 31 (Expressed in Canadian Dollars)

		2019		2018
ASSETS
Current assets
Cash and cash equivalents (note 4)	$	817,080	$	944,822
Interest receivable		1,025		-
Total assets	$	818,105	$	944,822
LIABILITIES
Current liabilities
Accountspayable and accrued liabilities(note 6)	$	7,838	$	47,524
Total liabilities		7,838		47,524
SHAREHOLDERS' EQUITY
Share capital (note 5)		1,388,720		1,388,720
Share-based payment reserve (note 5)		45,848		45,848
Contributed surplus		73,127		73,127
Deficit		(697,428)		(610,397)
Total equity		810,267		897,298
Total liabilities and equity	$	818,105	$	944,822

Nature and continuance of operations (note 1)

Approved on behalf of the Board:

Director	"Peter Born"
	Peter Born
Director	"Mark Ferguson"
	Mark Ferguson

The accompanying notes are an integral part of these financial statements

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RED ROCK CAPITAL CORP.

Statements of Loss and Comprehensive Loss For the Years Ended December 31 (Expressed in Canadian Dollars)

		2019		2018
EXPENSES
Consulting fees (note 6)	$	23,253	$	31,500
Office		19,275		19,309
Professional fees		28,407		45,008
Transfer agent and filingfees		17,156		24,286
Loss before other item		(88,091)		(120,103)
Other item
Interest income		1,060		-
Net and comprehensive loss	$	(87,031)	$	(120,103)
Basic and diluted lossper share	$	(0.00)	$	(0.00)
Weighted average number of common shares outstanding		29,185,007		29,185,007

The accompanying notes are an integral part of these financial statements

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RED ROCK CAPITAL CORP.

Statements of Cash Flow

For the Years Ended December 31 (Expressed in Canadian Dollars)

		2019		2018
Cash provided by (used in):
Operating activities
Net loss	$	(87,031)	$	(120,103)
Change in non-cash working capital:
Interest receivable		(1,025)		-
Accountspayable and accrued liabilities		(39,686)		10,345
Net cash flows used in operating activities		(127,742)		(109,758)
Change in cash and cash equivalents during the year		(127,742)		(109,758)
Cash and cash equivalents, beginning of theyear		944,822		1,054,580
Cash and cash equivalents, end of theyear	$	817,080	$	944,822

The accompanying notes are an integral part of these financial statements

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RED ROCK CAPITAL CORP.

Statements of Changes in Equity (Expressed in Canadian Dollars)

				Share-based	Share-based
	Number of		Share		Payment	Contributed
	Shares		Capital		Reserve		Surplus		Deficit		Total
Balance at January 1, 2018	31,931,007	$	1,388,720	$	45,848	$	73,127	$	(490,294)	$	1,017,401
Net loss	-		-		-		-		(120,103)		(120,103)
Balance at December 31, 2018	31,931,007		1,388,720		45,848		73,127		(610,397)		897,298
Balance at January 1, 2019	31,931,007		1,388,720		45,848		73,127		(610,397)		897,298
Net loss	-		-		-		-		(87,031)		(87,031)
Balance at December 31, 2019	31,931,007	$	1,388,720	$	45,848	$	73,127	$	(697,428)	$	810,267

The accompanying notes are an integral part of these financial statements

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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1. NATURE AND CONTINUANCE OF OPERATIONS

Red Rock Capital Corp. (the "Company") was classified as a Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4. The Company did not complete a qualifying transaction within the 24 months from listing on the TSX-V, and was therefore subject to halt of trading and delisting from the TSX-V. On January 6, 2016, the Company’s listing was transferred to the NEX, and resumed trading under the symbol “RCC.H”. The Company was incorporated as a private company by Certificate of Incorporation issued pursuant to the provisions of the British Columbia Business Corporations Act on February 9, 2012.

The address of the Company’s registered office is 2200 – 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8.

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

These 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 rather than through a process of forced liquidation. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

The Company’s continuing operations are dependent upon its ability to identify, evaluate and negotiate an agreement to acquire an interest in a material asset or business. Management believes the Company has sufficient working capital to meet its liabilities for the next twelve months.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. The impact on the Company is not currently determinable but management continues to monitor the situation.

These financial statements were authorized for issue on April 3, 2020 by the directors of the Company.

2. BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”). They have also been prepared in accordance with interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). The financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, the financial statements have been prepared using the accrual basis of accounting.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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2. BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE, continued

Significant accounting judgments, estimates and assumptions

The preparation of the Company’s financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The preparation of these financial statements requires management to make judgements regarding the going concern of the Company, as discussed in Note 1.

Critical accounting estimates

Fair value of share options and warrants

Determining the fair value of warrants and share options requires assumptions related to the choice of a pricing model, the estimation of share price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could result in a significant impact on the Company’s future operating results or on other components of shareholders’ equity. Refer to note 3 for the discussion of management’s assumptions.

Income taxes

The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. To the extent that management’s assessment of the Company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets, and deferred income tax provisions or recoveries could be affected.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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3. SIGNIFICANT ACCOUNTING POLICIES

Deferred financing costs

Costs directly identifiable with the raising of capital will be charged against the share capital. Costs related to shares not yet issued are recorded as deferred financing costs. These costs will be deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged to share capital or charged to profit or loss if the shares are not issued.

Share-based payments

The Company grants stock options to buy common shares of the Company to directors, officers, employees and consultants. The Company recognizes share-based payments based on the estimated fair value of the options. A fair value measurement is made for each vesting instalment within each option grant and is determined using the Black-Scholes option-pricing model. The fair value of the options is recognized over the vesting period of the options granted as both share-based payments and other equity reserve. This includes a forfeiture estimate, which is revised for actual forfeitures in subsequent periods. The other equity reserve account is subsequently reduced if the options are exercised and the amount initially recorded is then credited to capital stock.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods or services received.

Income taxes

Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, 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 or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded by 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 are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable 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 statement of financial position date.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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3. SIGNIFICANT ACCOUNTING POLICIES, continued

Income taxes, continued

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.

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend. 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.

Loss per share

The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

Financial instruments

(i) Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-byinstrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

(ii) Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statement of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statement of loss and comprehensive loss in the period in which they arise.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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3. SIGNIFICANT ACCOUNTING POLICIES, continued

Financial instruments, continued

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

(iii) Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statement of loss and comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

(iv) Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and / or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

Gains and losses on derecognition are generally recognized in profit or loss.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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3. SIGNIFICANT ACCOUNTING POLICIES, continued

New accounting standards

There were no new standards effective January 1, 2019 that had an impact on the Company’s financial statements, including IFRS 16 as the Company currently does not have any leases.

Changes in accounting standards not yet effective:

The Company has not early adopted any amendment, standard or interpretation that has been issued by the IASB but is not yet effective.

IFRS 3 – Definition of a Business

In October 2018, the IASB issued amendments to IFRS 3 – Definition of a Business which:

• Clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

• Narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;

• Add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;

• Remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and

• Add an option concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020, and to asset acquisitions that occurred on or after the beginning of that period. Earlier application is permitted. The Company does not expect any material impact upon adoption.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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4. CASH AND CASH EQUIVALENTS

		2019		2018
Cash	$	592,080	$	944,822
Guaranteed investment certificate		225,000		-
	$	817,080	$	944,822

5. SHARE CAPITAL AND RESERVES

Authorized

Unlimited common shares without par value

Issued

At December 31, 2019 and 2018 there were 31,931,007 issued and fully paid common shares.

Shares held in escrow

At December 31, 2019 there were 2,746,000 common shares held in escrow.

Share-based Payments

The Company has an employee stock option plan under which employees, directors and key consultants are eligible to receive grants. Under the stock option plan, the granted stock options are exercisable over periods of up to ten years as determined by the Company’s Board of Directors. The maximum number of outstanding stock options under the plan is limited to 10% of the number of common shares outstanding. The number of stock options, the vesting periods, and the exercise price is set by the Company’s Board of Directors based on the market value at the time of granting.

On December 5, 2017 the board of directors of the Company issued 200,000 options to a director at an exercise price of $0.15 per share. These options were granted for a period of 3 years, or 90 days following the director`s resignation whichever is earlier, and vest upon issuance. On October 18, 2019, these options were cancelled.

Stock options issued and outstanding are as follows:

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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5. SHARE CAPITAL AND RESERVES, continued

	2019	2019	2019		2018	2018
			Weighted			Weighted
	Number of		average	Number of		average
	options	exerciseprice		options	exerciseprice
Outstanding - beginning of year	200,000	$	0.15	200,000	$	0.15
Cancelled	(200,000)		-	-		-
Outstanding- end ofyear	-	$	-	200,000	$	0.15

6. RELATED PARTY TRANSACTIONS

The Company entered into the following related party transactions during the years ended December 30, 2019 and 2018:

Incurred consulting fees of $14,065 (2018 - $Nil) to directors of the Company and $9,188 (2018 - $31,500) to a company with a common director. At December 31, 2019, the Company owed the directors $Nil (2018 - $28,350) in respect of these fees.

Key management personnel comprise the Company’s Board of Directors and executive officers. No remuneration was paid to key management personnel during the years ended December 31, 2019 and 2018 other than as indicated above.

7. CAPITAL MANAGEMENT

The Company’s objectives for the management of capital are to safeguard the Company’s ability to continue as a going concern, including the preservation of capital, and to achieve reasonable returns on invested cash after satisfying the objective of preserving capital.

The Company considers its cash to be its manageable capital. The Company’s policy is to maintain sufficient cash and deposit balances to cover operating costs over a reasonable future period. The Company accesses capital markets as necessary and may also raise additional funds where advantageous circumstances arise.

The Company currently has no externally-imposed capital requirements. There was no change to the Company’s approach to capital management during the year.

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

As at December 31, 2019, the Company’s financial instruments consist of cash and cash equivalents, interest receivable and accounts payable.

In management’s opinion, the Company’s carrying values of cash and cash equivalents, interest receivable and accounts payable approximate their fair values due to the immediate or shortterm maturity of these instruments.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT, continued

Classification

The following table summarizes information regarding the carrying values and classification of the Company’s financial instruments:

ompany’s financial instruments:
	2019 2018
Fair value through profit or loss (i)
	$ 817,080 $ 944,822

(i) Cash and cash equivalents

The Company’s financial instruments are exposed to the following risks:

Credit Risk

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 credit quality financial institution. Credit risk is assessed as low.

Liquidity Risk

Liquidity risk is the risk that the Company will not meet its obligations associated with its financial liabilities as they fall due. The Company performs cash flow forecasting for each fiscal year to ensure sufficient cash is available to fund its projects and operations. As at December 31, 2019, the Company had a balance in cash and cash equivalents balance of $817,080 to settle current liabilities of $7,838. The Company’s financial liabilities include accounts payable which have contractual maturities of 30 days or are due on demand.

At present, the Company’s operations do not generate positive cash flows. The Company's primary source of funding has been the issuance of equity securities through private placements. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings.

Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, commodity and equity prices and foreign exchange rates.

The Company does not believe it is exposed to significant market risk.

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT, continued

Interest Rate Risk

The Company is exposed to interest rate risk arising from the cash maintained at Canadian financial institutions. The interest rate risk on cash is not considered significant due to its shortterm nature and maturity.

Currency Risk

As at December 31, 2019, the Company’s expenditures are predominantly in Canadian dollars, and any future equity raised is expected to be predominantly in Canadian dollars. As a result, the Company does not believe it is exposed to any significant currency risk.

9. INCOME TAXES

Income tax expense varies from the amount that would be computed by applying the expected basic federal and provincial income tax rates for Canada at December 31, 2019 at 27.00% (2018 – 27.00%) to income before income taxes.

A reconciliation of the differences is as follows:

		2019		2018
Loss before income taxes	$	(87,031)	$	(120,103)
Statutoryincome tax rate		27.00%		27.00%
Expected income tax (recovery)		(23,500)		(32,400)
Increase (decrease) in income taxes resulting from:
Share issue costs		-		(3,800)
Permanent differences and other		-		1,500
Change in tax benefits not recognized		23,500		34,700
Income tax recovery	$	-	$	-

The components of the deferred tax asset are as follows:

		2019		2018
Deferred income tax assets
Non-capital losses available for future period	$	201,000	$	173,900
Share issue costs		7,200		10,800
Less: tax benefits not recognized		(208,200)		(184,700)
Deferred income tax asset	$	-	$	-

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RED ROCK CAPITAL CORP. NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2019 and 2018 (Expressed in Canadian Dollars)

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9. INCOME TAXES, continued

The significant components of the Company’s temporary differences, unused tax credits and unused tax losses that have not been included on the statements of financial position are as follows:

		2019	Expiry Date Range		2018	Expiry Date Range
Share issue costs	$	26,600	2019 - 2021	$	54,000	2018 - 2021
Non-capital losses		745,000	2032 - 2039		502,000	2032 - 2038

Tax attributes are subject to revenues and potential adjustments by tax authorities.

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