BEACN Wizardry & Magic — Interim / Quarterly Report 2021

Apr 22, 2021

0GERMINATE CAPITAL LTD.

CONDENSED INTERIM FINANCIAL STATEMENTS For the three months ended February 28, 2021

(Unaudited)

GERMINATE CAPITAL LTD.

Contents
	Page
Notice of No Auditor Review of Interim Financial Statements	3
Condensed Interim Statements of Financial Position	4
Condensed Interim Statements of Comprehensive Loss	5
Condensed Interim Statements of Changes in Shareholders’ Equity	6
Condensed Interim Statements of Cash Flows	7
Notes to the Condensed Interim Financial Statements	8 - 11

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NOTICE OF NO AUDITOR REVIEW OF

INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

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

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GERMINATE CAPITAL LTD. CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (Presented in Canadian Dollars)

		February 28,	November 30,
	Note	2021	2020
Assets		(Unaudited)	(Audited)
Current
Cash and cash equivalents		$ 62,013	$ 69,245
Receivables		1,146	775
Deferred financing costs		30,000	-
Prepaid expense		-	15,000
		93,159	85,020
		$ 93,159	$ 85,020
Liabilities
Current
Accounts payable and accrued liabilities		$ 27,490	$ 2,490
Due to relatedparties		1,092	525
		28,582	3,015
Shareholders’ equity
Share capital	6(b)	100,000	100,000
Deficit		(35,423)	(17,995)
		64,577	82,005
		$93,159	$85,020

Events after the reporting period (Note 9)

These condensed interim financial statements are approved by the Board on April 22, 2021

Approved by the Board of Directors:

“Sarah Weber”		“Mark T. Brown”
Sarah Weber		Mark T. Brown

See the notes to the condensed interim financial statements

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GERMINATE CAPITAL LTD. CONDENSED INTERIM STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS (Presented in Canadian Dollars)

		Three months ended		For the Period from
			February 28,	Incorporation on August 14,
	Note		2021	2020 to November 30, 2020
General and administrative			(Unaudited)	(Audited)
Accounting fees		$	7,415	$ -
Bank charges			13	5
Legal fees			5,000	2,490
Listing fees			5,000	-
Professional fees			-	15,000
Rent			-	500
Loss from operations			17,428	17,995
Net loss and comprehensive loss for theperiod		$	17,428	$ 17,995
Basic and diluted lossper share		$	0.01	$ 0.04
Weighted average number of common shares outstanding			2,000,000	500,000

See the notes to the condensed interim financial statements

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GERMINATE CAPITAL LTD. CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Presented in Canadian Dollars)

Note	Number of shares Amount Deficit Total Shareholders' Equity Share Capital
Balance, August 14, 2020 Seed shares 6(b) Loss for the period	-$ - $ - $ - 2,000,000 100,000 - 100,000 - -(17,995) (17,995)
Balance, November 30, 2020 (Audited) Loss for theperiod	2,000,000 100,000 (17,995) 82,005 - -(17,428) (17,428)
Balance, February 28, 2021(Unaudited)	2,000,000$ 100,000$(35,423) $ 64,577

See the notes to the condensed interim financial statements

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GERMINATE CAPITAL LTD. CONDENSED INTERIM STATEMENTS OF CASH FLOWS

(Presented in Canadian Dollars)

	Three months ended				For the Period from
		February	28,	Incorporation on August 14,
	Note	2021		2020 to November 30, 2020
Cash provided by (used in):		(Unaudited)			(Audited)
Operating activities
Loss for the period	$		(17,428) $		(17,995)
Changes in non-cash working capital items:
Receivables			(371)		(775)
Prepaid expense			15,000		(15,000)
Accounts payable and accrued liabilities			10,000		2,448
Due to relatedparties			567		567
Net cashprovided by (used in)operatingactivities			7,768		(30,755)
Financing activities
Proceeds from issuance of common shares	6		-		100,000
Deferred financingcosts			(15,000)		-
Net cashprovided byfinancingactivities			(15,000)		100,000
Change in cash and cash equivalents			(7,232)		69,245
Cash and cash equivalents, beginning of theperiod			69,245		-
Cash and cash equivalents, end of theperiod	$		62,013	$	69,245
Supplemental disclosure with respect to cash flows:
Deferred financingcosts in accountspayable and accrued	liabilities	$	15,000	$		-

See the notes to the condensed interim financial statements

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GERMINATE CAPITAL LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2021 (Presented in Canadian Dollars)

1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS

Germinate Capital Ltd. (the “Company” or “Germinate”) is incorporated and domiciled in Canada under the Business Corporations Act (British Columbia), and its registered office is 10th Floor, 595 Howe Street, Vancouver, BC, V6C 2T5.

Since incorporation, the Company’s sole activity has been the preparation of a prospectus to become listed on the TSX Venture Exchange (the “Exchange”) as a “Capital Pool Company” as defined in the Exchange’s Listing Policy 2.4.

As a Capital Pool Company, the principal business of the Company is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to receipt of shareholder approval and acceptance for filing by the Exchange. Until the completion of such a Qualifying Transaction (“QT”), as defined under Exchange Listing Policy 2.4, the Company will not carry on any business other than the identification and evaluation of assets or businesses in this connection. The Company does not have business operations or assets other than cash, and has no written or oral agreements for the acquisition of an asset or business at this time.

These condensed interim financial statements (the “Financial Statements”) have been prepared on the basis of the accounting principles applicable to a going concern, which assumes the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company is recently incorporated, has no source of operating revenues and its capacity to operate as a going concern in the near-term will likely depend on its ability to continue raising equity financing, to complete an initial public offering as described below, and to ultimately complete a QT. In addition, the Exchange may suspend from trading or de-list the common shares of the Company where it has failed to complete a QT within 24 months of its date of listing.

2. BASIS OF PREPARATION - STATEMENT OF COMPLIANCE

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) using accounting policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for financial instruments that have been measured at fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The preparation of these condensed consolidated interim financial statements in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements.

These condensed consolidated interim financial statements, including comparatives, have been prepared on the basis of IFRS standards that are published at the time of preparation.

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GERMINATE CAPITAL LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2021 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS as issued by the IASB on a basis consistent with those followed in the Company’s most recent audited financial statements for the period ended November 30, 2020.

These unaudited condensed consolidated interim financial statements do not include all note disclosures required by IFRS for annual financial statements, and therefore should be read in conjunction with the audited financial statements for the period ended November 30, 2020. In the opinion of management, all adjustments considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the three month period ended February 28, 2021 are not necessarily indicative of the results that may be expected for the current fiscal year ending November 30, 2021.

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The fair values of the Company’s cash and accounts payable and accrued liabilities approximate their carrying values.

The Company’s financial instruments are exposed to certain financial risks, including credit risk, interest rate risk and liquidity risk.

a) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its bank account. The Company’s bank account is held with a major bank in Canada; accordingly, the Company believes it is not exposed to significant credit risk.

b) Interest rate risk

Interest rate risk is the risk of losses that arise as a result of changes in contracted interest rates. The Company is not exposed to significant interest rate risk.

c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company controls liquidity risk by ensuring that it has sufficient cash resources to pay for its financial obligations. As at February 28, 2021, the Company had a cash balance of $62,013 to settle current liabilities of $28,582.

5. CAPITAL MANAGEMENT

The Company’s capital consists of shareholders’ equity. The Company’s objective when managing capital is to maintain adequate levels of funding to support the development of its businesses and maintain the necessary corporate and administrative functions to facilitate these activities. This is done primarily through equity financing and incurring debt. Future financings are dependent on market conditions and there can be no assurance the Company will be able to raise funds in the future. The Company invests all capital that is surplus to its immediate operational needs in short-term, highly liquid, high-grade financial instruments. There were no changes to the Company’s approach to capital management during the period. The Company is subject to the TSX Venture Exchange policy in terms of limitations on general and administrative charges as well as permitted use of proceeds for a capital pool company.

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GERMINATE CAPITAL LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2021 (Presented in Canadian Dollars)

6. SHARE CAPITAL

• (a) Authorized:

At February 28, 2021, the authorized share capital was comprised of an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.

• (b) Share issuances:

On November 4, 2020, the Company closed a seed round of financing of 2,000,000 common shares at a price of $0.05 per share for gross proceeds of $100,000. The Company incurred $30,000 share issue costs related to this financing.

These 1,000,000 common shares are to be placed in escrow upon the successful application of the Company as a Capital Pool Company. The release of these shares from escrow is on a time basis, as to 10% upon the completion of a QT and an additional 15% every six months thereafter over a period of three years.

• (c) Stock options:

The Company has established a stock option plan for its directors, officers, and technical consultants under which the Company may grant options to acquire a maximum number of common shares equal to 10% of the total issued and outstanding common shares of the Company. Subject to regulatory approval, the Company agreed to grant options to acquire up to a total of 250,000 common shares to the directors and officers of the Company contemporaneous with closing of its initial public offering, which options are exercisable at $0.10 per share. These options are non-transferable and will expire on the fifth anniversary of their date of issue if unexercised.

7. INITIAL PUBLIC OFFERING

On April 20, 2021, the Company announced that it had completed its initial public offering (the “Offering”). The Company issued an aggregate of 2,500,000 common shares in the capital of the Company (each, a “Common Share”) to purchasers in British Columbia and Alberta at a purchase price of $0.10 per Common Share for gross proceeds to the Company of $250,000. Following the closing of the Offering, a total of 4,800,000 Common Shares are issued and outstanding, of which 2,300,000 are currently held in escrow pursuant to the policies of the Exchange.

The net proceeds of the Offering, together with the proceeds from prior sales of Common Shares, will be used by the Company to identify and evaluate assets or businesses for acquisition with a view to completing a “Qualifying Transaction” under the Exchange’s capital pool company program.

Echelon Wealth Partners Inc. (the “Agent”) acted as agent for the Offering. In connection with the Offering, the Company granted to the Agent non-transferable options to acquire up to an aggregate of 250,000 Common Shares (the “Agent’s Options”). Each Agent’s Option is exercisable to acquire one Common Share at a price of $0.10 per Common Share until April 20, 2026. In connection with the Offering, the Agent also received a cash commission of $25,000, along with a corporate finance fee of $15,000, and was reimbursed for their legal fees and reasonable expenses totaling $16,846.

The Company is a capital pool company within the meaning of the policies of the Exchange. The Company has not commenced operations and has no assets other than cash. The Company will use the net proceeds of the Offering to identify and evaluate assets or businesses for acquisition with a view to completing a QT pursuant to the policies of the Exchange.

The Common Shares were listed on the Exchange on April 20, 2021 and immediately halted pending closing of the Offering. The Common Shares resumed trading on the Exchange on April 22, 2021 under the trading symbol “GCAP.P”.

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GERMINATE CAPITAL LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2021 (Presented in Canadian Dollars)

8. RELATED PARTY TRANSACTIONS

Related party transactions and balances:

		Three months ended February 28, 2021	For the Period from	Balance due	Balance due
Amounts due to:	Service		Incorporation on August 14, 2020 to November 30, 2020	As at February 28, 2021	As at November 30, 2020
Pacific Opportunity Capital Ltd., a company controlled by Mark T. Brown, a director	Accounting, management, and rent services	2,415 $	500 $	1,092 $	525 $
TOTAL:		2,415 $	500 $	1,092 $	525 $

Amounts owing to/from related parties are non-interest bearing, unsecured, and have no fixed terms of repayment. The changes during the period were measured by the exchange amount, which is the amount agreed upon by the transacting parties.

9. EVENTS AFTER THE REPORTING PERIOD

On March 23, 2021, the Company closed a financing of 300,000 common shares at a price of $0.05 per share for gross proceeds of $15,000.

On April 20, 2021, upon completion of the Offering (Note 7), the Company granted 450,000 stock options with an exercise price of $0.10 expiring on April 20, 2031 to its directors and officers.

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