Contagious Gaming Inc. — Audit Report / Information 2021

Jul 29, 2021

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CONTAGIOUS GAMING INC.

Consolidated Financial Statements Years Ended March 31, 2021 and 2020

Expressed in Canadian Dollars

Tel: 905 946 1066 BDO Canada LLP Fax: 905 946 9524 60 Columbia Way, Suite 300 www.bdo.ca Markham, Ontario L3R 0C9 Canada

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Independent Auditor’s Report

To the Shareholders of Contagious Gaming Inc.

Opinion

We have audited the consolidated financial statements of Contagious Gaming Inc. and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at March 31, 2021 and 2020, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated 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 consolidated 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.

Material Uncertainty Related to Going Concern

We draw attention to Note 2(e) in the consolidated financial statements, which indicates that the Company does not have sufficient cash to meet anticipated cash needs for working capital and capital expenditures through the next twelve months. These conditions, along with other matters as set forth in Note 2(e), indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the Management Discussion and Analysis for the year ended March 31, 2021.

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

In connection with our audit of the consolidated 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 consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the Management Discussion and Analysis for the year ended March 31, 2021 prior to the date of this auditor’s 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 this auditor’s report. We have nothing to report in this regard.

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

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

In preparing the consolidated 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.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 consolidated financial statements.

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

• Identify and assess the risks of material misstatement of the consolidated 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 auditor’s report to the related disclosures in the consolidated 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 auditor’s 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 auditor’s report is Jeanny Gu.

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Chartered Professional Accountants, Licensed Public Accountants

Markham, Ontario July 29, 2021

CONTAGIOUS GAMING INC

Consolidated Statements of Financial Position

As at March 31, 2021 and 2020

(Expressed inCanadian Dollars) Notes	March 31, 2021 March 31, 2020
ASSETS Current Cash Accounts receivable 4 Prepaid expenses Total Assets	$ 34,345 $ 143,716 11,205 11,903 1,864 1,669
	$ 47,414 $ 157,288
LIABILITIES Current Accounts payable and accrued liabilities Due to related parties 5 Note payable 6 Total Liabilities EQUITY Share capital 8 Reserves 8 Deficit Total Equity	$ 829,970 $ 596,865 366,704 606,780 300,000 300,000
	1,496,674 1,503,645
	21,685,846 20,835,846 3,130,728 3,130,728 (26,265,834) (25,312,931)
	(1,449,260) (1,346,357)
Total Liabilities and Equity	$ 47,414 $ 157,288
Commitments and contingencies 7

Approved on behalf of the Board of Directors:

“Victor Wells” , Director “Justin Barragan” , Director

The accompanying notes form an integral part of these consolidated financial statements

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CONTAGIOUS GAMING INC

Consolidated Statements of Comprehensive Loss

For the Years Ended March 31, 2021 and 2020

Expressed inCanadian Dollars Notes	2021 2020
Revenue Direct costs Gross margin Expenses General and administrative Financing costs Foreign exchange (gain)/loss Loss on settlement of debt 8(b) Net loss from continuing operations Net income/(loss) from discontinued operations, net of income taxes 15 Net loss Comprehensive loss for the year Loss per share – basic and diluted 14 Loss per share – basic and diluted continuing operations Loss per share – basic and diluted discontinued operations Weighted average number of shares outstanding – basic and diluted	$ - $ 87,540 - (52,717)
	- 34,823
	516,732 542,316 24,000 52,469 (12,829) 3,010 425,000 -
	952,903 597,795
	(952,903) (562,972) - (137,457)
	(952,903) (700,429)
	$ (952,903) $ (700,429)
	S (0.03) S (0.02) (0.03) (0.02) - - 29,937,394 29,468,745

The accompanying notes form an integral part of these consolidated financial statements

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CONTAGIOUS GAMING INC

Consolidated Statements of Changes in Equity For the Years Ended March 31, 2021 and 2020

Expressed in Canadian Dollars	Share Capital(Note 8) Reserves Accumulated Other Comprehensive Number of Amount (Note 8) Income Deficit Total Shares $ $ $ $ $*
Balance at March 31, 2019 Adjustment on the sale of Contagious Sports (Note 15) Net loss for theyear	29,468,745 20,835,846 3,130,728 (137,458) (24,612,502) (783,386) - - - 137,458 - 137,458 - - - - (700,429) (700,429)
Balance at March 31, 2020	29,468,745 20,835,846 3,130,728 - (25,312,931) (1,346,357)

Expressed in Canadian Dollars	Share Capital (Note 8) Reserves Accumulated Other Comprehensive Number of Amount (Note 8) Income Deficit Total Shares $ $ $ $ $*
Balance at March 31, 2020 Cancellation of Trinity Mirror escrow shares Shares issued for debt (Note 8b) Net lossforthe year	29,468,745 20,835,846 3,130,728 - (25,312,931) (1,346,357) (183,910) - - - - - 8,500,000 850,000 850,000 - - - - (952,903) (952,903)
Balance at March 31, 2021	37,784,835 21,685,846 3,130,728 - (26,265,834) (1,449,260)

The accompanying notes form an integral part of these consolidated financial statements

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CONTAGIOUS GAMING INC

Consolidated Statements of Cash Flows For the Years Ended March 31, 2021 and 2020

Expressed inCanadian Dollars	2021 2020
Cash provided by (used in) operations Loss for the year Items not affecting cash: Financing costs Foreign exchange loss from discontinued operation Loss on settlement of debt Changes in non-cash working capital: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Other payables Cash flows from investing activities Cash received on sale of Contagious Sport (Note 15) Cash flows from financing activities Increase in due to related parties Interest paid on note payable Decrease in cash **Cash at beginning of year **	$ (952,903) $ (700,429) - 46,391 - 137,457 425,000
	(527,903) (516,581) 698 41,380 (195) 345 368,105 (3,877) - (3,698)
	(159,295) (482,431)
	- 130,000
	- 130,000
	49,924 251,809 - (18,086)
	49,924 233,723
	(109,371) (118,708) 143,716 262,424
Cash at end ofyear	$ 34,345 $ 143,716

Non-Cash Transactions:

Outstanding accounts payable and due to related parties totalling $425,000 were settled with the issuance of shares of the Company on February 24, 2021.

The accompanying notes form an integral part of these consolidated financial statements

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

1. CORPORATE INFORMATION

Contagious Gaming Inc. (on a consolidated basis the “Company ” or “ Contagious ”) is in the business of developing software solutions for regulated gaming and lottery markets. The Company’s head office address is at #800 – 789 West Pender Street, Vancouver, BC, V6C 1H2. The registered and records office address is at Suite 1500-1055 West Georgia Street, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7. The Company is listed on the TSX Venture Exchange (“TSX.V”) under the symbol “CNS” and on the Frankfurt Stock Exchange under the symbol “RHRD”.

2. BASIS OF PRESENTATION

a) Statement of Compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee. The policies set out below were consistently applied to all the years presented unless otherwise noted.

These consolidated financial statements were approved and authorized for issue by the Board of Directors on July 29, 2021.

b) Basis of Measurement

These financial statements have been prepared on the historical cost basis, with the exception of items that IFRS requires to be carried at fair value, as explained in the accounting policies set out in Note 3.

c) Basis of Consolidation

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

These consolidated financial statements include the accounts of Contagious Gaming and the following wholly-owned subsidiaries: (i) Canadian subsidiary Telos and (ii) U.K. subsidiary Contagious Sports., which was disposed of during the previous year. See Note 15.

d) Assets Held for Sale and Discontinued Operations

During the previous year, the Company sold all the shares of Contagious Sports. The results of Contagious Sports have been presented as a discontinued operations in the comparative consolidated statement of comprehensive loss separately from continuing operations. See Note 15.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

2. BASIS OF PRESENTATION – CONTINUED

e) Going Concern

As at March 31, 2021, the Company does not have sufficient cash to meet anticipated cash needs for working capital and capital expenditures through the next twelve months. The Company intends on raising financing before the end of fiscal 2022. The Company will require additional financing in the near term to enable the launch of current initiatives. There can be no assurance however, that additional financing can be obtained in a timely manner, or at all especially in light of the potential impact of COVID-19 on capital markets.

Not raising sufficient additional financing on a timely basis may result in delays and possible termination of all or some of the Company’s initiatives, and as a result, these conditions indicate the existence of a material uncertainty which, may cast significant doubt as to the ability of the Company to continue as a going concern. The Company cannot predict whether it will be able to raise the necessary funds it needs to continue as a going concern.

The Company’s financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realization of assets and settlement of liabilities in the ordinary course of business. The consolidated financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern.

f) Use of Estimates and Judgments

The Company makes certain estimates and assumptions regarding the future. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual outcomes may differ from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized prospectively by including it in profit or loss in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both.

Information about critical estimates and assumptions in applying accounting policies and estimates that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the consolidated financial statements within the next financial year are discussed below:

(i) Accruals and provisions

Estimate is used in assessing, measuring and recognizing accruals and provisions. Estimate is required to determine the possible consideration required to settle the present obligation at the statement of financial position date.

(ii) Deferred taxes

The recognition of deferred tax assets is based on forecasts of future taxable income. The measurement of future taxable income for the purposes of determining whether or not to recognize deferred tax assets depends on many factors, including the Company’s ability to generate such profits and the implementation of effective tax planning strategies. The occurrence or non-occurrence of such events in the future may lead to significant changes in the measurement of deferred tax assets.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

2. BASIS OF PRESENTATION – CONTINUED

g) Functional and Presentation Currency

These consolidated financial statements are presented in Canadian dollars. The functional currency of the Canadian legal parent company, Contagious Gaming, and its legal Canadian subsidiary, Telos, is the Canadian dollar. The functional currency of the UK subsidiary, Contagious Sports, is the British Pound Sterling (“GBP” or “₤”). The subsidiary’s financial statement amounts are translated into Canadian dollars as follows: assets and liabilities at the closing rate as at the consolidated statement of financial position date, and income and expenses and cash flows at the average rate of the period. All resulting changes are recognized in other comprehensive income (loss) as cumulative translation differences.

3. SIGNIFICANT ACCOUNTING POLICIES

a) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and demand deposits with maturities of 90 days or less.

b) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business. The Company recognizes revenue when the amount can be reliably measured and when it is probable that future economic benefits will flow to the Company.

Revenue arising from the development of content for mobile and online video games is recognized as the services are rendered. The Company’s content development agreements with developers of social games generally include non-refundable up-front fees and milestone payments which are initially deferred and recognized as revenue as work progresses. Where services are in-progress at the reporting period end, the Company recognizes revenues proportionately ‘over time’ based on the amount of service provided to the customer to the reporting period end date.

c) Earnings (Loss) per Share

Basic earnings per share is computed by dividing the net loss applicable to common shares of the Company by the weighted average number of common shares outstanding for the relevant year.

Diluted earnings per share is computed by dividing the net loss applicable to common shares by the sum of the weighted average number of common shares issued and outstanding and all additional common shares that would have been outstanding, if potentially dilutive instruments were converted. The Company’s instruments are not dilutive due to the loss in the period.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

3. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

d) Financial Instruments

(i) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

The Company initially measures a financial asset at its fair value, plus transaction costs in the case of a financial asset not at fair value through profit or loss.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost

The Company measures financial assets at amortized cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and loss are recognized in the statement of comprehensive loss when the asset is derecognized, modified or impaired.

Financial assets at amortized cost include cash and accounts receivable.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value.

The Company does not have any financial assets that are subsequently measured at fair value through other comprehensive income or at fair value through profit or loss.

Impairment of financial assets

The Company recognizes an allowance for expected credit losses (ECLs) for all financial assets not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

3. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

d) Financial Instruments - Continued

For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For those credit exposures that are considered credit impaired, a loss allowance is required for credit losses expected over the remaining life of the exposure, with interest income recognized on the balance net of allowance.

At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effect, including historical and forward-looking information.

The Company considers a financial asset to have experienced a significant increase in credit risk when contractual payments are 30 days past due and to be in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to have increased significantly in credit risk or to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

(ii) Financial Liabilities

Financial liabilities are classified as financial liabilities at fair value through profit or loss (FVTPL) or other financial liabilities, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognized initially at fair value net of directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate (“EIR”). Gains and loss are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the consolidated statement of comprehensive loss.

The Company’s accounts payable and accrued liabilities, due to related parties and note payable are classified as other financial liabilities at amortized cost.

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

3. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

e) Share Capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

• (i) The proceeds from the exercise of stock options, warrants and purchase of shares are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company.

• (ii) Share capital issued for non-monetary consideration is recorded at an amount based on the fair market value of these shares when the fair value of the goods or services received is not reliably estimable.

• (iii) The proceeds from the issue of units is allocated between common shares and common share purchase warrants classified as equity on a prorated basis on relative fair values as follows: the fair value of common shares is based on the stock price on the date the units are issued; and the fair value of the common share purchase warrants is determined using the BlackScholes pricing model.

f) Provisions

Provisions are recognized for liabilities of uncertain timing or amount that have arisen as a result of past transactions, including legal or constructive obligations, and when it is probable that an outflow of economic benefits will be required and that amount can be reliably estimated. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

3. SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

g) Recent Accounting Pronouncements

New standards, interpretations and amendments effective from January 1, 2020

• (i) IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors

The Company adopted the amendment to the accounting standard IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, effective for annual period beginning on or after January 1, 2020. The accounting standard has been amended to incorporate a new definition of “material”.

The Company adopted IAS 8 using the retrospective approach and did not restate comparative amounts for the year prior to first adoption. As at the date of transition, management assessed that it did not have any estimates that have been affected by the IAS 8 amendment. The adoption of the new IAS amendment therefore did not result in adjustments to previously reported figures and there has been no change to the opening deficit balance as at April 1, 2020.

New standards, interpretations and amendments not yet effective

A number of new standards are effective for annual periods beginning on or after January 1, 2021 and earlier application is permitted. However, the Company has not early adopted the new or amended standards in preparing these consolidated financial statements. The following amended standards and interpretations are not expected to have a significant impact on the Company’s consolidated financial statements.

• (i) Amendments to IAS 1 - Classification of Liabilities as Current or Non-current

The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount or timing of recognition.

• (ii) Onerous contracts – Costs of Fulling a Contract (Amendments to IAS 37) The amendments specify which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous. The amendments apply for annual reporting periods beginning on or after January 1, 2022, to contracts existing at the date when the amendments are first applied. At the date of initial application, the cumulative effect of applying the amendments is recognized as an opening balance adjustment to retained earnings or other components of equity, as appropriate. The comparatives are not restated. The Company has determined that all contracts existing at March 31, 2021 will be completed before the amendments become effective.

• (iii) Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The amendments address issues that might affect financial reporting as a result of the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. The amendments provide practical relief from certain requirements in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to:

• Changes in the basis for determining contractual cash flows of financial assets, financial liabilities and lease liabilities; and

• Hedge accounting

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

4. ACCOUNTS RECEIVABLE

4. ACCOUNTS RECEIVABLE
		March 31,	March 31,
		2021	2020
Trade receivable	$	2,294 $	2,906
Governmentremittances		8,911	8,997
	$	11,205 $	11,903

5. RELATED PARTIES TRANSACTIONS AND BALANCES

a) Amounts Due To Related Parties

a) Amounts Due To Related Parties
		March 31,		March 31,
		2021		2020
Due to related parties:
Due to directors, officers and their
companies (i)	$	366,704	$	606,780

• (i) Amounts due to directors, officers and their companies are for accrued salaries, fees and travel costs. These amounts are unsecured, non-interest bearing and are due on demand. Included in Accounts Payable is an amount of $345,763 owing to a former director who ceased to be a director during the year.

b) Compensation of Key Management Personnel

Key management personnel are those persons that have authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly. As of March 31, 2021, the Company’s key management personnel consist of the Company’s directors and senior management (Chief Executive Officer, President, Corporate Secretary and Chief Financial Officer). The Company incurred fees and expenses in the normal course of operations in connection with the key management and directors. Details are as follows:

		March 31	March 31
Nature of Transactions		2021	2020
Management fees and salaries	$	170,340 $	98,490
Directors fees		67,371	66,300
Advisoryfees		18,468	73,872
	$	224,886 $	238,662

During the current year, the Company recorded $10,014 (2020 - $4,195) of legal fees to McMillan LLP, a law firm in which one of the Company’s director is a partner.

During the previous year, the Company recorded $72,000 of consulting fees to 2444384 Ontario Inc., the owner of which became a director of the Company during the current year.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

6. NOTE PAYABLE

On September 19, 2014, Contagious Gaming issued to its lenders a Convertible Note payable with a face value of $300,000, accruing interest at a rate of 8% per annum compounded quarterly, with interest payable on quarterly basis, unsecured and with a maturity date of September 19, 2017 in settlement for a previously outstanding loan and accrued interest.

Upon maturity of the Convertible Note on September 19, 2017, the Company and its lenders agreed to extend the note without any conversion features, to be due on December 31, 2019. The extension was accounted for as an extinguishment of the convertible note payable for consideration equal to the fair value of the revised note payable. The carrying value of the note was determined using a 20% discount rate with the difference of $64,875 representing a gain on the extinguishment of the convertible note payable. The note payable is unsecured, bears interest at 8% per annum compounded quarterly, with interest payable on a quarterly basis. Subsequent to maturity on December 31, 2019, the note payable remains due on demand with no specified terms of repayment.

Details of the carrying value of the note are as follows:

etails of the carrying value of the note are as follows:
	March31,2021 March31,2020
Face value of the note $ Gain on extinguishment Carrying value on September 19, 2017 Accretion expense Interest paid	300,000 $ 300,000 (64,875) (64,875)
	235,125 235,125
	119,781 119,781 (54,906) (54,906)
$	300,000 $ 300,000

7. COMMITMENTS AND CONTINGENCIES

As part of the Board’s ongoing compliance process, the Board continues to monitor legal and regulatory developments and their potential impact on the Company. The Company takes legal advice as to the potential outcomes of claims and actions and provisions are made where appropriate.

Management is not aware of any contingencies that may have a significant impact on the financial position of the Company.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

8. SHARE CAPITAL

a) Authorized and Issued Share Capital

The Company’s authorized share capital consists of an unlimited number of common shares without par value. The Company is also authorized to issue an unlimited number of Class A Preferred Shares without par value. No Class A Preferred Shares were issued as of the period end date.

b) Issued and Outstanding

In satisfaction of agreements dated January 12, 2021, with certain creditors, on February 24, 2021, the Company issued 8,500,000 shares to settle $425,000 of accounts payable and amounts due to related parties and recorded a loss on settlement of debt of $425,000 based on the quoted share price on the date the shares were issued to extinguish the liabilities.

c) Stock Options

The Company has a stock option plan in place under which it is authorized to grant options of up to 10% of its outstanding shares of the Company to officers, directors, employees and consultants. The exercise price of each option is to be determined by the Board of Directors but shall not be less than the discounted market price as defined by the TSX Venture Exchange. The expiry date for each option should be for a maximum term of five years. Stock options granted vest over the period determined by the Board of Directors. Stock options granted to investor relations consultants vest according to TSX Venture Exchange policy.

There are no stock options outstanding as at March 31, 2021 and March 31, 2020.

d) Share Purchase Warrants

The following is a summary of activity in share purchase warrants:

						Weighted
						Average
March 31,					March 31	Exercise
2019	Granted	Forfeited	Exercised	Expired	2020	Price	ExpiryDate
9,327,083	-	-	-	9,327,083	-	$0.10	Mar07,2020 (i)
						Weighted
						Average
March 31,					March 31	Exercise
2020	Granted	Forfeited	Exercised	Expired	2021	Price	ExpiryDate
-	-	-	-	-	-	-

(i) Represents the warrants issued in the non-brokered private placement of 17,000,000 units closed on March 7, 2018 at $0.06 per unit for gross proceeds of $1,020,000.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

8. SHARE CAPITAL – CONTINUED

e) Escrow Shares

As of March 31, 2021, nil (March 31, 2020 – 183,910) common shares of the Company were held in escrow. Details are as follows:

In connection with the September 25, 2014, amending agreement with Trinity Mirror and pursuant to an escrow agreement dated September 25, 2014, 183,910 common shares of the Company were placed in escrow upon TSX-V approval on Nov 5, 2014. 25% of the escrowed shares are to be released for each £150,000 of advertising to be performed by Trinity Mirror under a £600,000 advertising credit. On April 1, 2020, the shares in escrow were returned to the Company as the advertising plan had not been executed and as such the deal expired.

f) Reserves

f) Reserves
	Reserves($)
	Contribution Options Warrants Convertible Note Total
Balance – March 31, 2020	202,877 1,546,275 1,319,046 62,530 3,130,728
Balance –March 31, 2021	202,877 1,546,275 1,319,046 62,530 3,130,728

Contribution reserve arose on the issuance of the redeemable Class A Preferred Shares in 2006 and 2007.

Options and warrants reserves represent fair value of share purchase options and share purchase warrants issued for services and private placement.

Convertible note reserve relates to the equity portion of the convertible note payable described in Note 6.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

9. INCOME TAX

The Company’s tax charge, which relates fully to deferred taxes, differs from the amount obtained by applying the Canadian statutory tax rate due to the following:

	March 31, 2021 March 31, 2020
Loss from continuing operations before taxes Canadian statutory tax rate Income tax recovery Foreign and provincial tax rate differences Items (deductible)/non-deductible for tax purposes Operating losses not set-up as deferred tax assets Future income tax recovery	$ (952,903) $ (562,972) 27.00% 27.00% $ (257,284) $ (152,002) (886) (1,815) 135,304 (3,713) 122,866 157,531 $ - $ -

Details of deferred income tax assets (liabilities) are as follows:

	March 31, 2021 March 31, 2020
Deferred income tax assets related to: Non-capital losses Intangible assets Total future income tax assets Valuation allowance Less deductible temporary differences for which deferred income tax assets are not recognized Net deferred income tax asset	$ 2,021,142 $ 2,073,296 83,914 90,230
	$ 2,105,056 $ 2,163,526 - -
	(2,105,056) (2,163,526)
	$ - $ -

As at March 31, 2021, the Company had non-capital losses in Canada of approximately $7,219,263 that may be applied against future income for income tax purposes. These losses expire at various dates between 2026 and 2041.

10. FINANCIAL INSTRUMENTS

a) Fair Value of Financial Instruments

The Company has classified its financial instruments using a fair value hierarchy that reflects the significance of inputs used as follows:

Level 1: Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Valuation based on directly or indirectly observable inputs in active markets for similar assets or liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates;

Level 3: Valuation based on significant inputs that are not derived from observable market data, such as discounted cash flow methodologies based on internal cash flow forecasts.

The fair values of accounts receivable, accounts payable and accrued liabilities, note payable and balances with related parties approximate their carrying value due to their short term maturities. There were no transfers between levels during the year.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

10. FINANCIAL INSTRUMENTS – CONTINUED

b) Management of Risks Arising from Financial Instruments

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

Credit risk

Credit risk arises from the potential that a counter party will fail to perform its obligations. The Company is exposed to credit risk from credit sales. The Company provides credit to its customers in the normal course of its operations and credit sales represent a significant portion of the Company’s sales activities. The Company does not obtain collateral or security to support trade receivables but mitigates this risk by granting credit only to financially reliable customers. An allowance for doubtful accounts is established using an expected credit loss model that is based upon factors surrounding the credit risk of specific accounts, historical trends and other information.

As of March 31, 2021, there were receivables from one customer (March 31, 2020 - one) representing 100% (March 31, 2020 - 100%) of total trade receivables. During the year ended March 31, 2021, sales to nil customer (2020 - one) accounted for 100% (2020 - 98 % ) of total revenue. The loss of a large customer would have a significant effect on the Company. There are no debtors past due as at March 31, 2021 and the Company’s estimated expected credit loss is insignificant.

Cash is spread across the Company with different institutions which helps to manage cash credit risk. Excess cash is held in Canadian Guaranteed Investment Certificates. The Company only engages banks with appropriate credit ratings.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company is exposed to this risk mainly with respect to ensuring the sufficiency of funds for working capital and commitments. The Company monitors the maturity dates of existing accounts payables and accrued liabilities, loans payable, and commitments to mitigate this risk.

The following table outlines the remaining contractual maturities for the Company’s financial liabilities and the financial period in which they fall due:

March 31, 2020	2021 $	2022 $	2023 $	Total $
Accounts payable	596,865	-	-	596,865
Due to related parties	606,780	-	-	606,780
Note payable	300,000	-	-	300,000
	1,503,645	-	-	1,503,645

March 31, 2021	2022 $	2023 $	2024 $	Total $
Accounts payable	829,970	-	-	829,970
Due to related parties	366,704	-	-	366,704
Note payable	300,000	-	-	300,000
	1,496,674,	-	-	1,496,674

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

11. NATURE OF EXPENSE

11. NATURE OF EXPENSE
	March 31, 2021 March 31, 2020 $ - $ 52,717 6,262 53,658 $ 6,262$ 106,375
Salaries and benefits included in: Direct costs General and administrative expense

12. CAPITAL MANAGEMENT

The Company’s capital management objectives are to ensure the Company’s ability to continue as a going concern and to grow the Company’s operations. The Company depends on revenue generated and external financing to fund its activities. The capital structure of the Company currently consists of common shares, share purchase warrants, loans payable and related party debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may arrange more loans, issue new shares through private placements, or sell assets to fund operations. Management reviews its capital management approach on a regular basis. The Company is not subject to externally imposed capital requirements. The Company invests all capital that is surplus to its immediate operational needs in short-term, liquid and highly-rated financial instruments, such as cash and other short-term guaranteed deposits, all held with major financial institutions.

13. SEGMENTED INFORMATION

The Company is engaged in the business of developing software solutions for regulated gaming and lottery markets. Based on the Company’s organizational structure and the manner in which the operations are managed and evaluated by senior management, the Company is considered to be operating in one reportable segment. Substantially all of the Company’s revenues were generated in Canada.

14. EARNINGS/(LOSS) PER SHARE

The calculation of basic and diluted earnings (loss) per share has been calculated based on the weighted average number of common shares issued and outstanding during the reporting period.

Diluted and basic loss per share are the same because the effects of potential issuances of shares under stock options and warrants would be anti-dilutive.

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CONTAGIOUS GAMING INC. Notes to Consolidated Financial Statements For the Year Ended March 31, 2021 and 2020 Expressed in Canadian Dollars

15. DISCONTINUED OPERATIONS

During the previous year, the Company sold all the shares of Contagious Sports, a wholly owned subsidiary, to a third party. The sale was completed in May 2019. Thus, in prior year, the results of Contagious Sports have been presented as a discontinued operation in the consolidated statement of comprehensive loss separately from continuing operations.

Loss from discontinued operations, net of income taxes, for Contagious Sports for the year ended March 31, 2020 consists of the cumulative translation balance cycled to net income on disposal of the subsidiary in the comparative period.

16. SUBSEQUENT EVENTS

On July 14, 2021, the Company announced a non-brokered private placement of up to 20,000,000 units at $0.05 for gross proceeds of up to $1,000,000 (the “ Offering ”). Each Unit will consist of one common share in the capital of the Company (the “ Shares ”) plus one common share purchase warrant (the “ Warrants ”). Each Warrant will entitle the holder to purchase one additional Share at a price of $0.07 for a period of two years from the closing of the Offering. The Company may pay a finder’s fee on the Offering within the amount permitted by the policies of the TSX Venture Exchange (the “ Exchange ”). All securities issued in connection with the Offering will be subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation. Closing of the Offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the Exchange. The net proceeds from the Offering will be used by the Company for general working capital.

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