Cross River Ventures Corp. - Audit Report / Information 2020

CROSS RIVER VENTURES CORP

AUDITOR’S REPORT AND FINANCIAL STATEMENTS YEARS ENDED JANUARY 31, 2020 AND 2019

(EXPRESSED IN CANADIAN DOLLARS)

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Crowe MacKay LLP

1100 - 1177 West Hastings St. Vancouver, BC V6E 4T5 Main +1 (604) 687-4511 Fax +1 (604) 687-5805 www.crowemackay.ca

Independent Auditor's Report

To the of Cross River Ventures Corp.

Opinion

We have audited the financial statements of Cross River Ventures Corp. ("the Company"), which comprise the statements of financial position as at January 31, 2020 and January 31, 2019 and the statements of loss and comprehensive loss, changes in equity (deficiency) and cash flows for the years then ended, and 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 January 31, 2020 and January 31, 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

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 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.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 to the financial statements which describes the material uncertainty 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:

Management's Discussion and Analysis

Our opinion on the 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 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, or otherwise appears to be materially misstated.

We obtained the other information 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 Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, 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.

Auditor's 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 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 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 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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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.

"Crowe MacKay LLP"

Chartered Professional Accountants Vancouver, Canada Canada May 25, 2020

Cross River Ventures Corp. Statements of Financial Position (Expressed in Canadian Dollars)

As at January 31, 2020	January 31, 2019
ASSETS Current assets Cash $ 802 Amounts receivable 8,300 Prepaid expenses 10,000	$ 15,325 4,117 10,000
19,102 Mineral Exploration and Evaluation Assets (Note 4) 76,809	29,442 53,316
Total assets $ 95,911	$ 82,758
LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 127,226	$ 61,353
Promissory Notes Payable (Note 5) 15,000	-
Total liabilities 142,226	61,353
SHAREHOLDERS’ EQUITY (DEFICIENCY) Share capital (Note 6) 102,500 Deficit (148,815)	102,500 (81,095)
Total shareholders’equity (deficiency) (46,315)	21,405
Total liabilities and shareholders’ equity (deficiency) $ 95,911	$ 82,758

Nature of Operations and Going Concern (Note 1) Subsequent Events (Note 10)

Approved on behalf of the Board on May 25, 2020

“Dan Placzek” Director “Mike Sieb” Director

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

Cross River Ventures Corp. Statements of Loss and Comprehensive Loss (Express in Canadian Dollars)

Year ended January 31, 2020	Year ended January 31, 2019
Expenses Bank charges $ 17 Filing fees 9,759 Professional fees 57,944	$ 64 14,682 51,964
Loss and comprehensive loss for theyear $ 67,720	$ 66,710
Basic and diluted lossper common share $0.02	$0.02
Weighted average number of common shares outstanding, basic and diluted 3,500,000	3,392,328

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

Cross River Ventures Corp. Statement of Changes in Equity (Deficiency) (Expressed in Canadian Dollars)

	Number		Share	Subscription
	of Shares*		Capital	Advance		Deficit		Total
Balance, January 31, 2018	1,250,000	$	12,500	$ 87,000	$	(14,385)	$	85,115
Issuance of shares (Note 6)	2,250,000		90,000	(87,000)		-		3,000
Loss and comprehensive loss for the year	-		-	-		(66,710)		(66,710)
Balance, January 31, 2019	3,500,000		102,500	-		(81,095)		21,405
Loss and comprehensive loss for the year	-		-	-		(67,720)		(67,720)
Balance,January31,2020	3,500,000	$	102,500	$-	$	(148,815)	$	(46,315)

On April 16, 2019, the Company consolidated its issued and outstanding common shares on the basis of one new share of every two existing shares. Unless otherwise indicated, all references to share capital presented in these financial statements and notes thereto are on a post-consolidation basis.

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

Cross River Ventures Corp. Statements of Cash Flows (Expressed in Canadian Dollars)

		Year		Year
		ended		ended
		January 31,		January 31,
		2020		2019
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Loss for the year	$	(67,720)	$	(66,710)
Item not involving cash
Change in accounts receivable		(4,183)		(4,117)
Change in prepaid expenses		-		(10,000)
Change in accounts payable and accrued liabilities		65,873		47,214
Net cash used in operating activities		(6,030)		(33,613)
INVESTING ACTIVITY
Exploration and evaluation assets		(23,493)		(33,316)
Net cash used in investing activity		(23,493)		(33,316)
FINANCING ACTIVITIES
Proceeds from issuance of shares		-		3,000
Proceeds from promissory notes		15,000		-
Net cash provided by financing activities		15,000		3,000
Increase (decrease) in cash for the year		(14,523)		(63,929)
Cash, beginning of year		15,325		79,254
Cash, end ofyear	$	802	$	15,325
Cash paid for interest during the year	$	-	$	-
Cash paid for income taxes during the year	$	-	$	-

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

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

1 Nature of operations and Going Concern

Cross River Ventures Corp. (the "Company"), of 307 - 2628 Yew Street, Vancouver, British Columbia, V6K 4T4 was incorporated under the Business Corporations Act (British Columbia) on April 11, 2017. The principal business of the Company is the identification, evaluation and acquisition of mineral properties, as well as exploration of mineral properties once acquired.

These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will 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. As at January 31, 2020, the Company had not achieved profitable operations and had an accumulated deficit of $148,815 since inception. The Company intends to complete an initial public offering (“IPO”) of its common shares (Note 10).

The Company is in the process of exploring and evaluating its mineral exploration and evaluation assets. On the basis of the information to date, it has not yet determined whether these assets contain economically recoverable ore reserves. The underlying value of the mineral exploration and evaluation assets and related deferred costs is entirely dependent on the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete development and upon future profitable production. The amounts shown as mineral exploration and evaluation assets and deferred exploration costs represent net costs to date, less any amounts written off, and do not necessarily represent present or future values.

Subsequent to year-end, there was a global pandemic outbreak of COVID-19. The actual and threatened spread of the virus globally has had a material adverse effect on the global economy and, specifically, the regional economies in which the Company operates. The pandemic could continue to have a negative impact on the stock market, including trading prices of the Company’s shares and its ability to raise new capital. These factors, amongst others, could have a significant impact on the Company’s operations.

The Company’s ability to continue as a going concern is dependent on its ability to complete its IPO and raise adequate financing from lenders, shareholders and other investors and/or generate operating profitability and positive cash flow. There can be no assurances that the Company will continue to obtain the additional financial resources necessary and/or achieve profitability or positive cash flows. These material uncertainties may cast significant doubt about the Company’s ability to continue as a going concern.

Realization values may be substantially different from carrying values as shown. These financial statements do not include any adjustments that would be necessary to the carrying values and classifications of assets and liabilities should the Company be unable to continue as a going concern.

2 Basis of preparation

These financial statements of the Company have been prepared in accordance with International Financial Reporting Standard (“IFRS”) as issued by International Accounting Standards Board (“IASB”), and interpretations of the IFRS Interpretations Committee (“IFRIC”).

The financial statements are presented in Canadian dollars. The financial statements of the Company have been prepared on an accrual basis, except for cash flow information, and are based on historical costs, except for certain financial instruments, which are stated at their fair values.

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

2 Basis of preparation (continued)

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the financial statements within the next financial year include the Company's going concern assessment.

3 Significant Accounting Policies

The accounting policies set out below have been applied consistently in the financial statements.

Mineral exploration and evaluation assets

Expenditures incurred before the entity has obtained the legal rights to explore a specific area are expensed. Expenditures related to the development of mineral resources are not recognized as exploration and evaluation assets. Expenditures related to development are accounted for as an asset only when technical feasibility and commercial viability of a specific area are demonstrable and when recognition criteria of International Accounting Standard (“IAS”) 16 Property, Plant and Equipment or IAS 38 Intangible Assets are met.

All costs directly associated with property acquisition and exploration activities are capitalized as exploration and evaluation assets. Costs that are capitalized are limited to costs related to the acquisition and exploration activities that can be associated with finding specific mineral resources, and do not include costs related to production and administrative expenses and other general indirect costs. Costs related to the acquisition of mineral property interests and to exploration and evaluation expenditures are capitalized until the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. When the technical feasibility and commercial viability of extracting a mineral resource become demonstrable, exploration and evaluation assets will be reclassified as mining assets under development. Exploration and evaluation assets will be assessed for impairment before reclassification, and any impairment loss will then be recognized.

The Company may occasionally enter into farm-out arrangements, whereby the Company will transfer part of a mineral property interest, as consideration, for an agreement by transferee to meet certain exploration and evaluation expenditures that would have otherwise been undertaken by the Company. The Company does not record any expenditures made by the farmee on its behalf. Any cash consideration received from the agreement is credited against the costs previously capitalized to the mineral property interest given up by the Company, with any excess cash accounted for as a gain on disposal.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

3 Significant Accounting Policies (continued)

Impairment of non-financial assets

Exploration and evaluation assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable and at each reporting date. The recoverability tests are carried out on a property-by-property basis. Impairment of a property is generally considered to have occurred if one of the following factors is present: the rights to explore have expired or are near to expiry with no expectation of renewal, no further substantive expenditures are planned, exploration work is discontinued in an area for which commercially viable quantities have not been discovered, or there are indications in an area with development likely to proceed that the carrying amount is unlikely to be recovered in full by development or sale.

The recoverable amount is the higher of an asset’s fair value less cost to sell or its value in use. An impairment loss is recognized in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. Value in use is determined using discounted estimated future cash flows of the relevant asset. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows, which are cash-generating units. The Company evaluates impairment losses for potential reversals when events or circumstances warrant such consideration.

Cash

Cash consist of amounts held in banks.

Functional and presentation currency

The functional currency is the currency of the primary economic environment in which the entity operates. The functional and presentation currency of the Company is the Canadian dollar.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Nonmonetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the year in which they arise.

Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive income (loss) to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive income (loss). Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

3 Significant Accounting Policies (continued)

Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Changes in closure and reclamation estimates are accounted for as a change in the corresponding capitalized cost. Costs of rehabilitation projects for which a provision has been recorded are recorded directly against the provision as incurred.

At each financial reporting date presented, the Company has not incurred any decommissioning costs related to the mineral exploration and evaluation assets, and accordingly, no provision has been recorded for such site reclamation or abandonment. issuance of the shares to which the costs relate, at which time the costs will be charged against the related capital stock or charged to operations if the shares are not issued.

Financial instruments

Non-Derivative Financial Assets

Cash is recognized initially at fair value. Subsequent to initial recognition these financial assets are measured at amortized cost using the effective interest method.

Non-Derivative Financial Liabilities

Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. Financial liabilities that are not designated at FVTPL are initially measured at fair value plus or minus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.

Accounts payable and accrued liabilities are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest method.

Equity issuances

The proceeds from equity issuances are allocated between common shares and common share purchase warrants based on the residual value method. Under this method, the proceeds are allocated to share capital based on the fair value of the common shares and any residual value is allocated to common share purchase warrants.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

3 Significant Accounting Policies (continued)

Share-based compensation

Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument on the date of grant using the Black-Scholes option pricing model. The grant date fair value is recognized in net loss over the vesting period, described as the period during which all the vesting conditions are satisfied.

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in net loss, unless they are related to the issuances of shares. Amounts related to the issuances of shares are recorded as a reduction of share capital. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is determined using the Black-Scholes option pricing model. The fair value of direct awards of stock is determined by the quoted market price of the Company’s stock. The amount recognized as expense is adjusted to reflect the number of stock options expected to vest. For both employees and non-employees, where the terms and conditions are modified before they vest, the increase in the fair value of the options, measured immediately before and after modification, is also charged to share-based compensation in net loss over the remaining vesting period.

All equity-settled share-based payments are reflected in reserve until exercised. Upon exercise, shares are issued from treasury and the amount reflected in reserve is credited to share capital, adjusted for any consideration paid. Amount recorded in reserve for unexercised share options remain in reserve upon their expiry or cancellation.

Where a grant of options is cancelled and settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense.

Basic and diluted loss per share

Basic loss per share is computed by dividing the loss for the period by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if potentially dilutive securities were exercised or converted to common shares. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method. Diluted amounts are not presented when the effect of the computations are anti-dilutive due to the losses incurred.

Flow through shares

The Company finances a portion of its exploration activities through the issue of flow-through shares.

The Company provides certain share subscribers with a flow-through component for tax incentives available on qualifying Canadian exploration expenditures. The Company renounces the qualifying expenditures upon issuance of the respective flow-through common shares, and accordingly, is not entitled to the related taxable income deductions for such expenditures, giving rise to taxable temporary differences for accounting purposes. A portion of the deferred income tax assets that were not recognized in previous years are recognized as recovery of income taxes in the statement of loss and comprehensive loss.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

3 Significant Accounting Policies (continued)

Flow through shares (continued)

The shares issued require that the Company make certain qualifying expenditures for tax purposes within two years of issuance, the deduction of which flow through to the shareholders.

The proceeds from issuing flow-through shares are allocated between the offering of shares and the sale of tax benefits. The allocation is based on the difference (“premium”) between the quoted price of the Company’s existing shares and the amount the investor pays for the actual flow-through shares. A liability is recognized for the premium (“other liability”) and is reversed into net loss as a deferred tax recovery when the eligible expenditures are incurred, and the Company has enough available unused non-capital losses. If the flowthrough shares are not issued at a premium, a liability is not recorded.

Income taxes

Income tax expense consisting of current and deferred tax expense is recognized in the statement of loss and comprehensive loss. Current tax expense (recovery) is the expected tax payable on the taxable income (loss) for the year, using tax rates enacted or substantively enacted at period-end, adjusted for amendments to tax payable with regard to previous years.

Deferred income tax is provided on all temporary differences at the Statement of Financial Position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled by the parent, investor or venturer and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilized, except

where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and.
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income taxes are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

3 Significant Accounting Policies (continued)

Income taxes (continued)

The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and recognized to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Statement of Financial Position date.

Recent Accounting Pronouncements

The Company adopted IFRS 16 Leases on February 1, 2019. The adoption had no impact on the Company’s financial statements.

IFRS 16 specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17 Leases. The standard was issued in January 2016 and is effective for annual periods beginning on or after January 1, 2019.

4 Mineral Exploration and Evaluation Assets

On December 6, 2017, the Company entered into an option agreement with Qualitas Holdings Corp. ("Qualitas") to acquire a 100% interest in the Tahsis property located in British Columbia by making the following payments and issuing option shares:

$20,000 upon signing of the agreement (paid);
150,000 option shares within ten business days of the Company’s shares being listed on Canadian Securities Exchange (“Approval Date”);
125,000 option shares on or before the first anniversary of the Approval Date; and
125,000 option shares on the second anniversary of the Approval Date.

In addition to the option payments, the Company must incur the following work commitments:

$100,000 expenditure on or before the first anniversary of the Approval Date; and
$150,000 on or before the second anniversary of the Approval Date.

Qualitas will retain a 3% NSR in the property, of which up to 2% can be purchased by the Company for $1,000,000 per 1% upon commercial production being achieved on the property.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

4 Mineral Exploration and Evaluation Assets (continued)

Acquisition and Exploration Costs

Details of activities for the years ended January 31, 2020 and 2019 are as follows:

			Janaury 31,		January 31,
Tahsis property, BC, Canada			2020		2019
Opening balance		$	53,316	$	20,000
Exploration expenditures:
Geological and geophysical			23,093		32,916
Technical reporting			400		400
Total exploration expenditures			23,493		33,316
Ending Balance	$		76,809	$	53,316

5 Promissory Notes Payable

During the year ended January 31, 2020, the Company received $15,000 of promissory notes from various shareholders. The notes bear simple interest at a rate of 5% per annum, payable on maturity with a maturity date of October 1, 2022.

6 Share Capital

a) Authorized

Unlimited common shares, without par value.

b) Issued

Share transactions for the year ended January 31, 2020;

On April 16, 2019, the Company consolidated its issued and outstanding common shares on the basis of one new share of every two existing shares, resulting in 3,500,000 post-consolidated common shares issued and outstanding. The Company issued 1,750,000 common share purchase warrants to all existing shareholders in connection with the share consolidation. Each warrant entitles the holder to purchase one common share until April 16, 2021 at $0.10 per share subject to certain acceleration provision. Unless otherwise indicated, all references to share capital presented in these financial statements and notes thereto are on a post-consolidation basis.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

6 Share Capital (continued)

b) Issued (continued)

Share transactions for the year ended January 31, 2019;

On February 1, 2018, the Company completed the first tranche of a non-brokered private placement of 300,000 common shares at a price of $0.04 per share for proceeds of $12,000, which was received in the period ended January 31, 2018.

On February 20, 2018, the Company completed the second tranche of a non-brokered private placement of 1,950,000 common shares at a price of $0.04 per share for proceeds of $78,000, of which $75,000 was received in the period ended January 31, 2018.

c) Share purchase warrants

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

January 31,			January 31,	Exercise
2019	Granted	Exercised	2020	Price	Expiry Date
-	1,750,000	-	1,750,000	$0.10	April 16, 2021

d) Escrow shares

Pursuant to an escrow agreement dated March 21, 2018, 1,250,000 common shares were placed in escrow. 10% of the escrowed shares will be released from escrow upon completion of the IPO, and 15% of the shares are released from escrow every 6 months thereafter.

7 Financial Instrument

Determination of Fair Value

Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Fair Value Hierarchy:

Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 – Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 – Applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly such as quoted prices for similar assets or liabilities in active markets or indirectly such as quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

7 Financial Instrument (continued)

Determination of Fair Value (continued)

Level 3 – Applies to assets or liabilities for which there are unobservable market data.

The fair value hierarchy level at which a fair value measurement is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

Financial risk factors

The Company’s risk exposures and the impact on the Company’s financial statements are summarized below.

Credit risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with major financial institutions.

Interest rate risk

The Company is exposed to interest rate risk to the extent that the cash maintained at the financial institutions is subject to floating rate of interest. The interest rate risks on cash and on the Company’s obligations are not considered significant.

Liquidity risk

All of the Company’s financial liabilities are classified as current and are anticipated to mature within the next fiscal period. The Company intends to settle these with funds from its working capital and funds raised subsequent to the year ended January 31, 2020.

Price risk

The Company’s ability to raise the capital required to fund exploration or development activities is subject to risk associated with the market price of gold and base metals and the outlook for these commodities.

8 Capital Management

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company manages its capital structure and makes adjustments to it in light of changes in economic and financial market conditions. The Company considers its capital structure to include shareholders’ equity and working capital. In order to maintain or adjust the capital structure, the Company may issue shares and adjust its spending to manage current and projected cash levels.

There had been no change to the Company’s approach to capital management during the year ended January 31, 2020. The Company is not subject to externally imposed capital requirements.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

9 Income Taxes

A reconciliation of income taxes at statutory rates is as follows:

Loss before income taxes Statutory income tax rates Expected tax recovery Tax benefits not recognized Total current and deferred income tax recovery	Year ended January 31, 2020 $ (67,720) 27% $ (18,284) 18,284 $ -	Year ended January 31, 2019 $ (66,710) 27% $ (18,012) 18,012 $ -

As at January 31, 2020, the Company had non-capital losses of approximately $149,000 which may be carried forward to reduce taxable income in future years, if not utilized, these losses will expire between 2038 and 2040.

10 Subsequent Events

Initial Public Offering

On April 14, 2020, the Company and Haywood Securities Inc. (the “Agent”) amended the previous agreement to act as agent in connection with its planned initial public offering (“IPO”) of its common shares in Canada. The Company is planning to issue up to 4,000,000 common shares at $0.10 per common share for gross proceeds of $400,000 (“the Offering”). Upon completion of the offering, the Agent will receive:

(i) a cash commission equal to 8% of the gross proceeds raised under the Offering;
(ii) compensation options equal to 8% of the number of common shares issued in the Offering, being 320,000, with an exercise price of $0.10 per share;
(iii)
a corporate finance fee of $32,500 plus GST to be paid in cash; and
(iv) reimbursement for expenses, including legal fees, third-party expenses and out of pocket expenses, of which the Company already paid $10,000 as a retainer.

The Company intends to complete the IPO by either the month of May or June, 2020.

Cross River Ventures Corp. Notes to the Financial Statements For the years ended January 31, 2020 and 2019 (Expressed in Canadian Dollars)

10 Subsequent Events (continued)

Promissory Notes

In the months of April and May, the Company received $30,000 of promissory notes from various shareholders. The notes bear simple interest at a rate of 5% per annum, payable on maturity with a maturity date of April 20, 2021.

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Cross River Ventures Corp. — Audit Report / Information 2020

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