DLC Holdings Corp. — Interim / Quarterly Report 2021

Aug 27, 2021

DLC HOLDINGS CORP.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

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

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

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

DLC HOLDINGS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited) (Expressed in Canadian Dollars) AS AT

	June 30, 2021	December 31, 2020
ASSETS Current Cash $ Receivables Marketable securities (Note 3) Investments in subsidiaries(Note 4) Loan receivable(Note 9) Tangible assets(Note 5) Total assets $	196,456 $ 5,031 38,527 240,014 11,377,760 16,307 886,538 12,280,605 12,520,619 $	210,569 6,175 24,376
		241,120 11,240,182 16,317 906,809
		12,163,308
		12,404,428
LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities $ Due to related parties (Note 9) Promissory note(Notes 6 and 9) Loans(Notes 7 and 9) Total liabilities Shareholders’ equity Share capital (Note 8) Reserves (Note 8) Accumulated other comprehensive income Non-controlling interest Deficit Total shareholders’ equity Total liabilities and shareholders’ equity $	217,572 $ 152,915 370,487 113,971 946,791 1,060,762 1,431,249 4,255,850 15,589,131 837,490 2,922,907 (12,516,008) 11,089,370 12,520,619 $	203,083 154,484
		357,567 182,209 878,138
		1,060,347
		1,417,914 4,255,850 15,589,131 1,340,934 2,886,625 (13,086,026)
		10,986,514
		12,404,428
Nature of Operations and going concern (Note 1)

Approved and authorized by the Board on August 27, 2021

“Mark Pajak” Director Mark Pajak - Director	“Craig Goldenberger” Director Craig Goldenberger - Director

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

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DLC HOLDINGS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Unaudited) (Expressed in Canadian Dollars)

	For the three months ended June 30, 2021	For the three months ended June 30, 2020		For the six months ended June 30, 2021	For the six months ended June 30, 2020
OPERATING EXPENSES Fair value adjustments (Note 5) Insurance Interest expense (Notes 6 and 7) General and administrative Transfer and filing fees Consulting fees Professional fees Foreign exchange loss (gain) Income (loss) from continuing operations OTHER ITEMS Interest and investment income Other income Gain (loss) on marketable securities (Note 3) Total other items Net income (loss) for the period OTHER COMPREHENSIVE INCOME (LOSS) Item that may be reclassified subsequently to profit or loss Currency translation adjustment Comprehensiveincome (loss)forthe period	$ 4,406 - 12,556 378 9,982 4,500 28,856 (1,311,252) 1,250,574 241 18,433 3,600 22,274 1,272,848 (67,274) $1,205,574	$ 5,876 - 13,100 1,726 8,884 6,350 25,530 (1,141,885) 1,080,419 9,412 14,052 33,880 57,344 1,137,763 (163,077) $ 974,686		$ 8,724 - 25,367 590 12,169 4,500 49,945 (828,263) 726,968 289 36,810 14,889 51,988 778,956 (676,100) $ 102,856	$ 11,993 9 25,049 3,552 11,165 8,850 26,035 2,077,671 (2,164,324) 18,886 31,038 (23,335) 26,589 (2,137,735) 651,372 $ (1,486,363)
Net income (loss) attributable to: Shareholders of the Company Non-controlling interest Comprehensive income (loss) attributable to: Shareholders of the Company Non-controlling interest	$ 934,005 338,843 1,272,848 886,562 319,012 $1,025,574	$ 833,319 304,444 1,137,763 712,056 262,630 $ 974,686		$ 570,018 208,938 778,956 66,574 36,282 $ 102,856	$ (1,602,577) (535,158) (2,137,735) (1,136,802) (349,561) $ (1,486,363)
Basic and diluted income (loss) per common share	$ 0.02	$ 0.01		$ 0.01	$ (0.03)
Weighted average number of common and preferred shares outstanding –basic and diluted	84,650,227	84,650,227		84,650,227	84,650,227

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

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DLC HOLDINGS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30,

	2021	2020
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net income (loss) for the period $ Non-cash items: Fair value adjustment Accrued interest expense Loss (gain) on marketable securities Unrealized foreign exchange Changes in non-cash working capital items: Receivables Accounts payable and accrued liabilities Due to related parties CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Repayment of broker margin Sale of marketable securities Purchase of marketable securities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds on loan Payment on loan Effect of foreign exchange on cash Change in cash during the period Cash, beginning of period Cash, end of period $	778,956 $ 8,724 25,367 (14,889) (849,843) 1,085 19,818 - (30,782) - - - - 72,796 (70,909) 1,887 14,782 (14,113) 210,569 196,456 $	(2,137,735) 11,993 25,049 23,335 2,093,178 (409) (17,846) (19,317)
		(21,752)
		(23,512) 238,242 (4,382)
		210,348
		63,710 (33,445)
		30,265
		(13,168)
		205,693 23,292
		228,985

There were no significant non-cash investing or financing activities for the period ended June 30, 2021 and 2020. No cash was paid for interest or taxes for the period ended June 30, 2021 and 2020.

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

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DLC HOLDINGS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(Expressed in Canadian Dollars)

	Number of Common Shares	Number of Preferred Shares	Amount	Reserves Accumulated Other Comprehensive Income	Reserves Accumulated Other Comprehensive Income	Non- controlling interest	Deficit	Total
Balance, December 31, 2019 Translation adjustment Net loss for the period Balance, June 30, 2020 Translation adjustment Net loss for the period Balance, December 31, 2020 Translation adjustment Net loss for the period Balance, June 30, 2021	29,033,375 - - 29,033,375 - - 29,033,375 - - 29,033,375	55,616,852 - - 55,616,852 - - 55,616,852 - - 55,616,852	$ 4,255,850 - - $ 4,255,850 - - $ 4,255,850 - - $4,255,850	$ 15,589,131 - - $ 15,589,131 - - $ 15,589,131 - - $15,589,131	$ 620,941 465,775 - $ 1,086,716 254,218 - $ 1,340,934 (503,444) - $ 837,490	$ 3,938,129 185,597 (535,158) $ 3,588,568 64,840 (766,783) $ 2,886,625 (172,656) 208,938 $2,922,907	$ (9,403,235) - (1,602,577) $(11,005,812) - (2,080,214) $(13,086,026) - 570,018 $(12,516,008)	$ 15,000,816 651,372 (2,137,735) $ 13,514,453 319,058 (2,846,997) $ 10,986,514 (676,100) 778,956 $11,089,370

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

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

1. NATURE OF OPERATIONS AND GOING CONCERN

DLC Holdings Corp. (“DLC”) (with its subsidiaries, collectively, the “Company”) is an investment company investing in agricultural land and in the food processing industry. The Company was incorporated pursuant to the provisions of the British Columbia Business Corporations Act on March 25, 2011 and is listed for trading on the TSX Venture Exchange (“Exchange”) under the symbol DLC.

This Company’s head office address is 1600 - 609 Granville Street, Vancouver, British Columbia, Canada V7Y 1C3, and its registered and records office address is 2200 – 885 West Georgia Street, Vancouver, British Columbia V6C 3E8.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) on a going concern basis, which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Accordingly, these consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

These consolidated financial statements have been prepared on the assumption that the Company and its subsidiaries will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. As at June 30, 2021, the Company has a cash balance of $196,456 and a working capital deficit of $130,473. The Company has entered into a credit facility with a related party (Note 9) which will provide working capital if required to meet ongoing costs. The Company therefore has sufficient capital resource from which to fund on-going operating requirements for the next twelve months.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. The Company is currently of the view that the long-term impact of the pandemic on investment holdings will not be severe. The most significant impact to date has been an impact on the valuation of land holdings in South America which have reduced as a result of a pandemic-linked devaluation of the Brazilian real relative to the US and Canadian dollars. In the mid- to long-term the Company anticipates that the the Brazilian real will appreciate and that land values will adjust in the Company's favour over time.

2. BASIS OF PREPARATION

Statement of compliance

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standards (“IAS”) 34 ‘Interim Financial Reporting’ (“IAS 34”) using accounting policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The accounting policies applied are consistent with the consolidated financial statements for the year ended December 31, 2020.

Basis of presentation

The consolidated financial statements have been prepared on a historical cost basis except for certain financial assets that are measured at fair value. All dollar amounts presented are in Canadian dollars unless otherwise specified.

These consolidated financial statements incorporate the financial statements of the Company and its controlled subsidiaries.

Use of judgments and estimates

The preparation of these condensed consolidated interim financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported expenses during the period. Actual results could differ from these estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

2. BASIS OF PREPARATION (cont’d…)

Use of judgments and estimates (cont’d…)

The key areas of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

Investment entities

The Company has judged that certain of its controlled subsidiaries qualify as investment entities. The primary functions of the private companies detailed in Note 4 was judged to be consistent with the requirements of the investment entity exemption under IFRS 10 C onsolidated financial statements . Specifically, those entities have the specific function of providing returns on a capital appreciation basis and are evaluated by management on a fair value basis.

Determination of functional currency

The functional currency of each of the subsidiaries and the Company were assessed to determine the economic substance of the currency in which each entity performed its operations. The functional currency determination was conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates . The determination of functional currency involves certain judgments to determine the primary economic environment and the Company reconsiders the functional currency if there are changes in events and conditions of the factors used in the determination of the primary economic environment.

Going concern

The assessment of the Company's ability to continue as a going concern involves judgment regarding future funding available for its operations and working capital requirements as discussed in Note 1.

The key areas of estimates applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

Valuation of investments

The Company recognizes its tangible assets (Note 5) and investments in subsidiaries (Note 4) at fair value. The material composition of these assets is land. The Company performs reviews of comparable transactions and engages third party valuators to provide annual valuations of those holdings. These valuations are determined using level 3 inputs which involve considerable estimates as the inputs used to value these assets are based on unobservable market data. There is inherent uncertainty and imprecision in estimating the factors that can affect fair value, and in estimating fair values generally, when observable market data is not available. Between third party valuations, management reviews assumptions and market conditions, including any impact of political or legal risk of foreign jurisdictions, to adjust fair value estimations. Changes in assumptions and inputs used in valuing financial instruments could affect reported fair values.

Deferred income tax

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

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

2. BASIS OF PREPARATION (cont’d…)

Use of judgments and estimates (cont’d…)

Impairment of long lived assets

The carrying value of long lived assets is reviewed each reporting period to determine whether there is any indication of impairment. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and an impairment loss is recognized in the consolidated statement of loss and comprehensive loss. The assessment of fair values, including those of the cash generating units (the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflow from other assets or groups of assets – “CGUs”) for purposes of impairment testing, require the use of estimates and assumptions for discount rates, foreign exchange rates, future capital requirements and operating performance. Changes in any of the assumption or estimates used in determining the fair value of long lived assets could impact the impairment analysis.

Consolidation

These condensed consolidated interim financial statements incorporate the financial statements of the Company and its controlled subsidiaries which exist for the purpose of executing the Company’s business operations. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All significant intercompany transactions and balances have been eliminated.

The condensed consolidated interim financial statements include:

			Country of		Functional
Name	of Entity	Activity	Incorporation	Ownership	Currency
DLC Holdings Corp.		Management company.	Canada	-	Canadian Dollar
Superior	Macadamias	Investment in agricultural industry.	South Africa	100%	South African
(Pty) Ltd.					Rand
DLC North America LLC		Investment company.	USA	100%	US Dollar
Craven House		Management activities of holding	Republic of	100%	Euro
Industries Limited		companies including holding,	Ireland
		acquiring, selling or otherwise
		disposing of shares in companies
		and all related activities.
Ceniako Ltd.		Management activities of holding	Cyprus	60.5%	Euro
		companies including holding,
		acquiring, selling or otherwise
		disposing of shares in companies
		and all related activities.

A subsidiary is an entity over which the Company has control, where control indicates exposure or rights to variable returns and the ability to affect those returns through power over the investee. Where an entity obtains funds for the purpose of providing investment management services, invests funds solely for returns from capital appreciation and/or investment income and measures and evaluates the performance of substantially all of its investments on a fair value basis, the Company applies the investment entity exemption under IFRS 10. These entities are not consolidated and are recorded on a fair value basis (Note 5).

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

DLC HOLDINGS CORP.

3. MARKETABLE SECURITIES

Marketable securities	Total
Balance, December 31, 2019 Purchased Proceeds on sale Loss on sale of marketable securities Unrealised gain on mark to market Foreign exchange Balance, December 31, 2020 Unrealised gain on mark to market Foreign exchange Balance, June 30, 2021	$ 251,791 21,834 (234,117) (111,449) 89,354 6,963 24,376 14,889 (738) $ 38,527

The Company has investments in certain marketable securities of publicly traded companies. Balances due to broker represent purchases made on margin. Purchases on margin are limited to 25% of securities held. There is no collateral pledged against the brokerage account.

4. INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries	Craven House investments	Ceniako investments	Total
Balance, December 31, 2019 Fair value adjustments Foreign exchange Translation differences Balance, December 31, 2020 Foreign exchange Translation differences Balance, June 30, 2021	$ 5,119,035 - (1,587,773) 351,980 3,883,242 279,469 (231,939) $ 3,930,772	$ 10,011,192 (237,437) (3,053,830) 637,015 7,356,940 530,030 (439,982) $ 7,446,988	$ 15,130,227 (237,437) (4,641,603) 988,995 11,240,182 809,499 (671,921) $11,377,760

Financial asset investments of Craven House represent part ownership of the share capital of the following companies:

1. 50.1% - Finishtec Acabamentos Tecnicos Em Metais Ltda – ME (Brazil); and

2. 99.9% - Universal Properties Brasil Administracao de Imoveis Ltda (Brazil).

The Craven House holdings in turn own approximately 500 hectares of land in Bahia, Brazil. The land is suitable for the cultivation of macadamias and coconuts. It presently has no operations.

Financial asset investments of Ceniako represent ownership of 100% of the issued and outstanding share capital Woodford Empreendimentos Imobiliarios LTDA (Brazil). The Ceniako holdings in turn own approximately 2,000 hectares of land in Bahia. The land is suitable for the cultivation of macadamias and coconuts. It is presently has no operations.

As the composition of the holdings of the investments in subsidiaries is materially land holdings, the Company does not anticipate significant short term fluctuations in fair value in the shares of the private companies.

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

DLC HOLDINGS CORP.

5. TANGIBLE ASSETS

Tangible assets Balance, December 31, 2019 Foreign exchange differences Fair value adjustments Translation differences Balance, December 31, 2020 Foreign exchange differences Fair value adjustments Translation differences Balance, June 30, 2021	Development Land	Macademia Facility	Vehicle	Total
	$ 475,165 (22,335) - 8,621 461,451 16,752 - (27,531) $ 450,672	$ 469,406 - (11,247) (30,659) 427,500 - (5,833) (311) $ 421,356	$ 25,809 - (12,544) 4,593 17,858 - (2,891) (457) $ 14,510	$ 970,380 (22,335) (23,791) (17,445) 906,809 16,752 (8,724) (28,299) $ 886,538

The development land represents a plot of land in Salta, Argentina. The macadamia facility consists of a package of land, buildings and equipment acquired with DLC and located in South Africa. Fair value adjustments reflect depreciation of the assets.

6. PROMISSORY NOTE

The Company has a promissory note due to a company controlled by the Company’s CEO. The promissory note bears interest at rate of 6%, is due on November 7, 2022 (extended by one year during the year ended December 31, 2020) and is unsecured. During the period ended June 30, 2021, the Company repaid $70,909 (2020 - $Nil).

7. LOANS

The Company has loans of $145,447 (December 31, 2020 - $146,007) due to a company controlled by the Company’s CEO (“Related Party Loans”) which bear interest at a rate of 6%, are due in 2022 and are unsecured. As at June 30, 2021, the Company has loans of $230,883 (December 31, 2020 - $159,755) due to a company controlled by the Company’s CEO which accrues interest at a rate of 6%, maturing in 2023.

Related Party Loans	Principal	Interest	Total
Balance, December 31, 2019 Proceeds Interest expense Foreign exchange Balance, December 31, 2020 Proceeds Interest expense Foreign exchange Balance, June 30, 2021	$ 194,601 98,612 - (27,192) 266,021 72,796 - (1,497) $ 337,320	$ 27,280 - 13,694 (1,233) 39,741 - 9,335 (10,066) $ 39,010	$ 221,881 98,612 13,694 (28,425) 305,762 72,796 9,335 (11,563) $ 376,330

The Company entered into a loan facility, under which the Company was provided with a loan from KwikBuild Corporation Ltd, a subsidiary of Craven Industrial Holdings PLC (“KwikBuild Loan”). The KwikBuild Loan holds a senior secured position, bears an interest rate of 5% and has a term of five years ending April, 2023 with interest and principal due at maturity. This is a related party transaction as the Company has directors in common with Craven Industrial Holdings PLC.

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DLC HOLDINGS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

7. LOANS (cont’d…)

KwikBuild Loan	Principal	Interest	Total
Balance, December 31, 2019 Proceeds Repayment Interest expense Foreign exchange Balance, December 31, 2020 Interest expense Foreign exchange Balance, June 30, 2021	$ 509,235 31,074 (32,866) - (9,946) 497,497 - (13,207) $ 484,290	$ 48,626 - - 28,670 (2,417) 74,879 13,361 (2,069) $ 86,171	$ 557,861 31,074 (32,866) 28,670 (12,363) 572,376 13,361 (15,276) $ 570,461

8. SHARE CAPITAL AND RESERVES

• a) Authorized share capital

Unlimited number of common shares without par value.

Unlimited number of Class A Preferred Shares without par value.

• Convertible on a 1 for 1 basis to common shares.

Unlimited number of Class B Preferred Shares without par value.

• Entitled to one vote per Class B Preferred Share at meetings of the shareholders of the Company;

• Entitled to participate on a per share basis with the common shares in respect of any declaration of dividends on the common shares and any distribution on the common shares upon the liquidation, winding-up or dissolution of the Company; and

• Convertible, at the election of the Company, on a one-for-one basis into common shares.

b) Issued share capital

The Company did not complete any private placements in the periods ended June 30, 2021 or year ended December 31, 2020.

	June 30,	December 31,
Issued and outstanding	2021	2020
Common shares	29,033,375	29,033,375
Class A Preferred Shares	4,545,455	4,545,455
ClassB Preferred Shares	51,071,397	51,071,397

c) Stock option plan

The Company has a stock option plan under which it is authorized to grant to executive officers and directors, employees and consultants stock options enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan, the exercise price of each option equals the market price of the Company's stock, less an applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 10 years and vest at the discretion of the Board of Directors.

As at June 30, 2021 and December 31, 2020, there are no stock options outstanding.

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

9. RELATED PARTY TRANSACTIONS

Key Personnel Compensation

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. There was no remuneration paid to the directors and key management personnel during the periods ended June 30, 2021 and 2020.

The following details amounts due to related parties:

Type of Service Nature of Relationship	June 30, 2021	December 31, 2020
Management fees (a) Emprise Capital Corp., a company with a former officer in common Loan, unsecured non- interest bearing (b) Eastern Approaches, a company owned by the CEO Management fees (b) Desmond Holdings Ltd., a company owned by the CEO Loan, unsecured non- interest bearing (b) 92 Spring LLC, director in common	$ 75,469 28,974 19,911 28,561 $ 152,915	$ 75,469 29,764 19,911 29,340 $ 154,484

• a) Balance is secured by a promissory note. The balance is payable in installments of $10,000 every two months, subject to a 10% late fee and subject to 12% following the maturity date of any such payment. The promissory note matured in the period ended June 30, 2021.

• b) Balances are due on demand and unsecured.

In addition to the balances above, the promissory note (Note 6), Related Party Loans (Note 7), and KwikBuild Loan (Note 7) are due to related parties. In the year ended December 31, 2019, the Company loaned an amount to a subsidiary of KwikBuild which is non-interest bearing and has no fixed terms of repayment. The balance receivable at June 30, 2021 is $16,307 (December 31, 2020 - $16,317).

During the year ended December 31, 2019 the Company entered into an unsecured revolving credit facility (the “Credit Facility”) with Craven House Capital Plc for up to USD $500,000. Craven House Capital Plc is a related party by a common directorship. The Credit Facility bears interest of 5% per annum with all principal and interest on the Credit Facility due and payable on or before December 1, 2022.

10. SEGMENTED INFORMATION

The Company operates in one segment, being investment. The Company’s non-current assets, except financial instruments are situated as follows:

June 30, 2021	United States	South Africa	Argentina	Total
Development land Macadamia facility Vehicle Total	$ - - 14,510 $ 14,510	$ - 421,356 - $ 421,356	$ 450,672 - - $ 450,672	$ 450,672 421,356 14,510 $ 886.538

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

10. SEGMENTED INFORMATION (cont’d…)

December 31, 2020	United States	South Africa	Argentina	Total
Development land Macadamia facility Vehicle Total	$ - - 17,858 $ 17,858	$ - 427,500 - $ 427,500	$ 461,451 - - $ 461,451	$ 461,451 427,500 17,858 $ 906,809

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

Financial instruments by category	Fair value through profit or loss Amortized cost
	June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020
Financial assets Cash Receivables Loan receivable Marketable securities Investments in subsidiaries Financial liabilities Accounts payable and accrued liabilities Due to related parties Promissory note Loans	$ - $ - $ 196,456 $ 210,569 - - 5,031 6,175 - - 16,307 16,317 38,527 24,376 - - 11,377,760 11,240,182 - -
	11,416,287 11,264,558 217,794 233,061 - - 217,572 203,083 - - 152,915 154,484 - - 113,971 182,209 - - 946,791 878,138
	$ - $ - $ 1,431,249 $ 1,417,914

The Company considers that the carrying amount of financial instruments carried at amortized cost to approximate their fair value due to the short-term nature of the financial instruments.

Financial instrumentsmeasured atFVPL	Level 1 Level 3 June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020
Marketable securities Investmentsinsubsidiaries(1)	$ 38,527 $ 24,376 $ - $ - - - 11,377,760 11,240,182

(1) The fair value Level 3 inputs include an independent valuation performed on the investment.

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Financial instruments (cont’d…)

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets, including cash, receivables and marketable securities. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality financial institutions. The Company considers the risk of financial loss on cash to be remote. The Company’s receivables consist materially of GST input tax credits recoverable from the government of Canada and a receivable from a related party. The Company considers credit risk with respect to these amounts to be low.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at June 30, 2021, the Company had a working capital deficiency of $130,473 (December 31, 2020 – $116,447).

Balances due to broker are supported by the Company’s investment in marketable securities. The extension of margin by the broker is limited to 25% of the value of the Company’s investment in marketable securities. The ability of the Company to settle balances due to broker may be impacted by significant changes in the value of its investment in marketable securities. Marketable securities may be subject to significant volatility relative to the overall equity market and volatility of the specific securities held. The liquidity of the marketable securities is subject to the characteristics of the individual equities and may or may not be immediately convertible to cash.

The Company’s ability to finance its future operating requirements is significantly dependent on the Company’s ability to achieve economic returns on its investments. Without these returns, the Company will remain dependent upon the continued financial support of its debtors and shareholders. The Company, as at June 30, 2021, is exposed to liquidity risk.

Market risk

Market risk is the risk of loss that may arise from changes in market factors, such as interest rates, foreign exchange rates, and commodity and equity prices. The Company does not have a practice of trading derivatives.

a) Interest rate risk

The Company’s financial asset exposed to interest rate risk consists of cash. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. The Company does not anticipate interest income on cash to contribute significantly to the operations and returns of the Company and is therefore minimally exposed to interest rate risk on assets.

Interest rates on debts payable are set at fixed rates reducing the Company’s exposure to interest rate changes.

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DLC HOLDINGS CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE SIX MONTHS ENDED JUNE 30, 2021

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Financial instruments (cont’d…)

Market risk (cont’d…)

b) Foreign currency risk

The Company’s investments and assets are located in a number of jurisdictions and therefore exposed to the currency movements of a number of currencies. In addition to the functional currencies of the Company and its subsidiaries, the Company is also exposed to the Brazilian Real and Argentinean Peso on its non-monetary investments which is the jurisdiction of the investments in the unconsolidated subsidiaries of Craven House and Ceniako.

As at June 30, 2021, the Company’s net foreign denominated monetary financial instruments are as follows:

				Canadian dollar
	Foreign currency			equivalent
US dollar	US$	(495,610)	$	(614,257)
Euro	€	(57,010)	$	(83,799)
South African Rand	R	122,022	$	10,584

A fluctuation of 10% of the above note currencies against the Canadian dollar would have had an impact of $68,748 on the net loss for the period.

c) Other price risk

The Company’s marketable securities is comprised of individual equities in publicly traded companies. The portfolio is not diversified against geography or industry and is therefore subject to fluctuations in equity markets as well as volatility in individual underlying equities. The Company’s exposure to other price risk is assumed to be the value of the marketable securities which are held at FVPL. The Company does not have a specific policy with respect to investment or portfolio requirements.

12. CAPITAL MANAGEMENT

The Company defines capital as consisting of the components of shareholder’s equity. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to manage the cost of capital at acceptable levels of risk.

The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital, but rather relies on the expertise of the Company’s management to sustain the future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

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