Enlighta Inc. — Audit Report / Information 2023

Dec 15, 2023

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Consolidated Financial Statements (Expressed in Canadian Dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

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Independent Auditor's Report

To the Shareholders of Enlighta Inc.

Opinion

We have audited the consolidated financial statements of Enlighta Inc. (the “Company”), which comprise the consolidated statements of financial position as at June 30, 2023 and 2022, and the consolidated statements of comprehensive loss, changes in deficiency and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2023 and 2022, 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 events or conditions that indicate 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.

Key Audit Matters

Key audit matters are those matters, that in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

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Other Information

Management is responsible for the other information. The other information comprises the information included in 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 Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. 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.

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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Heather McGhie.

Yours truly,

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DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, BC

December 11, 2023

Consolidated Statements of Financial Position (Expressed in Canadian dollars)

ENLIGHTA INC.

As at June 30, 2023 and 2022

		2023		2022
Assets
Current Assets
Cash	$	28,500	$	41,654
Prepaid (note 4)		2,249		3,704
Sales tax receivable		300		150
		31,049		45,508
Non-current Assets
Intangible assets (note 7)		1		1
Assignment rights		1		1
	$	31,051	$	45,510
Liabilities and Shareholders’ Deficiency
Current Liabilities
Trade and other payables (note 6)	$	774,418	$	600,732
Due to relatedparties(note 6)		2,220,890		1,940,117
		2,995,308		2,540,849
Shareholders’ Deficiency
Share capital (note 9)		28,827,754		28,827,754
Share-based payment reserve (note 9)		928,034		928,034
Accumulated deficit	(32,720,045)		(32,251,127)
		(2,964,257)		(2,495,339)
	$	31,051	$	45,510

Corporate information and going concern (note 1)

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

“Ben Wu” Director “Yun Zhu” Director Ben Wu Yun Zhu

1

Consolidated Statements of Comprehensive Loss (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

		2023		2022
Expenses:
Amortization (note 7)	$	-	$	315,204
General and administration (notes 5 and 6)		405,100		600,939
Researchand development (note 6)		78,604		39,403
Loss before other items		(483,704)		(955,546)
Provision for doubtful receivables (note 6)		-		(23,412)
Impairment of intangible assets (note 7)		-		(2,645,873)
Foreign exchange gain/(loss)		14,786		(1,882)
Net loss and comprehensive loss for theyear	$	(468,918)	$	(3,626,713)
Net lossper share,basic and diluted(note 9)	$	(0.03)	$	(0.21)
Weighted average number of common shares outstanding		17,080,529		17,080,529

See accompanying notes to consolidated financial statements.

2

Consolidated Statements of Changes in Deficiency (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

			Share-based	Share-based
	Number of	Share		payment		Accumulated
	shares	capital		reserve		deficit	Total
Balance June 30, 2021	17,080,529 $ 28,827,754		$	928,034	$	(28,624,414)	$ 1,131,374
Loss for the year	-	-		-		(3,626,713)	(3,626,713)
Balance June 30, 2022	17,080,529	28,827,754		928,034		(32,251,127)	(2,495,339)
Loss for the year	-	-		-		(468,918)	(468,918)
Balance June 30,2023	17,080,529$28,827,754		$	928,034	$	(32,720,045)	$ (2,964,257)

See accompanying notes to consolidated financial statements.

3

ENLIGHTA INC.

Consolidated Statements of Cash Flows (Expressed in Canadian dollars)

Years ended June 30, 2023 and 2022

		2023		2022
Cash (used in) provided by:
Operations:
Loss for the year	$	(468,918)	$	(3,626,713)
Items not involving cash:
Amortization		-		315,204
Impairment of intangible assets		-		2,645,873
Provision for doubtful receivables		-		23,412
Foreign exchange		(16,448)		-
Changes in non-cash operating working capital:
Prepaid		1,455		(3,113)
Sale tax receivable		(150)		-
Accounts payable and accrued liabilities		173,686		253,122
Due torelated parties		-		12,000
Cash used in operating activities		(310,375)		(380,215)
Financing:
Loans from related parties		297,221		362,025
Cashprovided byfinancingactivities		297,221		362,025
Decrease in cash		(13,154)		(18,190)
Cash, beginning of year		41,654		59,844
Cash,end ofyear	$	28,500	$	41,654
See accompanying notes to consolidated financial statements.

4

ENLIGHTA INC. Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

Years ended June 30, 2023 and 2022

1. Corporate information and going concern:

Enlighta Inc. (“Enlighta” or “Company”) was originally incorporated on December 10, 2010 under the Business Corporations Act (British Columbia) as Avagenesis Corp. (“Avagenesis”) and continued into Alberta, Canada on February 10, 2011. During the year ended June 30, 2023, the Company transferred its listing from the TSX Venture Exchange (“TSXV”) to the NEX board, under the symbol “NLTA.H”. On December 31, 2016, Avagenesis completed an amalgamation arrangement with Avapecia Life Sciences Corp. (“Avapecia”) and continued the business of both Avapecia and Avagenesis under the new name, Liberty Biopharma Inc.. Avagenesis was considered to have acquired the net assets of Avapecia and the consolidated financial statements of the amalgamated company are a continuation of the consolidated financial statements of Avagenesis. On September 25, 2018, the Company changed its name to HooXi Network Inc. The Company continued to the British Virgin Islands emigrating from British Columbia on April 3, 2019. On July 23, 2019, the Company changed its name to Enlighta Inc. Enlighta is in the process of evaluating new opportunities to enhance long-term shareholder value.

In fiscal 2018 and 2019, the Company entered into agreements with Cloud Medical Group Inc. (“CMGI”) and CTC Life Sciences Inc. (“HooXi”). Through these transactions, the Company will endeavour to expand its operations from developing and commercializing its legacy technologies to the acquisition and integration of joint ventures and intellectual property in health service delivery, biotechnology, green technology and allied services and digital assets and/or fintech. As at June 30, 2023, the Company had an accumulated deficit of $32,720,045. During the year ended June 30, 2023, the Company had no revenues, a net loss of $468,918, and negative cash flow from operations of $310,375. These conditions indicate a material uncertainty exists that may cast significant doubt about the Company’s ability to continue as a going concern.

The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to develop profitable operations in the future. The Company has generated operating losses since inception. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company’s liabilities and commitments.

There can be no assurances that the Company will be successful in raising additional cash to finance operations or that the continued support of shareholders will be available. These consolidated financial statements have been prepared using the going concern assumption, which assumes that the Company will continue in operation for the foreseeable future. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

2. Basis of preparation:

(a) Statement of compliance:

The consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements were approved and authorized for issue by the Board of Directors on December 11, 2023.

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

2. Basis of preparation (continued):

(b) Basis of measurement:

These consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments, which are recorded at fair value.

(c) Functional and presentation currency:

These consolidated financial statements are presented in Canadian dollars, which is the functional currency for the Company and each of its subsidiaries.

• (d) Use of estimates and judgments:

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Significant judgments made by management in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements include determining the acquirer in acquisition transactions, determining whether a transaction is a business combination or an acquisition of assets, purchase price valuation, useful economic life of intangible assets, accounting for share based payments, impairment assessment of intangible assets and the application of the going concern assumption.

Critical accounting judgment and estimates used in the preparation of these consolidated financial statements include:

(i) Useful economic life

The useful economic life of intangible assets is evaluated based on available information about the target market and review of contracts underlying the intangible asset. Estimates of useful economic life are based on the expiration date of either (1) the patents expiry on the underlying technology or (2) the licenses, or contractual rights, to use such technology depending on the nature of the technology and the lifecycle of the target market (emerging or mature).

(ii) Impairment assessment of intangible assets

Impairment assessment is determined continuously and if information has come to the attention of management that would indicate a change in the useful economic life, a recovery assessment is then conducted.

(iii) Going concern assumption

Management is of the opinion that funds will be successfully raised by way of equity or debt financing to fund operations for the next 12 months.

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

2. Basis of preparation (continued):

• (d) Use of estimates and judgments (continued):

• (iv) Accounting for share based payment

Share based payments are generally accounted for based on the fair value of the goods or services received. If the fair value of the goods or service cannot be measured reliably then an assessment of the fair value of the equity instrument issued is used. The use of the quoted share price of a thinly traded common share and assumptions pertaining to the Black Scholes Option Pricing Model are themselves examples of estimates and judgments that management may be required to rely upon.

3. Significant accounting policies:

• (a) Basis of consolidation:

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Cloud Medical Group Inc. (the “CMGI”), CTC Life Sciences Inc. (the “HooXi”), Beijing Pan Asia Consulting Co., Ltd. (the “Pan Asia”), Orchard Road Management Corp. (the “Orchard Road”) and Brilliance International Auto Company Limited (the “Brilliance”)(inactive). All inter-company transactions and balances are eliminated on consolidation.

• (b) Foreign currency transactions:

Transactions in foreign currencies are translated to the Canadian dollar functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Canadian dollars at the exchange rate at that date. Non-monetary items are translated using the historical rate on the date of the transaction.

Foreign currency differences arising from settlement of foreign currency translation are recognized in profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

7

ENLIGHTA INC. Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

Years ended June 30, 2023 and 2022

3. Significant accounting policies (continued):

• (c) Cash:

Cash includes cash on hand and balances with banks, consisting primarily of operating bank accounts and is subject to an insignificant risk of change in value.

• (d) Financial instruments:

• (i) Classification

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

The following table shows the classification of financial instruments under IFRS 9:

	Classification
	under IFRS 9
Cash	FVTPL
Trade and other payables	amortized cost
Due to related parties	amortized cost

• (ii) Measurement

Financial assets at FVTOCI

Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses recognized in other comprehensive income (loss)(“OCI”).

Financial assets and liabilities at amortized cost

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

8

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

3. Significant accounting policies (continued):

• (ii) Measurement (continued)

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit and loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit and loss in the period in which they arise. Where management has opted to recognize a financial liability at FVTPL, any changes associated with the Company’s own credit risk will be recognized in profit and loss.

• (iii) Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost.

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

• (iv) Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit and loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated OCI.

Financial liabilities

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit and loss.

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

3. Significant accounting policies (continued):

( e) Intangible assets:

Research and development:

Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are recognized in profit or loss as incurred.

Development expenditures are capitalized only if development costs can be measured reliably; the product or process is technically and commercially feasible; future economic benefits are probable; and the Company intends, and has sufficient resources, to complete development and use or sell the asset. The expenditures capitalized include the costs of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs on qualifying assets. Other development expenditures are recognized in profit or loss as incurred. No development costs have been capitalized as of June 30, 2023.

Licenses:

Licenses that are acquired by the Company that have a finite useful life are measured at acquisition cost less accumulated amortization and accumulated impairment losses.

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful life of the license from the date that it is available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The Company continually evaluates the remaining useful life of its intangible assets being amortized to determine whether events and circumstances warrant a revision to the remaining period of amortization. An impairment of all intangible assets with finite lives were recognized in the prior year and now all the intangible assets have a total carrying value of $1.

At June 30, 2023 and 2022, the Company did not have any intangible assets with indefinite life.

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

3. Significant accounting policies (continued):

(f) Impairment for non-financial assets:

The carrying amounts of the Company’s non-financial assets, such as finite life intangible assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or “CGU”).

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(g) Loss per share:

Basic loss per share is calculated using the weighted average number of shares outstanding during the year. The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method the dilutive effect on loss per share is recognized based on the use of proceeds that could be obtained upon exercise of such options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. This calculation generally produces an anti-dilutive effect for loss years.

(h) Income taxes:

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in earnings except to the extent that they relate to a business combination, or to items recognized directly in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

3. Significant accounting policies (continued):

(h) Income taxes (continued):

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable earnings on the acquisition date.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(i) Share-based payment transactions:

Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined that the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black-Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

Share based payment transactions involving contingent performance-based requirements are not recognized until the performance-based requirements are met or likely to be met.

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

3. Significant accounting policies (continued):

• (j) New or revised accounting standards:

Accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

4. Prepaid

The amount in prepaid is comprised of the following:

		2023		2022
Prepaidrent and deposit	$	2,249	$	3,704
Total	$	2,249	$	3,704

5. General and administrative expenses

The amount in general and administration is comprised of the following:

		2023	2022
Salaries and benefits (Note 6)	$	230,946	$ 271,716
Professional fees		146,627	279,413
Office and other		27,527	49,810
Total	$	405,100	$ 600,939

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Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

6. Related party transactions:

Related parties include shareholders with a significant ownership interest in the Company, its subsidiaries, affiliates of shareholders with a significant ownership interest in the Company, and the Company’s key management personnel. The related party transactions are in the normal course of operations and have been valued in these financial statements at fair value, which is the amount of consideration established and agreed to by the related parties.

• (a) Balances with related parties:

		2023		2022
Trade and other payables	$	502,909	$	346,375
Due to relatedparties - current	$	2,220,890	$	1,940,117

As at June 30, 2022, the related parties had not repaid the related party loans totaling $23,412. The Company thus recorded an allowance for the full amount of $23,412 in fiscal 2022 due to uncertainty of collectability of the amounts.

Included in due to related parties at June 30, 2023 is $315,419 (RMB1,728,323) (2022: $331,867) for loans received from a related company in prior years. The loans are unsecured, bear no interest and are due on demand.

• (b) Transactions during the year with key management and companies with shareholders in common:

		2023		2022
Salaries (included in general and administration)	$	141,750	$	180,750
Research and development	$	78,604	$	39,403
Rent (included in general and administration)	$	-	$	18,000
Professional fees(included ingeneral and administration)	$	73,552	$	-

14

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

7. Intangible assets:

As at June 30, 2023 and 2022, the Company had the following intangible assets:

					Accumulated
June 30, 2023		Cost	Amortization		amortization		Impairment		Net
(a) License for burn management	$	1,121,695 $	-	$	(536,837)	$	(584,857)	$		1
(b) License for Incontinence		3,449,572	-		(1,388,556)		(2,061,016)			-
	$	4,571,267$	-	$	(1,925,393)	$	(2,645,873)	$		1
					Accumulated
June 30, 2022		Cost	Amortization		amortization		Impairment		Net
(a) License for burn management	$	1,121,695 $	(68,806)	$	(536,837)	$	(584,857)	$		1
(b) License for Incontinence		3,449,572	(246,398)		(1,388,556)		(2,061,016)			-
	$	4,571,267$	(315,204)	$	(1,925,393)	$	(2,645,873)	$		1

The following licenses are based on the same underlying technology related to an automated bioprocessing system for adipose tissue. Each license is for the use of this technology in a specific area of clinical market indications.

(a) License for burn management

On March 16, 2015, the Company acquired the Curastem license for the use of the automated bioprocessing system for adipose tissue specific to the clinical market indication for burn wound management. The licenses were combined on January 1, 2018 with Avapecia licenses.

(b) License for urogynecology and urinary incontinence

On December 31, 2016, the Company amalgamated with Avapecia. Avapecia mainly held the license for the use of the automated bioprocessing system for adipose tissue specific to the clinical market indication for urogynecology and urinary incontinence.

(c) License for cosmetic and aesthetic medicine

On April 1, 2011, the Company signed a license agreement for the automated bioprocessing system for adipose tissue specific to clinical market indications for cosmetic and aesthetic medicine. This license was acquired from a shareholder who was also a director.

License payments

On January 1, 2018, all of the above listed licenses for the automated bioprocessing systems for adipose tissue were renegotiated under one master global license with no further minimum quarterly payments. This master global license expires on December 31, 2030.

During the year ended June 30, 2022, the Company anticipated difficulties in commercializing the licenses due to delay in clinical studies and uncertainty in obtaining funding. Therefore, the Company decided to write the intangible assets down to a nominal value and recorded an impairment of $2,645,873 in fiscal 2022.

15

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

8. Financial instruments:

• (a) Fair values:

The Company categorizes its financial instruments measured at fair value using a hierarchy based on the inputs used to measure fair value. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value as follows:

Level 1: observable inputs such as quoted prices in active markets;

• Level 2: inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3: unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

• Cash, trade and other payables and due to related parties approximate their fair value due to the short-term nature of the instruments.

• (b) Financial risk management:

The following provides disclosures relating to the nature and extent of the Company’s exposure to risks arising from financial instruments, including credit risk, liquidity risk, foreign currency risk and interest rate risk, and how the Company manages those risks.

• (i) Credit risk:

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The Company’s credit risk is attributable to cash. The Company manages such risk by holding cash as operating bank accounts with Canadian chartered banks with minimum DBRS ratings of AA (S&P AA-) and large banks in China. Credit risk is assessed as low.

• ( ii ) Liquidity risk:

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s primary source of liquidity is its cash reserves. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to develop profitable operations in the future. The Company has generated operating losses since inception. As disclosed in Note 1, there can be no assurance these efforts will be successful in the future. All the Company’s financial liabilities are subject to normal trade terms. Liquidity risk is assessed as high.

16

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

8. Financial instruments(continued):

• (b) Financial risk management (continued):

• ( iii ) Currency risk:

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Company has significant cash denominated in USD and in RMB and therefore is exposed to currency risk.

Management estimates that a 10% appreciation of the Canadian dollar exchange rate against the US dollar would result in a decrease of $1,396 in the Canadian dollar equivalent US cash balance and vice versa for a 10% depreciation of the Canadian dollar against the US dollar.

Management estimates that a 10% appreciation of the Canadian dollar exchange rate against the RMB would result in a decrease of $31,706 in the Canadian dollar equivalent balances and vice versa for a 10% depreciation of the Canadian dollar against the RMB.

• (iv) Interest rate risk:

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company is not exposed to interest rate risk as at June 30, 2023 and 2022.

9. Share capital:

• (a) Authorized share capital:

Unlimited voting, participating common shares, with no par value.

Unlimited preferred shares, issuable in series.

The preferred shares may be issued in one or more series and the directors are authorized to fix the number of shares in each series and to determine the designation, rights, privileges, restrictions, and conditions attached to the shares of each series.

• (b) Issued share capital:

There were no preferred shares issued and outstanding as at June 30, 2023 and 2022.

There were no new common shares issued for the years ended June 30, 2023 and 2022.

• (c) Warrants:

The following summarizes information about the Company’s share purchase warrants outstanding:

On June 27, 2022, 213,393 warrants expired unexercised.

17

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

9. Share capital (continued):

• (c) Warrants (continued):

The following table summarizes warrants activity:

	Number of	Weighted average
	warrants	exercise price
		$
Balance at June 30, 2021	213,393	7.50
Expired	(213,393)	7.50
Balance, June 30, 2022 and 2023	-	-

• (d) Earnings per share computation:

The following table sets forth the computation of loss per common share:

		2023		2022
Loss for the year	$	(468,918)	$	(3,626,713)
Weighted averagenumberofcommonshares outstanding		17,080,529		17,080,529
Lossper share,basic and diluted	$	(0.03)	$	(0.21)

(e) Stock option plan:

The Company has adopted an incentive stock option plan in accordance with the policies of the TSXV (the “Stock Option Plan”) which provides that the Board of Directors of the Company may from time to time, in its discretion, grant to directors, officers, employees and consultants of the Company nontransferable options to purchase common shares, provided that the number of common shares reserved for issuance under the Stock Option Plan shall not exceed ten percent (10%) of the issued and outstanding common shares. The options are exercisable for a period of up to ten (10) years. In addition, the number of common shares reserved for issuance to any one person shall not exceed five percent (5%) of the issued and outstanding common shares and the number of common shares reserved for issuance to any one consultant will not exceed two percent (2%) of the issued and outstanding common shares. The Board of Directors determines the price per common share and the number of common shares, which may be allocated to each director, officer, employee and consultant and all other terms and conditions of the option, subject to the rules of TSXV.

(f) Stock options granted:

During the year ended June 30, 2023, the Company recorded $ nil (2022: $ nil) for share-based payments for options vested.

18

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

9. Share capital (continued):

• (f) Stock options granted (continued):

The following table summarizes options activity:

						Weighted
						average exercise
						price
					Number of options	$
Balance, June	30,	2021	and	2022	900,000	0.72
Addition					-	-
Balance, June	30,	2023			900,000*	0.72

*Expired unexercised subsequent to year ended June 30, 2023.

The following table sets out the details of the options granted and exercisable as at June 30, 2023:

023:
Number of	Number of		Weighted
Options	Options		average	Remaining
outstanding	exercisable	Expiry date	exercise price	contractual life
900,000	900,000	December 5,2023	$0.72	0.43years

• (g) Share-based payment reserve

The share-based payment reserve records items recognized as stock-based compensation expense and other share-based payments until such time as the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

10. Income taxes and continuance into the British Virgin Island:

A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:

	Year-Ended	Year-Ended
	June 30, 2023	June 30, 2022
Net loss	$ (468,918)	$ (3,626,713)
Statutory income tax rate	27%	27%
Expected income tax recovery	(127,000)	(979,000)
Non-deductible items	32,000	831,000
Change in valuation allowance	95,000	148,000
Tax recovery	$-	$-

The significant components of deferred income tax assets and liabilities are as follows:

	June 30, 2023	June 30, 2022
Non-capital loss	$ 869,000	$ 774,000
Valuation allowance	(869,000)	(774,000)
	$-	$-

19

Notes to Consolidated Financial Statements (Expressed in Canadian dollars)

ENLIGHTA INC.

Years ended June 30, 2023 and 2022

10. Income taxes and continuance into the British Virgin Island (continued):

On April 3, 2019, the Company continued into the British Virgin Island and as of that date, became a non-resident for Canadian income tax purpose. Non-capital losses of approximately $1,900,000 incurred in Canada as at April 3, 2019 may not be available for carryforward.

11. Capital management:

Since inception, the Company’s objective in managing capital is to ensure sufficient liquidity to finance its research and development activities and general and administrative expenses. The Company is not exposed to external requirements by regulatory agencies or third parties regarding its capital. There was no change to the Company’s capital management during the year ended June 30, 2023.

To maintain or adjust the capital structure, the Company may attempt to issue new shares or issue new debt. As at June 30, 2023, the Company has not entered into any external debt financing.

The Company’s capital resources are determined by the status of the Company’s projects and its ability to compete for investor support.

12. Segmented information:

The Company operated in a single reportable operating segment in healthcare industry and anticipates to continue to operate in the healthcare industry for the foreseeable future.

20