Envirogold Global Limited — Audit Report / Information 2020

Apr 21, 2021

Range Energy Resources Inc.

Financial Statements

For the Years Ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Directors of Range Energy Resources Inc.

Opinion

We have audited the financial statements of Range Energy Resources Inc. (the “Company”) which comprise the statements of financial position as at December 31, 2020 and 2019, and the statements of comprehensive loss, cash flows and changes in shareholders’ deficiency for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ 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 audits 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.

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying financial statements which describes matters and conditions that indicate the existence of a 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, which comprises the information included in the Company’s Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

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.

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. 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 as issued by the International Accounting Standards Board, 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.

Auditors’ 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 auditors’ 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 auditors’ 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 auditors’ 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.

The engagement partner on the audit resulting in this independent auditors’ report is Michael Ryan Ayre.

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CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, Canada April 19, 2021

Range Energy Resources Inc. Statements of Financial Position

(Expressed in Canadian Dollars) As at December 31, 2020 and 2019

	2020	2019
Current assets
Cash	$ 8,829	$ 3,941
Loan receivable (note 5)	-	1
Prepaid expenses	3,659	4,391
	12,488	8,333
Non-current assets
Equipment	62	88
Long-term investment (note 6)	-	1
Total assets	$ 12,550	$ 8,422
Current liabilities
Accounts payable and accrued liabilities (note 10)	$ 354,748	$ 199,911
Loans payable (note 8)	89,415	-
Convertibleloans payable (note 9)	24,494,421	21,737,556
	24,938,584	21,937,467
Non-current liabilities
Loanpayable (note 8)	-	51,254
	24,938,584	21,988,721
Shareholders’ Deficiency
Share capital (note 7(a) and (b))	49,791,768	49,791,768
Reserves (note 7(c))	23,674,184	23,674,184
Deficit	(98,391,986)	(95,446,251)
	(24,926,034)	(21,980,299)
Total liabilities and shareholders’ deficiency	$ 12,550	$ 8,422

Nature of operations and going concern (note 1) Commitment (note 11) Contingent liability (note 14) Subsequent events (note 16)

Approved on Behalf of the Board of Directors:

(signed) Rick W Pawluk (signed) Allan Bezanson

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

2

Range Energy Resources Inc. Statements of Comprehensive Loss

(Expressed in Canadian Dollars)

For the years ended December 31, 2020 and 2019

	2020	2019
Expenses
Audit and accounting fees (note 10)	$ 105,762	$ 92,925
Depreciation	26	38
General and administrative	22,609	59,487
Interest (notes 8 and 9)	2,760,026	2,429,517
Legal fees	590	892
Management fees (note 10)	44,310	44,520
Transfer agent and filing fees	13,831	18,227
Loss before other items	(2,947,154)	(2,645,606)
Other items
Foreign exchange gain	1,421	1,432
Write off of loan receivable	(1)	-
Write offof investment	(1)	-
Other items	1,419	1,432
Net loss and comprehensive loss for theyear	$ (2,945,735)	$ (2,644,174)
Lossper share - basic and diluted	$ (0.69)	$ (0.62)
Weighted average number of common shares outstanding
- basic and diluted	4,281,136	4,281,136

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

3

Range Energy Resources Inc. Statements of Changes in Shareholders’ Deficiency

(Expressed in Canadian Dollars)

	Share capital Number of shares Amount	Reserves Warrants Contributed surplus Equity component of convertible loans Deficit Total deficiency
Balance, December 31, 2018 Warrants expired (note 7(d)) Warrants cancelled Netlossforthe year	4,281,136 $ 49,791,768 - - - - - -	$ 5,379,075 $ 14,489,560 $ 3,805,549 $ (92,802,077) $ (19,336,125) (1,937,927) 1,937,927 - - - (3,441,148) 3,441,148 - - - - - - (2,644,174) (2,644,174)
Balance, December 31, 2019	4,281,136 $49,791,768	$- $19,868,635 $3,805,549 $ (95,446,251) $ (21,980,299)
Netlossforthe year	- -	- - - (2,945,735) (2,945,735)
Balance, December 31, 2020	4,281,136 $49,791,768	$- $19,868,635 $3,805,549 $ (98,391,986) $ (24,926,034)

On February 26, 2021, the Company consolidated all of its issued and outstanding common shares on the basis of every 200 old common shares into 1 new common share. Unless otherwise noted, all share, option and warrant information have been retroactively adjusted to reflect this consolidation.

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

4

Range Energy Resources Inc. Statements of Cash Flows (Expressed in Canadian Dollars) For the years ended December 31, 2020 and 2019

	2020	2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,945,735)	$ (2,644,174)
Add items not involving cash:
Write-off of long-term investment	2	-
Depreciation	26	38
Accrued interest	2,760,026	2,429,517
Foreignexchange	1,421	1,432
	(184,260)	(213,187)
Changes in non-cash working capital items:
Prepaid expenses	732	39,130
Accounts payable and accruedliabilities	153,416	68,063
Cash used inoperating activities	(30,112)	(105,994)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan and interest paid	-	(33,808)
Proceedsfrom loans payable	35,000	83,299
Cash provided by financing activities	35,000	49,491
Increase (Decrease) in cash	4,888	(56,503)
**Cash -beginning of year **	3,941	60,444
**Cash -end of year **	$ 8,829	$ 3,941
Supplemental cash disclosures
Interest paid	-	356
Income taxpaid	$-	$-

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

5

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

1. Nature of operations and going concern

Range Energy Resources Inc. (the “Company”) was incorporated under the laws of British Columbia, Canada on March 1, 2005. On October 24, 2006, the Company's common shares were listed and called for trading on the Canadian Securities Exchange (“CSE”) and its current symbol is RGO. On February 12, 2007, the Company listed on the Frankfurt Stock Exchange. The Company’s corporate head office is located at Suite 810, 789 West Pender Street, Vancouver, BC V6C 1H2. The Company is currently a development stage company looking to invest potential growth projects, entities or other opportunities. The parent of the Company is 2706791 Ontario Inc., a company incorporated in Ontario. The address of its registered office is 295 The West Mall, 6th Floor, Toronto, Ontario, M9C 4Z4.

These financial statements are prepared on a going concern basis, which contemplates 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 business and that management neither intends to liquidate the entity nor does it have no realistic alternative but to do so. During the year ended December 31, 2020, the Company incurred a net loss totalling $2,945,735 and as at December 31, 2020, the Company has a working capital deficiency of $24,926,096. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue its operations is dependent upon its ability to restructure its debt and raise financing. Although the Company has been successful in obtaining the necessary financing to continue operations in the past, there can be no assurance that it will be able to continue to do so in the future and that such funds will be available on terms acceptable by the Company. Management intends to finance operating costs over the next twelve months with loans from directors and companies controlled by directors and to restructure the Company’s debt.

In March 2020, the World Health Organization declared a global pandemic known as COVID-19. The expected impacts on global commerce are expected to be far reaching. Material uncertainties may come into existence that could influence management’s going concern assumption. The duration and impact of the COVID-19 outbreak is unknown at this time and it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company. The Company continues to closely evaluate the impact of the COVID19 on its operations.

These financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

2. Statement of compliance

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

These financial statements have been authorized for release by the Company’s Board of Directors on April 19, 2021.

3. Significant accounting policies

• (a) Basis of presentation

The financial statements have been prepared on an accrual basis and are on a historical cost basis, except for certain financial instruments, which are measured at fair value. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant are disclosed in note 4.

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Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

(a) Basis of presentation (continued)

These financial statements are prepared in Canadian dollars. The functional currency of the Company is the Canadian dollar.

(b) Foreign currency transactions

Transactions in currencies other than the functional currency of the reporting entity are recorded at rates of exchange prevailing on the dates of such transactions. Monetary assets and liabilities that are denominated in currencies other than the functional currency are translated at rates prevailing at the end of each reporting period. Non-monetary items that are measured in terms of historical cost in the foreign currency are not re-translated.

• (c) Cash and cash equivalents

Cash and cash equivalents include cash on deposit and term deposits with banks with maturities of 90 days or less at inception. The Company does not have any cash equivalents as at December 31, 2020 and 2019.

(d) Equipment

Equipment is stated at cost of acquisition less accumulated depreciation and impairment losses. Depreciation is provided for on a declining balance basis at rates calculated to write off the cost less estimated residual value of each asset over it expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset was already of the age and in the condition expected at the end of its useful life.

Computer hardware and software are being depreciated at the rate of 30% per annum on a declining balance basis.

The carrying value of equipment is assessed annually and any impairment charged to the statement of comprehensive loss. The expected useful life of equipment is reviewed annually.

An item of equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in comprehensive loss in the year the item is derecognized.

(e) Share-based payment transactions

The Company grants stock options to directors, officers, employees and service providers. Each tranche in an award is considered a separate award with its own vesting period and fair values. The Company applies the fairvalue method of accounting for share-based payments. The fair value is calculated using the Black-Scholes Option Pricing Model (“Black-Scholes”).

Share-based payments for employees and others providing similar services are determined based on the grant date fair value. Share-based payments for non-employees is determined based on the fair value of the goods or services received or if the fair value of the services received cannot be reliably measured, the options granted are measured at the date on which the Company obtains the goods or services.

Share-based compensation expense is recognized over each tranche’s vesting period in the statement of comprehensive loss, or capitalized as appropriate, based on the number of awards that vest less the estimated forfeitures. The number of forfeitures likely to occur is estimated on the grant date. If stock options are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital.

7

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

(g) Share capital

Proceeds from the exercise of stock options and warrants, in addition to the estimated fair value attributable to these equity instruments, are recorded as share capital when exercised. In a unit offering, the Company prorates the proceeds between common shares and warrants using the relative fair value method. Share issuance costs are recorded as a reduction of share capital.

• (h) Income taxes

Income tax comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected payable on the taxable income for the period using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regards to previous years.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent it is no longer probable that the related tax benefit will be realized.

Deferred tax assets and liabilities are offset when there is legally enforceable right to set off current tax assets against current tax liabilities, when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Deferred tax is provided on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes using the liability method. Deferred tax is not recognized for temporary differences which arise on the initial recognition of assets or liabilities in a transaction that is not a business combination that affect neither accounting nor taxable loss. Deferred tax is also not recognized for temporary differences relating to investments in subsidiaries to the extent that it is probable they will not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using rates enacted or substantively enacted at the statement of financial position date.

(i) Financial instruments

• (i) Recognition and initial measurement

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value net of transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(ii) Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at: (i) amortized cost; (ii) fair value through other comprehensive income (“FVOCI”); or (iii) fair value through profit or loss (“FVTPL”). Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

8

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

• (i) Financial instruments (continued)

• (ii) Classification and subsequent measurement (continued)

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-byinvestment basis. All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost, FVOCI, or FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets: Subsequent measurement and gains and losses

• Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in the statement of comprehensive loss. The Company’s cash and long-term investment are measured at FVTPL.

• Financial assets at amortized cost: These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in the statement of comprehensive loss. Any gain or loss on derecognition is recognized in the statement of comprehensive loss. The Company’s loan receivable is measured at amortized cost.

• Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in the statement of comprehensive loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to the statement of comprehensive loss. The Company does not have any assets classified as debt investments at FVOCI.

• Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognized as income in the statement of comprehensive loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to the statement of comprehensive loss. The Company does not have any assets classified as equity investments at FVOCI.

9

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

• (j) Financial instruments (continued)

Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the statement of comprehensive loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in the statement of comprehensive loss. Any gain or loss on derecognition is also recognized in the statement of comprehensive loss. The Company’s accounts payable, loans payable and convertible loans are measured at amortized cost.

(iii) Derecognition

Financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Company enters into transactions whereby it transfers assets recognized in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in the statement of comprehensive loss, unless the transaction involves a creditor that is also a direct or indirect shareholder of the Company that is also acting in its capacity as such, in which case the difference is recognized in the statement of equity.

(iv) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(v) Impairment

Financial assets and contract assets

The Company recognizes loss allowances for expected credit losses (“ECLs”) on:

• financial assets measured at amortized cost;

• debt investments measured at FVOCI; and

10

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

• (i) Financial instruments (continued)

• (v) Impairment (continued)

  • contract assets (as defined in IFRS 15).

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following, which are measured as 12-month ECL:

• debt securities that are determined to have low credit risk at the reporting date; and

• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when:

• the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realizing security (if any is held); or

• the financial asset is more than 90 days past due.

The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of 'investment grade'.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECL’s that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the entity expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

11

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

• (j) Financial instruments (continued)

• (v) Impairment (continued)

Credit-impaired financial assets (continued)

Evidence that a financial asset is credit-impaired includes the following observable data:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or being more than 90 days past due;

• the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise;

• it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• the disappearance of an active market for a security because of financial difficulties.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

For debt securities at FVOCI, the loss allowance is charged to the statement of comprehensive loss and is recognized in OCI.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

(k) Earnings (loss) per share

The calculation of earnings (loss) per share is based on the weighted average number of common shares outstanding in the period. Diluted earnings (loss) per share is calculated whereby all “in the money” stock options and warrants are assumed to have been exercised at the beginning of the period and the proceeds from the exercise are assumed to have been used to purchase common shares at the average market price during the period. If the Company incurs net losses during the period, basic and diluted loss per share are the same as the exercise of options and warrants is considered to be anti-dilutive.

(l) Segment reporting

The Company operates in a single reportable operating segment – investing in entities involved in the acquisition, exploration and development of oil and gas properties.

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Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

(m) Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

(n) Convertible loans

Convertible loans, where applicable, are separated into their financial liability and equity instrument components and accounted for using the effective interest rate method. The fair value of the liability component at the time of issue is determined based on an estimated interest rate of the convertible loan without the conversion feature. The fair value of the equity component is determined as the difference between the face value and the fair value of the liability component. Issuance costs of the convertible loans are applied as a reduction of proceeds and split prorata between the liability and equity components. The issuance costs applied to the liability component are recognized as accretion expense over the term of the convertible loan.

(o) Debt issuance costs

Debt issue costs are recognized in connection with proposed financing transactions which are specifically identified in that the form of debt issuances is known and completion of the financing is probable. When the financing is completed, these costs are recognized and netted against the value of the debt for debt transactions. The debt is subsequently accreted to face value at maturity. The accretion amounts are included in interest and bank charges expense over the life of the debt. Debt issue costs include only those costs which are incremental and directly attributable to the proposed financing transaction. In the event that the transaction is abandoned, previously capitalized debt issue costs are expensed through the statement of comprehensive loss.

(p) Lease

The Company recognizes a right-of-use asset and a lease liability based on the present value of the future lease payments at the commencement date. The commencement date is when the lessor makes the leased asset available for use by the Company, typically the possession date. The discount rate used in the present value calculation for lease payments is the incremental borrowing rate for each leased asset or portfolio of leased assets with similar characteristics by reference to the Company’s creditworthiness, the original term of the lease, the quality of the underlying leased asset, and the economic environment where the leased asset is located. The lease term is determined as the non-cancellable periods of a lease, together with periods covered by a renewal option if the Company is reasonably certain to exercise that option and a termination option if the Company is reasonably certain not to exercise that option.

Lease payments for short-term leases with a term of 12 months or less and leases of low-value assets are treated as operating leases, with rent expense recognized in cost of sales or selling, general and administrative expenses on a straight-line or other systematic basis.

Lease liabilities are measured at the present value of future lease payments, discounted using the Company’s incremental borrowing rates, and include the fixed payments, variable lease payments that depend on an index or a rate, less any lease incentives receivable. Subsequent to initial measurement, the Company measures lease liabilities at amortized cost using the effective interest rate method. Lease liabilities are remeasured when there are changes to the lease payments, a change in lease term, a change in the assessment of an option to purchase the underlying asset, a change in expected residual value guarantee, or a change in future lease payments due to a change in index or rate tied to the payment.

13

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

3. Significant accounting policies – continued

• (p) Lease (continued)

Right-of-use assets are measured at the initial amount of the lease liabilities, lease payments made at or before the commencement date less any lease incentives received, initial direct costs if any, and decommissioning costs to restore the site to the condition required by the terms and conditions of the lease. Subsequent to initial measurement, the Company applies the cost model to the right of- use assets and measures the asset at cost less any accumulated depreciation, accumulated impairment losses in accordance with IAS 36, and any remeasurements of the lease liabilities. Assets are depreciated from the commencement date on a straight-line basis over the earlier of the end of the assets’ useful lives or the end of the lease terms.

During the year ended December 31, 2020, the Company’s leases are short-term leases with a term of 12 months or less. Lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

(q) Accounting standards adopted during the year

Other 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.

• (r) Accounting standards and amendments issued but not yet adopted

A number of new standards and amendments to existing standards have been issued by the IASB that are mandatory for accounting periods beginning on or after January 1, 2020, or later periods. The Company has not early adopted these new standards in preparing these financial statements. There new standards are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

4. Significant accounting estimates and judgments

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods affected.

The Company has identified the following areas where significant judgments, estimates and assumptions are made, where actual results may differ from these estimates and this may materially affect the Company’s financial results or statement of financial position in future periods.

Significant areas requiring the use of management estimates include the valuation of the Company’s long-term investment and future income tax rates applied to deferred income tax assets and liabilities.

14

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

4. Significant accounting estimates and judgments - continued

Significant areas requiring management judgment include:

Going concern

Assessment of the Company’s ability to continue as a going concern requires estimates of future cash flows and includes the consideration of other factors, the outcomes of which are uncertain.

Utilization of deferred income tax assets

Deferred tax assets require management judgement in order to determine the amounts to be recognized and the probability that there will be sufficient future taxable income against which the deferred tax assets can be utilized. This includes assessing the timing of the reversal of temporary differences to which deferred income tax rates are applied.

Accounting for long-term investment

Management applies judgment in determining whether the Company has significant influence over an investee in which it holds, directly or indirectly, 20 per cent or more of the voting power of the investee. Management does not consider the Company to have significant influence over the entity underlying its long-term investment (note 6).

5. Loan receivable

On March 3, 2012, the Company entered into a Letter of Intent (“LOI”) with Blackstairs Energy PLC (“Blackstairs”) whereby the Company proposed to acquire 100% of the issued share capital of Blackstairs subject to a number of conditions set out in the LOI, including, satisfactory completion by the Company of its due diligence review of Blackstairs on or before April 30, 2012, entering into a Definitive Agreement and obtaining requisite regulatory and shareholders’ approvals, if required. Under the terms of the LOI, the Company loaned Blackstairs US$500,000 for working capital purposes. As security for this loan, certain shares in Blackstairs were pledged to the Company.

The Company continued to consider what, if any actions it may take to obtain recovery out of the liquidation of Blackstairs’ assets of all or some portion of the outstanding principal and accrued and unpaid interest, the loan and accrued interest remain unpaid, and as the fair value of the pledged collateral is indeterminable, the loan was written down by $575,347 to a nominal amount of $1 due to the Company for the year ended December 31, 2013. As at December 31, 2019, total principal and US$500,000 and accrued interest of US$40,944, was due to the Company.

During the year ended December 31, 2020, the nominal amount of $1 was written off to $nil as the Company had no reasonable expectations of recovering the financial asset in its entirety or a portion thereof.

6. Long-term investment

Khalakan Block, Kurdistan Region of Iraq

The Company’s investment in New Age Al Zarooni 2 Limited, which held an indirect interest in an oil and gas resource property referred to as the Khalakan Block domiciled in the Kurdistan Region of Iraq, was impaired during the years ended December 31, 2017 and 2018, resulting in a nominal $1 carrying value for the year ended December 31, 2019. During the year ended December 31, 2020, the nominal amount of $1 was written off to $nil as the Company had no reasonable expectations of recovering the financial asset in its entirety or a portion thereof.

15

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

7. Equity

• (a) Authorized

The authorized share capital of the Company consists of an unlimited number of common shares without par value and an unlimited number of preferred shares, issuable in series. The preferred share rights and restrictions may be set by the Company’s directors upon issue.

On February 26, 2021, the Company consolidated all of its issued and outstanding common shares on the basis of every 200 old common shares into 1 new common share. Unless otherwise noted, all share, option and warrant information have been retroactively adjusted to reflect this consolidation.

(b) Private placements

There was no share capital activity for the years ended December 31, 2020 and 2019.

(c) Reserves

Reserves consist of share purchase warrants, the accumulated fair value of common share stock options recognized as share-based compensation and the equity component of convertible loans.

• (d) Warrants

Warrants
	December	31,	2020		December	31,	2019
	Number of		Amount		Number of		Amount
	warrants				warrants
Opening balance	-	$		-	2,005,241	$	5,379,075
Warrants expired	-			-	(373,959)		(1,937,927)
Warrants cancelled	-			-	(1,631,282)		(3,441,148)
Closingbalance	-	$		-	-	$	-

At December 31, 2020 there were no warrants outstanding.

During the year ended December 31, 2019, 373,959 warrants expired and $1,937,927 was transferred from warrants reserve to contributed surplus on the statement of changes in shareholders’ deficiency.

On July 31, 2019, 1,631,282 warrants at an exercise price of $10.00 were cancelled pursuant to the Share and Loan Purchase agreement between Gulf LNG America, LLC (“Gulf”) and 2706791 Ontario Inc. and $3,441,148 was transferred from warrants reserve to contributed surplus on the statement of changes in shareholders’ deficiency.

(e) Stock options

The Company adopted the 2015 Stock Option Incentive Plan (the “Plan”) that was approved by the shareholders on July 3, 2015. The aggregate number of shares of the Company’s share capital issuable pursuant to options granted under the Plan may not exceed 434,977 common shares. Options granted under the Plan may have a maximum term of 10 years. The exercise price of options granted under the Plan shall be determined by the Company’s directors, provided that such price shall not be lower than the closing share price on the day before the grant date less the applicable discount permitted under CSE policies. Stock options granted under the Plan may be subject to vesting terms that are set at the discretion of the directors at the time of grant.

16

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

7. Equity

• (e) Stock options (continued)

The following table summarizes stock option activity during the year ended December 31, 2020 and the year ended December 31, 2019:

December 31, 2019:
	December 31, 2020		December 31, 2019
	Number of options Weighted average exercise price of options exercisable		Number of options	Weighted average exercise price of options exercisable
Opening balance	21,250	$20.00	51,250	$20.00
Options cancelled	-	-	30,000	$20.00
Options expired	21,250	$20.00	-	-
Closingbalance	-	-	21,250	$20.00

During the year ended December 31 2020, 21,250 options at an exercise price of $20.00 expired unexercised. During the year ended December 31, 2019, 30,000 options at an exercise price of $20.00 were cancelled.

At December 31, 2020, there were no options outstanding.

8. Loans payable

On April 22, 2020 the Company entered into a loan agreement with 2706791 Ontario Inc. for the amount of $15,000 payable on demand. The loan is unsecured and interest free.

On January 9, 2020 the Company entered into a loan agreement with 2706791 Ontario Inc. for the amount of $20,000 payable on demand. The loan is unsecured and interest free.

On August 1, 2019, the Company entered into a loan agreement with 2706791 Ontario Inc. in the principal amount of $50,000. The loan is unsecured and interest bearing at a rate of 6% per annum compounded monthly and matures on August 1, 2021. Proceeds from this loan were partially used to repay the below mentioned US$25,000 loan from Gulf LNG America, LLC. Interest of $3,161 accrued for the year ended December 31, 2020.

On April 11, 2019, the Company entered into a loan agreement with Gulf LNG America, LLC in the amount of US$25,000. The loan was interest bearing at a rate of 13% per annum and was due to mature on January 13, 2020.

		December 31,		December 31,
		2020		2019
Opening Balance	$	51,254	$	-
Loan payable issued		35,000		83,299
Loan and interest paid		-		(33,808)
Interest		3,161		1,610
Foreign exchange		-		153
ClosingBalance	$	89,415	$	51,254
Current Liabilities	$	89,415	$	-
Non-Current Liabilities	$	-	$	51,254

17

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

9. Convertible loans payable

On July 31, 2019, 2706791 Ontario Inc., a company controlled by a director of the Company, entered into a Share and Loan Purchase agreement with Gulf whereby 2706791 Ontario Inc. acquired from Gulf 3,046,755 common shares of the Company and all secured convertible promissory notes in the aggregate principal amount of $15,982,472 (see Note 10). Upon completion of the transaction, 2706791 Ontario Inc. became the parent of the Company (See note 1). As at December 31, 2020 and December 31, 2019, the loans were in default.

• (b) The fair value of the liability component at the time of issue was determined based on an estimated rate of 20% for loans without the conversion feature. The fair value of the equity component was determined as the difference between the face value of the loans and the fair value of the liability component. After initial recognition the liability component is carried on an amortized cost basis and will be accreted to its face value over the term to maturity of the convertible loan at an effective interest rate of approximately between 18.37% and 18.98%. The carrying value and face value of convertible loans payable, including convertible accrued interest, is $24,494,422 at December 31, 2020 (2019 - $21,737,556). During the year ended December 31, 2020, the Company accrued interest expense of $2,756,866 (2019 - $2,427,907) related to these loans.

The following table summarizes the continuity of the convertible loans and interest payable including the amounts recognized in the liability and equity components during the years ended December 31, 2020 and 2019:

			**Liability **	Component	**Equity **	Component
Balance, December	31,	2018		19,309,649		3,805,549
Interest				2,427,907		-
Balance, December	31,	2019		21,737,556		3,805,549
Interest				2,756,865		-
Balance, December	**31, **	2020	$	24,494,421	$	3,805,549

10. Related party transactions and balances

Related parties are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly. Related parties include the Company’s directors and members of the senior management group.

The Company entered into a corporate management agreement for accounting services with a company controlled by the Chief Financial Officer of the Company (note 11).

18

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

10. Related party transactions and balances – continued)

Details of related party compensation are as follows:

Years ended December 31,		2020		2019
Services provided:
Accounting fees	$	63,000	$	63,000
Management fees		44,310		44,520
Rent and storage		12,600		12,600
Relatedparties’ compensation	$	119,910	$	120,120
		December 31,		December 31,
As at		2020		2019
Balancespayable to relatedparties	$	187,425	$	175,553

On July 31, 2019, 2706791 Ontario Inc., a company controlled by a director of the Company, entered into a Share and Loan Purchase agreement with Gulf whereby 2706791 Ontario Inc. acquired from Gulf 3,046,755 common shares and certain secured convertible promissory notes of the Company in the aggregate principal amount of $15,982,472 plus accrued interest. Under the terms of the acquisition, 2706791 Ontario Inc. became the administrative agent for all the convertible loans, including those of Harrington Global Opportunities Fund S.A.R.L. (“Harrington”). (Note 9). Upon completion of the transaction, 2706791 Ontario Inc. became the parent of the Company (See note 1).

On August 1, 2019, the Company entered into a loan agreement with 2706791 Ontario Inc. in the principal amount of up to $50,000. The loan is interest bearing at a rate of 6% per annum compounded monthly and matures on August 1, 2021. Interest of $3,161 accrued for the year ended December 31, 2020 (note 8).

On January 9, 2020 the Company entered into a loan agreement with 2706791 Ontario Inc. for the amount of $20,000 payable on demand. The loan is interest free (note 8).

On April 22, 2020 the Company entered into a loan agreement with 2706791 Ontario Inc. for the amount of $15,000 payable on demand. The loan is interest free (note 8).

The amounts payable to key related parties is included in accounts payable and accrued liabilities on the statements of financial position.

11. Commitment

The Company is party to a corporate management and accounting services agreement which automatically renewed for additional 12 months until December 31, 2021 (note 10). The future minimum payments are $114,000 for the remainder of the year ending December 31, 2021. Under the agreement, the Company is required to pay 24 months of fees in the event of a change in control.

19

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

12. Financial instruments

The Company’s financial instruments include cash, loan receivable, long-term investment, accounts payable, loan payable and convertible loans. The carrying value of cash, accounts payable, loan payable and convertible loans payable as presented in these financial statements are reasonable estimates of fair values due to the relatively short periods to maturity and the terms of these instruments. Loan receivable and long-term investment were written off during the year ended December 31, 2020.

Financial instruments must be classified at one of three levels within a fair value hierarchy according to the relative reliability of the inputs used to estimate their values. The three levels of the hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities; Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and, Level 3: Inputs that are not based on observable market data.

The Company’s financial instruments have been classified as follows:

Financial instrument	Classification	Fair valuehierarchy
Cash	FVTPL	Level 1
Loan receivable	Amortized cost	n/a
Long-term investment	FVTPL	Level 3
Accounts payable	Amortized cost	n/a
Loan payable	Amortized cost	n/a
Convertibleloans payable	Amortized cost	n/a

The Company holds a long-term investment in NAAZ2 that is considered to be classified as Level 3. As at December 31, 2019, the fair value of $1 has been estimated by management using the Company’s proportion of the discounted cash flows expected to be recovered from the bankruptcy proceedings of GPK plus the net assets of NAAZ2. During the year ended December 31, 2020, the long-term investment in NAAZ2 was written off to $Nil.

The following table reconciles the Company’s Level 3 fair value investment:

	Year ended	Year ended
	December 31,	December 31,
	2020	2019
Beginning balance	$ 1	$ 1
Impairment	(1)	-
Endingbalance	$-	$1

Risk exposure and management

The Company is exposed to various financial instrument risks and continuously assesses the impact and likelihood of this exposure. These risks include credit risk, commodity price risk, liquidity risk, interest rate risk and currency risk. Where material these risks are reviewed and monitored by the Board of Directors.

(a) Credit risk

Credit risk arises from the non-performance by counterparties of contractual financial obligations resulting in financial loss to the Company. The Company’s credit risk is primarily attributable to its cash and loan receivable. Cash is held with an investment grade Canadian financial institution as assessed by external rating agencies. Management believes the risk of loss to be minimal. As at December 31, 2020, the Company’s maximum credit risk is the carrying value of cash.

20

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

12. Financial instruments – continued

(b) Commodity price risk

The Company is subject to price risk from fluctuations in market prices of the commodities underlying its long-term investment. This exposure includes the ability to raise capital with favorable terms. The Company does not currently hold any financial instruments that mitigate this risk.

(c) Liquidity risk

Liquidity risk refers to the risk that the Company will not be able to meet its financial obligations when they become due or can only do so at excessive cost. As at December 31, 2020, the Company has a working capital deficiency of $24,926,096 (see note 1). The Company manages liquidity risk by monitoring and reviewing both actual and forecasted cash flows and intends to match the maturity profile of financial assets and liabilities.

Contractual undiscounted cash flow requirements of financial liabilities at December 31, 2020 are as follows:

	Carrying	Less than	Between	More than
	value	1 year	2 – 5 years	5 years	Total
	$	$	$	$
Accounts payable	354,748	354,748	-	-	354,748
Loans payable	89,415	89,415	-	-	89,415
Convertible loanspayable	24,494,421	24,494,421	-	-	24,494,421

Contractual undiscounted cash flow requirements of financial liabilities at December 31, 2019 are as follows:

	Carrying	Less than	Between	More than
	value	1 year	2 – 5 years	5 years	Total
	$	$	$	$
Accounts payable	199,911	199,911	-	-	199,911
Loan payable	51,254	-	51,254	-	51,254
Convertible loanspayable	21,737,556	21,737,556	-	-	21,737,556

(d) Interest rate risk

As at December 31, 2020 and December 31, 2019, the Company does not hold any variable rate term deposits. The Company’s loan payable and convertible loans payable bear fixed rates of interest and therefore is not subject to any significant interest rate cash flow risk.

(e) Currency risk

As the Company operates in an international environment, some of the Company’s transactions and balances are denominated in currencies other than the Canadian dollar. The Company’s foreign exchange risk arises primarily with respect to the United States dollar. Fluctuations in the exchange rate between the United States dollar and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk.

As at December 31, 2020, a strengthening (weakening) of the Canadian dollar against the United States dollar of 10% would have an insignificant impact on the Company’s statements of comprehensive loss.

21

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

13. Management of capital

The Company manages its capital to ensure it will be able to continue as a going concern. The Company has no operations that generate cash flow and depends on financings to fund its administrative expenses. The success of each financing depends on numerous factors including positive stock market conditions, a company’s track record and the experience of management. The capital structure of the Company consists of loan payable, convertible loans payable and shareholders’ deficiency, which is comprised of share capital, reserves and deficit. The Board of Directors does not establish quantitative return on capital criteria for management due to the nature of the Company’s business. The Company does not pay dividends and is not exposed to any externally imposed capital requirements.

14. Contingent liability

By way of Summons dated May 6, 2020, litigation proceedings were initiated against the Company in the Royal Court of Jersey in connection with fees for director services provided by Mr. Antony R. Gardner-Hillman who was appointed in 2016 as a non-executive director to an investee of the Corporation. The Summons was in respect of approximately £34,000 and required the Company’s appearance in Court on May 22, 2020. The Company did not defend the matter and anticipated judgement against it for that amount.

Mr. Gardner has indicated he intends to file the judgment in Canada. The Company has not accrued a provision for this amount in these financial statements as management believes it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

15. Income taxes

The Company’s provision for income taxes differs from amounts computed by applying the combined Canadian federal and provincial income tax rates, as a result of the following:

Year ended December 31,	2020	2019
Enacted rates	27.00%	27.00%
Income tax recovery computed at statutory rates	$ 795,349	$ 713,927
Change in tax rates and other	-	(18,670,164)
Changeindeferred assetsnotrecognized	795,349	17,956,237
Recoveryof(provision for)income taxes	$-	$-

The tax effects of temporary timing differences that give rise to significant components of the deferred tax assets and deferred tax liabilities are as follows:

Year ended December 31,	2020	2019
Deferred tax assets
Financing costs	$ 1,217	$ 3,492
Non-capital loss carry forwards	6,618,412	5,820,795
Other	4,472	4,465
Total gross deferred tax assets	6,624,101	5,828,752
Deferred taxassetsnotrecognized	(6,624,101)	(5,828,752)
Net deferred tax assets	$-	$-

22

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

15. Income taxes – continued

At December 31, 2020, the Company has non-capital losses of approximately $24,512,648 which may be carried forward to apply against future year’s income for Canadian income tax purposes, subject to final determination by taxation authorities, expiring as follows:

2026	$	250,451
2027		1,447,618
2028		958,035
2029		1,987,052
2030		2,448,244
2031		804,696
2032		2,316,825
2033		2,422,371
2034		955,440
2035		1,298,808
2036		494,196
2037		1,345,295
2038		2,174,328
2039		2,655,144
2040		2,954,145
		$24,512,648

16. Subsequent events

On February 26, 2021, the Company consolidated all of its issued and outstanding common shares on the basis of every 200 old common shares into 1 new common share. Unless otherwise noted, all share, option and warrant information have been retroactively adjusted to reflect this consolidation.

As initially disclosed in its press release on March 10, 2021, the Company has now entered into debt settlement agreements (the “Debt Settlement Agreements”) with its major creditors. Under the terms of the Debt Settlement Agreements, the Company and certain creditors have agreed to settle an aggregate of $25,426,720 in debt via the Company issuing Range Shares to such creditors on the basis of a deemed price of $1.95 per share in respect of $24,511,155 of the debt and a deemed price of $0.65 per share in respect of $915,565 of the debt (the “Range Debt Settlement”). As at April 19, 2021, there are currently 4,281,136 Range Shares issued and outstanding and 18,259,519 Range shares are expected to be outstanding immediately after the completion of the Range Debt Settlement.

Subsequent to the year-end, the Company entered into a business combination agreement (the “Combination Agreement”) dated March 26, 2021 with EnviroGold Global (Can) Ltd. (“EnviroGold Global”) to complete a business combination by way of a transaction that will constitute a reverse takeover of the Company by EnviroGold Global (the “Transaction”).

Under the terms of the Combination Agreement, the Transaction will be completed by way of a “three-cornered amalgamation” under the laws of Ontario, whereby a wholly-owned Ontario subsidiary of the Company will amalgamate with EnviroGold Global, with the amalgamated company becoming a wholly-owned subsidiary of the Resulting Issuer. In connection with the Transaction, the Company will reconstitute its board of directors and senior management, and change its name to “EnviroGold Private Limited or such other similar name as may be accepted by the relevant regulatory authorities (the “Name Change”) and the Resulting Issuer will conduct its business under the new name.

23

Range Energy Resources Inc. Notes to the Financial Statements For the years ended December 31, 2020 and 2019

(Expressed in Canadian Dollars)

16. Subsequent events – continued

The Combination Agreement includes a number of conditions, including but not limited to: requisite shareholder approvals, including the approval of the shareholders of the Company and EnviroGold Global as applicable; the completion of the Range Debt Settlement (as defined below); the completion of the EnviroGold Financing (as defined below) for gross proceeds of a minimum of $500,000; the completion of the Name Change; the issuance of common shares of the Company (“Range Shares”) to holders of common shares in the capital of EnviroGold Global (the EnviroGold Shares”) on the basis of a share exchange ratio that results in the current holders of EnviroGold Shares holding 87.5% of the common shares of the resulting issuer (“Resulting Issuer Shares”) and the current holders of Range Shares holding 12.5% of the Resulting Issuer Shares, calculated on a basis that is inclusive of the Range Shares issued under the Range Debt Settlement (as defined below) but exclusive of the EnviroGold Shares issued under the EnviroGold Financing; and other closing conditions customary to transactions of the nature of the Transaction.

Concurrently with the execution of the Combination Agreement, the Company and 2706791 Ontario Inc. (“Holdco”), a company controlled by Mr. Allan Bezanson, a director and CEO of Range Energy, have entered into an investor rights agreement (the “Investor Rights Agreement”). Pursuant to the terms of the Investor Rights Agreement, the Company has agreed to provide Holdco, conditional and effective upon completion of the Transaction, with certain preemptive rights such that Holdco, together with its affiliates, including Mr. Bezanson, will be entitled to notice of and participation rights in respect of any equity financings the Resulting Issuer completes for a period of eighteen (18) months from the completion of the Transaction, such that Holdco and its affiliates will be able to maintain their proportional shareholdings in the Resulting Issuer.

EnviroGold Global is to complete a non-brokered private placement (the “EnviroGold Financing”) of EnviroGold Shares, units comprised of EnviroGold Shares and common share purchase warrants, and/or subscription receipts, on the basis of a pre-money valuation of EnviroGold Global equal to $20,000,000, and for gross proceeds of a minimum of $500,000.

24