Fab-Form Industries Ltd. — Interim / Quarterly Report 2021

May 20, 2021

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FAB-FORM INDUSTRIES LTD CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE QUARTER ENDED 31 MARCH 2021

FAB-FORM INDUSTRIES LTD CONDENSED INTERIM FINANCIAL STATEMENTS

Table of Contents

Management's Report to Shareholders	3
Condensed Statements of Comprehensive Income	4
Condensed Statements of Financial Position	5
Condensed Statements of Changes in Equity	6
Condensed Statements of Cashflows	7
Selected notes to the Condensed Interim Financial Statements	8-10

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FAB-FORM INDUSTRIES LTD

Management's Report to Shareholders

For the quarter ended 31 March 2021

The accompanying Condensed Interim Financial Statements are the responsibility of the management of Fab-Form Industries Ltd. The Condensed Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards including International Accounting Standard (“IAS”) 34 – Interim Financial Reporting and, where appropriate, include management’s best estimates and judgments.

The Company maintains an accounting system and related controls to provide management with reasonable assurance that transactions are executed and recorded in accordance with its authorizations, that assets are properly safeguarded and accounted for, and that financial records are reliable for preparation of financial statements.

The Board of Directors oversees management’s responsibilities for the Condensed Interim Financial Statements primarily through the activities of its Audit Committee. The Audit Committee meets with management of the Company to review the Company’s Condensed Interim Financial Statements and MD&A. The Audit Committee also reviews internal accounting controls, risk management and accounting principles and practices. The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the Condensed Interim Financial Statements.

The Condensed Interim Financial Statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies of the Company.

The Company's independent auditors have neither reviewed nor audited these Condensed Interim Financial Statements.

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........................... Director Rick Fearn President and CEO 20 May 2021

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........................... Director Don Russell Chief Financial Officer 20 May 2021

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

For the quarters ended 31 March 2021, 2020, and year ended 31 December 2020

Not 31-Mar-21 31-Mar-20 $ $ Revenue 721,940 310,986 Cost of sales (488,886) (221,942) Gross profit 233,054 89,044 Gross profit margin % 32% 29% Other operating income/(expenses) (5,159) 42,103 Expenses General and administration (68,478) (52,078) Selling and marketing (40,867) (47,888) Total expenses (109,345) (99,966) Earnings from operations 118,550 31,181 Finance costs (311) - Earnings before income taxes 118,239 31,181 Income taxes (33,995) - Earnings for the quarter/year 84,244 31,181 Other comprehensive income - - Total comprehensive income for the quarter/year 84,244 31,181 No of shares issued 8,822,055 8,822,055 Basic and diluted earnings per share 0.010 0.004 Quarter ended	Quarter ended	Quarter ended	Year ended
		31-Mar-20 $ 310,986 (221,942) 89,044 29% 42,103 (52,078) (47,888) (99,966) 31,181 - 31,181 - 31,181 - 31,181 8,822,055 0.004	31-Dec-20 $ 2,634,852 (1,794,776)
			840,076 32% 15,678 (381,529) (173,086)
			(554,615)
			301,139 436
			301,575 (81,426)
			220,149 -
			220,149
			8,822,055 0.025

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF FINANCIAL POSITION

As at 31 March 2021, 2020 and 31 December 2020

ASSETS Current Cash and cash equivalents Trade and other receivables Inventories Non current assets Property, plant and equipment Right of use assets Deferred development Patents Total Assets LIABILITIES Current Trade and other payables Lease liabilities Corporate tax payable Non current liabilities Lease liabilities Total liabilities EQUITY Share capital Retained earnings Total equity Total equity and liabilities	31-Mar-21 $' 1,282,391 511,827 354,972	31-Mar-20 $' 933,408 280,518 430,993	31-Dec-20 $ 1,299,653 212,953 547,043
	2,149,190	1,644,919	2,059,649
	67,036 494,592 12,765 4,013	66,210 129,944 10,024 4,349	70,349 518,841 11,471 4,097
	578,406	210,527	604,758
	2,727,596	1,855,446	2,664,407
	322,283 91,805 16,644	105,323 72,552 -	335,203 94,155 -
	430,732	177,875	429,358
	403,473	57,392	425,902
	403,473	57,392	425,902
	834,205	235,267	855,260
	1,120,875 772,516	1,120,875 499,304	1,120,875 688,272
	1,893,391	1,620,179	1,809,147
	2,727,596	1,855,446	2,664,407

Approved and authorized by the Board 20 May 2021

“Richard Fearn”

…..........................., Director

“Don Russell” …..........................., Director

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF CHANGES IN EQUITY

	No of shares Amount' Issued Capital Retained earnings Total equity
	$' $' $
Balance, 1 January 2020 Total comprehensive income Balance, 31 December 2020	8,822,055 1,120,875 468,123 1,588,998 220,149 220,149
	8,822,055 1,120,875 688,272 1,809,147
Balance, 1 January 2021 Total comprehensive income Balance, 31 March 2021	8,822,055 1,120,875 688,272 1,809,147 84,244 84,244
	8,822,055 1,120,875 772,516 1,893,391

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF CASHFLOWS

For the quarters ended 31 March 2021, 2020, and year ended 31 December 2020

Cash flows form operating activities Earnings before income taxes Items not involving use of cash Depreciation Depreciation - Right of Use Assets Profit on disposal of assets Finance cost - lease liabilities Changes in working capital items Trade and other receivables Inventories Trade and other payables Cash generated from operating activities Income taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sales of assets Deferred development Net cash used in investing activities Cash flows from financing activities Lease payments Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the quarter/year Cash and cash equivalents at end of the quarter/year	Quarter ended	Quarter ended	Year ended
	31-Mar-21 $' 118,239 3,745 24,249 - 311	31-Mar-20 $' 31,181 5,688 23,875 (8,101) -	31-Dec-20 $ 301,575 9,903 98,217 (8,101) 1,083
	146,544 (309,231) 192,071 (12,920)	52,644 16,620 95,340 (96,188)	402,677 77,830 (19,094) 132,310
	16,464 (6,996)	68,415 -	593,723 (75,116)
	9,468	68,414	518,606
	- - (1,640)	- 19,092 (8,378)	(14,500) 19,092 (3,616)
	(1,640)	10,714	976
	(25,090)	(23,875)	(98,084)
	(25,090)	(23,875)	(98,084)
	(17,262) 1,299,653	55,254 878,154	421,499 878,154
	1,282,391	933,408	1,299,653

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS For the quarter ended 31 March 2021

1 Reporting Entity

Fab-Form Industries Ltd. (the "Company" or "Fab-Form") is a company domiciled in Canada and incorporated under the Company Act of British Columbia. The address of the Company’s head office is Unit 19, 1610 Derwent Way, Delta BC V3M 6W1. The Company develops, manufactures and distributes proprietary technology to form concrete footings, columns, foundations and walls for building structures. The Company also exclusively distributes Helix® micro rebar into the BC market and Nudura® insulating concrete form into the Lower Mainland of BC market. The Company has traded on the TSX Venture Exchange (“TSX-V” under the symbol FBF) since 2000.

2 Basis of presentation

a) Basis of preparation

These condensed interim financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standard Board (IASB) and the interpretations issued by International Financial Reporting Interpretations Committee (IFRIC).

b) Basis of measurement

These condensed interim financial statements were prepared on the historical cost basis. The accounting policies of the company, and have been applied consistently to all periods presented in these financial statements.

c) Functional and presentation currency

These condensed interim financial statements are presented in Canadian dollars, the Company’s functional currency.

d) Use of significant estimates and judgements

The preparation of the condensed interim 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. Actual results may 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 any future periods affected.

In the process of applying the Company’s accounting policies, management has made the following estimates and judgments, which have the most significant effect on the amounts recognized in the condensed interim financial statements:

 Impairment of non-financial assets

Impairment exists when the carrying value of a non-financial asset or cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The value in use calculation is based on a discounted cash flow model. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rates used.

 Depreciation and amortization rates

In calculating the depreciation and amortization expense, management is required to make estimates of the expected useful lives of property and equipment and intangible assets.

 Taxes

Deferred tax assets, if any, are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

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FAB-FORM INDUSTRIES LTD NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS For the quarter ended 31 March 2021

2 Basis of presentation (Continued)

d) Use of significant estimates and judgements (continued)

 Credit losses

The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Significant management judgement is required in developing segments and determining level of stratification. The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history and existing market conditions, as well as forward-looking estimates at the end of each reporting period.

 Provision for inventory obsolescence

The Company determines its allowance for inventory obsolescence based upon expected inventory turnover, inventory aging and current and future expectations with respect to product offerings. The Company reviews future revenue trends and forecasts, expected inventory requirements and inventory composition necessary to support future revenues.

The estimate for the Company’s allowance for inventory obsolescence could change from period to period due to changes in product offerings and customer acceptance of those products. If the inventory allowance was inadequate it would result in a charge to operations expense in the future.

 Right of use assets and lease liability

The Company applies judgement in determining the lease term by considering all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option and whether it is reasonably likely that options will be exercised by considering factors such as how far in the future an option occurs, the entity’s business planning cycle and past history of terminating/not renewing leases. Extension options (or periods after termination options) are only included in the lease term applied if the lease is reasonably certain to be extended (or not terminated). The extended lease term for recognised leases is 5 years commencing from 01 Aug 2021. The Company also applied judgement in determining the incremental borrowing of 2.50% based on prime rate plus 0.05% as of the assessment date (30 Sep 2020).

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FAB-FORM INDUSTRIES LTD NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS For the quarter ended 31 March 2021

3) Significant changes in the current reporting period

The company has reviewed its exposure to volatile market conditions and emerging business risks but has not identified any risk that could impact the performance or position of the Company as of 31 March 2021.

The financial position and performance of the Company was particularly affected by the following events and transactions during the quarter ended 31 March 2021.

• Trade receivables has grown by 240% during the period ended 31 March 2021 as a result of increase in credit sales. Credit granted to customers following a proper credit approval process to mitigate the credit risk. Remeasurement principals were applied for credit loss allowance in accordance with IFRS 9 - Financial Instruments, required to recognise an additional impairment of $589 for the quarter ended 31 March 2021. Refer to note 4.

• Inventory balance was reduced 35% during the period, resulting from an increase in sales of 126% compared to quarter ended 31 March 2020.

• Total accounts and other receivable includes $75,146 (USD 59,735) advances paid to our suppliers for deliveries scheduled in May 2021.

4) Credit risk - Accounts receivable

The following table presents an analysis of the age of customer accounts receivable not allowed for as at the dates of the statements of financial position.

31-Mar-21

31-Mar-21
	0-30 Days 31-60 Days 61-90 Days Over 91 Days Total
Trade receivables (CAD customers) Trade receivables (US Dollar customers) Total Loss allowance % Expected credit losses Net receivables	$ $ $ $ $ 290,271 30,140 35,820 8,356 364,588 9,874 17,064 1,961 14,316 43,214
	300,145 47,204 37,781 22,672 407,802 1.5% 0.7% 3.6% 100.0% 7.1% (4,482) (311) (1,376) (22,672) (28,841)
	295,663 46,892 36,405 0 378,961

31-Dec-20

31-Dec-20
	0-30 Days 31-60 Days 61-90 Days Over 91 Days Total
Trade receivables (CAD customers) Trade receivables (US Dollar customers) Total Loss allowance % Expected credit losses Net receivables	$ $ $ $ $ 88,603 25 4,286 13,742 106,656 12,998 6,516 2,084 11,500 33,098
	101,601 6,541 6,370 25,241 139,754 4.1% 0.7% 24.3% 89.0% 20.2% (4,206) (48) (1,545) (22,453) (28,252)
	97,395 6,493 4,825 2,788 111,501

Opening loss allowance at 1 January Increase in loss allowance recognised in profit or loss during the period Closing balance at 31 March The loss allowances for trade receivables as at 31 March reconciled to the opening loss allowances as follows:	Quarter ended
	31-Mar-21 $' 28,252 589
	28,841

The Company has a credit risk as a result of its trade accounts receivable. Trade accounts receivable consists of a large number of customers, spread across diverse industries. The concentration of credit risk is limited due to the fact that the customer base is large and unrelated. As such, the Company does not anticipate any significant credit losses. Of the trade receivable balance at March 31, 2021, only four customers represented greater than 5% of the balance amounting to $115,054.

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