Fintech Select Ltd. — Annual Report 2020

Apr 30, 2021

FINTECH SELECT LTD.

CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

FINTECH SELECT LTD. DECEMBER 31, 2020 CONTENTS

	Page
AUDITORS’ REPORT	1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Financial Position	3
Consolidated Statements of Operations and Comprehensive Loss	4
Consolidated Statements of Cash Flows	5
Consolidated Statements of Changes in Shareholders’ Deficit	6
Notes to Consolidated Financial Statements	7 – 30

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INDEPENDENT AUDITORS' REPORT

To the Shareholders of Fintech Select Ltd.:

Opinion

We have audited the consolidated financial statements of Fintech Select Ltd. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2020 and 2019, and the consolidated statements of operations and comprehensive income, cash flows and changes in shareholders' deficit for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

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

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 Auditor’s Responsibilities for the Audit of the consolidated 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 in the consolidated financial statements, which indicates that for the year ended December 31, 2020 the Company incurred losses in prior years resulting in an accumulated deficit of $27,750,048 and had a working capital deficiency of $3,458,493. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that 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.

Other information

Management is responsible for the other information. The other information comprises:

 Management’s Discussion and Analysis

Our opinion on the consolidated 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 consolidated 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 consolidated 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 on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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In preparing the consolidated 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 consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements, including the disclosures, and whether the consolidated 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 auditor’s report is Kevin Ramsay.

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Markham, Ontario April 28, 2021

Chartered Professional Accountants Licensed Public Accountants

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Fintech Select Ltd.

Consolidated Statements of Financial Position

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

Note December 31 December 31 2020 2019 ASSETS CURRENT Cash – non-restricted $ 37,005 $ 26,217 Accounts receivable 221,148 122,706 Intangibles – short term 5 184,596 84,207 Inventory 14,798 32,628 Prepaid and other assets 12,682 25,272	Note December 31 December 31 2020 2019 ASSETS CURRENT Cash – non-restricted $ 37,005 $ 26,217 Accounts receivable 221,148 122,706 Intangibles – short term 5 184,596 84,207 Inventory 14,798 32,628 Prepaid and other assets 12,682 25,272
470,229 291,030
LONG TERM Property and equipment 4 133,592 154,663 Intangibles – longterm 5 658,826 742,297
792,418 896,960
$ 1,262,647 $ 1,187,990
LIABILITIES & SHAREHOLDER’S EQUITY CURRENT Accounts payable and accrued liabilities 14 3,594,291 3,948,823 Deferred revenue 18,858 65,917 Demand loan 6 165,963 190,896 Customer deposits 34,700 35,200 Currentportion of lease obligations 11 114,910 131,315
3,928,722 4,372,151
NONCURRENT Lease obligations 11 154,256 244,687
4,082,978 4,616,838
SHAREHOLDERS’ EQUITY Share capital 7 18,296,876 18,270,142 Contributed and other surplus 8 6,694,857 6,375,740 Warrant capital 9 62,717 319,354 Other comprehensive loss (124,733) (238,888) Deficit (27,750,048) (28,155,196)
(2,820,331) (3,428,848)
$ 1,262,647 $ 1,187,990
Nature of Operations and Going concern (Note 1) Provision (Note 17) Approved by the Board Naveed UI-Hassan Director (Signed)	Mohammad Abuleil Director (Signed)

The accompanying notes form an integral part of these consolidated financial statements.

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Fintech Select Ltd.

Consolidated Statements of Operations and Comprehensive Income

(Presented in Canadian Dollars)

For the years ended December 31, 2020 and 2019

(Presented in Canadian Dollars) For the years ended December 31, 2020 and 2019
	Note		2020		2019
REVENUE		$	2,884,668	$	3,275,404
EXPENSES
Goods and services purchased			350,912		456,622
Salaries and benefits	18		1,637,557		2,465,305
Other general and administrative			300,448		325,349
Stock based compensation			69,572		--
Foreign exchange loss (gain)			18,256		37,204
Depreciation and amortization	4,5		156,031		212,317
Interest expenses	6		39,933		48,030
Net income(loss) from operations			311,959		(269,423)
Gain on disposal of intangibles	5		26,949		32,754
Gain(Loss) on revaluation of intangibles	5		39,246		36,565
Impairment loss of intangible asset	5		--		(101,212)
Write off stale-dated accounts payable and
accrued liabilities			26,994		47,803
Net income / (loss)			405,148		(253,513)
Exchange difference on translating foreign
operations			11,458		29,623
Gain on revaluation of intangibles			102,697		--
Comprehensive income(loss)			519,303		(223,890)
Earnings (loss) per share
Basic			0.006		(0.003)
Diluted		$	0.006		$ (0.003)
Weighted Average number of shares outstanding
Basic			70,883,102		70,144,378
Diluted			72,419,610		70,144,378

The accompanying notes form an integral part of these consolidated financial statements

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Fintech Select Ltd. Consolidated Statements of Cash Flow

(Presented in Canadian Dollars) For the years ended December 31, 2020 and 2019

(Presented in Canadian Dollars) For the years ended December 31, 2020 and 2019
	Note		2020		2019
Cash provided by (used in)
Operations
Net income (loss)		$	405,148	$	(253,513)
Items not affecting cash
Depreciation and amortization			156,031		212,317
Impairment loss on intangible assets			--		101,212
Write off stale-dated accounts payables and
accrued liabilities			(26,994)		(47,803)
Interest expenses			39,933		48,030
Stock based compensation			69,572		--
Unrealized foreign exchange loss (gain)			11,204		29,801
Gain on disposal of intangible			(26,949)		(32,754)
(Gain) Loss on revaluation of intangible			(39,246)		(36,565)
			588,699		20,725
Net change in non-cash working capital
Accounts receivable			(98,441)		62,493
Inventory			17,831		(2,443)
Prepaid and other assets			12,588		20,686
Accounts payable and accrued liabilities			(307,897)		48,750
Deferred revenue			(47,059)		23
Customer deposits			(500)		--
			165,221		150,234
Investing
Additions of property and equipment			(51,489)		(30,869)
Disposal (addition) of investment held for sale			68,503		49,134
			17,014		18,265
Financing
Addition of demand loan					--
Repayment of demand loan			(36,929)		--
Payment of lease			(134,775)		(157,998)
			(171,704)		(157,998)
Net change in cash			10,531		10,501
Effect of exchange rate changes on cash			257		(178)
Cash, beginning of year			26,217		15,894
**Cash, end of year **		$	37,005	$	26,217

The accompanying notes form an integral part of these consolidated financial statements

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Fintech Select Ltd. Consolidated Statement of Changes in Shareholders’ Deficit (Presented in Canadian Dollars) For the year ended December 31, 2020 and 2019

					Accumulated
	Share	Capital			Other
				Options	Comprehensive
			Contributed	and Warrant	Income (Loss)
Year ended Dec 31,2020	Number	Amount	Surplus	Capital		Deficit	Total
Balance, December 31, 2019	70,874,515	18,270,142	6,375,740	319,354	(238,888)	(28,155,196)	(3,428,848)
Grant of options	--	--	--	69,211	--	--	69,211
Options and warrants expired	--	--	319,117	(319,117)	--	--	--
Options exercised	392,857	26,734	--	(6,731)	--	--	20,003
Other comprehensive income from
translation of foreign entity	--	--	--	--	11,458	--	11,458
Gain on revaluation of intangibles	--	--	--	--	102,697	--	102,697
Net loss	--	--	--	--	--	405,148	405,148
As at December 31,2020	71,267,372	18,296,876	6,694,857	62,717	(124,733)	(27,750,048)	(2,820,331)
Balance, December 31, 2018	64,374,515	17,945,142	6,338,801	356,293	(268,511)	(27,901,683)	(3,529,958)
Issuance of new shares	6,500,000	325,000	--	--	--	--	325,000
Stock options expired	--	--	36,939	(36,939)	--	--	--
Other comprehensive income from
translation of foreign entity	--	--	--	--	29,623	--	29,623
Net loss	--	--	--	--	--	(253,513)	(253,513)
As at December 31,2019	70,874,515	18,270,142	6,375,740	319,354	(238,888)	(28,155,196)	(3,428,848)

The accompanying notes form an integral part of these consolidated financial statements

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN UNCERTAINTY

Fintech Select Ltd. (the "Company") is a leader in financial payment services and is a provider of robust and disruptive payment solutions, including prepaid card programs, Crypto-currency POS, and recently acquired e-wallet and online payment solutions. The address of the registered office of Company is 100 King St W, Unit T201a, Chatham, ON, N7M 6A9. The Company’s shares are listed on the TSX Venture Exchange under symbol FTEC.

These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue its operations in the foreseeable future and that it will be able to realize its assets and discharge its liabilities in the normal course of operations. The facts and circumstances noted below cast significant doubt on the company’s ability to continue as going concern.

During the year, the company incurred a net income from operations $311,959(2019- Net loss of 269,423. The company had a net inflow of cash from operations of $165,221 (2019 - $150,234). The Company has a working capital deficiency of $3,458,493 (2019 deficit $4,081,121). The working capital deficiency limits the Company’s ability to fund capital expenditures and operations.

As of the year end, the Company had collateral account shortfalls which was contrary to the terms of a special agreement with the financial institution whereby the Company agreed that it shall maintain in designated special collateral account in a designated bank of amounts equivalent to the consumers unspent card balances. As of December 31, 2020, the Company had collateral account shortfalls of approximately $2.8 million liable to the cardholders and financial institution. These collateral shortfalls are already included in the working capital deficiency number noted above. The Company continues to work towards an agreeable resolution with the financial institution and simultaneously has been working to address the collateral shortfall.

The continuation of the Company as a going concern is dependent on raising sufficient working capital to maintain operations, reducing operating expenses, and increasing revenues and profits. The Company is pursuing further financing alternatives to fund its operations, to settle the shortfall noted above and continue its activities as a going concern. There is no assurance that it will be able to do so in the near future, as without enough financing, the Company may be forced to cease operations.

These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the going concern assumption not be appropriate. These adjustments could be material.

The consolidated financial statements were authorized for issuance by the Board of Directors on April 28, 2021.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

2. BASIS OF PRESENTATION

Statement of compliance

These consolidated financial statements have been consistently 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 Interpretations Committee (“IFRIC”).

Basis of presentation

These consolidated financial statements are prepared on the historical cost basis except for held for sale investments which are measured at the fair value, with changes being recognized in other comprehensive income and financial assets classified as “fair value through profit and loss”, if any, which are measured at fair value.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 1382285 Ontario Limited ("SelectComm"), 2143436 Ontario Limited ("SelectCore Comm"), Local Fone Service, Inc. ("LFS"), SelectCore USA, LLC ("SelectCore US") and 2314606 Ontario Limited (“SelectCore Financial Services”).

Subsidiaries are all entities over which the Company has the power, is exposed, or has rights, to variable returns from its involvement and has the ability to use its power to affect its returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Company.

The company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Inter-Company transactions, balances and unrealized gains or losses between subsidiaries are eliminated in preparing the consolidated financial statements. The financial statements of the subsidiaries are prepared for the same reporting period as the reporting company using consistent accounting policies.

Functional and presentational currency

Unless otherwise noted, all amounts in the accompanying consolidated financial statements and these notes are presented in Canadian funds, which is the functional currency of the Company.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Inventory

Inventory comprises primarily of vouchers and point of sale activated Personal Identification Number ("Pins"), representing wireless prepaid airtime, which are valued at the lower of cost and net realizable value, with cost determined on a First-in First-out basis.

The amount of any write-down of inventories to net realizable value and all losses of inventories is recognized as an expense in the period the write-down or loss occurs. Reversals of previous inventory write downs are recognized in the period in which the reversals occur.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

Property and Equipment

All property and equipment are stated at historical cost less amortization and impairment losses, if any. Property and equipment are amortized over their estimated useful lives as follows:

Terminals - 30% declining balance basis Electronic equipment - 20-30% declining balance basis Office furniture and fixtures - 20% declining balance basis Leasehold improvements - straight-line over the term of the lease

The assets’ residual values, amortization methods and useful lives are reviewed and adjusted if appropriate at each reporting date.

An item 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 disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other costs, such as repairs and maintenance, are charged to profit or loss during the financial period in which they are incurred.

Leases

Right of use (“ROU”) assets

ROU assets are initially recorded at cost, which comprises the initial amount of the lease liability and any initial direct costs incurred less any lease payments made at or before the initial recognition date. ROU assets are depreciated on a straight-line basis over the estimated useful life of the asset if the Corporation expects to take ownership of the asset at the end of the lease term, or over the lease term if the Corporation does not expect to take ownership of the asset at the end of the lease term. The lease term includes periods covered by an option to extend if the Corporation’s intention is to exercise that option. ROU assets are periodically reduced by impairment losses, if any, and adjusted for re-measurements of the lease obligation.

Lease liabilities

The lease liability is measured at the present value of the expected lease payments over the lease term, discounted at the implicit rate in the lease; if the rate cannot be determined, the incremental borrowing rate of the asset or asset grouping is used. The lease liability is increased for the passage of time and payments on the lease are offset against the lease liability. The liability is subsequently re-measured when there is a change in the lease agreement, such as a change in future lease payments or if the Corporation decides to purchase, extend or terminate the lease option. When the lease liability is re-measured, an adjustment is applied to the carrying value of the ROU asset.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Intangibles

Intangible assets comprise computer software and cyptocurrency. Computer software is recorded at cost and amortized on a 30% declining balance basis. Costs associated with maintaining computer software are recognized as an expense in the period incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:

• It is technically feasible to complete the software product so that it will be available for use;

• Management intends to complete the software product and use or sell it;

• There is an ability to use the software product;

• It can be demonstrated that the software product will generate probable future economic benefits;

• Adequate technical, financial and other resources are available to complete the development and to use or sell the software product; and

• The expenditure attributable to the software during its development can be reliably measured.

Other development expenditures that do not meet these criteria are recognized as an expense when incurred. Completed computer software costs are recognized as assets and amortized over their useful lives.

The amortization methods and estimated useful lives of intangible assets are reviewed annually.

Cyptocurrency is recognized at purchase cost and then revalued at the end of each quarter using an open market quoted price. Any decrease in value as a result of revaluation is recorded in profit and loss while increase in value is recorded as other comprehensive income. However, the increase is recognised in profit and loss to the extent that it reverses revaluation decrease of the same asset previously recognised in profit and loss.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Impairment of Long-lived Assets

The carrying amount of Company’s non-current assets, which includes property and equipment and intangible assets with finite useful lives are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indication exists, the assets’ recoverable amount is estimated. An impairment loss is charged to profit or loss whenever the carrying amount of an asset (or its cash generating unit) exceeds its recoverable amount. An asset’s recoverable amount is greater of its fair value less costs to sell and its value-in-use (calculated as the present value of expected future cash flows). Impairment losses are charged to profit or loss but may be reversed (other than goodwill) if there has been a change in the estimates used to determine the recoverable amount.

Share Issuance Costs

Professional, consulting, regulatory fees and other costs that are directly attributable to the issuance of shares are charged to share capital when the related shares are issued net of any tax effects. Transaction costs of abandoned equity transactions are recognized in the statement of income and comprehensive loss.

Revenue Recognition

The Company recognizes revenue at the time persuasive evidence of an agreement exists, the price is fixed and determinable, the delivery has occurred and collectability is reasonably assured.

In addition, the Company applies the following specific revenue recognition policies:

• (a) Revenue for prepaid financial services is generated from multiple sources including transaction fees, cardholder fees and interchange fees and is recognized when transactions occur. Revenue from sales of physical cards is recognized when the card is delivered to the customer.

• (b) The Company’s revenues are partly generated from delivering point of sale activated prepaid mobile top-up pins and vouchers. Sales of these pins and vouchers under third party brands, where the price to the consumer is fixed or determinable and collection is reasonably assured, are recognized at the date of sale to the customer. Sales of vouchers which allow for the purchase of Pins at a later date are recognized when the pins are delivered. At year end, any voucher amount that has not been delivered to final users is recorded as deferred revenue.

• (c) Call center revenue is recognized monthly based on the service categories and minutes of services used by our customers.

• (d) Revenue from subscriber services, such as local phone lines, is recognized when the service is provided to the customer. Any payment received in advance of providing services is recorded as deferred revenue.

• (e) The Company charges commission on cryptocurrency transactions through our POS system. Once the transaction is completed, the service is considered provided and revenue is recognized monthly based on transactions completed and commission charged during the month.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Stock-Based Compensation

The Company applies a fair value-based method of accounting for stock-based compensation.

Stock-based compensation is charged to operations as an employee or consultant expense over the vesting period and the offset is credited to warrants capital. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. Awards with graded vesting are valued and recognized as compensation cost based on the respective vesting tranche. The amount of compensation cost recognized is adjusted to reflect the number of awards expected to vest based on continued employment vesting conditions, such that the amount ultimately recognized as compensation cost is based on the number of awards that vest.

Consideration received upon the exercise of stock options is credited to share capital and the related warrants capital amount is transferred to share capital.

The fair value of stock options is determined by the Black-Scholes option pricing model with assumptions for risk-free interest rates, dividend yields, volatility factors of the expected market price of the Company's common shares and an expected life of the option issued. The fair value of direct awards of stock is determined by the quoted market price of the Company's stock.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the Company as consideration cannot be reliably measured, they are measured at fair value of the equity instruments issued. Otherwise, such stock-based compensation is measured at the fair value of goods or services received.

Warrants

For transactions involving the issuance of warrants, the company measures these transactions at the fair value of the goods or services received, unless the fair value cannot be estimated reliably. In cases where the fair value cannot be estimated reliably, the company measures these transactions by reference to the fair value of the equity instruments granted. In the case of unit placements, the proceeds from the issuance of units is allocated between common shares and warrants on pro-rata basis based on relative fair values. Share issuance costs incurred in connection with the issuance of capital stock are netted against the proceeds received.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Income Taxes

(a) Income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted at the end of each reporting period.

(b) Deferred income tax

Deferred income tax is provided using the liability method on temporary differences, at the end of each reporting period, between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of each reporting period. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of comprehensive income.

Deferred income tax assets and deferred income tax liabilities are offset if, and only if, a legally enforceable right exists to set off current tax assets against current tax liabilities and deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to either settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Provisions

Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation (see Note 17).

Foreign Currency Transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions as well as from the translation of monetary assets and liabilities not denominated in the functional currency are recognized in the statement of operations and comprehensive loss.

Assets and liabilities of subsidiaries with functional currencies other than Canadian dollars are translated to Canadian dollars at the period end rates of exchange, and their earnings and expense accounts and cash flow statement items are translated at average rates of exchange for the period. The resulting translation adjustments are included in other comprehensive loss in shareholders’ deficiency.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of the net investment in a foreign operation and are recognized in other comprehensive losses.

On disposal of part or all of the operations, the proportionate share of the related cumulative gains and losses previously recognized in the equity are included in determining the profit or loss on disposal of that operation recognized in the profit or loss.

Earnings (loss) per share

Basic net income or loss per common share is calculated by dividing the net income or loss by the weighted average number of common shares outstanding during the period. Diluted net income or loss per common share is calculated by dividing the applicable net income or loss by the sum of the weighted average number of common shares outstanding and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the period. The dilutive effect of outstanding stock options and warrants on earnings per share is calculated by determining the proceeds for the exercise of such securities which are then assumed to be used to purchase common shares of the Company.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Financial Instruments

Financial assets

Financial assets are classified as either financial assets at fair value through profit or loss (“FVTPL”), fair value through other comprehensive income (“FVTOCI”) or amortized cost. The Company determines the classification of financial assets at initial recognition.

Financial assets at Fair-value through profit or loss

Financial instruments classified as fair value through profit and loss are reported at fair value at each reporting date, and any change in fair value is recognized in the statement of operations in the period during which the change occurs. Realized and unrealized gains or losses from assets held at FVPTL are included in losses in the period in which they arise.

Financial assets at Fair-value through other comprehensive income

Financial assets carried at FVTOCI are initially recorded at fair value plus transaction costs with all subsequent changes in fair value recognized in other comprehensive income (loss). For investments in equity instruments that are not held for trading, the Company can make an irrevocable election (on an instrumentby-instrument bases) at initial recognition to classify them as FVTOCI. On the disposal of the investment, the cumulative change in fair value remains in other comprehensive income (loss) and is not recycled to profit or loss.

Financial assets at amortized cost

Financial assets are classified at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset’s contractual cash flows are comprised solely of payments of principal and interest. The Company’s accounts receivable are recorded at amortized cost as they meet the required criteria. A provision is recorded based on the expected credit losses for the financial asset and reflects changes in the expected credit losses at each reporting period.

Financial liabilities

Financial liabilities are initially recorded at fair value and subsequently measured at amortized cost, unless they are required to be measured at FVTPL (such as derivatives) or the Company has elected to measure at FVTPL. The Company’s financial liabilities include trade and other payables which are classified at amortized cost.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Impairment

IFRS 9 requires an ‘expected credit loss’ model to be applied, which requires a loss allowance to be recognized based on expected credit losses. This applies to financial assets measured at amortized cost. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in initial recognition.

Fair value hierarchy

Financial instruments recorded at fair value on the statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

• Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company’s cash is classified as Level 2. Cash is recorded at fair value on the consolidated statement of financial position. Other than that, none of the Company’s financial instruments are recorded at fair value on the consolidated statement of financial position. The fair values of financial instruments approximate their carrying values due to their short term to maturity.

Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. The Company currently has three reportable segments: the call centers, distribution of prepaid wireless airtime, and the provision of prepaid card services.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Critical Judgements in Applying Accounting Policies

In the preparation of these consolidated financial statements management has made judgements, in addition to judgement over the going concern assumption described in note 1, aside from those that involve estimates, in the process of applying the accounting policies. These judgements can have an effect on the amounts recognized in the financial statements.

Revenue recognition

Certain revenues earned by the Company require judgement to determine if revenue should be recorded gross as a principal or net of related costs as an agent. The Company evaluates each significant contract using various criteria to determine if revenue should be recognized on a gross basis if the Company is the primary obligor to its customers and bears the risk of loss of inventory in its possession. Revenue from transactions where the Company earns a fee and does not incur inventory risk is recognized on a net basis.

Critical Accounting Estimates

The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes to the consolidated financial statements. While management believes that these estimates and assumptions, based on management’s best knowledge of current events and actions that the Company may undertake in the future, are reasonable, actual results could differ from these estimates.

Significant estimates and assumptions include those related to determining the value in use for impairment test, valuation of investments, valuation of share-based payments, the useful lives of property and equipment for amortization purposes, allowance for doubtful accounts, and the fair values of financial assets.

These estimates have been applied in a manner consistent with that in prior periods and there are no known trends, commitments, events or uncertainties that we believe will materially affect the assumptions utilized in these consolidated financial statements. The estimates are impacted by many factors, some of which are highly uncertain.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

4. PROPERTY AND EQUIPMENT

Activity during the year ended December 31, 2020 is as follows:

		**Electronic **	Office Furniture
Cost	**Terminals **	Equipment	& Fixtures	Totals
Balance January1,2020	954,633	671,372	183,960	1,809,965
Additions	-	6,960	-	6,960
Balance December 31,2020	954,633	678,332	183,960	1,816,925
Accumulated Depreciation
Balance January1,2020	921,555	581,052	152,695	1,655,302
Depreciation	8,666	17,072	5,710	31,448
Balance December 31,2020	930,221	598,124	158,405	1,686,750
Net Book Value	24,412	80,208	25,555	130,175

Activity during the year ended December 31, 2019 is as follows:

		**Electronic **	Office Furniture
Cost	**Terminals **	Equipment	& Fixtures	Totals
Balance January1,2019	954,817	667,445	183,960	1,806,222
Additions	62	3,927	-	3,989
Disposal	(246)	-	-	(246)
Balance December 31,2019	954,633	671,372	183,960	1,809,965
Accumulated Depreciation
Balance January1,2019	909,779	561,000	145,415	1,616,194
Depreciation	11,776	20,052	7,280	39,108
Balance December 31,2019	921,555	581,052	152,695	1,655,302
Net Book Value	33,078	90,320	31,265	154,663

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

5. INTANGIBLES

Intangibles – short term represents bitcoins held for sale. As of December 31, 2020, the Company has 5 bitcoins (December 31, 2019: 9 bitcoins). Cryptocurrency was revalued quarterly based on open market quoted price.

quoted price.
		31-Dec-20		31-Dec-19
Balance January1,	$	84,207	$	64,022
Additions
Disposal		(41,554)		(16,380)
Revaluation		141,943		36,565
Balance December 31,	$	184,596	$	84,207

Intangibles – long term represents computer software, Right-of-Use assets and leasehold improvement.

	Computer	Right-of-use	Leasehold
Cost	Software	Assets	Improvement	Totals
Balance January1,2020	1,550,029	499,967	6,522	2,056,518
Additions	41,109	-	-	41,109
Balance December 31,2020	1,591,138	499,967	6,522	2,097,627
Accumulated Depreciation
Balance January1,2020	1,182,338	130,256	1,627	1,314,221
Depreciation	4,079	119,166	1,335	124,580
Balance December 31,2020	1,186,417	249,422	2,962	1,438,801
Net Book Value	404,721	250,545	3,560	658,826	~~+~~

==> picture [387 x 192] intentionally omitted <==

In the year ended December 31, 2019, the Company made full impairment provision in the amount of $101,212 for the software platform used for its prepaid card business.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

6. Demand Loan

	December 31,	December
	2020	31, 2019
Demand loan	$ 165,963	$190,896

This loan bears an interest rate of 8% per annum. It was secured by a promissory note and a general security agreement, covering all of the assets of the Company.

7. SHARE CAPITAL

Authorized: Unlimited common shares

Issued and fully paid:

sued and fully paid:
	2020			2019
	Number		Amount	Number		Amount
Common Shares	71,267,372	$	18,296,876	70,874,515	$	18,270,142
Total	71,267,372	$	18,296,876	70,874,515	$	18,270,142

8. STOCK OPTIONS

The Board of Directors has adopted a stock option plan for the Company (the “Plan”). Pursuant to the Plan, the Board of Directors may, from time to time at its discretion, allocate non-transferable options to purchase shares to directors, officers and technical consultants of the Company.

Under the Plan, the aggregate number of shares to be issued upon the exercise of options granted thereunder may not exceed 10% of outstanding shares. Furthermore, the aggregate number of shares to be issued upon exercise of the options granted there under to any one director or officer shall not exceed 5% of the issued and outstanding shares and the number of shares reserved for issuance to all technical consultants will not exceed 2% of the issued and outstanding shares. Options shall expire no later than five years after the date of grant. Options may be exercised no later than ninety (90) days following cessation of the optionee’s position with the Company, provided that if the cessation of office, directorship or technical consulting arrangement was by reason of death, the option may be exercised within a maximum period of one year after such death, subject to the expiry date of such option.

The exercise price of options granted pursuant to the Plan shall be set by the Board of Directors and shall not be less than the applicable discount permitted by the TSX-V or such other stock market on which the shares are then traded. The options issued under the plan vest according to the provisions determined by the Board at the time of grant.

On April 3, 2017, the Company granted 3,380,000 incentive stock options, each giving the holder the right to acquire one common share to various officers, directors, employees and consultants. The options are exercisable at $0.17 per option for a period of three years from the date of grant, vesting immediately. 120,000 stock options were exercised during the year ended December 31, 2017. 1,465,000 options expired during the year ended December 31, 2019. The remaining 1,795,000 options expired in April 2020.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

On June 26, 2017, the Company granted 2,000,000 incentive stock options, each giving the holder the right to acquire one common share to directors and consultants. The options are exercisable at $0.30 per option for a period of three years from the date of grant, vesting immediately. 250,000 stock options were exercised during the year ended December 31, 2017. The remaining 1,750,000 options expired in June 2020.

On April 12, 2018, the Company granted 1,425,000 incentive stock options, each giving the holder the right to acquire one common share to certain of its consultants, directors and officers. The options are exercisable at $0.30 per option for a period of three years from the date of grant, vesting immediately. 300,000 options expired during the year ended December 31, 2019. None of these options were exercised yet.

On June 22, 2020, the Company granted 3,850,000 incentive stock options, each giving the holder the right to acquire one common share to certain of its directors and officers. The options are exercisable at $0.05 per option for a period of three years from the date of grant, vesting immediately. 392,857 of these options were exercised in December 2020.

The Company had following options outstanding and exercisable at December 31, 2019:

	Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2019	Year ended December 31, 2019
In number of units, except for	Number of options	Weighted	Number of options	Weighted
exercise price		average		average
		exercise		exercise
		price		price
Outstanding, beginning of year	4,670,000	0.25	6,435,000	0.25
Granted	3,850,000	0.05	--
Expired	(3,545,000)	0.25	(1,765,000)	.19
Exercised	(392,857)	0.05
Outstanding, end of year	4,582,143	0.10	4,670,000	0.25
Exercisable,end ofyear	4,582,143	0.10	4,670,000	0.25

Below is a summary of exercise prices, and weighted average remaining life as at December 31, 2020 for each grant of options. .

Granted in April 2018 Granted in June 2020 Balance, December 31, 2020	Weighted average exercise price Number of options Remaining life (Years)
	1,125,000 0.25 0.3 3,457,143 0.05 2.5
	4,582,143 $0.10 2.0

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

The following are the valuations of each grant of options and the major assumptions used to value these options.

Date	of Expiry	Number of Options	Exercise Price	Grant Date Fair Value of options
	11-Apr-21	1,125,000	$0.30	$ 225

The options granted were valued using the Black-Scholes option pricing model with the following assumptions.

assumptions.
Expected dividend yield Expected volatility Risk free interest rate Expected life	2018
	0.00% 15% 1.20% 3

Date	of Expiry	Number of Options	Exercise Price	Grant Date Fair Value of options
	22-Jun-23	3,850,000	$0.05	$69,572

The options granted were valued using the Black-Scholes option pricing model with the following assumptions.

Expected dividend yield Expected volatility Risk free interest rate Expected life	2020
	0.00% 116% 0.38% 3

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

9. WARRANTS

The Company had the following warrants outstanding and exercisable at December 31, 2020 and 2019.

	Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2019	Year ended December 31, 2019
In number of units, except for	Number of	Weighted	Number of	Weighted
exercise price	warrants	average	warrants	average
		exercise		exercise
		price		price
Outstanding, beginning of year	15,679,997	0.25	15,679,997	0.25
Granted	--	--	--	--
Expired	15,679,997	0.25	--	--
Outstanding, end of year	--	--	15,679,997	0.25
Exercisable,end ofyear	--	--	15,679,997	0.25

Upon expiry of the warrants, the related outstanding balance in warrant capital had been transferred to contributed surplus.

There were no warrants granted or exercised during the year ended December 31, 2020.

10. SEGMENT INFORMATION

Although the Company has revenue from US customers, it operates solely in Canada.

The Company operates primarily in three industry segments based on the nature of the product/service: its distribution division, which sells prepaid wireless airtime, its call center and its Financial Services division which provides prepaid debit card services.

					Financial and	Financial and
	Distribution		Call	Center	Payment Services		Corporate		Total
$ Millions	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
Revenue	0.12	0.31	2.75	2.82	0.01	0.15	--	--	2.88	3.28
Assets	0.08	0.13	0.54	0.48	0.61	0.47	0.03	0.11	1.26	1.19
Net
Profit/(Loss)	(0.03)	0.02	1.08	0.61	(0.02)	(0.07)	(0.62)	(0.81)	0.41	(0.25)

11. COMMITMENTS

a) The Company has no lease commitments as at December 31, 2020.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

b) Right of use assets

The Company had the following future commitments associated with its lease obligations:

Balance at December 31, 2019 Interest expense Lease payments Balance at December 31, 2020 Current portion Long term portion	$ 376,002 27,939 (134,775)
	$ 269,166
	114,910 154,256
	269,166

In relation to the leases recognized, the Company has recognized during the year ended December 31, 2020, $119,166 of depreciation charges, $134,775 of lease payments and $27,939 of interest expense from these leases.

As at December 31, 2020, the Company has recorded a $250,545 right-of-use asset (included in "Intangibles – Long term") and a $269,166 lease obligation (the non-current portion of $154,256 recorded in "Lease obligations" and the current $114,910 portion recorded in "Current portion of lease obligations").

12. CAPITAL MANAGEMENT

The Company's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Company includes equity, comprised of issued common shares, warrant reserve, contributed surplus and accumulated other comprehensive income in the definition of capital.

The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its growth activities, and to maintain its ongoing operations. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity and or debt financing. See note 1.

The Company’s overall capital management strategy during the period ended December 31, 2020 and 2019 has been to raise share capital, reach settlement with creditors, shut down money-losing businesses, and expand profitable call center business.

13. FINANCIAL RISK MANAGEMENT

The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance.

Risk management is carried out by the accounting and finance department under policies approved by the Board of Directors. This department identifies and evaluates financial risks in close cooperation with management. The finance department is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

(a) Market Risk

(i) Currency Risk

The Company operates primarily in Canada and has a subsidiary in USA that had ceased operation. The Company has exposure to foreign exchange risk. Foreign exchange risk arises from purchase and sales transactions, as well as recognized financial assets and liabilities denominated in foreign currencies.

The Company's main objective in managing its foreign exchange is to maintain Canadian cash on hand to support Canadian forecasted cash flows over a 12-month horizon. To achieve this objective, the Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the currency of cash held.

Balances denominated in USD at December 31, 2020 and 2019 are as follows:

		2020		2019
Cash	$	31,659	$	--
Accounts receivable and other receivables		118,008		119,340
Accounts payable and accrued liabilities		(94,969)	(122,960)
Total net asset(liability)	$	54,698	$	(3,620)

Fluctuations in the Canadian dollar exchange rate have an impact on the Company’s results from operations.

Fluctuation of the U.S. dollar relative to the Canadian dollar of 5% would impact net income by approximately $ 2,735 as of December 31, 2020 (2019 impact net income - $181).

(ii) Interest rate risk:

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

Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk.

The Company's demand loan has fixed interest rates and is not exposed to interest rate risk.

(b) Credit Risk

Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation. The maximum exposure to credit risk of the Company at period-end is the carrying value of its cash and accounts receivables.

The Company manages credit risk by maintaining bank accounts with Schedule 1 banks in Canada 。

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

FINANCIAL RISK MANAGEMENT (Cont’d)

The Company does not require collateral or other security for accounts receivable or amounts due from related parties. The Company estimates its provision for uncollectable amounts based on analysis of the specific amount and debtor's payment history and prospects. Accounts receivable are stated net of an allowance for doubtful accounts of $20,744 (2019 $30,757).

Top three customers represent 85% of accounts receivable as of December 31, 2020 (2019 - three customers represented 80%). As of April 26, 2021, 82% (2019 – 91%) of the accounts receivable balance was collected. As of December 31, 2020, approximately $30,110(2019 –$42,597) of the Company’s receivable were 60 days past due of which approximately $20,744 (2019- $30,757) have been allowed for as doubtful debts.

(c) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due.

The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. Senior management is also actively involved in the review and approval of planned expenditures.

As at December 31, 2020, the Company has accounts payable and accrued liabilities, demand loan and current portion of lease obligations of $3,875,164 due within 12 months (December 31, 2019 - $4,271,034), cash of $37,005 (December 31, 2019 - $26,217), receivables of $221,148 (December 31, 2019 - $122,706) and intangibles-short term of $184,596 (December 31, 2019 - $84,207) to meet its current obligations. As a result, the Company has liquidity risk.

(d) Economic Dependence

One customer accounting for more than 10% of total revenues, represent 83% of the Company's revenue in the current year (2019 - one customer, accounting for more than 10% of total revenues, represented 77%).

The Company depends on large telecommunications carriers to provide certain products and services. If these carriers were unwilling or unable to provide such products and services in the future, the Company's ability to provide products and services to its customers may be adversely affected and the Company may not be able to obtain similar services from alternative carriers on a timely basis or on terms favorable to the Company.

(e) Fair value

The estimated fair values of accounts receivable, accounts payable, accrued liabilities and demand loans debt approximates their carrying values due to the relatively short-term nature of the instruments. The fair value of investment is based on open market price.

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

14. RELATED PARTY TRANSACTIONS AND BALANCES

The following summarizes the Company’s outstanding balances with related parties:

	2020 2019
	Accounts payable $ 294,990 481,265

The balances are non-secured and without interest or payment terms. They mainly represent compensations due to directors for services provided.

15. KEY MANAGEMENT COMPENSATION

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Company’s key management personnel include the board of directors, Chief Executive Officer & President, Chief Financial Officer and Director of Business Operations.

Remuneration of Directors and key management of Company was as follows:

Year ended Dec 31, Year ended Dec 31, 2020 2019 Salaries and Benefits $ 356,423 $ 392,638

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

16. INCOME TAXES

(a) Income tax expense

The following table reconciles income taxes calculated at combined Canadian federal/ provincial tax rates with the income tax expense in the consolidated financial statements:

	2020	2019
Income (loss) before income taxes	$405,148	$(253,513)
Statutory rate	26.50%	26.50%
Expected income tax expense (recovery)	107,364	(67,181)
Effect on income taxes of unrecognized deferred income
tax asset relating to deductible temporary differences on:
Change in unrecognized deferred tax asset and rates	(107,364)	(14,794)
Non-deductible expenses	--	81,975
Income tax expense	-	-

(b) Deferred income taxes

The temporary differences that give rise to deferred income tax assets and deferred income tax liabilities are presented below:

	2020	2019
Amounts related to tax loss and credits carry forwards	$5,149,000	$4,887,226
Property and equipment, intangible assets and
investments	313,000	293,854
Deferred tax asset, not recognized	5,462,000	5,181,079

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FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

(c) Loss and tax credits carry forwards

As at December 31, 2020, the company has non-capital losses expiring as follows:

2028	$ 43,715
2029	444.439
2030	675,981
2031	490,688
2032	6,844,259
2033	4,019,146
2034	1,844,278
2035	2,053,958
2036	1,538,556
2037	387,659
2038	167,289
2039	920,407
	$19,430,375

The potential tax benefit relating to the non-capital losses and tax credit carry forwards has not been reflected in these financial statements.

17. PROVISION

In April, 2017, the Company was served by a service provider with a Statement of Claim filed in the Ontario Superior Court of Justice (the " Claim ") for the amount of $4,000,000. The Claim relates to the shortfall of a secured cash pledge ("Secured Deposit"), as per the Special Account Agreement executed between the Company and the service provider. The Company has recorded its best estimate of the liabilities associated to the service provider as of December 31, 2019. The Company has been working on settling this claim. The company does not expect that any additional loss will be incurred.

In July 2019, one of the Company’s subsidiary (“subsidiary”) has been served with a Statement of Claim by Her Majesty the Queen in Right of Alberta (“Alberta”) in the amount of $633,284 (the “Alberta Claim”). The Alberta Claim relates to the balance of funds on expired cards pursuant to a Card Management Agreement between the subsidiary and Alberta. The claimed amount was included in the Claim served on the Company by its service provider. The Company has recorded such payables in its financial statements. The Company intends to vigorously defend the Claim, as all of the funds claimed by Alberta were deposited in the Company’s service provider’s bank account and not that of the subsidiary.

18. COVID 19

During the year, the outbreak of the novel strain of coronavirus, specifically identified as “COVID 19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID 19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of

29

FINTECH SELECT LTD. Notes to consolidated financial statements December 31, 2020 and 2019 (Presented in Canadian Dollars)

these developments and the impact on the financial results and condition of the Company and its operating subsidiaries in future periods.

During the year, the Company received government subsidies in related to COVID 19 under the Canadian Emergency Wage Subsidy (“CEWS”) program in the amount of $602,321 which was credited to Salaries and Benefits.

30